Production and Operations Management
Unit 2
Facility Management & Aggregate Planning
Why and when location planning:
• New business set up
• Expansion of existing set up
• Changes to government policies or introduction of new government policies
• Change in demand, supply etc.
• Changes in cost structure
Factors affecting location planning
• Availability of factors of production – land and capital
• Availability of work force
• Availability of raw material
• Proximity of markets
• Stability of demand
• Availability of infrastructure – power, communication, transportation, roads,
water source. Effluent management
• Government support – grant, subsidy etc.
• Schools, colleges, standard of living, security, culture
Location
Types of facilities
Heavy manufacturing facilities: these require a lot of space and are expensive to
construct. Examples: automobile plants, steel mill, and oil refineries
Factors impacting facility location are: land cost, construction cost, transportation
modes, proximity of raw material, utilities, means of waste disposal, and
availability of labor
Light industry facilities: examples: electronic components, computers and
assembled products such as TVs breweries, pharmaceutical firms.
Retail and service facilities: example: grocery stores, department stores,
restaurants, banks, hotels, clinics, law offices etc. these are less expensive to build.
For these the location is very important. Closeness to customers is important.
• Single Facility
• Multi Facility
Unit 2
What is plant lay out
• It is a blue print for placing work centers at various location in a shop floor
with the objective of
• Minimizing investment
• Minimizing overall production time
• Efficiently use the available space
• Ensure employee safety, comfort, and convenience
• Ensure flexibility of operations
• Minimize material handling cost
• Facilitate manufacturing process
• Facilitate organization structure
Classification of Layouts
• Four types of layouts are commonly used
• Process Layout – similar workstations are grouped together in a place.
This layout is used when production volume is small and jobs come in
randomly. Job shops used this layout
• Product Layout – workstations are placed according to the sequence in
which they are used. Machines are not shared by different products.
This type of layout is used when the production volumes are high to
justify use of separate line of equipment for the product.
• Fixed position Layout – the product being manufactures stays in one
place and different equipment according to requirement are brought
near the product for operations. Example is construction of buildings
• Hybrid Layout – also known as group layout or group technology or
cellular manufacturing. It is a combination of product and process
layout. Products are d grouped into families requiring similar type of
operations. The equipment required for these operations are grouped
together in a cell. Several such cells are formed in a plant
manufacturing different categories of products. The advantage of this
layout is that minimizes material handling and equipment cost.
Layout design procedures
• Manual methods
• Travel chart
• Systematic layout planning (SLP)
• Computer aided methods
• Constructive methods
• ADLEP (Automated Layout Design Program)
• CORELAP (Computerized Relationship Layout Planning)
• Improvement methods
• CRAFT (Computerized Relative Allocation of Facilities Technique)
ADLEP
• It is a construction type algorithm
• Uses basic type of data on facilities
• Successively places departments in the layout
• Evaluates the layout obtained using closeness rating
• Iterates the process and selects the best layout based on highest score
• Basic Data Required for ADLEP
• Total number of departments
• Area of each department
• Length and width of layout
• Closeness rating of various pairs of departments in the form of
relationship chart
• Minimum department preference value (MDP)
• Sweep width
• Number of iterations to be performed
• Location and area of each restricted area in the layout present
Relationship chart
• Closeness rating is done as follows
Closeness
Notation
Value
Absolutely necessary
A
64
Especially important
E
16
Important
I
4
Ordinary closeness OK
O
1
Unimportant
U
0
Not desirable
X
-1024
Steps in ADLEP
• Step 0 input
• Step 1 – select a department randomly and place in the layout
• Step 2 Scan the Relationship chart and classify unselected departments into
two lists A and B
• List A contains departments with MDP less than the department
selected in step 1
• List B has departments with MDP greater than department selected in
step 1
• If the list B is empty then got to step 4
• Step 4 – select a department randomly from list A and place in the layout
then go to step 6
ADLEP continued
• Step 5 – select a department with maximum REL from list B and place it in
the layout
• If all the departments have been placed in the layout go to step 7 else go to
step 2
• Step 7 – Compute the layout score
• Step 8
Production Planning and Control
• Production planning and control has three phases
• Planning Phase
• Action phase
• Control phase
• Progress reporting
• Course corrections
Planning phase
• Pre-production planning – includes product development, product design,
forecasting, aggregate planning, Master scheduling, order writing, MRP etc.
• Product designing – it is a collection of information regarding, bill of
material, specification, drawings etc. it also includes aspects such as
designing for selling, designing for manufacturing, and design for usage
• Forecasting – it is the process of estimating the level of demand. It also
gives direction to the production manager on rate of production, size of
inventory, and size of work force. While doing this the capacity of the
plant is taken in to consideration.
• Aggregate planning – it is macro level planning to estimate resource
requirements for the whole set of products manufactured by the plant (
generally this is done for a year)
• Master scheduling – planning horizon is for a month or some times 3
months
• Order writing is nothing but issuing executable orders to different
departments such as the purchase department, the shop floor etc.
• MRP – material requirement planning – evaluates the material
requirements to execute orders using order in hand, material in hand,
material in transit, receipts, and scheduled production. It is done to
specify how much what and when needs to be produced
• Active planning – Process planning, routing, material planning, tools
planning, loading, scheduling etc.
• Process planning – specifies the technology to be used for the
production of product
• Routing – specifies the sequence of operations that need to done at the
desired quality, quantity, and cost
• Gives direction to the nature of tools and equipment to be used
for production
• Determines the flow of the material and components through the
shop floor
• Material planning – determines the kind of raw/packaging material
required to complete the production order. Gives direction to when,
where, what is needed.
• Loading is the assignment of specific jobs to work stations – several
quantitative and heuristic methods are used to do this
Action Phase
• This phase involves the issue of job ticket, store issue order, tool issue order,
time ticket, inspection order, and move order.
• Job ticket – is number or a code to identify the job
• Store issue order is direction to the store to issues items required to
manufacture the product
• Inspection order is the instruction to the quality control department to
perform required quality tests as per the order detail
• Time ticket is the used to note down when the manufacturing of the
job started, when it ended and the total time taken to complete the
job. It will also specify issues such as breakdown, power cuts, etc.
• Move order is used to instruct the personnel at various stages to move
the raw/packaging material to the production line and the finished
product to the warehouse of dispatch section as the case may be
Control phase
• Progress reporting
• Data such as percent completion of job, breakdowns, power problems,
tool problems, unavailability of operator etc. are communicated and
recorded.
• Corrective action
• Instructions to correct the above problems are communicated and
recorded.
Aggregate planning
• Nature: Aggregate planning is used to find the optimal combination of
resources to produce the whole set of products manufactured by a firm at
the most economical cost.
• The whole set of products manufactured by a firm are combined to a
common unit.
• It is used to decide the rate of production for a plant in a given period
(mostly it is for a year sometimes it may be for three months)
• The capacity of a plant is defined as follows for the purposed of aggregate
planning
• Regular time production capacity
• Overtime production capacity
• Subcontracting capacity
• Hiring and firing capacity
Strategies
• Building and utilizing inventory through constant work force
• Varying the size of work force
• Subcontracting
• Making changes in demand pattern
Aggregate planning methods
• Graphical method
• Heuristics
• Transportation methods
• Pure strategies
• Mixed strategies
Material Requirement Planning (MRP)
• Material requirement planning is process by which the current stock , stock
under production, stock scheduled to be produced, and orders in hand are
analyzed along with lead time requirements to ascertain what we can
commit.
• See example work sheet given to you
Aggregate Planning
• Aggregate planning is the process of making a medium term forecast for all
the products manufactured by a company together
• For example if a company manufactures toys of various types: the
aggregate planning will be : we will need to produce 7000 units of toys
next month. The aggregate planning does not mentions how many
animal toys or cars the company will manufacture. Also it does not say
how much the daily production will.
Aggregate Planning Strategies
• Pure
• Mixed
• Graphical
• Transportaion