DEPARTMENT OF MANAGEMENT SCIENCES (PUMBA)

SAVITRIBAI PHULE PUNE UNIVERSITY

Subject:

Production Management

Submitted By:

Aishwarya Arora (Roll No. 20002)

Under the guidance of:

Dr. D.R Mane

 Assignment 1 -Production Operation Management

Introduction:

Production/Operation management is the process which combines and transforms various

resources used in the production/operation subsystem of the organization into value added
products/services in a controlled manner as per the policies of the organization.

The set of interrelated management activities which are involved in manufacturing certain
products is called production management and for service management, the corresponding set
of management activities are called as operation management.

E.S. Buffa defines production management as follows: 'Production management deals with
decision-making related to production processes so that the resulting goods or services are
produced according to specifications, in the amount and by the schedule demanded and out of
minimum cost'

Operations Management, according to. Joseph G. Monks is the process whereby resources,
flowing within a defined system, are combined and transformed by a controlled manner to add
value in accordance with policies communicated by management.

Examples: (Products/goods) Boiler with a specific capacity, Constructing flats, Car, bus, radio,
television.
Examples: (Services) Medical facilities, Travel booking services

Objectives of Production and Operation Management:

• The main objectives of production and operation management may be one of the
following –

(a) Efficiency: To increase output for a given input

(b) Productivity: Increased production using given amount of resources
(c) Economical: Make sure that the production is more economical that is, it is done at a
reduced cost

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 (d) Quality: Aim to produce good quality products at a lesser cost
(e) Reduced processing time: Look for increased production within a given amount of time

Production - It is a process by which, raw materials & other inputs are converted into finished
products.

Nature of Production: - The nature of production can be better understood, if we view the
manufacturing function from 3 angles:

(1) Production system

(2) Production as an organizational function &
(3) Decision – making in production.

(1) Production System :

✓ A “Production System” is a system whose function is to transform an input into a desired

output by means of a process (the production process) and of resources.

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 ✓ The definition of a production system is thus based on four main elements: the input, the
resources, the production process and the output.
✓ It refers to manufacturing subsystem that includes all functions required to design,
produce, distribute and service a manufactured product.
✓ So this system produces goods and/or services on a continuous and/or batch basis with or
without profit as a primary objective

Production System Model:

• The production system of an organization is that part, which produces product.

• The resources, flowing within the definite system are combined and transformed in a
controlled manner to add value.
• Production system consists of input at one end and output at other.
• The input and output are connected by series of operations or processes, stages and
inspections.
• Simple Input-Process-Output model of production system is shown in following diagram.

3
For Example:

Manufacturing unit: Production of machine or engine component.

INPUT – Material like M.S, Steel, Screws (if required), machines etc.

PROCESS – Machining, Grinding etc.

OUTPUT – Desired engine component.

• Production system - A system whose function is to convert a set of inputs into a set of
desired outputs.
• Conversion sub-system - A sub-system of the large production system where, inputs are
converted into outputs.
• Control sub-system - A sub-system of the larger production system where, a portion of
the output is monitored for feedback signals to provide corrective action, if required.

EXAMPLES OF PRODUCTION SYSTEM:

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 (2) Production as an organizational function :

✓ Production is the functional area that is responsible for turning inputs into finished
outputs through a series of production processes and is present in all organizations.
✓ The production manager is responsible for making sure that the raw materials are
provided and made into finished goods effectively and is hence present in every
organization and plays an integral role in achieving objectives of that organization.

(3) Decision making in production :

✓ Operations and production managers are required to make a series of decisions in the
production function.
✓ They plan, organize, staff, direct and control all the activities in the process of converting
all the inputs into finished products.
✓ The decisions made by operations managers about the activities of production systems
tend to fall into three general categories –

1. Strategic - decisions relating to products, processes and manufacturing facilities.

These decisions are major ones, having strategic importance and long-term
significance for the organization.

2. Operating - decisions relating to planning production to meet demand. These

decisions are necessary in order to ensure that, the ongoing production of goods and
services meets the market demand and provides reasonable profits for the
organization.

3. Control - decisions relating to planning and controlling operations. These decisions

concern the day to day activities of workers, quality of products and services,
production and overhead costs and maintenance of machines.

Importance of Production Function:

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 • Aim of production function is to add value to product or service which will create a
strong and long lasting customer relationship or association.
• Firms look to production function to achieve competitive advantage - shorter new product
lead time, more inventory turns, shorter manufacturing lead time, higher quality, greater
flexibility, reduced wastage, etc.
• Standard of living of people depends on production of goods & services. More the
production, higher the standard of living of the people.

Why is Production Management Important?

Without effective floor-level management of production processes, error and inefficiency would
be more common within a factory. There are other reasons that production management is
important to business operations:

1. Reduces Manufacturing Cost – By maximizing outputs while minimizing inputs,

production management lowers the cost required to produce finished products. This can
be used to improve profit margin, or it may be passed onto the customer to ensure a
competitive advantage.

2. Improves Competitiveness – Knowing that the right products are available on time and
will be delivered on schedule means that a company is always in the game in any
market.

3. Accomplishes Business Objectives – Production management helps companies produce

finished goods efficiently. Because these finished products are always made with high
quality and delivered when needed, businesses can leverage those things to grow the
business, secure capital for improvement, and increase customer satisfaction.

4. Improves Brand Image – Many manufacturing companies today operate some or all
their production on a Direct to Consumer (D2C) basis. As a result, branding and brand
image have become important. Sound production management means that customers rely
on products and can have confidence in their quality and availability thus improving

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 brand image. Overall, a good brand image is important whether your products are
Engineer-to-Order (ETO), Make-to-Order (MTO), or Make-to-Stock (MTS).

5. Optimizes Use of Resources – Production management means that labor, equipment,

and resources are optimized in the production effort. This can lower waste levels and
create an environment for employees that is positive and well balanced

Scope of Production and Operation Management:

Due to the dynamic change in the business environment, the scope of production and operation
management has increased. Following are the activities which are included under production and
operations management functions:

1. Facility Location - Selecting appropriate location for production is a long term capacity
decision which involves a commitment about the geographically static factors that affect
a business organization. It deals with the questions such as ‘where our main operations
should be based?’

2. Plant layouts and material handling - Deciding upon the machines, equipment and
necessary devices which could lead to effectual and desired production in the most
economical way. Preparation of plan layout for the establishment of machines in the
required sequence. Storage of material and handling it in most effective way to avoid the
wastage and delivery at the work centers as and when required.

3. Product design – Deals with conversion of ideas into reality. Every business
organization have to design, develop and introduce new products as a survival and
growth strategy. This stage involves designing the product and conceive the idea about its
production.

4. Process design – It is a macroscopic decision making of an overall process route for

converting the raw material into finished goods. These decisions encompass selection of
a process, choice of technology, process flow analysis and layout of the facilities.
Determination of the production process is most relevant and efficient in the given state
of affairs.

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 5. Production and planning control – It can be defined as the process of planning the
production in advance. Planning the production and its various aspects how, when and
where producing a particular product or its assembly will be done.

6. Quality control – It may be defined as a system that is used to maintain a desired level of
quality in a product or service. Controlling the production and ensuring the quality by
setting the check points and taking the periodic measurements of the current
performance.

7. Materials management – It is that aspect of management function which is primarily

concerned with acquisition, control and use of materials needed. Hence involves
managing the inventories of raw material, semi-finished and finished goods in a way that
neither excessive money nor the required material is wasted. One of the main objectives
here is to minimize cost.

8. Maintenance management - Analysis the deviations and formulating the corrective

measures to stay in track with planned quality, time-schedule and predetermined cost
schedules.

References:

https://www.ques10.com/p/39783/explain-production-system-with-block-diagram-also-/

https://theintactone.com/2018/02/21/om-u1-topic-1-nature-and-scope-of-production-and-
operation-management/

https://www.yourarticlelibrary.com/production-management/functions-and-scope-of-production-
management/57395

https://theintactone.com/2019/06/16/pom-u1-topic-1-definition-objectives-scope-and-functions-
of-production-operation-management/

8
DEPARTMENT OF MANAGEMENT SCIENCES (PUMBA)

SAVITRIBAI PHULE PUNE UNIVERSITY

Subject:

PRODUCTIONS MANAGEMENT

Topic:

METHODS OF MANUFACTURING

Submitted by:

Mukul Gupta (20014)

Under the Guidance of:

Dr Dattatray Mane

1
 Assignment no: 1

Q. Explain Methods of Manufacturing.

Manufacturing is the making of goods by hand or by machine that upon completion the
business sells to a customer. Items used in manufacture may be raw materials or component
parts of a larger product. The manufacturing usually happens on a large-scale production line
of machinery and skilled labour.

Factors affecting selection of Methods of Manufacturing: -

• Effect of Volume & Variety

• Capacity of plant
• Flexibility
• Lead time
• Efficiency
• Environment

Classification of Manufacturing Process: -

❖ Intermittent Production
o Project Production
o Jobbing Production
o Batch Production
❖ Continuous Process
o Mass & Flow Production
o Process Productions

Project Production:

◼ Operations of such products are carried out in fixed position assembly type of layout
◼ EX.
◼ Construction of Highways, Bridges, Flyovers.
◼ Building of Ships & Aircrafts.

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 ◼ Characteristics:
◼ Short life cycle-
Short Product Life Cycle as only a single product in the form of Project is
designed & delivered.
◼ Product is very large:
Product is huge in terms of size. Usually, a single product is being
manufactured. It requires huge amount of Man, Money, Material
◼ Non uniform requirements of resources:
Different types of Raw material are required during the process. For example,
in project like building we initially need construction material, then followed by
electric connection & plumbing etc.
◼ Involvement of different agencies:
Different agencies are involved based upon the stages in which the process is.
Ex. Agencies like construction, Plumbing, Carpentry etc.
◼ ‘Fixed position’ layout:
Layout depends upon the design of product. The ship or Building or Flyover
remains at a fixed position based upon which process layout is decided
◼ High cost over runs:
High cost is required for trail runs during the process hence usually such
incidents are avoided.
◼ Scheduling & control difficult:
There is no fix schedule for each step. As a single product is being manufactured
planning & execution at each step is required.

Jobbing Production:

◼ A job shop manufacturing business contracts to make to order custom products in

accordance with designs supplied by the customers.

◼ Ex. Manufacture of Jigs & Fixtures

◼ Characteristics:

◼ Organization simple:

Simple in the terms there is a single Job comes to the shop on which the crew
has to work based upon the requirement.

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 ◼ Multiple workers skills:

There are General purpose machines & different variety of Jobs which a single
worker does, hence workers need to ne multiskilled.

◼ Work completed / value added rapidly:

Value of the final product goes on increasing.

◼ Easy to handle customization:

A lot of customization is possible as there is huge personalization in the type of

work which is being done at the shop floor.

◼ Easy to handle variety

Variety is very high in case of Job shop as

◼ Low equipment utilization

Less number of equipment & more labor-intensive work is carried out.

◼ High WIP inventory

Work in Process inventory is very high. The main reason is a single job me
require more than one day.

◼ Small production run:

As the variety is very high volume is very low. Less or no repetition of job is
carried out.

◼ Flow of materials highly discontinuous:

There is no proper or fixed flow of material. Whole flow is randomized based

upon the requirement. The layout designed in such case is highly flexible.

◼ Equipment chosen for flexibility:

General purpose machines are installed as there is no fixed or proper flow of

material & there is huge variety. Process flow is determined based upon the Job.

◼ Plant Layout:

◼ similar machine’s & services are located together.

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 ◼ Nonstandard items hence usually not produced in high volume.

◼ Factory should offer a great deal of flexibility.

◼ Purchase G.P. M’s & equipment so variety of operations can be performed.

◼ People’s & equipment’s performing similar functions are grouped in the same
area.

Batch Production:

◼ Make some intermediate variety of products & produce an intermediate volume of each.
Especially true where there is high volume & repeat business.
◼ Ex. Manufacture of Tablets & Capsule.
◼ Characteristic:
◼ Organizationally difficult
Batch manufacture is difficult as it has high volume & high variety. Process
needs to be optimized based upon the product being manufactured.
◼ Use of specialized skills
As process gets divided into various steps, labor with specialized skills at that
machine or process is employed.
◼ Possibility of high equipment utilization:
High number of equipment is required as volume is high. As there is variety
multiple equipment are also required to cope up with the demand.
◼ Probability of poor work flow:
As process changes with the change in product work flow gets disturbed. There
is high work in process inventory because the process is multistep.
◼ Value added slowly / work completed slowly
Value of product increases with increase in number of intermediatory steps.
◼ Flexibility of production schedules
Production process is flexible, the process is optimized based upon the required
volume & variety.
◼ Low material handling
JIT (Just in time) is followed in case of Batch Manufacturing.
◼ Comparatively large W I P:
This is because of number of steps in the process.

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 ◼ Smaller manufacturing cycle time
Time cycle is divided into multiple steps.
◼ Investment is aimed at reducing the process time yet maintaining flexibility.

Mass & Flow Production:

◼ Produce a high volume of the same or similar units of product that follow the same path
through the production steps.

◼ Ex. automobile assembly line (car production line)

◼ Characteristic:
◼ Products made to stock:
Huge volume is manufactured. This volume need to be stocked sometimes for
future demand.
◼ Production equipment performs same operation repeatedly:
Special purpose machines are installed. They repeatedly perform same task to
produce high volume & better quality.
◼ Special purpose machines used:
Machines designed to do particular task are equipped.
◼ Specially designed material handling equipment.
SPM are employed.
◼ Schedules are expressed as rates, specific number of units per hour or per day:
Production Scheduled by either number of products manufactured per hour &
based upon which number of hours are decided.
◼ Raw material inventory ensured:
High raw material demand is there as continuous process is carried out. Raw
material should not fall short of as it will stop the production process.
◼ Low work –in- process:
As process is continuous WIP inventory is low.

Process Manufacturing:

◼ Single product produced & stocked waiting for sales. Flexibility of such plant is zero.

◼ Ex. sugar, steel, cement, paper, coke, oil refinery etc.

◼ Characteristics:

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◼ Requires high capital expenditure

Require automation & SPM hence capital incorporated is high as compared to

other.

◼ Needs careful plant design:

Plant design should be based on unidirectional & steady flow of material.

◼ High automation of process control:

Complete automation of process is done, this results in high yield & high
production rate.

◼ Layout of plant & equipment – material flow is unidirectional & at the steady
rate:
Parameters like line balancing are consider to avoid material stopping during
the process.

◼ S P M’S & equipment with built- in controls to measure output & regulate input
are employed:

Autoregulatory equipment are used to avoid more human intervention. Only the
basic setup needs to be done by operator after which the machine does its job.

◼ Material handling is highly mechanized (e.g., conveyor) & (automatic transfer

machines):

As already mentioned, process require high automation to increase yield of

production, equipment such as conveyer & auto transfer machines are installed.

◼ Manufacturing cycle time almost zero:

As the process is continuous, we get a final product each time raw material
enters the production process, hence cycle time appears zero.

◼ Semi- skilled – work men & skilled technicians:

Semiskilled workers are needed to perform labor jobs like example in sugarcane
industry, worker are employed to handle the sugarcane.

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 Technician’s job is to handle the automated machines. A proper training is
provided to them regarding the functionality & basic maintenance-repair of the
machine.

◼ Supervisor in process production is highly qualified

Supervisor need to be highly qualified as he should be aware all the production

bottlenecks.

◼ W I P inventory is very small as material flow is continuous:

There is almost no WIP as the flow of process is continuous, the material doesn’t
stop it doesn’t go to WIP inventory. There is high finished product inventory.

8
DEPARTMENT OF MANAGEMENT SCIENCES (PUMBA)

SAVITRIBAI PHULE PUNE UNIVERSITY

Subject:

PRODUCTION MANAGEMENT

Submitted by:

Harshda Kshirsagar (20024)

Under the Guidance of:

Dr. D. R. Mane
 Assignment No – 1

PLANT LOCATION

Plant location refers to the choice of the region where men, materials, money, machinery
and equipment brought together for setting up a business or factory. A plant is a place
where the cost of the product is kept to low in order to maximize gains. Identifying an
ideal location is very crucial, it should always maximize the net advantage, must
minimize the unit cost of production and distribution. Plant location decisions are very
important because once the plant is located at a particular site then the organization has
to face the pros and cons of that initial decision.

Factors affecting the plant location:

Decisions regarding selecting a location need a balance of several factors. These are
divided into Market factors, Tangible factors (Primary factors) and Intangible factors
(Secondary factors) all these factors influence the business in the long run.

Market factors:

Location of demand and Competition these two factors are responsible for market factors.

1) Demand forecasting helps determine where goods or services are most likely to be sold.

2) Convenience & inconvenience of location may affect the number of potential customers &
thus revenue.

3) Companies with high –volume purchases are changing their practices to favour suppliers
located closer to the purchaser’s plant.
Tangible factors or Primary factors

1) Availability of raw materials

Availability of raw materials is the most important factor in plant location decisions. Usually,
manufacturing units where there is the conversion of raw materials into finished goods is the
main task then such organizations should be located in a place where the raw materials
availability is maximum and cheap.

2) Nearness to the market

Nearness of market for the finished goods not only reduces the transportation costs, but it can
render quick services to the customers. If the plant is located far away from the markets then
the chances of spoiling and breakage become high during transport. If the industry is nearer
to the market then it can grasp the market share by offering quick services.

3) Availability of labour

Another most important factor which influences the plant location decisions is the availability
of labour. Human resource can be divided into managerial skills, technological invention and
labour supply. The combination of the adequate number of labour with suitable skills and
reasonable labour wages can highly benefit the firm. However, labour-intensive firms should
select the plant location which is nearer to the source of manpower.

4) Transport facilities

In order to bring the raw materials to the firm or to carrying the finished goods to the market,
transport facilities are very important. Depending on the size of the finished goods or raw
materials a suitable transportation is necessary such as roads, water, rail, and air. Here the
transportation costs highly increase the cost of production, such organizations can not
complete with the rival firms. The point considered is transportation costs must be kept low.
It can be classified as Market oriented location and Material oriented location.

A) Market Oriented Location- It includes the information if products are perishable,

extremely heavy or bulky. Here rapid delivery is a condition of sale.
B) Material Oriented Location- It has single source as raw material. It spreads the product in
multiple directions. Example – Paper mill.

5) Availability of fuel and power

Unavailability of fuel and power is the major drawback in selecting a location for firms. Fuel
and power are necessary for all most all the manufacturing units, so locating firms nearer to
the coal beds and power industries can highly reduce the wastage of efforts, money and time
due to the unavailability of fuel and power.

6) Availability of water

Depending on the nature of the plant firms should give importance to the locations where
water is available.

For example, power plants where use water to produce power should be located near water
bodies.

7) Availability of finance

Finance is the most important factor for the smooth running of any business; it should not be
far away from the plant location. However, in the case of decisions regarding plant location,
it is the secondary important factor because financial needs can be fulfilled easily if the firm
is running smoothly. But it should be located nearer to the areas to get the working capital
and other financial needs easily.

8) Taxes:

Tax concession to attract business & industries Tax exemption or reduction for new
businesses. Extent of company’s investment will influence the relative importance of taxes in
selection of a location.
Intangible or Secondary factors

1) International consideration:

Companies considering foreign location must assess. The important aspects that needs to be
considered are trade policy, language of foreign country, culture that the firm follows. All
these should be coordinated with having proper monetary system.

2) Suitability of climate:

Climate is really an influencing factor for industries such as agriculture, leather, and textile,
etc. For such industries extreme humid or dry conditions are not suitable for plant location.
Climate can affect the labour efficiency and productivity.

3) Government policies

While selecting a location for the plant, it is very important to know the local existed
Government policies such as licensing policies, institutional finance, Government subsidies,
Government benefits associated with establishing a unit in the urban areas or rural areas, etc.

4) Competition between states

In order to attract the investment and large scale industries various states offer subsidies,
benefits, and sales tax exemptions to the new units. However, the incentives may not be big
but it can help the firms during its start-up stages.

5) Availability of facilities

Availability of basic facilities such as schools, hospitals, housing and recreation clubs, etc.
can motivate the workers to stick to the jobs. On the other hand, these facilities must be
provided by the organization, but here most of the employees give preference to work in the
locations where all these benefits/facilities are available outside also. So while selecting plant
location, organizations must give preference to the location where it is suitable for providing
other facilities also.

6) Disposal of waste
Disposal of waste is a major problem particularly for industries such as chemical, sugar, and
leather, etc. So that the selected plant location should have provision for the disposal of
waste.

Errors of site selection:

Site selection is vital for optimising a manufacturer’s competitiveness. Today, successful site
selection requires attention to many qualitative and quantitative variables. Those involved in
selection must consider a potential site’s attributes and how those will affect ongoing costs,
profits, product quality, logistics and the supply chain.

These are main errors that may occur during site selection:

1) Failing to get key decision-makers to agree on search parameters- One of the most
important tasks in any site-selection process is to make sure all corporate decision-makers are
aware of and agree to key search parameters. This alignment must occur before their search
begins, to avoid wasting time, money and other resources evaluating marginal or otherwise
unsatisfactory location.

2) Choosing a site with inadequate labour and talent- Manufacturing investments today are
increasingly capital intensive and require access to employees with sophisticated skillsets.
Verifying an adequate short- and long-term labour force is one of the most significant factors
for today’s site-location projects; in the future, the importance of qualified labour will only
increase. Selecting a site in an area without an adequate labour force is a major error, often
resulting in higher human resources costs that will have a long-term negative impact on
quality and production efficiency.

3) Choosing a site based on the most generous incentive offer- Site-location incentives are an
important consideration, and naturally most companies want to maximise the value of
incentives. However, a common error is selecting a site based on the best incentive package,
rather than selecting the one best aligned with a company’s ongoing operational needs.

4) Not understanding the usable value and cost of securing incentives- Most states and
communities are extremely aggressive in assembling incentive packages that present very
attractive savings. But without careful analysis, the estimated value of incentives often appear
higher than what can actually be realised.

5) Choosing a site that is too small- Committing to a site that is too small can reduce the
success of the initial start-up and limit future expansion. Selecting a site that has the size to
accommodate a best-case growth scenario while maintaining an adequate buffer to provide
privacy from future commercial or residential encroachment is important.

6) Narrowing to a single proposed site prior to final selection- For the best site search results,
the selection team should narrow the list of candidate sites until two or three sites remain,
preferably in competing locations. All of these sites should be entirely acceptable as a final
location. Narrowing to one site too soon creates the risk that if a fatal flaw is found in that
site, the search must begin again.
7) Preference for acquiring an existing structure (usually at an imaged bargain) that is
improperly located or not designed for the most efficient production.

8) Choice of community with low cultural & educational standards, so that key
administrative & technical personnel eventually accept employment elsewhere.

STEPS FOR ECONOMIC SURVEY FOR SITE SELECTION:

Step 1: Prepare a list of relevant factors.

Step 2: Estimate expenses on material, transport, wages, Power for each location.

Step 3: Collect data on intangible factor’s (community attitude).

Step 4: Analyse tangible data for each location & calculate rate. . Of return on investment.

Step 5: Select provisionally a location based on financial data.

Step 6: Compare the intangible data for different locations &. Select optimal location
considering tangible & intangible.

References:

https://www.google.com/url?sa=t&source=web&rct=j&url=https://myventurepad.com/plant-
location-decisions-factors-affecting-plant-location

https://www.fdiintelligence.com/article/66342
DEPARTMENT OF MANAGEMENT SCIENCES (PUMBA)
SAVITRIBAI PHULE PUNE UNIVERSITY

Subject
Production Management

Submitted By
Tahura Makandar
Roll No – 20027

Under the guidance of

Dr. D R. Mane
 ASSIGNMENT 1
PLANT LOCATION

Plant location- decision is related to the choice of an appropriate geographical site for locating
various manufacturing and service facilities of an organization. Location decisions are an
integral part of designing a supply chain for an organization as it determines the flow of
materials from the raw material suppliers to the factories and finally to the customers. It affects
the profitability of the firm. For example: if locating manufacturing facilities are far away could
raise the logistics and distribution costs. And if locating manufacturing facilities in regions with
high cost factor will make the firm unattractive as the cost of manufacturing will turn out to be
high.
Importance of location –
 Location of the plant influences capital investment and operating costs. Location decision
also affects the efficiency, effectiveness, productivity and profitability. Location decision
should be taken carefully wrong location may cause higher investments, higher cost,
difficulty in transportation, frequent interruptions of production etc.
 Market trend and competition regarding product to be manufactured also determines the
location.
 Location fixes some of the physical factors of the overall plant design.

Factors affecting the plant location:

Decisions regarding selecting a location need a balance of several factors. These are divided into
Market factors, Tangible factors (Primary factors) and Intangible factors (Secondary factors) all
these factors influence the business in the long run.
Market factors: Location of demand and Competition these two factors are responsible for
market factors.
1) Demand forecasting helps determine where goods or services are most likely to be sold.
2) Convenience & inconvenience of location may affect the number of potential customers &
thus revenue.
3) Companies with high – volume purchases are changing their practices to favor suppliers
located closer to the purchaser’s plant.
Tangible factors (Primary Factors)
Tangible factors are those factors that are readily identifiable and precisely measured. They
include utilities, labor, raw materials, taxes, depreciation, and another costs that management can
identify.
1. Raw materials - Nearness of the plant to the sources of raw materials would reduce the
cost of production of the industry. For most of the major industries, the cost of raw
materials form the bulk of the total cost. Most of the agro-based and forest-based
industries are located in the vicinity of the sources of raw material supply as they are
perishable. Transport cost: Forest and mineral industries : (loss of weight)

2. Energy availability and cost - availability of cheap power, Water, wind, coal, gas, oil
and electricity are the chief sources of power. Less percent use of electricity and natural
gas is need to save on cost.

3. Human Resource - it is divided into technological skills, managerial skills and labour
supply. Adequate supply of cheap and skilled labour is necessary for and industry. There
should be sufficient applicants for the job. There are 3 types of labour i.e High skilled
labour, semiskilled and unskilled labour. The location of technical training should be near
the industry.

4. Transportation - The transportation with its three modes, i.e., water, road, and rail
collectively plays an important role. Transportation should be flexible and with minimum
cost. Example: The heavy concentration of cotton textile industry in Bombay has been
due to the cheap and excellent transportation network both in regard to raw materials and
markets. It includes market oriented location where rapid delivery of product is a
condition of sale and Material oriented location where products is shipped in many
directions.

5. Nearness of Markets - Purchasing power- demand, ability to pay and earning capacity.
Access to markets is an important factor for the firm. Industries producing perishable or
bulky commodities which cannot be transported over long distance are generally located
in close proximity to markets. Industries located near the markets could be able to reduce
the costs of transport in distributing the finished product.

6. Site and construction cost - Cheapness of the value of the site, may require more
expenditure to prepare site and construct building.

7. Availability of finance - Financial backing is required to develop an industry. Capital is

the most mobile of all industrial resources. The availability of capital at cheap rates of
interests and in adequate amount is a dominating factor influencing industrial location.

8. Taxes - Tax concessions are used to attract business and industries .Extent of companies
investment will influence the relative importance of taxes in selection of a location.
 9. Water availability and cost - Availability of water is another factor that influences the
industrial location. Many industries are established near rivers, canals, and lakes, because
of this reason. Iron and steel industry, textile industries and chemical industries require
large quantities of water, for their proper functioning.

Intangible or Secondary factors

1. International consideration - Companies considering foreign location must assess. The
important aspects that needs to be considered are trade policy, language of foreign country,
culture that the firm follows. All these should be coordinated with having proper monetary
system.
2. Climate - Climate is really an influencing factor for industries such as agriculture, leather,
and textile, etc. For such industries extreme humid or dry conditions are not suitable for plant
location. Climate can affect the labour efficiency and productivity.
3. Government policies - While selecting a location for the plant, it is very important to
know the local existed Government policies such as licensing policies, institutional finance,
Government subsidies, Government benefits associated with establishing a unit in the urban
areas or rural areas, etc.
4. Competition - between states In order to attract the investment and large scale industries
various states offer subsidies, benefits, and sales tax exemptions to the new units. However,
the incentives may not be big but it can help the firms during its start-up stages.
5. Availability of facilities- Availability of basic facilities such as schools, hospitals, housing
and recreation clubs, etc. can motivate the workers to stick to the jobs. On the other hand,
these facilities must be provided by the organization, but here most of the employees give
preference to work in the locations where all these benefits/facilities are available outside
also. So while selecting plant location, organizations must give preference to the location
where it is suitable for providing other facilities also.
6. Disposal of waste - Disposal of waste is a major problem particularly for industries such
as chemical, sugar, and leather, etc. So that the selected plant location should have provision
for the disposal of waste.
7. Expansion potential - Facilities for expansion should be provided. Access to roads and
transportation facilities should also be capable of accommodating increased volume.

Errors in Selection.
1. Lack of proper Investigation & consideration of factors involved.
 2. Personal likes & prejudices of key executives or owners over riding impartially
established facts.
3. Reluctance of key executives to move from traditional established home ground to new &
better locations.
4. Preference for acquiring an existing structure (usually at a bargain) that is improperly
located or not designed for the most efficient production.
5. Choice of community with low cultural & educational standards. Thus, Plant location
should be selected on the basis of the factors mentioned in write up, as this study would
help an entrepreneur to select a proper plant location.
6. Choosing a site that is too small- Committing to a site that is too small can reduce the
success of the initial start-up and limit future expansion
7. One of the most important tasks in any site-selection process is to make sure all corporate
decision-makers are aware of and agree to key search parameters

Example of Milk Dairy –

1. Milk dairy requires milk as raw material and hence the company has to situate near the
raw material location that is near the villages as milk is a perishable commodity.
2. Transportation of milk requires special tankers hence the transportation costs much
higher if the plant location is away from the source of material.
3. The factory also has to be situated near to the market as it is not possible to transport milk
to distance locations as it is perishable.
4. Hence while selection the location it becomes very important to analyze all the
parameters of site selection.
Department of Management Sciences (PUMBA),
Savitribai Phule Pune University -07

Subject:
Production Management

Topic
Plant Layout

Submitted by,
Sumit Patil
Roll No. 20039

Under the guidance of

Dr.Dattatray Mane
 Assignment No-1

Plant Layout: Concept, Objectives, Principles and Types

What is Plant Layout:

• Plant layout is a plan for effective utilisation of facilities for the manufacture of

products; involving a most efficient and economical arrangement of machines,

materials, personnel, storage space and all supporting services, within available floor

space.

• “Plant layout is a plan of optimum arrangement of facilities including personnel,

equipment’s, storage space, material handling equipment and all other supporting

services along with the decision of best structure to contain all these facilities.”

Certain useful observations on the concept of plant layout are as follows:

(i) Plant layout is complex in nature; because it involves concepts relating many fields as

engineering, architecture, economics and business management.

(ii) Many of managers now realize that after a site for plant location is selected; it is better to

develop layout and build the building around it – rather than to construct the building first

and then try to fit the layout into it.

Objectives/Advantages of Plant Layout:

• Provide enough production capacity

• Reduce material’s handling cost

• Conform to site & building constraints

• Allow space for production machine’s

• Allow high labour, machine, space utilization & productivity

• Provide for volume & product flexibility
 • Provide space for restrooms

• Provide for employee safety & health

• Allow ease of supervision

• Allow ease of maintenance

• Control capital investment

• Streamline flow of materials through the plant

• Minimise material handling

• Facilitate manufacturing progress by maintaining balance in the processes

• Maintain flexibility of arrangements and of operation

• Maintaining high turnover of in-process inventory

• Effective utilisation of men, equipment and space

• Increase employee morale

• Minimise interference (i.e. interruption) from machines

• Reduce hazards affecting employees

• Hold down investment (i.e. keep investment at a lower level) in equipment.

Principles of Plant Layout:

(i) Principle of Minimum Movement:

Materials and labour should be moved over minimum distances, So it will be saving cost and

time of transportation and material handling.

(ii) Principle of Space Utilization:

All available cubic space should be effectively utilized both horizontally and vertically in

each direction.

(iii) Principle of Flexibility:

Layout should be flexible enough to be adaptable to changes required by technological

development.
(iv) Principle of Interdependence:

Interdependent operations and processes should be located in close proximity hence to

minimize product travel.

(v) Principle of Overall Integration:

All plant facilities and services should be fully integrated into a single operating unit; to

minimize cost of production.

(vi) Principle of Safety:

There should be in-built provision in the design of layout, to provide for comfort and safety

of workers.

(vii) Principle of Smooth Flow:

The layout should be so designed as to reduce work bottlenecks and facilitate uninterrupted

flow of work throughout the plant.

(viii) Principle of Economy:

The layout should aim at effecting economy in terms of investment in fixed assets.

(ix) Principle of Supervision:

A good layout should facilitate effective supervision over workers.

(x) Principle of Satisfaction:

A good layout should boost up employee morale, by providing them with maximum work

satisfaction.
Types of Plant Layout:

Two basic plans of the arrangement of manufacturing facilities are – product layout and

process layout. The only other alternative is a combination of product and process layouts, in

the same plant.

Following is an account of the various types of plant layout:

a)Job shop layout:

In this type of layout, all machines performing similar type of operations are grouped at one

location i.e. all lathes, milling machines etc. are grouped in the shop and they will be

clustered in like groups.

Lathe’s Assembly

Milling’s

Grinder’s Inspection Shipping and Painting

Welder’s receiving

Advantages:

1. Greater flexibility with regard to work distribution to machinery and personnel. Adapted to

frequent changes in sequence of operations.

2. Lower investment due to general purpose machines; which usually are less costly than

special purpose machines.

3. Higher utilisation of production facilities; which can be adapted to a variety of products.

4. Variety of jobs makes the work challenging and interesting.

5. Breakdown of one machine does not result in complete stoppage of work.

Disadvantages:

1. Lack of materials handling efficiency, back tracking & long movements may occur in

the handling of materials.

2. Lack of efficiency in timing, work must wait between tasks

3. Complication of production planning & control

4. Cost:- workers must have boarder skills & must be paid higher wages than assembly-

line workers

5. Lowered productivity because each job is different, it requires different setups &

operator learning.

Suitability of job shop layout:

Job shop layout is suitable in the following cases, where:

1. Non-standardised products are manufactured; as the emphasis is on special orders.

2. It is difficult to achieve good labour and equipment balance.

3. Production is not carried on a large scale.

4. It is difficult to undertake adequate time and motion studies.

5. It is frequently necessary to use the same machine or work station for two or more difficult
operations.

6. During the sequence of operations, many inspections are required.

7. Process may have to be brought to work, instead of “vice-versa”; because materials or

products are too large or heavy to permit bulk or continuous handling by mechanical means.
(b) Product Layout (or Line Layout):

In this type of layout, all the machines are arranged in the sequence, as required to produce a

specific product. It is called line layout because machines are arranging in a straight line. The

raw materials are fed at one end and taken out as finished product to the other end.

Special purpose machines are used which perform the required jobs (i.e. functions) quickly

and reliably.

• Machines & auxiliary services are located according to the processing sequence of the

product’.

• Machines & auxiliary services are located according to the processing sequence of the

product’.

• S.P.M’s & equipments that can quickly & reliably perform a specific task are

employed.

• Equipments are closely placed along a line in the sequence

• Object is to make the path of movement no longer than necessary

• Internally produced components or subassemblies should be made near the location

where they are used in the process

• If items are stored they should be stored close to the area it is used.

Advantages:

1. Reduced material handling cost due to mechanized handling systems and straight flow

2. Perfect line balancing which eliminates bottlenecks and idle capacity.

3. Short manufacturing cycle due to uninterrupted flow of materials

4. Simplified production planning and control; and simple and effective inspection of work.

5. Small amount of work-in-progress inventory

6. Lesser wage cost, as unskilled workers can learn and manage production.

Disadvantages:

1. Lack of flexibility of operations, as layout cannot be adapted to the manufacture of any

other type of product.

2. Large capital investment, because of special purpose machines.

3. Dependence of whole activity on each part; any breakdown of one machine in the sequence

may result in stoppage of production.

4. Same machines duplicated for manufacture of different products; leading to high overall

operational costs.

5. Delicate special purpose machines require costly maintenance / repairs.

Suitability of product layout:

Product layout is suitable in the following cases:

1. Where one or few standardized products are manufactured.

2. Where a large volume of production of each item has to travel the production process, over

a considerable period of time.

3. Where time and motion studies can be done to determine the rate of work.

4. Where a possibility of a good balance of labour and equipment exists.

5. Where minimum of inspection is required, during sequence of operations.

6. Where materials and products permit bulk or continuous handling by mechanical parts.

7. Where minimum of set-ups are required.

(c) Group layout or Combination Layout:

In practice, plants are rarely laid out either in product or process layout form. Generally, a

combination of the two basic layouts is employed; to derive the advantages of both systems

of layout. For example, refrigerator manufacturing uses a combination layout.

Process layout is used to produce various operations like stamping, welding, heat treatment

being carried out in different work centres as per requirement. The final assembly of the

product is done in a product type layout.

Group technology increases:

• Component standardization
• Reliability of estimate
• Effective machine operations
• Productivity
• Costing accuracy
• Customer service
• Order potential

Group Technology Decreases:

• Planning efforts
• Paper work
• Setting time
• Down time
• Work in progress
• Work movement
• Overall production time
• Finished part stock
• Overall cost

(d) Fixed Position Layout:

It is also called stationary layout. In this type of layout men, materials and machines are
brought to a product that remains in one place owing to its size. Ship-building, air-craft
manufacturing, wagon building, heavy construction of dams, bridges, buildings etc. are

typical examples of such layout.

e) Cellular Layout

Cellular manufacturing is a manufacturing process that produces families of parts within a

single line or cell of machines operated by machinists who work only within the line or cell.
A cell is a small scale, clearly-defined production unit within a larger factory.

REASONS FOR CM LAYOUT BE ATTEMPTED ARE:

• Machines changeover is simplified.
• Training periods for workers are shortened.
• Reduce material handling costs.
• Parts can be made faster & shipped more quickly.

FACTORS THAT INFRLUENCE LAYOUT SELECTION:

• Volume of production
• As the weight of the item to be produced
• The nature of the services to be provided
• Cost of the building to house the operations
• Product mix that must share the facility.
DEPARTMENT OF MANAGEMENT SCIENCES (PUMBA)

SAVITRIBAI PHULE PUNE UNIVERSITY

Subject:

Production Management

Submitted by:

Shreyal Sethiya (20049)

Under the Guidance of:

Dr. Dattatray. Mane

 Production Planning and Control

Definition: Production planning and control (or PPC) is defined as a work process which seeks to
allocate human resources, raw materials, and equipment/machines in a way that optimizes
efficiency.

The Production planning involves the overall manufacturing/operating system of an organization

to produce a product. To plan for the operating and production system of an organization,
following activities are to be included in the production planning:

 Designing the product: It refers to the determination of shape, standard and pattern of the
product. Design of the product will influence the manufacturing cost and thereby the selling
cost of the product.

 Determining the equipment & capacity requirements: Capacity requirements planning

(CRP) is the process of discerning a firm's production capacity and whether it can meet its
production goals. Based on capacity, manufacturing process and design, the equipments
required are planned.

 Designing the layout of physical facilities & materials handling system: Facility layout can
be defined as the process by which the placement of departments, workgroups within
departments, workstations, machines, and stock- holding points within a facility are
determined.

 Determining the sequence of operations & the nature of the operations to be performed
along with time requirements: To effectively utilize the plant, the sequence of operations are
decided and with proper coordination the operations are planned to get optimum time
utilization.

 Specifying certain production quantity & quality levels: Using Capacity requirements
planning a company figures out how much product it needs to make, and determines if it has
the ability to meet its production goals. Also, the quality of product is decided and accordingly
the operations are specified.
Factors Determining Production Planning Procedures: The organization first has to decide the
product. The raw materials required, design of the product, variants if any and quality are the
factors to be studied. Once the product gets finalised, the manufacturing process of the product
is to be decided. The equipment, type of machinery, supplier of raw materials, sequence of
operations and procedure to manufacture are to be specified. Based on the volume/variety ratio,
the type of manufacturing process has to be decided. The quantity of the product to be produced
has to be planned based on which the type of machines, quantity of raw materials, plant location,
labour and cost of production will be decided. This will finally lead to a detailed plan of
production process.

Variants in Manufacturing Approach: Based on the type of product and its demand, the
manufacturing process can be decided. A) The product can be produced in batches, where they
can either be repeated at regular intervals or not, as required. B) The product may have to be
repeatedly manufactured or produced in bulk. For that, manufacturing of mass production is
required. C) Some products are added to stock and sold. The stock needs to be continuously
updated. So, process manufacturing needs to be planned.

Production Control: The production control is the function of management which plans, 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 programme.

Importance of Production Control Function: To produce the parts, assemble those and
manufacture the products of desired quality and in required quantity, it is necessary to control the
process of production. By controlling, we can achieve the set goal in time. It helps to co-ordinate,
monitor and give feedback to the manufacturing unit. The company needs to utilise all its resources
optimally. Also, to achieve the broad objectives of low cost production & reliable customer
service, production control is an important process.

Benefits of Production Control:

1. Improvements in profit: A balanced inventory of materials, parts, work in progress and

finished goods are maintained. Balanced and stabilized production can be achieved via
 production control. Maximum utilization of equipments, tooling, labour & manufacturing
& storage space, minimum investment in inventory, reduction in indirect cost, reduction in
set up cost and scrap and rework cost are all possible with the help of production control.
These will lead to minimum cost required for production, thereby, improving the profit.

2. Competitive Advantage: With proper production control system, reliable delivery to

customers within short schedules is possible. It can also lower production costs and greater
pricing flexibility. Along with this, orderly planning and marketing of new or improved
products will bring competitive advantage to the company.

Elements of production control:

 Control of planning: To assure receipt of latest forecast data from sales & production
planning, balance of material data from product engineering & routing information from
process engineering.

 Control of material: To control inventory and providing issue of material.

 Control of tooling: To check on availability of tooling.

 Control of manufacturing capacity: To check availability of equipment and labour

capacities.

 Control of activities: Release order & information at assigned times.

 Control of quality: Follow – up of progress of production.
 Control of material handling: Release orders for movement of work to ensure availability
of materials.
 Control of information: Distribute timely information & reports showing deviation from
plans.
Production Control System: A group of procedural elements that operates as a whole
consists of production control system. They decide the means of setting the system in
motion, like that for completing the production orders. Specific methods are to be decided
as per which the parameters functioning will be checked. Like, methods to determine the
lead time for production and methods to control and monitor production operations (with
respect to what, where, how and when) are to be decided. Orders are to be issued to
 production shops and the work completed has to be confirmed. Techniques for measuring
and recording data on machine utilization, scrap & indirect labor. An information system
for display, recording and retrieval as well as processing & flow of data is to be decided
for the whole system.

Factors determining production control procedures:

1. Nature of production: Production control is comparatively simpler in the continuous flow

process operation than multi-operation production. Determining the nature of production
process will help decide the control system and control procedure as it differs for every
production process.

2. Complexity of operations: Production planning & control function increases with

increase in the variety of operations. More control is required with more equiments and
more manufacturing machinery.
Factors affecting the complexity of production control procedures are:-
 Number of ultimate parts in the end product.
 Number of different operations on each part.
 Extent to which processes are dependent on the completion of previous
operations.
 Variation in production rates of machines used in the process
 Number of discrete parts & sub-assemblies.
 Degree to which customer’s order with specific delivery dates occur.
 Receipt of many small lot order’s.
3. Magnitude of operations: The size of operation (time taken) & the distance travelled by
the parts from operations to operations. If the production process is long, the control
process will become complex, while if the distance and time are less the control process
will become easier.

Objectives of production planning & control:

1) To deliver quality goods in required quantities to achieve maximum customer satisfaction
& minimum possible cost.
2) To ensure maximum utilization of all resources.
 3) To ensure production of quality products.
4) To minimize the product through-put time or production cycle time. ( average time for a
unit to move through the system)
5) To maintain optimum inventory.
6) To maintain flexibility in manufacturing operations.
7) To co-ordinate between labour & machines & various supporting depts.
8) To plan for plant capacities for future requirements.
9) To remove bottle-necks at all stages of production & to solve problem’s related to
production.
10) To ensure effective cost reduction & cost control.
11) To prepare production schedules & ensure that promised delivery dates are met.
12) To produce effective results for least total cost.
13) To ensure routes & schedules for work.
14) The ultimate objective is to contribute to the profit of the enterprise.

3 Stages in Production Planning and Control:

1. Planning: Choosing the best course of action among several alternatives for the complete
production process to obtain maximum profits with optimum utilization of resources.
2. Operations: Executing the decided plan to get optimum output in the production process.
3. Control: Maintaining the performance by comparing the actual results and keeping an eye
so that the operations run smoothly for optimum utilization and more profits.

Role of PPC in Operations Management: Based on the product design, the machinery and
equipments are to be decided. Next, the job design and process design are planned. The
equipment selection and replacement are to be decided and controlled accordingly. Labour
skills and training programme for the required labours also play an important role. Based on the
input material selection including raw material & sub-contracting, the plant selection and layout
are designed. The steps of the plan are scheduled and the implementation and controlling of the
planned schedule are maintained. Later the complete operation of production system is carried
out..
Additional control systems to be considered: The inventory control policies and quality control
policies are the legal aspects. Some other policies to be considered are production schedule
policies, productivity and cost control policies. Considering the control systems, implementing and
operating them and modifying the policies and designs as per the updates also became an important
aspect.
Importance of production planning & control department: PPC is a manufacturing tool
employed for the direction of the manufacturing operations & their co-ordination with other
activities of the firm.
R&D Department designs the product which is then shared with the Marketing Department and
PPC Department. The PPC Department further discusses with Marketing Department and
Industrial Engineering Department. The PPC Department further sends it to Purchase and
Stores Department, Inspection and Q.C. Department and Maintenance Department. The PPC
Department then shares it to the Manufacturing Department for Assembly and Fabrication related
stuff. They further send it to the Final Inspection and Acceptance Testing who then share it to the
Packaging and Dsipatching of Finished Goods. At last, the distribution to customers is done
through channels of distribution.

Scope of PPC:
 Materials: Planning & procurement for the supplies of raw materials and the quantity and
quality required.
 Methods: Choosing best method of processing depending on the quantity required and the
time available for manufacturing.
 Machines & equipment: Based on the method of processing, the equipment and machines
are to be decided, whether to choose Special or General Machines.
 Manpower: Planning of manpower having appropriate skills & expertise and giving them
training is planned.
 Routing: Determining the flow of work, sequence of operations.
 Estimating: Establishing operation times leading to fixation of performance standard both
for workers & machines.
 Loading & scheduling: Allocation of jobs to machines.
 Dispatching: Execution of the planning functions.
  Expediting: Means chasing, follow-up.
 Inspection: Inspecting whether the operations and interactions are working well.
 Evaluating: Objectives is to improve performance.
 Cost control: By wastage reduction, inventory control etc.

Phases in PPC function:

 Planning phase:
a) Pre-planning: It involves product planning & development, demand forecasting,
resources planning, facilities planning, plant planning, plant location & layout.
b) Active planning: It involves planning for quantity, determination of product mix,
routing scheduling, material planning, capacity planning and tool planning.
 Action phase:
Execution or implementation phase includes the dispatching & progressing function.
 Control phase: Includes status reporting, material control, tool control, inventory control,
quality control, labor output control & cost control.

a)ESTIMATING
PRODUCTION b)ROUTING
PLANNING c)SCHEDULING
d)LOADING

PPC DEPARTMENT a)DISPATCHING

b) EXPEDITING/ FOLLOWUP
PROGRESSING
PRODUCTION
CONTROL
c) INSPECTION

d) EVALUATION &
CORRECTIVE ACTION.

Production planning functions

1) Estimating: Deciding the quantity of products & cost involved in it on the basis of sales
forecast, estimating manpower, machine capacity & material required.
 2) Routing: Process of determining the sequence of operations to be performed in the
production process.
Route sheet contains the following information:
a) The operations required & their desired sequence.
b) Machines & equipments to be used for each operation.
c) Estimated setup time & operation time per piece.
d) Tool, jigs & fixtures required for the operations.
e) Detailed drawing of parts, sub-assemblies & final assemblies
f) Specification of raw material to be used.
g) Specification, dimensions, tolerances, surface finish.
h) Cutting speed, feed, depth of cut etc.
i) Inspection procedure & tools required for inspection.
j) Packing & handling instructions during the movement of parts & sub-assemblies
through the operation stages.
3) Scheduling: Involves fixing priorities for each job & determining the starting time &
finishing time for each operation ,starting & finishing dates for each part & sub assembly.
It’s a time table for production. The objectives of scheduling are to prevent unbalanced use
of time among work centers and debts and uilize labor such that the output is produced
within established cycle time.
4) Loading: Means loading of facility or work centre & deciding which jobs to be assigned
to which centre or machine. Loading is nothing but a process of converting operation
schedules into practice. It ensures maximum possible utilization of productive facilities &
avoids bottlenecks in production .Important to avoid over loading or under loading of
facilities.
Production control functions:
1. Dispatching: Setting production activities in motion through the release of orders (work
order, shop order) & instructions in accordance with previously planned time, schedules
& routings.
2. Expiditing/ follow-up/ progressing: It ensures that, the work is carried out as per the plan
& delivery schedules are met.
3. Scheduling: Scheduling function of PPC makes possible by determining starting &
completion date of the operations listed on the process sheet.

Example:

Production planning & control functions in process production:

In the process production type of manufacturing process, the variety is usually zero or very
low and the volume is high. So, materials control function is of crucial importance and
materials need to be planned in advance. The quantity of material, the source, the supplier
location, cost of material and cost of transportation are all required. A scientific inventory
system is necessary to operate specialized machines that are designed for a single product. The
plant or the location will decide the route and so, process planning activity is not required here.
Scheduling the activity is very simple and is merely restricted to final targets. Progressing &
expediting functions are extremely simplified as they are limited to recording of the final
production at the end of the shift.
References:

https://www.optiproerp.com/in/blog/what-are-the-steps-in-production-planning-and-
control/

https://abas-erp.com/en/erp-production-planning-
control#:~:text=Production%20planning%20and%20control%20(or,a%20way%20that%2
0optimizes%20efficiency.&text=It%20enables%20efficiency%2C%20coordination%2C
%20and,related%20data%20to%20drive%20improvement.

https://accountlearning.com/production-planning-control-meaning-objectives-elements-
stages/
Department Of Management Sciences (PUMBA)
Savitribai Phule Pune University -07

Subject:

Production Management

Submitted by
Akash Shukla (20052)
FY MBA PBT (2020-2022)

Under the guidance of

Dr. Dattatray R. Mane
 Assignment 1
Maintenance Management
Introduction:
Maintenance management deals with decision making with regards to preventive maintenance
(PM) and corrective maintenance (CM) actions and the planning and execution of the tasks
involved. A good maintenance organization provides clear roles and responsibilities, an effective
span of control, facilitation of good supervision, effective reporting, and a continuous
improvement culture.

Definition:
Maintenance is that function of manufacturing management that is concerned with the day-to-
day problem of keeping the physical plant in good operating condition. It is set of activities which
help keep plant, machinery and other facilities in good condition.

What is maintenance management?

Maintenance management involves keeping track of assets and parts. The purpose is to ensure
that production proceeds efficiently and the minimum amount of resources are wasted. This is
generally accomplished by a tailored combination of software, practices, and personnel that focus
on achieving these goals.

Why is Maintenance Management Important?

Maintenance directly impacts the long-term success of an organization. Assets that are poorly
maintained experience frequent, unexpected downtime, and cause a ripple effect. Instability,
inconsistent product quality, stopped production, and high operational costs jeopardize an
organization’s profitability and longevity.

When done properly, maintenance management keeps assets in optimum operating condition.
Less disruption in production or service leads to efficient operations, increases quality, and
improves productivity. In addition, maintenance management lowers operational costs, protects
the organization from liability, and improves environmental and personal safety.

Areas of Maintenance:

Civil maintenance: - Work undertaken to keep, restore or improve every facility, i.e., every
part of a building, its services and surrounds to a currently acceptable standard and to sustain
the utility and value of the facility.
 Mechanical maintenance: - Mechanical Technicians carry out planned or
unplanned maintenance and repair activities on a wide range of equipment e.g. pumps,
engines, turbines. Typical Day/Duties: Carries out maintenance and testing activities. Fault-
finding and repair of plant, systems and equipment.

Electrical maintenance: - The main areas of general electrical maintenance commonly

include the power outlets and surge protectors, generators and lighting systems. These supply
sources are checked for structural integrity as well as internal stability. The maintenance plan
normally includes the regular replacement of burned out fluorescent and incandescent lights.

Objectives of Maintenance Management

All forms of maintenance management share similar objectives no matter the industry, plant,
or product or service offered. The following are some objectives of maintenance management:

• Minimizing asset failure and downtime

• Extending asset life
• Planning maintenance work
• Cost control and budgeting
• Improving product quality
• Developing improved policies, procedures, and standards
• Complying with regulations
• Ensuring safety of personnel

Types of Maintenance

Planned Maintenance:
Planned maintenance refers to any maintenance activity that is planned, documented, and
scheduled. The aim of planned maintenance is to reduce downtime by having all necessary
resources on hand, such as labor and parts, and a strategy to use these resources.
There are two main types of planned maintenance. The first is planned preventive maintenance,
which is scheduled maintenance aimed at repairing assets before they fail. An example would be
conducting maintenance on a forklift after every 150 hours of operation.
The second is planned and unscheduled maintenance or corrective maintenance, which is based
on having a strategy in place to repair or replace an asset as quickly as possible when it fails.
An example would be planning to have a sufficient number of easily accessible power drills on
hand so replacing a broken one is quick and easy for a technician.

Unplanned Maintenance:
Unplanned maintenance is any maintenance task that occurs unexpectedly. It happens when there
is no formal strategy in place to address a repair, replacement, or inspection before it’s needed.
Unplanned maintenance is commonly the result of equipment failure that was not anticipated.
Preventive Maintenance:
Preventive maintenance (or preventative maintenance) is maintenance that is regularly performed
on a piece of equipment to lessen the likelihood of it failing. It is performed while the equipment
is still working so that it does not break down unexpectedly.
Preventive maintenance is a means to increase the reliability of their equipment. By simply
expending the necessary resources to conduct maintenance activities intended by the equipment
designer, equipment life is extended and its reliability is increased. In addition to an increase in
reliability, lot of amount will be saved over that of a program just using reactive maintenance.
Studies indicate that this savings can amount to as much as 12% to 18% on the average.

Advantages

1. Cost effective in many capital intensive processes.

2. Flexibility allows for the adjustment of maintenance periodicity.
3. Increased component life cycle.
4. Energy savings.
5. Reduced equipment or process failure.
6. Estimated 12% to 18% cost savings over reactive maintenance program.

Disadvantages
1. Catastrophic failures still likely to occur.
2. Labor intensive.
3. Includes performance of unneeded maintenance.

Types:

1. Predictive Maintenance: Predictive maintenance is a technique that uses data analysis

tools and techniques to detect anomalies in your operation and possible defects in
equipment and processes so you can fix them before they result in failure.
2. Routine Maintenance:
a. Running Maintenance: Maintenance work is carried out while the equipment is in
the operating condition. E.g. Greasing & lubricating the bearings
b. Shut down Maintenance: Maintenance work is carried out when the machine or
equipment is out of service (shutting down). E.g. repairing boiler tube of a boiler.

Break down or Corrective Maintenance:

Corrective maintenance is the category of maintenance tasks that are performed to rectify and
repair faulty systems and equipment. The purpose of corrective maintenance is to restore systems
that have broken down. Corrective maintenance can be synonymous with breakdown or reactive
maintenance.
 Examples of Corrective Maintenance
Corrective maintenance may be performed on a wide variety of equipment, systems, and
processes. Here are a few examples:
• Production line. A technician is performing preventive maintenance on a line of production
equipment and notices significant wear on a critical part or component. A corrective maintenance
order can be initiated to repair or restore that part within the next month.
• HVAC systems. A technician responds to an emergency heating system repair in the middle of
winter and notices partially clogged or dirty filters. This can trigger a corrective maintenance
request to clean or replace filters in the near future to improve efficiency and prevent further heat
loss.
• Public works. While performing routine roadway repairs, a technician may notice some signage
damage from a recent storm. A corrective maintenance order to restore that signage can be entered
so the work is performed at a later date.

Benefits of Corrective Maintenance

Since the focus of corrective maintenance is to restore an asset so it can be functioning properly
and efficiently, there are many benefits realized. Here are the largest benefits:

• Reduce emergency maintenance orders. If corrective orders can be executed in a timely

manner once they are initiated, it’s likely that a company can reduce the number of emergency
maintenance orders it generates. In general, corrective maintenance is less expensive
than emergency maintenance.
• Increase employee safety. In some cases, the issues identified and tagged as corrective
maintenance may have significant safety repercussions for employees working nearby the asset
in question.
• Reduce service interruptions. Since corrective maintenance work orders are scheduled and
prioritized in a computerized maintenance management system (CMMS), they can help
maintenance teams resolve problems before delays in production or service interruptions occur.
• Extend asset lifetime. Corrective maintenance, coupled with good preventive maintenance,
helps a business extend the lifetime of its assets. By noting corrective maintenance needs before
they affect other components of the machine, companies can preserve the lifespan of critical
assets.
• Optimize resource planning. Since corrective maintenance requests are sent back to a
centralized system, they can be reviewed, prioritized, and scheduled appropriately. This allows
both monetary and labor resources to be optimized throughout the organization.
• Decreases downtime. In some cases, corrective maintenance may help companies decrease
downtime. For example, if a maintenance technician is performing routine maintenance on a piece
of equipment and sees that a part is worn down, a corrective maintenance order can be placed
immediately. Ideally, that task gets scheduled and completed before breakage or downtime
occurs.
Impact of poor maintenance:
• Production capacity: Machines idled by breakdowns cannot produce, thus the capacity of the
system is reduced.
• Production costs: Labor costs per unit rise because of idle labor due to machine breakdowns.
When machine malfunctions result in scrap, unit labor and material costs increase.
• Product and service quality: Poorly maintained equipment produce low quality products.
Equipment that have not been properly maintained have frequent break downs and cannot provide
adequate service to customers.

Scope of Maintenance:
Plant maintenance services provide attention for the maintenance of machines and equipment’s
due to their frequent use and strategic position in the entire production function. A machine is the
name given to mechanism consisting of the services of sequential components each performing
its specific function which is part of the whole system or mechanism. For any machine some of
its parts are fixed while other are replaceable. Such equipment or mechanical devices and their
components require constant and continuous services such as cleaning, lubrication, repair and
replacements etc. so that their operational efficiency can be maintained. Further it may be noted
that plant maintenance service is not confined to the equipment and machines.

Under the wide spectrum of the plant maintenance service, the maintenance of the buildings
power plant, material handling equipment’s, heating and air conditioning equipment’s, waste
disposal systems, wash rooms, water supply, jigs and fixtures and fire-fighting facilities etc., also
need attention. The activity of the plant maintenance service also includes the provision of
maintenance equipment and stock of repair parts and maintenance materials.

Costs Associated with Eventual Break down of Plant:

1. Down time cost
2. Idle wages
3. Loss of materials
4. Cost of repairs
5. Opportunity cost
6. Effect on other machines
7. Expediting cost leading to overtime , offloading, job splitting
8. Accident cost
9. Added set-up cost –resetting & change of job
10. Tool breakage (failure of hydraulic system may cause loosening of job).
11. Increase in WIP investment.
12. Overtime wages paid to the maintenance.
13. Premium paid on the spare parts.
14. Reduced life of the equipment.
15. Broken promises.
16. Lowered morale.
17. Higher spares inventory investment.
18. Cost of standby equipment.
Maintenance Decisions:

• Centralized verses decentralized maintenance.

• Contract verses in-house maintenance.

• Standby equipment.

• Individual verses group replacement.

• Repair verses replacement

Maintenance policies:

Comparison of different maintenance policies

Policy Approach Goals

Reactive Run to failure (fix it when Minimize maintenance costs for
broke). non-critical equipment.
Preventive Use-based maintenance Minimize equipment
program. breakdown.
Predictive Maintenance decision based on Discover hidden failures and
equipment condition. improve reliability for critical
equipment.
Proactive Detection of sources of failures. Minimize the risk of failures for
critical systems.
Global Integrated approach. Maximize the system
productivity.
References:
managementstudyguide.com
onupkeep.com
fixsoftware.com
interplaylearning.com