production & material management

FOP?

Land Labor Capital Entrepreneur Organization

Work Of Production Manager?

Production planning Production control Inventory control Maintenance Replacement Cost control Work System Design

Functions of production management

To identified the new product. To design the new product. Process design and planning. Design of layout. Design of material handling system. Capacity planning. To forecast the demand. To find out the requirements of various FOP. To plan the production activities. To select and implement a method to produce a product. Production control. Inventory control. To carry out the maintenance activities as per schedule. Replacement. Cost control. Work system design. To arrange for various service such as maintenance, material handling, store keeping,

inspection and quality control. To utilize effectively the FOP.

Historical development in production management

Industrial revolution Post civil war period Scientific management Human relation and behaviorism Operation research Service revolution Computer revolution

Main features of Scientific management

Division of work Job analysis Time and work study Method study Functional and foremanship Standardization of work Scientific selection and Training of workers Piece rate and wage rate system

F. W. Taylor’s principles of scientific management

Fredrick Winslow Taylor(1856 – 1915)

1. Replacing rule of thumb with science

2. Harmony not discard

3. Maximum output, not restricted

4. Co – operation not individual

5. Training and development of workers

PRODUCTION DESIGN

Production design is the planning, Analysis and selection of

Material and input to be used Nature and type of machine to be used Amount and quality of labor to be used Manufacturing operation to be used

Need to design new product

Organization design new product due to following reasons.

To be in business for a long time. To satisfied the unfulfilled needs of the customers. If the existing product line become saturated. If the sales is on reject stage. If the company decide to enter new prospective business

through diversification. If there exists too much competition in the existing product line. Due to continuous change in technology.

Factors influencing product design

Customer’s requirement Facility to operators Functionality Trade off between functional and form Material requirement Work methods and equipments Cost Product quality Process capability standards

Characteristics of a Good Product Design

A good product design must ensure the following1. Function or performance2. Appearance or Aesthetics3. Reliability4. Maintainability5. Availability6. Productivity or manufacturability7. Simplification8. Standardization9. Specification10. safety

Stages in new product Development process

Step1: Idea GenerationStep2: Idea ScreeningStep3: Concept DevelopmentStep4: Concept TestingStep5: Market Strategy Development Step6: Business AnalysisStep7: Product DevelopmentStep8: Test MarketingStep9: Commercialization

Design Quality and Safety Responsibility

Company’s public responsibilities. Theory of strict liability. Have an exceptional impact. Affordable product repair, renovate. Prefer to repair a product rather than discard.

PROCESS DESIGN

Process design is a framework in which selection of the work stations and the flow analysis of

materials between the various department.It include:

1. Process planning

2. Selection of process

3. Process selection decisions

4. Process planning design

Process selection decisions

Market condition Capital requirement Labor Management skills Raw materials Technology

Process planning design

Identify the product or service Identify the Customer Identify the Supplier Identify the Process Mistake – proof the process Develop measurement, controls and

improvement goals

Service process design

In designing high quality service process, consider the following question:1. What service standards are already in place?2. Which of these standards have been clearly communicated to all service

personnel?3. Have these standards been communicated to the public?4. Which standards require refinement?5. What is the final result of the service provided? what should it ideally be?6. What is the maximum access time?7. How long should it take to perform the service itself?8. What is the maximum time to complete the service?9. At what point does service begin?10. How many different people must the customer deal?11. What components of services must be controlled?12. What products that affect its service performance?

Responsibilities of Process Planning Engineers

Interpretation of 1. Part print analysis

2. Symbols Gathering the fundamental details of product design1. Type of rough stock

2. Dimensional balance

3. Type of finish

4. Production rate

5. Production volume

6. Scrap losses

7. Down time

8. Design changes Selection of proper machinery with allied tooling based on1. Required machine capability

2. Setup time

3. Practical lot size

4. Quality of parts

5. Cost and types of tooling

Steps in process planning

Selection of process1. Delivery schedule

2. Availability of machine

3. Quantity

4. Quality

Selection of material Selection of skip stuff etc. Time calculation Process sheet1. Requirement of men, machine, material.

2. Time required for manufacturing the products.

Process Sheet

Process Sheet

Part description- Part No.-

Drg. No.- Assembly No.-

Matl. Specification- Issued by-

Lot Size-

S .No.

Description of operation

M/C code

Tool Code

Labor code

Speed Feed/supply

Set up time

Standard time

Example: The process planner of a firm listed down the sequence of operations, as shown in the following table to produce a product.

Sequence of operation

Process sequence

1. Cutting-milling- drilling-welding

2. Cutting-drilling-welding

3. All operations are performed with CNC machine

The detail of process time for the components for various operation and their machine hour rates are tabulated below.

Operations Machine (min.) / rate (Rs.)

Process sequence

1. 2. 3.

Cutting 250 6 4 -

milling 300 8 - -

drilling 400 4 5 -

welding 360 6 7 -

CNC machine 900 - - 12

Find the most economical sequence of operations to manufacture the product.

Solution:

(a) Cost of product using process sequence 1

Cutting Milling Drilling Welding

The calculation for the cost of the above process sequence are summarized in the table.

Working for process sequence 1

Operation No.

Operations Time Machine Hr. rate(Rs.)

Cost (Rs.)

Min.

Hr.

1 Cutting 6 0.100 250 25.00

2 Milling 8 0.133 300 39.90

3 Drilling 4 0.067 400 26.80

4 Welding 6 0.100 360 36.00

Total 127.70

(b) Cost of product using process sequence 2

Cutting Drilling Welding



Operation No.


Cost (Rs.)

Min.

Hr.

1 Cutting 4 0.066 250 16.50

2 Drilling 5 0.083 400 33.20

3 Welding 7 0.116 360 41.76

Total 91.46

(c ) Cost of product using process sequence 3

CNC Operation only



Operation No.


Cost (Rs.)

Min.

Hr.

1 CNC operation

12 0.200 900 180.0

The process sequence 2 has the least cost (Rs. 91.46) therefore it should be selected for manufacturing the product.

Scientific Methods for Process Improvement

The steps are involved in the scientific method of process improvement.

they are:

1. Identify and define the Problem

2. Study the existing situation

3. Collect the necessary data

4. Generate possible solution alternative

5. Evaluate the alternative and choose the preferred one

6. Implement the improvement and measure the results

CAPACITY PLANNING?

Capacity plans are made of two levels.

Based on time horizon Long term capacity planning Short term capacity planning

Based on amount of resources employed Finite capacity planning Infinite capacity planning

The Factors that affects in determining the plant capacity

Market demand for the product. Capacity investment required. Level of automation desired. Type of technology selected. Changes in product design, process design, market conditions

and product life cycles.

The Need Of Capacity Planning

Capacity planning is necessary when the organization decided:-

1. To increase its production.

2. To introduce new product.

3. To increase the volume of production.

4. To gain the advantages of economics of scale.

Problems in Capacity Planning

A department works on 8 hours shift, 250 days a year has the usage date, of a machine given below.

Determine the number of machine s required?

Solution: calculate the processing time needed in hours to produce product X, Y and Z in the quantities demanded using the standard time data.

Product Annual demand Processing time (in hr.)

X 300 4.0

Y 400 6.0

Z 500 3.0

Product Annual demand

Processing time (in hr.)

Processing time needed

(Hr.)

X 300 4.0 1200

Y 400 6.0 2400

Z 500 3.0 1500

1200 Units Total 5100Hrs.

Total 5100 Hrs. are required to produce 1200 Units

Annual production capacity of one machine is (in standard hrs.) = 8hr./days * 250 days

= 2000 hrs. per year

Hence Number of Machines required = Workload per year in hrs.

Production capacity per machine in hrs.

= 5100/2000

= 2.55

≈ 3 machines

Ex.2 A firm operates 6 days a week on single shift of 8 hours per day basis. There are 10 machines of the same capacity in the firm. If the machines are utilized for 75% of the time at a system efficiency of 80% , what is the rated output in terms of standard hours per week?

Solution:

Maximum number of hr. of work possible per week

= No. of machine * machine hrs worked per week

= 10*6*8

= 480 hrs.

If the utilization is 75% then number of hrs worked

= 480 hrs. * 0.75

= 360 hrs.

Rated output = utilized hrs * System efficiency

= 360 hrs * 0.8

= 288 Standard hrs.

Ex.3 A TV assembly unit has 5 work stations whose individual capacities per shift are given below. The capacity of the assembly line is 350 TVS per day of single shift . Calculate the system capacity and system efficiency?

Solution:

System capacity is the maximum, the system can generate without bottleneck.

hence it is equal to the least of the sub assembly capacities i.e.

the picture tube and the final inspection.

System Capacity = bottleneck = 400TV’s / days

Actual Output of TV’s = 350Per day of one shift

Actual output *100

System Efficiency = System capacity

= (350/400)*100

= 87.5%

Sub Assembly Cabin Picture Tube Speaker Final Assembly

Inspection

Individual Capacity

550 400 500 450 400

When to take Make Or Buy Decision

The following situations demand for the evaluation of make or buy decisions:

1. When the organization introduces new products.

2. The fluctuating demand for the company’s products.

3. When the organization carries out value analysis or cost reduction programs.

4. Failing quality and delivery commitment of the supplier if presently the item is brought.

5. The shortage of funds for investment in additional plant and equipment.

Various factors that influence make or buy decision

1. Volume of production

2. Cost analysis

3. Utilization of production capacity

4. Integration of production system

5. Availability of manpower

6. Secrecy or protection of patent, right

7. Fixed cost

8. Availability of competent suppliers or vendors

9. Quality and reliability of vendors

Breakeven analysis

Decision on whether to make or buy is mainly affected by the cost factor. We have to compare the cost of the manufacturing and the cost of the buying the require quantity of the products. The cost of producing is calculated as follows.

In the business organization, for manufacturing a product, there are mainly two cost namely, fixed cost and variable cost. The sum of these two cost is known as the total cost of the product.

Units of sales per period

A

B

C

Loss

Profit

TC

VC

FC

Problems in Make or Buy Decisions

An automobile company has extra capacity that can be used to produce gears that the company has been buying for Rs. 300 each. if the company makes the gears. It will incur material cost of Rs 90 per unit, labor cost of Rs.120 per unit and variable overhead cost of Rs. 30 per unit. The annual fixed cost associated with the unused capacity is Rs. 2,40,000. demand over the next year is estimated at 4000 units.

(i) What it would be profitable for the company to make the gears?

(ii) Suppose the capacity could be used by another department for the production of some agricultural equipment that would cover its fixed cost and variable cost and contribute Rs. 90,000 to profit. Which would be more advantageous, gear production or agricultural equipment production?

Solution:

(i) In this part, we assume that the unused capacity has alternative use.

Cost to Make

Variable cost /unit = material cost + labor cost +overhead cost

= Rs. 90 +Rs. 120 +Rs. 30

= Rs. 240

Total variable cost =(4000 units)*(240per unit)

= Rs. 960,000

Fixed cost = Rs. 240,000

Total cost =Rs.1,200,000

Cost to BuyPurchase cost =(4000 unit)*(Rs.300per unit) = Rs. 1,200,000Fixed cost =Rs. 240,000Total cost =1,440,000Therefore cost of making the gears is less than that of buying the gears from outside. Hence making the gears is advantageous.

(ii) In this section the company has the following alternatives a) Making the gears within the companyb) Buy the gears from an outside suppliers and utilize the existing capacity of the company to manufacture agricultural equipment

The cost calculation for each of the above alternatives is summarized in the following table:

Make Gears Purchase Gears and make agricultural Equipments

Total Variable cost (Rs.) 960,000 1,200,000

Fixed cost (Rs.) 240,000 0

Total cost (Rs.) 1,200,000 1,200,000

Contribution to profit 0 90,000

Net relevant cost 1,200,000 1,110,000

From the above table it is clear that the net cost of the second alternative is less than that of the first alternative. Hence it is advisable to produce agricultural equipment using the existing capacity of the company and buy the gears from a supplier.

PLANT LOCATION

Various factors to decide new locations are:

1. Demand

2. Availability of materials

3. Availability of transports

4. Supply of materials

5. Market position

6. Government policies

7. Cost and supply of labor

8. Policy of industries

Stages in facility Location Decisions

There are four stages in facility location decisions:

Stage 1: Selection of a country

Stage 2: Selection of a general territory or region

Stage 3: Selection of a community

Stage 4: Selection of a particular site

Various factors in selection of a country

1. The political situation of the country

2. Government trade polity

3. Government industrial policy

4. The economical conditions of the country

5. Infrastructure facilities

6. Availability of labor and cost of labor

7. Market conditions

8. Availability of competitions

9. Natural calamities

Various factors in selection of a region

1. Local government

2. Industrial policy

3. Availability of labor

4. Market

5. Cost of labor

6. Sources of raw materials

7. Basic infrastructure facilities

8. Climatic conditions

9. Taxation and laws

Various factors in selection of a community

1. Availability of labor

2. Community attitude

3. Social structure

4. Services facilities

Various factors in selection of a particular site

1. Cost of the land

2. Availability of the land

3. Suitability of the land

Note: These factors also influence the selection of the site selection.

Comparison between Urban and Rural Location

Urban Location Rural Location Good transport facilities Poor transport facilities Availability of skilled and Trained manpower Unavailability of skilled and Trained manpower Less distribution and transportation cost Distribution cost and transportation cost is high Availability of good communication network Poor communication network facilities Good educational, recreational and medical facilities are available Poor educational, recreational and medical facilities are available Adequate storage facilities like warehouse Inadequate storage facilities like warehouse Availability of service consultants, training institute and trainers Unavailability of service consultants, training institute and trainers Excellent sub contracting facilities Less sub contracting facilities Availability of more suppliers in and around by Less number of suppliers will be are found Cost of land is very high Cost of land is very cheap Sufficient land may not be available for future expansion Sufficient land may be available for future expansion Cost of living is very high Cost of living is very less Cost of labor is high Cost of labor is cheap Difficult to get skilled labor due to more demand Easy to get more unskilled labors Industrial interest due to trade union activities No any Industrial interest due to less trade union activities High labor tern over due to batter opportunities Less labor tern over due to less opportunities Municipal and other authority restrictions on buildings Municipal and other authority are not restrictions on buildings Polluted environment Free from Environment pollution

ROI Method to select the best site

This method is based on the economics of various sites or Rate of return

ROI = Total revenues – Total expenses

Total investment

OR

If the value of Merit of M > 1 , Select the site N otherwise if < 1 ,

Merit of N

Select the site M.

Ex. An ABC company intends to select one of the three locations – both tangible and intangible factors collected by the expert is given below

Particulars Sites

A B C

Total investment in land building, plant and Machinery (Rs.)

250 325 270

Revenues 410 515 360

Expenses on raw material 89 100 98

Distribution cost 40 60 25

Expenses on utilities 50 40 25

Wages & Salary 25 30 28

Community facilities Indifferent Good Bad

Community attitude Indifferent Good Indifferent

Using ROI method select the best site?

Solution: Calculation of ROI for the three alternatives

Particulars Sites

A B C

Total investment in land building, plant and Machinery (Rs.)

250 325 270

Revenues 410 515 360

Expenses on raw material 89 100 98

Distribution cost 40 60 25

Expenses on utilities 50 40 25

Wages & Salary 25 30 28

Total Expenses 204 230 181

ROI in % 82.4% 87.6% 66.29%

Comparison of Service and Manufacturing Considerations

MANUFACTURING SERVICES Customer access Parking

Traffic volume Patterns

Building Leasing costs

Competition Competition

Labor cost Availability/skills

Population Drawing area

Energy availability Costs Demographics: age,income,etc

Transportation modes Costs

Revenue focus Cost Focus

Global Locations

Reasons for globalization Benefits Disadvantages Risks Global operations issues

Globalization

Facilitating Factors – Trade agreements – Technology

Benefits – Markets – Cost savings – Legal and regulatory – Financial

Disadvantages – Transportation costs – Security – Unskilled labor – Import restrictions – Criticism

Globalization

Risks – Political – Terrorism – Legal – Cultural

Globalization

Location Cost-Volume Analysis

Assumptions – Fixed costs are constant – Variable costs are linear – Output can be closely estimated – Only one product involved

Evaluating Locations

Transportation Model – Decision based on movement costs of raw

materials or finished goods

Factor Rating – Decision based on quantitative and qualitative

inputs

Center of Gravity Method – Decision based on minimum distribution costs

Layout Types

– Product layout or line layout – Group layout or combination layout – Fixed layout – Process layout or functional layout

The Plant Layout KEYWORDS

1. Raw material Storage

2. Product Storage

3. Process Site

4. Laboratories

5. Workshop

6. Canteen & Change house

7. Fire Brigade

8. Central Control Room

9. Security office

10. Administrative Building

11. Site for Expansion Project.

12. Effluent treatment plant

13. Power house

14. Emergency water storage

15. Plant utilities

Facility Layout

• Developing a facilities layout is a critical step in the facilities planning process.

• Facilities Planner must be CREATIVE and

COMPREHENSIVE in generating layout

alternatives.

Layout is effected by:

Centralized vs. Decentralized Storage of WIP,

Tooling, & Supplies Fixed Path vs. Variable Path Handling Unit Load Size Degree of Automation Type and Level of Inventory and Control of

Materials

PRINCIPLES OF PLANT LAYOUT

Principle of integration: a good layout is one that integrate men, machines and materials and supporting services in order to make optimum utilization of resources.

Principle of cubic space utilization: the good layout is one that utilize all the three dimension i.e. horizontal space (floor space), vertical space and overhead space.

Principle of flow: A good layout is one such that material should flow or move in a forward direction and there should not be any back tracking.

Principle of minimum distance: this principle is concern with the minimum movement of men, materials and material handling equipments. as far as possible straight line movement should be preferred.

Principle of maximum flexibility: a good layout is one that can be altered without much cost and time. The layout should be highly flexible in enough in order to overcome the changes that takes place in future.

Principle of safety, security and satisfaction: a good layout is one that gives due consideration to workers safety and satisfaction and safeguards the plant and machinery against fire, theft etc.

Handling and Storing“Work-In-Process”

Issues

– Centralized versus decentralized storage

– Shop floor control and material tracking

– Reduced WIP inventory levels

– Controlled material movement to production areas

– Reduced damage due to handling and storage

– Automatic encoding of production data

– "Just-in-time" production

– Increasing levels of automation: CAE, CAD,CAM, MRP, RTIC, CAPP

– Rapid tool changing for minimizing setups and reducing lot sizes

Handling and Storing“Work-In-Process

• In-process handling includes movement of material, tooling, and supplies to and from

production units, as well as handling at the workstation.

• In-process storage includes the storage of material, tooling, and supplies needed to support production. Typically, applies to material in a semi finished state of production.

Raw

Materials

Work-in-process

Finished

Goods

Handling and Storing“Work-In-Process

• Rules of Thumb– Handling less is best

– Maintain physical control of materials

– Eliminate, combine, and simplify

– Moving and/or storing material incurs costs.

– Pre-position material

• Design requirements for WIP handling system– Establish control requirements

– Determine process flow methods

– Establish inventory points and levels

– Consider workplace layout

– Determine load increment and container design

– Evaluate WIP storage methods

– Determine distribution method

– Design control system

Objectives of material handling

Material handling have to focus on the following primary and secondary objectives:-

Primary objectives: To save and assist personnel by making material handling safer and easier through better method and equipment. To save materials. To save time by speeding up operations.

Secondary objectives: To enhance the performance of machines. To reduce damage in materials. To efficiently use the storage of space. To reduce work in process. To increase the turnover of the material by accelerating its flow. To minimize distance through which materials is to be moved. To improve the working conditions. To enhance the morale of the personnel.

Which comes FIRST, the material handling

System

or

the facilities layout?

BOTH

Layout or MHS First ?

BECAUSE: Sequential approach that considers a number of alternative handling systems and the corresponding layout alternatives.

JOB DESIGN

production & material management

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