UNIT 2

OPERATIONS MANAGEMENT

PLANT LOCATION

Introduction:
The location where firms set up their operation is simply called as plant location. All the
manufacturing and service organizations carefully plan where they should locate their plants and
service facilities because location will have a serious affect on the success of an organization.
Firms conduct plant location analysis where they evaluate different locations and finally choose
an optimum location to start their operations.

Importance:
Selection of a plant location is a strategic decision for any organization. Therefore, it has to
be made after considering all the factors which have a bearing on it. Location decisions are
important for several reasons.
1. The location of a plant will fix the production technology and cost structure.
2. The significance of plant location depends on the size and nature of the business.
3. The location of the facility affects the company’s ability to serve its customers quickly
and conveniently.

FACTORS AFFECTING PLANT LOCATION

1) Closeness to raw material:

Normally the proportion of raw material cost to the cost of production is significant for every
product. If the plant is located close to supply points of the raw material, the cost of procurement can
be minimized, particularly if the raw material is fragile, perishable, bulky or heavy.
Ex:- Rice mills are located near by paddy fields.
2) Nearness to the markets:
If the plant is located close to the markets, the cost of transportation can be minimized. This
also helps the producers to have direct knowledge of the requirements of the customers. The
knowledge about the profiles of customer segments enables the plant to mould its sales strategies
accordingly.

3) Transportation facilities:
The five basic modes of physical transportation are air, road, rail, water and pipeline.
Firms consider relative costs, convenience and suitability of each mode and then select the
transportation method.
Ex:- Exporters may choose a location near to a seaport or airport.

4)Availability of labour:
The availability of labour and skills is one of the important factors in production. Labour may
be readily available in some areas than in other areas. Availability of skilled and unskilled in the
required proportion in one area is usually not possible. Firms that emphasise more on technology
require skilled people and so prefer a location where the skilled people are available and vice
versa.
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  Natural and climatic factors:- :- In some cases, location of industry is simply the result
of industry is simply the result of certain naturalfactors.
Shipbuilding is located in vishakapatnam and Bombay as these are deep water-
harbours, besides having well-developed markets for labour, raw material and machinery
in its neighbourhood.

 Availability of amenities:- :- Locations with good external amenities such as housing,

shops, community services, communication systems etc… are more attractive than those
located in the remote areas.

 Availability of services:- Electricity, water, gas, drainage, and disposal of waste are
some of the important services that need to be considered while selecting a location.

 Safety requirements:- some units such as nuclear power stations and other chemical and
explosive factories may present potential threat to the surrounding neighbourhood . so
firms should ensure that such units are located in remote areas where the damage will be
minimum in case of an accident.

 Political interference:- This applies more in case of public enterprises, many a time,
political considerations over ride the economic rational in assigning an industry to a
particular location.

 Site cost:- The management of the firm should ensure that the cost of the site is
reasonable for the benefits that it is going to provide.

PLANT LAYOUT

Introduction:
Plant layout deals with the arrangement of work areas and equipment. It is related to allocation
of adequate spaces at the appropriate places for work equipment, working men, materials, other
supporting activities and also customers. The basic theme behind the arrangement of work area is
to produce the product economically, to provide the service effectively and to provide a safe and
good physical environment for the users that is, the workers and / or the consumers

Plant Layout:
Plant Layout can be defined as the process of determining a spatial location for a collection
physical production facility suitable to manufacture a product or service. It is concerned with
arranging
 The manufacturing and servicing departments in the factory site
 The machinery within these departments
 The layout of individual work places

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Principles of Plant Layout

1. The total movement of materials should be minimum. For this, one has to consider the
movement distances between different work areas and the number times such movements
occur per unit period of time.
2. The arrangement of the work area should have as much congruence as possible with the
flow of materials within the plant. Here, flow means not any particular direction, it means
that the different stages through which the material passes before it becomes a finished
product.
3. the layout should ensure adequate safety and healthy working conditions for the
employees
4. The layout should be adaptable or flexible enough so as to allow for probable changes in
the future as all systems should anticipate changes in the future.
5. A good layout should take into consideration all the three dimensions of space available.
In addition to the floor space, the vertical space available should also be taken into
account while designing the work areas.

Basic types of layout

Process layout or layout by function
This is typical of the job-shop type of production where the equipment performing similar
operations is grouped together. For instance, grinding machines could be grouped together to
form a work area, milling machines could be grouped together, drilling machines could be
grouped together, etc. such a layout is particularly useful where the volume of manufacturing is
low and the variety of jobs is great. Here, the layout should provide tremendous flexibility in the
sequence of operations because; the sequence of operation for one job is different from that of
another job. For this reason, in all job-shop types of production, work areas are grouped together.
Process layout can be preferred when—

 more varieties of products are manufactured in fewer quantities

 close quality inspection is required

 it is difficult to carry out time and motion study

 it is necessary to use the same machine for more than one product

Merits:
 It is more flexible, since, it allows to change the sequence of operations.
 Production can be increased by installing additional equipment.
 Better working conditions
 More specialization
 If a machine fails, it does not effect on other machines.
Demerits:
 It is very difficult to shift material from one stage to another.
 Diseconomy in utilization of floor space.

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  Under this method of layout more manpower is required to check the work of each and
every department.
 It increases the material handling cost.

Product layout or line production

The equipment here is laid out accordance to the sequence in which it is used for making the
product. Product layout is usually suitable for assembling operations, for example in the
automobile industry. In product layout the logical sequence in the production process forms the
basis for the arrangement.
Product layout can be applicable where—
 the machines can be continuously handled for longer periods
 time and motion study can be conducted
 the products so manufactured do not require higher degree of inspection

Finished goods

Drill Bore Grind Mill Inspect

Merits:
 This layout ensures constant flow of production.
 Under this method there is direct channel for the flow of material. So that , there is
economy in material handling.
 Inspection is more easy and convenient. Since, all the machines are in a sequence.
 Economy is manufacturing time
 Maximum utilization of available space.
 Lesser work-in-progress or semi finished goods
 Economy in manufacturing time.

Demerits:
 If one machine in the line stops on account of breakdown, the remaining machines cannot
operate.
 Certain changes are very costly and impracticable under this method of layout
 It is an expensive layout.

Fixed position layout:

In this layout, the material remains in a fixed position, but the machinery, tools, workmen, etc.
are brought to the material.
It is suitable when the equipment and the machinery are small in number and size, and where the
workmen are highly skilled to perform the various small jobs on the product.
This type of layout is used in case o large projects such as building ships, manufacture of
aircrafts, heavy pressure vessels and automobile industries etc.,

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Merits:
 It is more flexible layout.
 It requires less floor space because machines are moved from one location to another.
 Material handling cost is minimum.
Demerits:
 This type of layout is not suitable for manufacturing small products in large quantity.
 It involves high equipment handling cost.
 It requires more capital.

Features of good layout:

1. Maximum Flexibility: A good layout is one which can be modified to meet changing
circumstances. It must be capable of incorporating, without major changes, new equipment to
meet technological requirement.

PRODUCTIVITY AND PRODUCTION

Productivity is defined as the rate at which the goods and services are produced. It refers to
the relationship between the inputs and the outputs. It is calculated as a ratio between the
amount produced and the amount of resources used in the production.
Productivity =output/input
Productivity is different from production. Productivity is the rate of production of goods and
services while production refers to the actual amount of goods and services produced.

Methods of production:- The methods of production can be of the following types.

o Job production
o Batch production
o Continuous or mass production

Job production:- The production of small number of a product at a time, which may
or may not be repeated in future is known as job production or unit production.
The products are manufactured to meet the specific requirements of a customer.
Generally, a special job order is made and it is connected with some special
machinery, special models and projects. These are produced in very small quantity
according to the customerrequirements.

Ex:- Lifting equipments, pressure vessels, processing plants etc

Batch production:- The production of sufficient number of identical items, mostly

repeated with time intervals is known as batch production. It is also known as quantity
production.
There are several standard components which are used in different
machineries . Batch production is mainly concerned with the production of such items

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 to meet a specific demand. When a particular batch is manufactured, the plant should
be available for the production of similar products. This type of production needs
general purpose equipments and is very useful in manufacturing machine tools,
paints, drugs etc

Mass production:- The production of large number of identical items, continuously

is known as mass production.
In this case, the production is carried out throughout the day and plant
facilities are fully engaged. Production goes on the same sequence of process . It is
associated with large quantity production and with high rate of demand.
The main advantage of this method of production is the lowest unit cost
of production.
The products such as Tv’s, air conditioners, cars, scooters, and others
are manufactured through mass production.

WORK STUDY

Introduction:
Work study is a new name for the techniques usually known as motions and time study. Work
study refers to the method study and work measurement, which are used to examine human work
in all its contexts by systematically into all factors affecting its efficiency and economy to bring
forth the desired improvement.

Nature & Scope

Work study is a generic term for those techniques, particularly method study and work
measurement, which are used in the examination of human work in all its contexts.

Work study is the study of the work in order to simplify it. In fact, it is an approach in respect of
the use of manpower, material and equipment with a view to eliminating waste in every form. It
is extensively used in agricultural operations, manufacturing, services, and transport and supply
industries.

Method study is the systematic recording and critical examination of existing and proposed ways
of doing work, as means of developing and applying easier and more effective methods and
reducing costs.

Objectives of method study:

The study is conducted to achieve the following objectives—
1. to bring improvement of work processes and procedures
2. to economize human efforts and to reduce unnecessary fatigue
3. to improve the usage of materials, machines and manpower
4. to develop better physical working condition and environment

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Procedure for method study:
Method study includes the following steps:
Select – choosing the job or procedure to be studies
Record – collect all the relevant facts about the present or proposed
method.
Examine - critically scrutinizing these facts in an orderly sequence
using the techniques best suited to the purpose
Develop – develop the best possible method
Install - practice the developed method
Maintain – checking the new standard practice by proper control
procedures and regular routine checks.

Select:
Only such jobs are to be selected that promise substantial improvement and dividends. Some of
the prospective tasks for the study are those which are holding up certain other operations –
bottleneck tasks which involve a long ‘travel’ of the forms, documents and materials.
After selection of job, it will be a good practice to compile a list of specifications of the job
Ex: job particulars, who initiated the study, layout etc.

Record:
The current process of doing job has to be recorded. While doing so, every detail, however small
it may be, has to be identified. Where the process is too long, involving many stages of
production, inspection, the present process of doing the job is recorded sufficiently, together with
all the relevant information, by using the process chart.

A process chart is a graphic representation of the sequence of events or steps that occur in the
work method or procedure. Classifying them by symbols according to the nature of the event is
as follows

Symbol Meaning
Operation: It involves change in the condition of a product

Transport: Moving something from one location to another

Storage: It occurs when object is kept and protected against

unauthorized removal
Delay or Temporary storage: A delay occurs to an object when
D conditions do not permit the performance of next job
Inspection: Quality and quantity of the product is good or not

Operation cum Inspection: Inspection is taking place during the

production process

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Examine:
This is the most important phase of method study. After an activity has been suitably recorded by
means of any method, the recorded events are to be critically examined. The analysis may be
based on primary questions like purpose, place, sequence, person etc.
At the secondary stage, the questions are meant to seek alternatives so as to be able to think out a
better, and finally the best way of accomplishing the task.

Develop:
Based on the recorded data, the alternative methods of doing the same job more effectively are to
be identified and evaluated. From these alternatives, the best one is selected and developed to
suit the requirements.

Install:
The new method so developed is to be installed in a phased manner. As part of installation,
adequate planning of schedules and deployment of resources should be taken carte of.
Once the method is adopted, the workers have to be retrained, the equipment has to be provided,
and the method has to be tested in order to seek improvement.

Maintain:
It should be ensured that the method is used in the manner intended. Complaints and
improvements in productivity should be registered. Once the new method starts yielding the
desired result, it is necessary to maintain the new method without any change for sometime.

Work Measurement:
Work measurement, also called time study, establishes the time taken by a qualified worker to
complete a specified jab at a defined level of performance. These techniques are used to answer
the questions – how long? And when? They usually follow the results of method study. They are
employed for following purposes.
 To develop costing system
 To determine the production schedules
 To develop incentive schemes
 To compare the time taken by alternative methods of a given job
 To standardize the job in terms of standard time, thus, supplementing the efforts of
method study.
 To determine the optimum number of men and machines to ensure their effective
utilizations
Effective planning and control of production, distribution, administration and services can not be
achieved unless they are based on the facts. One of the most important facts is the time required
to complete the job, which can be obtained by work measurement.

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Procedure:
1. Break the job into elements which can be identified as distinct parts of an operation,
capable of being observed, measure and analyzed
2. Measure time taken to perform each element using a stopwatch
3. Add the time taken to do all elements and arrive at the basic time required to do the entire
job.

Work Sampling:
One of the methods of developing production standards i.e., work sampling differs from the
other methods. It does not require a stop watch and involves observing a portion or sample of
one or more work activities.
Work sampling is one of the very common techniques of work measurement which has gained
widespread use on shop floor and office in nearly all types of manufacturing and non
manufacturing organizations.

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PROBLEMS

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