Production & Operations Management (OM)

 Meaning of Production

 In Economic Sense, Production is the creation of utilities  Production is a value addition process.  Production is a process by which goods & services are created  In a manufacturing Organization Production is the Fabrication of physical object through the use of Men, materials & equipments.
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Meaning of Production Management

 Production Management is a process of planning,

organizing, directing & controlling the activities of the Production function.

Meaning of operations Management

operations Management is concerned with the activities, concepts & techniques employed in producing goods & services.  operations Management is the process of designing, operating,& controlling a productive system that capable of transforming physical resources & human talent into needed goods & services.

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Production System/Process
Adjustment Needed Random Fluctuations Major Output

Inputs Men Machine  Materials

Conversion Process

Output Goods & Services

Comparison of Actual Vs Desired Feedback

Production System characteristics

 Production is an organized activity, so every

production system has an objective  The system transforms the various inputs into usable outputs  Production system does not operate in isolation from the other organizational systems such as Finance, Marketing, e.t.c  There exist feedback about the activities which is essential to control & improve system performance.
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Functions of a production & Operations manager

1. 2. 3. 4. 5. 6. 7. 8.

Demand forecasting Job design Production planning Production control Quality control Method analysis Plant lay out Material handlings

9. 10. 11. 12. 13. 14. 9.

Plant location Inventory control Wage incentives Work measurement Measurement of performance Product development & design Maintenance

Distinguish between Manufacturing & service Operations

Aspects of Differences are: 1. Definition 2. Nature of Product 3. Consumption of 8. Nature of inventory 9. Measurement of productivity 10. Quality 11. Expenses for material handling 12. Utilization of investment 13. Maintenance 14. Response time 15. Facilities 16. Nature
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4. 5. 6. 7.

Product Degree of Customer contact Customer perception Measurement of performance Nature of work

Some of major issues facing production or operations managers or executives today in the constantly changing business environment or Challenges faced by Operations Executives in the continuously changing global Environment
1. 2. 3. 4. 5.

Reducing the development & manufacturing time for new product & services Achieving & sustaining high quality while keeping cost down Integrating new technologies & control systems into existing production systems Obtaining, training & retaining qualified workers & Managers Working effectively with other functional areas of business to accomplish the goals of the firm
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Challenges faced by operations Executives in the continuously changing global Environment

6. Controlling production & services at

multiple sites in decentralized organization 7. Working effectively with suppliers & being user that is friendly for customers 8. Working effectively with New patterns formed by strategic alliances

Critical Decisions areas/Scope/Subject matter of Production & Operations Management

A. Strategic Level Decisions are: that is 1. New Product Identification & development design 2. Process design & planning 3. Facilities Location 4. Layout Planning 5. Capacity Planning 6. Job design 7. Selection of equipment
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Critical Decisions areas/Scope/Subject matter of Production & Operations Management

B. Operations Level Decisions are: that is 1. Production Planning 2. Production controlling & scheduling 3. Inventory Control 4. Quality control 5. Material handlings 6. Labor control 7. Maintenance & Reliability 8. Cost control& improvement

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Principles of OM or how can you increase Operational efficiency in an organization.

1. 2. 3. 4. 5. 6. 7. 8.

Get to Know the customer Cut that is work that is in Process Cut throughput time Cut setup & change over time Cut flow distance & space Decrease cycle intervals for production Cut number of suppliers to a few goods one Cut number of components of the product or services
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Principles of OM or how can you increase Operational efficiency in an organization

9. Make it easy to make 10. Arrange the work place to climate search

time 11. Cross train for mastery of more than one job 12. Record & retain production, quality & problem data at the work place 13. Assume that the line people get first check at problem solving
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Principles of OM or how can you increase Operational efficiency in an organization

14. Maintain & improve existing

equipment & human work before thinking about new equipment 15. Look for simple, Cheap, & Movable equipment 16. Automate increasingly when process variability cant otherwise be reduced.
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Today's Factors Affecting OM

 Global Competition  Quality, Customer Service, and Cost

Challenges  Rapid Expansion of Advanced Technologies  Continued Growth of the Service Sector  Scarcity of operations Resources  Social that is Responsibility Issues

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Historical Milestones in OM
 The Industrial Revolution  Post that is Civil War Period  Scientific Management  Human Relations and Behaviorism  operations Research  The Service Revolution

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The Industrial Revolution

 The industrial revolution developed in England in the

1700s.  The steam engine, invented by James Watt in 1764, largely replaced human and water power for factories.  Adam Smiths The Wealth of Nations in 1776 touted the economic benefits of the specialization of labor.  Thus the late is1700s factories had not only machine power but also ways of planning and controlling the tasks of workers.

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The Industrial Revolution

 The first great industry in the US was the textile industry. The industrial revolution spread from England to other European countries and to the United Sates.  In 1790 an American, Eli Whitney, developed the concept of interchangeable parts.  The first great industry in the US  In the 1800s the development of the gasoline engine and electricity further advanced the revolution.  By the midthat is1800s, the old cottage system of production had been replaced by the factory system.  . . . more
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Postthat isCivil War Period

 During the postthat isCivil War period great

expansion of production capacity occurred.  By postthat isCivil War the following developments set the stage for the great production explosion of the 20th century:
   

increased capital and production capacity the expanded urban workforce new Western US markets an effective national transportation system

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Scientific Management
 Frederick Taylor is known as the father of

scientific management. His shop system employed these steps:



Each workers skill, strength, and learning ability were determined.  Stopwatch studies were conducted to precisely set standard output per worker on each task.  Material specifications, work methods, and routing sequences were used to organize the shop.  Supervisors were carefully selected and trained.  Incentive pay systems were initiated.
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Scientific Management
 In the 1920s, Ford Motor Companys Operations

embodied the key elements of scientific management:

     

standardized product designs mass production low manufacturing costs mechanized assembly lines specialization of labor interchangeable parts
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Human Relations and Behavioralism

 In the 1927that is1932 period, researchers in the

Hawthorne Studies realized that human factors were affecting production.



Researchers and managers alike were recognizing that psychological and sociological factors affected production.

 From the work of behavioralists came a gradual change in

the way managers thought about and treated workers.

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operations Research
 During World War II, enormous quantities of resources

(personnel, supplies, equipment, ) had to be deployed.  Military operations research (OR) teams were formed to deal with the complexity of the deployment.  After the war, operations researchers found their way back to universities, industry, government, and consulting firms.  OR helps operations managers make decisions when problems are complex and wrong decisions are costly.

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The Service Revolution

 The creation of services organizations accelerated     

sharply after World War II. Today, more than twothat isthirds of the US workforce is employed in services. About twothat isthirds of the US GDP is from services. There is a huge trade surplus in services. Investment per office worker now exceeds the investment per factory worker. Thus there is a growing need for service operations management.

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The Computer Revolution

 Explosive growth of computer and

communication technologies  Easy access to information and the availability of more information  Advances in software applications such as Enterprise Resource Planning (ERP) software  Widespread use of email  More and more firms becoming involved in Ethat isBusiness using the Internet  Result: faster, better decisions over greater distances
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Today's Factors Affecting OM

 Global Competition  Quality, Customer Service, and Cost

Challenges  Rapid Expansion of Advanced Technologies  Continued Growth of the Service Sector  Scarcity of operations Resources  Socialthat isResponsibility Issues

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Facility Location
 Meaning of Facility Location

By Facility Location mean determining an areas as well as site for establishment of an enterprise, the performance of an organization is considerably affected by its location. Facility Location planning involves choosing the best place from the available options for setting plant /service facility.
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Importance & reasons for in the selection of Facility Location

1. 2. 3. 4. 5. 6. 7.

A companys Facility Location affects its operations & ability to compete In manufacturing organization, location affects direct costs In service operations Facility Location affects the demand for the service Long lasting consequences Effective marketing of products & services Prospective location implies respective market area Selection of Good Facility Location enables a company to provide convenient, dependable services to its customers. Facility Location Influence public Relations
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8.

Factors affecting choice of location of facilities

1. Materials & supplies availability & 2. 3. 4. 5. 6. 7. 8.

costs Labor availability & costs Proximity to market Transportation system & costs Utilities & costs Infrastructure availability Environmental regulations Govt. restriction & incentives

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Factors affecting choice of location of facilities

9. Community attitude 10. Social infrastructural facilities 11. Proximity to related industry or

services 12. Site availability 13. Zoning restrictions 14. Constructions costs 15. Climate 16. Political situation of a particular place.
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Factors affecting choice of location of service operations

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Proximity to customers & market Transportation facilities & costs Location of competitors Residential density Proximity to support & services Image of the area Visibility of site Local ordinance Community attitude Law & order situation
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Reasons for relocation of existing facilities

1. Changes in availability of input 2. 3. 4. 5. 6. 7. 8.

resources Shift in the structure in the market Undesirable labor situation Relocation of various associates industries Demolition, Expropriation Merger Change in regulations & law Scientific discoveries

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Facility Location quantitative analysisthat is

BEP analysis, Factors Rating System,  Transportation model

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Break even analysis

Problem: For the following data determine the best among of facility Requirement: that is Find which location is best & the Break even quantity & cost Location Fixed Cost (TK) TK200000 TK500000 TK600000 TK400000 Variable Cost Per Unit (TK) TK62 TK38 TK50 TK70

A B C D

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Break even analysis

Location

Fixed Cost (TK)

Variable Cost Per Unit (TK)

TC=TFC+TVC

A B C D

TK200000 TK500000 TK600000 TK400000

TK6220000=1240000

TCa= TK200000+1240000 =TK 1440000 TCb= TK500000+760000 = TK 1260000 TCc= TK600000+1000000 = TK 1600000 TCd= TK400000+1400000 = TK 1800000
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TK3820000=760000

TK5020000=1000000

TK7020000=1400000

20 1800000 1600000 15 1440000 1260000 Costs 10 In 0000 6 5 4 3 2 1

D C A B

Feasible Region for Location A 5000 10000 1250

Feasible Region for Location B 15000

Feasible Region for Location B

20000 Quantity

35 25000

Facility Layout Planning

 Facility Layout/ Plant Layout: that

is Plant layout is a plan of the most effective way of arrangement of the physical facilities & manpower for manufacturing of Products & services.

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Objectives of Facility Layout

Provide enough production capacity To reduce material handling costs Conform to site & building constraints To allow space for production machine To allow high labor, Machine & space utilization & productivity  Provide for volume & product flexibility  Provide for employee safety & health  To allow ease of Supervision  To allow ease of Maintenance
    
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Types of Layout
1. Product or Line layout: Product or Line

layout is a type of layout in which equipment, machineries or processes are arranged according to the progressive steps by which product is made. Product or Line layout is a type of layout in which equipments & works are laid out according to the sequences of operations so that R & M started at the head of the line move progressively to adjacent item at the other end of the line.
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Process Layout
 Process Layout is a type of layout in which

work stations or work departments groups according to functions to accomplish the purpose of the organization.

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Figure:that is Product Layout

Turning Operations Milling Operations Drilling Operations Assembly Inspection Package Dispatch

Figure:that is Process Layout

Milling Lathes Assembly

Welding

Grinding

Inspection

Shipping & Receiving

Painting /Printing

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Process Layout

Each Machine Unit with Machines Ex -that is Lathe Department

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Hybrid Layout
Hybrid Layout is a flow strategy combines elements of both a product & process layout focus.

Product or Process Layout Line Layout

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Fixed position Layout

 In this type of layout the product remains

stationary at one location. This is called the project type layout. In Fixed position Layout, the materials or major components remain in a fixed location tools, Machineries, men & others materials are bought to this Location. EXthat is Construction of BRIDGE or Infrastructure.

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Factors Affecting the design of Layout of facilities

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Nature of manufacturing System Production process Nature of product to manufacture Material handling systems used Volume of production Nature of factory building Availability of floor Place Flexibility required in the system Ease of supervision Accessibility to other related departments Provisions of Factory Act.
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Planning Product Layout: Planning Product Layout

is the analysis production lines is the central focus of analysis of product layouts
 Line Balancing: is an analysis process that

tries to equally divide the work to be done among work stations so that the number of work stations or workers required on a production line minimized, it is also called line balancing staff techniques.  Work Elements: Work Elements are the smallest units of work that can be performed independently.  Desired outthat isRate: Desired outthat isRate is what should be lines output rate.
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Some Terminologies
 Cycle Time: Cycle Time is the maximum

allowed time for work on a unit at each station. C=

Production time (I) Rate of output

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 Theoretical Minimum: is a benchmark or goal

for the smallest number of stations possible, where the total time required to assemble each unit.

Formula; TM =

Sum of work elements time (t) Cycle Time (C)

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 Balance Delay: Balance Delay is the amount

by which efficiency falls short of 100%.

Efficiency =

t
100 NC

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Problemthat isLine balancing with the longestthat isTask time hurestic

Work Elements Time (Second) Immediate Predecessors

t
A B C D E F G H I J 40 80 30 25 20 15 120 145 130 115 Total=720 (Seconds) None A D,E,F B B B A G H C,I
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Using the information above:

1. Draw the precedence diagram 2. Compute the cycle time 3. Determine the minimum number of work

stations 4. Assign tasks to workstations using the longest that is task that is time heuristic 5. Calculate the efficiency & balance delay of the solution found

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Figure :that is Precedence Diagram

D 25 A 40 B 80 E 20 C 30 J 115

F 15

I 130 H 145

G 120

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Station

Candidates

Choice

Work element time=t

(Second)

Cumulative Time (Seconds)

Idle Time
(Second)

Out of c=150 110 (150that is40) 30 (110that is80)

S1

A,B,D,E,F

A B D

40 80 25

40 120 145

5 (30that
is25) S2 S3 S4 S5 E,F,C,G F,C,H F,C,I C,J E G H F I C J 20 120 145 15 130 30 115 t=720
Seconds

20 140 145 15 145 30 145 Total Idle time = 30 Seconds

130 10 5 135 5 120 5

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Figure :that is Precedence Diagram

D 25 A 40 B 80 E 20 C 30 J 115

F 15

I 130 H 145

G 120

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Materials Handling
Meaning of Materials Handling:that is  Materials Handling involves movement of materials mechanically or manually in batches or one by one within the plant. Movement may be vertical, horizontal or a combination of two.  Materials Handling system is the entire network of transportation that receive materials, store materials in inventories, moves them about between processing points within & between buildings, & finally deposits the finished products into vehicles that will deliver them to customers.
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Purposes of Materials Handling

1. Minimize the unit materials Handling cost 2. Reduce manufacturing cycle time 3. Provide for improved working conditions &

greater safety in the movement of materials 4. Contribute toward better control of the flow of production 5. Gain higher productivity at lower manufacturing cost.

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Factors affecting the design of Materials handlings System

1. Nature of production process 2. Layout of the plant 3. Nature of factory building 4. Nature of materials to be moved 5. Paths over which materials to be moved 6. Volume of materials to move 7. Space of holding 8. Capacity of the holding equipments
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Principles of Materials handlings

1. 2. 3.

4.

5. 6. 7.

Materials should move through the facility in direct flow patterns, minimizing zigzagging or back tracking Related production processes should be arranged to provide for direct material flow Mechanical materials handling devices should be designed & located and materials storage locations should be selected so that human effort expended through bending, reaching, lifting, & walking is mini9mized. Heavy or bulky materials should be moved the shortest distance through locating processes that use them near receiving & shipping areas The number of times each material is moved should be minimized Provide for safe handling methods & equipments Replace obsolete handling equipments when more efficient methods & equipments will improve operations
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Factors affecting the selection of efficient Materials handlings Equipments

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Adaptability Flexibility Load capacity Power & speed Space requirement Easy of maintenance Cost of equipments Safety Efficient manpower availability Supervision required
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Different Materials handlings Equipments

Conveyers: Conveyers primarily performs the movement of uniform loads between fixed points. Types of Conveyers:  Belt Conveyers  Pipeline Conveyers  Monorail  Chain Conveyers Conveyers are useful when A. Loads are uniform B. Materials move continuously C. Routes dont vary D. Movement rate is relatively fixed E. Movement is from one point to another point
1.
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Different Materials handlings Equipments

2. Cranes: Cranes are devices capable of

moving materials vertically & laterally in area of limited length & width & height. Cranes are employed for lifting & lowering heavy objects & moving them from one point to another. Cranes find their application in heavy engorging industries & in intermittent type of production

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Different Materials handlings Equipments

Hoists: Hoists are used for loading & unloading of heavy objects & they are also used for raising & lowering heavy & long objects. Types of Hoists & cranes:  Overhead traveling cranes  Chain Hoists  Electric Hoists
3.
 1. 2. 3. 4.

Elevators

The hoists & cranes are useful when

Movement is within fixed areas Movements are intermittent Loads vary in size & weight Loads handled are not uniform Industrial trucks: Forklift, Platform truck, Tractor trailer
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Product Design & Development

 Definition of Product Design: Product

Design is the structuring of component parts or activities so that as a unit they can provide a specific value.  Product or Service Design is concerned with the functional & aesthetic requirements necessary to meet the demand of the market place & at the same time achieve an acceptable rate of return.
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How can you design product & service for an organization? or Discuss the steps involved in the development of product & service Design
Steps Step1 Step2 Step3 Step4
Idea generation Product selection

Key Activities
Search for consumer needs Market analysis & feasibility study Evaluation of alternative Design Process development & testing process

Key outputs
Selection of ideas Choice of specific products features Selection of best design including Productivity Final specification in the form of assembly, drawing processing formulas,procedure 63 ,statement etc.

Preliminary Design

Final Design

steps involved in the development of product & service Design

Steps Step4
Final Design

Key Activities
Process development & testing process

Key outputs
Final specification in the form of assembly, drawing processing formulas,procedure, statement etc.

Facility Exist

New Facilities required Technological choice of specific Evaluation equipment Technology alternatives & process flow

Step5

Process Selection Capacity planning Production planning Scheduling

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Designing service organizations

 Designing a service organization entails the

   

execution of Four elements of what James Hoskett refers as the Service Vision. The First element is Identification of target market that is who is our customer The second is the service concept that is How we differentiate our service in the market The Third is the service strategy what is our service package& the operating focus of our service? And Fourth is the service delivery system that is what are the actual process, staff, & facilities by which the service is created?
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Production Planning & control

 Production Planning: - Production

Planning implies formulation, coordination, & determination of activities in a manufacturing system necessary for the accomplishment of desired objectives.  Production Planning is the determination, acquisition & arrangement of all facilities necessary for future Production of products.
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Production Planning & control

 Production control: - Production control is

the process of maintaining a balance between various activities during Production Planning providing most effective & efficient utilization of resources.  Production Planning & control:Production Planning & control can be defined as the direction & coordination of firms resources towards attaining the pre fixed goals
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Objectives of production Planning & control

1. To achieve the highest efficiency in production of goods 2. To determine the nature & magnitude of various input factors to manufacture the desired output 3. Establish targets & checking these against performance 4. To achieve the production objectives in respect of quality, quantity & cost & timeliness of delivery. 5. Ensure smooth flow of materials by eliminating bottlenecks, in production 6. Effective utilization of firm resources 7. Conform to delivery commitments 8. Make adjustments due to changes in demand & rush orders.

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Different Manufacturing system

 Intermittent Manufacturing: - In this type

of system the goods are manufactured specially to fulfill orders made by the customers rather than for stock.  Intermittent Manufacturing systems are those where the production facilities are flexible enough to handle a wide variety of production & sizes.  Continuous manufacturing system:- In this system the items are produced for stocks & not for specific orders.
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Difference between Intermittent Manufacturing system & Continuous manufacturing system

Intermittent Manufacturing system Flexible production process High product variety Work in process inventory high Demand can be discontinuous Customize product production Wide variety product produces Flexible sequence schedule required in this system Continuous manufacturing system Rigid production system Low productivity Low Continuous demand Standardize product Fewer variety of products are produced Standard set of process & sequence 70 used

Aggregate production planning (APP)

 Aggregate production planning (APP) is

related to the planning of overall production activities & their associated operating resources.  Aggregate production planning (APP) is a process by which a company determines level of capacity, level of production, level of subcontracting & even pricing over specified time period.
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Master Production Schedule

 Master Production Schedule is an

extension of aggregate production plan. It tells us the number of units of different models of product to be manufactured on a weekly or monthly basis.

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Maintenance
 Defination (Marked)

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Factors emphasizing increasing importance of maintenance

 Increased mechanization  Increased complexity of equipment  Increased parts and supplies investment  Tighter control of production  Tighter delivery schedule  Increased quantity requirement  Rising costs

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How does maintenance contribute for incoming operations efficiency/competitive advantage to the enterprise?
    

     

By reducing cost of operations By ensuring manufacture or quality product By reducing lead time of production By reducing wastage By ensuring maximum utilization of efforts of human resources and capacity of equipment By minimizing investment inventory By meeting delivery schedule to customer By minimizing machine downtime By increasing longibility of equipment and machines By ensuring smooth flow of production By providing safe working environment.
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Types of maintenance
 Connective/Repair maintenance
Connective or Repair maintenance: Repair activities are reactive, that is they are performed after malfunction has occurred. This is also known as breakdown maintenance or corrective maintenance. Objectives of repair program: operations managers implement repair programs to achieve the following activities: To get equipments back into operations as quickly as possible in order to minimize interruptions to production. To control the cost of repair crews. To control the cost of the operation of repair shops. To control the investment in replacement spare parts those are used when machines are repaired. To control the investment in replacement spare machines. To perform the appropriate amount of repairs at each malfunction. 76

      

Preventive/planned/schedule maintenance
        Preventive maintenance: this is a type of maintenance work which is undertaken before malfunctioning of equipments and buildings. It is a planned maintenance of equipment and machines. This is also called scheduled maintenance. In broader sense preventive maintenance is the periodical inspection and service activities which are aimed to detect potential failures and perform minor adjustments or repairs which will prevent major operating problems in future. Objectives of preventive maintenance program: Reduce the frequency and severity of interruptions to production cause d by machine malfunctions. Extend the useful life of production machinery. Reduce the total cost of maintenance by substituting preventive maintenance cost for repair cots. Provide safe working environment for workers. Improve product quality by keeping equipment in proper adjustments well serviced, and in good operating conditions.  Advantages of preventive maintenance(marked)  Limitations of preventive maintenance(marked)  How preventive maintenance can be made effective?(marked) Page 20  Equipment malfunctions in manufacturing ands service industries have a direct impact on :  Production capacity  Product and service quality  Employee and customer safety  Production cost  Customer satisfaction
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Distinction between connective and preventive maintenance?

 Autonomous/Total production maintenance  Autonomous maintenance refers to take additional

   

responsibility to maintain the whole production system. In that approach production and maintenance department jointly take the responsibility. It is widely used maintenance approach which gives the competitive advantage. Pre-requisites of Autonomous maintenance: Adequate and skilled people. Additional incentives for people Require necessary training

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Chapter: Productivity Measurement

 Productivity: Productivity refers to the efficiency of the

production system.  Productivity is some relationship between inputs and outputs of an enterprise. It is the quantitative relationship between what we produced and the resources used. That it is the ratio of outputs to inputs  According to P.F. Drucker, productivity means balance between all factors that will give the maximum output with the smallest effect. Productivity is therefore defined as = outputs/inputs  Symbolically; productivity= measure of outputs measure of inputs.

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Types of productivity measurement



there are a number of ways to measure productivity. The main criterion of measuring productivity are
 

 

In term of input performance by calculating changes in output per unit of input. On the basis of output performance by calculating change in input per unit of output. Total productivity=total(Tangible)output/total inputs=output/Labor+ Machine+ Capital +technology+ information +Management multifactor productivity=output/L+M+C+T+I Partial productivity=output/L/M/C/I/T/M
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Productivity Measurements
 Advantages of total productivity measure:  Easy and more accurate representation of the total picture of the company.  Easily related to total cost  Considers all quantifiable outputs and inputs.  Limitations of total productivity measure:  Difficulty in obtaining data.  Requirement of special data collection system. Advantages of potential productivity measure:  Easy to understand and calculate.  A tool to pinpoint improvement. Limitations: Misleading of used alone. No consideration of overall impact.
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Maintenance
 Maintenance means up-keep of property or

plant.

Types of Maintenance

 Connective/Repair maintenance  preventive/planned/schedule maintenance  predictive maintenance

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Importance of maintenance
 Factors emphasizing increasing importance

of maintenance  Increased mechanization  Increased complexity of equipment  Increased parts and supplies investment  Tighter control of production  Tighter delivery schedule  Increased quantity requirement  Rising costs

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How does maintenance contribute for incoming operations efficiency/competitive advantage to the enterprise?
By reducing cost of operations By ensuring manufacture or quality product By reducing lead time of production By reducing wastage By ensuring maximum utilization of efforts of human resources and capacity of equipment By minimizing investment inventory By meeting delivery schedule to customer By minimizing machine downtime By increasing legibility of equipment and machines By ensuring smooth flow of production By providing safe working environment.
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Types of maintenance
 Connective/Repair maintenance  preventive/planned/schedule maintenance  predictive maintenance

Connective or Repair maintenance:

Repair activities are reactive, that is they are performed after malfunction has occurred. This is also known as breakdown maintenance or corrective maintenance.

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Objectives of repair program:

      

operations managers implement repair programs to achieve the following activities: To get equipments back into operations as quickly as possible in order to minimize interruptions to production. To control the cost of repair crews. To control the cost of the operation of repair shops. To control the investment in replacement spare parts those are used when machines are repaired. To control the investment in replacement spare machines. To perform the appropriate amount of repairs at each malfunction.

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Preventive maintenance:
 Preventive maintenance: this is a type of

maintenance work which is undertaken before malfunctioning of equipments and buildings. It is a planned maintenance of equipment and machines. This is also called scheduled maintenance.  In broader sense preventive maintenance is the periodical inspection and service activities which are aimed to detect potential failures and perform minor adjustments or repairs which will prevent major operating problems in future.

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Objectives of preventive maintenance program:

 Reduce the frequency and severity of interruptions to    

production cause d by machine malfunctions. Extend the useful life of production machinery. Reduce the total cost of maintenance by substituting preventive maintenance cost for repair cots. Provide safe working environment for workers. Improve product quality by keeping equipment in proper adjustments well serviced, and in good operating conditions.

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Inventory Management
 Good inventory management is essential to

successful operations of management of the organizations for a number of reasons. Inventory policies are important enough that production, marketing and financial managers work together to reach an agreement of these policies. There are conflicting a view concerning inventory policies under scores the balance that must be stuck among conflicting goals.  Reduce production costs, reduce inventory investment and increase customer responsiveness. An effective control of inventory becomes a must for smooth and efficient running of production cycle with last interruptions.
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Meaning /definition of Inventory

 Inventory is defined as the stock of any item or

resources used in an organization.  Inventory is the piles of raw materials and finished goods in the warehouse.  All materials, parts, and in-process or finished products recorded on the books by an organization and kept in its stores, warehouses and plants are known as inventories.  Inventory refers to the physical stock of goods which through remain idle in store but is essential for smooth sailing of the company and hence has economic value.
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Characteristics of inventory
   

Inventories serve as cushions to absorb shocks. Inventory for any organization is necessary evil. Inventories are the result of many interrelated decisions and policies with in organization. Inventory provides production economies.

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Classification of inventories
 Classification of inventories according to

functions
   

Transit inventories Cycle inventories Buffer inventories Decoupling inventories

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Purposes of Inventory
1. to protect against uncertainty
1. to take the advantage of price discounts 2. to meet demand during the replenishment period 3. to keep face with or adapt with changing market conditions 4. to prevent loss of orders(sales) 5. to take advantage of economies of scale 6. to support a strategic plan 7. to hedge against price increase 8. generated by the transformation process 9. to ensure smooth flow of production
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Functions of Inventory
 Inventories serve a number of functions. Among the       

most important are the following: To meet anticipated demand. To smooth production requirements To decouple components of the production distribution system. To protect against stock out. To take advantage of order cycles. To hedge price increases or to take advantage of quantity discounts. To permit operations.

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Inventory Control
 Inventory control is the techniques of

maintaining the size of the inventory at some designed level keeping in view the best economic interest of an organization.  Inventory control is a panned approach of determining what to order, when to order , and how much to order, and how much to stock so that costs associated with buying and storing are optimal without interrupting production and sales.
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Techniques/Types/methods of Inventory Control



Techniques/Types/methods of Inventory Control

      ABC analysis Two-Bin System Economic order quantity Material Requirement Plan (MRP) Cad system JIT system

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ABC Analysis.
 It is the process of dividing items into three classes according to

their usages so that manages can focus on items that have the highest dollar value.  A class items typically represent about10pecent of the items but account 80%of the dollar usage i.e., dollar value. These items required right and strict control and need to be stocked in the smaller quantities. The inventory of A, class items is kept at minimum.  B class items account another 2%of the items (i.e., Quantity) but only 15% of the dollar usage (i.e., value) these are intermediate items. The control on these items should be intermediate between A and C items.  Finally, 70% of the items fall in class C .representing mean5% of the dollar usage (i.e., value). These items being less representative does not require strict control. These are ordered in bulk as against infrequent ordering of A class items.
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To Bin System or Two Bucket System

 A visual system version f the Q system in the

two bin system in which an items inventory is stored at two different locations. Inventory is first withdrawn from one bin. If the first bin is empty then second bin provides backup to cover demand until a replenishment order arrives. An empty bin signals the need to replace a new order.

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Economic Order Quantity (EOQ)

 EOQ is an optimum quantity level which minimizes

the cost and maximizes return.

 Some Technologies of EOQ :

 Reorder point/Level=safety stock+ Lead time usage

wages

time*daily usage  Maximum inventory= Safety stock+ EOQ  Minimum Inventory=Safety stock  Average inventory=Safety Stock+EOQ/2

=safety stock+ Lead

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Some Technologies of EOQ

 Total Inventory cost= Total Carrying Cost+ Total Ordering Cost  =EOQ/2*Carrying cost per unit+ D/EOQ*Ordering 

     

cost per order MinimumTotalCost(MTC)=Total carrying cost +Total ordering Cost+ Cost of the materials=EOQ/22*Carrying cost per unit+ D/EOQ*order cost per order+ Cost of the materials EOQ= 2DCO/CC Where, D=Annual demand CO=Cost per order (per year) CC=Carrying cost per unit per year Time between successive order/Order cycle =360/No of orders per year

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(Purchase model with instantaneous replenishment and without storage)

 Problem: Alpha Industry needs 5400 units per

year of a bought out component which will be used in its main product. The ordering cost is taka 250 per order and the carrying cost per unit per year per year of average industry is Taka 30. Find EOQ, the number of orders per year and the time between successive orders. (Lead time)

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