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Production & Operation Management Prof. G.Purandaran B.E. (Mechanical), M.Tech ( Maintenance Engineering & Management)- I.I.T-Madras: P.G.D.M ( Marketing & International Business) -I.I.M-Bangalore
Production & Operation Management • Production & Operations Management • Objectives • To familiarize the concepts of production & operations management systems • And to appraise customer expectations of quality and relationships • And update and technologies to meet global competition • And to understand functions of interrelations departments • And decisions involved therein for effective operations management
POM • 1.Operations Management • Plant Location Criteria, Plant Layout Types: Product, Process, Cell layout, Fixed station, Merit & Demerits: Volume – Variety relationship, Modern practices of Production management, Line Balancing, Desired Output, Limited Resources, Product Design Criteria, Work Study, Method Study, Work Measurement, Various Techniques of Method Study and work measurement + Problems.
• 2.Quality Management • Inspection Vs Quality, Seven Stages of Quality, ISO 9000 & ISO 14000, Seven Tools of Quality Circles, Pareto Chart, Causes and Effect Diagram, Histogram, Stratification, Scatter Diagram, Control Charts, Check Sheets, Concept of Total Quality Management + Problems, Excellence in all sub-system Leading to Organizational Excellence, Introduction to Six Sigma, QFD and FMEA & POKAYOKE, Vender Development and Vendor Quality Rating CasesHow to improve Quality
POM • 3.Maintenance Management • Different Types of maintenance: Breakdown, Preventive, Predictive, Condition maintaining, Total Productive Maintenance ( TPM), Concept of OEE ( Overall Equipment Effectiveness) + Problem, Concept of “5S” House Keeping
POM • 4.Planning • Material Requirement Planning ( MRP), Enterprise Resource Planning ( ERP), Production planning & Control, Master Production Schedule, Yearly Planning- to Quarterly to Monthly – to weekly-to daily, Capacity planning and Assessment, Line Balance, Cost Control Vs Cost Reduction, Concept of value Engineering
POM • 5.Material management • Inventory management; RMC Inventory, ABC Analysis, JIT, Lead-time management, Pareto Principles,, WIP: Lean manufacturing, Line balancing, SPC,FGS: Push Vs Pull System, Advantages of Pull System, Spares: EOQ & Breakeven analysis to reduce total inventory cost, supply chain management & Logistics management- Introduction
POM • 6.Manufacturing Technology • CIM/CAD Introduction, Automation, concept of special purpose m/c, (SPM’s), Designing Production Systems at Shop Floor, Work Instructions, Standard Operating Procedure, Monitoring Productivity Measurement, Productivity, Quality, Breakdowns & etc., • Books: • POM: SN Chary/ Upendra Kachru / Chunawalla & Patel / Martin K Starr/ Mahadevan/ Kansikha Bedi/ : OM: William Stevenson/ Norman Gaither & Greg Fraizer
POM-Overview • Producing Products demanded by Customers is a Challenging Job today • Production managers are involved in: – Planning – Organizing – Coordinating – Executing – Controlling
Production Vs Manufacturing • Production implies the creation of Goods and services to satisfy Human needs • A process of creating goods ( Tangibles) as well as services ( Intangibles) • Manufacturing is the process of producing only tangible goods
Distinction between products and services
Manufactured Products Tangible outputs Products can be inventoried Little customer contact Long lead times Capital intensive Product quality easily determined
Services Intangible outputs Outputs cannot be inventoried Extensive customer contact Short lead times Labour intensive Service quality determined with difficulty
Difference between Goods and Services
Value-Added-Process The difference between the cost of inputs and the value or price of outputs. Value added Inputs Land Labor Capital
Transformation/ Conversion process
Outputs Goods Services
Feedback
Control Feedback
Feedback
Conversion Process Used in Production System Production System
Inputs
Conversion Process
Outputs
Steel Plant
Iron Ore, Smelting, Coal/Coke, Rolling limestone, labor, M/c
Steel sections, Sheets
Restaurants
Hungry Cooking & Customers, serving foods Chefs, Services, Equipments
Satisfied Customer
Automobile
Raw materials & Fabrication of components, parts & machinery, labor assembly of automobiles
Automobiles
Conversion Process Used in Production System Production System
Inputs
Conversion Process
Outputs
Oil Refinery
Crude Oil, Equipments, labor
Chemical processes (Fractional distillation)
Petroleum Products
Supermarkets
Customer with needs, sales person
Selling / Retailing
Satisfied Customers
College or university
High School / Students, Teacher
Teaching ( Imparting Knowledge + Skills)
Graduated Person
Different brands of cars Acura
Lamborghini
Aston martin
Land Rover
Audi
Lexus
Bentley
Lincoln
BMW
Lotus
Bugatti
Mazda
Buick
Mercedes'-Benz
Cadillac
Mercury
Chevrolet
Mitsubishi
Chrysler
Nissan
Dodge
Porsche
Ferrari
Rolls-Royce
Ford
Saab
GMC
Saturn
Honda
Scion
Hummer
Smart
Hyundai
Subaru
Infiniti
Suzuki
Jaguar
Tesla
Jeep
Toyota
Kia
Volvo
Acura • .
Aston Martin • .
Audi • .
Model with Hyundai car • .
Toyota car with Models
Honda car • .
Nissan Car • .
Lamborghini
• .
Automobile Assembly line • .
Toyota plant location
Nuclear Power plant in France
78.8% power Selective screening Land/water availability Seismotectonic areas Hydrology, geology Land use, meteorology Transmission lines Demography topography ecology
Underground Storage of LPG
Channel Tunnel: London to Paris
Plant Location Possible Factory Location Criterion
Weighting
A
B
C
D
E
PROXIMITY TO:
Skilled labour
7
2
14
3
21
0
0
1
7
4
28
A pool of unskilled labour
8
5
40
2
16
0
0
4
32
2
16
A motorway
7
3
21
2
14
1
7
3
21
4
28
An airport
4
1
4
3
12
4
16
2
8
2
8
The sea / a river
0
2
0
5
0
5
0
2
0
1
0
Housing
5
4
20
3
15
0
0
3
15
4
20
Amenities
5
3
15
2
10
0
0
2
10
3
15
Potential for expansion
7
2
14
1
7
5
35
3
21
2
14
Availability of grants/incentives
8
1
8
2
16
5
40
1
8
3
24
Safety
2
3
6
2
4
5
10
2
4
2
4
Planning constraints
5
2
10
3
15
5
25
4
20
2
10
Environmental impact
4
3
12
2
8
4
16
1
4
2
8
TOTAL
164
138
149
150
175
Facility Location
Facility Layout
Layout Goals • • • • • •
Use space efficiently Efficient personnel movement Maximum equipment utilization Convenient / safe work environment Simplify repair / maintenance Smooth flow of work
33
Products, Processes, and Layouts PRODUCTS Make-to-stock standardized commodities
Assemble-to-order modular
Make-to-order custom
Engineer-to-order one-of-kind
PROCESSES Continuous process industries repetitive mfg
Hybrid, FMS, CAM, CIM
Job-Shop(intermittent)
LAYOUTS high volume, low variety
low volume,
Product Layout
Cellular Layout
medium variety
low volume,
Process Layout
high variety
low volume,
Special Project low variety
Fixed Position 34
Fixed Position Layout •The product or project remains stationary, and workers, materials, and equipment are moved as needed.
Examples: Home building, ship and aircraft buiding, drilling for oil
35
Manufacturing Method-project form • .
Building a Hospital :project
Process Layout
Similar processes (or processes with similar needs) are located together By grouping similar processes utilization of resources is improved Customers, products, patients move through the processes according to their needs Different products = different needs = different routes Complex flow pattern in the operation Examples: • Supermarkets, job-shops, hospitals 38
Process Layouts Milling Assembly & Test
Grinding
Drilling
Plating
Process Layout –products travel to dedicated process centers 6-39
Product Layout
Sometimes called line layout, flow line or assembly line Parts follow a specified route – the sequence of workstations matches with the sequence of required operations Work Flow is clear, predictable, easy to control Examples: • Car assembly, paper manufacture, self-service canteen
40
Product Layout
Raw materials or customer Material and/or labor
Station 1 Material and/or labor
Station 2 Material and/or labor
Station 3
Station 4
Finished item
Material and/or labor
Used for Repetitive or Continuous Processing
6-41
Cellular Layouts – –
machines are grouped into a cell that can process items that have similar processing requirements Based on Group technology which involves grouping items with similar design or manufacturing characteristics into part families
Could be considered as mini product layouts Can improve and simplify a functional/process layout Flexible Duplicates some resources
6-42
Comparison of Product and Process Layouts Product • •
Workers Inventory
• • • • • •
Storage space Material handling Aisles Scheduling Layout decision Goal
•
Advantage
Limited skills Low in-process, high finished goods Small Fixed path (conveyor) Narrow Line balancing (Easier) In-line, U-type Equalize work at each station Efficiency
Process
High skills High in-process, low finished goods Large Variable path (forklift) Wide Dynamic (More difficult) Functional Minimize material handling cost Flexibility
Product Volume and Variety
Cellular
Quantity
Product Layouts Fixed Position Layouts
Mixed Layouts
Process Layouts
Number of Different Products 44
Product Flow Control
Batch Processing (Process Layout) • • • •
From a couple to several thousands identical parts A batch for each different part type Move together through the production system May split for material handling or to reduce processing time Examples are clothing, furniture production
Repetitive or Flow processing (Product Layout) • Continuous– chemicals, foods, pharmaceuticals • Discrete – car, refrigerator production
45
Setup Costs Affect The Batch Size • Cost and time to set up production facilities to manufacture a specific product affect the batch size. • When changeover time (setup time) and cost are large, the size of batch is kept large. • Large batch sizes result in high inventory cost. 46
Production Choices
Make-to-stock • Number of units of each product are kept on hand at all times • Quick delivery to customers upon receipt of an order • When delivery response time is a key competitive factor • Limited number of products manufactured repeatedly • An idea what customers will want • Allows to schedule production in advance Make-to-order • Only produce items after they have been ordered • Production system must respond quickly • Products have high degree of customization • Shelf life of products is short Assemble-to-order • Customers have influence on the design • They can select various options from predesigned subassemblies 47
Modern Practices of Production Operations Management MNCs are financially sound and they spend money on R & D to gain competitive advantage. MNCs take advantage of location economies.
Strategic Issues In operations management, an MNC needs to made decisions on several strategic issues. The following are the important issues: 1. Sourcing and vertical integration. 2. Facilities location 3. Standardization of production facilities 4. Contract manufacturing 5. Supply chain management 6. Managing service operations 7. International quality standards 8. Internationalisation of R&D, and 9. Managing technology transfers.
Outsourcing Outsourcing is the act of moving some of a firm’s internal activities and decision responsibility to external providers. Country, technology, product, government policies and Organisational factors need to consider facility locations in global market. Resource availability infrastructure, and host community are the country factors. Value to weight ratio and universal need are the two product-factors. Incentives, subsidies, trade barriers, local product standard are the prime government factors.
Modern Trends • Growth in Service Sector: – 70 to 80% in the near future – Managing service quality and productivity offers is a great challenge • Productivity Changes – Output/input ? – Material cost/labor cost/energy cost increasing – Utilization of resources like machinery/material/improving quality of output and reduce wastages
Modern trend • Global competition : – The worldwide customers evaluate quality of products on: • Performance • Features • Reliability • Serviceability • Durability • Appearance • Customer Service • safety
Modern trend • Competition based on Quality, Time and Technology – Conformance to quality – Product Reliability – Delivery Dependability – Performance Quality – Low Price – Speedy New Product Introduction – JIT/TQM/Factory Automation – Advances in Computer technology/Robotics/Automated Manufacturing System (CAD,CAM,CIM,FMS System)
Modern trend • Environmental, Ethical, Work force Diversity – Responsibility that go beyond producing goods and services for profits – Help solve social problems – Respond to the needs of the customers, society and public rather than shareholders alone – Have impact beyond simple marketplace transaction – Serve a range of human values
Line Balancing Line Balancing: Arranging a production line so that there is an even flow of production from one work station to the next, so that there are no delays at any work station that will leave the next work station with idle time.
Line balancing
Product Design
Product Design
Two different movement Three dial shape Two dial size Three diff colors =36 variety
Product Design, Process Design and Production Design Product Design: Concerned with form and function of a product. It refers to the arrangement of elements or parts that collectively form a product. Process Design: Concerned with the overall sequence of operations required to achieve the design specification of the product. Production Design: Concept of designing products from the point of view of producibility.
Importance of Product Design A good product design can improve the marketability of a product by making it easier to operate or use, upgrading its quality, improving its appearance, and/or reducing manufacturing costs. An excellent design provides competitive advantage to the manufacturer, by ensuring appropriate quality, reasonable cost and the expected product features.
Objectives of Product Design (i) The overall objective is profit generation in the long run.
(ii) To achieve the desired product quality. (iii) To reduce the development time and cost to the minimum. (iv) To reduce the cost of the product. (v) To ensure producibility or manufacturability (design for manufacturing and assembly).
What does product design do? • Translating customer needs and wants into product and services requirements ( marketing) • Refining existing products ( marketing) • Developing new products ( marketing, product design, production ) • Formulating quality goals ( quality assurance, production ) • Formulating cost structures (Accounting ) • Constructing and testing prototype ( marketing, production )
Steps Involved in Work Study
Work Study • .
Work Measurement and Productivity
Presented by: Prof.G.Purandaran M.Tech (I.I.T-M), PGDM (I.I.M-Bangalore)
Work Measurement Work Measurement: establish a measurable work standard upon which to evaluate, compare and improve labor productivity. Work (labor) Standard: Determine on average-how many labor-hour are required to produce one unit of desired output for a well-trained worker under normal operating conditions
Work Measurement Continue… Level of standard: * Operations/Department/Plant standards * Element/Operations/Product standards Use of work standard: * Work and personnel planning * Cost estimation for labor and machine Techniques to set work standard: * Time study * Work sampling * Elemental timing * Predetermined motion-time study
Three Levels of Standards • Production and operations standards: individuals job standards • Department standards: sum of performance of the individual and team in a department • Plant standards: quantity and labor standards of the plant are the goals management strives to meet
Evaluation Performance • Evaluating individual performance: subsequent compensation • Evaluating department performance: subsequent supervisor compensation • Evaluating process design, layout, and work methods • Estimating expense and revenue streams in equipment evaluation as alternative are compared • Formulating standards costs
How to Determine “Average Worker” Standard ? Example from Distribution of 100 Workers Sample
Number of Workers Sampled
Performance in Units Per Hour
Mean
5
10-14
12
*5%
=0.6
20
15-19
17
*20%
=3.4
45
20-24
22
*45%
=9.9
25
25-29
27
*25%
=6.75
5
30-34
32
*5%
=1.6
Total =
22.5
100
Work Measurement Time Study Normal time
Standards time=
(1-allowance)
Normal time= (average cycle time)* (rating factor) Time recorded to perform an element
Average cycle time=
Number of cycles observed
Allowance fraction= fraction of time for personal needs, unavoidable work delays, fatigue
Work Measurement- Work Sampling Purpose: To estimate what proportion of a worker’s time is devoted to work activities
Main Issues: What level of statistical confidence is desired in the results? How many observations are necessary
Primary Applications: Time standards: to obtain the standards time for a task
Work Measurement- Work Sampling Formulas Proportion of Time Employee Performance Total Study Time * Observed Working * Rating Factor Normal Time= Number of Units Produced
Proportional of = Time Employee Observed Working Or
Number of observations in which working occurred
Number of Observations x
P=
n
Work Measurement- Work Sampling Formulas Example:
N= 100 (observations) X= 83 (sampled worker is working) P= 83/100 = 0.83
Given: (hours)
Total Study Time = 37.5 Rating Factor = 1.05 Number of Units Produced = 100
Normal Time:
= (37.5*0.83*1.05)/100 = 1/3 (hours) = 20 (min)
Productivity Calculation Labour Productivity Units produced
Productivity =
Labour-hours used =
1,000 250
= 4 units/labour-hour
One resource input single-factor productivity
Example