Manufacturing Planning and

Control
Rajiv Gupta
BITS Pilani
August 2014
Lecture 1
 Session 1
• Module 1
– Introduction to Dr. Rajiv Gupta, faculty for MMZG 533
– Introduction to the course and guidelines to the course
• Module 2
– Manufacturing Context
• Module 3
– Manufacturing Performance Measures
• Module 4
– Evolution of Manufacturing
• Module 5
– Summary

2
 Session 1
• Begin Module 1
– Introduction to Dr. Rajiv Gupta, faculty for
MMZG 538
– Introduction to the course and guidelines for
the course

3
• Dr. Rajiv Gupta
Education:
B.Tech. M.E. I.I.T. Delhi
M.S. I.E. North Carolina State University
Ph.D. I.E. Purdue University
Taught at The State University of New York at
Buffalo, General Motors Institute, and the University of
Michigan, Dearborn in the U.S.
S.P. Jain Institute in Singapore and Dubai, FORE School of
Management, School of Inspired Leadership and BITS,
Pilani 4
Worked at Mahindra Logistics as Head of Solution
Design and Automotive Operations

Started and ran own Consulting Company as an

International Associate of Tompkins Associate of
Raleigh, North Carolina

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 Course Outline
• We will cover the topics related to Manufacturing
Planning and Control
• Text book: Operations Management For Competitive
Advantage, 11th ed. By Richard Chase, F. Robert
Jacobs, Nicholas J. Aquilano, and Nitin K. Agarwal, 2008
• Method of instruction: Taped lectures, live on-line
recitation sessions. In addition there will be additional
taped material that will be available
• Neither the text book, nor the lecture notes, nor the
lectures substitute for each other. You need all three to
learn about the subject.

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• It is the responsibility of the student to watch the
taped lectures, attend the recitations (or watch
taped), read the relevant chapters from the book
and other material that is made available.
• For any questions, doubts pertaining to the
subject matter, please send me an email at
[email protected],ac.in. For all
administrative questions, please call or write the
WILPD office at BITS Pilani. If you do not get a
satisfactory response please let me know.
7
• Assessment: There will be 2 exams and 2
on-line quizzes. The point breakdown will
be as follows:
– Mid-term exam (closed book) – 35%
– Final exam (open book) – 50%
– 2 on-line quizzes (open) – 15%

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• I expect you to keep regular with the
material covered in class and with the
readings as assigned. This is your
responsibility.

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 Session 1
• End of module 1

10
 Session 1
• Begin Module 2
– Manufacturing Context

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The Supply Chain
Customers

Distributors
Wholesalers Retailers
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(Manufacturing) is the process of buying materials fairly
and, with the smallest possible addition of cost, transforming
those materials into a consumable product and distributing
it to the consumer.

Henry Ford I in “My Life and Work”

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 Our Focus In the Course
• Our focus will be the manufacturing
component of the supply chain
• We will not be discussing external
transportation, purchasing, or distribution
systems
• Our concern will be the configuration of
the manufacturing system, its planning
and control

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 Traditional Role of
Manufacturing
• Traditionally, manufacturing has not been considered a
concern of corporate management, where finance and
marketing have tended to predominate
• However, manufacturing is becoming recognized as a
key part of a company’s ability to meet its strategic
objectives
• The strategic importance of manufacturing is being
understood by progressive management
• The need to configure manufacturing to match the
strategic objectives is vital

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 What Do the Customers Want
• Typically, customers of any kind of
business look for
– The right product, i.e., variety
– Consistent quality product
– Short lead times
– Affordable cost
• Manufacturing plays a key role in meeting
all the above needs

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 What Customers Look For
• Variety
– Although manufacturing does not get into market
research and product development and design,
modularization, the ability to produce in small batches,
scheduling, and inventory policies, impacts product
availability
– For example, at McDonalds, you can get a variety of
burgers, etc. in a short time because of the design of the
methods to prepare the food
– At Dell computers, you can get virtually any
configuration of computers assembled due to modular
structure and mass customization
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 What Customers Look For
• Quality
– Quality refers to consistency, features that customers
want, reliability, etc.
– Control over processes, small batch production and
rapid feedback prevents large quantities of defects
from being produced
– Standardized operations ensure consistency of
quality
– Restaurant chains such as McDonalds, Pizza Hut,
Haldiram have standard products and standard
operations to deliver consistency of product
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 What Customers Look For
• Short lead times
– Synchronized production with little in-process inventory
reduces waiting times for product and lead times that
customers have to wait
– Earlier it was thought that the best way to manufacture
was in large batches to obtain economies of scale. But
current approaches point toward single piece flow to
better match demand with supply
– When customization is expected, slightly longer lead
times are accepted, e.g., fast food vs. sit down
restaurants

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 What Customers Look For
• Affordable cost
– With a focus on eliminating unnecessary activities,
which constitute waste, the cost of manufacturing can
be reduced

Old Formula Selling price = Cost price + Profit

New Formula Profit = Selling price – Cost price

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 Session 1
• End of module 2

21
 Session 1
• Begin Module 3
– Manufacturing Performance Measures

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 Measures of Manufacturing
Performance

Output
Input
Manufacturing

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Two Measures of Manufacturing
• The two broad categories of measures to
consider in manufacturing are;
– How successfully have we achieved the goals we set
out to achieve, i.e., are we doing the right things? -
Effectiveness
– How well have we used the resources to achieve our
goal - Productivity
• According to Russell Ackoff, it is better to do the
right thing less well than to do the wrong things
very well
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 Productivity
• Productivity is defined as

Productivity = Output/Input

• Output is the number of units of the output

achieved
• Input can be the number of units of any of
the inputs used to achieve the output
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 Productivity
• A common measure of productivity is the number of
units of a product produced per hour of direct labor
• For example, consider that it takes 200 workers
working for an eight hour shift to produce 1000 units
of a finished product
• Output = 1000 units
• Input = 200*8 = 1600 hours
• Productivity = 1/1.6 units per direct labor hour
or 0.625 units per direct labor hour

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 Productivity
• We can compare the productivity of two different
manufacturers of the same product using different
number of labor hours to produce one unit
• For example, based on the Harbour Report, the number
of hours of labor/car in body, paint, trim,chassis and
assembly (Salaried+Hourly Direct Labor+Hourly Indirect
Labor) in 2005 and 2006 were

Ford Toyota Honda

2005 23.77 21.33 21.43
2006 23.19 22.05 21.13

Source: Harbour Report 27

 Productivity
• Comparisons can be made across companies,
for the same company in different years, etc. to
see how well the company is utilizing its
resources
• Also productivity can be measured in terms of
different input factors, such as investment, total
dollars spent, etc.
• In agriculture, for example, we can measure the
productivity per acre of land

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 Productivity Improvement
• Productivity of a process or a system can be improved
by either increasing the output, while not increasing the
input, or by reducing the input while keeping the output
constant.
• Some ways of improving productivity could be:
– Automation – by reducing physical effort in a task
– Eliminating waste in activities
– Training in better methods
• There may be other ways to improve productivity but we
have to be careful that it does not become a game of
mere numbers and there is real improvement in the
output per unit of input
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 Effectiveness
• Although effectiveness is considered a separate
measurement, without effectiveness, productivity means
nothing
• For example, manufacturing companies used to run long
production runs of parts on machines with long setup
times to get a high rate of productivity. This was because
while the machine was being setup, there was no
production. So reducing the number of setups would
increase the output and hence, productivity
• However, if there is no demand for the product, the
output is not saleable and the false measurement is
misleading
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 Efficiency
• The term efficiency is sometimes used interchangeably
with productivity
• However, efficiency has a very different meaning in
industrial engineering
• Efficiency = Actual output/Standard output
• Here the standard output is based on past experience,
time studies, etc.
• So if the standard output from a process is 100 pieces in
one shift and it produces 90 pieces, the efficiency of the
process will be 90%

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 Session 1
• End of module 3

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 Session 1
• Begin Module 4
– Evolution of manufacturing

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 Standardization
• The first major development in the development of mass
manufacturing was the development of standard,
interchangeable parts
• The person who is credited with this development is Eli
Whitney, the inventor of the cotton gin. Some people
claim Whitney did not invent interchangeable parts but
popularized them when he got a contract to supply
10,000 muskets for the army
• Among others who have contributed to the cause of
standardization are Frederick Taylor, Henry Ford, and
Frank and Lillian Gilbreth

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 Standardization
• Standardization allowed the introduction of measures of
performance and in the development of mass
manufacturing
• Frederick Taylor is considered to be the father of
standardized work and time study. He suggested that
there was an optimum way to perform each task and that
each worker needed to be trained in this method
• Taylor is often criticized for dictating the “one best way”
to do a task. However, Taylor, in his book “Scientific
Management” mentions that the best way can be
improved upon. This was the beginning of what we call
Continual Improvement
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 Standardization
• Henry Ford used the idea of interchangeable parts and
along with the moving conveyor, created mass
manufacturing
• Prior to that most products were made on benches
(bench assembly) with significant amount of wasted
movements and material handling
• Henry Ford was a staunch believer in productivity and
sharing the gains with the consumer. He simultaneously
doubled the wages of his workers and cut the prices of
his cars by half. He wanted to create a mass market for
the mass manufactured products

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 Growth
• With General Motors and other automotive companies
forming, there was significant growth in production
• With the growth came functional specialists such as
accountants, marketing, finance, etc.
• The development of these functional specializations
reduced the importance of manufacturing and distanced
the top management from the area that contributed to
the wealth of the organization
• Also, the functional specializations started to develop
their individual goals and aspirations, making the task of
ensuring that the customer got his product on time, and
at a reasonable cost, more complex
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 Manufacturing Evolution
• The leadership at General Motors, including Alfred
Sloan, were of the opinion that manufacturing companies
could be managed with the help of numbers alone and
that the top management of an organization did not need
to know or understand what happened on the shop floor
• This thinking has created several problems that plague
modern manufacturing as non-core areas have taken
center-stage and manufacturing personnel have been
distanced from the customer

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 Manufacturing Evolution
• Without manufacturing, however, you cannot have
wealth creation
• All other functions in an organization only help support
manufacturing
• The role of the other functions is more to distribute the
wealth among different players. They do not create
wealth in and of themselves
• After World War II, Japanese automobile industry,
learning from the US, developed an alternate approach
to management with manufacturing playing a central role

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 Current Manufacturing
• Currently manufacturing organizations have become
very large and complex, several of them existing as
multi-national conglomerates
• There is a great need to run the systems effectively so
that the ultimate purpose of the organizations, i.e.,
meeting the customer need, is done well and in a short
period of time
• We will be discussing several topics in this class related
to the planning, design, and control of manufacturing
operations

40
 Session 1
• End of module 4

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 Session 1
• Begin Module 5
– Summary

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 Summary of Session 1
• The focus of this course will be on the
manufacturing function
• Manufacturing needs to be well understood as it
plays a key role in our ability to meet our
customer demand in an effective and productive
manner
• Manufacturing has gone through a series of
changes, most dramatic of which have occurred
in the last 100 years.

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 Summary of Session 1
• Manufacturing has become global and, as a
result, more complex
• The challenge in the management of
manufacturing operations is to harness the
potential benefits of globalization while keeping
complexity to a minimum

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 Session 1
• End of module 5

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