Updated BES 323 - WK 1-4

1
TECHNOLOGICAL UNIVERSITY OF THE PHILIPPINES VISAYAS

Capt. Sabi St., City of Talisay, Negros Occidental
College of Engineering
Office of the Program Coordinator
LEARNING MODULE
BES 323
PRODUCTION
MANAGEMENT
AND
QUALITY CONTROL
DEPARTMENT: MECHANICAL ENGINEERING
COMPILED BY:
.ENGR. ERLYN H. MALIGAYA
2020
This module is a property of Technological University of the Philippines Visayas and intended
for EDUCATIONAL PURPOSES ONLY and is NOT FOR SALE NOR FOR REPRODUCTION.
i
VISION
The Technological University of the Philippines shall be the premier state university
with recognized excellence in engineering and technology at par with leading universities in
the ASEAN region.
MISSION
The University shall provide higher and advanced vocational, technical, industrial,
technological and professional education and training in industries and technology, and in
practical arts leading to certificates, diplomas and degrees.
It shall provide progressive leadership in applied research, developmental studies in
technical, industrial, and technological fields and production using indigenous materials;
effect technology transfer in the countryside; and assist in the development of small-and-
medium scale industries in identified growth center. (Reference: P.D. No. 1518, Section 2)
QUALITY POLICY
The Technological University of the Philippines shall commit to provide quality

higher and advanced technological education; conduct relevant research and extension
projects; continually improve its value to customers through enhancement of personnel
competence and effective quality management system compliant to statutory and regulatory
requirements; and adhere to its core values.
CORE VALUES
T - Transparent and participatory governance

U - Unity in the pursuit of TUP mission, goals, and objectives
P - Professionalism in the discharge of quality service
I - Integrity and commitment to maintain the good name of the University
A - Accountability for individual and organizational quality performance
N - Nationalism through tangible contribution to the rapid economic growth of the
country
S - Shared responsibility, hard work, and resourcefulness in compliance to the
mandates of the university
ii
TABLE OF CONTENTS
Page Numbers
TUP Vision, Mission, Quality Policy, and Core Values…..……………….…… i
Table of Contents…………………………………………….………………..…..ii
Course Description……………………………………..……………….… iii
Learning Outcomes……………………………………………………...…iii
General Guidelines/Class Rules…………………………………………...iii
Grading System…………………………………………………………....iv
Learning Guide (Week No. 1) ………………………………………….…1
Topic/s……………………………………………………………..1
Expected Competencies……………………………………………1
Content/Technical Information…………………………………….2-21
Progress Check…… ………………………………………………21-23
References…………………………………………………………23
Learning Guide (Week No. 2) …………………………………….……...24
Topic/s……………………………………………………….……24
Expected Competencies………………………………………..….24
Content/Technical Information …………………………………..25-41
Progress Check…… ……………………………………………...42
References…………………………………………………..…….43
Learning Guide (Week No. 3)……………………………………………44
Topic/s……………………………………………………….……44
Expected Competencies…………………………………………..44
Content/Technical Information…………………………………..45-59
Progress Check…… ………………………………………….….60
References…………………………………………………….….61
Learning Guide (Week No. 4)……………………………………………62
Topic/s……………………………………………………….…...62
Expected Competencies…………………………………………..62
Content/Technical Information…………………………………..62-70
Progress Check…… ………………………………………….….71
References…………………………………………………….….72
List of References………………………………………………………………73
About the Author/s……………………………………………………………..74
iii
COURSE DESCRIPTION
The subject deals with two major topic: Production Management and Quality
Control. It includes basic principles of production management and their effective application
geared toward producing optimum output as per required quality, the different methods and
techniques used to control quality of products. Topics such as forecasting, inventory control,
schedule routing and dispatching are given emphasis for effective control of production. Also,
this subject presents statistical tools that will equip students on the fundamentals of quality
control and background of the management systems abide and complied by the industry.
LEARNING OUTCOMES
By the end of the course, the students will be able to do the following:
1. explain the basic concept of production management and quality control as applied
to operation and manufacturing set up;
2. exhibit ability to present data and and analysis through the use of statistical tools
for proper control of quality products; and
3. solve practical problems based on industry setting using production management

techniques
GENERAL GUIDELINES/CLASS RULES
1. Make-up exams and quizzes will only be given with prior approval of the professor and
under exceptional circumstances. For excused absences during the exam, the university
policy will be followed.
2. Students are not allowed to leave the classroom once the class has started, unless extremely
necessary. Students who leave the classroom without any valid reason will be marked absent.
3. Students are expected to comply strictly with the university’s rule on dress code, class
tardiness and attendance.
4. Cell phones or any e-gadgets must be turned off or put in a silent mode during class hours.
iv
5. Late homework or projects will not be accepted. Students are expected to maintain
complete honesty and integrity in their academic work. Acts of academic dishonesty, such as
cheating, plagiarism, or inappropriately using the work of others to satisfy course
requirements, will not be tolerated and may result in failure of the affected assignments
and/or failure of this class.
Students with Special Needs:

A student with special medical needs, is advised to inform the instructor as to how he/she can
best assist him/her. All information will be considered confidential.
GRADING SYSTEM
The student will be graded according to the following:
Average of examinations - 50%

Average of assessments - 50%
Prelim Grade : [(Prelim Exam x 0.50) + (Assessment x 0.50)]

Midterm Grade : [(Midterm Exam x 0.50) + (Assessment x 0.50)]
End term Grade : [(Final Exam x 0.50) + (Assessment x 0.50)]
Final Grade : (Prelim Grade x 0.30) + (Mid-term Grade x 0.30) + (End term
Grade x 0.40)]
The passing grade for this course is 5.0.
1
LEARNING GUIDE
Week No.: __1__
TOPIC/S
 INTRODUCTION TO PRODUCTION
1. Concept of Production
2. Classification of Production System
 PRODUCTION MANAGEMENT
1. Production Management Objectives
2. Scope of Production Management
 PRODUCTIVITY
1. Different Types of Productivity
2. Productivity Measurement
 FORECASTING
1. Steps in Forecasting Process
2. Different Approaches to Forecasting
3. Factors in Selecting Forecasting Technique
EXPECTED COMPETENCIES
Upon completing this Learning Module, student will be able to:
1. identify the concept of production and its classification;

2. determine the objectives of productions management and its scopes;
3. differentiate types of productivity;
4. solve problems in based on different productivity measurement;
5. illustrate the process and different approaches in forecasting; and
6. solve problems with the use of different forecasting techniques.
2
CONTENT/TECHNICAL INFORMATION
Production is a part of an organization, which is incharge in the transformation of

different inputs into a necessary products or service with the required level of quality.
Production can either be of service or product. Introduction to production was already
discussed from previews module of Engineering Management.
Production management had been popularizes in the industry during 1930 to . the works
of F.W. Taylor became more commonly recognized, managers developed strategies that
concentrated on efficient economic performance.
Production management reflected a new name of operations management in the 1970s,

because the service sector became more prominent and the shift from 'production' to
'operations' emphasized the expansion of the field to service organizations.
Figure 1:Historical Summary of Production Management
On the 21st century, logistics, e-commerce, and e-business was introduced. Currently,
some of the industries already ventured on (IoT) Internet of Things.
3
Concept of Production:
The figure below explains the flow of the production system, wherein inputs are being
converted into a desired product or service with the aid of the different transformation
processes while continuously maintaining its quality and cost of operation.
Figure 2: Schematic Diagram of a Production System
Production System Classification:
Production system can be categorized on the based on the following categories:
1. Production type such as job shop, batch production, or mass production
2. Plant size which can be large, medium or small size plant
3. Product type that can either be complex or simple to manufacture
4. Physical flow of material that could be automated flow, semi-automated flow or

manual flow
5. Demand pattern or nature of order where it can stable or unstable demand
6. Variety of jobs which maybe with wide variety and single variety
4
Production Management Define
Production Management is a method that integrates and converts various resources used
in the organization's manufacturing subsystem into value-added products or services in a
standardized manner according to the organization's policies.
It is also a set of interrelated management activities involved in the production of certain

goods. It deals with decision-making related to production processes so that the resulting
goods or services are manufactured in accordance with the specifications, the required
quantity and schedule at the minimum cost.
Production Management Objectives:
Production management is ‘to produce goods or services of right quality and quantity at
the right time and right manufacturing cost’
* Right quality is when the product was developed based on the technical
specifications and requirements set by the customers or end-user. Product cost may
determine the quality of the product
* Right quantity means producing the products in the right amount. If they are
manufactured in excess of demand, the resources will be blocked and an inventory
will be form and if the amount is produced in the deficient of demand, there will be a
shortage of goods.
* Right time of delivery is one of the important parameters to be considered to

identify production’s effectiveness. To achieve organization’s objectives it has use its
input resources appropriately.
* Right manufacturing cost should be based on established amount used to

manufacture them so as to avoid variation.Cost must be competitive with other
enterprise producing the same product or service.
Production Management Scope:
Management of production and operations requires the conversion of raw materials

into finished products, using physical resources to provide the consumer with the desired
products and services while achieving the other organizational goals of productivity,
efficiency, capability and profitability.
5
Following are the activities which are listed under production and operations
management functions:
1. Location of facilities is the process where venue of operation is selected.

Essential decision should be taken earnestly since large amount of investment
is made in building plant and machinery
2. Plant layouts and material handling
A. Plant Layout is a plan for the optimal arrangement of facilities, including

staff, operating equipment, storage space, material handling
equipment and all other support services, together with the design of
the best structure to contain all of these facilities
B. Material Handling - refers to the 'movement of materials from the store room
to the machine and from one machine to the next during the production
process'
3. Product design deals with transforming theories into actual output. Provides a
link between the marketing, the standards and expectations of customers and
the activities required for production.
4. Process design is a macroscopic decision-making process for the

transformation of raw materials into finished goods.
5. Production and planning control defined as the process of production planning

in ahead of time, setting the exact route of each item, setting the start and end
dates to every item, giving shops production orders, and monitoring the
progress of products according to orders.s.
* Main functions of production planning and control includes:
A. Planning D. Dispatching
B. Routing E. Follow-Up
C. Scheduling
6. Quality control is a system used in a product or service to maintain a desired
level of quality. It is also defined as the technique of industrial management by
which the product is manufactured with uniform acceptable quality.
6
7. Materials management is the aspect of the management which is primarily

concerned with the acquisition, control and use of the necessary materials and
the flow of products and services related to the production process with
certain predetermined goals in mind.
8. Maintenance management is keeping the machines and other equipment in such

a state that they can be operated without interruption at their highest
capability.
The outputs of a production system are normally called products.
These products may be:

1. Tangible goods (Steels, chemicals etc)
2. Intangible services (Teaching, health care etc)
3. Combination of (a) and (b) (fast food, tailoring etc.)
Differences between product and service:
Models of Production system:
A model is a representation of reality that captures an object/system/critical process's

characteristics.
Types of models:
I. Physical model: Replica of a physical object with a change of scale.

a. For big/huge structure of physical object: small scale (Ex. solar system)
b. For microscopic objects: magnified scale(Ex. Atomic model)
7
II. Schematic model: These are 2-D models which represents

• Price fluctuations with year.
• Symbolic chart of activities in sequence for a job.
• Maps of routing
• Networks of timed events.
• The pictorial aspects are useful for good demonstration purposes.
III. Mathematical model:
Formulas and equations have been subordinates of physical science. Using

variables, parameters and functions, one may describe the significant aspect of a
system/problem in mathematical form. This is called a mathematical model. We will
learn how the actual system would behave under different circumstances by observing
and modifying the mathematical model.
PRODUCTIVITY:
Productivity is the relation between the output (product/service) and input

(resources consumed in supplying them) of a business system. The ratio of aggregate
production and aggregate input is termed productivity.
This ratio of efficiency must be at least 1 for any company's sustainability.

When it is greater than 1, the business is in a stable environment. But if the ratio
between the output produced and the input resources used in manufacturing is lesser
then in the future, the activity may face problems.
Importance of Higher Productivity:
 It helps to lower costs per unit and thereby raise income.

 Productivity benefits may be passed to customers in the form of lower priced
goods or products of higher quality.
 By rewarding them at higher rates, these profits may also be shared with
employers or employees.
 There could be better chances for a more active entrepreneur to take advantage
of expert opportunities.
 It will create more opportunities for employment.
 The efficiency of the production system is expressed in overall productivity.
 With the same or lower input, more output is produced.
 The same output with a lower input is generated.
 With more input, more output is produced.
 The proportional rise in output is greater than the proportional rise in input.
8
TYPES OF PRODUCTIVITY:
Productivity can be computed on individual or aggregate basis. It could be partial, multifactor

of total productivity.
Productivity can be presented by the formula:
䇅⺁⺁戴
t
1. Partial Productivity is a ratio of output to a specific input. It involves with the

computation of one particular characteristic.
* Input may include: labor, machine, material, energy, overhead, management,
land, or capital.
Example of Formulas Used for Partial Productivity Computation:
⺁t t⺁
th 䇅䇅⺁⺁戴
tt 䇅䇅݅
⺁t t⺁
t h⺁t 䇅⺁⺁戴
t h⺁t 䇅䇅݅
⺁t t⺁
tt 䇅⺁⺁戴
䇅 t 䇅 tt
⺁t t⺁
ttt t 䇅⺁⺁戴
t ttt t
2. Multifactor Productivity is a measure of output to a group of inputs. It concerns the

productivity of several resources used in production or service.
Example of Formulas Used for Multifactor Productivity:
⺁ t 䇅䇅⺁⺁戴
䇅䇅
th 䇅 t h⺁t t 䇅⺁t th 䇅 tt t ⺁t
9
3. Total Productivity is a computation of output to all inputs used in producing the

products. This concerns the overall performance of the whole organization or the
entire enterprise.
䇅䇅⺁䇅
t 䇅⺁⺁戴
⺁t 䇅 h
Sample Problems:
1. Given the following data, compute for the productivity:

Allen Screws Produced = 10, 000 units and is sold at Php10.00 per unit
Used labor = 500 man-hour and labor rate is Php9.00 per hour
Given:
Output = 10,000 units
Cost per piece (output) = Php10.00
Labor (man-hour) = 500
Labor Rate = Php9.00 / hour
Required:
a. Labor Productivity (units per man-hour)
b. Labor Productivity
Solution:
th 䇅䇅⺁⺁戴 th 䇅
‫ ݑݑݑ ݑ‬t⺁
th 䇅䇅⺁⺁戴
‫ݑݑ‬ tt−h 䇅
t⺁
th 䇅䇅⺁⺁戴 t‫ݑ‬
tt−h 䇅
‫ ݑݑݑ ݑ‬t⺁ ∗ h ‫ݑ‬䙕‫ݑݑ‬팰 t⺁

th 䇅䇅⺁⺁戴 h 䙕‫ݑݑ‬
‫ݑݑ‬ tt − h 䇅∗
tt᐀ 䇅
th 䇅䇅⺁⺁戴 tt䙕tt
10
2. Solve for the multifactor productivity of a certain product with 7500 pieces output sold
at $3 each, with the following inputs used:
Materials = $800
Machines = $1200
Labor = $400
Given:
Output = 7500 pieces @ $3 each
Materials = $800
Machines = $1200
Labor = $400
Required:
Multifactor Productivity =?
Solution:
t 䇅⺁t th 䇅 t h⺁t
‫⺁ ݑݑ‬ ∗݅ 팰 ⺁
⺁ t 䇅䇅⺁⺁戴 ݅䇅‫ ݅ ݑݑ‬t‫ݑݑ ݅ ݑݑ‬
⺁ t 䇅䇅⺁⺁戴䙕
11
The table below provides the input and output data for a certain company. Find various
measurements of productivity, such as overall, multifactor and partial calculation.
Given:
Output:
Finished Output 10, 000
Work In Progress 2,500
Dividends 1,000
Input:
Human 3,000
Material 150
Capital 10,000
Energy 540
Others 1,500
Required:
Partial Productivity (Human, Material, Capital, Energy and Others)
Multifactor Productivity
Total Productivity
Solution:
t ‫ݑݑ‬
t䇅⺁t 䇅⺁⺁戴 tt ‫ݑݑݑ‬
4.5
⺁t⺁ ‫ݑݑݑݑ‬
t䇅⺁t 䇅⺁⺁戴
tt ‫ݑݑݑ‬
3.33
t ‫ݑݑ‬
t 䇅⺁t ‫ݑ‬
90
t 䇅⺁t ‫ݑ‬
66.67
t ‫ݑݑ‬
tt t 䇅⺁t ‫ݑݑݑ‬ ‫ݑ‬
4.29
12
⺁ t 䇅䇅⺁⺁戴 tt t 䇅⺁t ‫ݑݑݑ‬ ‫ݑ‬
3.18
t ‫ݑݑ‬
tt t 䇅戴 ‫ݑݑݑ‬ ‫ݑ‬
3.81
tt t 䇅戴 ‫ݑݑݑ‬ ‫ݑ‬
2.82
t ‫ݑݑ‬
t 䇅⺁⺁戴 ‫ݑ‬䙕䇅
t t ‫ݑ‬
13
Forecasting:
Forecasting the operation is almost similar to forecasting weather, farmers relay on

the forecast weather so they may know when to plant, fertilize or harvest. Travel, recreations
and even our choice of clothing relies in the weather forecast. In similar way forecasting
helps in anticipating the future to planning can be made accordingly.
Forecasting is a projection of an activity or event in the future using past data, it is the
fundamental basis of planning operation.
The Need of Forecasting:
 When there is a gap in period between the realization of an expected event or the
need for that activity to be implemented. This lead time is the primary reason for
scheduling and forecasting.
 It is used as source of projecting activities by the planning department.
 To understand the level of activities the company is preparing prior to the
allocation of investments or budget
Types of Forecasting:
(a) Short Term forecasting is the forecasting that made for short term objectives
covering less than one year.
Ex. Material Requirement Planning (MRP), scheduling, sequencing, budgeting
(b) Long Term Forecasting is the forecasting that made for that made for long term
objectives covering more than five years.
Ex. Product diversification, sales and advertisement
Common Features to all Forecasts:
1.Techniques used in forecasting assumes that the causal system that have
occurred in the past will continue to happen in the future
2. Forecasts are not perfect, expected or predicted result may not be the same
as with the actual outcome. Allowance are being considered for inaccuracies that
might be encountered.
14
3. Individual forecast is less accurate than group forecast because of the

canceling effect in the forecasting errors among the items in the group.
4. Accuracy of forecast decreases as the time horizon increases. Flexible

organizations that can quickly respond to change in customers demand can benefit
more than those who use longer forecast horizons.
Steps in Forecasting Process:
1. Determine the purpose of the forecast. The objective of the forecast must be
clear and why and when it is needed. This will give indication of the required details,
resources needed and level of accuracy of the forecast.
2. Create a time horizon. Forecast should have a target time limit. When
creating a forecast you should think that the accuracy varies with regards to the length
of time.
3. Choose a technique to use.
4. Collate and analyze appropriate data needed for the forecast.
5. Make the forecast.
6. Monitoring of forecast. Forecast needs to be monitored to verify whether it

needs to be modified or not.
Approaches to Forecasting:
Forecasting can either be qualitative of quantitative. Qualitative methods

used mainly subjective inputs such as soft information like human factors and
personal opinions. Quantitative methods use data to develop a forecast. Biases are
avoided on this type of forecast.
A. QUALITATIVE FORECASTS:
Forecast based on judgment relies on the analysis of the subjective inputs from
different sources such as customer feedback or surveys, sales personnel, the
management and consultants of expert’s opinion.
15
1.Executive opinions are used as part of long range plan and new product
development. Upper level management will form a small group and will try to the
organizations future. This will brought all the skills and knowledge of the
management executives, however there’s a possibility that only one’s opinion will
prevail.
2.Sales force composite is a very reliable source of information for forecast.

Since sales personnel deal more with consumers, he may have a greater knowledge on
what they would want and what they would don’t. But the difficulty is that they may
tend to rely more on their experiences on sales.
3.Consumer surveys are a process where the producer directly inquires for the
customer’s feedback. The information the consumer’s give will be very helpful in
forecasting. However, this is time consuming and would require an extra amount of
money since this till need skills and knowledge from professionals.
4.Outside opinion will be helpful when your team doesn’t have idea or opinion
what to forecast. Political or economic advice from various organizations or groups
may be helpful in the forecast.
5.Opinions of managers and staff are that information collected from the
management personnel in making the forecast. Questionnaires are distributed to
obtain a consensus forecast.
* Delphi Method which originated in 1948 was used to assess the potential
impact of the atomic bomb on the United States. This method is very effective in
technological forecasting, where it assess the change in technology and their effects in
the organization.
B. QUANTITATIVE FORECASTS:
Forecast based on time series data requires an analyst to identify the behavior
of the series. Time series is an ordered sequence of observations at a uniform interval
of time. This is done by collecting the data, plotting them and inspecting the pattern it
will result.
Behaviors may be presented as follows:
a.Trend. Movement of data is gradual and is long-term.
b.Seasonality. Data moves on a regular variation such as weather and

holidays.
c.Cycles. Series which are wavelike and could be an interval of more than a
year
16
d.Irregular Variations. Those that are cause by an unusual event like severe
weather condition, labor strikes or major product change. This
does not indicate a typical behavior of the data.
e.Random Variations. If the variation does not fall on the other behaviors or it
is residual it is considered as random variations
Figure 2: Sample presentations of forecast behaviors:
Note:
Demand forecast should be based on time series data of the past demand and not of the
sales or shipments, since this does not reflect the accurate amount of the product
requirements.
17
Categories of Forecasting Methods:
A. Naive Forecast:
The most common, fast and easiest technique used in a forecast. This forecast
bases its prediction on the previous period’s value. This can also be applied to a
series trend and seasonality.
Example:
If the production plan for the month of April is 12,000 units of bolts and nuts,
the naive forecast for the month of May would also be 12,000.
For seasonal pattern if the demand for January and February last year is 20000
and 25000 respectively, it can also be the same for this year’s forecast for the
month of January and February.
If trend is present, any change in demand can be carried over to the next
period’s forecast. Like when the demand for September is 1000 higher than that of
August, the October’s naive forecasts will be 1000 higher than that of September.
B. Moving Average:
A method use to forecast by computing the average of the recent actual data.
This can be computed using the following equation:
t
⺁⺁
t
t
Where:
⺁ “Age” of the data (⺁ t
t Number of periods in the moving average
⺁ Actual value with age ⺁
MA = Forecast
Note:
In moving average, the forecast is being updated once a new value is available.
To compute for the next forecast the old value is replaced by the new one.
18
Sample Problem:
1. Compute a three-period moving average forecast given demand for carts for
the five periods.
Period Age Demand

1 5 42
2 4 40
3 3 43
4 2 40
5 1 41
Required:
Solution:
‫ݑ‬
䙕
If actual demand for period 6 turns out to be 39, the average forecast for period 7
would be:
‫ݑ‬
‫ݑ‬
C. Weighted Moving Average:

This process is similar to the moving average, except that it uses the assigned
weight for each period. The most current value is given more weight than that of
the old ones. Weight assigned to each period should be equal to 1.
19
Sample Problem:
From the previous data given:
a. Compute the weighted average forecast using the weight of 0.40 for the
most recent period, 0.30 for the next most recent, 0.20 for the next and
0.10 for the next.
b. If the demand for period 6 is 39, forecast demand for period 7 using the
same weights as in part a.
Solution:
a. 䇅 t ‫ݑ‬䙕 ‫ݑ‬ ‫ݑ‬䙕 ‫ݑ ݑ‬ ‫ݑ‬䙕t‫ݑ‬ ‫ݑ‬䙕 ‫ݑ ݑ‬
b. 䇅 t ‫ݑ‬䙕 ‫ݑ‬ ‫ݑ‬䙕 ‫ݑ‬ ‫ݑ‬䙕t‫ݑ ݑ‬ ‫ݑ‬䙕 ‫ݑ‬ ‫ݑ‬䙕t
D. Exponential Smoothing:
This a weighted averaging method based on previous forecast plus the
percentage of the forecast error.
This is the most used technique in computing for the forecast, it’s because of
minimal data requirement and ease of calculation and weighted scheme can be
easily changed. The sensitivity of forecast judgment is determined by the
smoothing constant. Its selection based on the benefit of smoothing random
variation. Normally it ranges from 0.05 to 0.50
When computing for exponential smoothing, you will start with the use of
naive forecast.
Next Forecast = Previous Forecast + α (Actual – Previous Forecast)
᐀ ᐀ ᐀ ᐀
Where:
Forecast for period
᐀ Forecast for period ᐀
= Smoothing Constant
᐀ Actual demand or sales for period ᐀
20
Sample Problem:
Suppose the previous forecast was 42 units, actual demand was 40 units
and α = 0.10.
a. Find the new forecast

b. If the actual demand turns out to be 43, what would be the next forecast?
Solution:
a. ᐀ ᐀ ᐀ ᐀
t ‫ݑ‬䙕 ‫ ݑ ݑ‬᐀ t 䙕䇅
b. 䙕䇅 ‫ݑ‬䙕 ‫ݑ‬ ᐀ 䙕䇅䙕 t
Additional Sample Problem:
Given the following data:
Number of
Period
Complaints
1 60
2 65
3 55
4 58
5 64
Prepare a forecast using each of the following approaches:
a. naive approach
b. 3 period moving average
c. weighted average using 0.50 (most recent), 0.30 and 0.20
d. exponential smoothing with a smoothing constant of 0.40
21
Solution:
a. Naive forecast for period 6 is 64
b. Period 6 forecast with three moving average is 59
c. Period 6 forecast with weighted moving average is 60.4
d. Period 6 forecast using exponential smoothing is 60.83
PROGRESS CHECK
I. Enumeration: ( 5 points each)

1. Different categories of production system classification
2. Scope of Production Management
3. Behaviors of quantitative forecast
4. Importance of higher productivity (Give at least 5)
II. Problem Solving:
A. Productivity:
1. Determine the productivity for the following cases:

A. Four workers installed 720 square yards of carpeting in eight hours
B. A machine produced 68 usable pieces in two hours
22
2. Determine the multifactor productivity for the combined input of labor and
machine time using the following data:
Output = 16000 units
Input: Labor = 65 hours
Machine = 15 hours
3. John Lucy makes wooden boxes in which to ship motorcycles. John and hos
three employees invest 40 hours per day making the 120 boxes.
A. What is their productivity?
B. John and his employees have discussed redesigning the process to
improve efficiency. If they can increase the rate to 125 per day,
what would be their new productivity?
C. What would be their increase in productivity?
4. HM Bank employs three loan officers, each working eight hours per day.
Each officer processes an average of five loans per day. The bank’s payroll
cost for the officers is P900 per day, and there is a daily overhead expense of
P450.
a. Compute the labor productivity.
b. Compute the multifactor productivity, using loans per dollar cost as
the measure.
The bank is considering the purchase of new computer software for the
loan operation. The software will enable each loan officer to process eight
loans per day, although the overhead expense will increase to P550
c. Compute the new labor productivity. d. Compute the new

multifactor productivity. e. Should the bank proceed with the
purchase of the new software? Explain
B. Forecasting:
1. A car wash uses exponential smoothing to forecast equipment usage.

December usage was forecast to be 88 percent of capacity; actual usage
was 89.6 percent of capacity. A smoothing constant of 0.2 is used.
a. Prepare a forecast for January
b. Assuming the actual usage for January is 90 percent, prepare a forecast
for February usage.
23
2. A private contractor’s records during the last five months indicate the
number of job requests:
Week 1 2 3 4 5
Requests 20 22 15 20 25
Determine the number of requests for month 6, using the following

methods:
a. naive
b. four –period moving average
c. exponential smoothing with α = 0.25
REFERENCES
Textbook/s:
William J. Stevenson, Production or Operations Management Fifth Edition, Busy

Book Distributors, 1999
S. Anil Kumar and N. Suresh, Production and Operation Management, 2nd Edition,
New Age International Publisher, 2008
24
LEARNING GUIDE
Week No.: __2__
TOPIC/S
 INVENTORY MANAGEMENT
1. Effective inventory management requirements

2. Inventory management objectives
 INVENTORY
1. Types of Inventory
2. Counting System
3. Cost Information
4. ABC Classification Method
5. Replenishment Method
 INVENTORY MODELS
1. Basic economic order quantity
2. Economic Run size
3. Quantity discount
4. Reorder point
1. determine the requirements of effective inventory management

2. discuss the objectives of inventory management
3. describe and solve problems for the following models:
a. basic EOQ
b. economic run size model
c. quantity discount model
d. reorder point model
25
Inventory is an expensive asset of the company. Industries may have different

inventory control system in used. Inventory planning involves demand plan and helps the
organization to determine what goods and/or services need to be produced.
Figure 1: Material flow in operation
Sometimes, the flow of materials in manufacturing can accumulate longer time than
the production itself. That is why, it is very important to reduce the time allocated for the
movement of materials to reduce the cost that comes along with it.
Inventory and Inventory management define:
Inventory is a stock or storage of goods, which can be classified as the

following:
a. Raw Materials and Purchased Parts.

b. Partially Completed Goods (Work in Process)
c. Finished Goods Inventories
d. Replacement Parts, Tools and Supplies
e. Maintenance and repairs (MRO) inventory
f. Goods in Transit to Warehouse or Customer (Pipeline inventory)
Inventory management is a branch of business management that deals with

planning and control of inventory.
26
Functions of Inventory:
1. To fulfill planned demand
2. To smooth manufacturing requirements
3. To decouple elements of the distribution system for production
4. To prevent from stock out
5. To take advantage of cycles of order
6. Hedge toward cost increases or take advantage of discounts on quantities
7. To allow operation
8. To take advantage of quantity discounts
Requirements for Effective Inventory:

1. A system to keep track of inventory on hand and on order
2. A reliable forecasts of demand
3. Knowledge of lead times and lead time variability
4. Reasonable estimates of inventory holding cost, ordering cost and shortage cost
5. A classification system for inventory items
Counting System for Inventory:
1. Periodic. The inventory of items in this system are made at periodic intervals
Advantage:
 Orders of many items occur at the same time resulting to less processing /
shipping costs
Disadvantage:
 Lack of control between reviews
 Need to protect against shortages need to make decision after every review
2. Perpetual. The inventory of items are track on continuous basis
Advantage:
 Control is provided in monitoring of inventory withdrawal
 Fixed order quantity
Disadvantage:
 Additional cost on record keeping
 Physical count of inventories must still be performed periodically to
confirm or verify records
27
Aside from the two system mentioned above, some of the enterprise use UPC (universal
Product Code), POS (Point-of-sale) system and RFID (Radio Frequency Identification) tags
to track their inventory. This largely help the industry in updating the actual inventory of
items on time.
Inventory Cost Information:
1. Holding or Carrying Cost

This relates to physically having items in storage and is the total cost related to
maintaining the inventory. This may include:
1. capital costs invested in stock;
2. the cost of storage for space, equipment and people;
3. inventory taxes and insurance;
4. obsolescence due to product shifts in the industry, design, or rivals;
5. deterioration from long-term handling and storage; and
6. record-keeping for stock.
Cost to carry an item in inventory for a length of time is usually one year. This
can be stated in 2 ways:
o as percentage of unit price (20-40%)
o as amount per unit
2. Ordering Cost
This is the cost related to the ordering and receiving of inventory. This is a fixed
cost per order (regardless of order size). This may include:
1. paperwork;
2. workstation setups;
3. inspection, scrap and re-work associated with setup; and
4. record keeping for work-in-progress
5.
Note:
If the operation creates its own inventory ordering cost = change over cost
(fixed charge per run)
3. Shortage Cost
This is the cost resulting when demand exceeds the supply of inventory on hand
28
Simple Inventory Replenishment Methods
Two-bin system
A type of fixed order scheme in which two bins hold product. The second bin
is the order point (the amount of inventory at or below which an order is released),
and is not touched until the first bin has been used up. When the first bin is empty,
a replenishment order is placed. The second bin is refilled when the product is
collected, and the excess is placed into the first bin. At this point, the stock is
pulled from the first bin again until it is depleted.
The two-bin system has several variations. There doesn't need to be

exactly two bins in one combination. For example, five boxes may be included in
the first "bin," and three boxes of materials in the second bin. There may be no
bins in other models. In a bookstore, for example, tags are widely used to
replenish inventories. In a book that is in a stack in a location similar to the order
point, a tag is placed. The tag automatically notifies the clerk to reorder the books
when that book is sold.
Visual Review System

A basic inventory management system where the reordering of inventory is
based on actual visual inspection of the quantity of inventory on hand. The system
of visual inspection regularly reviews stocks of items against rough inventory
levels where reordering or order points are deemed appropriate. If this amount is
reached, orders are placed for replenishment. There are many differences in the
visual analysis method.
It is not necessary to check the inventories where they are physically located.
A card is attached to each case of material in one option. When the materials of a
case are consumed, the card is placed in the office on a board. Consumption of
materials is demonstrated by the number of cards on the board. The order point is
depicted with a red line drawn on the board. A replenishment order is released
when the cards cross the red line.
Min-max System
A type of order point replenishment system where the order point is the "min,"
and the "max" is the inventory level of the "order-up-to." The quantity of the order
is variable and is the result of max minus available and inventory on order. When
the accessible and on-order is at or below the min, an order is placed. Via practice,
the min and max levels are typically randomly defined.
29
Inventory Systems
Inventory systems answer the questions: when to order and how much to order
ABC Inventory Classification:
ABC system classifies inventory based on its degree of importance
Note:
Items or materials that are being kept in different location are classified
depending on its stock keeping unit (SKU).
Steps in ABC Classification:

1. Determine annual usage or sales for each item
2. Determine % of total usage or sales for each item
3. Rank items from highest to lowest %
4. Classify items into groups:
A: highest value, B: moderate value, C: least valuable
Figure 1: ABC Model Classification
30
Sample Problem:
1. A manager has obtained a list of unit costs and estimated annual demands for 10
inventory items and now wants to categorize the items on an A-B-C basis.
Multiplying each item’s annual demand by its unit cost yields its annual dollar value:
Annual
Item Annual Unit
Dollar
Number Demand Cost
Value
1 2,500 $ 360 $ 900,000
2 1,000 70 70,000
3 2,400 500 1,200,000
4 1,500 100 150,000
5 700 70 49,000
6 1,000 1,000 1,000,000
7 200 210 42,000
8 1,000 4,000 4,000,000
9 8,000 10 80,000
10 500 200 100,000
7,591,000
Solution:
Arrange the data based on the amount or dollar value of the items in
descending order. Then assign those items the corresponding categories.
Take note that items belong to categories A has a low percentage of items but
has the highest value. While those that belongs on category C has low value but has
high percentage of items.
31
Two categories of Inventory System:
• Fixed-Order quantity system is an order of fixed quantity, Q, is placed when

inventory drops to a reorder point, (ROP)
The following are considered in this system:

a. assumes a constant demand rate of d
b. the inventory position, IP, is reduced by a rate of d
c. order placed when the reorder point, ROP is reached
d. when inventory is received, the IP is increased by the order quantity, Q
e. there is a lead time, L, during which we have to wait for the order
f. inventory is checked on a continual basis
g. Q is computed as the economic order quantity, EOQ
Figure 2: Fixed Order Quantity System:
• Fixed-Time Period System is where inventory is checked in fixed time periods,

T, and the quantity ordered varies
The following are considered in this system:

a. inventory levels checked in fixed time periods, T
b. target inventory level, R, is restored when order received
c. sometimes called Periodic Review System
d. quantity ordered varies:
Q = R – IP
where:
Q = order quantity
R = target inventory level
IP = inventory position
32
Figure 3: Fixed Time Period System
Figure 4: Comparison of Fixed Order quantity and Fixed-Time Period
INVENTORY MODELS:
1. Basic Economic Order Quantity (EOQ)
It is used to describe a fixed order size that will minimize the amount of the annual
inventory keeping and ordering costs. The unit purchasing price of goods in stock is not
normally included in the overall cost because unless quantity discounts are a factor, the unit
cost is unaffected by the order size. If the holding costs are defined as a percentage of the unit
cost, the unit cost is implicitly included as part of the holding costs in the overall cost.
Basic EOQ model assumptions:

1.Only one product is involved.
2.Annual demand requirements are known.
3.Demand is spread evenly throughout the year so that the demand rate is reasonably
constant.
4.Lead time is known and constant.
5.Each order is received in a single delivery.
6.There are no quantity discounts.
33
Figure 4: Inventory cycle for EOQ Model:
Figure 5: Cost Curve involve for basic EOQ (carrying cost, ordering cost and total
Cost)
A. Annual Carrying Cost

The annual cost of carrying is determined by multiplying the total amount of
stock available by the cost of carrying one unit for one year, although each unit will
not necessarily be carried for one year.
where:
Q = Order quantity in units
H = Holding (carrying) cost per unit per year
34
Note:
Carrying cost is sometimes stated as a percentage of the price of an item rather than
as a amount per unit
B. Annual Ordering Cost:

The annual cost of ordering depends on the number of orders per year and the
cost of ordering per order.
where
D = Demand, usually in units per year
S = Ordering cost per order
C. Total Annul Cost:

The total cost carried out when carrying ad ordering an inventory every time
the order is made.
Note:
Make sure that D and H are of the same unit. (example: year, month, days or weeks)
D. Ordering Quantity:
The optimal ordering quantity for items in the inventory
E. Length of Order Cycle:

The time between order.
35
Sample Problem:
1. A local distributor for a national tire company expects to sell approximately 9,600
steel-belted radial tires of a certain size and tread design next year. Annual carrying
cost is $16 per tire, and ordering cost is $75. The distributor operates 288 days a year.
a.What is the EOQ?

b.How many times per year does the store reorder?
c.What is the length of an order cycle?
d.What is the total annual cost if the EOQ quantity is ordered?
Given:
D = 9,600 tires per year
H = $16 per unit per year
S = $75
Required:
a. Q=?
b. Number of Orders per year = ?
c. Length of Order Cycle = ?
d. Total Annual Cost = ?
Solution:
a.
b.
c.
36
d.
2. Piddling Manufacturing assembles security monitors. It purchases 3,600 black-and-

white cathode ray tubes a year at $65 each. Ordering costs are $31, and annual
carrying costs are 20 percent of the purchase price. Compute the optimal quantity and
the total annual cost of ordering and carrying the inventory.
Given:
D = 3,600 cathode ray tubes per year
S = $31
H = 0.20($65) = $13
Required:
Q and Total Cost of inventory =?
Solution:
a.
b.
37
2. Economic Production Quantity (EPQ)

In some instances, the production are not ordered from suppliers, instead they are
produced directly from the company. They are sometimes called sub assembly units. This are
widely used in the manufacturing. Production operation are done in batch process, since
sometimes it can exceed the usage of the operation.
EPQ model has similar assumptions like those of the EOQ model, except that units
are delivered in an incremental manner during production. Following are the assumptions:
1.Only one item is involved.
2.Annual demand is known.
3.The usage rate is constant.
4.Usage occurs continually, but production occurs periodically.
5.The production rate is constant.
6.Lead time does not vary.
7.There are no quantity discounts.
Figure 5: EOQ with incremental build up of inventory
Inventory builds up at a rate equal to the difference between output and use rates
during the manufacturing stage of the cycle. The inventory level will continue to build as
long as production occurs; the inventory level will begin to decline when production stops.
Hence, at the stage where production stops, the inventory level would be maximum.
Production is resumed when the quantity of inventory on hand is depleted, and the cycle
repeats itself.
Since the company produces the product itself, as such, there are no ordering costs.
Nevertheless, there are setup costs for any production run (batch): the costs needed to prepare
the equipment for the job, such as modifying, and changing tools and fixtures. Setup costs are
close to the costs of ordering because they are independent of the size of the lot (run).
38
A. The number of runs (batches) per year
B. Annual Set-up Cost
C. Total Cost
D. Economic Run Quantity
where:
p = Production or delivery rate
u = Usage rate
E. Cycle Time:
The time between orders or between the beginnings of run
F. Run Time
The production phase of the cycle
G. Maximum and Average Inventory Levels
39
Sample Problem:
1. A toy manufacturer uses 48,000 rubber wheels per year for its popular dump truck
series. The firm makes its own wheels, which it can produce at a rate of 800 per day.
The toy trucks are assembled uniformly over the entire year. Carrying cost is $1 per
wheel a year. Setup cost for a production run of wheels is $45. The firm operates 240
days per year. Determine the
a.Optimal run size.
b.Minimum total annual cost for carrying and setup.
c.Cycle time for the optimal run size.
d.Run time.
Given:
D = 48, 000 wheels per year
S = $45
H = $1 per wheel per year
p = 800 wheels per day
u = 48,000 wheels per 240 days, or 200 wheels per day
Required:
a.Q = ?
b.Total Annual Cost = ?
c. Cycle Time = ?
d. Run Time = ?
Solution:
a.
b.
40
c.
d.
3. Quantity Discount
Quantity discounts are price reductions given to consumers with larger orders to
enable them to purchase in large quantities.
If quantity discounts are offered, the consumer must balance the possible advantages
of lower sales rates and fewer orders resulting from large volumes of purchases against the
higher carrying costs resulting from higher average inventories. With quantity discounts, the
buyer's goal is to pick the order quantity that will minimize overall cost.
Figure 6: Inventory with Quantity Discount
41
A. Total Annual Cost
where:
P = Unit price
4. Reordering Point (ROP)
Reordering point exists when the quantity on hand decreases to a specified amount. In
general, this includes anticipated demand during the lead time period and maybe an
additional stock buffer, which decreases the risk of experiencing a stockout during operation.
There are four determinants of the reorder point quantity:
1.The rate of demand (usually based on a forecast).
2.The lead time.
3.The extent of demand and/or lead time variability.
4.The degree of stockout risk acceptable to management.
If demand and lead time are both constant, the reorder point is:
Where:
d = Demand rate (units per day or week)
LT = Lead time in days or weeks
Note: Demand and lead time must be expressed in the same time units.
If there is variability is present in demand or lead time, safety stocks should be

considered:
Safety stock amount that is appropriate for a given situation depends on the following factors:
1.The average demand rate and average lead time.
2.Demand and lead time variability.
3.The desired service level.
42
PROGRESS CHECK
1. The maintenance department of a large hospital uses about 816 cases of liquid cleanser
annually. Ordering cost are P12, carrying cost are P4 per case a year, and the new price
schedule indicates that orders of less than 50 cases will cost P20 per case, 50-79 cases will
cost P18 per case, 80-99 cases will cost P17 per case, and larger orders will cost P16 per case.
Determine the optimal order quantity and the total cost.
2. Surge electric uses 4000 toggle switches a year. Switches are priced as follows: 1-499 90
cents each, 500-999, 85 cents each, and 1000 or more, 82 cents each. It cost approximately
$18 to prepare an order and to receive it, and carrying costs are 18 percent of price per unit on
annual basis. Determine the optimal order quantity and the total annual cost
3. A manager receives a forecast for next year. Demand is projected to be 600 units for the
first half of the year and 900 units for the second half. The monthly holding cost is $2 per unit,
and it costs an estimated $55 to process an order.
a. Assuming that monthly demand will be level during each of the six-month periods
covered by the forecast (e.g., 100 per month for each of the first six months),
determine an order size that will minimize the sum of ordering and carrying costs for
each of the six-month periods.
b. Why is it important to be able to assume that demand will be level during each six-
month period?
c. If the vendor is willing to offer a discount of $10 per order for ordering in multiples
of 50 units (e.g., 50, 100, 150), would you advise the manager to take advantage of
the offer in either period? If so, what order size would you recommend?
4. A certain chemical industry produces sodium chloride in 500-pound bags. Demand for this
product is 25 tons per day. The capacity for producing the product is 50 tons per day. Setup
costs P1500, and storage and handling costs are P800 per ton a year. The firm operates 250
days a year.
a. What is the optimal bags per run?
b. What is the average inventory?
c. Determine the length of a production run, in days.
d. How many runs per year would there be?
e. How much could the company save annually if the setup cost could be reduced to
P700 per run?
43
REFERENCE
Textbook/s:

44
LEARNING GUIDE
Week No.: __3__
TOPIC/S
 ROUTING
1. Routing Meaning and Functions
2. Procedure in Routing
3. Advantages of Routing
 PLANT LAYOUT
1. Plant Layout Objectives
2. Classification of Layout
A. Process Layout
B. Product Layout
C. Combination Layout
D. Fixed Position Layout
E. Group Layout (Cellular Layout)
3. Design Layouts
A. Product
B. Process
1. define the concept of routing and route sheet

2. solve problems and computation of production standard time
3. determine different classifications of layout
4. apply design of process and product layout to illustrate production line balance
45
Basically, manufacturing industry deals with transformation of inputs into a product.

The transformation used a process flow where the parts or sub-assemblies undergoes a certain
route of operation.
INTRODUCTION TO ROUTING
Routing is deciding the direction to be established in the transformation of each

parts/component from the input/raw material into the finished product.
The process of routing becomes automated or mechanized when a single part/product

is generated by a fixed series of machines.
Less managerial effort is needed for routing in continuous production systems with
line type or product type layout, although different sets of machines may be used in the
production of products in such systems. routing is a complex activity for varying products
that needs to be produced.
Production order routing includes complete product information to be manufactured,

complete details of each operation to be performed, set up time and the standard time
required for the job/product to be completed.
FUNCTIONS OF ROUTING:
The aim of routing is to construct the optimum sequence of operations such that the
output of the finished product is carried out at the lowest cost and the fastest time.
ROUTING PROCESS PROCEDURE:
1. Make and Buy Decision:
In order to decide the parts/components are to be produced and which are to be

purchased in the terms of the available details, the product to be produced and as specified
parts are thoroughly analyzed:
 Making and purchasing expense comparison.

 If the manpower available can be used for the purpose of production within the
factory.
 If it is possible to use current machines which are idle.
 If the input materials and machines are available in the plant for manufacture or
need procurement.
46
2. Bill of Material
The quality and quantity of materials needed are calculated after careful examination
of the product and the bill of materials is prepared.
The quantity of material needed for each part is known from this proforma and can be
procured accordingly. For finished products and raw materials, some companies plan
different lists. The quantity of products in the shops should be understood to know how
much material should be bought or procured.
Figure 1: Sample Format of Bill of Material
3. Preparation of Route Sheet:
The third stage of the routing process is to decide the operations needed to generate
the product in accordance with their sequence. The routing decision specifies the operations
required for the product processing and lists them on the route sheet or operation sheet in
their order.
The flowchart can be prepared from this route sheet method to help visualize
operations that can be streamlined, combined or eliminated. It can further assist in changing
the sequence of operations.
47
Figure 2: Route Sheet Sample
4. Determining of Size
The mathematical references can be used to figure out the lot size to be produced in
the case of mass or continuous production systems. The concept is to calculate the number of
units in one lot to be generated. If the goods is to be manufactured in order to satisfy the
requirements of the market, the issue of deciding the lot size does not occur.
5. Scrap Factor Determination
The amount of waste that depends on the factors of scraping is calculated. The scrap
variable is the estimated usual scrap encountered during the course of production. As we
know, all components manufactured at different work stations do not meet the requirements
needed and those that do not pass inspection should be neglected as scrap.
In addition, the total material taken from the plant for processing does not go into the
end product. Scrap factor determination is therefore an essential component of process of
routing.
It should be known when the scrap will occur when deciding the scrap factor, whether
it happens gradually during the manufacture/production of parts, final assembly or all of a
sudden during a certain procedure or after assembly completion. If the scrap happens at one
point in the process, the estimated scrap at the point can be taken care of by a single scrap
factor, but when the scrap is progressive, the cumulative scrap factor is required to serve the
purpose.
48
In order to determine the personnel, the necessary machines and equipment and the
materials, the normal procedure should be to determine these variables from previous
experience. Thus the scrap factor plays an important role in deciding the requirements for
labor and loading of different machines.
In order to perform routing, different forms and procedures are provided as required,
which include the necessary details for the operation , various forms used, like production
order, job ticket, inspection, moving order, instrument and equipment ticket, are also
prepared.
Many plant types are incorporated into a sheet called the Master Route Sheet if the
production process is simple. This is a multipurpose sheet that significantly reduces paper
work as well.
 Advantages of Routing:
(i) Effective utilization of available resources.

(ii) Reduction in production costs.
(iii) Quality improvement occurs,
(iv) Productivity of the system improves and
(v) Provides a basis for loading & scheduling.
PLANT LAYOUT
The layout of the plant refers to the physical arrangement of production structures. It's
the configuration in the transmission process of departments, work centers and equipment. It
is a floor plan for the physical structures used in manufacturing.
According to Moore, the plant layout is a proposal for an efficient arrangement of

facilities, including employees, operating equipment, storage space, material handling
equipment and all other support services, along with the design of the best structure to
contain the facilities.
The main purpose of the layout of the plant is to optimize the value to the best
advantage of the overall output of the product by organizing all of the plant facilities.
49
Objectives of Plant Layout:
1. Streamline the movement through the plant of materials.

2. Facilitate the process of development.
3. Maintain high in-process inventory turnover.
4. Minimize the handling and expense of materials.
5. Manpower, facilities and space are utilization efficiently.
6. Making use of cubic space effectively.
7. Flexibility of operations and plans for output.
8. Providing convenience, protection and comfort for employees.
9. Minimize equipment expenditure.
10. Minimize the production time overall.
11. Maintain arrangement and process flexibility.
12. Facilitate the arrangement of organizations.
Plant Layout Principle:
1. Integration principle
A good layout is one that utilizes men, materials, machines and supporting
services and others in order to achieve optimal resource usage and maximum
efficiency.
2. Minimum distance principle

This principle deals with the minimum movement of man and materials. The
facilities should be arranged in such a way that the overall distance traveled by the
men and materials should be minimal and straight line motion should be desired as far
as possible.
3. Cubic space utilization principle

One that uses both horizontal and vertical space is the good layout. Not only it
is necessary that only the floor space is used optimally, but the third dimension, i.e.
the height, should also be used effectively.
4. Flow principle
A successful layout is one that allows the materials to pass towards the
completion stage in the forward direction i.e. no backtracking should be provided.
5. Maximum flexibility principle

The successful layout is one that can be changed without much expense and
time, i.e., when designing the current layout, potential specifications should be taken
into account.
50
6. Security, safety and satisfaction principle

A good layout is one that gives due consideration to the safety and satisfaction
of employees and protects the plant and machinery against fire, theft, etc.
7. Minimum handling principle

A successful design is one that reduces the handling of the material to a
minimum.
CLASSIFICATION OF LAYOUT
A. PROCESS LAYOUT
For batch processing, process layout is recommended. All machines

conducting similar types of operations are grouped in the process layout at one
location e.g. all lathes, milling machines, etc. are placed into similar groups in the
factory.
Process layout is usually used to explain a product layout when the output
volume is not adequate. Usually, because of the variety of goods produced and their
low production rates, job shops employ process layouts.
Figure 1: Process Layout Example
Advantages:
1. Machines are best used in the design of processes and fewer machines are needed.
2. In process design, versatility of equipment and staff is possible.
3. Lower investment due to the comparatively reduced number of machines and lower
cost of machines for general purposes.
4. Higher utilization of facilities for development.
5. A high degree of versatility for equipment and staff in terms of job distribution.
6. The range of activities and variety of jobs makes the job complicated and exciting.
7. Supervisors can become extremely educated about their department's activities.
51
Limitations:
1. In the handling of materials, backtracking and long movements can thus occur,
reducing the efficiency of material handling.
2. The handling of materials can not be mechanized, which adds to costs.
3. Process time is extended, which reduces inventory turnover and increases inventory
in the process.
4. Reduced performance due to the amount of set-ups.
5. Throughput (time gap in the process between in and out) time is longer.
6. The work-in-process ties up space and money.
B. PRODUCT LAYOUT
Machines and auxiliary facilities are located according to the product's

processing sequence in this type of layout. If the output volume of one or more items
is high, installations can be arranged to achieve efficient material flow and lower costs
per component. Special purpose machines are used ,which quickly and reliably
perform the desired function. When the amount of output of a product is high, the
product layout is chosen so that a separate production line to produce it can be
justified. Machines are not shared by multiple products in a strict product layout.
Therefore to achieve satisfactory use of the machinery, the output volume must be
sufficient.
Figure 2: Product Layout Example
Advantages:
1. In streamlines, product flow will be smooth and logical.

2. Less in-process inventory.
3. There is less time for throughput.
4. Minimum handling cost of products.
5. Simplified processes of manufacturing, preparation and control are feasible.
6. Work-transit and temporary storage occupy less space.
7. Reduced cost of material handling due to mechanized methods of handling and
straight flow.
8. Perfect line balancing which removes idle capacity and bottlenecks.
9. The manufacturing time is short due to uninterrupted material flow.
10. Low volume of inventory for work-in-process.
11. Inexperienced employees can learn and manage the production.
52
Limitations:
1. A failure of a single machine in the product line can cause the machines in the
downstream line to stop.
2. Significant changes in the layout could be needed for a change in product design.
3. The bottleneck machine determines the line production.
4. It needs a comparatively large investment in equipment.
5. The lack of versatility. A product change could involve the modification of the
facility.
C. COMBINATION LAYOUT
The benefits both for different types of layouts are combined by a mix of
process and product layouts. It is possible to build a combination layout where an
object is created in various types and sizes. Machinery is structured here in a process
layout, but the grouping of processes is then grouped in a series to generate different
product types and sizes. It should be noted that with the selection of products and
sizes, the sequence of operations stays the same.
Figure 3: Combination Layout Example
D. FIXED POSITION LAYOUT
Also called a project type layout. The material or major components remain in
a fixed position in this form of layout and equipment, machines, men and other
materials are brought to this location. This style of layout is acceptable when
assembling one or a few pieces of similar heavy goods because when the assembly
consists of a large number of heavy parts, the cost of shipping these parts is very high.
53
Advantages:
1. Assists in job expansion and develops the abilities of the operators.

2. The staff are associated with a commodity in which they are involved and proud of
doing the job.
3. Greater versatility with this layout form.
4. Layout capital expenditure is lower
E. GROUP OR CELLULAR LAYOUT
In terms of variance in batch sizes and operating sequences, there is a trend

now to add an element of versatility into the production system. It has become all the
more important to group equipment for carrying out a sequence of operations on
groups of similar components or items.
The analysis and evaluation of objects to organize them into groups with
similar characteristics is Group Technology (GT). A hybrid between the pure process
layout and the pure flow line (product) layout can be created using GT. This
technique is very useful for businesses that manufacture small batches of different
components to allow them to take advantage of flow line layout and economics.
Two basic steps are involved in applying group technology; the first step is to
define member families or groups. The second stage in the implementation of group
technology is to organize the equipment of the plants used to process a specific
component family. Group technology decreases the preparation time for jobs in
manufacturing. It decreases the time for set-up.
The group layout is therefore a mixture of the product layout and the layout of
the process. This incorporates the benefit of both layout techniques. If there are m-
machines and n-components, the m-machines and n-components would be divided
into a different number of machine-component cells (group) in a group layout (Group-
Technology Layout), so that all the components allocated to a cell are almost
processed within the cell itself. Here the aim is to minimize the movements between
cells.
The basic objective of a group technology layout is to define families of
components that are grouped into cells that require similar fulfillment of all the
specifications of the machines. Each cell is capable of satisfying all of the component
family requirements assigned to it.
54
Advantages of Group Technology Layout

Group Technology layout can increase—
1. Component standardization and rationalization.
2. Reliability of estimates.
3. Effective machine operation and productivity.
4. Customer service.
It can decrease the—
1. Paper work and overall production time.
2. Work-in-progress and work movement.
3. Overall cost.
LAYOUT DESIGNS:
A. PRODUCT LAYOUT
The methodology involved in the design of production lines and assembly

lines is mainly concerned with the pacing, alignment and balance between the various
stages of the process. For process layouts, because of the vast amount of transport and
handling involved, the relative arrangement of departments and machines is the
critical factor.
 Procedure in Designing Process Layout

1. List each functional work centre and define it.
2. Obtain a sketch of the facility being built and a description.
3. Identify and estimate the volume of flow of materials and workers between
work centre
4. To obtain a good general layout, use standardized analytical methods.
5. Evaluate and change the configuration, integrating information such as the
orientation of the unit, the location of the storage area and access to
equipment.
B. PRODUCT LAYOUT
Duplicate equipment is used to eliminate backtracking in product layout,

equipment or divisions are allocated to a single product line, and a straight-line flow
of material movement is achievable. When the batch size of a given product or part is
large compared to the number of different products or parts created, implementing a
product layout 's possible.
55
 Assembly Line is a special case of product layout is assembly lines. The term
assembly line refers, in a general sense, to progressive assembly connected by
some material-handling system. The standard assumption is that there is some
sort of pacing and the allowed processing time for all workstations is equal.
There are major distinctions between line types under this broad definition. The
determination of the optimum configuration of operators and buffers in a
production flow process is a more challenging issue in this design.
Figure 4: Assembly Line Example
Assembly-line systems perform well when there is a slight difference in the

periods needed for the individual sub-assemblies work. If the tasks are very difficult,
this can lead to a line breakdown and cannot be able to keep up with the flow of
greater assembly-time variation. Parts from the previous workstation can encounter
excessive idle time. An alternative to these, a series of workstations connected by
gravity conveyors act as buffers between successive movements to avoid idle time or
delays.
Assembly lines can be in straight, U-type and branched configurations.
* Line Balancing:
Assembly-line balancing also has impact in layout. This would arise when the
workstation scale or the number used would need to be physically changed for line
balance purposes. A moving conveyor that moves a series of workstations in a
uniform time period called the workstation cycle time is the most typical assembly
line. At each workstation, work is carried out either by adding components or
completing assembly operations on the product. The work performed in the station
consists of several activities is explained by the motion-time analysis.
56
Steps in Balancing the Assembly Line:

1. Specify the sequential relationships between tasks using a diagram of precedence.
2. Determine the workstation cycle time required
3. Determine the theoretical minimum number of workstations required to satisfy the

time restriction of the workstation period
4. Choose a primary rule to delegate tasks to workstations, and a secondary rule to

shift ties.
5. Assign tasks, one at a time, to the first workstation until the number of the task
times is equal to the time of the workstation cycle, or because of time or
sequence constraints, no other tasks are possible. For workstation 2,
workstation 3, and so on, repeat the procedure until all tasks are completed.
6. Evaluate the efficiency of the line
7. If efficiency is unacceptable, re-balance the line using a different decision method
Sample Problem:
Using the information contained in the table shown, do each of the following:
1. Draw a precedence diagram.
2. Assuming an eight-hour workday, compute the cycle time needed to obtain an
output of 400 units per day.
3. Determine the minimum number of workstations required.
4. Assign tasks to workstations using this rule: Assign tasks according to greatest
number of following tasks. In case of a tie, use the tiebreaker of assigning the
task with the longest processing time first.
5.Compute the resulting percent idle time and efficiency of the system.
57
Solution:
1. Drawing a precedence diagram is a relatively straightforward task. Begin with
activities with no predecessors. We see from the list that tasks a and c do not have
predecessors. We build from here.
58
Important physical facilities to be organize

1. Factory building
Factors Considered in Industrial Building:
A. Design of the Building
Factors in the designing of a factory building:
1. Flexibility
2. Product and equipment
3. Can be expanded
4. Employee facilities and service area
B. Types of Buildings
1. Single-storey buildings
2. Multi-storey buildings
2. Lighting
Control of Lighting:
1. Install an individual switch for a row of lighting fixtures nearest to the
windows for uniform light distribution. Depending on whether or not
natural light is appropriate, this allows the lights to be turned on and
off.
59
2. Avoid using particularly shiny, reflective work surfaces to avoid glare.

3. To attain the optimal level for a specific fine work, use localized lighting.
4. Regularly clean light fixtures and follow a maintenance plan to avoid old
bulbs and electrical hazards from flickering due to worn out cables.
5. Avoid direct eye contact with sources of light. This is normally done by
correctly positioning them. Also the use of diffuser is effective.
3. Climatic conditions
Workplace climate management is of utmost importance for the health and
comfort of workers and for the maintenance of greater productivity. Staff can feel
very uncomfortable with excess heat or cold, and their productivity decreases. This
may however, lead to accidents. It is necessary to avoid extreme heat or cold and to
maintain optimal climate conditions where possible so that the body can maintain a
thermal balance.
4. Ventilation
The dynamic parameter which complements the notion of air space is
ventilation. The smaller the office, the greater the ventilation should be for a given
number of employees.
Ventilation is different from circulating air. Ventilation combines fresh air
with polluted air, while air-circulation merely transfers the air without refurbishing it.
Where the air temperature and humidity are high, not only is it inefficient to circulate
the air, but it also increases the absorption of heat. The heat produced by machines
and individuals at work is distributed by ventilation. Adequate ventilation should be
seen as an essential factor in preserving the health and efficiency of the worker.
5. Work-related welfare facilities
A. Drinking Water
B. Sanitary Facilities
C. First Aid and Medical Facilities
D. Rest Facilities
E. Feeding Facilities
F. Child Care Facilities
G. Recreational Facilities
60
PROGRESS CHECK:
A. Discussion: Briefly explain the following in 3-10 sentences. (5 points each)
1. Differentiate types of layout

2. Identify ways or means were layout can help or hinder productivity
B. Problem Solving:(10 points)
1. An assembly line with 17 tasks is to be balanced. The longest task is 2.4 minutes,
and the total time for all tasks is 18 minutes. The line will operate for 450 minutes per
day.
a.What are the minimum and maximum cycle times?
b.What range of output is theoretically possible for the line?
c.What is the minimum number of workstations needed if the maximum
output rate is to be sought?
d.What cycle time will provide an output rate of 125 units per day?
e.What output potential will result if the cycle time is (1) 9 minutes? (2) 15
minutes?
2. A manager wants to assign tasks to workstations as efficiently as possible, and

achieve an hourly output of 33 1⁄3 units. Assume the shop works a 60-minute hour.
Assign the tasks shown in the accompanying precedence diagram (times are in
minutes) to workstations using the following rules:
a. In order of most following tasks. Tiebreaker: greatest positional weight.
b. In order of greatest positional weight.
c. What is the efficiency?
61
REFERENCES
Textbook/s:

Online:
https://www.thebalancesmb.com/production-routing
62
LEARNING GUIDE
Week No.: __4__
TOPIC/S
 LINEAR PROGRAMMING
1. Model formulation
2. Approaches to linear programming problems
A. Graphical Method
B. Simplex Method
1. formulate linear programming model from a given problem; and

2. analyze and solve problems with regards to linear programming for
profit maximization and cost minimization using geometric and matrix
approach.
Linear programming is a powerful quantitative method that operations managers and

other managers use to achieve optimum solutions to issues such as budgets and available
materials, manpower, and machine time that require constraints or limitations. These issues
are referred to as constrained issues in optimization
Linear programming is a branch of applied mathematics that deals with solving

problems of optimization of a particular subset. A linear problem of programming involves:
 maximize or minimize a linear equation consisting of a certain number of variables
(known as the objective function);
 set of constraints that can be expressed in the objective function by a system of linear
inequalities / equations of the variables used.
63
A. Problem Formulation:
Problem formulation or modelling a linear programming problem consists of

indicating the following three features:
 Variables – represent choices available to the decision maker in terms of amounts of

either inputs or outputs
 Constraints – are boundaries or limitations that restricts the available alternatives for
decision makers.
Constraints can either be, are less than or equal to, greater than or equal to, and
equal to.
 Objective function – is a linear function in terms of decision variables with correct
coefficients, which determines a solution that is either to be maximized or
minimized.
 Parameters - are statements represented by symbols that corresponds to decision
variables and numeral values. They are fixed value used when solving a model
Example:
Given a situation that involves the production of three possible products, each of
which will yield a certain profit per unit, and each requires a certain use of two resources that
are in limited supply: labor and materials. The objective is to determine how much of each
product to make to achieve the greatest possible profit while satisfying all constraints
Solution:
64
In order for linear program models to be effective, certain assumptions must be

satisfied:
1.Linearity: The impact of decision variables is linear in constraints and the objective
function.
2.Divisibility: Non-integer values of decision variables are acceptable.
3.Certainty: Values of parameters are known and constant.
4.Non-negativity: Negative values of decision variables are unacceptable.
B. Problem Solving: Using Graphical Method Approach
The graphical method can be used to solve a linear programming problem with two
decision variables. In a linear programming problem, there are usually infinitely many
solutions which satisfy all the constraints simultaneously.
The general procedure followed in the graphical approach is as follows:

1. Set up the objective function and the constraints in mathematical format.
2. Plot the constraints.
3. Identify the feasible solution space.
4. Plot the objective function.
5. Determine the optimum solution.
Finding the feasible region:
1. The non-negativity constraints x ≥ 0 and y ≥ 0 confine all the feasible solutions to

the space above or on the x-axis and to the right or on the y-axis.
2. The feasible region is determined by first replacing the inequality sign by “=” for
each constraint to yield a straight line equation. Each straight line is then plotted on
the Cartesian plane, and the region in which each inequality holds is the resulting
solution space.
65
Example 1:
Finding the optimal solution
The fundamental theorem of linear programming states that: The maximum (or
minimum) value of the objective function is achieved at one of the vertices of the feasible
region. The optimal solution can be determined by observing the direction in which the
objective function increases (for maximization problem) or the direction in which the
objective function decreases (for minimization problem).
First of all, a search line is drawn by assigning an arbitrary value to the objective
function. To determine the optimal solution, obtain a family of parallel lines by moving the
search line “uphill” to determine the maximum solution, or “downhill” to determine the
minimum solution, to the point where any further movement would fall outside the feasible
region.
66
Note:
Notice that the feasible region of a linear programming problem is a convex polygon,
if it is bounded. Thus the maximum and the minimum values of an objective function occur at
the vertices, or at all the points of a bounded line segment of the feasible region.
Hence, an alternative way of finding an optimal solution is to evaluate the objective function
at each of the vertices of the feasible region, and then choose a vertex at which the value of
the function is optimal
67
Example 2:
68
Every linear programming problem falls into one of the four categories:
1. Has an optimal solution – if the optimal solution is achieved at only one feasible point.
2. Has multiple optimal solutions – if the optimal solution is achieved at every point on
the boundary line joining two vertices of the feasible region.
3. Infeasible – if a feasible solution to the linear programming problem does not exist.
4. Unbounded solutions – if the constraints do not sufficiently restrain the objective
function so that for any given feasible solution, another feasible solution can be found
that makes a further improvement to the objective function.
C. Problem Solving: Using Matrix Method Approach
The simplex method allows us to solve problems that cannot be solved geometrically
(when the number of variables increases to three or more). The simplex method solves linear
programming problems in iterations where the same computational steps are repeated a
number of times before the optimal solution is reached.
Advantages of the simplex method:

1. Completely mechanical (use matrices, elementary row operations, and basic
arithmetic).
2. Can solve linear programming problems having any number of variables and
constraints.
To use the simplex method, the linear programming problem must be in the standard
form.
For maximization problem, all the constraints (other than the non-negative conditions),
are of the type with non-negative right-hand side.
For minimization problem, all the constraints are of the type with non-negative right
hand side.
All the variables are non-negative.
The objective function may be maximization or minimization.
The simplex method requires that all the constraints be written in the form of
equations.
A constraint of the type ≤ (≥ ) can be converted to an equation by adding a slack
variable to (subtracting a surplus variable from) the left side of the constraint.
69
Example 1:
Solution:
Follow the steps of the simplex algorithm:
70
71
PROGRESS CHECK:
72
REFERENCES:
Textbook/s:

Online:
https://www.scribd.com/document/233748672/Linear-Programming
https://www.youtube.com/watch?v=8IRrgDoV8Eo
https://www.youtube.com/watch?v=O6QO3J_85as
https://www.youtube.com/watch?v=M8POtpPtQZc
https://www.youtube.com/watch?v=SNc9NGCJmns
73
LIST OF REFERENCES

74
ABOUT THE AUTHOR/S
This module's author is a licensed mechanical engineer who graduated in 2002 with her
course at TUP-Visayas. Her preceding industry experience for approximately 10 years covers
maintenance and operation. She works as a specialist, officer, and supervisor that allows her
to apply and practice various management functions. She is currently a TUP-Visayas faculty.

Updated BES 323 - WK 1-4

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Updated BES 323 - WK 1-4

Uploaded by

Copyright:

Available Formats

1

TECHNOLOGICAL UNIVERSITY OF THE PHILIPPINES VISAYAS

DEPARTMENT: MECHANICAL ENGINEERING

.ENGR. ERLYN H. MALIGAYA

The Technological University of the Philippines shall commit to provide quality

T - Transparent and participatory governance

3. solve practical problems based on industry setting using production management

GENERAL GUIDELINES/CLASS RULES

Students with Special Needs:

The student will be graded according to the following:

Average of examinations - 50%

Prelim Grade : [(Prelim Exam x 0.50) + (Assessment x 0.50)]

The passing grade for this course is 5.0.

Week No.: __1__

Upon completing this Learning Module, student will be able to:

1. identify the concept of production and its classification;

Production is a part of an organization, which is incharge in the transformation of

Production management reflected a new name of operations management in the 1970s,

Figure 1:Historical Summary of Production Management

Figure 2: Schematic Diagram of a Production System

Production System Classification:

Production system can be categorized on the based on the following categories:

1. Production type such as job shop, batch production, or mass production

2. Plant size which can be large, medium or small size plant

3. Product type that can either be complex or simple to manufacture

4. Physical flow of material that could be automated flow, semi-automated flow or

5. Demand pattern or nature of order where it can stable or unstable demand

Production Management Define

It is also a set of interrelated management activities involved in the production of certain

Production Management Objectives:

* Right time of delivery is one of the important parameters to be considered to

* Right manufacturing cost should be based on established amount used to

Production Management Scope:

Management of production and operations requires the conversion of raw materials

1. Location of facilities is the process where venue of operation is selected.

2. Plant layouts and material handling

A. Plant Layout is a plan for the optimal arrangement of facilities, including

4. Process design is a macroscopic decision-making process for the

5. Production and planning control defined as the process of production planning

* Main functions of production planning and control includes:

7. Materials management is the aspect of the management which is primarily

8. Maintenance management is keeping the machines and other equipment in such

The outputs of a production system are normally called products.

These products may be:

Differences between product and service:

Models of Production system:

A model is a representation of reality that captures an object/system/critical process's

I. Physical model: Replica of a physical object with a change of scale.

II. Schematic model: These are 2-D models which represents

III. Mathematical model:

Formulas and equations have been subordinates of physical science. Using

Productivity is the relation between the output (product/service) and input

This ratio of efficiency must be at least 1 for any company's sustainability.

Importance of Higher Productivity:

 It helps to lower costs per unit and thereby raise income.

Productivity can be computed on individual or aggregate basis. It could be partial, multifactor

Productivity can be presented by the formula:

1. Partial Productivity is a ratio of output to a specific input. It involves with the

Example of Formulas Used for Partial Productivity Computation:

2. Multifactor Productivity is a measure of output to a group of inputs. It concerns the

Example of Formulas Used for Multifactor Productivity:

3. Total Productivity is a computation of output to all inputs used in producing the

1. Given the following data, compute for the productivity:

Week No.: 1

Week No.: 2