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Chapter 1: Introduction to Production and Operations Management Chapter 2: Strategic Operations Management Chapter 3: Production Processes. This book covers the emerging and important topics related to production and operations management in a systematic way. It covers not only the essentials of. This widely adopted and well-established book, now in its Third Edition, provides the students of management and engineering with the latest.
Inventory Models and Safety Stocks Chapter Materials Requirement Planning Chapter Other Aspects of Materials Management Chapter Physical Distribution Management Chapter Outsourcing Part Five: Plan Layout Chapter Cellular Manufacturing Chapter Location of Facilities Part Six: Timing Decisions Chapter Production Planning and Control Chapter Aggregate Planning Chapter Scheduling Chapter Project Management - I Chapter 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.
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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.
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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. Perfect line balancing which eliminates bottlenecks and idle capacity. Manufacturing cycle is short due to uninterrupted flow of materials.
Small amount of work-in-process inventory. Unskilled workers can learn and manage the production. A breakdown of one machine in a product line may cause stoppages of machines in the downstream of the line. A change in product design may require major alterations in the layout. The line output is decided by the bottleneck machine. Comparatively high investment in equipments is required.
Lack of flexibility. A change in product may require the facility modification. A combination layout is possible where an item is being made in different types and sizes.
Here machinery is arranged in a process layout but the process grouping is then arranged in a sequence to manufacture various types and sizes of products.
It is to be noted that the sequence of operations remains same with the variety of products and sizes. Figure 2. In this type of layout, the material, or major components remain in a fixed location and tools, machinery, men and other materials are brought to this location. This type of layout is suitable when one or a few pieces of identical heavy products are to be manufactured and when the assembly consists of large number of heavy parts, the cost of transportation of these parts is very high.
Helps in job enlargement and upgrades the skills of the operators. The workers identify themselves with a product in which they take interest and pride in doing the job.
Greater flexibility with this type of layout. Layout capital investment is lower.
A grouping of equipment for performing a sequence of operations on family of similar components or products has become all the important.
Group technology GT is the analysis and comparisons of items to group them into families with similar characteristics. GT can be used to develop a hybrid between pure process layout and pure flow line product layout.
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This technique is very useful for companies that produce variety of parts in small batches to enable them to take advantage and economics of flow line layout.
The application of group technology involves two basic steps; first step is to determine component families or groups. The second step in applying group technology is to arrange the plants equipment used to process a particular family of components.
This represents small plants within the plants. The group technology reduces production planning time for jobs. It reduces the set-up time. Thus group layout is a combination of the product layout and process layout. It combines the advantages of both layout systems.
Here, the objective is to minimize the intercell movements. The basic aim of a group technology layout is to identify families of components that require similar of satisfying all the requirements of the machines are grouped into cells. Each cell is capable of satisfying all the requirements of the component family assigned to it. The layout design process considers mostly a single objective while designing layouts. In process layout, the objective is to minimize the total cost of materials handling.
Because of the nature of the layout, the cost of equipments will be the minimum in this type of layout. In product layout, the cost of materials handling will be at the absolute minimum. But the cost of equipments would not be at the minimum if the equipments are not fully utilized. In-group technology layout, the objective is to minimize the sum of the cost of transportation and the cost of equipments. So, this is called as multi-objective layout. Component standardization and rationalization.
Reliability of estimates. Effective machine operation and productivity. Customer service. It can decrease the— 1. Paper work and overall production time. Work-in-progress and work movement. Overall cost. If the product mix is completely dissimilar, then we may not have meaningful cell formation. Adopting a product layout makes sense when the batch size of a given product or part is large relative to the number of different products or parts produced. Assembly lines are a special case of product layout.
In a general sense, the term assembly line refers to progressive assembly linked by some material-handling device. The usual assumption is that some form of pacing is present and the allowable processing time is equivalent for all workstations. Within this broad definition, there are important differences among line types. A few of these are material handling devices belt or roller conveyor, overhead crane ; line configuration U-shape, straight, branching ; pacing mechanical, human ; product mix one product or multiple products ; workstation characteristics workers may sit, stand, walk with the line, or ride the line ; and length of the line few or many workers.
The range of products partially or completely assembled on lines includes toys, appliances, autos, clothing and a wide variety of electronic components.
In fact, virtually any product that has multiple parts and is produced in large volume uses assembly lines to some degree. A more-challenging problem is the determination of the optimum configuration of operators and buffers in a production flow process.
A major design consideration in production lines is the assignment of operation so that all stages are more or less equally loaded. Consider the case of traditional assembly lines illustrated in Fig. The first operation requires 3 minutes per unit; the second operation requires 1 minute per unit; and the third requires 2 minutes per unit. The first workstation consists of three operators; the second, one operator; and the third, two operators.
An operator removes a part from the conveyor and performs some assembly task at his or her workstation. The completed part is returned to the conveyor and transported to the next operation. The number of operators at each workstation was chosen so that the line is balanced. This is also true for other two stations. Since the parts arrive at a rate of one per minute, parts are also completed at this rate. Assembly-line systems work well when there is a low variance in the times required to perform the individual subassemblies.
If the tasks are somewhat complex, thus resulting in a higher assembly-time variance, operators down the line may not be able to keep up with the flow of parts from the preceding workstation or may experience excessive idle time. An alternative to a conveyor-paced assembly-line is a sequence of workstations linked by gravity conveyors, which act as buffers between successive operations.
This would occur when, for balance purposes, workstation size or the number used would have to be physically modified. The most common assembly-line is a moving conveyor that passes a series of workstations in a uniform time interval called the workstation cycle time which is also the time between successive units coming off the end of the line.
At each workstation, work is performed on a product either by adding parts or by completing assembly operations. The work performed at each station is made up of many bits of work, termed tasks, elements, and work units. Such tasks are described by motion-time analysis. Generally, they are grouping that cannot be subdivided on the assembly-line without paying a penalty in extra motions. The total work to be performed at a workstation is equal to the sum of the tasks assigned to that workstation.
The line-balancing problem is one of assigning all tasks to a series of workstations so that each workstation has no more than can be done in the workstation cycle time, and so that the unassigned idle time across all workstations is minimized.
The problem is complicated by the relationships among tasks imposed by product design and process technologies. This is called the precedence relationship, which specifies the order in which tasks must be performed in the assembly process.
The steps in balancing an assembly line are: Specify the sequential relationships among tasks using a precedence diagram. Select a primary rule by which tasks are to be assigned to workstations, and a secondary rule to break ties.
All PDF Epub. Essentials of Inventory Management Max Muller. HarperCollins Leadership Add to Cart Add to Cart.
13 Operations Management Books Every Supply Chain Professional Should Read
Add to Wishlist Add to Wishlist. View More. The Phoenix Project 3rd ed. IT Revolution Press BenBella Books, Inc. Womack , Daniel T. Jones and 1 more Balanced Scorecard Step-by-Step 2nd ed.
Anderson and 1 more Identifying and Managing Project Risk 3rd ed. Supply Chain Transformation: Paul Dittmann. McGraw-Hill Education Supply Chain Management 2nd ed. An Introduction to Logistics Donald Waters. Macmillan Education UK The cycle time is determined by the slowest operation. Land and 3 1 3 2 6 construction costs 5.
Certain types of industries are power hungry e. In some of the organization the product is a physical good hotels while in others it is a service hospitals. Operation managers establish a structure of roles and the flow of information within the operations subsystem. Unit cost is lower due to high volume of production.
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