PDF Drive is your search engine for PDF files. As of today we have 77,, eBooks for you to download for free. No annoying ads, no download limits, enjoy . meteolille.info Page 3. Contents. Chapter 1 Improving Operations Performance with World Class Manufacturing. This book is about operations management. The subject matter is presents an introduction and overview of operations management. Among the issues it.
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This book is a part of the course by Jaipur National University, Jaipur. This book contains the course content for Operation Management. JNU, Jaipur. We were motivated to write this book to help students understand operations .. Many of the decisions made by operations managers are dependent on. A catalogue record for this book is available from the British Library. Library of Operations management / Nigel Slack, Stuart Chambers, Robert Johnston.
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Join With us. Today Updates. Punmia, Ashok Kumar Jain, Arun April 8. April 7. A Practical Course By S. April 4. Popular Files. January Manufacturing plants supplying to a specific market area: This type of strategy is useful where market proximity consideration dominates the resources and technology considerations. This strategy requires great deal of coordination from the corporate office.
An extreme example of this strategy is that of soft drinks bottling plants. Plants divided on the basis of the process or stages in manufacturing: Each production process or stage of manufacturing may require distinctively different equipment capabilities, labour skills, technologies, and managerial policies and emphasis.
Since the products of one plant feed into the other plant, this strategy requires much centralized coordination of the manufacturing activities from the corporate office that are expected to understand the various technological aspects of all the plants. Plants emphasizing flexibility: This requires much coordination between plants to meet the changing needs and at the same time ensure efficient use of the facilities and resources. Frequent changes in the long-term strategy in order to improve be efficiently temporarily, are not healthy for the organization.
In any facility location problem the central question is: This is acceptable when it does not violate the basic business and managerial outlines, i. For example, expansion should not compromise quality, delivery, or customer service. Unless there are very compelling reasons, relocation is not done. The reasons will be either bringing radical changes in technology, resource availability or other destabilization. All these factors are applicable to service organizations, whose objectives, priorities and strategies may differ from those of hardcore manufacturing organizations.
In Case of Global Location Because of globalisation, multinational corporations are setting up their organizations in India and Indian companies are extending their operations in other countries.
In case of global locations there is scope for virtual proximity and virtual factory. Many firms use the communications highway for conducting a large portion of their business transactions. Logistics is certainly an important factor in deciding on a location—whether in the home country or abroad. Markets have to be reached.
Customers have to be contacted. Hence, a market presence in the country of the customers is quite necessary. The location decision need not always necessarily pertain to own operations. Tangible Reasons The trangible reasons for setting up an operations facility abroad could be as follows: Reaching the customer: One obvious reason for locating a facility abroad is that of capturing a share of the market expanding worldwide.
The phenomenal growth of the GDP of India is a big reason for the multinationals to have their operations facilities in our country. An important reason is that of providing service to the customer promptly and economically which is logistics-dependent. Therefore, cost and case of logistics is a reason for setting up manufacturing facilities abroad. Reaching the customer is thus the main objective. The tangible costs could be the logistics related costs; the intangible costs may be the risk of operating is a foreign country.
The other tangible reasons could be as follows: This may be due to lower labour costs, lower raw material cost, better availability of the inputs like materials, energy, water, ores, metals, key personnel etc.
Intangible Reasons The intangible reasons for considering setting up an operations facility abroad could be as follows: Organisational Learning-related Reasons a The firm can learn advanced technology. For example, it is possible that cutting-edge technologies can be learn by having operations in an technologically more advanced country.
Such learning may help the entire product-line of the company. A physical location there may be essential towards this goal. For this reason, it may have to be physically present where the action is. If the firm has a manufacturing plant there, it will have intensive interaction with the suppliers in that country from whom there may be much to learn in terms of modern and appropriate technology, modern management methods, and new trends in business worldwide.
This may help the firm in lobbying with the government of that country and with the business associations in that country. The firm could, thus, reduce its supply risks. Thus, the firm can gather the best of people from across the globe. If one market goes slow the other may be doing well, thus lowering the overall risk. Managers of both service and manufacturing organizations must weigh many factors when assessing the desirability of a particular site, including proximity to customers and suppliers, labour costs, and transportation costs.
Location conditions are complex and each comprises a different Characteristic of a tangible i. Freight rates, production costs and non-tangible i. Location conditions are hard to measure. Tangible cost based factors such as wages and products costs can be quantified precisely into what makes locations better to compare. On the other hand non-tangible features, which refer to such characteristics as reliability, availability and security, can only be measured along an ordinal or even nominal scale.
Other non-tangible features like the percentage of employees that are unionized can be measured as well. To sum this up non-tangible features are very important for business location decisions. It is appropriate to divide the factors, which influence the plant location or facility location on the basis of the nature of the organisation as 1. General locational factors, which include controllable and uncontrollable factors for all type of organisations.
Specific locational factors specifically required for manufacturing and service organisations. Location factors can be further divided into two categories: Dominant factors are those derived from competitive priorities cost, quality, time, and flexibility and have a particularly strong impact on sales or costs.
Secondary factors also are important, but management may downplay or even ignore some of them if other factors are more important.
Proximity to markets 2. Supply of materials 3. Transportation facilities 4. Infrastructure availability 5. External economies 7. Government policy 9. Climate conditions Supporting industries and services Community and labour attitudes Proximity to markets: Every company is expected to serve its customers by providing goods and services at the time needed and at reasonable price organizations may choose to locate facilities close to the market or away from the market depending upon the product.
When the buyers for the product are concentrated, it is advisable to locate the facilities close to the market. Nearness to the market ensures a consistent supply of goods to customers and reduces the cost of transportation. Supply of raw material: It is essential for the organization to get raw material in right qualities and time in order to have an uninterrupted production.
This factor becomes very important if the materials are perishable and cost of transportation is very high. General guidelines suggested by Yaseen regarding effects of raw materials on plant location are: Nearness to raw material is important in case of industries such as sugar, cement, jute and cotton textiles. Transportation facilities: Speedy transport facilities ensure timely supply of raw materials to the company and finished goods to the customers.
The transport facility is a prerequisite for! There are five basic modes of physical transportation, air, road, rail, water and pipeline. Goods that are mainly intended for exports demand a location near to the port or large airport.
The choice of transport method and hence the location will depend on relative costs, convenience, and suitability. Thus transportation cost to value added is one of the criteria for plant location. Infrastructure availability: The basic infrastructure facilities like power, water and waste disposal, etc. Certain types of industries are power hungry e. The non-availability of power may become a survival problem for such industries. Process industries like paper, chemical, cement, etc.
Supply of water in large amount and good quality, and mineral content of water becomes an important factor. A waste disposal facility for process industries is an important factor, which influences the plant location.
Labour and wages: The problem of securing adequate number of labour and with skills specific is a factor to be considered both at territorial as well as at community level during plant location.
Importing labour is usually costly and involve administrative problem. The history of labour relations in a prospective community is to be studied.
Prospective community is to be studied. Productivity of labour is also an important factor to be considered. External economies of scale: External economies of scale can be described as urbanization and locational economies of scale. In the case of urbanization economies, firms derive from locating in larger cities rather than in smaller ones in a search of having access to a large pool of labour, transport facilities, and as well to increase their markets for selling their products and have access to a much wider range of business services.
Location economies of scale in the manufacturing sector have evolved over time and have mainly increased competition due to production facilities and lower production costs as a result of lower transportation and logistical costs.
This led to manufacturing districts where many companies of related industries are located more or less in the same area. This high efficient production system was one main factor in the Japanese car industry for being so successful. Just in time ensures to get spare parts from suppliers within just a few hours after ordering. To fulfill these criteria corporations have to be located in the same area increasing their market and service for large corporations.
By looking at capital as a location condition, it is important to distinguish the physiology of fixed capital in buildings and equipment from financial capital. Fixed capital costs as building and construction costs vary from region to region. But on the other hand buildings can also be rented and existing plants can be expanded. Financial capital is highly mobile and does not very much influence decisions.
Capital becomes a main factor when it comes to venture capital. In that case young, fast growing or not high tech firms are concerned which usually have not many fixed assets. These firms particularly need access to financial capital and also skilled educated employees. Government policy: The policies of the state governments and local bodies concerning labour laws, building codes, safety, etc.
In order to have a balanced regional growth of industries, both central and state governments in our country offer the package of incentives to entrepreneurs in particular locations. The incentive package may be in the form of exemption from a safes tax and excise duties for a specific period, soft loan from financial institutions, subsidy in electricity charges and investment subsidy. Some of these incentives may tempt to locate the plant to avail these facilities offered.
Climatic conditions: The geology of the area needs to be considered together with climatic conditions humidity, temperature. Climates greatly influence human efficiency and behaviour. Some industries require specific climatic conditions e. Supporting industries and services: Now a day the manufacturing organisation will not make all the components and parts by itself and it subcontracts the work to vendors. So, the source of supply of component parts will be the one of the factors that influences the location.
The various services like communications, banking services professional consultancy services and other civil amenities services will play a vital role in selection of a location. Community and labour attitudes: Community attitude towards their work and towards the prospective industries can make or mar the industry.
Community attitudes towards supporting trade union activities are important criteria. Facility location in specific location is not desirable even though all factors are favouring because of labour attitude towards management, which brings very often the strikes and lockouts.
Community infrastructure and amenity: All manufacturing activities require access to a community infrastructure, most notably economic overhead capital, such as roads, railways, port facilities, power lines and service facilities and social overhead capital like schools, universities and hospitals.
These factors are also needed to be considered by location decisions as infrastructure is enormously expensive to build and for most manufacturing activities the existing stock of infrastructure provides physical restrictions on location possibilities. They are listed in the order of their importance as follows. Favourable labour climate 2. Proximity to markets 3. Quality of life 4. Proximity to suppliers and resources 5. Utilities, taxes, and real estate costs 1.
Favorable labour climate: A favorable labour climate may be the most important factor in location decisions for labour-intensive firms in industries such as textiles, furniture, and consumer electronics. Labour climate includes wage rates, training requirements, attitudes toward work, worker productivity, and union strength. Many executives consider weak unions or al low probability of union organizing efforts as a distinct advantage.
After determining where the demand for goods and services is greatest, management must select a location for the facility that will supply that demand. Locating near markets is particularly important when the final goods are bulky or heavy and outbound transportation rates are high.
For example, manufacturers of products such as plastic pipe and heavy metals all emphasize proximity to their markets. Quality of life: Good schools, recreational facilities, cultural events, and an attractive lifestyle contribute to quality of life.
This factor is relatively unimportant on its own, but it can make the difference in location decisions. Proximity to suppliers and resources: In many companies, plants supply parts to other facilities or rely on other facilities for management and staff support. These require frequent coordination and communication, which can become more difficult as distance increases. Utilities, taxes, and real estate costs: Other important factors that may emerge include utility costs telephone, energy, and water , local and state taxes, financing incentives offered by local or state governments, relocation costs, and land costs.
SECONDARY FACTORS There are some other factors needed to be considered, including room for expansion, construction costs, accessibility to multiple modes of transportation, the cost of shuffling people and materials between plants, competition from other firms for the workforce, community attitudes, and many others.
For global operations, firms are emphasizing local employee skills and education and the local infrastructure.
Customers usually look about how close a service facility is, particularly if the process requires considerable customer contact. For example, few people would like to go to remotely located dry cleaner or supermarket if another is more convenient. Thus the influence of location on revenues tends to be the dominant factor. With a warehouse nearby, many firms can hold inventory closer to the customer, thus reducing delivery time and promoting sales.
Avoiding areas where competitors are already well established often pays. However, in some industries, such as new-car sales showrooms and fast- food chains, locating near competitors is actually advantageous. The strategy is to create a critical mass, whereby several competing firms clustered in one location attract more customers than the total number who would shop at the same stores at scattered locations.
Recognizing this effect, some firms use a follow —the leader strategy when selecting new sites. Retail activity in the area is important, as shoppers often decide on impulse to go shopping or to eat in a restaurant.
Visibility involves distance from the street and size of nearby buildings and signs. His model took into account several spatial factors for finding the optimal location and minimal cost for manufacturing plants. The point for locating an industry that minimizes costs of transportation and labour requires analysis of three factors: The labour distortion, in which more favourable sources of lower cost of labour may justify greater transport distances.
Agglomeration and degglomerating. Also supporting companies, such as facilities that build and service machines and financial services, prefer closer contact with their customers. Degglommeration occurs when companies and services leave because of over concentration of industries or of the wrong types of industries, or shortages of labour, capital, affordable land, etc.
Weber also examined factors leading to the diversification of an industry in the horizontal relations between processes within the plant.
Focusing only on the mechanics of the Weberian model could justify greater transport distances for cheap labour and unexploited raw materials. When resources are exhausted or workers revolt, industries move to different countries. Some of the popular models are: Factor rating method 2. Weighted factor rating method 3. Load-distance method 4. Centre of gravity method 5. Break even analysis 2. Identify the important location factors.
Rate each factor according to its relative importance, i. Assign each location according to the merits of the location for each factor. Calculate the rating for each location by multiplying factor assigned to each location with basic factors considered. Find the sum of product calculated for each factor and select best location having highest total score.
Let us assume that a new medical facility, Health-care, is to be located in Delhi. The location factors, factor rating and scores for two potential sites are shown in the following table. Which is the best location based on factor rating method? Location factor Factor Rating rating Location 1 Location 2 1. Facility utilization 8 3 5 2. Total patient per month 5 4 3 3. Average time per emergency trip 6 4 5 4.
Land and construction costs 3 1 2 5. Facility utilization 8 3 24 5 40 2. Total patient per 5 4 20 3 15 month 3. Average time per 6 4 24 5 30 emergency trip 4. Land and 3 1 3 2 6 construction costs 5. Employee 5 5 25 3 15 preferences Total 96 Total The total score for location 2 is higher than that of location 1. Hence location 2, is the best choice. The site with the highest weighted score is selected as the best choice. What is the weighted score for these sites?
Which is the best location? Location factor Weight Scores Location 1 Location 2 1. Facility utilization 25 3 5 2. Total patient km per month 25 4 3 3. Average time per emergency trip 25 3 3 4. Land and construction costs 15 1 2 5. Employee preferences 10 5 3! The objective is to select a location that minimizes the total weighted loads moving into and out of the facility. The distance between two points is expressed by assigning the points to grid coordinates on a map.
An alternative approach is to use time rather than distance. It will receive inbound shipments from several suppliers, including one in Ghaziabad.
If the new warehouse were located at Gurgaon, what would be the distance between the two facilities? If shipments travel by truck, the distance depends on the highway system and the specific route taken. Computer software is available for calculating the actual mileage between any two locations in the same county. However, for load-distance method, a rough calculation that is either Euclidean or rectilinear distance measure may be used.
Euclidean distance is the straight-line distance, or shortest possible path, between two points. Essentially, this distance is the sum of the two dashed lines representing the base and side of the triangle in figure. The distance travelled in the x-direction is the absolute value of the difference in x-coordinates. Depending on the industry, a load may be shipments from suppliers, between plants, or to customers, or it may be customers or employees travelling to or from the facility.
The firm seeks to minimize its load- distance, generally by choosing a location so that large loads go short distances. To calculate a load-distance for any potential location, we use either of the distance measures and simply multiply the loads flowing to and from the facility by the distances travelled.
These loads may be expressed as tones or number of trips per week. This calls for a practical example to appreciate the relevance of the concept. Let us visit a new Health-care facility, once again.
The new Health-care facility is targeted to serve seven census tracts in Delhi. The table given below shows the coordinates for the centre of each census tract, along with the projected populations, measured in thousands. Customers will travel from the seven census tract centres to the new facility when they need health-care. Two locations being considered for the new facility are at 5. Details of seven census tract centres, co-ordinate distances along with the population for each centre are given below.
If we use the population as the loads and use rectilinear distance, which location is better in terms of its total load- distance score? Census tract x, y Population l 1 A 2. Calculate the load-distance score for each location. Using the coordinates from the above table.
Calculate the load-distance score for each tract. Therefore, the location in census tract F is a better location. This method can be used to assist managers in balancing cost and service objectives. The centre of gravity method takes into account the locations of plants and markets, the volume of goods moved, and transportation costs in arriving at the best location for a single intermediate warehouse. The centre of gravity is defined to be the location that minimizes the weighted distance between the warehouse and its supply and distribution points, where the distance is weighted by the number of tones supplied or consumed.
The first step in this procedure is to place the locations on a coordinate system. The origin of the coordinate system and scale used are arbitrary, just as long as the relative distances are correctly represented. This can be easily done by placing a grid over an ordinary map. The centre of gravity is determined by the formula. Customers will travel from the seven census tract centres to the new facility when they need health- care. Details of seven census tract centres, coordinate distances along with the population for each centre are given below.
To calculate the centre of gravity, start with the following information, where population is given in thousands. Census tract x, y Population l Lx Ly 1 A 2. Using the centre of gravity as starting point, managers can now search in its vicinity for the optimal location.
Break even analysis is concerned with finding the point at which revenues and costs agree exactly. The Fig. Break even point is the volume of output at which neither a profit is made nor a loss is incurred.
This will be helpful in identifying the range of production volume over which location can be selected. Potential locations X, Y and Z have the cost structures shown below. The ABC company has a demand of 1,30, units of a new product.
Three potential locations X, Y and Z having following cost structures shown are available. Select which location is to be selected and also identify the volume ranges where each location is suited? Solve for the crossover between X and Y: From the graph Fig.
These costs are influenced by a number of factors as discussed earlier. The various costs which decide locational economy are those of land, building, equipment, labour, material, etc.
Other factors like community attitude, community facilities and housing facilities will also influence the selection of best location. Economic analysis is carried out to decide as to which locate best location. The following illustration will clarify the method of evaluation of best layout selection. From the following data select the most advantageous location for setting a plant for making transistor radios.
It is a floor plan of the physical facilities, which are used in production. The objectives of plant layout are: Streamline the flow of materials through the plant. Facilitate the manufacturing process. Maintain high turnover of in-process inventory. Minimise materials handling and cost. Effective utilisation of men, equipment and space. Make effective utilisation of cubic space. Flexibility of manufacturing operations and arrangements. Provide for employee convenience, safety and comfort.
Minimize investment in equipment. Minimize overall production time. Maintain flexibility of arrangement and operation. Facilitate the organizational structure. Principle of integration: A good layout is one that integrates men, materials, machines and supporting services and others in order to get the optimum utilisation of resources and maximum effectiveness. Principle of minimum distance: This principle is concerned with the minimum travel or movement of man and materials.
The facilities should be arranged such that, the total distance travelled by the men and materials should be minimum and as far as possible straight line movement should be preferred. Principle of cubic space utilisation: The good layout is one that utilise both horizontal and vertical space.
It is not only enough if only the floor space is utilised optimally but the third dimension, i. Principle of flow: A good layout is one that makes the materials to move in forward direction towards the completion stage, i. Principle of maximum flexibility: The good layout is one that can be altered without much cost and time, i. Principle of safety, security and satisfaction: A good layout is one that gives due consideration to workers safety and satisfaction and safeguards the plant and machinery against fire, theft, etc.
Principle of minimum handling: A good layout is one that reduces the material handling to the minimum.
Process layout 2. Product layout 3. Combination layout 4. Fixed position layout 5. Group layout 2. All machines performing similar type of operations are grouped at one location in the process layout e. Thus, in process layout the arrangement of facilities are grouped together according to their functions. A typical process layout is shown in Fig. The flow paths of material through the facilities from one functional area to another vary from product to product.
Usually the paths are long and there will be possibility of backtracking. Process layout is normally used when the production volume is not sufficient to justify a product layout. Typically, job shops employ process layouts due to the variety of products manufactured and their low production volumes. In process layout machines are better utilized and fewer machines are required.
Flexibility of equipment and personnel is possible in process layout. Lower investment on account of comparatively less number of machines and lower cost of general purpose machines. Higher utilisation of production facilities. A high degree of flexibility with regards to work distribution to machineries and workers.
The diversity of tasks and variety of job makes the job challenging and interesting. Supervisors will become highly knowledgeable about the functions under their department.
Limitations 1. Backtracking and long movements may occur in the handling of materials thus, reducing material handling efficiency. Material handling cannot be mechanised which adds to cost. Process time is prolonged which reduce the inventory turnover and increases the in- process inventory. Lowered productivity due to number of set-ups. Throughput time gap between in and out in the process time is longer. Space and capital are tied up by work-in-process.
If the volume of production of one or more products is large, the facilities can be arranged to achieve efficient flow of materials and lower cost per unit. Special purpose machines are used which perform the required function quickly and reliably.
The product layout is selected when the volume of production of a product is high such that a separate production line to manufacture it can be justified. In a strict product layout, machines are not shared by different products. Therefore, the production volume must be sufficient to achieve satisfactory utilisation of the equipment.
A typical product layout is shown in Fig. The flow of product will be smooth and logical in flow lines. In-process inventory is less. Throughput time is less. Minimum material handling cost.
Simplified production, planning and control systems are possible. Less space is occupied by work transit and for temporary storage. Reduced material handling cost due to mechanised handling systems and straight flow.
Customer service schedule Producing quantities to meet expected demand. Meeting the required delivery date for goods or services. Adaptability for future survival. Relating these six operations sub-goals to the broader strategic choices above, it is clear that quality, efficiency, and dependability customer service are reflected in the sub-goals. Once choices about product and process are made, boundaries for meeting the other operations objectives are set.
Each decision involves important tradeoffs between choices about product and process versus choices about quality, efficiency, schedule and adaptability.
Once a decision is made, it leads to many choices. Where should facilities be located? How large should they be? What degree of automation should be used? How skilled must labour be to operate the automated equipment? Will the product be produced on site? How do these decisions impact quality, efficiency, schedule customer service , and adaptability?
Are we prepared for changes in product or service, or do these decisions lock in our operations? These are examples of the tough, crucial tradeoffs that are at the heart of understanding the choices that must be made when planning strategically and tactically. Operations Management Concepts 15 1. Strategic planning is built on fundamental concepts: Production and operations strategic plans are the basis for 1 operational planning of facilities design and 2 operational planning for the use of these facilities.
The planning model uses planning essentials combined with the logical analysis of management science. There are many approaches to strategic planning. The key point is that operations strategies must be consistent with the overall strategies of the firm.
Operations typically utilize the overall corporate approach to strategic planning, with special modifications and a focus upon operations issues and opportunities. One general approach to strategic planning is a forced choice model given by Adam and Ebert.
Charles, N. Greene, Everett E. Adam, Jr. Voss of the London Business School, England, has set forth a framework for strategy and policy development in manufacturing. A simplified framework for examining operations strategy is shown in Figure 1. One feature of this approach that is crucial to competitiveness is market-based view of strategic planning.
It suggests that any strategic business unit of a company operates in the context of its corporate resources, the general and competitive industry environment, and the specific corporate goals of the company. In any area in which the company chooses to compete is a set of specific market-based criteria for success.
A low-cost, high productivity operation makes efficiency possible. Minimum use of scarce resources while sustaining high outputs is the key to productivity. Effectiveness is how well a company is able to meet specific criteria such as delivery schedules and technical capability. Quality is the degree to which the product or services meets customer and organisation expectations.
Flexibility is the adoptability, the capability to change as business conditions change. With this, the demand for communication and information based product is gradually restructuring the society. Traditional ways of doing things are being replaced by efficient methods. Computers play a major role in this transition along with fiber optics, microwaves, lasers and other communication technologies.
Following characteristics can be considered for distinguishing Manufacturing Operations with Service Operations: Production and consumption 3. Nature of work job 4. Degree of customer contact 5. Customer participation in conversion 6. Measurement of performance 7. Quality of output 8.
Inventory accumulated. Consumption of outputs at overtime. Jobs useless labour and more equipment, little customer contact, no customer participation in the conversion process in production. Sophisticated methods for measuring production activities and resource consumption as product are made. Service is characterized by intangible outputs. In addition, it possess a potential for high variability in quality of output.
Production and consumption occurs simultaneously. Jobs use more labour and less equipment, direct consumer contact, frequent customer participation in the conversion process. Elementary methods for measuring conversion activities and resource consumption are used. In simple terms, productivity is the ratio of output to input. For example, productivity of labour can be measured as units producedperlabourhourworked. Hence, there is a strong stress on productivity improvement in competitive business environment.
Productivity can be improved by a controlling inputs, b improving process so that the same input yields higher output, and c by improvement of technology. These aspects are discussed in more detail in the lesson on Productivity Management.
The productivity is energized by competition. Competition leads to higher productivity, higher productivity results in better value for customers, this results in higher share of market for the organization, which results in still keener competition. Productivity thus forms a cycle, relating to design and products to satisfy customer needs, leading to improved quality of life, higher competition i.
When productivity is measured for all the factors of production together, it is called total factor productivity. Operations Management Concepts 19 Generally factor productivity calculations are required at firm level and industry level, whereas total factor productivity calculations are made for measuring productivity at national and international level.
Productivity of materials can be measured as output units per unit material consumed. It can also be measured in terms of value generated per unit expenditure in materials. For example, the productivity of assembly line work can be measured as output units per man-hour or alternatively, the value of good produced per cost of labour on assembly line.
Trend analysis: Studying productivity changes for the firm over a period of time. Horizontal analysis: Studying productivity in comparison with other firms of same size and engaged in similar business. Vertical analysis: Studying productivity in comparison with other industries and other firms of different sizes in the same industry. Budgetary analysis: Setting up a norm for productivity for a future period as budget, based on studies as above, and planning strategies to achieve it.
However some of the principle factors influencing productivity rate are: It is a measure of whether enough investment is being made in plant, machinery, and tools to make effective use of labour hours. Scarcity of some resources: Resources such as energy, water and number of metals will create productivity problems.
Work-force changes: Change in work-force effect productivity to a larger extent, because of the labour turnover. Innovations and technology: This is the major cause of increasing productivity. Regulatory effects: These impose substantial constraints on some firms, which lead to change in productivity. Bargaining power: Bargaining power of organized labour to command wage increases excess of output increases has had a detrimental effect on productivity.
Managerial factors: Managerial factors are the ways an organization benefits from the unique planning and managerial skills of its manager. Quality of work life: It is a term that describes the organizational culture, and the extent to which it motivates and satisfies employees.
Moving to a new and more advanced products, and 2. Employing better and more flexible system. Nations such as Japan, France and West Germany are shifting their industrial base towards products and processes that make better use of their research capabilities and skilled workers.
Their future lies in microelectronics, precision manufactured castings, specialty steels, custom fabrics, fiber optics, lasers, etc. But the non-productive time downtime required to set up equipment for producing different options, new models and new products are very costly.
So production facilities must be designed with the utmost flexibility to accommodate change overs in rapid fashion.
This is where computers, robotics come into play. German executives understand the need for a strong technological focus and the dangers of hierarchical bureaucracies and paper profits. In recent years, the managerial techniques and productivity methods in Japanese firms have attracted worldwide attention. The following are some of the characteristics of the Japanese firm as compared with the American firms.
Corporate objectives: Employees and customers are given priority over shareholders. Honesty in business is important. Time horizon: Long-term viability is more important than short-term profits.
Production systems: Automated systems with extensive use of microprocessors and robotics. Quality is paramount, and things happen on schedule. Employment relations: Long-term employment of loyal workers. Unions cooperate to benefit total firm. Politeness and harmony are emphasized.
Resources are limited. Space is used efficiently and inventories are kept to a bare minimum. More use is made of debt capital and less of equity capital. Employees are thoroughly trained and rotated to learn a variety of skills.
Worker participation: Employees are thoroughly trained and rotated to learn a variety of productivity improvements via suggestions, quality circles and consultation with supervisors. The social impact of an organization is a reflection of the values held by top management. The preferred values of the society reflect purpose, integrity and a respect for the life and humanity of others.
Every facet of our economic and social environment regulated and controlled by law designed to protect general public. The figure illustrates some of the laws impact on the productivity of the firms. It distinguishes itself from other functions such as personnel, marketing, finance, etc. Following are the activities, which are listed under Production and Operations Management functions: Location of facilities.
Plant layouts and Material Handling. Product Design. Process Design. Production and Planning Control.
Quality Control. Materials Management. Maintenance Management. It is an important strategic level decision-making for an organisation. An improper location of plant may lead to waste of all the investments made in plant and machinery equipments. The purpose of the location study is to find the optimal location that will results in the greatest advantage to the organization.
It is the configuration of departments, work centres and equipment in the conversion process. The overall objective of the plant layout is to design a physical arrangement that meets the required output quality and quantity most economically.
This cost can be reduced by proper section, operation and maintenance of material handling devices. Material handling devices increases the output, improves quality, speeds up the deliveries and decreases the cost of production. Hence, material handling is a prime consideration in the designing new plant and several existing plants. Every business organisation have to design, develop and introduce new products as a survival and growth strategy.
Developing the new products and launching them in the market is the biggest challenge faced by the organizations. The entire process of need identification to physical manufactures of product involves three functions— Design and Marketing, Product, Development, and manufacturing.
Product Development translates the needs of customers given by marketing into technical specifications and designing the various features into the product to these specifications.
Manufacturing has the responsibility of selecting the processes by which the product can be manufactured. Product design and development provides link between marketing, customer needs and expectations and the activities required to manufacture the product.
These decisions encompass the selection of a process, choice of technology, process flow analysis and layout of the facilities. Hence, the important decisions in process design are to analyse the workflow for converting raw material into finished product and to select the workstation for each included in the workflow.
Main functions of production planning and control include Planning, Routing, Scheduling, Dispatching and Follow-up. Planning is deciding in advance what to do, how to do it, when to do it and who is to do it.
Planning bridges the gap from where we are, to where we want to go. It makes it possible for things to occur which would not otherwise happen. Routing may be defined as the selection of path, which each part of the product will follow, which being transformed from raw material to finished products. Routing determines the most advantageous path to be followed for department to department and machine to machine till raw material gets its final shape. Scheduling may be defined as 'the fixation of time and date for each operation' as well as it determines the sequence of operations to be followed.
Dispatching is concerned with the starting the processes. The function of Follow-up is to report daily the progress of work in each shop in a prescribed proforma and to investigate the causes of deviations from the planned performance.
It is a systematic control of various factors that affect the quality of the product. Quality Control aims at prevention of defects at the source, relies on effective feedback system and corrective action procedure. It is the entire collection of activities, which ensures that the operation will produce the optimum quality products at minimum cost.
The main objectives of Quality Control are: To improve the companies income by making the production more acceptable to the customers i. To reduce companies cost through reduction of losses due to defects. To achieve interchangeability of manufacture in large-scale production.
To produce optimal quality at reduced price. To ensure satisfaction of customers with productions or services or high quality level, to build customer good will, confidence and reputation of manufacturer. To make inspection prompt to ensure quality control. To check the variation during manufacturing. The main objectives of Material Management are: To minimise material cost. To purchase, receive, transport and store materials efficiently and to reduce the related cost. To cut down costs through simplification, standardisation, value analysis, import substitution, etc.
To trace new sources of supply and to develop cordial relations with them in order to ensure continuous supply at reasonable rates. To reduce investment tied in the inventories for use in other productive purposes and to develop high inventory turnover ratios.
Therefore their idleness or downtime becomes are very expensive. Hence, it is very important that the plant machinery should be properly maintained. The main objectives of Maintenance Management are: To achieve minimum breakdown and to keep the plant in good working condition at the lowest possible cost.
To keep the machines and other facilities in such a condition that permits them to be used at their optimal capacity without interruption. To ensure the availability of the machines, buildings and services required by other sections of the factory for the performance of their functions at optimal return on investment. Define Operations management. Explain the key concepts of Operations management with a schematic diagram.
Distinguish between manufacturing and service operation with example. What is strategic planning? Explain the role of models in strategic planning. Define the term operations management. Briefly explain the strategic role of operations. Write a note on system view of operations.
Explain, how the considerations of environtnenta1 assessment and organisational position provide a modeling framework for the strategic planning of operations. Briefly explain how service producers differ from goods producers in important aspects of their operations. State the important objectives of production management. Define the term productive system. Give two examples for the productive systems concerned to service and manufacturing respectively.
Briefly explain. Explain what do you understand by product-focused systems and process-focused systems.
Differentiate between Production Management and Operations Management. Explain the historical evaluation of production function up to 21st century. What are the various decisions and their applications made by operations manager in a POM system? Briefly explain the importance of operations management in the corporate management.
Explain the concept of productivity. Everett, E. Ronald J. Joseph, G. Anil Kumar, N. Operations Decision-Making 27 2. Not all the decisions will make or break the organisation.
But each one adds a measure of success or failure to the operations. Hence decision- making essentially involves choosing a particular course of action, after considering the possible alternatives.
This chapter examines management as a science and the characteristics of decisions. The use of economic and statical models is discussed along with decision trees. Scientific decision-making rests upon organized principles of knowledge and depends largely upon the collection of empirical data and analysis of the data in a way that repeatable results will be obtained.
The association of management with the scientific method involves drawing objective conclusions from the facts. Facts come from the analysis of data, which must be gathered, compiled and digested into meaningful form, such as graphs and summary statistics.
Computers are helpful in these tasks because they can easily store data and us with the more sophisticated and statistical analysis. But not all variables are quantifiable, so decision-makers must still use some value-based judgments in a decision process. Thus management as a science is characterised by Organised principle of knowledge. Systematic analysis of data. Repeatable results. Judgment typically incorporates basic knowledge, experience, and common sense.
They enable to blend objectives and sub-objective data to arrive at a choice. The appropriateness of a given type of analysis depends on The significant or long lasting decisions, The time availability and the cost of analysis, and The degree of complexity of the decision. The significant or long lasting decisions deserve more considerations than routine ones. Plant investment, which is a long-range decision, may deserve more thorough analysis.
The time availability and the cost of analysis also influence the amount of analysis. The degree of complexity of the decision increases when many variables are involved, variables are highly independent and the data describing the variables are uncertain. Business decision-makers have always had to work with incomplete and uncertain data. In some situations a decision- maker has complete information about the decision variables; at the other extremes, no information is available.
Operations management decisions are made all along this continuum. Complete certainty in decision-making requires data on all elements in the population. If such data are not available, large samples lend more certainty than do small ones.
Beyond this, subjective information is likely to be better than no data at all. Establish the decision criteria.