Production and Operations Management
Production and Operations Management
R18A0328
Prepared by:
Dr. BORUKATI SANDHYA RANI
Assoc. Professor
UNIT I
Introduction to Operations Management:
Role of Operations Management in total management System- Process planning and
process design, Production Planning and Control: Basic functions of Production Planning and
Control, Production Cycle Project, Job Shop, Assembly, batch and Continuous - Inter
Relationship between product life cycle and process life cycle.
UNIT II
Scheduling and control of production operations:
Aggregate planning, Master Production schedule (MPS), Product sequencing: Sequencing of
products in multi- product multi-stage situations - Plant Capacity and Line Balancing.
Maintenance Management: Objectives Failure Concept, Reliability, Preventive and
Breakdown maintenance, Replacement policies
UNIT IV
Resource requirement planning: Resource requirement planning, material requirement
planning-manufacturing resource planning (MRP)-general overview of MRP- definitions of
terms used in MRP systems-MRP outputs and inputs-MRP computational procedure-
Enterprise Resource planning- scope, Benefits, applications.
UNIT V
Stores Management and materials handling:
Stores management nature of stores- store lay out-stock verification-classification and
codifcation - safety stock Inventory Control. Material handling:-organization of material
handling-factors affecting the selection of material handling equipment- types of material
handling system-selection of handling system.
REFERENCE BOOKS:
Course Outcomes:
1. The understand significance of POM, students able to Illustrate production planning
functions and manage manufacturing functions in a better way.
2. memorable competency in scheduling and sequencing in manufacturing operations
and effect affordable manufacturing lead time.
3. To apply the techniques of quality control and control inventory with cost
effectiveness.
4. Get conversant with various documents procedural aspects and preparation of
orders for various MRP and stores management.
5. Analyzed and applied various techniques in cost reduction.
OPERATIONS MANAGEMENT
Operation Management is a way or means through which the listed objectives of an operating
system is achieved. There is always a confusion between the word OM & PM (Production
Management). It is accepted norm that OM includes techniques which are enabling the
achievement of operational objectives in an operation system.
The operation system includes both manufacturing sector as well as service sector, but when you
use the word PM, you should be careful to note that it refers to the manufacturing sector but not
the service sector. Suppose, you are designing a layout for the hospital you should say that you
are applying Operations Management Technique not the Production Management Technique.
When you design a layout for a manufacturing sector you can say that you are applying
Production Technique or Operation Technique or vice versa. From, the above discussion we can
come to a conclusion that production management is a subset of Operations Management.
Operation managers are concerned with planning, organizing, and controlling the activities
which affect human behavior through models.
Planning
Activities that establishes a course of action and guide future decision-making is planning.
The operations manager defines the objectives for the operations subsystem of the organization,
And the policies, and procedures for achieving the objectives. This stage includes clarifying the
Role and focus of operations in the organization’s overall strategy. It also involves product
Planning, facility designing and using the conversion process.
Organizing
Activities that establishes a structure of tasks and authority. Operation managers establish a
Structure of roles and the flow of information within the operations subsystem. They determine
The activities required to achieve the goals and assign authority and responsibility for carrying
Them out.
Controlling
Activities that assure the actual performance in accordance with planned performance. To
Ensure that the plans for the operations subsystems are accomplished, the operations manager
Must exercise control by measuring actual outputs and comparing them to planned operations
Management. Controlling costs, quality, and schedules are the important functions here.
Behavior
Operation managers are concerned with how their efforts to plan, organize, and control affect
Human behavior. They also want to know how the behavior of subordinates can affect
Management’s planning, organizing, and controlling actions. Their interest lies in decision-
making behavior.
Customer service
The first objective of operating systems is the customer service to the satisfaction of customer
Wants. Therefore, customer service is a key objective of operations management. The operating
System must provide something to a specification which can satisfy the customer in terms of cost
And timing. Thus, primary objective can be satisfied by providing the ‘right thing at a right price
At the right time’.
Resource utilization
Another major objective of operating systems is to utilize resources for the satisfaction of
Customer wants effectively, i.e., customer service must be provided with the achievement of
Effective operations through efficient use of resources. Inefficient use of resources or inadequate
Customer service leads to commercial failure of an operating system.
Operations management is concerned essentially with the utilization of resources, i.e., obtaining
Maximum effect from resources or minimizing their loss, underutilization or waste. The extent
Of the utilization of the resources’ potential might be expressed in terms of the proportion of
Available time used or occupied, space utilization, levels of activity, etc. Each measure indicates
The extent to which the potential or capacity of such resources is utilized. This is referred as the
Objective of resource utilization.
Operations Management concern with the conversion of inputs into outputs, using physical
resources, so as to provide the desired utilities to the customer while meeting the other
organizational objectives of effectiveness, efficiency and adoptability. It distinguishes itself from
other functions such as personnel, marketing, finance, etc. by its primary concern for ‘conversion
by using physical resources’.
Operations management functions:
1. Location of facilities
2. Plant layouts and material handling
3. Product design
4. Process design
5. Production and planning control
6. Quality control
7. Materials management
8. Maintenance management.
1. Location of facilities
Location of facilities for operations is a long-term capacity decision which involves a long term
Commitment about the geographically static factors that affect a business organization. It is an
Important strategic level decision-making for an organization. It deals with the questions such as
‘Where our main operations should be based?’
The selection of location is a key-decision as large investment is made in building plant and
Machinery. An improper location of plant may lead to waste of all the investments made in plant
And machinery equipment’s. Hence, location of plant should be based on the company’s
expansion.
2. Plant layout and material handling
Plant layout refers to the physical arrangement of facilities. It is the configuration of
departments,
Work centers and equipment in the conversion process. The overall objective of the plant layout
Is to design a physical arrangement that meets the required output quality and quantity most
Economically.
3. Product design
Product design deals with conversion of ideas into reality. Every business organization have to
Design, develop and introduce new products as a survival and growth strategy. Developing the
New products and launching them in the market is the biggest challenge faced by the
organizations.
The entire process of need identification to physical manufactures of product involves three
Functions: marketing, product development, manufacturing. Product development translates the
Needs of customers given by marketing into technical specifications and designing the various
Features into the product to these specifications. Manufacturing has the responsibility of
selecting the processes by which the product can be manufactured. Product design and
development provides link between marketing, customer needs and expectations and the
activities required to manufacture the product.
4. Process design
Process design is a macroscopic decision-making of an overall process route for converting the
Raw material into finished goods. These decisions encompass the selection of a process, choice
Of technology, process flow analysis and layout of the facilities. Hence, the important decisions
In process design are to analyze the workflow for converting raw material into finished product
And to select the workstation for each included in the workflow.
5. PRODUCTION PLANNING AND CONTROL
Production planning and control can be defined as the process of planning the production in
advance, setting the exact route of each item, fixing the starting and finishing dates for each item,
to give production orders to shops and to follow up the progress of products according to orders.
The principle of production planning and control lies in the statement ‘First Plan Your Work
And then Work on Your Plan’. Main functions of production planning and control includes
Planning, routing, scheduling, dispatching and follow-up.
Planning is deciding in advance what to do, how to do it, when to do it and who is to do
It. Planning bridges the gap from where we are, to where we want to go. It makes it possible
For things to occur which would not otherwise happen.
Routing may be defined as the selection of path which each part of the product will follow,
Which being transformed from raw material to finished products. Routing determines the most
Advantageous path to be followed from department to department and machine to machine till
Raw material gets its final shape. Scheduling determines the programmed for the operations.
Scheduling may be defined as ‘the fixation of time and date for each operation’ as well as it
determines the sequence of operations to be followed.
Dispatching is concerned with the starting the processes. It gives necessary authority so
As to start a particular work, which has already been planned under ‘Routing’ and ‘Scheduling’.
Therefore, dispatching is ‘release of orders and instruction for the starting of production for any
Item in acceptance with the route sheet and schedule charts’.
The function of follow-up is to report daily the progress of work in each shop in a prescribed
Preform and to investigate the causes of deviations from the planned performance.
6. QUALITY CONTROL
Quality Control (QC) may be defined as ‘a system that is used to maintain a desired level of
Quality in a product or service’. It is a systematic control of various factors that affect the quality
Of the product. Quality control aims at prevention of defects at the source, relies on effective
Feedback system and corrective action procedure.
Quality control can also be defined as ‘that industrial management technique by means of which
Product of uniform acceptable quality is manufactured’. It is the entire collection of activities
which ensures that the operation will produce the optimum quality products at minimum cost.
The main objectives of quality control are:
To improve the companies income by making the production more acceptable to the
Customers i.e., by providing long life, greater usefulness, maintainability, etc.
To reduce companies cost through reduction of losses due to defects.
To achieve interchangeability of manufacture in large scale production.
To produce optimal quality at reduced price.
To ensure satisfaction of customers with productions or services or high quality level, to
Build customer goodwill, confidence and reputation of manufacturer.
To make inspection prompt to ensure quality control.
To check the variation during manufacturing.
7. MATERIALS MANAGEMENT
Materials management is that aspect of management function which is primarily concerned with
The acquisition, control and use of materials needed and flow of goods and services connected
With the production process having some predetermined objectives in view.
The main objectives of materials management are:
To minimize material cost.
To purchase, receive, transport and store materials efficiently and to reduce the related
cost.
To cut down costs through simplification, standardization, value analysis, import
substitution, etc.
To trace new sources of supply and to develop cordial relations with them in order to
Ensure continuous supply at reasonable rates.
To reduce investment tied in the inventories for use in other productive purposes and to
Develop high inventory turnover ratios.
8. MAINTENANCE MANAGEMENT
In modern industry, equipment and machinery are a very important part of the total productive
Effort. Therefore, their idleness or downtime becomes are very expensive. Hence, it is very
Important that the plant machinery should be properly maintained.
The main objectives of maintenance management are:
1. To achieve minimum breakdown and to keep the plant in good working condition at the
Lowest possible cost.
2. To keep the machines and other facilities in such a condition that permits them to be used
At their optimal capacity without interruption.
3. To ensure the availability of the machines, buildings and services required by other sections
Of the factory for the performance of their functions at optimal return on investment.
A process is described as a set of steps that result in a specific outcome. It converts input into
output. Process planning is also called manufacturing planning, material processing, process
engineering, and machine routing.
Process planning determines how the product will be produced or service will be provided.
Process planning converts design information into the process steps and instructions to
powerfully and effectively manufacture products.
1. First define the outputs, and then look toward the inputs needed to achieve those outputs.
2. Describe the goals of the process, and assess them frequently to make sure they are still
appropriate. This would include specific measures like quality scores and turnaround
times.
3. When mapped, the process should appear as a logical flow, without loops back to earlier
steps or departments.
4. Any step executed needs to be included in the documentation. If not, it should be
eliminated or documented, depending on whether or not it's necessary to the process.
5. People involved in the process should be consulted, as they often have the most current
information.
Major steps in process planning: Process planning has numerous steps to complete the project
that include the definition, documentation, review and improvement of steps in business
processes used in a company.
PROCESS DESIGN
Process design is concerned with the overall sequence of operations required to achieve the
product specifications. It specifies the type of work stations that are to be used, the machines and
equipment necessary and the quantities in which each are required.
Production planning and control the process of planning the production in advance.
Setting the exact route of each item and fixing the starting and finishing date for each
item is the key operation. Giving the production orders to different shops and observing
the progress of products according to order.
PRODUCTION CYCLE
The production cycle is a recurring set of business activities and related data processing
operations associated with the manufacturing of products. The first function of the AIS is to
support the effective performance of the organization’s business activities.
1. Product design
2. Planning and scheduling
3. Production operations
4. Cost accounting
1. Product design: The objective of this activity is to design a product that meets customer
requirements for quality, durability, and functionality while simultaneously minimizing
production costs.
2. Planning and scheduling: a production plan efficient enough to meet existing orders and
anticipate short-term demand without creating excess finished goods inventories.
3. Production operations: Every firm needs to collect data about the following four facets of its
production operations: 1. Raw materials used 2. Labor-hours expended 3. Machine operations
performsed 4. Other manufacturing overhead costs incurred
4. Cost accounting: three principal objectives of the cost accounting system? 1. To provide
information for planning, controlling, and evaluating the performance of production operations 2.
To provide accurate cost data about products for use in pricing and product mix decisions 3. To
collect and process the information used to calculate the inventory and cost of goods sold values
Every process inside a client's plant is unique and has special characteristics. Process technology
services are divided into process technologies and process engineering. The characteristics are;
1. The degree of automation of the technology: the ratio of technology to human effort it
employs is sometimes called capital intensity of the process technology.
2. The scale or scalability of the technology: the ability to shift to a different level of
useful capacity quickly and cost effectively.
PROJECT
A Project is a temporary endeavor (attempt with lot of effort) undertaken to create a unique
product, service or result.
Temporary means having a definite beginning and end. The end is reached when the project’s
objectives have been achieved, or if the project is terminated for any reason.
Temporary does not mean short in nature, and it could well be a mammoth project – like a 10
year project – for example, sending a man to moon, sending Curiosity to Mars, Building the Taj
Mahal or the Pyramids (I visited the amazing Pyramids today, as I am in Cairo this week to
conduct a series of corporate training in Egypt, and it was absolutely fantastic…)
Secondly, each project creates a unique product, service or result. Sure, there may be some
repetitive elements present in each project, but the output must be unique – like similar housing
projects in the same area with the same design may be similar, but each will have unique
challenges, different contractors, issues, etc. that will make them each unique.
JOB SHOP
A job shop is a type of manufacturing process in which small batches of a variety of custom
products are made. In the job shop process flow, most of the products produced require a unique
set-up and sequencing of process steps.
Examples of job shops include a wide range of businesses—a machine tool shop, a machining
center, a paint shop, a commercial printing shop, and other manufacturers that make custom
products in small lot sizes.
Routing
When an order arrives in the job shop, the part being worked on travels throughout the various
areas according to a sequence of operations. Not all jobs will use every machine in the plant.
Jobs often travel in a jumbled routing and may return to the same machine for processing several
times.
Employees
Employees in a job shop are typically highly skilled craft employees who can operate several
different classes of machinery. These workers are paid higher wages for their skill levels. Due to
their high skill level, job shop employees need less supervision.
Information
Information is the most critical aspect of a job shop. Information is needed to quote a price, bid
on a job, route an order through the shop, and specify the exact work to be done. Information
begins with quoting, then a job sheet and blueprint are prepared before the job is released to the
floor.
Scheduling
A job is characterized by its route, its processing requirements, and its priority. In a job shop the
mix of products is a key issue in deciding how and when to schedule jobs.
ASSEMBLY
A product life cycle is much broader and covers the entire life of the product and all it’s
revisions and enhancements until the product is ultimately retired.
The Product-Process Matrix. The process life cycle has been attracting increasing
attention from business managers and researchers over the past several years. Just as
a product and market pass through a series of major stages, so does the
production process used in the manufacture of that product.
S
UNIT – II
AGGREGATE PLANNING:
Aggregate planning' is a marketing activity that does an aggregate plan for the production
process, in advance of 6 to 18 months, to give an idea to management as to what quantity of
materials and other resources are to be procured and when, so that the total cost of operations of
the organization is kept to the minimum over that period.
Use a constant workforce & produce similar quantities each time period
Use inventories and back-orders to absorb demand peaks & valleys
Use inventories in better way to absorb the peak of demand and valleys
1. Planning for changes in demand months in advance ensures that the change of production
schedules can occur with little effort.
2. Aggregate production planning is a general approach to altering a company's production
schedule to respond to forecasted changes in demand.
A master production schedule (MPS) is a plan for individual commodities to be produced in each
time period such as production, staffing, inventory, etc. It is usually linked to manufacturing
where the plan indicates when and how much of each product will be demanded.
This plan quantifies significant processes, parts, and other resources in order to optimize
production, to identify bottlenecks, and to anticipate needs and completed goods. Since an MPS
drives much factory activity, its accuracy and viability dramatically affect profitability. Typical
MPSs are created by software with user tweaking.
The MPS translates the customer demand (sales orders, PIR’s), into a build plan using planned
orders in a true component scheduling environment. Using MPS helps avoid shortages, costly
expediting, last minute scheduling, and inefficient allocation of resources. Working with MPS
allows businesses to consolidate planned parts, produce master schedules and forecasts for any
level of the Bill of Material (BOM) for any type of part.
Give production, planning, purchasing, and management the information to plan and
control manufacturing
The overall business planning and forecasting to detail operations
Enable marketing to make legitimate delivery commitments to warehouses and customers
Increase the efficiency and accuracy of a company's manufacturing
Rough cut capacity planning
OPERATIONS SCHEDULING
Operations scheduling helps in the confirmation or the revision of the tentative delivery date that
has been promised in the original quotation. Sometimes during the operations scheduling of the
work order, it may be discovered that the delivery date originally and tentatively promised
cannot be met.
All this may be due to the several problems like the materials that are required may not be
available at that particular time or may not be available immediately. This problem can also
occur due to the increased plant loading while the customer is deciding whether or not to award
the quoted job to this company.
1. Performance standards
2. Unit of the measurement
3. Unit of the loading and the scheduling
4. Effective capacity per work centre
5. Extent of the rush orders
6. Overlapping of the operations
7. Loading charts
PRODUCT SEQUENCING
The product sequencing model is the evolution of knowledge to new product introductions over
time in technology intensive or operationally complex organizations.
Product sequencing is one way to reduce cost and improve product quality for multistage
manufacturing systems (MMS). However, systematically evaluating the influence of product
sequence on quality performance for MMS is still a challenge.
By considering the rate of incoming conforming product, manufacturing system quality
transition between batch to batch, and quality propagation along stages, this paper investigates
the appropriate batch policies and product sequencing for MMS so that satisfied quality
performance can be achieved.
PLANT CAPACITY Plant capacity is the maximum amount of production for a specific
production facility.
LINE BALANCING
Everyone is doing the same amount of work doing the same amount of work to customer
requirement. i.e Variation is ‘smoothed’, No one overburdened, No one waiting, Everyone
working together in a BALANCED fashion.
PLANT LAYOUT
Plant layout design has become a fundamental basis of today's industrial plantswhich can
influence parts of work efficiency. It is needed to appropriately plan and position employees,
materials, machines, equipment, and other manufacturing supports and facilities to create the
most effective plant layout.
Plant layout is the most effective physical arrangement, either existing or in plans of
industrial facilities i.e arrangement of machines, processing equipment and service
departments to achieve greatest co-ordination and efficiency of 4M’s (Men, Materials,
Machines and Methods) in a plant.
3. Proximity to Markets: Access to markets is an important factor which the entrepreneur must
take into consideration. Industries producing perishable or bulky commodities which cannot be
transported over long distance are generally located in close proximity to markets. Industries
located near the markets could be able to reduce the costs of transport in distributing the finished
product as in the case of bread and bakery, ice, tins, cans manufacturing, etc. Accessibility of
markets is more important in the case of industries manufacturing consumer goods rather than
producer goods.
4. Transport Facilities: Transport facilities, generally, influence the location of industry. The
transportation with its three modes, i.e., water, road, and rail collectively plays an important role.
So the junction points of water-ways, roadways and railways become humming centres of
industrial activity. Further, the modes and rates of transport and transport policy of Government
considerably affect the location of industrial units. The heavy concentration of cotton textile
industry in Bombay has been due to the cheap and excellent transportation network both in
regard to raw materials and markets.
5. Power: Another factor influencing the location of an industry is the availability of cheap
power. Water, wind, coal, gas, oil and electricity are the chief sources of power. Both water and
wind power were widely sought at sources of power supply before the invention of steam engine.
During the nineteenth century, nearness to coal-fields became the principal locating influence on
the setting up of new industries, particularly, for heavy industries. With the introduction of other
sources of power like electricity, gas, oil, etc. the power factor became more flexible leading to
dispersal and decentralization of industries.
6. Site and Services: Existence of public utility services, cheapness of the value of the site,
amenities attached to a particular site like level of ground, the nature of vegetation and location
of allied activities influence the location of an industry to a certain extent. The government has
classified some areas as backward areas where the entrepreneurs would be granted various
incentives like subsidies, or provision of finance at concessional rate, or supply of power a
cheaper rates and provision of education and training facilities. Some entrepreneurs induced by
such incentives may come forward to locate their units in such areas.
7. Finance: Finance is required for the setting up of an industry, for its running, and also at the
time of its expansion. The availability of capital at cheap rates of interests and in adequate
amount is a dominating factor influencing industrial location. For instance, a review of locational
history of Indian cotton textile industry indicates that concentration of the industry in and
around Bombay in the early days was mainly due to the presence of rich and enterprising Parsi
and Bhatia merchants, who supplied vast financial resources.
8. Natural and Climatic Considerations: Natural and climatic considerations include the level
of ground, topography of a region, water facilities, drainage facilities, disposal of waste products,
etc. These factors sometimes influence the location of industries. For instance, in the case of
cotton textile industry, humid climate provides an added advantage since the frequency of yarn
breakage is low. The humid climate of Bombay in India and Manchester in Britain offered great
scope for the development of cotton textile industry in those centres.
10. Strategic Considerations: In modern times, strategic considerations are playing a vital role
in determining industrial location. During war-time a safe location is assuming special
significance. This is because in times of war the main targets of air attacks would be armament
and ammunition factories and industries supplying other commodities which are required for
war. The Russian experience during the Second World War provides and interesting example.
11. External Economies: External economies also exert considerable influence on the location
of industries. External economies arise due to the growth of specialized subsidiary activities
when a particular industry is mainly localized at a particular centre with port and shipping
facilities. External economies could also be enjoyed when a large number of industrial units in
the same industry were located in close proximity to one another.
MAINTENANCE MANAGEMENT
The maintenance s managments knoledge and experinces if there is then will be the maintainance
s materials needed if itis ok then the badest manpower if they are active then experince
managments availability of maintainance materials then active manpower there will be no any
maintenance objectives what do you need more to run the maintenance department.
RELIABILITY
The ability of an apparatus, machine, or system to consistently perform its intended or required
function or mission, on demand and without degradation or failure.
TYPES OF MAINTENANCE
1. Breakdown maintenance
It means that people waits until equipment fails and repair it. Such a thing could be used when
the equipment failure does not significantly affect the operation or production or generate any
significant loss other than repair cost.
Breakdown maintenance
Breakdown maintenance is perhaps the least desirable of the three different types of maintenance
programs. This type of maintenance involves repairing or rebuilding the equipment, just as the
other maintenance programs. The trigger event, though, is the actual breakdown of the
equipment. Breakdown maintenance can be beneficial if it's used with preventive and predictive
maintenance. It may still be necessary, at times, to use breakdown maintenance as a program
when unexpected events take place. If it is the only type of maintenance in place, yet, it tends to
be the most costly option.
Replacement Policies
Basic to the implementation of virtual memory is the concept of demand paging. This means
that the operating system, and not the programmer, controls the swapping of pages in and out of
main memory as they are required by the active processes. When a non-resident page is needed
by a process, the operating system must decide which resident page is to be replaced by the
requested page. The part of the virtual memory which makes this decision is called
the replacement policy.
All replacement policies can be considered to fall into two broad categories in regards to the
timing of the replacement, as follows:
Listed below are some of the primary replacement strategies that can be applied to different
types of assets.
There are many approaches to the problem of deciding which page to replace but the object is the
same for all--the policy which selects the page that will not be referenced again for the longest
time.
Examples:
Quality control (QC) is a procedure or set of procedures intended to ensure that a manufactured
product or performed service adheres to a defined set of quality criteria or meets the
requirements of the client or customer.
QC is similar to, but not identical with, quality assurance (QA). QA is defined as a procedure or
set of procedures intended to ensure that a product or service under development (before work is
complete, as opposed to afterwards) meets specified requirements. QA is sometimes expressed
together with QC as a single expression, quality assurance and control (QA/QC).
In order to implement an effective QC program, an enterprise must first decide which specific
standards the product or service must meet. Then the extent of QC actions must be determined
(for example, the percentage of units to be tested from each lot). Next, real-world data must be
collected (for example, the percentage of units that fail) and the results reported to management
personnel. After this, corrective action must be decided upon and taken (for example, defective
units must be repaired or rejected and poor service repeated at no charge until the customer is
satisfied). If too many unit failures or instances of poor service occur, a plan must be devised to
improve the production or service process and then that plan must be put into action. Finally, the
QC process must be ongoing to ensure that remedial efforts, if required, have produced
satisfactory results and to immediately detect recurrences or new instances of trouble.
Quality Control Standards
ASTM's quality control standards provide the mathematical and statistical procedures
instrumental in the evaluation of experiments and test methods. These procedures encompass the
information-gathering stage of an experiment where variation is present, and includes the
probability sampling process, the determination of the precision and bias of an experiment, and
the measurement of the reliability and degree of uncertainty of test results and data. These
quality control standards help guide laboratories and their respective scientists and engineers in
the careful planning and design of experiments and test procedures.
A quality circle or quality control circle is a group of workers who do the same or similar
work, who meet regularly to identify, analyze and solve work-related problems. [1] Normally
small in size, the group is usually led by a supervisor or manager and presents its solutions
to management; where possible, workers implement the solutions themselves in order to improve
the performance of the organization and motivate employees. Quality circles were at their most
popular during the 1980s, but continue to exist in the form of Kaizen groups and similar worker
participation schemes.[2]
Typical topics for the attention of quality circles are improving occupational safety and health,
improving product design, and improvement in the workplace and manufacturing processes. The
term quality circles was most accessibly defined by Professor Kaoru Ishikawa in his 1988
handbook, "What is Total Quality Control? The Japanese Way" [3] and circulated throughout
Japanese industry by the Japanese Union of Scientists and Engineers in 1960. The first company
in Japan to introduce Quality Circles was the Nippon Wireless and Telegraph Company in 1962.
By the end of that year there were 36 companies registered with JUSE by 1978 the movement
had grown to an estimated 1 million Circles involving some 10 million Japanese workers.
Contrary to some people's opinion this movement had nothing whatever to do with Dr. W.
Edwards Deming or indeed Dr Juran and both were skeptical as to whether it could be made to
work in the USA or the West generally.
Quality circles are typically more formal groups. They meet regularly on company time and are
trained by competent persons (usually designated as facilitators) who may be personnel and
industrial relations specialists trained in human factors and the basic skills of problem
identification, information gathering and analysis, basic statistics, and solution
generation.[4] Quality circles are generally free to select any topic they wish (other than those
related to salary and terms and conditions of work, as there are other channels through which
these issues are usually considered).[5][6]
Quality circles have the advantage of continuity; the circle remains intact from project to project.
(For a comparison to Quality Improvement Teams, see Juran's Quality by Design.
Statistical quality control refers to the use of statistical methods in the monitoring and
maintaining of the quality of products and services. One method, referred to as acceptance
sampling, can be used when a decision must be made to accept or reject a group of parts or items
based on the quality found in a sample
In Chapter 5 we learned that total quality management (TQM) addresses organizational quality
from managerial and philosophical viewpoints. TQM focuses on customer-driven quality
standards, managerial leadership, continuous improvement, quality built into product and process
design, quality identified problems at the source, and quality made everyone’s responsibility.
However, talking about solving quality problems is not enough. We need specific tools that can
help us make the right quality decisions. These tools come from the area of statistics and are used
to help identify quality problems in the production process as well as in the product itself.
Statistical quality control is the subject of this chapter. Statistica1 quality control (SQC) is the
term used to describe the set of statistical tools used by quality professionals. Statistical quality
control can be divided into three broad categories: 1. Descriptive statistics are used to describe
quality characteristics and relationships. Included are statistics such as the mean, standard
deviation, the range, and a measure of the distribution of data.
Control Charts for Variables:
A number of samples of component coming out of the process are taken over a period of time.
Each sample must be taken at random and the size of sample is generally kept as 5 but 10 to 15
units can be taken for sensitive control charts.
For each sample, the average value X̅ of all the measurements and the range R are calculated.
The grand average X̅ (equal to the average value of all the sample average, X̅) and R (X̅ is equal
to the average of all the sample ranges R) are found and from these we can calculate the control
limits for the X̅ and R charts.
Techniques
Time study Predetermined motion time systems
Synthesis from elemental data Work sampling
The allowance was exactly what we had hoped for as this
made our budget work and go according to plan
INTRODUCTION TO MANAGEMENT
Management is defined as the creation and maintenance of an internal environment in an
enterprise where individuals working together in groups, can perform efficiently and
effectively towards the attainment of group goals.
Definition of Materials: Materials refer to inputs into the production
process, most of which are embodied in the finished goods being
manufactured. It may be raw materials, work-in-progress, finished
goods, spare parts and components, operating supplies such as
lubricating oil, cleaning materials, and others, required for maintenance
and repairs.
Definition on Material Management: Material management deals with
controlling and regulating the flow of materials in relation to changes in
variables like demand, prices, availability, quality, delivery schedules
etc.
Objects of materials management:
Minimization of materials costs
To reduce inventory for use in production process and to develop high
inventory turnover ratios.
To procure materials of desired quality when required, at lowest
possible overall cost of the country.
To reduce paper work procedure in order to minimize delays in
procuring materials.
To note changes in market conditions and other factors
Affecting the concern.
The purchase, receive, transport, store materials efficiently
To reduce cost, through simplification, standardization, value analysis
etc.
To conduct studies in new areas e.g., equality consumption and cost of
materials so as to minimize cost of production.
Characteristics of Management:
Setting goals for organizations: Goals differ from organization to organization in
business, the basic economic goal is to earn maximum profit, while in service
organization like hospital and educational institution for the basic goal is to
provide better service and better education.
VED stands for vital, essential and desirable. This analysis relates to the classification of
maintenance spare parts and denotes the essentiality of stocking spares.
The spares are split into three categories in order of importance. From the view-points of
functional utility, the effects of non-availability at the time of requirement or the operation,
process, production, plant or equipment and the urgency of replacement in case of breakdown.
Some spares are so important that their non-availability renders the equipment or a number of
equipment in a process line completely inoperative, or even causes extreme damage to plant,
equipment or human life.
On the other hand some spares are non-functional, serving relatively unimportant purposes and
their replacement can be postponed or alternative methods of repair found. All these factors will
have direct effects on the stocks of spares to be maintained.
FNSD Analysis FNSD analysis divides the items of stores into 4 categories in the descending
order of importance of their usage rate. 'F' stands for fast moving items that are consumed in a
short span of time. 'N' stands for normal moving items which are exhausted over a period of a
year
In FSN analysis, items are classified according to their rate of consumption. The items are
classified broadly into three groups: F – means Fast moving, S – means Slow moving, N – means
Non-moving. The FSN analysis is conducted generally on the following basis:
The last date of receipt of the items or the last date of the issue of items, whichever is
later, is taken into account.
The time period is usually calculated in terms of months or number of days and it pertains
to the time elapsed seems the last movement was recorded.
The items considered to be “active” may be reviewed regularly on more frequent basis.
Items whose stocks at hand are higher as compared to their rates of consumption.
Non-moving items whose consumption is “nil” or almost insignificant.
VALUE ANALYSIS
Value engineering or value analysis had its birth during the World War II Lawrence D. Miles
was responsible for developing the technique and naming it. Value analysis is defined as “an
organized creative approach which has its objective, the efficient identification of unnecessary
cost-cost which provides neither quality nor use nor life nor appearance nor customer features.”
Value analysis focuses engineering, manufacturing and purchasing attention to one objective-
equivalent performance at a lower cost.
Value Analysis Framework The basic framework for value analysis approach is formed by the
following questions, as given by Lawrence D. Miles:
Steps in Value Analysis In order to answer the above questions, three basic steps are necessary:
Identifying the function: Any useful product has some primary function which must be
identified a bulb to give light, a refrigerator to preserve food, etc. In addition it may have
secondary functions such as withstanding shock, etc. These two must be identified.
Evaluation of the function by comparison: Value being a relative term, the comparison
approach must be used to evaluate functions. The basic question is, ‘Does the function
accomplish reliability at the best cost’ and can be answered only comparison.
Cost reduction. Cost reduction is the process used by companies to reduce their costs and
increase their profits. Depending on a company's services or product, the strategies can vary. ...
Cost becomes more important when competition increases and price becomes a differentiator in
the market.
1. Economies of scale:
2. The experience effect
3. Location of production facility