Production / Operations Management—Page 1
ASSIGNMENT
Q.1) What is “Operations Management”? What are the objectives of Operations
Management? Enlist key elements of Operations Management.
Answer.1)
An operation may be defined “as the process of changing inputs into outputs thereby
adding value to some entity”.Right quality, right quantity, right time and right price are
the four basic requirements of the customers and as such they determine the extent of
customer satisfaction. And if these can be provided at a minimum cost, then the value of
goods produced or services rendered increases. Thus the objectives of production
management are “to produce goods and services of the right quality, in the right
quantities, according to the time schedule and a minimum cost”.
Objectives of production management may be amplified as under:

Producing the right kind of goods and services that satisfy customers’ needs
(effectiveness objective).

Maximizing output of goods and services with minimum resource inputs (efficiency
objective).

Ensuring that goods and services produced conform to pre-set quality specifications
(quality objective).

Minimizing throughput-time- the time that elapses in the conversion process- by reducing
delays, waiting time and idle time (lead time objective).

Maximizing utilization of manpower, machines, etc. (Capacity utilization objective).

Minimizing cost of producing goods or rendering a service (Cost objective).
Key elements of Operations Management
1. Product selection and design
The right kind of products and good designs of the products are crucial for the success of an
organizing. A wrong selection of the product and/or poor design of the products can render the
company’s operation ineffective and non-competitive. Products/services, therefore, must be
chosen after detailed evaluation of the product/services alternatives in conformity with the
organization’s objectives. Techniques like value engineering may be employed in creating
alternate designs, which are free from unnecessary features and meet the intended functions at the
lowest cost.
2. Process selection and planning
Selection of the optimal “conversion system” is as important as choice of products/services and
their design. Process selection decisions include decisions concerning choice of technology,
Production / Operations Management—Page 2
Equipment, machines, material handling systems, mechanization and automation. Process
planning involves detailing of processes if resource conversion required and their sequence.
3 Facilities (Plant) location
Plant location decisions are strategic decisions and once plant is set up at a location, it is
comparatively immobile and can be shifted later only at a considerable cost and interruption of
production. Although problem of location choice does not fall within preview the production
function and it occurs infrequently, yet it is of crucial importance because of its major effect on
the performance of every department including production. Therefore, it is important to choose
the right location, which will minimize total “delivered customer” cost (Production and
distribution cost). Locational decisions involve evaluation of locational alternatives against
multiplicity of relevant factors considering their relative importance to the organization and
selecting those, which are operationally advantageous to the organization.
4. Facilities (Plant) layout and materials handling
Plant layout is concerned with relative location of one department (Work centre) with another in
order to facilitate material flow and processing of a product in the most efficient manner through
the shortest possible time. A good layout reduces material handling cost, eliminates delays and
congestion, improves co-ordination, provide good housekeeping etc. while a poor layout results
in congestion, waste, frustration, inefficiency and loss of profit.
5. Capacity Planning
Capacity planning concerns determination and acquisition of productive resource to ensure that
their availability matches the demand. Capacity decisions have a direct
Influence on performance of production system in respect of both resource productivity and
customer service (i.e. delivery performance). Excess capacity results in low resource productivity
while inadequate capacity leads to poor customer service. Capacity planning decisions can be
short-term decisions. Long-term capacity planning decisions concern expansion/contraction of
major facilities required in the conversion process, economics of multiple shift operation,
development of vendors for major components etc. Short term capacity planning decisions concern
issues like overtime working, sub-contracting, shift adjustments etc. Break even analysis is a
valuable tool for capacity planning.
6. Production Planning and Control (PPC)
Production planning is the system for specifying the production procedure to obtain the desired
output in a given time at optimum cost in conformance with specified standard of quality, and
control is essential to ensure that manufacturing takes place in the manner stated in the plan.
7.
Inventory control
Inventory control deals with determination of optimal inventory levels of raw materials,
components, parts, tools; finished goods, spares and supplies to ensure their availability with
minimum capital lock up. Material requirement planning (MRP) and just-in-Time (JIT) are the
latest techniques that can help the firm to reduce inventory.
Production / Operations Management—Page 3
8. Quality assurance and control
Quality is an important aspect of production system and it must ensure that services and products
produced by the company conform to the declared quality standards at the minimum cost A total
quality assurance system includes such aspects as setting standards of quality, inspection of
purchased and sub-contracted parts, control of quality during manufacture and inspection of
finished product including performance testing etc.
9. Work study and job design
Work-study, also called time and motion study, is concerned with improvement of productivity in
the existing jobs and the maximization of productivity in the design of new jobs. Two principal
component of work-study are:
(i)
(ii)
Method study
Work measurement
Method study has been defined (BS 3138) as the systematic recording and critical examination
of the existing and proposed ways of doing work, as a means of developing and applying easier
and more effective methods and reducing costs. Method study when applied to production
methods yields one or more of the following benefits:








Improved work environment
Improved facility layout
Better utilization of facilities
Greater safety
Lesser materials handling
Smooth production flow
Lower work-in-process
Higher earnings for the workmen
10. Maintenance and replacement
Maintenance and replacement involve selection of optimal maintenance Preventive and/or
breakdown) policy to ensure higher equipment availability at minimum maintenance and repair
cost. Preventive maintenance, which includes preventive inspection, planned lubrication,
periodic cleaning and upkeep, planned replacement of parts, condition monitoring of the
equipment and machines, etc. is most appropriate for critical machines.
11. Cost reduction and cost control
Effective production management must ensure minimum cost of production and in this context
cost reduction and cost control acquires significant importance. There are large number of tools
and techniques available that can help to make a heavy dent on the production cost.
Production / Operations Management—Page 4
Q.2) What is batch Production? What are its key characteristics? Compare these
characteristics with those of project production.
Answer.2)
Batch production is characterized by the manufacture of a limited number of a product
(but many such quantities of different products) produced at periodic intervals and stocked in
warehouses as finished goods (or finished parts) awaiting sales (or withdrawal for assembly).
Typical examples of batch production are: process industries such as pharmaceuticals, paints,
chemicals; medium and heavy engineering industry engaged in the manufacture of electric
motors, switch gears, heavy motor vehicles, internal combustion engines; manufacture of ready
made garments; manufacture of assembly shops such as machine tools; sub contractors which
take on machining of batches of components to the drawings of a large manufacture etc.
Characteristics of batch production
(a) Short runs:
Short production runs and frequent changes of set also characterize batch
production up. The equipment and the assembly set up is used for a limited
number of parts or assemblies and is then changed to make a different product. The
production is generally made to stock.
(b) Skilled labour in specific trades:
The labour force is expected to posses skill in one specific manufacturing
process, Turning, milling, drilling, welding, grinding, hobbing, fitting etc.
The operator may perform simpler machine set-ups but the separate machine tool setter
performs those involving complex operations.
(c) Supervision to possess knowledge of a specific process
The supervision has considerable knowledge of a specific process. Supervisor in
the grinding section for example, may not expert in turning and drilling work but s
expected to possess a find of knowledge of different types of grinding operations.
Similarly a supervisor in the gear shop is expected to have sound knowledge in working
of different types of gear cutting machines.
(d) Limited span of control:
The amount of supervision required in batch production is lower than that of
jobbing production. The ration of direct workmen to supervisors is more or less a
function of batch size. The smaller the batches, the lower are the ratio of direct workers
to supervisors, and vice versa. This is because smaller lots require each supervisor to
spend a great deal of his time in allocating new work, giving instructions, follow up on
the shop floor for proper movement of materials from and to the machines, identifying
delays and interruptions, and arranging, in consultation with planning, work load in his
section to keep his men busy.
(e) General purpose machines and process type of layout
Plant and equipment is procured and arranged to obtain maximum flexibility.
General purpose machines and handling equipment capable of performing variety of operations
with minimum set –up times are installed in lieu of variety of products. The machines are
Production / Operations Management—Page 5
arranged to give process layout-layout by function. Similar machines capable of doing similar
types of operations are grouped together and kept at one place. Presses for example, are put
together and kept at one place milling machines are placed together at another place, drilling
machines are kept at the third place, gear cutting machines are located at the fourth place and so
on. Each Group of machines is usually designated as a work centre or a section or a shop.
(f) Manual materials handling:
Materials handling in batch production as compared to jobbing production are
small. Individual components and parts are placed in trolleys and trays and are
transported as unit loads. Materials handling may be mechanized by deploying power
driven trucks.
(g) Manufacturing cycle time affected due to queues:
The manufacture cycle time is comparatively smaller than jobbing production but
is much more than mass and flow production. The batches of work tend to queue up at
different machines due to differing cycles times, batch sizes and sequence of operations.
(h) Large work-in-progress:
Work in progress is comparatively large due to varying work content of different
components, imbalance in manufacturing times, formation of queues between the
machines.
(i) Flexibility of production schedules:
Disruptions due to machine breakdown or absenteeism do not seriously affect
production as job can be shifted to another machine or another operator from another
machine can be shifted.
(j) Need to have production planning and control:
Functions of production planning and control in a batch production unit are more
complex than those in jobbing production or mass and flow production:

Materials control and tools control functions are important. Some kind of replenishment
system needs to be used to ensure routine replenishment

Detailed operational layout and route sheets are prepared for each part of the product.

Loading and scheduling needs to be more detailed and more sophisticated since every
machine requires to be individually scheduled.

Progressing function is very important to collect information on progress of work. A
separate progress card needs to be maintained to record progress of each component.

Expediting is generally necessary since quite often jobs, due to imbalances in work
content, tend to lag behind
Production / Operations Management—Page 6
Q.3) (a) Why are locational decisions important? What factors should be taken into
account while deciding location of a unit to manufacture washing machines?
Answer.3a)
Locational decisions generally arise when:



A new manufacturing (or servicing) unit is to be set up.
Existing plant operations are difficult to expand due to poor selection of site earlier.
The growth of the business makes it advisable to establish additional facilities in new
territories.
There is emergence of new social (chronic labour problems) political (political instability
or economic conditions that suggest a change in the location of the existing plant.
The product development has over weighted the advantages of the existing plant.
The changes in the industrial Policy of the Government, favoring decentralizing and
dispersal of industries to achieve overall development of the country, do not permit
expansion of the existing plant



FACTORS GOVERNING PLANT LOCATION
Plant location studies are conducted in three phases:
(i)
(ii)
(iii)
1.
General territory selection
Community selection, and
Site selection
Proximity to market:
Every company is in business to market and it can survive only if their product reaches the
consumers on time and at the competitive price. The ratio of selling costs to sales generally
increases with distance. Therefore, in the choice of location o the plant, the factor of “proximity
to the market” is given the highest priority. Locating a plant nearer to the market is preferred if:




The product is fragile.
The product is susceptible to spoilage.
The promptness of service is required.
The product is relatively inexpensive and transportation costs add significantly to the
cost.
Bread, soap factories, etc. require the market to be nearby. If factory cannot be started in
Bombay, it may be started in Thane, Kalyan or Poona. If the product is exported, location near
ports is desirable. This is particularly important for producers who sell bulky commodities,
which incur high transportation costs
Production / Operations Management—Page 7
Nearness to market not only lowers transportation costs but also gives many other benefits
namely:




A good many administrative problems, which cause perpetual headaches and add to
costs, are avoided.
Liaison with dealers or whole sellers can be maintained economically and easily
Other costs such as commission to middlemen, which at times run as high as 20 to 50
percent can be reduced significantly.
Customer’s accounts do not remain outstanding for settlement. This recovery is easy and
less time saving which itself reduces selling costs.
2. Proximity to source of raw materials:
Since raw materials usually constitute 50 to 60 percent of the total product cost, it is important
that the firm gets its requirements of raw materials at the right time and at the reasonable price for
which the plant must be located in the neighborhood of some source which can meet the raw
materials requirement of the unit “Proximity to supply of raw materials” factor assumes still
greater importance if raw materials are of perishable nature or if they are expensive to transport,
or if their weight is substantially reduced by processing.
Proximity to sources of raw materials is equally important for small units. This is because
usually small units are not considered important customers. They get least priority and in the
event of scarcity are the one to be struck off first from the list. The availability of materials to
small units to a large extent thus depends on their follow up and personal visits to the supplier’s
plant which is possible only if the buyer’s plant is close by.
3. Infrastructural facilities:
Infrastructural facilities consider availability of utilities like power water, disposal of waste etc.
These form the life-blood of many types of industries without which there facilities may come to
a stand still. Underestimating the need of any one of the utilities can be extremely costly and
inconvenient.
Certain industries, for example, aluminium, steel, etc are power intensive and must be located
close to the sites of power generation failing which the shortage of, or increase in cost of
generating power may spell problems for their survival.
Similarly, chemical process industries like paper and pulp, cement, steel, sugar laundries, metal
plating, food preparation etc. requires perennial source of water. Mineral content of water may
also be an important factor. Treatment of water is an expense to be considered while comparing
economics of different locations.
Drainage facilities are important for process industries otherwise disposal of process waster can
create lot of difficulties.
4. Transport facilities:
Transportation cost to the value added is a key determinant of the plant location. The structure of
the transportation cost depends on (i) Characteristics of the commodity (ii) average distance of
shipment (iii) medium of shipment: rail, road, and air sea.
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The need for transport arises because raw materials and fuel are to be moved to factory site and
finished goods are to be transported from factory to markets. Other things being equal since
transport cost has a major effect on product cost, the regions well served by transport facilities are
most suitable for industrial locations.
5. Labour and wages:
Plant location should be such that required labour is easily available in the neighbourhood.
Importing labour from outside is usually costly and it causes lot of administrative problems.
Availability of required labour locally is better since problem of arranging accommodation and
other related problems do not arise. Since normally workers with specific skills are required,
some sort of training facility should also be available in the neighborhood. Skilled employees are
easily available if ITI’s, or Engineering colleges are there in the neighbourhood.
6. Legislation and taxation:
The policies of the state Government and Local Bodies relating to issue of licenses, building
codes, labour laws, etc. are the factors in selecting/rejecting a particular community/site.
In order to disperse industries and ensure balanced economic growth, both Central and State
government offer a package of incentives for setting up industries in particular locations.
Exemption from excise duty, sales tax and octroi, soft loans from financial institutions, subsidy in
electricity charges, etc. are some of the incentives offered.
Since taxes and duties levied by the State Government and Local bodies substantially influence
product cost, the incidence of such taxes/levies must be taken into account while selecting a
community/site.
7. Climatic conditions:
Climatic factors may not have a major influence these days because of modern air conditioning
facilities available today. However, it may be important factor for certain industries like textile
mills, which require high humidity.
8. Industrial and labour attitudes:
Community attitudes towards supporting hostile trade union activities are an important factor.
Locating facilities in a certain region/community may not be desirable as frequent labour
problems and interruptions are harmful to the plant in the long run. Political situation in the state
and attitude of the government towards labour activities also influences selection of the site for
the plant.
9. Safety requirement:
Safety factor may be important for certain industries such as:
Nuclear power plants
Explosive factories
Location of such industries close to border areas is undesirable.
Production / Operations Management—Page 9
10. Community facilities (or social infrastructure):
Community facilities imply accommodation, educational, entertainment and transport facilities.
Accommodation is needed unless the employees are local residents. Accommodation should be
easily available, comparatively cheap and near some public transport stop.
The locational area should be fully developed, be accessible by road and should have a
convenient and efficient public transport system operating between the area and the township to
enable employees, officials, customers and suppliers to make easy trips for their work
11. Community attitudes:
Community attitudes towards work (i.e. whether the people in the location are hard working or
otherwise) as well as their attitudes towards the incoming entrepreneurs (helpful and cooperative
or otherwise) can make or mar an industry. Locational decisions, therefore, must take such
factors also into account particularly while setting up labour intensive units.
12. Supporting industries and services:
Locational factors should also include proximity of services needed by the firm. A firm desirous
of getting some or all parts made from outside or some of the operations done from outside must
see that such sub-contractors are located in the neighbourhood. Getting a job done from units
located at far off places will mean not only additional transportation cost but also time consuming
and costly. Also if units are too far off, the control on quality of work done by them cannot be
exercised.
13. Suitability of the land:
Site selection should also take into account topography and soil structure of the land. The soil
structure must be capable of bearing loads of foundations. Though modern building techniques
can overcome the limitations of the soil, but if considerable improvement is required then
selection of a low cost and may ultimately turn out to be expensive.
14. Availability and cost of the land:
Site size (Plot size) must be large enough to accommodate the present production facilities,
parking and access facilities but also leave sufficient room for future expansion. As a general
rule, a site five times the actual plant size is considered minimum for all these things including
future expansion.
Production / Operations Management—Page 10
ECONOMY SURVEY OF THE SITE SELECTION:
An ideal location is one where the cost of obtaining materials and processing them into finished
product plus the cost of distributing the finished product to customers is minimum.
One of the most commonly used approaches consists of following steps:
Step 1:
Prepare a list of all relevant factors.
Step 2:
Estimate expenses on materials, transport, wages, power etc for each location on
each of the above factors.
Step 3: Collect data on intangible factors like community facilities, community attitudes etc.
Step 4:
Analyse the tangible data for each location and calculate rate of return on
investment.
Step 5:
Select provisionally a locational based on financial data.
Step 6:
Compare the intangible data for the different locations and select the optimal
location considering intangible data.
Production / Operations Management—Page 11
Q.3) (b) What are objectives of a good layout? Discuss any six principles of a good layout?
Answer.3)(b)
OBJECTIVE OF A GOOD PLANT LAYOUT
Only through an efficient layout, the organization can attain the following objectives:
(i)
Economy in handling of materials, work-in-process and finished goods.
(ii)
Minimization of product delays.
(iii)
Lesser work-in-progress and minimum manufacturing cycle time.
(iv)
Efficient utilization of available space.
(v)
Easy supervision and better production control.
(vi)
Greater flexibility for changes in product design and for future expansion.
(vii)
Better working conditions by eliminating causes of excessive noise, objectionable odor
smoke etc.
PRINCIPLES OF A GOOD LAYOUT
(i)
Overall integration of factors:
A good layout is one that integrates men, materials, machines and supporting
activities and others in a way that the best compromise is obtained
No layout can satisfy each and every principle of a good layout. Some criterion may
conflict with some other criterion and as a result no layout can be ideal it has to
integrate all factors into the best possible compromise.
(ii)
Minimum movement:
A good layout is one that permits the minimum movement between the
operations.
The plant and machinery in case of product layout and departments
in case of
process layout should be arranged as per sequence of operations of most of the
products.

Since straight line is the shortest distance between any two points, men
and materials as far as possible should be made to move along the
straight path
A door may be made in a wall or a hole may be drilled in a ceiling if that eliminates or
reduces material handling in place of stairs or a distant door.
Production / Operations Management—Page 12
(iii)
(iv)
Uni-direction flow:
A good layout is one that makes the materials move only in the forward
direction, towards stage of completion, with any backtracking.

Since straight line is the shortest distance between any two, points,
materials as far as possible should be made to move on the principle of
straight line flow. And when straight line flow is not possible, other
flows like U-shaped flow, circular flow or zig zag flow may be adopted,
but the layout may ensure that materials move in the forward direction
(Fig 4.1)

To ensure forward flow, equipment if necessary may be duplicated.
Effective use of available space:
A good layout is one that makes effective use of available space both
horizontal and vertical

Backtracking and duplicated movements consume more time, involve un-necessary
materials handling, add to cost and lead to inefficiency.

Raw materials, work-in-progress and finished goods should be piled vertically one above
another rather than being strewn on the floor.

Pallets or equivalents should be made use of to pile up several layers one above another

Area below the work tables or in the cupboards built into the wall are welcome since they
reduce requirement of space
(v)
Maximum visibility:
A good layout is one that makes men, machines and materials ready observable at all
times.

All departments should be smoothly integrated, convenient to service and easy to
supervise

Every piece of positioning or screening or partitioning should be scrutinized and carefully
planned.

Special cupboards, enclosures, offices, partitions etc. should be avoided except when
their utility is established beyond doubt.
(vi)
Maximum accessibility:
A good layout is one that makes all servicing and maintenance point readily
accessible.

Machines should be kept sufficiently apart and with reasonable clearance from
The wall so that lubrication, adjustment and replacement of belts, removal of parts at the
time of repairs etc can be done conveniently by the maintenance staff.
Area in front of electrical panels and fire extinguishers should be kept free from
obstructions.
Production / Operations Management—Page 13
Q.4) How does production planning differ from production control? What are the key
functions of production planning and control?
Answer.4)
Production planning versus production control.
Planning (Planning the work)
Control (Working the Plan)
Planning involves collection and maintenance
of data regarding time standards, materials and
their specifications, machines and their
quantities, tools and their process capabilities,
drawings and operational layouts etc.
Control involves dissemination of data
preparation of reports regarding output,
machine and labour efficiency, percent
defectives etc.
Planning is seeing that requirements tool,
machines, men, instructions, authorization and
the like-will be available at the right time and Control is seeing the requirements are actually
in the right quantities and are of proper quality. made available at the right place and in the
right quantities.
Planning involves preparations of load charts
and fitting various work orders into
uncommitted time available on the company’s
facilities (men or machines).
Control involves actual seeing that the jobs are
started and completed as per schedule prepared
Planning involves preparation of all necessary by the scheduling cell of the PPC.
forms and paper work.
Control involves actual issue of forms and
Planning involves designing suitable feed back paper work.
as to what may happen.
Control involves keeping track of what is
happening and collecting information as to
Planning involves forwarding thinking what has happened.
regarding the remedial action to be taken if the
job falls behind schedule.
Control involves suggesting remedial action
when the job is falling behind schedule.
Planning therefore is a centralized
Activity (in the office) and includes such Control is thus a diffused activity (in the shops)
functions as materials control, tools control, and includes functions such as dispatching,
process planning and scheduling.
progressing and expediting.
Production / Operations Management—Page 14
FUNCTIONS OF PRODUCTION PLANNING AND CONTROL:
Production planning and control is normally assigned two sets of functions:
(I)Regular functions and
(ii) Optional functions.
(i)
Regular functions are those, which are generally assigned to PPC in most of the
organizations through the importance of the function, may vary from industry to
industry.
(ii)
Optional functions are those, which may be assigned to PPC depending upon policy
of the management of the firm.
Common (or Regular Functions)
Optional Functions
Order Preparation includes activities like
making of work orders, converting work orders
to shop orders, preparing auxiliary orders and
releasing such orders to those concerned to
authorize their activities
Cost Estimation concerns preparations of
Preproduction cost estimates to be used by
sales department for quotation purposes
(Alternatively this may be assigned to Costing
Department
Or
Industrial
Engineering
Department)
Materials control concerns preparations of
materials estimates, indenting non-stock
materials, ascertaining availability of materials
purchased to stock, continual follow-up with
purchase and stores for timely receipt of
materials, and advising stores to allocate
required quantities or available materials
(alternatively on their receipt) against specific
shop orders.
Work measurement concern fixation of time to
be allowed to a qualified workman to carry out
a specific task, under specified conditions and
at the defined level of performance. Work
measurement employs scientific, well-known
techniques like time study, work sampling
standard data, production study, analytical
estimating
etc.
(Alternatively,
work
measurement function may be assigned to
Industrial Engineering department.
Sub-Contract concerns offloading of certain
work on outside vendors for economic reasons
or to augment the existing manufacturing
facilities (Sub-contract work alternatively) be
handled by Materials/purchase Department)
Process planning or Routing concerns fixation
of method of manufacture: operations and their
sequence, machine tool for each operation, jigs
and fixtures, measuring instruments and gauges
etc. to enable shops to produce goods of the
right quality at the lowest cost.
Tools control concerns preparations of
estimates of cutting tools (Standards as week
As non-standards tools), gauges and measuring
instruments, jigs and fixtures etc indenting nonstick tooling: follow up with tool room for
timely manufacture of jigs and fixtures;
periodical replenishment of worn-out-nonconsumable tooling (e.g. work arbors, collets,
copying masters, Allen keys, spanners, etc.
Capacity planning concerns estimation of
requirements of men and machines as the basis
of decision making to meet the firm’s increased
volume of business (Some companies prefer to
assign this function to Engineering department.
Production / Operations Management—Page 15
Scheduling concerns preparation of machine
loads, fixation of calendar dates of various
operations to be performed on a job,
coordination with sales to confirm delivery
dates of new items and periodical preparation
of dispatch schedules of regular items.
Dispatching
concerns
preparation
and
distribution of shop orders and manufacturing
instructions to the concerned department as
their authority to perform the work according
to the predetermined schedule.
Progressing concerns collection of data from
manufacturing shops, recording of progress of
work, and comparing progress against the plan.
Expediting concerns intensive progress chasing
to identify delays and interruptions which may
hold up production, devising cures from time to
time to keep rate of production in line with the
schedule, communicating possible failure in
delivery commitments to Sales Department.
Demand
forecasting
concerns
making
projection of company’s product market.
Though, long term forecasts are given by Sales
Department but short term forecasts required
for materials planning, machine loading, sub
contracting etc may be prepared by PPC
department
Production / Operations Management—Page 16
Q.12 (a) What is critical path? What does it signify? How is it identified?
Answer.2)(a)
Critical path analysis, an important aid to planning, scheduling and coordinating the
activities if large scale projects. Is a synthesis of two independent techniques: Programme
Evaluation and Review Technique (PERT) and Critical Path Method (CPM).
Though the two techniques were developed independently, they are only superficially different.
The two method have many features in common and are now combined into a technique called
Critical Path Analysis (CPA) or Network Analysis.
There are three basic different between a PERT network and CPM network:

PERT is event oriented while CPM is activity oriented (i.e. PERT prepares network from
events while CPM builds if from activities)

PERT provides for an allowance for uncertainty while CPM does not (i.e. PERT makes
three time estimates for each activity while CPM makes one time estimate)

Activity time in CPM technique are related to costs while it is not so in PERT since it is
event oriented
Significance of critical path
Critical path analysis offers several advantages. It
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
Forces through pre-planning. Each and every activity compromising the project is
identified and recorded. Nothing is left to memory or chance which prevents crises
in scheduling
Increases coordination of tasks as technological relationship between the activities
suggests which activities can run simultaneously and which should succeed others.
Helps computations of different project duration’s for different level of resources and
thereby select a plan that minimizes total project cost.
Indicates optimal start and finish times of each activity of the project.
Defines areas of responsibility of different departmental heads for timely execution
of the project.
Facilitates progress reporting and limits unnecessary discussion at the progress
meetings.
Identifies troubles spot often in advance and apply remedial measures.
Enables the plan to be revised in accordance with changes/changing circumstances.
Helps to exercise “control by exception” and prevents cost overruns.
A Project comprises a series of activities and the identification of the individual activities requires
knowledge and experience of the men responsible for the planning of the project. Even the
preliminaries-mere listing of the activities-make the operating personnel:

Think of details about the project well in advance.

Observe critically the way in which the various activities interact or compete for scarce
resources
Production / Operations Management—Page 17

Improve upon the original plans even before network is formally drawn and analyzed.
A project, therefore, must be torn into a set of identifiable activities. There are no set rules but
general guidelines are as under:

An activity should represent the smallest unit of the operation or set of operations over
which management desires control.

An activity should represent an operation or set of operations, which can be performed
using a particular kind of equipment or a special skill. For example in
construction project, plumbing is considered as one activity while wiring can be
considered as another activity since the first activity requires plumbers and the second
activity needs electricians.
Production / Operations Management—Page 18
Q.12) (b)
Activity
1-2
1-3
1-4
2-5
3-5
4-5
4-6
5-6
Optimistic
02
02
02
01
04
02
02
03
Most Likely
03
04
06
01
05
03
05
05
Pessimistic
10
06
10
01
12
04
08
13
Answer:
(a) Expected time of an activity can be obtained from the three time estimates using the formula:
te = a + 4m +b
6
where
a
m
b
=
=
=
Optimistic time
most likely time
pessimistic time
a
m
b
=
=
=
2
3
10
For activity (1-2)
te
=
2 + 4 x 3 + 10
6
te
=
24
6
=
4
Expected times of all activities of the network, calculated on above lines, are tabulated below.
Activity
1-2
1-3
1-4
2-5
3-5
4-5
4-6
5-6
Three time estimates
02-03-10
02-04-06
02-06-10
01-01-01
04-05-12
02-03-04
02-05-08
03-05-13
Expected time
4
4
6
1
6
3
5
6
Production / Operations Management—Page 19
4
5
6
6
3
6
3
4
6
4
1
2
1
5
Critical path is 1-3,3-5,5-6 and the duration for the project is 16 weeks (4+6+6)
Variance is
Vi
=
(b –a) X (b – a)
6
6
V1-3
=
4
9
V3-5
=
16
9
V5-6
=
25
9
V
=
V1-3 + V3-5 + V5-6
V
=
5
Standard deviation Z
=
T - Tcp

=
19 -16
5
=
=
3
2.236
1.34
The approximate probability value when Z = 1.34 is 0.9099
The probability of completion of critical path by the schedule time of 19 weeks = 91%
Production / Operations Management—Page 20
Q.5) What is preventive maintenance? Why it is better than Breakdown Maintenance?
What are the key activities of Preventive Maintenance?
Answer.5)
Preventive maintenance anticipates failures and adopts necessary actions to check
failures before they occur. It includes activities like inspection, lubrication cleaning and unkeeps,
minor adjustments and replacements found necessary at the time of inspection etc. Preventive
maintenance can be either: running maintenance or “shut down maintenance”. Running
maintenance includes maintenance activities (e.g. minor adjustments
In machines revealed
through inspections, lubrication, cleaning and unkeep etc.)
Which are carried out when the
machine is still running. Shutdown maintenance includes preventive maintenance activities such
as minor component replacement whose needs are identified through inspections, which require
stoppage of Machines. Preventive inspection is one of the key activities of preventive
maintenance which
is usually performed by making use of human senses – watch) eye),
listen (ear), Touch (hand, leg, body) smell (nose) and taste (tongue) – but the trend is Changing
towards use of condition monitoring instruments. Such maintenance. Practice is known as
predictive maintenance or condition based maintenance.
Production / Operations Management—Page 21
Q.10) (a) What are X-R Charts? How are they made and used in controlling a process?
Answer.10)
X-R chart is a pair of chart consisting of a average (called X chart) and a range
Chart (called R chart) placed one below another on a piece of graph paper. The X chart is used to
control the mean value of the characteristic an R-chart is used to restrict the range of variations in
the values. X-R charts are drawn when the characteristics are measurable. Each chart consists of
three values: a central line, upper control limit and lower control limit. The central line represents
the arithmetic average of the sample means which equals the mean of the population, u. The
upper and lower control limits are located at three standard deviation on either side of the central
line.
Samples of fixed size are drawn at regular intervals and measurements are taken.
The
samples wise values of the mean and range are plotted in their respective X
and R charts.
The spread of sample points in the charts is studied to decide the remedial action (if any) to be
taken. The X chart analyses whether or not the mean of the quality Characteristics is within
control while R-chart analyses whether or not the variability is within control.
STEPS TO PREPARE X-R CHART
A pre-requisite to the preparation of the chart is the decision on the following aspects:




Quality Characteristics refer to the property of the product, which is to be assessed. The
quality characteristics must be capable of being measured. In case of more than quality
characteristics, separate chart is made for each quality characteristic.
Sample size refers to number of pieces comprising each sample. Sample size is an
important decision. It is a common practice to use sample of n = 4 or 5 to have low
appraisal cost. Large samples such as n = 15 or 20 are used if the process standard
deviation is large.
Sample Population refers to the number of samples to be collected to construct a control
chart. The number of samples must be sufficient. Usually, 20 samples each of size 4 or 5
are enough to have good estimates of the process average (X) and dispersion (R).
Time Interval measures the time gap between consecutive samples. Time interval, as a
genera rule, should be proportional to the average frequency of out-of-control conditions.
It is a fairly complex decision since a number of factors such as cost economy,
susceptibility of the process to disturbances; convenience of the inspector etc. requires to
be considered.
The making of X-R Charts involves the following Steps:
Step 1:
(a)
(b)
(c)
Step 2:
A
Collect Data
Collect sufficient samples spread over a reasonable period. Each sample must be
of equal size.
Measure each component comprising the sample for the given quality
characteristic
Record individual measurements on a work data sheet.
Calculate mean (X) and Range (R) of each sample
The mean which is written as X (X bar) is average of each sample and is
Production / Operations Management—Page 22
B
C
Step 3:
A
B
Step 4:
Obtained by totaling the individual measurements of the units comprising the
sample and dividing the total by the sample size (number of units in each sample)
The range, which is written as R, is obtained as the difference between the
highest and the lowest measurement of a sample.
The values of X and R are recorded sample wise either on the extreme right of
the individual measurements on the data sheet or in a separate table.
Calculate grand Average (X) and mean Range (R)
The grand average, which is written as, X (X double bar) is the average of the
sample averages and is obtained by dividing the total of the averages of all the
samples by the total number of samples.
The mean range, which is written as, R (R bar) is the average of the ranges and is
obtained by dividing the total of the ranges of the samples by the total number of
samples.
Set up Control chart for the average
A
Set up a control chart with the central line drawn at X (X double bar), upper
control limit located X + A2R (R bar) and the lower control limit set up at X-A2R.
B
Plot the averages to see whether the process was under control when samples
were drawn.
If all points fall within the control limits, the process is said to be under control
If process is not under control (indicated by some points falling outside the
control limits), eliminate points outside the control limits and compute new trial
control limits for the remaining points.
Repeat step 4 (d) until all points fall within the control limits
Control limits in a particular situation should be revised from time to time as
additional data is accumulated.
C
D
E
F
Step 5: Calculate control limits of the range chart
A
B
C
D
E
F
The control chart for range chart is set up with central line as R, upper control
limit (UCLR) located at D4R above the central line and lower control limit
(LCL) at D3R below the central line
Plot the value of the range of each sample.
If all points fall within the control limits no modification is necessary unless it is
desired to reduce the process dispersion
if range chart exhibits lack of control indicated by some points falling outside the
control limits, eliminate those points out of control and compute new trial control
limits
Repeat step 5 (d) until all points fall within the control limits.
Control limits in a practical situation should be revised time to time
as
additional data is accumulated.
Production / Operations Management—Page 23
Step 6: Use control chart
A
B
Collect samples of fixed size at specified intervals of time.
Measure each unit of the sample for the quality characteristics, calculate mean
and the range of each sample.
C
D
Plot the values of X and R of each sample in their respective charts
Study the trend of the points to interpret and suggest remedial action
Q10 (b) ABC company produces a solvent, which must contain 3 percent of alcohol. It tries
to maintain the actual percentage at 3 + 0.3 percent. It tests hourly in samples of five. The
following table shows the results of last five samples. Set up a control chart for mean and
examine whether the process is under control.
A) Solution:
(i)
Collect data
(ii)
Calculate mean (X bar) and range(R bar)
(iii)
Sample No.
Arithmetic Mean (X bar)
Range(R)
1
2
3
4
5
2.92
2.98
3.06
3
3
0.3
0.1
0.1
0
0.2
Calculate grand average and the mean range
X(X bar)
R
=
2.92 + 2.98 + 3.06 + 3 + 3
5
=
2.992
=
0.3 + 0.1 + 0.1 + 0 + 0.2
5
=
0.14
Production / Operations Management—Page 24
(iv)
Set Up control chart for the average
Central Line = CLx = X(X bar)
=
2.992
Upper Control Limit
=
UCLx = X (X bar) + A2.R(R bar)
=
2.992 + 0.5768 x 0.14
=
3.476
=
UCLx = X (X bar) - A2.R(R bar)
=
2.992 - 0.5768 x 0.14
=
2.507
Central line CLR
=
R(R bar)
=
Lower control limit
=
LCLR =
D3.R (R bar)
=
0 x 0.14
=
0
=
UCLR =
=
2.114 x 0.14
=
0.29596
Lower Control Limit
(v)
Set up a range chart
Lower control limit
0.14
D4.R (R bar)
Production / Operations Management—Page 25
Q.6) What is method study? Describe the procedural steps to develop easier and effective
methods.
Answer.6)
Method study is the systematic recording and critical examination of existing and
proposed ways of doing work, as a means of developing and applying easier and more effective
methods and reducing costs.
Method study is an organized approach and its investigation rests on the following six basic steps
outlined in the block diagram
 Select
the work to be analyzed.
 Record
all facts relating to the existing method.
 Examine
the recorded facts critically but impartially.
 Develop
the most economical method commensurate with plant Requirements
 Install
the new method as standard practice.
 Maintain
the new method.
Selection of the job
Selections of the jobs to be studied for methods improvement by the method study
practioner is a managerial responsibility and it (selection) may be based on economic
technical or human consideration. Economic consideration justifies selection based on
the economic worth (i.e. money saving potential) of the job.
Technical consideration identifies jobs, which require studies to overcome manufacturing
difficulties (excessive rejection, relaxation in prefixed performance standards, inability if
the shops to stick to specified machining parameters such as speeds, feeds, depth of cut
etc., inconsistent quality etc.) Human consideration in job selection is usually given
weightage while introducing method study practices for the first time.
Recording of facts
Systematic recording is the most crucial step in method improvement. Since recording
by long hand (or by descriptive method) has its limitations, it is not recommended for use
in method study. Instead, five symbols and eight charting conventions are used to record
facts relating to the job under study. Five typical symbols are O, ||, , D and V and eight
charting conventions concern composition of the chart, reject, rework, repletion, change
of state, introducing of new material, combined events and numbering of events. The
document on which details of the process are recorded by the above referred symbols and
conventions is called chart. There are four basic types of chart: (i) operation process
chart (ii) Flow process chart (iii) multiple activity charts and (iv) two handed process
chart.
Besides charts, two types of diagrams-flow diagram and string diagram are drawn when
recording details of an existing layout. Travel chart is another typical chart, which is
used to record frequency of movements (weight x distance) between work
centres/departments.
Production / Operations Management—Page 26
Repetitive short cycle operation which involves quick hand/feel motions (i.e. microscopic
motions) may be studied with micro motion study. Glibreth, founder father of micro
motion study, also developed photographic techniques called cyclograph and
chronocylegraph to record path of the motions of the members of the body.
Critical examination
Critical examination aims to analyze the facts critically and thereby give rise to
alternatives, which form the basis of selection and development of easier, and effective
methods.
Critical examination is conducted through a systematic and methodical questioning
process. Each activity recorded on the chart, whether it relates to processing or
inspection, or material handling, or to any other aspect, is picked up one at a time and is
examined minutely. The questioning process is considered under five major heads,
namely the purpose, the place, the sequence, the person and the means. These five
aspects in critical examination are referred to as five governing considerations.
Development and selection:
Development and selection stage concerns short listing of ideas generated at the critical
examination stage, testing each short listed idea for its technical and economic feasibility,
and making selection among the alternatives wherever choice exists. To develop ideas
and to ascertain their technical and economical feasibility, the method study practioner
needs to solicit the cooperation of personnel from different departments of the company.
Various techniques available for the development and selection purpose are: cost benefit
analysis, break even analysis, investment analysis and critical path analysis.
Installation
‘Installation’ (or implementation) of the proposed method involves preparation of project
report on recommendations making oral presentation to the top management, securing
approval of the decision maker, assisting line management during implementation,
arranging training of workmen, and getting jobs (operations) retime after implementation,
arranging training of workmen, and getting jobs (operations) retimed after
implementation.
Maintenance
“ Maintenance” phase is the follow up phase after implementation, which serves as a
monitoring and control mechanism. It helps to ensure that the revised methods are set
into concrete and workmen do not revert back to old methods. It also provides an
opportunity to the practitioner to assess the effectiveness of the approach followed by
him and makes changes in the methodology (if required).
Production / Operations Management—Page 27
Q.9) (a) What desirable conditions need to be present to be present to guarantee success of
an incentive scheme?
Answer.9)
A good wage incentive plan should have the following characteristics.
 Administrative simplicity:
The incentive system should be simple and must be easily understood by the workers and
their representatives. An incentives scheme, which can be understood, only by engineers and
mathematicians or a scheme which involves the use of complex formulate or references and
cross-references is sure to fail. The incentive scheme should be such that workmen can
calculate their own earnings easily and quickly.
 Minimum clerical work:
The system should fit into existing system of production and cost control. It should not
involve any significant addition to the clerical work.
 Maximum coverage:
The system should cover as many workmen as possible. A scheme if applied to a few
workmen creates a demoralizing effect on the morale of those not covered by the scheme.
 Direct
Incentive payments should increase at least in direct proportion to the increase in output by
the operator. There are two reasons:
Firstly because it is more difficult to producer extra units and secondly because saving in the
overheads are far greater at higher levels of production.
 Period of Payment
The period of payment should be as short as possible
 Adequate guaranteed minimum hourly rate
The scheme must ensure adequate guaranteed minimum hourly rate to all incentive workers
regardless of their output. Such an hourly guaranteed rate is normally referred to as the
guaranteed base rate.
The guaranteed base rate must be realistic and should be at least equal to the hourly rate
payable to a non-incentive worker doing similar job in the industry. Incentive earnings of the
workers should never be regarded as a substitute for poor wages.
 Accurate and yet attainable performance standards
Performance standards should be set through systematic work measurement studies. The
experts to that there is no dispute or malpractice and yet the standards are attainable so that a
worker working at normal pace can attain them should base the standards of measurement on
the assessment.
Production / Operations Management—Page 28
Further the incentive plan should be such that it provides an opportunity to all average
workers to earn reasonable earnings.
 Consistency of the standards
Standards once fixed should not be changed unless there is a permanent change in methods,
or change in equipment, or change in material and plan should provide for the provisions to
modify the performance standards.
 Inbuilt check on process rejections
A good incentive scheme should exercise a check on the operator against achieving higher
bonus by poor workmanship. Payment should be made only for pieces declared acceptable
by the inspection department and a workman constantly producing substandard pieces should
be liable for disciplinary action.
 Payment of partially completed jobs
The problem of payment for the incomplete work arises only in case of long cycle jobs.
Situations do arise when the jobs are of very long cycle duration and cannot be finished
within the bonus period. Similarly, a semi-finished job may require to be handed over by one
operator to another at the end of shift, or prior to having a holiday. The scheme should
clearly spell out as how assessment of work done by the workmen on the same job will be
carried out and how disputes arising out of such assessment would be resolved.
 Payment of Idle Time
Adequate safeguards must be provided to compensate the operator for the time lost due to
reasons beyond his control. A good incentive scheme should ensure that an operator does not
suffer financial loss for reasons attributable to the managerial weakness, e.g.: lack of material
due to bad buying, breakdowns of the machines due to poor maintenance practices, nonavailability of work etc. Thus an operator rendered idle because of factors attributable to the
management should be given a lieu bonus.
 Safeguards
The scheme should be fair not only to the employees but also to the employer. Safeguarding
clauses as under should be incorporated to protect.
a. Management’s right to change a standard when there are changes in methods. Materials
and machines
b. Management’s right to withdraw or discontinue temporarily a scheme during bad period.
c. Management’s right to initiate disciplinary action against operators who continually
produce sub-standard articles.
d. Management’s right to initiate disciplinary action against employees who, time and
again, do not achieve minimum standard of production even in the presence of fair and
accurate standards.
e. Management’s right to initiate disciplinary action against employees who, time and again
are found using speeds and feeds higher than those recommended in the process sheet (or
operational layouts)
 Maximum ceiling on the earnings
The system should have built-in-control against higher earnings beyond a certain limit.
Firstly, the system should discourage workers to work beyond a certain limit otherwise too
attractive an incentive scheme may induce the worker to work more and more and thereby
Production / Operations Management—Page 29
adversely affect his health. Secondly, the system should ensure that in case of loose
standards the company does not lose financially.
 Consistency of Plan
The plan should be consistent over a period of time. Frequent changes in the plan make it’s
functioning difficult. Faith in plan is lost if there are frequent revisions.
 Acceptance of Labour Body
The scheme should finally have acceptance of the labour body. The body of workers’
representatives to prevent any misunderstanding and ill-feeling later on must accept the basic
incentive plan and its provisions.
 Continuous Use
The scheme should be in continuous use. The temporary use of the scheme in good times and
its discontinuation in bad times makes it’s functioning difficult.
 Define End Results
The plan must result in reduction in per unit labor cost.
Production / Operations Management—Page 30
Q 13)
Answer 13)
i) Average Cycle time
Normal Time
=
0.22 + 0.24 + 0.28 + 0.26 + 0.25
5
=
0.25
=
Observed time x Rating
100
=
0.25 x 80
100
=
0.2
Similarly, average cycle time and normal time for all the elements are calculated and
tabulated as below
Element
A
B
C
D
E
ii)
Avg. cycle time
0.25
0.15
0.35
0.102
0.12
Rating
80
100
120
90
100
Normal time
0.2
0.15
0.42
0.0918
0.12
Total Normal time
=
0.2 + 0.15 + 0.42 + 0.0918 + 0.12
Total Normal time
=
0.9818
15
100
x
=
0.1473
Contingency Allowance =
5
100
x
Standard time
=
0.0491
Relaxation Allowance =
0.9818
0.9818
Normal time + Relaxation Allowance + Contingency Allowance
=
Standard time
=
1.1782
0.9818 + 0.1473 + 0.0491