Production and Operations Management (POM) - SEM-II - (GTU)

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( 1 4/ 03/ 12)

POM-Sem-II (GTU)
Production and Operations Management
Module I!!!
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1. NATURE AND SCOPE OF PRODUCTION AND OPERATIONS
MANAGEMENT
NATURE OF PRODUCTION MANAGEMENT
The term production management is more used for a system where tangible goods
are produced .Whereas, operations management is more frequently used where
various inputs are transformed into tangible services.
Viewed from this perspective, operations management will cover such services
organization as banks, airlines, utilities, pollution control agencies super bazaars,
educational institutions, libraries, consultancy firm and police departments, in
addition, of course ,to manufacturing enterprises.
The second distinction relates to the evolution of the subject. Operation
management is the term that is used now a-days .Production management precedes
operations management in the historical growth of the subject
DEFINITION OF PRODUCTION:
It is the process of converting raw material to finished products.
NATURE OF PRODUCTION:
As a system
As an org. function
Decision Making
IMPORTANCE OF PRODUCTION FUNCTION
Significant contribution to societys well-being
Considerable impact to standard of living of people
Org. to achieve competitive advantage
EVOLUTION OF PRODUCTION FUNCTION
Industrial Revolution
Scientific Management
The Human Relations Movement
Operations Research
Computers and advanced production technology
The Service Revolution
WHAT IS A PRODUCT?
Need-satisfying offering of an organization
o Example
P&G does not sell laundry detergent
P&G sells the benefit of clean clothes
Customers buy satisfaction, not parts
May be a good or a service
PRODUCT LIFE CYCLE
Introduction
Growth
Maturity
Decline
INTRODUCTION
Fine tuning
o research
o product development
o process modification and enhancement
o supplier development
GROWTH
Product design begins to stabilize
Effective forecasting of capacity becomes necessary
Adding or enhancing capacity may be necessary
MATURITY
Competitors now established
High volume, innovative production may be needed
Improved cost control, reduction in options, paring down of product line
DECLINE
Unless product makes a special contribution, must plan to terminate offering
PRODUCT DEVELOPMENT STAGES
1.IDEA GENERATION
Provides basis for entry into market
Sources of ideas
o Market need (60-80%); engineering & operations (20%); technology;
competitors; inventions; employees
Follows from marketing strategy
o Identifies, defines, & selects best market opportunities

2.ASSESSMENT OF FIRMS ABILITY TO CARRY OUT
3.CUSTOMER REQUIREMENTS
o Identifies & positions key product benefits
o Stated in core benefits proposition (CBP)
o Example: Long lasting with more power
(Sears Die Hard Battery)
Identifies detailed list of product
attributes desired by customer
Focus groups or 1-on-1 interviews

4.FUNCTIONAL SPECIFICATION
Defines product in terms of how the product would meet desired attributes
Identifies products engineering characteristics
o Example: printer noise (dB)
Prioritizes engineering characteristics
May rate product compared to competitors

5.PRODUCT SPECIFICATIONS
Determines how product will be made
Gives products physical specifications
o Example: Dimensions, material etc.
Defined by engineering drawing
Done often on computer
o Computer-Aided Design (CAD)

6.DESIGN REVIEW
7.TEST MARKET
8.INTRODUCTION TO MARKET
9.EVALUATION

ISSUES FOR PRODUCT DEVELOPMENT
ROBUST DESIGN
o Product is designed so that small variations in production or assembly do not
adversely affect the product
TIME-BASED COMPETITION
o Product life cycles are becoming shorter
MODULAR DESIGN
o Products designed in easily segmented components
COMPUTER-AIDED DESIGN
o Designing products at a computer terminal or work station
VALUE ANALYSIS
o Seeks improvements leading either to a better product or a product which
can be more economically produced
PRODUCT-BY-VALUE ANALYSIS
o Lists products in descending order of their individual dollar contribution to
the firm

WHY STUDY OPERATIONS MANAGEMENT?
Systematic Approach to Org. Processes
Business Education
Cross-Functional Applications
Career Opportunities

OBJECTIVE OF PRODUCTION MANAGEMENT
The objective of Production Management is to produce the desired product or
specified product by specified methods so that the optimal utilization of available
resources is met with.

Hence the production management is responsible to produce the desired product,
which has marketability at the cheapest price by proper planning, the manpower,
material and processes.

Production management must see that it will deliver right goods of right quantity at
right place and at right price.

When the above objective is achieved, we say that we have effective Production
Management system.

BENEFITS DERIVED FROM EFFICIENT PRODUCTION MANAGEMENT
The efficient Production Management will give benefits to the various sections of
the society. They Are:

Consumer benefits from improved industrial Productivity, increased use value in the
product.

Products are available to him at right place, at right price, at right time, in desired
quantity and of desired quality.

(ii) Investors: They get increased security for their investments, adequate market
returns, and Creditability and good image in the society.

(iii) Employee gets adequate Wages, Job security, improved working conditions and
increased Personal and Job satisfaction.

(iv) Suppliers: Will get confidence in management and their bills can be realized
without any delay.

(v) Community: community enjoys Benefits from economic and social stability.

(vi) The Nation will achieve prospects and security because of increased
Productivity and healthy industrial atmosphere.

FUNCTIONS OF PRODUCTION MANAGEMENT DEPARTMENT
They are:

Materials: The selection of materials for the product. Production manager must
have sound Knowledge of materials and their properties, so that he can select
appropriate materials for his product. Research on materials is necessary to find
alternatives to satisfy the changing needs of the design in the product and
availability of material resumes.

Methods: Finding the best method for the process, to search for the methods to
suit the available resources, identifying the sequence of process are some of the
activities of Production Management.

Machines and Equipment: Selection of suitable machinery for the process desired,
designing the maintenance policy and design of layout of machines are taken care of
by the Production Management department.

Estimating: To fix up the Production targets and delivery dates and to keep the
production costs at minimum, production management department does a thorough
estimation of Production times and production costs. In competitive situation this
will help the management to decide what should be done in arresting the costs at
desired level.

Loading and Scheduling: The Production Management department has to draw the
time Table for various production activities, specifying when to start and when to
finish the process required. It also has to draw the timings of materials movement
and plan the activities of manpower. The scheduling is to be done keeping in mind
the loads on hand and capacities of facilities available.

Routing: This is the most important function of Production Management
department. The Routing consists of fixing the flow lines for various raw materials,
components etc., from the stores to the packing of finished product, so that all
concerned knows what exactly is happening on the shop floor.

Dispatching: The Production Management department has to prepare various
documents such as Job Cards, Route sheets, Move Cards, Inspection Cards for each
and every component of the product. These are prepared in a set of five copies.
These documents are to be released from Production Management department to
give green signal for starting the production. The activities of the shop floor will
follow the instructions given in these documents. Activity of releasing the
document is known as dispatching.

Expediting or Follow up: Once the documents are dispatched, the management
wants to know whether the activities are being carried out as per the plans or not.
Expediting engineers go round the production floor along with the plans, compare
the actual with the plan and feed back the progress of the work to the
management. This will help the management to evaluate the plans.

Inspection: Here inspection is generally concerned with the inspection activities
during production, but a separate quality control department does the quality
inspection, which is not under the control of Production Management. This is true
because, if the quality inspection is given to production Management, then there is
a chance of qualifying the defective products also.

For example

Teaching and examining of students is given to the same person, then there is a
possibility of passing scripts, so that the quality of answers are correctly judged.

Evaluation: The Production department must evaluate itself and its contribution in
fulfilling the corporate objectives and the departmental objectives. This is
necessary for setting up the standards for future. What ever may be the size of
the firm; Production management department alone must do Routing, Scheduling,
Loading, Dispatching and expediting. This is because this department knows very
well regarding materials, Methods, and available resources etc. If the firms are
small, all the above-mentioned functions (i to x) are to be carried out by Production
Management Department. In medium sized firms in addition to Routing, Scheduling
and Loading, Dispatching and expediting, some more functions like Methods,
Machines may be under the control of Production Management Department. In large
firms, there will be Separate departments for Methods, Machines, Materials and
others but routing, loading and scheduling are the sole functions of Production
Management.

Operations Management is.
The business function responsible for planning, coordinating, and controlling the resources
needed to produce products and services for a company
A management function
An organizations core function
In every organization whether Service or Manufacturing, profit or Not for profit
What is Role of OM?
OM Transforms inputs to outputs
o Inputs are resources such as
People, Material, and Money
o Outputs are goods and services
OMs Transformation Process

OMs Transformation Role
To add value
o Increase product value at each stage
o Value added is the net increase between output product value and input
material value
Provide an efficient transformation
o Efficiency means performing activities well for least possible cost

Goods & Services

Manufacturing
Tangible product
Product can be inventoried
Low customer contact
Longer response time
Capital intensive

Services
Intangible product
Product cannot be inventoried
High customer contact
Short response time
Labor intensive

OM Decisions

OM in Practice
OM has the most diverse organizational function
Manages the transformation process
OM has many faces and names such as;
o V. P. operations, Director of supply chains, Manufacturing manager
o Plant manager, Quality specialists, etc.
All business functions need information from OM in order to perform their tasks
Business Information Flow

OM across the Organization
Most businesses are supported by the functions of operations, marketing, and
finance
The major functional areas must interact to achieve the organization goals
Marketing is not fully able to meet customer needs if they do not understand what
operations can produce
Finance cannot judge the need for capital investments if they do not understand
operations concepts and needs
Information systems enables the information flow throughout the organization
Human resources must understand job requirements and worker skills
Accounting needs to consider inventory management, capacity information, and
labor standards
Scope of Production and Operation Management

The scope of production and operations management is indeed vast .Commencing
with the selection of location production management covers such activities as
acquisition of land, constructing building, procuring and installing machinery,
purchasing and storing raw material and converting them into saleable products.

Added to the above are other related topics such as quality management,
maintenance management, production planning and control, methods improvement
and work simplification and other related areas.

2. Types of Manufacturing Systems (production Processes)

TYPES OF PRODUCTION SYSTEMS

Three main factors generally determine this aspect are:

(i)Type of production i.e., quantities of finished products and regularity of
manufacture.

o For example whether Job production or Batch Production or Continuous
Production.

(ii) Size of the Plant i.e., Small Industry, Medium sized Industry or Large
Industry.

(iii) Type of Production: In general there are three classifications in types of
Production system.

THEY ARE DISCUSSED BELOW.

Job Production: In this system Products are manufactured to meet the
requirements of a specific order. The quality involved is small and the
manufacturing of the product will take place as per the specifications given by the
customer. This system may be further classified as.

The Job produced only once: Here the customer visit the firm and book his order.
After the completion of the product, he takes delivery of the product and leaves
the firm. He may not visit the firm to book the order for the same product. The
firm has to plan for material, process and manpower only after receiving the order
from the customer. The firms have no scope for pre-planning the production of the
product.

The job produced at irregular intervals: Here the customer visits the firm to place
orders for the same type of the product at irregular intervals. The firm will not
have any idea of customers visit. Here also planning for materials, process and
manpower will start only after taking the order from the customer. In case the
firm maintains the record of the Jobs Produced by it, it can refer to the previous
plans, when the customer arrives at the firm to book the order.

The Jobs Produced periodically at regular intervals: In this system, the customer
arrives at the firm to place orders for the same type of product at regular
intervals. Here firm knows very well that the customer visits at regular intervals, it
can plan for materials, and process and manpower and have them in a master file. As
soon as the customer visits and books the order, the firm can start production. If
the volume of the order is considerably large and the number of regularly visiting
customers are large in number, the Job Production system slowly transform into
Batch Production system.

Batch Production: Batch Production is the manufacture of number of identical
products either to meet the specific order or to satisfy the demand. When the
Production of plant and equipment is terminated, the plant and equipment can be
used for producing similar products. This system also can be classified under three
categories.

A batch produced only once: Here customer places order with the firm for the
product of his specification. The size of the order is greater than that of job
production order. The firm has to plan for the resources after taking the order
from the customer.

A Batch produced at irregular intervals as per Customer order or when the need
arises: As the frequency is irregular, the firm can maintain a file of its detailed
plans and it can refer to its previous files and start production.

A Batch Produced periodically at known Intervals: Here the firm either receives
order from the customer at regular intervals or it may produce the product to
satisfy the demand. It can have well designed file of its plans, material requirement
and instructions for the ready reference. It can also purchase materials required in
bulk in advance. As the frequency of regular orders goes on increasing the Batch
Production system becomes Mass Production System. Here also, incase the demand
for a particular product ceases, the plant and machinery can be used for producing
other products with slight modification in layout or in machinery and equipment.

Continuous Production: Continuous Production system is the specialized manufacture
of identical products on which the machinery and equipment is fully engaged. The
continuous production is normally associated with large quantities and with high
rate of demand. Hence the advantage of automatic production is taken. This system
is classified as

Mass Production: Here same type of product is produced to meet the demand of an
Assembly line or the market. This system needs good planning for material, process,
Maintenance of machines and instruction to operators. Purchases of materials in
bulk quantities are advisable.

Flow Production: The difference between Mass and Flow Production is the type of
product and its relation to the plant. In Mass Production identical products are
produced in large numbers. If the demand falls or ceases, the machinery and
equipment, after slight modification be used for manufacturing products of similar
nature. In flow production, the plant and equipment is designed for a specified
product. Hence if the demand falls for the product or ceases, the plant cannot be
used for manufacturing other products. It is to be scraped. The examples for the
above discussed production system are

Job Production Shop: Tailors shop; cycle and vehicles repair shops, Job typing
shops, small Workshops.

Batch Production Shop: Tyre Production Shops, Readymade dress companies,
Cosmetic manufacturing companies...etc.

Mass Production Shops: Components of industrial products,

Flow Production: Cement Factory, Sugar factory, Oil refineries...etc.,

IN ORDER THAT FLOW METHODS CAN WORK WELL, SEVERAL REQUIREMENTS MUST BE MET:
(1) There must be substantially constant demand
If demand is unpredictable or irregular, then the flow production line can lead to a
substantial build up of stocks and possibility storage difficulties. Many businesses
using flow methods get round this problem by "building for stock" - i.e. keeping the
flow line working during quiet periods of demand so that output can be produced
efficiently.
(2) The product and/or production tasks must be standardized
Flow methods are inflexible - they cannot deal effectively with variations in the
product (although some "variety" can be accomplished through applying different
finishes, decorations etc at the end of the production line).
(3) Materials used in production must be to specification and delivered on time
Since the flow production line is working continuously, it is not a good idea to use
materials that vary in style, form or quality. Similarly, if the required materials are
not available, then the whole production line will come to a close - with potentially
serious cost consequences.
(4) Each operation in the production flow must be carefully defined - and recorded in
detail
(5) The output from each stage of the flow must conform to quality standards
Since the output from each stage moves forward continuously, there is no room for
sub-standard output to be "re-worked" (compare this with job or batch production
where it is possible to compensate for a lack of quality by doing some extra work on
the job or the batch before it is completed).
The achievement of a successful production flow line requires considerable
planning, particularly in ensuring that the correct production materials are
delivered on time and that operations in the flow are of equal duration.

3. Facility Layouts
A facility layout is an arrangement of everything needed for production of goods or
delivery of services. A facility is an entity that facilitates the performance of any
job. It may be a machine tool, a work centre, a manufacturing cell, a machine shop, a
department, a warehouse, etc.
The layout design generally depends on the products variety and the production
volumes. Four types of organization are referred to, namely fixed product layout,
process layout, product layout and Hybrid layout

FACILITY LAYOUT IS OF TWO TYPES:
1. Machinery layout
2. Product layout

1. MACHINERY LAYOUT
The processes involved in getting things done have to be detailed out in
terms of materials required, the sequence of the various activities of the
process & their movements from one location to another.
In it the essence of planning is the determination of activities that need to
be performed at a future date to meet demands that have been forecast
based on market surveys.
Another main consideration is the material handling that is required for the
raw materials, goods in process and the finished goods.
2.PRODUCT LAYOUT
These are also called production lines or assembly lines.
They are designed and laid out in such a way that only a few products are
capable of being manufactured or assembled. Materials flow through the
various facilities.
These use special machines to perform specific operations to produce only
one product at one time. So, companies set different set of machines for
different operations.
The operation times, the sequence of movements, routing procedures are
highly standardized to meet production requirements which are
synchronized with many such products to complete finished goods to meet
demands.
The skill required of the workers is low, supervision is minimal. Training
needs are small. The MAIN concern is to keep a check on the processes so
that QUALITY is assured.

PLANT LAYOUT IS DEFINED AS the most effective physical arrangements of the
facilities (machines, processing equipments and service departments, etc. ) of a
plant and its various parts in order to achieve the best co-ordination and efficiency
in the usage of the man, machine and materials resulting in the quickest and
smoothest production activities.

OBJECTIVES OF PLANT LAYOUT
The main objective consists of organizing equipment and working areas in the most
efficient way, and at the same time satisfactory and safe for the personnel doing
the work.
o Sense of Unity
The feeling of being a unit pursuing the same objective.
o Minimum Movement of people, material and resources.
o Safety
In the movement of materials and personnel work flow.
o Flexibility
In designing the plant layout taking into account the changes over short and medium
terms in the production process and manufacturing volumes.
These main objectives are reached through the attainment of the following facts:
o Congestion reduction.
o Elimination of unnecessary occupied areas.
o Reduction of administrative and indirect work.
o Improvement on control and supervision.
o Better adjustment to changing conditions.
o Better utilization of the workforce, equipment and services.
o Reduction of material handling activities and stock in process.
o Reduction on parts and quality risks.
o Reduction on health risks and increase on workers safety.
o Moral and workers satisfaction increase.
o Reduction on delays and manufacturing time, as well as increase in production
capacity.
All these factors will not be reached simultaneously, so the best solution will be a
balance among them.
FACTORS AFFECTING PLANT LAYOUT
The final solution for a Plant Layout has to take into account a balance among the
characteristics and considerations of all factors affecting plant layout, in order to
get the maximum advantages.
The factors affecting plant layout can be grouped into 8 categories:
O MATERIALS
The layout of the productive equipment will depend on the characteristics of the
product to be managed at the facility, as well as the different parts and materials
to work on.
Main factors to be considered: size, shape, volume, weight, and the physical-
chemical characteristics, since they influence the manufacturing methods and
storage and material handling processes.
The sequence and order of the operations will affect plant layout as well, taking
into account the variety and quantity to produce.

O MACHINERY
Having information about the processes, machinery, tools and necessary equipment,
as well as their use and requirements is essential to design a correct layout.
The methods and time studies to improve the processes are closely linked to the
plant layout.
Regarding machinery, we have to consider the type, total available for each type, as
well as type and quantity of tools and equipment.
Its essential as well to know about space required, shape, height, weight, quantity
and type of workers required, risks for the personnel, requirements of auxiliary
services, etc.

O LABOR
Labor has to be organized in the production process (direct labor, supervision and
auxiliary services).
Environment considerations: employees safety, light conditions, ventilation,
temperature, noise, etc.
Process considerations: personnel qualifications, flexibility, number of workers
required at a given time as well as the type of work to be performed by them.
O MATERIAL HANDLING
Material handling does not add value to the product; its just waste.
Objective: Minimize material handling as well as combining with other operations
when possible, eliminating unnecessary and costly movements.
O WAITING TIME
Objective: Continuous Material Flow through the facility, avoiding the cost of
waiting time and demurrages that happen when the flow stops.
On the other hand, the material waiting to flow through the facility not always
represents a cost to avoid. As stock sometimes provides safety to protect
production, improving customer service, allowing more economic batches, etc.
Its necessary then to consider space for the required stock at the facility when
designing the layout.
Resting time to cool down or heating up

O AUXILIARY SERVICES
Support the main production activities at the plant:
Related to labor: Accessibility paths, fire protection installations, supervision,
safety, etc.
Related to material: quality control.
Related to machinery: maintenance and electrical and water lines.
The auxiliary services represent around 30% of the space at a facility.
The space dedicated to auxiliary services is usually considered as waste.
Its important to have efficient services to insure that their indirect costs have
been minimized.
O THE BUILDING
If it has been already selected, its characteristics will be a constraint at the
moment of designing the layout, which is different if the building has to be built.
O FUTURE CHANGES
One of the main objectives of plant layout is flexibility.
Its important to forecast the future changes to avoid having an inefficient plant
layout in a short term.
Flexibility can be reached keeping the original layout as free as possible regarding
fixed characteristics, allowing the adjustment to emergencies and variations of the
normal process activities.
Possible future extensions of the facility must be taken into account, as well as the
feasibility of production during re-layout.

PLANT LAYOUT REQUIREMENT OCCURS DUE TO
Planning and arranging manufacturing machineries, equipments and services to build
a new plant.
The improvement in layouts already in use in order to introduce new methods and
improvements in manufacturing procedures.
The management of the company is interested to introduce any new product to
meet the market demand.
The modernization of the plant has been considered by removing the existing
facilities
The design of the existing product has been changed owing the customers
requirements.
OBJECTIVES OF A GOOD LAYOUT
To provide enough production capacity
To reduce the cost of material handling
To minimize the accidents and hazards to personnel
To reduce the congestion and to utilize the space efficiently and effectively
To utilize the labor efficiently and to improve the morale of the employees
To achieve the easy supervision
To make the maintenance process easier as well as to achieve high degree of
machine/equipment utilization
To improve productivity
TYPES OF LAYOUT:
Process or Functional Layout:
Product or Straight-line or Flow-shop layout :
Fixed Position or Project Layout
Hybrid Layout
1.PROCESS OR FUNCTIONAL LAYOUT:
Similar pieces of equipment that perform similar functions are grouped together. For
example; all drill machines are grouped and placed together.
PROCESS LAYOUT UNIQUE CHARACTERISTICS INCLUDE;
General purpose & flexible resources
Facilities are more labor intensive
Lower capital intensity & automation
Higher labor intensity
Processing rates are slower
Material handling costs are higher
Scheduling resources & work flow is more complex
Space requirements are higher

2.PRODUCT OR STRAIGHT-LINE OR FLOW-SHOP LAYOUT :
The pieces of equipment required to make a Particular product are grouped
together, as in an Automobile assembly line.

PRODUCT LAYOUT UNIQUE CHARACTERISTICS ARE
Produce small number of products efficiently
Resources are specialized
High capital intensity
Low flexibility relative to the market
Processing rates are faster
Material handling costs are lower
Lower space requirements
3.FIXED POSITION OR PROJECT LAYOUT
The equipment is brought to the object being processed, and the object does not
move.
Example; house construction.

Used when product is large
Product is difficult or impossible to move, i.e. very large or fixed
All resources must be brought to the site
Scheduling of crews and resources is a challenge
4.HYBRID LAYOUT
Combine elements of both product & process layouts
o Maintain some of the efficiencies of product layouts
o Maintain some of the flexibility of process layouts
EXAMPLES:
Group technology & manufacturing cells
Grocery stores
THE SELECTION OF THE LAYOUT TYPE DEPENDS ON:
1) The firms operations strategy,
2) The forecast volume of production,
3) The physical characteristics of the product,
4) Availability of the resources, and
5) The type of process technology that will be used.

DESIGNING PROCESS LAYOUTS
Step 1: Gather information:
o Space needed, space available, importance of proximity between
various units
Step 2: Develop alternative block plans:
o Using trial-and-error or decision support tools
Step 3: Develop a detailed layout
o Consider exact sizes and shapes of departments and work centers
including aisles and stairways
o Tools like drawings, 3-D models, and CAD software are available to
facilitate this process

THE STEPS FOR DESIGNING AN PRODUCT LAYOUT ARE
(1) Identify tasks that need to be performed and their immediate predecessors;
(2) determine output rate;
(3) Determine cycle time;
(4) Computing the theoretical minimum number of work stations,
(5) Assigning tasks to workstations; and
(6) Computing efficiency and balance delay.

FACILITY LAYOUT ACROSS THE ORGANIZATION
Layout planning is organizationally important for an efficient operations
Marketing is affected by layout especially when clients come to the site
Human resources is affected as layout impacts people
Finance is involved as layout changes can be costly endeavors
FACILITY LAYOUT PROBLEM
Once a firm has decided where a facility will be located, the next important
decision is the Arrangement of people and Equipment within the facility
Facility Layout problem involves the location of departments (or sections) within
the facility AND the arrangement of people and equipment within each department.
The layout decision will certainly affect the Flow of materials, in-plant
Transportation cost, equipment utilization, and general productivity and
effectiveness of the business.
Therefore, plant layout should be carefully arranged, AND It must satisfy specific
objectives.
Usually the layout is planned to minimize a particular criterion:
For example, minimizing total traveling time, total cost, total delays, etc.
There are also situations in which the layout may be designed to maximize a
criterion:
For example, maximize quality, flexibility, or space utilization.

4. Layout Planning and Analysis
Introduction
Plant layout planning includes decisions regarding the physical allocation of the
economic activity centers in a facility.
o An economic activity center is any entity occupying space.
o The objective of plant layout planning is a more effective work flow at the
facility, allowing workers and equipment being more productive.
Facility layout techniques apply to the case where several physical means have to be
located in a certain area, either industrial processes or services.
The objective of the chapter is not only Plant layout but re-layout also (most
common situation for a company).
To carry out an appropriate plant layout, its important to take into account the
business strategic and tactical objectives
o Example: space requirements/cost per m2 in Malls; accessibility/privacy in
offices.
To make a decision about layout planning, 4 different questions must have an
answer:
o Which centers do we have to consider?
o How much space and capacity is required for each center?
If there is not enough space, productivity may be reduced.
Too much space is expensive and may also reduce productivity.
o How must the space be configured at each center?
Space quantity, shape and the elements of the work center are
related to each other.
o Where should each center be located at within the facility?
The allocation of the different centers may affect productivity.
The plant layout process starts at an aggregate level, taking into account the
different departments. As soon as we get into the details, the different issues
arise, and the original configuration may be changed through a feedback process.
Most (if not all of them) layouts are designed properly for the initial conditions of
the business, although as long as the company grows and has to be adapted to
internal and external changes, a re-layout is necessary.

The reasons for a re-layout are based on 3 types of changes:
O Changes in production volumes.
O Changes in processes and technology.
DETALLE
TIEMPO
GRADO DE DETALLE SEGN
AVANCE DEL PROYECTO
Fase I
Localizacin
Fase IV
Instalacin
Fase III
Distribucin Detallada
Fase II
Distribucin General
O Changes in the product.
The frequency of the re-layout will depend on the requirements of the process.
Symptoms that allow us to detect the need for a re-layout:
O Congestion and bad utilization of space.
O Excessive stock in process at the facility.
O Long distances in the work flow process.
O Simultaneous bottle necks and workstations with idle time.
O Qualified workers carrying out too many simple operations.
O Labor anxiety and discomfort. Accidents at the facility.
O Difficulty in controlling operations and personnel.

Process oriented plant layout
o Its essential to design a flexible plant layout, taking into account as well the
need of flexibility for the material handling equipment to be used.
o Main disadvantage of this layout:
Low operations and material handling efficiency when comparing to a
plant layout oriented to the product.
On the other hand, technology development is facilitating getting
over this disadvantage (i.e.- CNC Equipment).
O Analysis
Decision to be made: Relative location of the different working areas
(same type of equipment).
Criteria: reduction of distance and material handling costs: Increase
of operations efficiency.
If it exists a clear material flow that carries out more volume than
anyone else, the layout could be similar to a Product oriented plant
layout.
The main factor for the analysis is the material handling and
transportation costs among the different working areas.
Sometimes, quantitative information relative to material handling
flows is not available, or its not the main factor to be considered,
being the qualitative factors the most important ones in this case.
Process:
Information gathering.
Plan development.
Quantitative criteria: transportation costs.
Qualitative criteria: closeness priorities.
Information gathering
- We have to know the space requirements
by working area.
o Demand forecast production plan
working hours number of
workers and equipment.
o Consider demand and production
fluctuations.
- Working area space.
o Static area (Se): Physical space
for equipment and workstations.
o Gravitation area (Sg): Allocation
of tools and materials. Area where
operators develop their work.
o Evolution area (Sv): Space to allow
operators and material movements.
- Available space.
o Total available area at the plant.
o Divide the area at a first approach
to estimate each section.
o When performing the detailed
layout, its required to have more
accurate shapes adjusted to the
reality.
- When the objective is the reduction of material handling
costs, we can solve the problem in quantitative terms:
o Its required to know the material flow among
departments or areas, distances among them and means
of transportation.
- When the objective is the reduction of material handling
costs, we can solve the problem in quantitative terms:
o Traffic intensity matrix: Number of material handling
moves among departments (information provided by
historical data, route sheets and production plans).
o Distance matrix: Distances among areas at the plant
and places where the different working areas could be
allocated.
o Cost matrix: Cost of material transportation.- It
depends on the type of equipment to be used.
- Sometimes, quantitative information is not available, or the
importance of distance among areas depends on qualitative
factors (i.e.- a hospital X-ray room may be close to the trauma
medicine room).
Plan development
- Once the size of the different areas has been determined,
the next step is to organize the different areas within the
existent facility, or to determine the desired shape for the
facility construction.
- There are multiple possible solutions, so the selected one will
be the good one that complies with the max. number of
constraints.
Quantitative criteria: Transportation costs.
- With the information gathered in the previous 3 matrixes, the
objective is to minimize the transportation costs.
- Total Transportation Cost: TTC= tij dij cij

- Objective: Finding the combination of dij that minimizes TTC.
- This formula is complicated for common cases, due to the
number of different possibilities (i.e.- for 10 sections, the
alternatives would be 3,628,000).

- Use of heuristics: Algorithm of basic transposition
o Initial arbitrary layout: base permutation.
o Transportation cost calculation for this layout.
o Generation of all possible permutations among
activities, interchanging the ones in the initial arbitrary
layout 2 to 2:
o Number of permutations =(n*(n-1))/2
o Transportation cost calculation for each of the
generated permutations: If we get one with a lower
cost than the base, this last one becomes the base
permutation and the process starts again until there is
no one with a lower cost.
In practice, we have to take into account certain constraints
and circumstances that have to be considered, apart from the
quantitative criteria of the transportation costs.
Once this information is taken into account, the next step will
be to perform the spatial design of the different
departments.
Qualitative criteria: Closeness priorities.
- Technique: Systematic Layout Planning
(SLP)
o Closeness priorities have a letter
code:

O Technique: Systematic Layout Planning (SLP): Example.

O Technique: Systematic Layout Planning (SLP): Example.
OR
Designing and installing a layout for the first time and its subsequent revision may
be looked after by the Engineering or Planning Department. At times the services
of outside consultants are engaged for the purpose. Large establishments with
branches, subsidiaries and associate companies, may have a construction company as
one of their subsidiaries, which discharges the responsibility of planning and
constructing the plants of its family concerns, apart from accepting orders from
outside.
There is no ready-made method available to anyone preparing the layout. The
process of preparing a layout is an art as well as science, in spite of the advances
made in the use of layouts. Naturally, the final layout will be a consummation of
many trials, errors, and compromises. The final layout, which emerges out of trials
and errors, may not be the best

To make the final layout as perfect as possible, the layout personnel would do well
to proceed step by step in the process of layout planning.

The layout procedure might start with an analysis of the product to be
manufactured and the expected volume of its production. An analysis of the
product includes a study of the parts to be manufactured and/or bought, and the
stages at which they should be assembled to obtain the end product. The volume of
production is estimated in terms of market and management policies.

For a given product, at a stated volume of production, a process most appropriate
must be determined. The process that is determined, like any other factor, may not
be permanent because it will be influenced by changes in the volume of production,
changes in the product and changes in equipment. The process which is decided
upon, determines the type of equipment that would be needed to manufacture a
given product at a given volume. The equipment requirements of a company vary
with its methods of grouping machines or the type of layout, the main consideration
being an increasing use of machines and not of labor. The equipment, which is
selected, determines the number of workers that will be required.

The trend nowadays is to replace labor by machines, because that results in
increased production, reduces costs, better quality and fewer labor troubles. But,
the labor cannot be completely dispensed with; it would always be needed to switch
on and switch off the machines, even if the whole plant is mechanized
At the fourth stage, product and volumes have led to a process which dictates the
type of equipment which would be acquired and which, in turn, would require
operators. But the operators require the services of indirect labor of material
handlers, janitors, maintenance staff, quality control staff and production
supervisors. The arrangement of all these facilities and personnel constitutes the
plant layout. Once the plant layout is designed, the layout engineer often engages
the services of an architect or the construction division of the company to design
the system

5. LINE BalancingProblems

Assembly line is a sequence of progressive assembly stations linked by some
material handling devices. Assembly line is a special case of product layout in which
the operations pertain to assembly of different parts at few stations. Line (or,
product) layout is useful for high volume, single product type of manufacturing
activity. In this, a moving conveyor may bring the work unit or sub-assemblies units
near to the workers, who carry them along the next station and do the required
operations. At each station, one or more workers perform the required operations.

OBJECTIVE OF LINE BALANCING PROBLEM
In an assembly line, the problem is to design the work station. Each work station is
designed to complete few processing and assembly tasks. The objective in the
design is to assign processes and tasks to individual stations so that the total time
required at each work station is approximately same and nearer to the desired
cycle time or production rate.
In case, all the work elements which can be grouped at any station have same
station time, then this is a case of perfect line balancing. Production flow would be
smooth in this case. However, it is difficult to achieve this in reality. When perfect
line balancing is not achieved, the station time of slowest station would determine
the production rate or cycle time.
Example: Let us consider a five-station assembly system in which the station times
are 12, 16, 13, 11 and 15 minutes respectively. The slowest station is station 2,
which takes 16 min., while station 4 is fastest with 11 min. of station time. Work
carrier enters at station i and leaves at station 5. Now a work carrier at station 1
cannot leave station 1 after 12 minutes as station 2 is not free after 12 minutes of
work on a previously arrived work carrier. Only after 16 minutes it is free to pull
work carrier from station 1. Therefore, station 1 will remain idle for (16-12) = 4 min.
Similarly, in each cycle, station 3 and 5 would be idle for 3, 5 and 1 min.

Approaches to Line Balancing
Three Basic Approaches for finding a solution
o COMSOAL Basic random solution generation method
o Ranked Positional Weight Heuristic Good solutions found quickly
o Implicit Enumeration Scheme
Assumptions
Required cycle time, sequencing restrictions and task times are known

1. COMSOAL Random Sequence Generation
A simple record-keeping approach that allows a large number of possible sequences
to be examined quickly
Only tasks that satisfy all the constraints are considered at each step.
Sequence discarded as soon as it exceeds the upper bound.
Sequence saved if it is better than the previous upper bound and the bound is
updated.
Efficiency depends on the data storage and processing structure
COMSOAL uses several list for speed computation.
o NIP(i) Number of immediate predecessors for each task i.
o WIP(i) Indicates for which other tasks i is an immediate predecessor.
o TK Consists of N tasks.
During each sequence generation,
o List of unassigned tasks (A)
o Tasks from A with all immediate predecessors (B)
o Tasks from B with task times not exceeding remaining cycle time in the
workstation (F Fit List) are updated.
COMSOAL Procedure
1. Set x = 0, UB =, C = Cycle Time, c = C.
2. Start the new sequence: Set x = x+1, A = TK, NIPW(i) = NIP(i).
3. Precedence Feasibility: For all, if NIPW(i) = 0, add i to B.
4. Time Feasibility: For all ie B, if ti c, add i to F. If F empty, Step 5; otherwise
Step 6.
5. Open new station: IDLE = IDLE + c. c = C. If
IDLE > UB go to Step 2; Otherwise Step 3.
6. Select Task: Set m = card {F}. Randomly generate RN e U(0,1). Let i* = [m.RN]th
task from F. Remove i* from A, B, F. c = c ti*. For all i e WIP(i*), NIPW(i) =
NIPW(i) 1. If A empty, go to Step 7; otherwise go to Step 3.
7. Schedule completion: IDLE = IDLE + c. If IDLE UB, UB = IDLE and store schedule.
If x = X, stop; otherwise go to Step 2.
COMSOAL Advantages
The technique is relatively easy to program.
Feasible solutions are found quickly.
Greater the computational effort expended, the better the expected solution .
Basic idea can be applied to many decision problems, the only requirement being
that we can build solutions sequentially and a function evaluation can be
performed to rank candidate solutions.
2. Ranked Positional Weight Heuristic
A task is prioritized based on the cumulative assembly time associated with
itself and its successors.
Tasks are assigned in this order to the lowest numbered feasible workstation.
Cumulative remaining assembly time constrains the number of workstations
required.
Illustrates the greedy, single pass heuristics.
Procedure requires computation of positional weight PW (i) of each task.
RPW Procedure
Let S (i) Set of successors of tasks i.
Example, j e S(i) means j cannot begin until i is complete.
Compute PWi = ti +
Tasks ordered such that i < r implies i not e S(r).
Task r is then a member of S(i) only if there exists an immediate successor
relationship from i to r.
Immediate successors IS(i) are known from the inverse of the IP(i)
relationships.
Task Ordering : For all tasks i = 1,,N compute PW(i). Order (rank) tasks by no
increasing PW(i)
Task Assignment : For ranked tasks i = ,,N assign task i to first feasible
workstation.
Precedence Constraints : assignment to any workstation at least as large as that to which
its predecessors are assigned Zoning & Time Restrictions : Checked on placement.
e ) (i S r
r
t

Module II!!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1. UNDERSTAND THE BASIS OF INVENTORY MANAGEMENT
DECISIONS

Inventory management
Inventory management is primarily about specifying the shape and percentage of
stocked goods. It is required at different locations within a facility or within many
locations of a supply network to precede the regular and planned course of
production and stock of materials.
The scope of inventory management concerns the fine lines between
replenishment lead time, carrying costs of inventory, asset management, inventory
forecasting, inventory valuation, inventory visibility, future inventory price
forecasting, physical inventory, available physical space for inventory, quality
management, replenishment, returns and defective goods, and demand forecasting.
Balancing these competing requirements leads to optimal inventory levels, which is
an on-going process as the business needs shift and react to the wider environment.
The reasons for keeping stock
There are three basic reasons for keeping an inventory:
1. Time - The time lags present in the supply chain, from supplier to user at every
stage, requires that you maintain certain amounts of inventory to use in this lead
time. However, in practice, inventory is to be maintained for consumption during
'variations in lead time'. Lead time itself can be addressed by ordering that many
days in advance.
2. Uncertainty - Inventories are maintained as buffers to meet uncertainties in
demand, supply and movements of goods.
3. Economies of scale - Ideal condition of "one unit at a time at a place where a user
needs it, when he needs it" principle tends to incur lots of costs in terms of
logistics. So bulk buying, movement and storing brings in economies of scale, thus
inventory.

All these stock reasons can apply to any owner or product

At the very basic level any firm faces two main decisions concerning the
management of inventory:
When should new stock be ordered and in what quantities? With regard to the
order quantity, which minimizes inventory related costs, we are familiar with the
classical EOQ (economic order quantity) model. This remains the basic inventory
model even when it is not applicable in real life business situations in most cases.
In inventory related literature, the answer to the question of when to order is
given with reference to the ROP (reorder point), the point at which the
replenishment order should be initiated so that the facility receives the inventory
in time to maintain its target level of service. The ROP can be defined in terms of
units of days or in units of inventory. In the static and deterministic model, the
ROP is the simple multiplication of the number of lead days and the daily demand. It
means that every time the inventory falls to the ROP level, an order must be
initiated. And the order quantity is given by the EOQ model which is based on cost
minimization.

Figure 4.1 A simple deterministic inventory model based on fixed demand and fixed lead
time
You are aware that the EOQ quantity is the balance between order and holding
costs attached with the inventory. The order cost is made up of fixed and variable
costs, whereas the holding cost consist of costs of insurance, taxes, maintenance
and handling, opportunity costs and costs of obsolescence.
The formula for EOQ or economic order quantity is well known:

Q is the order quantity per order.
K is the fixed set up cost which the warehouse incurs every time it places an order.
D is the demand per day.
h is the inventory carrying or holding cost per unit per day.
You will notice that your text highlights two important insights regarding the EOQ model.
These are:
Optimum order size is a good balance between the holding cost and the fixed order
cost.
Total inventory cost is related with order size, but the relationship is not very
significant.
A discussion of the EOQ model would remain incomplete if the inherent assumptions on
which the model is based are ignored. Bowersox (2001) explains that these major
assumptions are:
All demand is satisfied.
The rate of demand is continuous, constant and known.
Replenishment lead time is constant and known.
There is a constant price of product that is independent of order quantity or time.
There is an infinite planning horizon.
There is no interaction between multiple items of inventory.
There is no inventory in transit.
There are no limits on capital availability.

2. The hierarchical approach to planning and various methods
of inventory management.

Reasons for Inventories

Improve customer service
Economies of purchasing
Economies of production
Transportation savings
Hedge against future
Unplanned shocks (labor strikes, natural disasters, surges in demand, etc.)
To maintain independence of supply chain

3. CAPACITY AND AGGREGATE PRODUCTION PLANNING.

Capacity Planning
Capacity is the upper limit or ceiling on the load that an operating unit can handle.
Capacity also includes
o Equipment
o Space
o Employee skills
The basic questions in capacity handling are:
o What kind of capacity is needed?
o How much is needed?
o When is it needed?

IMPORTANCE OF CAPACITY DECISIONS

1. Impacts ability to meet future demands
2. Affects operating costs
3. Major determinant of initial costs
4. Involves long-term commitment
5. Affects competitiveness
6. Affects ease of management
7. Globalization adds complexity
8. Impacts long range planning
CAPACITY
Design capacity
o maximum output rate or service capacity an operation, process, or facility is
designed for
Effective capacity
o Design capacity minus allowances such as personal time, maintenance, and
scrap
Actual output
o Rate of output actually achieved--cannot
exceed effective capacity.
DETERMINANTS OF EFFECTIVE CAPACITY
Facilities
Product and service factors
Process factors
Human factors
Policy factors
Operational factors
Supply chain factors
External factors
KEY DECISIONS OF CAPACITY PLANNING
1. Amount of capacity needed
Capacity cushion (100% - Utilization)
2. Timing of changes
3. Need to maintain balance
4. Extent of flexibility of facilities
STEPS FOR CAPACITY PLANNING
1. Estimate future capacity requirements
2. Evaluate existing capacity
3. Identify alternatives
4. Conduct financial analysis
5. Assess key qualitative issues
6. Select one alternative
7. Implement alternative chosen
8. Monitor results
DEVELOPING CAPACITY ALTERNATIVES
1. Design flexibility into systems
2. Take stage of life cycle into account
3. Take a big picture approach to capacity changes
4. Prepare to deal with capacity chunks
5. Attempt to smooth out capacity requirements
6. Identify the optimal operating level

Aggregate Production Planning

AGGREGATE PRODUCTION PLANNING IS medium-term capacity planning over a
two to eighteen month planning horizon. It involves determining the lowest-
cost method of providing the adjustable capacity for meeting production
requirements.

AGGREGATION REFERS to the idea of focusing on overall capacity, rather
than individual products or services.
AGGREGATION IS DONE ACCORDING TO:
Products
Labor
Time

PRODUCTION PLANNING

LONG RANGE PLANNING
Strategic planning (1-5 years)
MEDIUM RANGE PLANNING
Employment, output, and inventory levels (2-18 months)
SHORT RANGE PLANNING
Job scheduling, machine loading, and job sequencing (0-2 months)
AGGREGATE PRODUCTION PLANNING INVOLVES MANAGING...
Work force levels - the number of workers required for production.
Production rates - the number of units produced per time period.
Inventory levels - the balance of unused units carried forward from the
previous period.
COMMON OBJECTIVES OF PRODUCTION PLANNING...
MINIMIZE:
cost, inventory levels, changes in work force levels, use of overtime, use of subcontracting,
changes in production rates, changes in production rates, plant/personnel idle time
MAXIMIZE:
profits, customer service
METHODS OF INFLUENCING DEMAND
Price Incentives
Reservations
Backlogs
Complementary Products or Services
Advertising/promotion
METHODS OF INFLUENCING SUPPLY
Hiring/firing workers
Overtime/slack time
Part time/temporary labor
Subcontracting
Cooperative arrangements
Inventories
AGGREGATE PRODUCTION PLANNING VARIABLE COSTS
Hiring/firing costs
Overtime/slack time costs
Part time/temporary labor costs
Subcontracting costs
Cooperative arrangements costs
Inventory carrying costs
Backorder or stock out costs
AGGREGATE PRODUCTION PLANNING STRATEGIES
Chase strategy production rates or work force levels are adjusted to match
demand requirements over planning horizon

Level strategy
constant production rate or work force level is maintained over planning
horizon
Mixed strategy
both inventory level changes and work force level changes occur
Aggregate Production Planning Techniques
1. Trial-and-error method
EXAMPLES OF ALTERNATIVE STRATEGIES:
Vary work force levels
Level work force, vary inventories and backorders
Level work force, use subcontracting
Level work force, use overtime and subcontracting

2.MATHEMATICAL TECHNIQUES
Linear Decision Rule
Mgmt. Coefficient Models
Parametric Prod. Planning
Search Decision Rule
Production-Switching Heuristic
Linear Programming
Transportation Method
Goal Programming
Mixed Integer Programming
Simulation Models
MANAGERIAL ISSUES IN AGGREGATE PRODUCTION PLANNING
1. APP should be tailored to the particular company and situation.
2. APP may be constrained by union contracts or company policies.
3. Mathematical techniques will likely have to be balanced with managerial
judgment and experience.
4. A tendency to blur the distinction between production planning and
production scheduling.
AGGREGATE PLANNING IN SERVICES
-For service companies, aggregate planning results in staffing plans that call for
changing the number of employees or subcontracting.
METHODS FOR AGGREGATE PLANNING
1. GRAPHICAL AND CHARTING METHODS
This is a Trial And Error Approach.
- It Does Not Guarantee Optimal Production Plan.
- It is Easy to Apply and Understand. It includes following steps:
1- Determine Demand In Each Period
2- Determine Capacities Of Regular Time, Overtime, And Subcontractor Each
Period
3- Find Labor Costs, Hiring/Layoff Costs, And Inventory Costs
4- Consider Company Policies That May Apply To The Workers Or To Stock Levels.
5- Develop Alternative Plans And Find Their Total Costs.

2. MATHEMATICAL APPROACHES
A) Linear Programming
B) Linear Decision Rules
C) Management Coefficient Model
D) Simulation
E) Search Decision Rules

4. Material Handling Principles- Equipments.

Material handling is the function of moving the right material to the right place in
the right time, in the right amount, in sequence, and in the right condition to
minimize production cost.
The cost of MH estimates 20-25 of total manufacturing labor cost in the United
States
GOALS OF MATERIAL HANDLING
The primary goal is to reduce unit costs of production
Maintain or improve product quality, reduce damage of materials
Promote safety and improve working conditions
Promote productivity
material should flow in a straight line
use gravity! It is free power
move more material at one time
mechanize material handling
automate material handling
Promote increased use of facilities
Reduce tare weight (dead weight)
Control inventory
OVERVIEW OF MATERIAL HANDLING EQUIPMENT
Material handling equipment includes:
Transport Equipment: industrial trucks, Automated Guided vehicles (AGVs),
monorails, conveyors, cranes and hoists.
Storage Systems: bulk storage, rack systems, shelving and bins, drawer
storage, automated storage systems.
Unitizing Equipment: palletizers
Identification and Tracking systems
CONSIDERATIONS IN MATERIAL HANDLING SYSTEM DESIGN
1. Material Characteristics
Category Measures
Physical state
Size
Weight
Shape
Condition
Safety risk and risk of
damage
Solid, liquid, or gas
Volume; length, width, height
Weight per piece, weight per unit
volume
Long and flat, round, square, etc.
Hot, cold, wet, etc.
Explosive, flammable, toxic; fragile,
etc.

2. PLANT LAYOUT
Layout Type Characteristics Typical MH Equipment
Fixed position
Process
Product
Large product size, low
production rate
Variation in product and
processing, low and
medium production
rates
Limited product variety,
high production rate
Cranes, hoists,
industrial trucks
Hand trucks, forklift
trucks, AGVs
Conveyors for product
flow, trucks to deliver
components to stations.

PRINCIPLES OF MATERIAL HANDLING

1. THE PLANNING PRINCIPLE
Large-scale material handling projects usually require a team approach.
Material handling planning considers every move, every storage need, and any
delay in order to minimize production costs.
The plan should reflect the strategic objectives of the organization as well
as the more immediate needs.

2. THE SYSTEMS PRINCIPLE:
o MH and storage activities should be fully integrated to form a coordinated,
operational system that spans receiving, inspection, storage, production,
assembly, , shipping, and the handling of returns.
o Information flow and physical material flow should be integrated and
treated as concurrent activities.
Methods should be provided for easily identifying materials and products,
for determining their location and status within facilities and within the
supply chain.

3. SIMPLIFICATION PRINCIPLE
o Simplify handling by reducing, eliminating, or combining unnecessary
movement and/or equipment.
o Four questions to ask to simplify any job:
Can this job be eliminated?
If we cant eliminate, can we combine movements to reduce
cost? (unit load concept)
If we cant eliminate or combine, can we rearrange the
operations to reduce the travel distance?
If we cant do any of the above, can we simplify?

4. GRAVITY PRINCIPLE
Utilize gravity to move material whenever practical.

5. SPACE UTILIZATION PRINCIPLE
The better we use our building cube, the less space we need to buy or rent.
Racks, mezzanines, and overhead conveyors are a few examples that promote
this goal.

6. UNIT LOAD PRINCIPLE
Unit loads should be appropriately sized and configured at each stage of the
supply chain.
The most common unit load is the pallet
cardboard pallets
plastic pallets
wooden pallets
steel skids
pp 164 169

8. AUTOMATION PRINCIPLE
MH operations should be mechanized and/or automated where feasible to
improve operational efficiency, increase responsiveness, improve consistency
and predictability, and decrease operating costs.
ASRS is a perfect example.

10. EQUIPMENT SELECTION PRINCIPLE
Why? What? Where? When? How? Who?
If we answer these questions about each move, the solution will become
evident.
Look at pp 160-161.

11. THE STANDARDIZATION PRINCIPLE
Standardize handling methods as well as types and sizes of handling
equipment Too many sizes and brands of equipment results in higher
operational cost.
A fewer sizes of carton will simplify the storage

12. THE DEAD WEIGHT PRINCIPLE
Try to reduce the ratio of equipment weight to product weight. Dont buy
equipment that is bigger than necessary.
Reduce tare weight and save money.

13. THE MAINTENANCE PRINCIPLE
Plan for preventive maintenance and scheduled repairs of all handling
equipment.
Pallets and storage facilities need repair too.

14. THE CAPACITY PRINCIPLE
use handling equipment to help achieve desired production capacity
i.e. material handling equipment can help to maximize production equipment
utilization.
15. WORK PRINCIPLE
Material handling work should be minimized without sacrificing productivity or the level of
service required of the operation.
Definition: The measure of work is material handling flow (volume, weight or count per
unit of time) multiplied by the distance moved.
Simplifying processes by reducing, combining, shortening or eliminating unnecessary moves
will reduce work.
Consider each pickup and set-down or placing material in and out of storage, as
distinct moves and components of the distance moved.
Process methods, operation sequences and process/equipment layouts should be prepared
that support the work minimization objective.

Where possible, gravity should be used to move materials or to assist in their movement
while respecting consideration of safety and the potential for product damage.
The shortest distance between two points is a straight line.
16. ERGONOMIC PRINCIPLE
Human capabilities and limitations must be recognized and respected in the design of
material handling tasks and equipment to ensure safe and effective operations.
Definition: Ergonomics is the science that seeks to adapt work or working conditions to
suit the abilities of the worker.
Equipment should be selected that eliminates repetitive and strenuous manual labor and
which effectively interacts with human operators and users.
The ergonomic principle embraces both physical and mental tasks.
The material handling workplace and the equipment employed to assist in that work
must be designed so they are safe for people.
17. UNIT LOAD PRINCIPLE
Unit loads shall be appropriately sized and configured in a way which achieves the material
flow and inventory objectives at each stage in the supply chain.
Definition: A unit load is one that can be stored or moved as a single entity at one time,
such as a pallet, container or tote, regardless of the number of individual items that make
up the load.
Less effort and work is required to collect and move many individual items as a single load
than to move many items one at a time.
Load size and composition may change as material and product moves through
stages of manufacturing and the resulting distribution channels.
Large unit loads are common both pre and post manufacturing in the form of raw
materials and finished goods.
During manufacturing, smaller unit loads, including as few as one item, yield less in-process
inventory and shorter item throughput times.
Smaller unit loads are consistent with manufacturing strategies that embrace
operating objectives such as flexibility, continuous flow and just-in-time delivery.
Unit loads composed of a mix of different items are consistent with just-in-time and/or
customized supply strategies so long as item selectivity is not compromised.
18. SPACE UTILIZATION
Effective and efficient use must be made of all available space.
Definition: Space in material handling is three dimensional and therefore is counted as
cubic space.
In work areas, cluttered and unorganized spaces and blocked aisles should be eliminated.
In storage areas, the objective of maximizing storage density must be balanced
against accessibility and selectivity.
When transporting loads within a facility the use of overhead space should be
considered as an option.
19. SYSTEM PRINCIPLE
Material movement and storage activities should be fully integrated to form a coordinated,
operational system which spans receiving, inspection, storage, production, assembly,
packaging, unitizing, order selection, shipping, transportation and the handling of returns.
Definition: A system is a collection of interacting and/or interdependent entities that
form a unified whole.
Systems integration should encompass the entire supply chain including reverse logistics.
It should include suppliers, manufacturers, distributors and customers.
Inventory levels should be minimized at all stages of production and distribution
while respecting considerations of process variability and customer service.
Information flow and physical material flow should be integrated and treated as
concurrent activities.

Methods should be provided for easily identifying materials and products, for
determining their location and status within facilities and within the supply chain and for
controlling their movement.

Customer requirements and expectations regarding quantity, quality, and on-time
delivery should be met without exception.

20. AUTOMATION PRINCIPLE

Material handling operations should be mechanized and/or automated where
feasible to improve operational efficiency, increase responsiveness, improve
consistency and predictability, decrease operating costs and to eliminate repetitive
or potentially unsafe manual labor.

Definition: Automation is a technology concerned with the application of electro-
mechanical devices, electronics and computer-based systems to operate and control
production and service activities. It suggests the linking of multiple mechanical
operations to create a system that can be controlled by programmed instructions.

Pre-existing processes and methods should be simplified and/or re-engineered
before any efforts at installing mechanized or automated systems.
Computerized material handling systems should be considered where
appropriate for effective integration of material flow and information management.

All items expected to be handled automatically must have features that
accommodate mechanized and automated handling.

Treat all interface issues as critical to successful automation, including
equipment to equipment, equipment to load, equipment to operator, and control
communications.

21. ENVIRONMENTAL PRINCIPLE

Environmental impact and energy consumption should be considered as criteria when
designing or selecting alternative equipment and material handling systems.

Definition: Environmental consciousness stems from a desire not to waste natural
resources and to predict and eliminate the possible negative effects of our daily
actions on the environment.

Containers, pallets and other products used to form and protect unit loads should
be designed for reusability when possible and/or biodegradability as appropriate.

Systems design should accommodate the handling of spent dunnage, empty
containers and other by-products of material handling.

Materials specified as hazardous have special needs with regard to spill protection,
combustibility and other risks.

22. LIFE CYCLE COST PRINCIPLE

A thorough economic analysis should account for the entire life cycle of all
material handling equipment and resulting systems.

Definition: Life cycle costs include all cash flows that will occur between the
time the first dollar is spent to plan or procure a new piece of equipment, or to put
in place a new method, until that method and/or equipment is totally replaced.

Life cycle costs include capital investment, installation, setup and equipment
programming, training, system testing and acceptance, operating (labor, utilities,
etc.), maintenance and repair, reuse value, and ultimate disposal.
A plan for preventive and predictive maintenance should be prepared for the
equipment, and the estimated cost of maintenance and spare parts should be
included in the economic analysis.

A long-range plan for replacement of the equipment when it becomes obsolete
should be prepared.

Although measurable cost is a primary factor, it is certainly not the only
factor in selecting among alternatives. Other factors of a strategic nature to the
organization and which form the basis for competition in the market place should
be considered and quantified whenever possible.

Module III!!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!
1. PRODUCTION PLANNING AND CONTROL

What is Production Planning and Control?

Production Planning and Control System consist of planning, routing,
scheduling, dispatching and progressing the production process.

Objectives of Production Planning and Control

Timely supply of finished goods.
Maximum utilization of material and human resources.
Effective control of production process.
Helps to produce the goods on the basis of sale.

Types of Production Plan

Production plan relating the qualities of sale.

Production plans are always taking according to the qualities of sale.
These plans can achieve balance relationship among sales rate, production rate and
inventory rate.

Production Plan relating to the method

These types of plans are used in custom manufacturing products, only after receiving the
orders from the customers.

Production plan relating to the time.

Every process is completed according to the schedule, so we need a proper plan on the
basis of time for managing the production.

Types of Production Control

1. Centralized production control

In this method, all the production process are controlling by a separate production control
department.

It is a good method in case of continuous production system

Advantages of centralized production control

Accurate determination of production control.
Decision making process is very fast.
Centralized coordination of all works.

Disadvantages of centralized production control

There may be a clash between the line authority.
Dont have direct knowledge about each production team.

2. Decentralized Production Control

Under this method the authority and responsibility of production controls are dividing to
the different departments. This method is more suitable incase of intermittent production
system.

Advantages of decentralized production control

No additional work-loads.
Smooth running of the production.
Better utilization of available resources.

Disadvantages of decentralized production control

Overall control is very difficult.
It is not suitable in case of continuous production.

o All manufacturing and service operations require planning and controlling,
although the formality and detail may vary.

o Some operations are more difficult to plan than others.

o Those with high unpredictability can be difficult to plan.

o Some are more difficult to control than others. The day to day running of
manufacturing and service system rests with Production Planning.

o The purpose of the production planning is to ensure that manufacturing run
effectively and efficiently and produces products as required by customers.

PRODUCTON PLANNNG ACTVTES

Capacity Planning
1. Facility Size
2. Equipment Procurement

Aggregate Planning
1. Facility Utilization
2. Personnel needs
3. Subcontracting

Master Production Scheduling
1. MRP
2. Disaggregation of master plan

Short-term Scheduling
1. Work center loading
2. Job sequencing

2. Project management and operations scheduling (Gantt
chart, CPM and PERT methods)

- Project Management is the discipline of planning, organizing, and managing
resources to bring about the successful completion of specific project goals and
objectives.

- A project is a finite endeavor (having specific start and completion dates)
undertaken to create a unique product or service which brings about beneficial
change or added value.
- This finite characteristic of projects stands in sharp contrast to processes , or
operations, which are permanent or semi-permanent functional work to repetitively
produce the same product or service.

- In practice, the management of these two systems is often found to be quite
different, and as such requires the development of distinct technical skills and the
adoption of separate management philosophy, which is the subject of this article.
The primary challenge of project management is to achieve all of the project goals
and objectives while adhering to classic project constraintsusually SCOPE, time
and budget.

The secondaryand more ambitiouschallenge is to optimize the allocation and
integration of inputs necessary to meet pre-defined objectives.

A project is a carefully defined set of activities that use resources (MONEY,
PEOPLE, MATERIALS, ENERGY, SPACE, PROVISIONS, COMMUNICATION,
MOTIVATION, etc.) to achieve the project goals and objectives.

- DEFINITIONS RELATED TO PROJECT MANAGEMENT

- PROJECT- A project is a finite endeavor (having specific start and completion
dates) undertaken to create a unique product or service which brings about
beneficial change or added value.

- This finite characteristic of projects stands in sharp contrast to processes , or
operations, which are permanent or semi-permanent functional work to repetitively
produce the same product or service.

- In practice, the management of these two systems is often found to be quite
different, and as such requires the development of distinct technical skills and the
adoption of separate management philosophy.

- MANAGEMENT- Management in business and human organization activity is simply
the act of getting people together to accomplish desired goals.

- Management comprises planning , organizing , resourcing , leading or directing, and
controlling an organization (a group of one or more people or entities) or effort for
the purpose of accomplishing a goal.

- PROJECT CYCLE- A project cycle basically consists of the various activities of
operations, resources and the limitations imposed on them.

- PROCESS- A process is thus a specific ordering of work activities across time and
space, with a beginning and an end, and clearly defined inputs and outputs: a
structure for action. ...

- Taking a process approach implies adopting the customers point of view. Processes
are the structure by which an organization does what is necessary to produce value
for its customers.

- RESOURCE- It refers to manpower, machinery, money and materials required in
the project. SCOPE- It refers to the various parameters that affect the project in
its planning, formulation & executions.

- PROJECT COST- It is budgeted expenditure of the project.

NEED FOR PROJECT MANAGEMENT
-A project require huge investments which should not go waste
-A loss in any project would have direct or indirect impact on the society
-Prevent failures in projects Scope of the project activity may undergo a change
-Technology used may change during the course of project execution
-Consequences of negativity in project related problems could be very serious
-Changes in economic conditions may affect a project

- STEPS OF GOOD PROJECT MANAGEMENT

1. Define the project
2. Reduce it to a set of manageable resources
3. Obtain appropriate and necessary resources
4. Build a team to perform the project work
5. Plan the work and allocate the resources to the tasks
6. Monitor and control the work
7. Report progress to senior management and/or the project sponsor
8. Close down the project when completed
9. Review it to ensure that the lessons are learnt and widely understood

The Seven Steps of Successful operations Scheduling

1. Define the problem.
That is, What is the goal of this project?
2. Pick a solution.
Preferably, as simple as possible!
Once you pick it make a detailed plan for how it will happen. A plan is a real
thing.
Dont get too attached to your solution.
3. Manage risks.
First: Identify Risks.
Second: Decide how you will mitigate them.
Third: Periodically review your risk list and mitigation strategies.
You might notice that mitigating risks often requires multiple early
prototypes (or, iterations)
The Spiral Model is a great way to manage risks!
4. Do a detailed task breakdown.
Put tasks in categories, and label how long they will take, who will do them,
when they need to be done, and how important they are.
How much detail? Remember, the more days there are in the estimate for
one task, the less certain you are about how long it will really take.
EVERY task should be on the list.
5. If you are in the red, get out.
You can beg for more time.
You can change the solution (Begging may be necessary).
You can cut lower priority tasks.
You can add people to the project with extreme caution!
The important thing: Get out sooner, not later!
6. Update the task list weekly.
Each week, everyone should answer two questions: What did you do this
week, what will you do next week?
Feedback on predictions is how you get better at predicting!
Stay out of the red!
7. When the project is over, do a post-mortem.
How else will you know how to do better next time?

(GANTT CHART, CPM AND PERT METHODS)

CPM was developed by Du Pont and the emphasis was on the trade-off between the
cost of the project and its overall completion time (e.g. for certain activities it may
be possible to decrease their completion times by spending more money - how does
this affect the overall completion time of the project?)

PERT was developed by the US Navy for the planning and control of the Polaris
missile program and the emphasis was on completing the program in the shortest
possible time. In addition PERT had the ability to cope with uncertain activity
completion times (e.g. for a particular activity the most likely completion time is 4
weeks but it could be anywhere between 3 weeks and 8 weeks).

CPM - Critical Path Method

Definition: In CPM activities are shown as a network of precedence relationships
using activity-on-node network construction
Single estimate of activity time
Deterministic activity times
USED IN: Production management - for the jobs of repetitive in nature where
the activity time estimates can be predicted with considerable certainty due to the
existence of past experience.
PERT -
Project Evaluation & Review Techniques

Definition: In PERT activities are shown as a network of precedence relationships
using activity-on-arrow network construction
Multiple time estimates
Probabilistic activity times
USED IN: Project management - for non-repetitive jobs (research and
development work), where the time and cost estimates tend to be quite uncertain.
This technique uses probabilistic time estimates.

GANTT Charts

O Matrix
O Lists on the vertical axis all the tasks to be performed
O Each row contains a single task identification which usually consists of a number
and a name
O The horizontal axis is headed by columns indicating estimated task duration, skill
level needed to perform the task, and the name of the person assigned to the task,
followed by one column for each period of the projects duration
O Each period may be expressed in hours, days, weeks, months or other time units.
O In some cases it may be necessary to label the period columns as Period 1, Period
2, etc.
O The graphic portion of the chart consists of a horizontal bar for each task
connecting the period start and period ending columns.
O Variants include a lower chart with personnel allocation on a person-by-person basis
(shows slack time).

Advantages
- Gantt charts are quite commonly used. They provide an easy graphical
representation of when activities (might) take place.

Limitations
- Do not clearly indicate details regarding the progress of activities
- Do not give a clear indication of interrelation ship between the separate activities

CPM/PERT

These deficiencies can be eliminated to a large extent by showing the
interdependence of various activities by means of connecting arrows called network
technique.
Overtime CPM and PERT became one technique

ADVANTAGES:
Precedence relationships
large projects
more efficient

Tasks are Arrows
Events are Circles
Critical Tasks are Thick Arrows
Dummy Tasks are Dashed Arrows

We will use PERT/CPM Analysis to determine Task Secondary properties:

Tail Event and Head Event
Earliest Start, Earliest Complete
Latest Start, Latest Complete
Critical / Non-Critical Status
Total Float, Free Float
Scheduled Start, Scheduled Complete
Actual Staffing, Duration, and Variable Costs

We will then use Task Secondary Properties to generate Project Management
Tools:

Gantt Chart (Project Schedule)
Manpower Chart
Expenditure Curves
Project Completion (PC)

Benefits of CPM/PERT

Useful at many stages of project management
Mathematically simple
Give critical path and slack time
Provide project documentation
Useful in monitoring costs

Limitations to CPM/PERT

Clearly defined, independent and stable activities
Specified precedence relationships
Over emphasis on critical paths

3. PROJECT CRASHING

Crashing basically means adding more resources to complete a task to keep the
project schedule on track. However, the risks involved could be many. Some of
them are

1) More resources do not guarantee higher efficiency
2) more resources means incremental project costs
3) Qualities may be affected if the new team members added are not sufficiently
trained

Crashing is a process of expediting project schedule by compressing the total
project duration. It is helpful when managers want to avoid incoming bad weather
season. However, the downside is that more resources are needed to speed-up a
part of a project, even if resources may be withdrawn from one facet of the
project and used to speed-up the section that is lagging behind. Moreover, that may
also depend on what slack is available in a non-critical activity, thus resources can
be reassigned to critical project activity. Hence, utmost care should be taken to
make sure that appropriate activities are being crashed and that diverted
resources are not causing needless risk and project scope integrity.

Crashing refers to a particular variety of project schedule compression which is
performed for the purposes of decreasing total period of time (also known as the
total project schedule duration). The diminishing of the project duration typically
take place after a careful and thorough analysis of all possible project duration
minimization alternatives in which any and all methods to attain the maximum
schedule duration for the least additional cost. There are a number of standard and
typical approaches to attempting to crash a project schedule. One of the most
commonly utilized methods of crashing a project schedule involves minimizing the
schedule activity durations while, at the same time, increasing the assignment of
resources on schedule activities. Crashing is something which can be utilized to
attempt to get the most value out of a project assignment. Essentially, it boils down
to an attempt to get the most productivity out of the least time and expense.
Crashing is also similar to schedule compression as well as schedule fast tracking.

4. Job sequencing (n-jobs on one machine and n-jobs on m-machines)
Job Sequencing is the arrangement of the tasks required to be carried out sequentially.
Hence the two techniques called Priority Rules and Johnson's Rule are adopted here.
Priority Rules

Priority rules provide guidelines for the sequence in which jobs should be worked.
The rules generally involve the assumption that job setup cost and time is
independent of processing times. In using this rules, job processing times and due dates
are important pieces of information. Job times usually include setup and processing times.
Due dates may be the result of delivery times promised to customers, MRP processing, or
managerial decisions. The rules are especially applicable for processs-focussed facilities
such as clinics, print shop and manufacturing job shops. Priority Rules try to minimise
completion time, number of jobs in the system, and job lateness, while maximizing facility
utilization.
The following standard measures of schedule performance are used to evaluate
Priority Rules:
-Meeting due dates of customers or downstream operations.
-Minimizing the flow time (the time a job spends in the process).
- Minimizing work-in-process inventory.
-Minimizing idle time of machines or workers.

Types of Priority Rules

The most popular Priority Rules are:

FCFS (First Come First Serve)
--- The first job to arrive at a work centre is processed first.

EDD (Earliest Due Date)
--- The job with the earliest due date is selected first.

SPT (Shortest Processing Time)
--- The shortest job are handled first and completed.

LPT (Longest Processing Time)
--- The longer, bigger jobs are often very important and are selected first.

CR (Critical Ratio)
--- Critical Ratio is an index number computed by dividing the time remaining until due
date by the work time remaining.

Johnson's Rules

Johnson's Rule is a technique that can be used to minimize the completion time for a
group of jobs that are to be processed on two machines or at two successive work centers.

The Objectives of the Johnson's Rule are:

To minimize the processing time for sequencing a group of jobs through two
work centers.

To minimize the total idle times on the machines.

To minimize the flow time from the beginning of the first job until the finish of
the last job.

In order for the technique to be used, several conditions must be satisfied:

Job time (including setup and processing) must be known and constant for each
job at each work centre.

Job times must be independent of the job sequence.

All jobs must follow the same two-setup work sequence.

Job priorities cannot be used.

Johnson's Rule involves four steps:

1. All jobs are to be listed, and the processing time of each machine is to be listed.
2. Select the job with the shortest processing time.

If the shortest time lies on the first machine/work centre, the job is scheduled
first.
If the shortest time lies on the second machine/work centre, the job is
scheduled at the end.
Ties in activity times can be broken arbitrarily.
3. Once the job is scheduled, go to step 4.
4. Repeat steps2 and step3 to the remaining jobs, working towards the centre of
the sequence.
Module IV!!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1. QUALITY MANAGEMENT

QUALITY GURUS

WALTER SHEWART
In 1920s, developed control charts
Introduced the term quality assurance
W. EDWARDS DEMING
Developed courses during World War II to teach statistical quality-control
techniques to engineers and executives of companies that were military
suppliers
After the war, began teaching statistical quality control to Japanese
companies
JOSEPH M. JURAN
Followed Deming to Japan in 1954
Focused on strategic quality planning
ARMAND V. FEIGENBAUM
In 1951, introduced concepts of total quality control and continuous quality
improvement

PHILIP CROSBY
In 1979, emphasized that costs of poor quality far outweigh the cost of
preventing poor quality
In 1984, defined absolutes of quality managementconformance to
requirements, prevention, and zero defects
KAORU ISHIKAWA
Promoted use of quality circles
Developed fishbone diagram
Emphasized importance of internal customer

STRATEGIC IMPLICATIONS OF TQM

Strong leadership
Goals, vision, or mission
Operational plans and policies
Mechanism for feedback

SEVEN QUALITY CONTROL TOOLS
Pareto Analysis
Flow Chart
Check Sheet
Histogram
Scatter Diagram
SPC Chart
Cause-and-Effect Diagram

SCOPE OF QUALITY MANAGEMENT

1. Quality management is particularly important for large, complex systems. The
quality documentation is a record of progress and supports continuity of
development as the development team changes.

2. For smaller systems, quality management needs less documentation and should
focus on establishing a quality culture.

QUALITY MANAGEMENT ACTIVITIES

1. QUALITY ASSURANCE
Establish organizational procedures and standards for quality.
2. QUALITY PLANNING
Select applicable procedures and standards for a particular project and
modify these as required.
3. QUALITY CONTROL
Ensure that procedures and standards are followed by the software
development team.
4. QUALITY MANAGEMENT should be separate from project management to
ensure independence.

PROCESS-BASED QUALITY

QUALITY ASSURANCE AND STANDARDS

Standards are the key to effective quality management.
They may be international, national, organizational or project standards.
Product standards define characteristics that all components should exhibit
e.g. a common programming style.
Process standards define how the software process should be enacted.

IMPORTANCE OF STANDARDS

Encapsulation of best practice
Avoids repetition of past mistakes.
They are a framework for quality assurance processes
They involve checking compliance to standards.
They provide continuity
New staff can understand the organisation by understanding the standards
that are used.

PROBLEMS WITH STANDARDS

They may not be seen as relevant and up-to-date by software engineers.
They often involve too much bureaucratic form filling.
If they are unsupported by software tools, tedious manual work is often
involved to maintain the documentation associated with the standards.

ISO 9000

An international set of standards for quality management.
Applicable to a range of organizations from manufacturing to service
industries.
ISO 9001 applicable to organizations which design, develop and maintain
products.
ISO 9001 is a generic model of the quality process that must be
instantiated for each organization using the standard.

DOCUMENTATION STANDARDS

Particularly important - documents are the tangible manifestation of the software.

Documentation process standards
Concerned with how documents should be developed, validated and
maintained. Document standards
Concerned with document contents, structure, and appearance.
Document interchange standards
Concerned with the compatibility of electronic documents.

DOCUMENT STANDARDS

Document identification standards
How documents are uniquely identified.
Document structure standards
Standard structure for project documents.
Document presentation standards
Define fonts and styles, use of logos, etc.
Document update standards
Define how changes from previous versions are reflected in a document.

2. JIT and Lean manufacturing systems

JUST-IN-TIME: an operations system for producing the right goods and services in
the right place, at the right time, in a quality manner
LEAN SYSTEMS: A broad view of JIT that shows how the entire organization
contributes to JIT production (of goods and services), customer service, and
customer satisfaction
VALUE-ADDING ACTIVITIES
1. Necessary steps in completing a product or service
2. Customer service activities that increase the value of the service to
customers
OBJECTIVE OF JIT
Produce only the products the customer wants.
Produce products only at the rate that the customer wants them.
Produce with perfect quality
Produce with minimum lead time.
Produce products with only those features the customer wants.
Produce with no waste of labor, material or equipment -- every movement must have
a purpose so that there is zero idle inventory.
Produce with methods that allow for the development of people
JIT Principles
Create flow production
One piece flow
Machines in order of processes
Small and inexpensive equipment
U cell layout, counter clockwise
Multi-process handling workers
Easy moving/standing operations
Standard operations defined
JIT Tactics
Single Minute Exchange of Dies (SMED)
Statistical Process Control
Use of standard containers
Doable stable schedules with adequate visibility
TAKT-Time
5-S Program
Kaizen Event
Visual control
Flexible workers
Tools at the point of need
Product redesign
Group Technology
Total Productive Maintenance
JIT & Lean Manufacturing
Lean Manufacturing
Doing more with less
Less of:
Materials, time, resources
Overhead, people
Waste
Money
JIT is a subset of Lean Manufacturing
Now seen as most applicable to mass production settings
Limitations of JIT
Right Settings
Applicable in growth to maturity phases of
Product Life Cycle
Standard product
Steinway and JIT
Standard/fixed pay-rate
Problems with piece-rate scheme
Universal agreement that change needed
Theoretical Benefits of JIT
Unpleasant surprises eliminated
Less computerization
Visual control
Improved quality
WIP reduced
Better communications
Less pressure on receiving docks and incoming inspection areas
Lower costs
Change in attitude
Defects are treasures

7 Elements of JIT Philosophy

All waste must be eliminated- non value items
Waste is any amount of a resource that is not required to produce and
deliver a quality good or service when it is needed
Broad view that entire organization must focus on serving customers
Serving customers requires cooperation throughout the organization
JIT is built on simplicity - the simpler the better
Focuses on improving every operation- Kaizen
Install simple, visible control systems
Provide flexibility to produce different models/features
The same philosophy also applies in Lean Systems

Seven Basic Types of Waste

Transportation waste
Process Waste
Inventory Waste
Waste of motion
Waste from product defects
Waiting time
Overproduction

Common Causes of Waste

Layout (distance)
Long setup time
Incapable processes
Poor maintenance
Poor work methods
Lack of training
Inconsistent performance measures
Ineffective production planning
Lack of workplace organization
Poor supply quality/reliability

Examples of Waste

Producing items before they are needed
Waiting time: high WIP,
Idle machines or idle people
Needless movement of materials or people
Unneeded process steps
Inventory
Searching for materials, tools, etc.
Defects
People who are not challenged by their jobs and are not allowed to give input into
decisions

3 Key Principles of JIT and Lean Systems

Just-in-time processes
Total quality management
Respect for people

Elements of Lean Systems in Services

Improved quality consistency
Uniform facility loading when possible
Multifunctional workers
More efficient processes and shorter cycle time
Shorter setup times
Parallel processing
Clean, well-organized workplace

Elements of JIT Manufacturing

Inventory reduction exposes problems
Kanbans & pull production systems
Small lots & quick setups
Uniform plant loading
Flexible resources
Efficient facility layouts (cellular layout)

JIT and TQM

TQM = Total Quality Management

Build quality into all processes
Focus on continuous improvement - Kaizen
Quality at the source - immediate inspection
Jidoka (authority to stop line)
Poka-yoke (fail-safe all processes)
Preventive maintenance- scheduled
Work environment- everything in its place, a place for everything

Respect for People: The Role of Employees

Genuine and meaningful respect for associates
Willingness to develop cross-functional skills
Actively engage in problem-solving (quality circles)
Everyone is empowered
Everyone is responsible for quality: understand both internal and external customer
needs
Associates gather performance data
Team approaches used for problem-solving
Many decisions are made from the bottom up
Everyone (in a manufacturing plant) is responsible for preventive maintenance

Benefits of JIT and Lean Systems

Smaller inventories
Shorter lead times
Improved quality
Reduced space requirements
Lower operations costs
Increased productivity
Greater product flexibility

3. TQM AND SIX-SIGMA

Total Quality Management

TQM is a philosophy which applies equally to all parts of the organization.
TQM can be viewed as an extension of the traditional approach to quality.
TQM places the customer at the forefront of quality decision making.
Greater emphasis on the roles and responsibilities of every member of staff within
an organization to influence quality.
All staff is empowered.

Elements of TQM

Leadership
Top management vision, planning and support.
Employee involvement
All employees assume responsibility for the quality of their work.
Product/Process Excellence
Involves the process for continuous improvement.
Continuous Improvement
A concept that recognizes that quality improvement is a journey with no end
and that there is a need for continually looking for new approaches for
improving quality.
Customer Focus on Fitness for Use
Design quality
Specific characteristics of a product that determine its value in the
marketplace.
Conformance quality
The degree to which a product meets its design specifications.

A fundamental concept of TQM from BS 7850 - a Process

A set of inter-related resources and activities which transform inputs into
outputs. (ISO 8402).
Any activity that accepts inputs, adds values to these inputs for customers, and
produces outputs for these customers. The customers may be either internal or
external to the organization. (BS 7850)

TQM & organizational Cultural Change

Additional views of Quality in Services

Technical Quality versus Functional Quality
Technical quality the core element of the good or service.
Functional quality customer perception of how the good functions or the
service is delivered.
Expectations and Perceptions
Customers prior expectations (generalized and specific service experiences)
and their perception of service performance affect their satisfaction with a
service.
Satisfaction = (Perception of Performance) (Expectation)

Continuous Improvement

Philosophy that seeks to make never-ending improvements to the process of
converting inputs into outputs.
Kaizen: Japanese word for continuous improvement.

Implementing TQM

Successful Implementation of TQM
Requires total integration of TQM into day-to-day operations.
Causes of TQM Implementation Failures
Lack of focus on strategic planning and core competencies.
Obsolete, outdated organizational cultures.

Obstacles to Implementing TQM

Lack of a company-wide definition of quality.

Lack of a formalized strategic plan for change.

Lack of a customer focus.

Poor inter-organizational communication.

Lack of real employee empowerment.

Lack of employee trust in senior management.

View of the quality program as a quick fix.

Drive for short-term financial results.

Politics and turf issues.

Some criticisms of TQM

1. Blind pursuit of TQM programs

2. Programs may not be linked to strategies

3. Quality-related decisions may not be tied to market performance

4. Failure to carefully plan a program

Overview of the EFQM Excellence Model

Total Quality Management and Continuous Improvement

TQM is the management process used to make continuous improvements to all
functions.
TQM represents an ongoing, continuous commitment to improvement.
The foundation of total quality is a management philosophy that supports meeting
customer requirements through continuous improvement.

What is Six Sigma?

Degree of variation;
Level of performance in terms of defects;
Statistical measurement of process capability;
Benchmark for comparison;
Process improvement methodology;
It is a Goal;
Strategy for change;
A commitment to customers to achieve an acceptable level of performance

A methodology to improve a business process by constantly reviewing,
updating and re-tuning the existing process.

Six Sigma improves the process performance, decreases variation and
maintains consistent quality of the process output. This leads to defect
reduction and improvement in profits, employee morale, product quality and
finally customer satisfaction.

Six Sigma Strives for perfection. It allows for only 3.4 defects per million
opportunities for each product or service transaction.

Six Sigma relies heavily on statistical techniques to reduce defects and
measure quality

Evolution of Six Sigma

Japan has been credited with the evolvement of Quality Systems like TQM,
Kanban, Kaizen, etc.

Pioneered in the U.S. by Bill Smith at Motorola in 1986; originally used as a
metric for measuring defects for improving quality; a methodology to reduce
defect levels <3.4 Defects Per Million Opportunities (DPMO). Motorola has
reported >US$17b savings as of 2006.

Early adopters include Bank of America, Caterpillar, Honeywell International
(previously known as Allied Signal), Raytheon, Merrill Lynch and General
Electric.
Six Sigma was originally centered on manufacturing improvements. The
reason for this was knowledge of the statistical tools in the manufacturing
functions and the ease with which we can quantify the benefits

Three levels of Six Sigma:

As a Metric
As a Methodology
As a Management system

Essentially, Six Sigma is all three at the same time.

As a Metric

The term Sigma is often used as a scale for levels of "goodness" or
quality. Equates to 3.4 defects per one million opportunities (DPMO).
Six Sigma started as a defect reduction effort in manufacturing and was then
applied to other business processes for the same purpose.

As a Methodology

A business improvement methodology that focuses an organization on:
Understanding and managing customer requirements
Aligning key business processes to achieve those requirements
Utilizing rigorous data analysis to minimize variation in those processes
Driving rapid and sustainable improvement to business processes

At the heart of the methodology is the DMAIC model for process improvement
-Define opportunity
-Measure performance
-Analyze opportunity
-Improve performance
-Control performance

As a Management system

A top-down solution to help organizations:

Align their business strategy to critical improvement efforts
Mobilize teams to attack high impact projects
Accelerate improved business results
Govern efforts to ensure improvements are sustained

Framework to prioritize resources for projects that will improve the metrics, and it
leverages leaders who will manage the efforts for rapid, sustainable, and improved
business results

SIX SIGMA PROCESS

Define

Identify, evaluate and select projects for improvement
Set goals
Form teams.

MEASURE

Collect data on size of the selected problem,
identify key customer requirements,
Determine key product and process characteristic.

ANALYZE

Analyze data, establish and confirm the vital few determinants of the
performance.
Validate hypothesis

IMPROVE

Improvement strategy
Develop ideas to remove root causes
Design and carry out experiments,
Optimize the process.
Final solutions

CONTROL

Establish standards to maintain process;
Design the controls, implement and monitor.
Evaluate financial impact of the project

LEVELS OF SIX SIGMA IMPLEMENTATION

SIX SIGMA CHAMPION: Champions undergo five days of training and are taught how
to manage projects and act as advisors to various project teams.
GREEN BELTS: They undergo two weeks of training that includes project-oriented
tasks. They act as team members to the Six Sigma project team. Their cooperation
and involvement is necessary for projects success.
BLACK BELTS: They receive four weeks of trainings and are directly involved in the
implementation of Six Sigma Projects. They are the project leaders and go through
in-depth training on Six Sigma approach and tools and work full time on the project.
MASTER BLACK BELTS: These are the people who conduct Six Sigma Training and
also have on the job training and experience

Benefits of Six Sigma
Generates sustained success
Sets performance goal for everyone
Enhances value for customers;
Accelerates rate of improvement;
Promotes learning across boundaries;
Executes strategic change

4. ISO 9000 and other ISO series

ISO 9000 is a family of standards related to quality management systems
and designed to help organizations ensure that they meet the needs of
customers and other stakeholders. The standards are published by ISO, the
International Organization for Standardization, and available through
National standards bodies. ISO 9000 deals with the fundamentals of
quality management systems, including the eight management principles on
which the family of standards is based. ISO 9001 deals with the
requirements that organizations wishing to meet the standard have to fulfill.

Advantages
1. Creates a more efficient, effective operation
2. Increases customer satisfaction and retention
3. Reduces audits
4. Enhances marketing
5. Improves employee motivation, awareness, and morale
6. Promotes international trade
7. Increases profit
8. Reduces waste and increases productivity.
9. Common tool for standardization.
What are ISO 9000 Standards?

4 ISO 9000 Standards
Define the required elements of an effective quality management system
Can be applied to any company
Adopted by the United States as the ANSI/ASQC Q90 series.

4 Revised 2000 wider applicability

Who created the standards?

International Organization for Standardization - Geneva
ISO tech committee - TC 176 started in 1979
Standards created in 1987
To eliminate country to country differences
To eliminate terminology confusion
To increase quality awareness

How did ISO get started?

1906 - International Electro-technical Commission
1926 - International Federation of the National Standardizing Associations (ISA)
1946 London - delegates from 25 countries decided to create a new international
organization "the object of which would be to facilitate the international
coordination and unification of industrial standards
1947 - ISO began to officially function
1951 - The first ISO standard was published
"Standard reference temperature for industrial length measurement".

What has ISO Accomplished?

ISO film speed code
Standard format for telephone and banking cards
ISO 9000 which provides a framework for quality management and quality
assurance
ISO 14000 series provides a similar framework for environmental management
Internationally standardized freight containers
Standardized paper sizes.
Automobile control symbols
ISO international codes for country names, currencies and languages

ISO 9000:2000 Consists of 3 Areas

ISO 9000:2000 Quality Management Systems: fundamentals and vocabulary
ISO 9001:2000 Quality Management Systems Requirements (required for
certification)
Management responsibility
Resource management
Product/service realization
Measurement, analysis, improvement
ISO 9004-2000 Quality Management Systems Guidelines for performance
improvement

ISO 9000 Family of Standards

ISO 8402 - QA and Quality management vocabulary
ISO 9000-2 - Generic guidelines for applying ISO 9001, ISO 9002, and ISO 9003
ISO 9000-3 - Guidelines for applying ISO 9001 to the development, supply,
and maintenance of software
ISO 9000-4 Application for dependability management
ISO 9004-2 Guidelines for services
ISO 9004-3 Guidelines for processed material
ISO 9004-4 Guidelines for quality improvement
ISO 9004-5 Guidelines for quality plans
ISO 9004-6 Guidelines for configuration management

Why is ISO 9000 important?

European Union directive
ISO 9000 certification required by suppliers of Regulated Products
health, safety, and the environment
EC has strict corporate liability legislation protecting consumers
Globalization impact

Why adopt ISO 9000?

To comply with customers who require ISO 9000
To sell in the European Union market
To compete in domestic markets
To improve the quality system
To minimize repetitive auditing by similar and different customers
To improve subcontractors performance

Ten Steps to ISO Registration

1. Set the registration objective
2. Select the appropriate standard
3. Develop and implement the quality system
4. Select a third-party registrar and apply
5. Perform self-analysis audit
6. Submit quality manual for approval
7. Pre-assessment by registrar
8. Take corrective actions
9. Final assessment by registrar
10. Registration!

Six Essential Elements of a Successful Registration Effort

1. SENIOR Management Commitment to the Effort
2. APPROPRIATE ISO 9000 Training
3. AN Effective Management Review Process
4. DOCUMENTATION of the Quality System
5. AN Effective Internal Auditing System
6. AN Effective Corrective Action Process

5. STATISTICAL QUALITY CONTROL

INTRODUCTION

The production processes are not perfect!
WHICH MEANS THAT THE OUTPUT OF THESE PROCESSES WILL NOT BE
PERFECT CORRECT AND DETERMINISTIC?
Successive runs of the same production process will produce non-identical parts.
Alternately, seemingly similar runs of the production process will vary, by some
degree, and impart the variation into the some product characteristics.
Because of these variations in the products, we need probabilistic models and
robust statistical techniques to analyze quality of such products.
No matter how carefully a production process is controlled, these quality
measurements will vary from item to item, and there will be a probability
distribution associated with the population of such measurements.
If all important sources of variations are under control in a production process,
then the slight variations among the quality measurements usually cause no serious
problems.
Such a process should produce the same distribution of quality measurements no
matter when it is sampled, thus this is a stable system.

Objective of quality control is to develop a scheme for sampling a process,
making a quality measurement of interest on sample items, and then making a
decision as to whether or not the process is in the stable state, or in control.
If the sample data suggests that the process is out of control, a cause is for the
abnormality is sought.
A common method for making these decisions involves the use of control charts.
These are very important and widely used techniques in industry, and everyone in
the industry, even if not directly related to quality control, should be aware of
these.

Statistical process control

Methodology for monitoring a process to identify special causes of variation and
signaling the need to take corrective action.
When special causes are present, the system said to be statistically out of control.
If the variations are due to common causes alone, the process is said to be in
statistical control.
SPC relies heavily on control charts.

Quality control measurements

Attributes A performance characteristics that is either present or absent in
the product or service under consideration.
Examples: Order is either complete or incomplete; an invoice can have one, two, or
more errors.
Attributes data are discrete and tell whether the characteristics conforms to
specifications.
Attributes measurements typically represented as proportions or rates. e.g. rate of
errors per opportunity.
Typically measured by Go-No Go gauges.

Variable Continuous data that is concerned with degree of conformance to
specifications.
Generally expressed with statistical measures such as averages and standard
deviations.
Sophisticated instruments (caliper) used.
In statistical sense, attributes inspection less efficient than variable inspection.
Attribute data requires larger sample than variable inspection to obtain same
amount of statistical information.
Most quality characteristics in service industry are attributes.

Interpreting patterns in control charts

General rules to determine whether a process is in control:

1. No points outside the control limits.
2. The number of points above and below the center line are about the same.
3. Points seem to fall randomly above and below the center line.
4. Most points are near center line, and only a few are close to control limits.
Basic assumption: Central Limit Theorem.

One point outside control limits:
Measurement or calculation error, power surge, a broken tool, incomplete operation.
Sudden shift in process average:
new operator or inspector, new machine setting.
Cycles:
operator rotation or fatigue at the end of shift, different gauges, seasonal effects
such as temperature and humidity.
Trends:
x-bar-chart learning effect, dirt or chip buildup, tool wear, aging of equipment; R-
chart (increasing trend) gradual decline in material quality; R-chart (decreasing
trend) improved skills, better materials.

Hugging the center line:
Sample taken over various machines canceling out the variation within the sample.
Hugging the control limits:
Sample taken over various machines not canceling out the variation within the
sample.
Instability:
Difficult to identify causes. Typically, over-adjustment of machine.
Always, R-chart analysis before the x-bar-chart analysis.

The p-Chart

The control charts we looked at so far were applicable to quality measurements
that possessed continuous probability distribution.
This sampling is commonly referred to as sampling by variables.
In many cases we merely want to assess whether or not a certain item is defective.
We can observe a number of defective items from a particular sample of series of
samples. This is referred as sampling by attributes.
Suppose a series of k independent samples, each of size n, is selected for a
particular process.
Let p denote the proportion of defective items in the population (total production
for a certain time period) for a process in control.
Let Xi denote the number of defective items in the ith sample.
Then Xi is a binomial variable, assuming random sampling from a large lot, with mean
E(Xi) = np, and Var(Xi) = np(1-p).
We typically consider the fraction of defective items in a sample (Xi/n) rather than
the observed number of defectives.

( ) ( )
.
size sample total
observed defective of number total
: of estimator unbiased The
samples. from data the using
limits, control the estimate must we unknown, is Since
. / ) 1 ( / and / since,
) 1 (
3
interval in the or mean, their of
deviations standard ree within th lie should fractions sample All
1
nk
X
p
p
k
p
n p p n X Var p n X E
n
p p
p
k
i
i
i i
=
= =
= =

Thus the estimated control limits are given by

The c-Chart

In many quality control problems the particular items being subjected to inspection
may have more than one defect.
We may wish to count # of defects instead of merely classifying at item as to
whether or not it is defective.
If Ci denotes the # of defects observed in the ith inspected item, we can safely
assume that Ci has a Poisson distribution.
Let this Poisson distribution have a mean of for a process in control.
For us to be 99.74% sure, almost all the Cis should fall within three standard
deviations of the mean if the process is in control.

.
) 1 (
3
n
p p
p

( ) ( )
. 3
: become then limits control estimated The
.
1
: is of estimator unbiased then the inspected, are items If
. 3
: are limits control the , and Since
1
C C
C
k
C
k
C Var C E
k
i
i
i i
= =

6. Acceptance Sampling

ACCEPTANCE SAMPLING

Acceptance sampling is a method used to accept or reject product based on a
random sample of the product.
The purpose of acceptance sampling is to sentence lots (accept or reject) rather
than to estimate the quality of a lot.

Acceptance sampling plans do not improve quality. The nature of sampling is such
that acceptance sampling will accept some lots and reject others even though they
are of the same quality.

The most effective use of acceptance sampling is as an auditing tool to help ensure
that the output of a process meets requirements.

As mentioned acceptance sampling can reject good lots and accept bad lots.
More formally:

Producers risk refers to the probability of rejecting a good lot. In order to
calculate this probability there must be a numerical definition as to what
constitutes good

AQL (Acceptable Quality Level) - the numerical definition of a good lot. The
ANSI/ASQC standard describes AQL as the maximum percentage or
proportion of nonconforming items or number of nonconformities in a batch
that can be considered satisfactory as a process average

Consumers Risk refers to the probability of accepting a bad lot where:

LTPD (Lot Tolerance Percent Defective) - the numerical definition of a bad
lot described by the ANSI/ASQC standard as the percentage or
proportion of nonconforming items or nonconformities in a batch for which
the customer wishes the probability of acceptance to be a specified low
value.

The Operating Characteristic Curve is typically used to represent the four
parameters (Producers Risk, Consumers Risk, AQL and LTPD) of the sampling plan
as shown below where the P on the x axis represents the percent defective in the
lot:

Note: if the sample is less than 20 units the binomial distribution is used to build
the OC Curve otherwise the Poisson distribution is used.

OR

Acceptance sampling is a process that helps to determine whether to accept or
reject the sample being observed

Acceptance Sampling is a form of inspection that is used to determine whether or
not goods are coherent with a set standard of quality

When is Acceptance Sampling useful?

When product testing is
destructive
expensive
time consuming
When developing new products

It will help reduce costs to the company and ensure a set standard of quality.
When dealing with new suppliers, it may be necessary to inspect the incoming goods to
ensure that their quality standards are in line with yours.
When a suppliers product has had excellent quality in the past, it may not be necessary to
perform 100% sampling. Acceptance sampling will just ensure that they are maintaining
their quality.

Risks of Acceptance Sampling

Producers Risk

The risk associated with a producer rejecting a lot of materials that actually
have good quality
Also referred to as a Type I Error

Consumers Risk

The risk associated with a consumer accepting a lot of materials that
actually have poor quality
Also referred to as a Type II Error

Disadvantages of acceptance sampling

Acceptance sampling does not in fact improve the process that the goods being
inspected are derived from.
It only points out the defects of the products and may in fact aid the inspector to
find the source of the problem.

When can acceptance sampling be applied?

At any point in production
The output of one stage is the input of the next

In this example, the input is the tree. The output are the wood shingles that are
produced from the tree, which later become the input for the house that is being
built.

Sampling at the Input stage
Prevents goods that dont meet standards from entering into the process
This saves rework time and money

Sampling at the Output stage
Can reduce the risk of bad quality being passed on from the process to a
consumer
This can prevent the loss of prestige, customers, and money

Sampling at the Process stage
Can help adjust the process and reduce the amount of poor quality in
production
Helps to determine the source of bad production and enables return for
reprocessing before any further costs may be incurred

Typical Application of Acceptance Sampling

A vendor delivers a product to a manufacturing company
The product is a raw material used by the company

A sample of the shipment is taken
Quality characteristics of the units in the sample are inspected.
Based on the observations made, the decision is made to either accept or reject
the entire shipment

The decision to accept or reject the shipment is based on the following set
standards:
Lot size = N
Sample size = n
Acceptance number = c
Defective items = d
If d <= c, accept lot
If d > c, reject lot

Acceptance sampling by attributes

Inspections in which a unit of product is classified simply as defective or non-
defective is called inspection by attributes.
Lots of items, either raw materials or finished products, are sold by a producer to
consumer with some guarantee for quality.
We determine quality, here, by the proportion p of defective items in the lot.
To check these characteristics of the lot, the consumer will sample some of the
items, test them, and observe the number of defectives.

Generally, some defectives are allowed because defective-free lots may be too
expensive for the consumer to purchase.
But if the number of defectives is too large, the consumer will reject the lot and
return it to the producer.
Sampling is generally used because the cost of inspecting the entire lot may be too
high or the inspection process may be destructive.
Before sampling inspection takes place for a lot, the consumer must have in mind a
proportion p0 of defectives that will be acceptable.
Thus, if the true proportion of defectives p is no greater than p0, the consumer
wants to accept the lot, and reject otherwise

This maximum proportion of defectives satisfactory to the consumer is called the
Acceptable Quality Level (AQL).
So, we have a hypothesis-testing problem.
We are testing null hypothesis of the true defectives proportions being less than
or equal to the acceptable proportion; against an alternative hypothesis that the
true proportion is actually greater than the acceptable one.

A random sample of n items is selected from the lot, and the number of defectives
Y is observed.
The decision concerning rejection or non-rejection of Ho (and consequently
rejecting or accepting the lot) will be based on the observed value of Y.
The probability of Type I error () in this problem is the probability that the lot is
rejected by the consumer when, in fact, the proportion of defectives is
satisfactory to the consumer.
This is referred to as the producers risk.

The value of calculated at p = p0 is the upper limit to the proportion of good lots
rejected by the sampling plan being considered.
The probability of Type II error calculated for some proportion of defective p1,
where p1 > p0, represents the probability that an unsatisfactory lot will be
accepted by the consumer.
This is referred to as the consumers risk.
The value of calculated at p1 = p is the upper limit to the proportion of bad lots
accepted by the sampling plan being considered, for all .

The null hypothesis will be rejected if the observed value of Y is larger than some
constant a.
Since the lot is accepted if Y is less than or equal to a, the constant a is called the
acceptance number.
In this context, the significance level is given by:

. : against :
0 0
p p H p p H
a o
> s
1
p p >
( )
( )
( )
( ) ) ( lot when the Accepting
when rejecting Not 1
,
when Reject
0
0 0
0
0 0
A P p p P
p p H P
p p a Y P
p p H P
= =
= =
= > =
= =
o
o

Since p0 may not be known precisely, it is of interest to see how P(A) behaves as a
function of true p, for a given n and a.
A plot of these probabilities is called an operating characteristic curve (OC curve).

Example of OC curve plotting:
Suppose that one sampling plan calls for (n = 10, a = 1) while another calls for (n =
25, a = 3). Plot the OC curve for both of them.

If the plant using these plans can operate with 30% defective raw materials,
considering the price, but cannot operate efficiently if the proportion gets close to
40%, which plan do you recommend?
Solution: We need to calculate the P(A) for various values of p.
For each plan, P (A) is the binomial probability of finding at the most a number of
defects in n trials.

0
0.2
0.4
0.6
0.8
1
1.2
P
r
o
b
a
b
i
l
i
t
y

o
f

A
c
c
e
p
t
a
n
c
e

P
OC Curve
LTPD AQL
Producers
Consumers

Note that OC curve for first plan (n = 10, a = 1) drops slowly and does not get
appreciably small until p is in the neighborhood of 0.4.
For p around 0.3 this plan still has fairly high probability of accepting the lot.
The other curve for the second plan (n = 25, a = 3) drops much more rapidly and
falls to a small P(A) at p = 0.3.
Hence, the second plan would be better for inspection if the plant can afford to
sample n = 25 items out of each lot before making a decision.

Acceptance sampling by variables

At times the characteristics under study involve a measurement on each sampled
item.
In these cases, one could base the decision to accept or reject on the
measurements themselves, rather than simply on the number of defective items.
Defective items would mean those items having measurements that do not meet the
standards.
When looking at actual measurements obtained from variables method, the
experimenter may gain some insights into degree of nonconformance and may be
able to quickly suggest methods of improvements.

For variables, arriving at the correct sample size and correct acceptance factor is
slightly tedious and depends on the non-standard statistical tables.
US Military standards (MIL-STD-414) is one such standard for calculating the
same.

7. INDUSTRIAL SAFETY AND SAFETY MANAGEMENT

OBJECTIVES

Identifies safety hazards
Ensures that remedial action necessary to maintain an acceptable level of safety is
implemented
Provides for continuous monitoring and regular assessment of the safety level
achieved
Aims to make continuous improvement to the overall level of safety

Benefits of Good Safety Management

Reduction in the cost of medical and workers compensation
Greater productivity
Improved product or research quality
Overall operation improvement
Basic Principles of Good Safety Management:

Management Commitment
Documented Safety Philosophy
Safety Goals and Objectives
Committee Organization for Safety
Line Responsibility for Safety
Supportive Safety Staff
Rules and Procedures
Audits
Safety Communications
Safety Training
Accident Investigations
Motivation

Expectations for Safety Performance

Performance Employees must:
Make safety equal to all other aspects of the job
Follow all safety rules and procedures

Management must:
Accept responsibility for prevention of injuries
Accept responsibility for safety training

Supervisors Responsibilities:

Know, communicate, and enforce existing standards
Recognize the need for revised standards
Develop new procedures and rules when necessary
Train employees to follow all rules and procedures

Purpose of PPDs Safety Audit:

Identify safe and unsafe, acts or conditions
Identify areas for improvement
Follow up when mitigating actions are indicated
Accumulate data for tracking trends related to safety

Types of safety audits:

Scheduled
Unannounced
Compliance with standards
Adherence to procedures

Benefits of safety audits:

Promote safe behavior
Test for compliance with standards
Establish standards
Identify weaknesses
Accumulate data
Prevent injuries

Who conducts PPD safety audits? :

Division Office
Department Heads
Group Leaders
Supervisors
ES&H Staff
Project Management

What Is Process Safety Management
14 Elements

Application
Employee Participation
Process Safety Information
Process Hazard Analysis
Operating Procedures
Employee Training
Contractors
Pre-Start up Safety Review
Mechanical Integrity
Hot Work (Non-routine Work Authorizations)
Management of Change
Incident Investigation
Emergency Planning and Response
Compliance Audits

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!The end!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Keyur D vasava.

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