plant layout location

8/4/2019 Plant Layout Location

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Production Systems

AndOperations Management I

Anubha Walia


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1. MANAGING OPERATIONS

Nature and scope of production/operation management

Relationship with other functional areas

Standardisation and simplification

Reliability and redundancy

Value engineering Ergonomic considerations

Product (and service) design for differentiation

2. PROCESS DESIGNING

Types of production systems and layouts

Capacity requirements planning

Facilities, location and influencing factors; evaluation of alternatives JIT, FMS, and Group Technology

3. PRODUCTIVITY AND WORK STUDY

Method study: Basic procedure, charts, diagram

Work measurement & Time study

Work sampling, learning curve, production standards

Aggregate production planning; heuristic methods 4. PROCESS CONTROL

Inventory management: Basic concepts; selective inventory control models; orderingsystems; material requirement planning; operations scheduling: Meaning; dynamicand static scheduling; design rules

Quality control; variables and attributes

Process control and acceptance sampling Maintenance: Facilities; total productive maintenance


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Production

Inputs (6Ms-Man, Machine, Method, Material,

Money, Management)

Process- Conversion

Output-Good / Services

Production is heart of Org Fin, Mktg, HR

Material Mgmt dependant


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(Input Conversion / Transformation Output)

Input Transforming

Resources

Facilities

Staff

Output

Good orServices

Volume

VarietyVariation

Visibility

Input

Transformed

Resources

Material

Information

Customer

The Transformation

Process

Physical PropertiesInformational Properties

Possession

LocationStorage/Accommodation

Physiological State

Psychological State

Environment :- *Customer * Competitors *Suppliers*Government regulations * Technology * Economy

Monitoring & Control


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Production Management Function

Planning- Course of Action. Pdt planning,

facility planning, Designing

Organizing- Est structure of tasks andassigning authority.

Controlling ensure actual performance is in

accordance with planned performance. Weprepare standard


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Introduction

Operations management is the management of

an organizations productive resources or its

production system. A production system takes inputs and converts

them into outputs.

The conversion process is the predominantactivity of a production system.

The primary concern of an operations manager

is the activities of the conversion process.


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Organizational Model

MarketingMarketing

MISMISEngineeringEngineering

HRMHRM

QAQA

AccountingAccounting

SalesSales

FinanceFinance

OMOM


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Some inter-functional relationships between the

operations function and other core and

support functions

Engineering/technicalfunction

Accounting

and financefunction

Humanresourcesfunction

Informationtechnology(IT) function

Marketingfunction

Product/servicedevelopment

function

Financial analysisfor performanceand decisions

Provisionof relevantdata

Analysis of newtechnology options Understanding of

process technologyneeds

Understanding of thecapabilities and

constraints of theoperations process

New product andservice ideas

Understanding of thecapabilities and

constraints of theoperations process

Marketrequirements

Provision of systems fordesign, planning and

control, and improvement

Understanding

of infrastucturaland systemneeds

Recruitmentdevelopmentand training

Understanding of humanresource needs

Operationsfunction


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Objective of PM

Optimal use of resources

Max use of Manpower and resource

Quality of good at minimal cost

Contributing towards all round productivity

through Decision Making & QT


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SCOPE of POM

1- Activities relating to designing or

formulation of the prod system

Designing tools & drawingDesigning Development and installation equipment

Selection of overall plan

Location planPlant layout

Material Handling system


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2 Activities relating to analyzing and

controlling of prod operation after the prod syshas been activatedProd Planning Prep of short term prod schedules,

plan for maintaining records of RM finished good-

semi finished stockProd Controlling Work assignment, check and

remove discrepancies (control on inventory RM,purchase parts, finished goods), Control on WIP and

quality through process control


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Scope of POM

A) GENERAL PHASE

1Operations Management

(Input Conversion / Transformation

Output)

2Strategic Role ( Strategy and performance

objectives)


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Scope of POM Cont

B) DESIGN PHASE

3 Design of Products and Services

4 Design of Operations Networka) Capacity Decision

b) Layout Decision

c) Location Decision

5 Process Technology

6 Job Design & Work Organization


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Scope of POM Cont

C) PLANNING & CONTROL

7 Capacity Planning and Control

8 Inventory Planning and Control

10 MRP ( Material Requirement Planning )

11 Quality Planning and Control12 Project Planning and Control

13 JIT ( Just In Time) Planning and Control


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Scope of POM Cont

D) IMPROVEMENT

14 Failure Prevention & Recovery

15 TQM ( Total Quality Management)


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Scope of POM Cont

E) OPERATION CHALLENGES

a) Globalization and Environmental Protection

b) Social Responsibility

c) Technology Awareness

d) Knowledge Management

e) Industrial Safety and Security


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Why Should you study POM

A business education is incomplete without anunderstanding of modern approaches to managingoperations.

Operations management provides a systematic wayof looking at organizational processes.

Operations management presents interesting career

opportunities. The concepts and tools of OM are widely used in

managing other functions of a business.


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They are alloperations

Retail

operation

Back office

operation in

a bank

Take-out /

restaurant

operation

Kitchen unit

manufacturing

operation


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The operations function is fashionable!

The consultancy services market% of world revenues of 40 largest firms

Marketing/sales

2

Operations and process

management

31

Corporate strategy

17

IT strategy

17

Benefits/Actuarial

16

Organizational design11

Financial

6


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POM

Plan, design and operate production system / subsystems

that create and deliver the firms primary products and

services and to achieve organizational goals

Note that:

Operations management deals with process

Management in a broad, systems sense

Subsystems are operations too Multiple goals: efficiency, productivity, cost minimization


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Managers Need Knowledge Of

Production processes

Operations management processes

Decision making tools


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Analytical Tools Used In

Operations

Forecasting methods

Optimization models

Queuing analysis

Decision analysis

Simulation


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Operations Management as aOperations Management as a

FunctionFunction

Figure 1.3Figure 1.3


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Operations Management As aOperations Management As a

FunctionFunction Skill Areas Quantitative methods Organizational

behavior General management Information systems Economics International

business Business ethics

and law

Figure 1.3Figure 1.3


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The position of the operations function

Marketing Operations

ChurchCall onnewcomers

Manageappeals

Retranslatescriptures

Conductweddings

Advertise ontelevision

Paysuppliers

Designhamburgers

Makehamburgers

Sell tostores

Pay staffDesign newfurniture

Assemblefurniture

Identifyneeds

Raisecapital

Developproduct

Make anddistribute

Accounting

and finance

Product

development

Fast food

chain

Furniture

manufacturer

Process

perspective


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Continuum of CharacteristicsContinuum of Characteristics

More like amanufacturingorganization

More likea service

organization

Physical, durable product Output that can be

inventoried Low customer contact

Long response time Regional, national, or

international markets Large facilities Capital intensive

Quality easily measured

Intangible, perishable

product Output that cannot be

inventoried

High customer contact Short response time Local markets Small facilities Labor intensive

Quality not easily measuredFigure 1.4Figure 1.4


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Physical / Informational Output

Physical Outputs

Seller no longer owns

when sold

Replication requires

manufacturing

Output exists in single

location Wears Out

Informational Outputs

Seller continues to

possess after sale and

can sell again

Replication at negligible

cost and without limit

Output can exist inmultiple locations

simultaneously

Does not wear out


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The output from most types of operation is a

mixture of goods and services

Cr

udeoilproduction

Pure goodsTangible

Can be storedProduction precedes

consumptionLow customer

contactCan be transported

Quality is evident

IntangibleCannot be storedProduction andconsumption are

simultaneousHigh customer contactCannot be transportedQuality difficult to

judge

Pure services

Alumi

niumsmelting

Specialistm

achinetool

manufa

cturer

Restaurant

Computersystems

services

Ma

nagement

consultancy

Psychother

apyclinic


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Facilitating Good Concept

Often confusion in trying to classify

organization as manufacturer or service

Facilitating good concept avoids thisambiguity

All organizations defined as service

The tangible part of the service is defined asfacilitating good

Pure Services


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The Range From Services to

Products


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Classification and Evolution of

Economic Offerings


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Comparison of Alternative

Economic OfferingsEconomicOffering

Commodities Goods Services Experiences

Value added by Extracting Producing Delivering Staging

Form of output Fungible Tangible Intangible Memorable

Keycharacteristics

Natural Standardized Customized Personalized

Buyer Market User Client Guest


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A Typology of Operations

IMPLICATIONS IMPLICATIONS

High Low Visibility

High LowVariation in demand

High LowVariety

Low HighVolume

Time lag betweenproduction andconsumptionStandardized

Low contact skills

High staff utilization

CentralizationLow unit costs

Short waiting toleranceSatisfaction governed bycustomer perception

Customer contact skillsneededReceived variety is high

High unit cost

Changing capacity

Anticipation

FlexibilityIn touch with demand

High unit cost

FlexibleComplex

Match customer needs

High unit cost

Low repetition

Each staff member

performs more of jobLess systemization

High unit costs

Stable

Routine

Predictable

High utilizationLow unit costs

Well defined

Routine

Standardized

Regular

Low unit costs

High repeatabilitySpecialization

SystemizationCapital intensive

Low unit cost


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Japanese Production System

Quality comes first

Continuous improvement of products &

processes Eliminate all forms of waste

7 waste Concept is called LEAN


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Lean:

A systematic approach to identifying and eliminating waste {non-value-added activities) through continuous improvement in pursuit of

perfection by flowing the product at the pull of the customer.

Lean champion:

Subject matter expert in the tools of lean typically chosen to leadlean training, lean projects, and lean transformation.

Lean enterprise:

Any organization that continually strives to eliminate waste,reduce costs, and improve quality, on-time delivery, and service levels.

Understanding lean


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Lean production:

The opposite of mass production.

Muda:

A Japanese word, usually translated as waste, that refers to

those elements of production that do not add value to the product.


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Taiichi Ohno's original enumeration of the seven wastes plus

underutilized people. These are:

Eight wastes

1. Overproduction: Making more, "earlier, or faster than the next

operation needs it.

2. Waitingfor the next process, worker, material, information, or

equipment.3. Transportation: unnecessary transport of materials.

4. Over-processings of anything that does not add value.

5. Inventories more than the absolute minimum required to meet

customer demand. (KANBAN CARD)

6. Motion: unnecessary movement (like waiting) of people.7. Production ofdefective parts or information.

8. Not fully utilizing employees brain power, skills, experience,

talents and creativity.

Value- Added and


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Value Added andNonvalue- Added Steps

Value-Added Step:

Customers are willing to pay for it.

It physically changes the product.

Its done right the first time.

Nonvalue -Added Step: Is not essential to produce output.

Does not add value to the output.

Includes:

Defects, errors, omissions.

Preparation/setup, control/inspection.

Over- production, processing,inventory.

Transporting, motion, waiting, delays.


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Operations Management Today

Service economy

Environmental awareness


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D. Operations Management,

Productivity & Competitiveness

(1990-93) (1982-93)

Productivity Labor cost

growth (%) increase (%)

U.S. 2.5 16.1

Canada 2.4 16.2

Japan 1.8 123.9

Germany 1.2 100.8Sweden 4.2 26.3

U.K. 4.5 27.0


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Operations Management Uses

apply quality tools to tax work

project management used on merger

inventory theory for personal purchases

job design improves home chores

flexible spending accounts analyzed as

inventory models


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POM Models

Verbal Models- Express in words therelationship among variable a motorist asksyou to give directions for the nearest fast foodstation.

Schematic Pictorial relationship map

Iconic Physical replica of process eg arch

model of new building

Mathematical functional relationship amongvariables


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Productivity & Wastivity

Effectiveness of PM is measured by efficiency

through which the i/p are converted into o/p

Productivity output / input Standard / Actual Wastivity

1/Productivity

Amt of waste generated in the system. If we couldmeasure waste, then it becomes a tool for measuring

the efficiency of the i/p call wastivity


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Example of waste

Idling of resources material waiting in the

form of inventory in store, job order waiting to

be processed Production of Defective good and services


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Productivity problem In a manf unit the standard time allowed for the

production of a unit is 5 hrs. If in a particular month126 units are produced by employing 4 persons and theallowable delays are found to be 44 man hours, find the

productivity and wastivity Earned Standard Hrs 630 hrs

Std time 5hrs, prod 126 unit = 5x126=630hrs

Available Man hr = 756 hrs

Manpower emp 4 person, Monthly working hr 4x25x8=800 hrs

Allowed delay Actual Man hr 800-44 = 756

Productivity ESH/AWH = 630/756x100=83.3%

Wastivity 100-83.3 16.6%


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ERGONOMICS British term systematic study of how people

physically interact with the working environment, aswell as their equipment, facilities, and pdt.

Alternative name is human factor, becoz people differin size, age, there are significant design question thatmust be decided

Eg- AT&T Henry Dreyfuss designers created one ofthe first single unit mouth and ear telephone that wasused by both adult and kids

Ergonomics starts with physical efficiency, issue ofsafety and comfort


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Plant Layout & Location

Factory Place in which the factors of

production land, labour, capital and

enterprises are brought together for creation ofgood and service. The term plant layout is used

with factory layout


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Optimal Criteria for Selecting Plant location

Criteria is to achieve max ROI return on investmentover long run

ROI depends on Profit Margin and Investment Turnover

ROI (Average) = IT x PM

IT =~ long run investment PM= ~ long run profit margin

IT = SR / TA SR = Sales Revenue TA Total Assests PM = P / SR P = ~long run profit SR Sales Rev

ROI = (SR / TA) x (P / SR) = P / TA

P = SR TC were TC is Total Cost

SR depends upon the market and not location hence ROI isdirectly proportional to TC/TA

THUS, to MAX ROR, the location must be chosen so as to minimise the TA(land, building, equipment, material, cash) and TC (cost of material, transpcost, labour cost, conversion cost)


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Factors Affecting Facility Location

Nearness to raw material

Nearness to Markets

Availability of Labour Availability of Fuel and Power

Availability of Water

Climatic Conditions Government Policy

Land


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Factors Affecting Facility Location

Community Attitude

Security

Transport Facilities

Momentum of an early start

Personal Factors

Communication Facilities

Other Considerations


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Facility Location

Manufacturing

raw materials

labormarkets

Services

proximity to customers

Noxious facilities

remote locations


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Decision Stages & Factors

Affecting Facility Location

Identify set of alternatives

Reduce set using evaluation procedures

Hierarchy of decisionsregional

local

site


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Regional Decision

Market proximity

Proximity to raw materials

Availability of utilities

Labor supply & unionization

International locations also include

national taxes

legal restrictions


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Local Decision

Taxes

Economic incentives

Attractiveness of community

Compatible industry

Transportation network

Government policy & attitude

Environmental regulations


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Site Decision

Space for expansion

Proximity of other industry


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Planar Location

Median (Steiner-Weber) problem

travel time proportional to distance

Center-of-gravity problem

travel time proportional to squared distance

Min transportation cost


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Example

Locate facility to minimize distance to regionsin city

Customer Round Trips x y

Center i per Month Coord Coord1 30 1 4

2 50 2 5

3 20 3 3

4 60 3 65 30 5 2

6 40 7 4


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Formulation & Solution

x=3.48

[30(1)+50(2)+20(3)+60(3)+30(5)+40(7)]/[30+50+20+60+30+40]

y=4.00

[30(1)+50(5)+20(3)+60(6)+30(2)+40(4)]/[30+50+20+60+30+40]

Optimal solution

x= iw ix[ ] iw[ ], y= iw iy[ ] iw[ ]

Minimize iw ix x( )2 + iy y( )2

i=1

6


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Work Method

k h d


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Work Method

Construction of charts such as workers

machine charts, simulation charts and activity

charts, time study.

The choice of charts depends on

Production process

Workers at a fixed place

Workers interacting with equipment

Workers interacting with other workers

d i


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Production process - PP

Obj of studying PP is to identify delays, transport distance,

process.

Main philosophy is to eliminate any step that does not add value

to product

Process chart is prepared O Operation, Transportation,

Inspection, delay, storage

Ask foll question

What is done?, Must it be done? What would happen if not

done? Where is the task done? Must it be done at that location?

How is the task done?Can someone else do?


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Operation (an activitythat directly adds value)

Inspection (a check of

some sort)

Transport (a movement

of some thing)

Delay (a wait, e.g. for materials)

Storage (deliberate storage,

as opposed to a delay)

Process mapping symbols derived

from Scientific Management

Decision (exercising discretion)

Process mapping symbols derived

from Systems Analysis

Direction of flow

Input or Output from the process

Activity

Beginning or end of process


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Project Processes

One-off, complex, large scale, high workcontent products

Specially made, every one customized Defined start and finish: time, quality

and cost objectives

Many different skills have to becoordinated

Fixed position layout, resourcesbrought to product

Flow process chart for on day on an


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Flow process chart for on day on anadventure holiday

Flow process chart

Activity .. . Location .

Description of element

1 Get up

2 Go to washroom

3 Wash, brush teeth

4 Return to bedroom

5 Dress

6 Go to dining room

7 Await serving

8 Eat

9 Go to rifle range

10 Await instructor and equipment

11 Check equipment

12 Rifle shooting

T pes of Prod ction S stem (PS)


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Types of Production System (PS)

2 types = Continuous and Intermittent PS

CPS Continuous physical flow of material.

Standard pdts are manuf which are large in dd.

Standardized I/p and sequence of operations,

machine tools and equipment are used. Less

supervision, Possibility of Rigid Quality

Control

CPS are of two types- Mass production and

Process production

Mass and Process


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Mass and Process

Mass One type of product or max 2 or 3 type

of pdt are manf in large quantities and muchemphasis is not given to consumer order.

Process This system is used for manf those

items whose demand is continuous or high.Here single Raw material can be transformed

into different kinds of pdt a different stage of

the production. (oil refinery to kerosene,gasoline

Intermittent PS


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Intermittent PS Good are manf specifically to fulfill order by

customers rather than producing against stock.Eg switch gear

Two types Job and Batch production

Job production of a single complete unit byone operator or a group operators eg bridge

construction whole project considered as one

operation. Require skilled labour Batch Items are processed in lots. Printing

press


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Jobbing Processes

Very small quantities: one-offs, or only a few

required

Specially made. High variety, low repetition.

Strangers

Skill requirements are usually very broad

Skilled jobber, or team of jobbers complete wholeproduct

Fixed position or process layout (routing decided

by jobbers)


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Batch Processes

Higher volumes and lower variety than forjobbing

Standard products, repeating demand. Butcan make specials

Specialized, narrower skills

Set-ups (changeovers) at each stage of

production Process or cellular layout, predetermined

planned routing


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Mass (Line) Processes

Higher volumes than Batch

Standard, repeat products (runners)

Low and/or narrow skills

No set-ups, or almost instantaneous

ones

Cell or product layout: a fixed

sequence of operations


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Continuous Process

Extremely high volumes and low variety:often single product

Standard, repeat products (runners)

Highly captial-intensive and automated

Few changeovers required

Difficult and expensive to start and stop

the process Product layout: usually flow along

conveyors or pipes


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VolumeLow High VolumeLow High

Variety

Low

High

Variety

Low

High

Project

Jobbing

Batch

Mass

Contin-

-uous

Professional

service

Service shop

Mass service

Service process

types

Manufacturing process

types

Different process types are appropriate for different


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Volume-Variety combinations

High

Variety

Low

Low Volume High

Project

Jobbing

Mass

Continuous

Batch



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Volume-Variety combinations

High

Variety

Low

Low Volume High

Professional services

Mass services

Service shops

Pl t it


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Plant capacity

Capacity may be defined as the max or limitingcapability of a production unit to produce ina

specified period.

This is expressed in terms of o/p per unit oftime.

Measure of capacity different org used

different measure of capacity. Steel plant-tons,

beer cans produced, auto plant auto parts

Capacity Planning


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Capacity Planning

Designed capacity i.e maximum capacity that

a producing unit can produce under idealcondition.

Whenever the existing dd changes or addition

of new product has been made, then re-assessment of capacity at various stage ofproduction, depending upon the process details(i.e identifying ways of meeting desired

capacity through better utilization, higherefficiency, overtime, adding machinery orshifts


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Break-even Analysis

Production cost = fixed cost + (variable cost x output rate)

= FC + (VC x Q)

Revenue = revenue x units sold = p x Q

At break-even point Production cost = Revenue

Solve for break-even quantity, Q

Q = FC/ (p - VC)

LAYOUT TYPES


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LAYOUT TYPES LINE LAYOUT all equipment reqd for one part or pdt

are grouped together in one department in sequence ofthe operation performed higher rate of o/p as no

interruption, high division of work, less inspection,

lower material handling cost, better machine utilization

S, U, L shape Process / FUNCTIONAL LAYOUT The product is

fabricated by moving it from one dept to another dept

acc to sequence of operation to be performed ( high

degree of pdt can be manf, flexibility to change, mach

breakdown do

FMS Flexible Manf System


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FMS- Flexible Manf System

The age of mass prod is gone and era of

flexible prod is being started as competitive

world is there pdt introduced, phase out results

to lower order quantities.

Rapid intro of new pdt

Quick modification in pdt

Consistently Q Control

Ability to produce variety of pdt

Increase productivity

Saves labour cost

Shorter preparation time for new pdt.

plant layout location

Documents