Aeas 4091

AEAS 409: PRODUCTION PLANNING AND CONTROL
Nikhil R. Dhar, Ph. D

Professor, IPE Department BUET
Course Outlines
Elements of Production Planning and Control Types of Production System Functions of Production, Planning and Control with an overview of different types of manufacturing systems Factors affiliated with different fields of production including product characteristics and economic analysis Forecasting Methods and their Application Aggregate planning Master Production Scheduling (MPS) Material Requirement Planning (MRP) Coding and standardization Capacity planning Inventory Management-ABC analysis Production Scheduling Techniques-CPM and PERT and Line balancing
Department of Industrial & Production Engineering
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Methods of Sales Forecasting Plant location and layout Work study and method study Plant performance measurement Introduction to product development and design Procedure for evaluation of materials and processes Advantages due to different types of scheduling of jobs on processors and methods employed Types of information systems and its benefits at different management levels Computers in production planning and control MRPII and JIT
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Suggested Reading
Operations Management-Strategy and Analysis-Lee, J. Krajewski and Larry, P. Ritzman Production and Operations Management-A Life Cycle Approach - Richard B. Chose and Nicholas J. Aquilano Element of Production Planning and Control - Eilon Samuel Industrial Engineering and Production ManagementM. Telsang Engineering Management A. K. Gupta Production and Operations Management - S.N. Chary. Production Management-K. Aswathappa, Production and Operations Management-R. Panneerselvam,
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LECTURE-01: PRODUCTION PLANNING & CONTROL
Nikhil R. Dhar, Ph.D.

Department of IPE BUET
Production Management
Production management is defined as management function which plans, organizes, coordinates, directs and controls the material supply and Processing activities of an enterprise, so that specified products are produced by specified methods to meet an approved sales program. These activities are being carried out in such a manner that Labor, Plant and Capital available are used to the best advantage of the organization. The objectives of production management is stated as To produce goods or services of right quality and quantity at the predetermined time and pre-established cost. Thus the objective of production management are reflected in Right Quality Right Quantity Predetermined Time and Pre-established Cost (Manufacturing Cost)
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The objectives of production Management are: To produce goods and services as per the estimated manufacturing cost and minimum inputs of resources. To produce right quality goods and services as per the established standards and specifications. To produce goods and services as per the decided time schedule. Minimize the use of resources to the optimum level. These are 4 Ms like Machinery, Materials, Manpower and Money. These inputs are to be used to full extent to result minimum cost and time. Maximize the utilization of manpower. Minimizing the total cost of production with continuous elimination of non-value added activities and improving labor productivity on the production shop floor.
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5 P`s of Production Management
Product: Product is the link between production and marketing. It is not enough that a customer requires product but the organization must be capable of producing the product. Plant: The plant accounts for major investment (fixed asset). The plant should match the needs of the product, market, the worker and the organization. Processes: There are always number of alternatives methods of creating a product. But it is required to select the one of the best method which attains the objectives. Programs: The program here refers to the time-table of production. Thus the program prepares schedules for purchasing, transforming, maintenance, cash and storage and transport.
People: Production depends upon people. The people vary in their attitudes, skill and expectations from the work. Thus, to make best use of available human resource, it is required to have a good match between people and jobs which may lead to job satisfaction.
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Scope of Production Management: There are two types of scope of Production

Management: Strategic Level: Design and Development of New Product Process Design and Planning Facilities Location and Layout Planning Design of Material Handling Capacity Planning Operational Level: Production Planning Production Control Inventory Control Product maintenance & replacement Cost Control & Cost Reduction
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Production Planning & Control

Production planning and control (PPC) can be defined as the process of planning or deciding on the resources the firm will require for its future manufacturing operations and of allocating and time scheduling these resources to produce the desired products on time at the least total cost. Production planning and control is most essential for any organization. Planning process within an organization is dynamic and continuous. PPC involves:

the planning of production a decision on the sequence of operations to achieve what has been planned the setting of starting and finishing time for production proper dispatching of the material and follow up action to check the progress of operations.
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Production Planning and Control

Production Control System Demand Forecasting Sales and Order Entry Customer
Aggregate Planning
Material Requirement Planning
Shop-floor scheduling and control
Production
Shipping and Receiving
Inventory Management
Inventory
Vendors
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Production Objectives
High Profitability Low Costs Low Unit Costs Quality Product High Sales High Customer Service
High Throughput
High Utilization
Low Inventory
Fast Response
Many products
Less Variability
Short Cycle Times
Low Utilization
High Inventory
More Variability
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Need for Production Planning & Control

Production system can be compared to the nervous system with PPC as a brain. Production Planning and Control is needed to achieve:

Effective utilization of firms resources To achieve the production objectives with respect to quality, quantity, cost and timeliness of delivery To obtain the uninterrupted production flow in order to meet customers varied demand with respect to quality and committed delivery schedule. To help the company to supply a good quality products to the customer on the continuous basis at competitive rates.
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Objectives of PPC
Systematic planning of production activities to achieve the highest efficiency in production of goods/services To organize the production facilities like machines, men etc., to achieve stated production objectives with respect to quantity and quality, time and cost. Optimum Scheduling of resources Coordinate with other departments relating to production to achieve regular balanced and uninterrupted production flow To conform to delivery commitments To be able to make adjustments due to changes in demand and rush orders. Forecasting to predict customer demand on various products over a given horizon. Aggregate Planning to determine overall resources needed. Materials Requirement Planning to determine all required components and timing. Inventory Management to decide production or purchase quantities and timing. Scheduling to determine shop-floor schedule of various components.
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Functions of PPC
Elements of PPC
Planning: It is the first element of production planning and control. Planning is deciding in advance what is to be done in future. An organizational set up is created to prepare plans and policies. Various charts, manuals and production budgets are also prepared. Planning provides a sound base for control. A separate department is set up for this work. Routing: Routing is determining the exact path which will be followed in production. It is the selection of the path from where each unit have to pass before reaching the final stage. The stages from which goods are to pass are decided in this process. The following steps are taken for completing a routing procedure:

Deciding what part to be made or purchased Determining Materials required Determining Manufacturing Operations and Sequences Determining of Lot Sizes Determining of Scrap Factors Analysis of Cost of the Product Preparation of Production Control Forms
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Scheduling: Scheduling is the determining of time and date when each operation is to be commenced or completed. 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. Different types of scheduling is given below:
Master Scheduling: It is the breakup of production requirements. It is the start of scheduling. It is prepared by keeping in view the order or likely sales order in near future. Manufacturing Scheduling: It is used where production process is continuous. The order of preference for manufacture is also mentioned in the schedule for a systematic production planning. Detail Operation Scheduling: It indicates the time required to perform each and every detailed operations of a given process
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Dispatching: Dispatching is the transition from planning phase to action phase. In this phase, the worker is ordered to start manufacturing the product. Dispatching involves the actual granting of permission to proceed according to plans already laid down. In dispatching, orders are issued in terms of their priority. The dispatch section of the PPC is responsible for the following task:
Checking the availability of material and then taking appropriate action to have it transferred from the main stores to the point at which it is needed.
Ensuring that all production aid is ready when needed and then having them issued to manufacturing departments.
Obtaining specific drawings from the drawing office. Informing the process section that production is commencing.
At the conclusion of the manufacturing, ensure that all the drawings, layout and tools are withdrawn and returned to their correct location.
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Following two procedures may be used for dispatching: Centralized Dispatching: Under this, orders are directly issued to workmen and machines. It helps in exercising effective control. Decentralized Dispatching: Under this procedure all work orders are issued to the foreman or dispatch clerk of the department or section. It suffers from difficulties in achieving co-ordination among different departments. Follow Up & Expediting: Follow up or expediting is that branch of production control procedure which regulates the progress of materials and part through the production process. Progress may be assessed with the help of routine reports or communication with operating departments. The follow up procedure is used for expediting and checking the progress. Inspection: Inspection is the process of ensuring whether the products manufactured are of requisite quality or not. Inspection is undertaken both of products and inputs. It is carried on at various levels of production process so that pre-determined standards of quality are achieved. Inspection ensures the maintenance of pre-determined quality of products.
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Areas of Production Planning

Preparation of production budget Devising manufacturing methods and sequence of operations Deciding type of machines and equipments Preparation of operation sheets and instruction cards Estimating men, machine and material requirements Undertaking time and motion studies Preparing master schedules
Need or Importance of PPC

Production planning and control is important for the following reasons: For Increasing Production: Main purpose of production planning is to arrange inputs. Production control programme minimizes idleness of men and machines. It thus helps in raising industrial output. For coordinating plant activity: In planning production is carried out in a number of processes and thus activities are synchronized for smooth working.
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Limitations of PPC
Following are the limitations faced by production planning and control:
Based on Assumptions: Production planning and control is based on certain assumptions. In case the assumptions prove correct, the planning and control will go smoothly. But if they go wrong, process of planning and control will go weak. Rigidity: Under production planning and control, there is rigidity in the behavior of employees and it may not help in smoothening flow of work. Difficult for small firms: This process is time consuming and therefore not affordable for small firms Costly: It is a costly device as its implementation requires separate persons to perform functions of planning, expediting, dispatching etc. Dependence on External Factors: External factors like natural calamities, change in technology, government controls etc reduce effectiveness of production planning.
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Benefits of Production Planning and Control

Higher quality Better resource utilization and reduced inventory Reduced manufacturing cycle time Faster delivery Better customer services Lower production costs and Lower capital investment Higher customer service Improved sales turnover Improved market share Improved profitability Flexibility Dependability Lower prices
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LECTURE 02:FORECASTING METHODS

Forecasting
Forecasting plays a crucial role in the development of plans for the future. It is essential for the organizations to know for what level of activities one is planning before investments in input, i.e. men, machines and materials be made. Before making an investment decision, many questions will arise like:

What should be the size or amount of capital required? How large should be the size of the work force? What should be the size of the order and safety stock? What should be the capacity of the plant?
The answers to the above questions depends upon the forecast for the future level of operations.
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Need for Forecasting:

Majority of the activity of the industries depend upon the future sales Projected demand for the future assists in decision-making with respect to investment in plant and machinery, market planning and programs To schedule the production activity to ensure optimum utilization of plants capacity To prepare material planning to take up replenishment action to make the materials available at right quantity and right time To provide an information about the relationship between demand for different products in order to obtain a balanced production in terms of quantity required of different products as a function of time Forecasting is going to provide a future trend which is very much essential for product design and development
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Forecasting in Action: Forecasts are made to guide decisions in a variety of fields.

Operations planning and Control: Firms use forecasts to decide what to produce, when to produce and where to produce. Marketing: Pricing decisions, distribution path decisions, and advertising expenditure decisions all rely heavily on forecasts of responses of sales to different marketing schemes. Economics: The forecast of the major economic variables, such as unemployment, consumption, investment, the price level, and interest rates are used for governments to guide monetary and fiscal policy. Private firms use them for strategic planning, because economy-wide economic fluctuations typically have industry-level and firm-level effects. Financial speculation: Speculators in asset markets have an interest in forecasting asset returns (stock returns, interest rates, exchange rates, ...). Such forecasts are made routinely. Are these forecasts successful???
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Financial risk management: Volatility forecasts are crucial for evaluating and insuring risks associated with asset portfolios. Volatility forecasts are also crucial for firms and investors who need to price assets such options and other derivatives. Capacity planning: Capacity planning decisions rely heavily on a variety of forecasts related both to product demand and supply. Business and government planning: Business and governments of all sorts must constantly plan and justify their expenditures. A major component of the budgeting process is the revenue forecast. Demography: Population forecasts are crucial for planning government expenditure on health care, infrastructure, social insurance, antipoverty programs, and so forth.
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Time Horizons for Strategic Decisions
Long Term Decisions Locating and Sizing New Facilities Finding New Markets for Products Mission Statement: meeting quality objectives Intermediate Term Decisions Forecasting Product Demand Determining Manpower Needs Setting Channels of Distribution Equipment Purchases and Maintenance Short Term Decisions Purchasing Shift Scheduling Inventory Control
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Aggregate Planning
Aggregate Planning may be defined as Intermediate Planning, which is normally done for a period of up to one years time. The word Aggregate symbolizes that the planning is done at the broadest level.
Aggregate Planning Process Sales forecast for each product: the quantities to be sold in each time period (weeks, months, or quarters) over the planning horizon (6 -18 months) Total all the individual product or service forecasts into one aggregate demand Transform the aggregate demand for each time period into production resource requirements (workers, materials, machines, etc.) Develop alternative resource plans to support the cumulative aggregate demand and compute the cost for each. Select the best alternative which satisfies aggregate demand and best meets the organizations objectives
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Goals for Aggregate Planning: There are number of goals to be satisfied

It has to provide the overall levels of output, inventory and backlogs Proper utilization of the plant capacity. The aggregate plan should be consistent with the companys goals and policies regarding its employee Make sure enough capacity available to satisfy expected demand Use inventories to absorb changes in demand Accommodate changes by varying workforce size Use part-timers, overtime, or idle time to absorb changes Use subcontractors and maintain a stable workforce Change prices or other factors to influence demand
Aggregate Planning Strategies

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Aggregate Planning Options

Capacity based Options: Changing inventory levels Increase inventory in low demand periods to meet high demand in the future Increases costs associated with storage, insurance, handling, obsolescence, Shortages can mean lost sales due to long lead times and poor customer service Varying workforce size by hiring or layoffs Match production rate to demand Training and separation costs for hiring and laying off workers New workers may have lower productivity Laying off workers may lower morale and productivity Varying production rate through overtime or idle time Allows constant workforce May be difficult to meet large increases in demand Overtime can be costly and may drive down productivity Absorbing idle time may be difficult Using part-time workers Useful for filling unskilled or low skilled positions, especially in services
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Subcontracting Temporary measure during periods of peak demand Assuring quality and timely delivery may be difficult Exposes your customers to a possible competitor Influencing demand Use advertising or promotion to increase demand in low periods Attempt to shift demand to slow periods May not be sufficient to balance demand and capacity Back ordering during highdemand periods Requires customers to wait for an order without loss of goodwill or the order Most effective when there are few if any substitutes for the product or service Often results in lost sales Counterseasonal product and service mixing Develop a product mix of counterseasonal items May lead to products or services outside the companys areas of expertise
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Demand based Options:
Aggregate Planning Options

Option
Changing inventory levels
Advantages
Changes in human resources are gradual or none; no abrupt production changes Avoids the costs of other alternatives Matches seasonal fluctuations without hiring/ training costs
Disadvantages
Inventory holding cost may increase. Shortages may result in lost sales. Hiring, layoff, and training costs may be significant Overtime premiums; tired workers; may not meet demand
Some Comments
Applies mainly to production, not service, operations Used where size of labor pool is large Allows flexibility within the aggregate plan
Varying workforce size by hiring or layoffs Varying production rates through overtime or idle time
Sub-contracting
Permits flexibility and Loss of quality smoothing of the control; reduced firms output profits; loss of future business
Applies mainly in production settings
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Option
Using part-time workers
Advantages
Is less costly and more flexible than full-time workers Tries to use excess capacity. Discounts draw new customers. May avoid overtime. Keeps capacity constant.
Disadvantages
High turnover/ training costs; quality suffers; scheduling difficult Uncertainty in demand. Hard to match demand to supply exactly. Customer must be willing to wait, but goodwill is lost.
Some Comments
Good for unskilled jobs in areas with large temporary labor pools Creates marketing ideas. Overbooking used in some businesses. Allows flexibility within the aggregate plan
Influencing demand
Back ordering during highdemand periods
Counterseasonal product and service mixing
Fully utilizes resources; allows stable workforce
May require skills or equipment outside the firms areas of expertise
Risky finding products or services with opposite demand patterns

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Aggregate Planning
Marketplace and demand Product decisions Research and technology
Demand forecasts, orders
Process planning and capacity decisions Workforce Aggregate plan for production Raw materials available Inventory on hand
Master production schedule and MRP systems
External capacity (subcontractors)
Detailed work schedules Department of Industrial & Production Engineering
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Master Production Schedule (MPS)

Master Production Schedule (MPS)States the requirements for individual end items by date and quantity. It represents what the company plans to produce expressed in specific configurations, quantities and dates. The MPS is not a sales forecast that represents a statement of demand. The MPS must take into account the forecast, the production plan, and other important considerations such as backlog, availability of material, availability of capacity and management policies and goals. The main functions of PMS are:
To translate aggregate plans into specific end items Evaluate alternative schedule Generate material requirement Generate capacity requirements Facilitate information processing Effective utilization of capacity
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Scope of Master Production Schedule
Breaks down, or disaggregates, the production plan into product families: The production plan is broken into product families for the MPS and production is planned based on demand forecasts provided by marketing. Promotes valid order promises: Order promises can be made against planned production. This job falls to marketing and is referred to as consuming the Inventory. Provides a communication medium between Marketing/Sales and Operations: When more product has been promised than will be produced, marketing and operations must work together to develop a strategy to meet customer requirements. This can take the form of many options including; subcontract, allow overtime, increase capacity through equipment acquisition, expand facilities, increasing staffing, etc
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Proactively control ability to deliver goods to customers: The MPS allows for better understanding of capacity and gives visibility to capacity shortfalls. This allows action to be taken to meet demand or prioritize customer orders ahead of time. Resource availability control: Understanding future capacity shortfalls creates the ability to plan the best uses of resources or increase resources if needed. Proactively control inventory levels: MPS gives a firm the ability to not rely on safety stock or reactive Economic Order Quantity (EOQ) models.
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Aggregate Planning and Master Scheduling
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Materials Requirements Planning

Materials Requirements Planning (MRP) is a system that controls inventory levels, plans production, helps supply management with important information and helps with the manufacturing control system with respect to the production of assembled parts. Materials Requirement Planning (MRP) is a technique for determining the quantity and timing for the acquisition of dependent demand items needed to satisfy master production schedule requirements. There are certain environments or situations in which it is better and more efficient to use MRP. These environments and situations are as follows.

Job Shop Production Complex Products
Assemble-to-Order Environments
Discrete and Dependent Demand Items
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MRP Objectives:
Inventory reduction: MRP determines how many components are required, when they are required in order to meet the master schedule. It helps to produce the materials/components as and when needed and thus avoid excessive build up of inventory. Reduction in the manufacturing and delivery lead times: MRP identifies materials and component quantities, timings when they are needed, availabilities and procurements and actions required to meet delivery deadlines. MRP helps to avoid delays in production and priorities production activities by putting due dates on customer job order. Realistic delivery commitments: by using MRP, production can give marketing timely information about likely delivery times to prospective customers. Increased efficiency: MRP provides a close coordination among various work centers and hence helps to achieve uninterrupted flow of materials through the production line. This increases the efficiency of production system.
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Steps of MRP
Step-1: Identifying Requirements

Quantity on Hand Quantity on Open Purchase Order Quantity in/or Planned for Manufacturing Quantity Committed to Existing Orders and Quantity Forecasted Company Sensitive, Location Sensitive and Date Sensitive
Step-2: Running MRP Creating the Suggestions

Critical Items: Critical items are items of immediate importance that should be taken care of right away. Expedite Items: Expedite items are items that need to be sped up so that it is completed in less than the normal lead time. Delay Items: Delay items are item that are not of vital importance and can be delayed for the benefit of other items.
Step-3: Firming the Suggestions

Manufacturing Orders Purchasing Orders Various Reports
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Overview of the MRP System

Product Structure File Master Production Schedule Inventory Master File
Material Requirements Planning

Manufacturing Orders Purchase Orders Various Reports
The Orange boxes indicate the inputs into the MRP system. The MRP system then processes the information and delivers outputs as indicated by the yellow boxes.
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MRP Inputs:
Product Structure File: The product structure file contains a bill of material (BOM) for every item produced. In other words, this file contains all the component parts for a larger item. For example if you are producing a car, the component parts for the car would be the screws, steel, rubber, and so on. Not only does the product structure contain all the component parts, it also supplies information for in which order the product is to be assembled. The MRP system accesses the product structure file to determine which component items need to be scheduled. Master Production Schedule: The master production schedule specifies which end items or finished products the company is to produce, how many are needed, and when they are needed. The numbers that are on the master production schedule represent production, not demand, may be a combination of customer orders and demand forecasts, and gives what needs to be produced. Inventory Master File: This file includes all the numbers from inventory. The MRP system keeps track of your inventory and when more items need to be ordered. It is important that you inventory numbers are accurate from the beginning in order for the MRP system to work properly. It includes (i) On-Hand Quantities, (ii) On-Order Quantities, (iii) Lot Sizes, (iv) Safety Stock, (v) Lead Time and (vi) Past-Usage Figures
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MRP Process: During the process, the system uses an MRP matrix to record the calculations that are made. From the inputs discussed earlier in the presentation, the system calculates the gross requirements, scheduled receipts, projected on hand, net requirements, planned order receipts, and planned order releases. MRP Outputs: Manufacturing Orders Purchasing Orders Various Reports The MRP system delivers two main outputs along with various other reports. The two main outputs are manufacturing orders which can be released to shop floors for inhouse production and purchasing orders which are sent to outside suppliers. The various reports offer suggested changes in previous plans or existing schedules.
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Just-In-Time (JIT)
If you think about someone's journey to work, they could leave the house just-in-time to cycle to the train station, just-in-time to catch their train, which would get them to their place of work just-in-time, allowing them to be at their desk just-in-time to start work. In engineering, using the just-in-time theory would allow the components that are needed to produce a product to be delivered to the worker, just-in-time. The products can then be made available for the customers just-in-time. This process allows for all types of stock, including materials and finished products, to be eliminated. Implementing a just-in-time structure can mean a company is adopting a lean production system.
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Seven Wastes
Shigeo Shingo, a Japanese JIT authority, identifies seven wastes as being the targets of continuous improvement in production processes.

Waste of overproduction: Eliminate by reducing set-up times, synchronizing quantities and timing between processes, layout problems. Make only what is needed now. Waste of waiting: Eliminate bottle necks and balance uneven loads by flexible workforce and equipment. Waste of transportation: Establish layouts and locations to make handling and transport unnecessary if possible. Minimize transportation and handling if not possible to eliminate. Waste of processing itself: Question regarding the reasons of existing of the product and then why each process is necessary. Waste of stock: Reducing all other waste reduce stocks. Waste of motion: Study motion for economic and consistency. Economic improves productivity and consistency improves quality. First improve the motions, then mechanize or automate. Otherwise, there is a danger of automating the waste. Waste of making defects products: Develop the production process to be prevent defects from being produced, so as to eliminate inspection. At each process, do not accept defects and make no defects. A quality process always yields quality product.
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When is JIT a suitable system to use?

JIT is a suitable production system when: The engineering manufacturer has a standard product that is steadily produced in practical amounts. The product is of high value. The workforce producing the product is a disciplined one. Flexible working practices are maintained. Machinery does not demand lengthy set up times. Quality can be guaranteed through either a cost penalty for defects or good working practices.
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A Just-In-Time Illustration
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Characteristics of JIT operations

The JIT concept is most applicable to manufacturing operations that produce a relatively small number of different products. Product demand must be reasonably predictable, and requirements must be generated accurately. A closed loop MRP system can be used to do this, but typically the master production schedule must be smoothed on a daily basis. Statistical process control typically is used in both the buyer's and suppliers' organizations to ensure tight control of material and production quality. This is vital to the functioning of the low-float, small-volume, relatively smooth-flowing operation. Production operation setup requirements must be able to be reduced to relatively short times. Most firms target for tool changes and equipment setups of less than ten minutes. Without this capability, small-batch and smooth-flow production of different models or different products cannot be accomplished efficiently. Purchasing must be able to reduce materials replenishment lead times. This usually is accomplished by reducing the four major elements of lead time-internal paperwork and ordering time, supplier queue and manufacturing time, transportation time requirements, and incoming receiving and inspection requirements.
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Advantages of using a JIT system

The most significant benefit of JIT is to improve the responsiveness of the firm to the changes in the marketplace thus providing an advantages in competition. The advantages are: Products are of a better standard. Less waste and, in turn, less rework. Set up times are reduced. Production flow is improved. Less stock. Overall savings. Efficiency is increased. Relations with suppliers are enhanced.
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LECTURE 03: PLANT LOCATION & PLANT LAYOUT

Plant Location
Site selection is an important activity as it decides the fate of the business. A good location will reduce the cost of production &distribution to a large extent. The reduction of cost of distribution helps in elevating either the competitive strength or the profit margin of business. Locating of business involves large & relatively permanent investment. If the site selection is not done properly, all the money spent on factory building, machinery & their installation will go in waste & the owner has to suffer great loss.
Therefore the site for factory should be selected very carefully. While selecting a site it is necessary to consider technical, commercial, &financial aspects & then select a site that may provide maximum profit.
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Steps in Choosing Location:
National Decision
Political, social, economic stability; Currency exchange rates; . . . . . Climate; Customer concentrations; Degree of unionization; . . . . . Transportation system availability; Preference of management; . . . . . Site size/cost; Environmental impact; Zoning restrictions; . . . . .
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Regional Decision
Community Decision
Site Decision
Plant Location Problems:

Selection of a General Territory (or Region): This refers to the selection of a particular geographical zone or state taking into consideration such factors as nearness to market and sources of raw materials, basic infrastructure facilities available, climate conditions and taxation and laws. Selection of a Community: This refers to the selection of the specific locality within the selected region. The factors that influence the selection of community are, availability of labor, community attitude, social structure and service facilities. Generally the following alternatives are available:

Urban area Rural area and Semi-urban area
Selection of Specific Site: This refers to the selection of specific site within the community. The factors that influence the site selection are the cost of the land, availability and suitability of the land. The type of the manufacturing process may dictate the site selection. The conditions that govern the particular types of community are as follows:
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Condition that demand Urban location: Highly skilled labor requirements Manufacturing depends on urban utilities Excellent communication and transportation facility Concentrated suppliers Conditions that demand Sub-urban location Semi-skilled or female workforce required Large space availability for future expansion Community close to large population center Conditions demanding rural location Large site required for future expansion Requirement of unskilled labor Manufacturing process is dangerous and objectionable Low wage structure Lower property tax rates and Lower cost of land.
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Advantages and Disadvantages of Urban, Suburban and Rural Locations: Suburban Area Advantages: Land available at cheaper rate compared to urban location Infrastructure facilities are developed by promotional agencies Because of nearness to city availability of the skilled manpower Educational, medical facilities are available because of nearness to city
Disadvantages: Due to concentration the suburban area will become crowdy and will become urban in turn within short period High mobility of workers and hence higher labor turnover Government incentive and subsides to promote industries.
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Urban Area Advantages: Excellent communication network Good transportation facilities for material and people Availability of skilled and trained manpower Factory in the vicinity of the market hence high local demand Excellent sourcing (subcontracting) facilities Good educational, recreational and medical facilities Availability of service of consultants, training institute and trainers Disadvantages: High cost of land compare to rural area Sufficient land is not available for expansion Labor cost is high due to high cost of living Industrial unrest due to trade union activities Management labor relations are much influenced by union activities Municipal and other authority restrictions on building etc. and high labor turnover
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Rural Area Advantages: Cheaper and ample availability of site Cheaper labor rates Less turnover of labors because of limited mobility No municipal restrictions Good industrial relations Scope for expansion and diversification No slums and environmental pollution Disadvantages: Poor transportation network No good communication facilities Sourcing of components and materials should be from outside Far away from market High absenteeism during harvest season No educational, medical and recreational facilities.
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Factors Affecting Plant Location :

Availability of raw material Nearness to the potential market Near to the source of operating requirements like electricity, disposal of waste, drainage facilities. Supply of labor Transport & communication facilities Integration with other group of companies Suitability of land & climate Availability of housing, other amenities & services Local building & planning regulations Safety requirements Others like low interest on loans, special grants, living standards
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Selection of the Site for the Factory: There are many analytical techniques that can be used in facility location decision. Some of these are: Methods of Factor Rating: In factor rating method, first we must identify the most important factors in evaluating alternative sites for the new facility. Then we should assign a weight between 0 and 100 to each of these factors. Each alternative location will then be rated based on these factor weights. The most weighted alternative is selected as the best alternative. Cost-Profit-Volume Analysis: When the fixed and variable costs for each site differ, Cost-profit-volume analysis can be used to identify the location with the lowest cost. Center of Gravity Method: The center of gravity method is used to find a location that minimizes the sum of transportation cost in between new facility and old facilities. Transportation cost is assumed to be a linear function of the number of units shipped and the traveling distance. Transportation and Simulation Models: A special form of linear programming, that is Transportation Model, can be used to compare the total transportation cost associated with each alternative site.
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Recent Trends in Plant Location:

Priority for sub-urban areas Industrial development in notified backward areas Establishment of Industrial estate Decentralization of industries Increased role of government in the decision of location of industries Competition between Government & Industries
Backward Area and Industrial Policy: In the facilities location problems, the
industrial policies of the governments are very important inputs in the overall consideration. In India, the industrial development of backward areas for balanced regional development of the country has always been emphasized. This has been attempted mainly through: Licensing policy and investment subsidy Location of public sector projects Concessional finance and concession on income tax import duty etc and Setting up of industrial estates (property consisting of much land )
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Global Locations: World-wide locations are called global locations. Multinational

Company (MNC) are setting up their branches in India & Indian companies are extending their operations in other countries like - USA, EUROPE, CHINA. Virtual proximity: Social networking at a distance with the advances in telecommunications technology , a firm can be in virtual proximity to its customers. Virtual Factory: Many firms based in USA and UK - in the service sector and in the manufacturing sector - often outsource part of their business processes to foreign locations such as India. Thus, instead of one's own operations, a firm could use its business associates' operations facilities. In a way, the Indian BPO firm is that foreign-based company's 'virtual service factory'. So, one's business associate's operations facilities is called virtual factory.
Reasons for a Foreign Location:
Reaching the Customer One obvious reason for locating a facility abroad is that of capturing a share of the market expanding worldwide.
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Tangible Reasons
The host country may have/offer substantial tax advantages compared to the home country. The costs of manufacturing and/or running operations may be substantially less in that foreign country. This may be due to (i) low labor cost, (ii) low raw material cost and (iii) better availability of inputs The company may overcome the tariff (table of fixed charges) barriers by setting up a manufacturing plant in foreign country rather than exporting the items to that country.
Customer-related reasons
firms customer may feel secure that firm is more accessible. Firm may be able to give a personal touch. Firm may understand customers requirements better. It may discover other potential customers in abroad.
Organizational learning related reasons

Firm can learn advanced technology Firm can learn from its customers abroad It can also learn from its competitors operating in abroad. It may also learn from its suppliers abroad.
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Plant layout
Plant layout is the physical arrangement of industrial facilities. It involves the allocation of space & the arrangement of equipment in such a manner that overall operating costs are minimized.
L L L L L L L L A A A A M M M M M M D D D D
G
G G
G
G G
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Objectives of Plant Layout
Economies in materials, facilitate manufacturing process & handling of semifinished & finished goods. Proper & efficient utilization of available floor space. To avoid congestion & bottlenecks. Provision of better supervision & control of operations.
Careful planning to avoid frequent changes in layout which may result in undue increase in cost of production.
To provide adequate safety to the workers from accidents. To meet the quality & capacity requirements in the most economical manner.
Provision of medical facilities & cafeteria at suitable & convenient places.

To provide efficient material handling system. To suggest the improvements in production process & work methods.
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Principles of Plant Layout Principle of integration (of 5Ms) Principle of minimum distance Principle of cubic space utilization( both horizontal & vertical space). Principle of flow( must be forward no backtracking) Principle of maximum flexibility Principle of safety, security & satisfaction Principle of minimum handling. Types of plant layout Product layout Process layout Group layout Fixed Product layout
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Product layout: Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow. Here machines are arranged according to the needs of product & in the same sequence as the operations are necessary for manufacture
S t o r a g e
Lathe Drill Grind Drill A s s e m b l y W a r e h o u s e
Press
Mill Lathe
Bend
Drill Lathe
Drill
Drill
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Advantages of Product Layout High rate of output Low unit cost Labor specialization Low material handling cost High utilization of labor and equipment Established routing and scheduling Short processing time Disadvantages of Product Layout Creates dull, repetitive jobs Poorly skilled workers may not maintain equipment or quality of output Fairly inflexible to changes in volume Highly susceptible to shutdowns Needs preventive maintenance Require large capital investment
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Process layout: Layout that can handle varied processing requirements. Here all machines performing similar type of operations are grouped together at one location in the process layout. Thus here facilities are grouped together according to their functions. E.g. all drilling machines are located at one place known as drilling section.
S t o r a g e
Lathe
Lathe Lathe Mill
Drill Drill Grind Grind
Weld Paint Assembly Assembly
Weld Paint
Lathe
Mill Mill
Mill
W a r e h o u s e
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Advantages of Process Layouts Can handle a variety of processing requirements Machines breakdown doesnt result in shutdown. Equipment used is less costly Wide flexibility in production facilities. Each production unit of system works independently. High utilization of facilities Variety makes the job interesting. Disadvantages of Process Layouts In-process inventory costs can be high Challenging routing and scheduling Equipment utilization rates are low Material handling is slow and inefficient & is more. More space is required and longer processing time Back tracking may occur.
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Comparison of Product and Process Layout Factors Product layout Nature Product Processing time Material handling Sequence of facilities standardized less less Cant tolerate simple low
Process layout Similar are group together
Machines utilization Not to full capacity
Better utilization
diversified more more Can tolerate complex high
Inventory
Breakdown Production centre Flexibility
High work-in-process inventory Low work-in-process inventory
Floor space
Investment
Requires less
high
more
low
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Group layout: There is a trend now to bring an element of flexibility into manufacturing system as regards to variation in batch sizes and sequence of operations. A group of equipment for performing a sequence of operations on family of similar components or products has become all the important. The application of group technology involves two basic steps, first step is to determine component families or group. The second step in applying group technology is to arrange the plants equipment used to process a particular family of components. This represents small plants within the plants.
S t o r a g e
Lathe
Drill
Grind
Assembly
Mill
Assembly
Weld
Paint
Press
Lathe
Drill
Press
Assembly
Grind
Drill
Assembly
Drill
Grind
W a r e h o u s e
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Advantages of Group Layouts By grouping, higher machine utilizations Smoother flow lines and shorter travel distances Team spirit and job enlargement Disadvantages of Group Layouts Greater labor skills for team Balancing individual cells Unbalanced flow may result in work-in-process
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Fixed Product 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. This type of layout is suitable when one or few pieces of identical heavy products are to be manufactured and when the assembly consists of large number of heavy parts, the cost of transportation of these part is very high. S t o r a g e Lathe Press Grind W a r e h o u s e
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Weld
Paint
Assembly
Advantages of Fixed Product Layouts Reduced material moves Highly flexible Job enrichment Promotes pride & quality Responsibility Disadvantages of Fixed Product Layouts Personel-equipment moves Equipment duplicates Greater skill Close control& coordination Increased space & greater work-in-process
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Volume
High
Product Planning Department
Product Layout
Medium
Fixed Materials Location Planning Department Product Family Planning Department
Group Layout
Process Planning Department
Fixed Layout
Low Low Medium
Process Layout Variety

High
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Material Flow Pattern

The pattern of material flow is an important consideration in the plant layout decision because good layout aims at minimizing the flow of materials. The flow pattern of materials helps in eliminating bottle-necks, rushing and backtracking and ensures good supervision and control. The material flow systems can be classified on the basis of the availability of floor space as Horizontal flow system: Usually devised for a single story building when the flat floor area is available
Vertical flow system: This system is used in case of multi-storey buildings and limited area is available.
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Different Flow Pattern

Straight line:
Shortest route and must have roads on both sides Plant area has long length and narrow width Unsuitable for longer production lines
Straight
Simplest. Separate receiving/shipping crews
U-type:
Less difficulty in returning empty containers' Suitable for longer production lines Requires square like floor area One side road link will be required U flow
Very popular. Combine receiving /shipping. Simple to administer

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Serpentine (inverted S-shaped):

Requires roads on both sides Suitable for longer production lines Difficulty in returning empty containers Requires square like floor area.
Serpentine
When line is too long
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Plant Layout Procedure

Analyze the product or products to be produced. Determine the process required to manufacture the product. Prepare layout planning charts. Flow process, including operations, transportation, storage, and inspections. Standard times for each operation. Machine selection and balance. Manpower selection and balance. Material handling requirements. Determine workstations. Analyze storage area requirements. Establish minimum aisle widths. Establish office requirements. Consider personnel facilities and services. Survey plant services. Provide for future expansion.
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Factors Affecting Plant Layout

Nature of product- e.g. some products need air-conditioned plants. Size of outputFor bulk-product/line layout For small-functional layout Nature of manufacturing systemFor intermittent-functional layout For continuous-product/line layout Localization of plant- e.g. there will be different transportation arrangement if site is located near railway line. Machines or equipment- e.g. heavy machines need stationary layout Climatic conditions, need of light, temperature also affect design of layout.
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LECTURE 04: PROJECT SHEDULING & CONTROL TECHNIQUES

Project
A project is a temporary endeavor involving a connected sequence of activities and a range of resources, which is designed to achieve a specific and unique outcome and which operates within time, cost and quality constraints and which is often used to introduce change. Characteristic of a project A unique, one-time operational activity or effort Requires the completion of a large number of interrelated activities Established to achieve specific objective Resources, such as time and/or money, are limited Typically has its own management structure Need leadership
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Scheduling the Project

Planning, budgeting and scheduling are all part of the same process Planning a project, developing a budget for it, and scheduling all the of the many tasks involved are not easily separable Budget must include both the amounts and timing of the resources received or expanded One cannot prepare a budget without knowing the specifics of each task and the time periods during which the task must be undertaken. Similarly, a project action implies a schedule just as a schedule implies a plan. CPM (Critical Path Method), PERT (Program Evaluation and Review Technique) and Gantt Chart
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Language of Scheduling
Activity task or set of tasks use resources Event state resulting from completion of one or more activities consume no resources or time predecessor activities must be completed Network diagram of nodes and arcs used to illustrate technological relationships Path series of connected activities between two events Critical Path set of activities on a path that if delayed will delay completion of project
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Building the Network

Building the Network Activity-on-Node (AON) Network Usually associated with CPM Activity-on-Arrow (AOA) Network Usually associated with PERT
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Situations in Network Diagram

A B A must finish before either B or C can start A C C A C A B Dummy C D
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both A and B must finish before C can start
B D
both A and C must finish before either of B or D can start
A must finish before B can start both A and C must finish before D can start
Building the Network: AON

Task a b c d e f g Predecessor a b b c, d e
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Building the Network: AOA

Task a b c d e f g Predecessor a b b c, d e
Dummy Activity
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Critical Path Method (CPM)

Path: A connected sequence of activities leading from the starting event to the ending event Critical Path: The longest path (time); determines the project duration Critical Activities: All of the activities that make up the critical path Forward Pass Earliest Start Time (ES): earliest time an activity can start, ES = maximum EF of immediate predecessors Earliest finish time (EF): earliest time an activity can finish, EF= ES + t Backward Pass Latest Start Time (LS): Latest time an activity can start without delaying critical path time , LS= LF - t Latest finish time (LF): latest time an activity can be completed without delaying critical path time, LS = minimum LS of immediate predecessors
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Example: Consider the list of four activities for making a simple product:
Activity A B C D Description Buy Plastic Body Design Component Make Component Assemble product Immediate Predecessor B A,C Expected Time (min) 180 30 20 60
Solution :
Arcs indicate project activities

1
A B
2
D Nodes correspond to the beginning and ending of activities
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Example: Develop the network for a project with following activities and immediate predecessors
Activity Immediate Predecessors A B 3 dummy 2 C B D A, C E C 4 F C G D, E,F
Solution :
1
A B C
E
5
We need to introduce a dummy activity
Note how the network correctly identifies D, E, and F as the immediate predecessors for activity G. Dummy activities is used to identify precedence relationships correctly and to eliminate possible confusion of two or more activities having the same starting and ending nodes Dummy activities have no resources (time, labor, machinery, etc)purpose is to PRESERVE LOGIC of the network
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Examples of the use of dummy activity

Network concurrent activities
a 1 b 2 1 b 3 a 2
Dummy
WRONG !!! RIGHT
Activity c not required for e

a a d 1 e b d 2 c e 1
WRONG !
b c
WRONG!!!
RIGHT
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RIGHT
Example: Draw the network for the following relationships:

Activity C can be performed at the same time as E; but D cannot be started unless both C and A are completed; A and B can be performed simultaneously, B has also constraint on activity C and E both D and E should be completed before the objective is achieved. Solution : A D C B E
Example: In a program consisting of five activities, the constraints determined are as under. Draw the network.
AB AD BE DE
Solution :
CB CD
C
B
D
E
dummy activity
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Example: Develop the network for a project with following activities and immediate predecessors. Construct the network and find the critical path.
Activity Immediate Predecessors Completion Time a 6 b 8 c 5 f, 15 a, 6 g, 17 i, 6 d b 13 e c 9 f a 15 g a 17 h f 9 i g 6 j d, e 12
Solution:
h, 9
b, 8 d, 13
c, 5 e, 9
j, 12
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ES and EF Times
f, 15
a, 6 0 6 b, 8 0 8 c, 5 0 5
g, 17 i, 6
h, 9
d, 13
j, 12
e, 9
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ES and EF Times
f, 15 6 21 h, 9 i, 6
a, 6 0 6 b, 8 0 8 c, 5 0 5 6
g, 17 23
d, 13 8 e, 9 5 14 21
j, 12
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ES and EF Times
f, 15 6 21 h, 9 21 i, 6 23 b, 8 0 8 c, 5 0 5 d, 13 8 e, 9 5 14
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a, 6 0 6 6
g, 17 23
30
29
j, 12
21 33
21
Projects EF = 33
LS and LF Times
f, 15 6 21 h, 9
a, 6 0 6 b, 8 0 8 6 23
g, 17 i, 6 23 27 29 33 j, 12 21 21 e, 9 5 14
21
24
30
33
d, 13
8 21
33 33
c, 5 0 5
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LS and LF Times
f, 15 6 9 21 24 g, 17 6 9 b, 8 0 0 8 8 c, 5 0 7 5 12 6 10 23 27 i, 6 23 27 29 33 j, 12 21 21 33 33 h, 9
a, 6 0 3
21
24
30
33
d, 13
8 8 e, 9 5 12 14 21 21 21
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f, 15
Float
a, 6 3 0 3 6 9 b, 8 0 0 0 8 8 c, 5 7 0 7 5 12 0 4 6 10
6 9 23 27
21 24 3 i, 6 4 23 27 29 33 j, 12 0
h, 9
g, 17
21
24
30
33
d, 13
8 8 e, 9 7 5 12 14 21 21 21
21 21
33 33
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Critical Path
f, 15
a, 6
g, 17 i, 6 b, 8 d, 13 j, 12
h, 9
c, 5
e, 9
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Activity A B C D E F G H I J
Immediate Predecessors
Duration
90
A
15
B
05
G
20
D
21
A
25
C,F
14
D
28
A
30
D,I
45
Solution:
90,105 15 95,110 B,B 90,115 90,115 F,F 25
C, C 05
105,110 110,115 115,129 115,129 G, G 14
149,170 173,194
E,E 21 149,177 166,194 H, H 28 149,194 149,194 J,J 45

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0, 90 0, 90 A, A 90
129,149 129,149 D, D 20
90,120 119,149 I, I 30
Example: Task. A project has been defined to contain the following list of activities along with their required times for completion. Construct the network and find the critical path.
Activity Immediate Predecessors Duration
05,11 06,12 2 0,5 0,5 1 5 05,12 05,12 3 7
1 -5
2 1 6
3 1 7
4 2,3 2
14,20 16,22 5
5 4 6
6 4 5
7 6 3
22,23 22,23 8
8 5,7 1
12,14 12,14 4 2
14,19 14,19 6 5
19,22 19,22 7 3
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Activity
Immediate Predecessors Completion Time
A
5
B
6
C
A 4
D
A 3
E
A 1
F
E 4
G
D,F 14
H
B, C 12
I
G,H 2
Solution:
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Activity Immediate Predecessors Duration a 5 b 4 c a 3 d a 4 e a 6 f b, c 4 g d 5 h d, e 6 i f 6 j g, h 4
Solution:
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Gantt Chart
Gantt charts are used as a tool to monitor and control the project progress. A Gantt Chart is a graphical presentation that displays activities as follows: Time is measured on the horizontal axis. A horizontal bar is drawn proportionately to an activity s expected completion time. Each activity is listed on the vertical axis. In an earliest time Gantt chart each bar begins and ends at the earliest start/finish the activity can take place which is shown below:
Gantt Chart Format

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Example: Draw a Gantt chart for the work of decorating the drawing room of a house. The list of activities involved in this project are as follows:
Activity Immediate Predecessors Duration A 90 B A 15 C B 05 D G 20 E D 21 F A 25 G C,F 14 H D 28 I A 30 J D,I 45
Solution:
Activity A B C D E F G H I J Immediate Predecessor None A B G D A C,F D A D,I Estimated Completion Time 90 15 05 20 21 25 14 28 30 45
90 A
105 115 129 C G
149
194
B
F I
D H J
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Example: A Gantt Chart of a Sample Project
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Example: Draw a Gantt chart for the work of decorating the drawing room of a house. The list of activities involved in this project are as follows:
ID 1 2 3 4 5 6 7 8
Task Name Start A B C D E F Finish
Predecessors 1 1 2 3 3 4,5 6,7
Duration 0 days 5 days 4 days 6 days 2 days 5 days 8 days 0 days
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LECTURE 05: WORK STUDY & WORK MEASUREMENT

Work Study
Work Study is the systematic examination of the methods of carrying on activities so as to improve the effective use of resources and to set up standards of performance for the activities being carried out. Work study succeeds because it is systematic both in the investigation of the problem being considered and in the development of its solution. Work study is encompassed by two techniques such as
Method Study (MS) is the systematic recording and critical examination of ways of doing things in order to make improvements.
Work Measurement (WM) is the application of techniques designed to establish the time for a qualified worker to carry out a task at a defined rate of working.
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Components of Work Study
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Steps Involved in Work Study

Select Record
: Job or Process to be studied : All the details concerning job using various recording techniques
Examine : Recorded facts critically by asking questions like who, what, when, why Develop : Most economic method of taking into account all the circumstances Measure : The amount of work involved and set standard time to do that job
Define
Install
: New method and the related time so that it can always be identified
: New method as agreed standard practice with the time allowed
Maintain : The new standard by proper control procedure
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Importance of Work Study

Work study is a means of enhancing the production efficiency of the firm by elimination of waste and unnecessary operations It is used to identify non-value adding operations by investigation of all the factors affecting the job It is a accurate and systematic procedure oriented technique to establish time standards. It is going to contribute to the profit as the savings will start immediately and continue throughout the life of the product. It has got universal application. It helps to achieve the smooth production flow with minimum interruptions It helps to reduce the cost of the product by eliminating waste and unnecessary operations Better worker-management relations and meets the delivery commitment Reduction in rejections and scrap and higher utilization of resources of the organization. Helps to achieve better working conditions Improves upon the existing process and helps in standardization and simplification Helps to establish the standard time for an operation which has got application in manpower planning, production planning
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Advantages of Work Study
Method Study
Method study is the process of subjecting work to systematic, critical scrutiny to make it more effective and/or more efficient. It is one of the keys to achieving productivity improvement. It was originally designed for the analysis and improvement of repetitive manual work but it can be used for all types of activity at all levels of an organization. The steps in method study is given below: Select (the work to be studied) Record (all relevant information about that work) Examine (the recorded information) Develop (an improved way of doing things) Install (the new method as standard practice) Maintain (the new standard proactive) Select: Work selected for method study may be an identified problem area or an identified opportunity. It may be identified through a systematic review of available data, normal monitoring or control processes, high levels of dissatisfaction and complaint or as part of a change in management policy, practice, technology or location, and usually because it meets certain conditions of urgency and/or priority.
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Record: The Record stage of method study involves gathering sufficient data (in terms of both quality and quantity) to act as the basis of evaluation and examination. A wide range of techniques are available for recording; the choice depends on the nature of the investigation; the work being studied; and on the level of detail required. Many of the techniques are simple charts and diagrams, but these may be supplemented by photographic and video recording, and by computer based techniques. Examine: The recorded data are subjected to examination and analysis; formalized versions of this process are critical examination and systems analysis. The aim is to identify, often through a structured, questioning process, those points of the overall system of work that require improvements or offer opportunity for beneficial change. Develop: The Examine stage merges into the Develop stage of the investigation as more thorough analysis leads automatically to identified areas of change. The aim here is to identify possible actions for improvement and to subject these to evaluation in order to develop a preferred solution. Sometimes it is necessary to identify short-term and longterm solutions so that improvements can be made (relatively) immediately, while longerterm changes are implemented and come to fruition.
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Install: The success of any method study project is realized when actual change is made on the ground-change that meets the originally specified terms of reference for the project. Thus, the install phase is very important. Making theoretical change is easy; making real change demands careful planning and handling of the people involved in the situation under review. They may need reassuring, retraining and supporting through the acquisition of new skills. Install, in some cases ,will require a parallel running of old and new systems, in others, it may need the build-up of buffer stocks, and other planning to manage the change. Maintain: Some time after the introduction of new working methods, it is necessary to check that the new method is working, that it is being properly followed, and that it has brought about the desired results.
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Work Measurement
Work measurement is the application of techniques designed to establish the time for a qualified worker to carry out specified jobs at a defined level of performance. Work measurement is concerned with investigating, reducing and eliminating ineffective time, whatever may be the cause. Work measurement is also used to set standard times to carry out the work, so that any ineffective time is not included later. Major reason for that has been the initial focus of the work measurement methods, which essentially targeted only the worker controllable ineffective times. Purpose of Work Measurement To find ineffective time in a process To set standard for output level To evaluate worker's performance To plan work force needs. To determine available capacity To compare work methods To facilitate operations scheduling To establish wage incentive schemes
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Uses of Work Measurement
Measure and monitor performance: Work measurement provides a common 'currency' of 'standard hours' or 'standard minutes' which allows: the outputs of different units and departments to be compared the outputs of the same unit or department to be compared over time actual output to be compared with planned output. Determine workforce levels: Since work measurement provides a reliable figure for the amount of work, it allows managers to estimate the workforce requirements of a given scheduled output and to plan for overtime working, additional labor requirements and so on. Compare working methods: If we can measure, or reliably estimate, the time taken to complete an activity using a variety of working methods, we can use this data as one of the key factors in comparing those methods. Assist in preparing budgets: Time standards can be used to convert planned output levels into working hours and then into labor costs. Provide a basis for incentive payment schemes: Actual hours taken to complete a fixed amount of work can be compared to the planned hours and this ratio used as the basis of a performance calculation. The calculated performance can be compared to a target performance level and bonus payments made where the actual performance exceeds planned.
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Techniques of Work Measurement: There is a variety of work measurement techniques,

each suited to different types of work or to different forms of measurement. The commonest are:

Time study Activity sampling Predetermined motion time systems Synthesis from standard data Estimating Analytical estimating Comparative estimating
However the basic methodology of work measurement remains common to all of these techniques. This is to:

Analyze the work being measured into its constituent parts. Measure the time taken to complete each of these elements, using some process that converts any observed or recorded times to a time at a defined level of performance Synthesize the time for the whole job of work by combining these element times according to the specific frequency with which they should occur in the work when carried out as properly specified, and making due allowance for such factors as the need for workers to recover from stresses and fatigue brought about by doing this work.
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Time Study: Time Study consists of recording times and rates of work for elements of
a specified job carried out under specified conditions to obtain the time necessary to carry out a job at a defined level of performance. In this technique the job to be studied is timed with a stopwatch, rated, and the basic time calculated.
Requirements for Effective Time Study: The requirements for effective time study are:
Co-operation and goodwill Defined job Defined method Correct normal equipment Quality standard and checks Experienced qualified motivated worker Method of timing Method of assessing relative performance Elemental breakdown Definition of break points Recording media
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Performance Rating: Time Study is based on a record of observed times for doing a job together with an assessment by the observer of the speed and effectiveness of the worker in relation to the observer's concept of Standard Rating. The numerical value or symbol used to denote a rate of working. Standard Time: Standard time is the total time in which a job should be completed at standard performance i.e. work content, contingency allowance for delay, unoccupied time and interference allowance, where applicable. Contingency allowance: A contingency allowance is a small allowance of time which may be included in a standard time to meet legitimate and expected items of work or delays, the precise measurement of which is uneconomical because of their infrequent or irregular occurrence. Relaxation allowance: A relaxation allowance is an addition to the basic time to provide the worker with the opportunity to recover from physiological and psychological effects of carrying out specified work under specified conditions and to allow attention to personal needs. The amount of the allowance will depend on the nature of the job.
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Types of Elements for Time Study:

A repetitive element is an element which occurs in every work cycle of the job. An occasional element does not occur in each work cycle of the job, but which may occur at regular or irregular intervals. e.g. machine setting. For a constant element, the basic time remains constant whenever it is performed. e.g. switch the machine on. A variable element is an element for which the basic time varies in relation to some characteristics of the product, equipment or process, e.g. dimensions, weight, quality etc. e.g. push trolley of parts to next shop. A manual element is an element performed by a worker. A machine element is automatically performed by a power-driven machine A governing element occupies a longer time than any of the other elements which are being performed concurrently. e.g. boil kettle of water, while setting out teapot and cups. A foreign element is observed during a study which, after analysis, is not found to be necessary part of the job. e.g. degreasing a part that has still to be machined further.
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Activity Sampling: Activity sampling is a technique in which a large number of

instantaneous observations are made over a period of time of a group of machines, processes or workers. Each observation records what is happening at that instant and the percentage of observations recorded for a particular activity or delay is a measure of the percentage of time during which the activity or delay occurs. Predetermined Motion Time Systems: A predetermined motion time system is a work measurement technique whereby times established for basic human motions are used to build up the time for a job at a defined level of performance. The systems are based on the assumption that all manual tasks can be analyzed into basic motions of the body or body members. They were compiled as a result of a very large number of studies of each movement, generally by a frame-by-frame analysis of films of a wide range of subjects, men and women, performing a wide variety of tasks. Synthesis: Synthesis is a work measurement technique for building up the time for a job at a defined level of performance by totaling element times obtained previously from time studies on other jobs containing the elements concerned, or from synthetic data. Synthetic data is the name given to tables and formulae derived from the analysis of accumulated work measurement data, arranged in a form suitable for building up standard times, machine process times, etc by synthesis.
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Estimating: The technique of estimating is the least refined of all those available to the work
measurement practitioner. It consists of an estimate of total job duration (or in common practice, the job price or cost). This estimate is made by a craftsman or person familiar with the craft. It normally embraces the total components of the job, including work content, preparation and disposal time, any contingencies etc, all estimated in one gross amount. Analytical Estimating: This technique introduces work measurement concepts into estimating. In analytical estimating the estimator is trained in elemental breakdown, and in the concept of standard performance. The estimate is prepared by first breaking the work content of the job into elements, and then utilizing the experience of the estimator (normally a craftsman) the time for each element of work is estimated - at standard performance. These estimated basic minutes are totaled to give a total job time, in basic minutes. An allowance for relaxation and any necessary contingency is then made, as in conventional time study, to give the standard time. Comparative Estimating: This technique has been developed to permit speedy and reliable assessment of the duration of variable and infrequent jobs, by estimating them within chosen time bands. Limits are set within which the job under consideration will fall, rather than in terms of precise capital standard or capital allowed minute values. It is applied by comparing the job to be estimated with jobs of similar work content, and using these similar jobs as "bench marks" to locate the new job in its relevant time band - known as Work Group.
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AEAS 409: PRODUCTION PLANNING AND CONTROL

Nikhil R. Dhar, Ph. D

Department of Industrial & Production Engineering

Department of Industrial & Production Engineering

Department of Industrial & Production Engineering

LECTURE-01: PRODUCTION PLANNING & CONTROL

Nikhil R. Dhar, Ph.D.

Department of Industrial & Production Engineering

Department of Industrial & Production Engineering

5 P`s of Production Management

Department of Industrial & Production Engineering

Scope of Production Management: There are two types of scope of Production

Production Planning & Control

Department of Industrial & Production Engineering

Production Planning and Control

Material Requirement Planning

Shop-floor scheduling and control

Shipping and Receiving

Short Cycle Times

Department of Industrial & Production Engineering

Need for Production Planning & Control

Department of Industrial & Production Engineering

Department of Industrial & Production Engineering

Department of Industrial & Production Engineering

Department of Industrial & Production Engineering

Department of Industrial & Production Engineering

Areas of Production Planning

Need or Importance of PPC

Department of Industrial & Production Engineering

Benefits of Production Planning and Control

Department of Industrial & Production Engineering

LECTURE 02:FORECASTING METHODS

Nikhil R. Dhar, Ph. D

Department of Industrial & Production Engineering

Need for Forecasting:

Department of Industrial & Production Engineering

Forecasting in Action: Forecasts are made to guide decisions in a variety of fields.

Department of Industrial & Production Engineering

Department of Industrial & Production Engineering

Time Horizons for Strategic Decisions

Department of Industrial & Production Engineering

Department of Industrial & Production Engineering

Goals for Aggregate Planning: There are number of goals to be satisfied

Aggregate Planning Strategies

Department of Industrial & Production Engineering

Aggregate Planning Options

Demand based Options:

Department of Industrial & Production Engineering

Aggregate Planning Options

Applies mainly in production settings

Department of Industrial & Production Engineering

Back ordering during highdemand periods

Counterseasonal product and service mixing

Fully utilizes resources; allows stable workforce

May require skills or equipment outside the firms areas of expertise

Risky finding products or services with opposite demand patterns

Department of Industrial & Production Engineering

Demand forecasts, orders

Master production schedule and MRP systems

External capacity (subcontractors)

Detailed work schedules Department of Industrial & Production Engineering

Master Production Schedule (MPS)

Department of Industrial & Production Engineering