PRODUCTION & OPERATION MANAGEMENT

DEFINITION (POM)
Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firms primary products and services

POM concerns itself with the conversion of inputs into outputs, using physical resources, so as to provide utilities, place, possession or state or a combination of these to customer while meeting the other organizational objectives of effectiveness, efficiency and adaptability.
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 2

Value-Added Service Categories

Problem Solving

Information

Operations Management

Sales Support

customization
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 3

Production Vs Operation Management

Production Management Operation Management

focused upon administration, planning and execution of production process

concerned with input/output and churning out products in the shape of desired finished product.

Historical Development of OM

TANGIBILITY SPECTRUM
Salt

Soft Drinks Detergents Automobiles Cosmetics Fast-food Outlets

Intangible Dominant

Tangible Dominant

4/1/2014

Fast-food Outlets Advertising Agencies Airlines Investment Management Consulting Teaching

GOODS & SERVICES MIX

0 100

90 80
70 50

30

70

60
100 50 40 100

70 50
30

30
20

10 0 0
Tangible goods goods+ services equal share of goods & services services + minor goods Pure services

services

goods

4/1/2014

Differences Between Goods and Services

Intangibility Heterogeneity

Simultaneous Production and Consumption

4/1/2014

Perishability

IMPLICATIONS OF INTANGIBILITY
Services cannot be inventoried

Services cannot be patented

Services cannot be readily displayed or communicated Pricing is difficult
4/1/2014 9

IMPLICATIONS OF HETEROGENEITY
Service delivery and customer satisfaction depend on

employee actions
Service quality depends on many uncontrollable

factors
There is no sure knowledge that the service delivered

matches what was planned and promoted

4/1/2014

10

Implications of Simultaneous Production and Consumption Customers participate in and affect the transaction
Customers affect each other

Employees affect the service outcome

Decentralization may be essential

Mass production is difficult

4/1/2014 11

IMPLICATIONS OF PERISHABILITY
It is difficult to synchronize supply and demand with services Services cannot be returned or resold

4/1/2014

12

SERVICES ARE DIFFERENT

Goods
Tangible

Services
Intangible

Resulting Implications
Services cannot be inventoried. Services cannot be patented. Services cannot be readily displayed or communicated. Pricing is difficult.

Standardized

Heterogeneous Service delivery and customer satisfaction depend on employee actions. Service quality depends on many uncontrollable factors. There is no sure knowledge that the service delivered matches what was planned and promoted. Simultaneous production and consumption Customers participate in and affect the transaction. Customers affect each other. Employees affect the service outcome. Decentralization may be essential. Mass production is difficult. It is difficult to synchronize supply and demand with services. Services cannot be returned or resold.

Production separate from consumption

Nonperishable Perishable

Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Problems and Strategies in Services Marketing, Journal of Marketing 49 (Spring 1985): 33-46.

Operations Strategy @ Global Level

Corporate Mission
Business Strategy Product/service Plans

Operation Strategy

SWOT

Competitive Priorities- Cost, time, Quality & flexibility Operation Strategy

4/1/2014 PRODUCTION & OPERATION MANAGEMENT 14

THREE INPUTS TO A BUSINESS STRATEGY

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

15

BUSINESS/FUNCTIONAL STRATEGY

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

16

OPERATIONS STRATEGY DESIGNING THE OPERATIONS FUNCTION

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

17

IMPORTANCE OF OPERATIONS STRATEGY

Companies often do not understand the differences between operational efficiency and strategy
Operational efficiency is performing tasks well, even better than competitors Strategy is a plan for competing in the marketplace

Operations strategy is to ensure all tasks performed are the right tasks
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 18

COMPETITIVE PRIORITIES- THE EDGE

Four Important Operations Questions: Will you compete on Cost? Quality? Time? Flexibility? All of the above? Some? Tradeoffs?
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 19

COMPETING ON COST?
Offering product at a low price relative to competition

Typically high volume products

Often limit product range & offer little customization May invest in automation to reduce unit costs Can use lower skill labor Probably use product focused layouts

Low cost does not mean low quality

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

20

COMPETING ON QUALITY?
Quality is often subjective Quality is defined differently depending on who is defining it Two major quality dimensions include
High performance design:
Superior features, high durability, & excellent customer service

Product & service consistency:

Meets design specifications Close tolerances Error free delivery

Quality needs to address

Product design quality product/service meets requirements Process quality error free products
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 21

COMPETING ON TIME?
Time/speed one of most important competition priorities

First that can deliver often wins the race

Time related issues involve
Rapid delivery:
Focused on shorter time between order placement and delivery

On-time delivery:
Deliver product exactly when needed every time
PRODUCTION & OPERATION MANAGEMENT

4/1/2014

22

COMPETING ON FLEXIBILITY?
Company environment changes rapidly Company must accommodate change by being flexible
Product flexibility:
Easily switch production from one item to another
Easily customize product/service to meet specific requirements of a customer

Volume flexibility:
Ability to ramp production up and down to match market demands
PRODUCTION & OPERATION MANAGEMENT

4/1/2014

23

CURRENT ISSUES IN OM
Coordinate the relationships between mutually supportive but separate organizations.

Optimizing global supplier, production, and distribution networks.

Increased co-production of goods and services

Managing the customers experience during the service encounter

Raising the awareness of operations as a significant competitive weapon Managing the customers experience during the service encounter Raising the awareness of operations as a significant competitive weapon
4/1/2014 PRODUCTION & OPERATION MANAGEMENT

24

Career Perspective & Job Role & Responsibilities

Career in every Industry- retail, banking, Real estate, manufacturing (cement, FMCG, apparel etc) prepares program budgets, facilitates several programs around the company, controls inventory, handles logistics, and interviews and supervises employees.
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 25

Productivity
American Productivity: A double edged sword (2008-09)
Law Firm-24 recruitments (Required 48) Rescind joining by year @ low salary Americans are most productive. 1920 working hours (240 working days/year) 122 working hours (Britain), 378 working hours(Germans) Results: Living standard, employment rate,

Productivity
Textile Industry: In 1950s one worker taking care of 5 machines at a time. In 2010s one worker can take care of 100 machines @ a time. Productivity:120 fold increase in productivity. Egg laying Operation: In 2010s 2 worker can manage 1 mn chickens laying 240 mn eggs/yr. Result: Higher standard of living.

MEASURING PRODUCTIVITY
Productivity is a measure of how efficiently inputs are converted to outputs
Productivity = output/input

Total Productivity Measure

Total Productivity = $sales/inputs $

Partial Productivity Measure

Partial Productivity = cars/employee

Multifactor Productivity Measure

Multi-factor Productivity = sales/total $costs

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

28

NUMERICAL
Productivity Example - An automobile manufacturer has presented the following data for the past three years in its annual report. As a potential investor, you are interested in calculating yearly productivity and year to year productivity gains as one of several factors in your investment analysis.
2003 2002 2001 2003 2002 2001 Partial Prod. Measure Unit Car Sales/Employee 24.1 21.2 18.3 Employees 112,000 113,000 115,000 Year-to-year Improvement 13.7% 15.8% Total Cost Productivity 1.26 1.24 1.19 4.2%

Unit car sales

2,700,000

2,400,000

2,100,000

$ Sales (billions$) Cost of Sales (billions)

4/1/2014

$49,000

$41,000

$38,000

Year-to-year Improvement 1.6% $39,000 $33,000 $32,000 Which is the best measurement?

PRODUCTION & OPERATION MANAGEMENT

29

PRODUCTIVITY EXAMPLE

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

30

It took 500 hrs of labor to produce 200 units of a product. The product sells for $160 each. Total labor cost is $14/hr on the average. Material cost is $30/unit. Compute final productivity and productivity/hr.

Solution: Here are two from many ways to compute productivity: Total output = 200 units x $160/unit = $32,000 Total input = 500 hrs x $14/hr + 200 units x $30/unit =$13,000 Productivity = Output/Input = $32,000/$13,000 = 2.46
Output ($/hr) = 200 units x $160/unit / 500 hrs = $64/hr Input ($/hr) = $14/hr Productivity = Output/Input = ($64/hr) / ($14/hr) = 4.57

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

31

MANAGEMENT FUNCTIONS
Planning Staffing

Controlling
4/1/2014

Organizing
32

PRODUCTION & OPERATION MANAGEMENT

Five stages of strategic management process

Develop strategy ,vision and mission. Analyze the internal and external environment Refine options and choices Plan Implement Evaluate

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

33

KEY SUCCESS FACTORS

strategic elements that affect their ability to prosper in the marketplace (i.e., attributes, resources, competencies, or capabilities).

PRICE/COST QUALITY
Performance Conformance Features Durability Reliability

SERVICE FLEXIBILITY TRADEOFFS

ORDER QUALIFERSORDER WINNERSone firm from those of another.

Performance dimensions on

which customers expect a minimum level of performance. Superior performance on an order qualifier will not, by itself, give a company a competitive advantage. A useful way to examine a firm's

Serviceability
Aesthetics Perceived Quality
4/1/2014

ability to be successful in the market is to identify the order winners. An order winner is a criterion that customers use to differentiate the services or products of
PRODUCTION & OPERATION MANAGEMENT

34

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

35

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

36

PRODUCT DEVELOPMENT PROCESS

There are six phases of the generic development process are: PLANNING: Marketing- articulate market opportunity, STP etc Design- Consider product platform & architecture, assess new
technology

Manufacturing- identify production constraints, set supply chain

strategy

Other functions- Research, available technologies, financial

budgeting, allocate project resources
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 37

PRODUCT DEVELOPMENT PROCESS contd

Concept Development Marketing: collect customers need, competitive products, Design: feasibility test, develop industrial design concepts, Build
and test experimental prototypes.

Manufacturing: estimate manuf. Cost, assess

feasibility.

production

OF: Facilitate economic analysis, investigate patent issues.

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

38

PRODUCT DEVELOPMENT PROCESS contd

System Level Design Marketing: Develop Product plan options & extended pro.
Family. Set target sales price points

Design: Generate alternative product arch, define major sub systems and interfaces, define ind. designs.

Manuf.: Identify suppliers, perform make-buy analysis, define

assembly scheme, set target costs.

OF: facilitate make-buy analysis, identify service issues.

4/1/2014 PRODUCTION & OPERATION MANAGEMENT 39

PRODUCT DEVELOPMENT PROCESS contd

Detail Design: Marketing: develop marketing plan, sales plan Design: Manuf.:
define part geometry, choose materials, assign tolerance,

complete industrial design control docx. define piece-part production processes, design tooling,

define QA, procurement of long-lead tooling.

4/1/2014 PRODUCTION & OPERATION MANAGEMENT 40

PRODUCT DEVELOPMENT PROCESS contd

Testing & Refinement:

Marketing: Develop promotion and launch materials, facilitate

field testing.

Design: Reliability, life & performance testing, regulatory

approval, implement design changes.

Manuf.: Facilitate supplier ramp-up, refine fabrication and

assembly process, train work force, refine QA.
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 41

PRODUCT DEVELOPMENT PROCESS contd

Production Ramp-up Marketing: Place early production with key customers. Design: Evaluate early production o/p. Manuf.: Begin operation of entire production system.

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

42

Variants of Generic Products on the basis of Product Design

Generic( Market-pull Products)- basic goods. Technology-push products- Innovative Products- I Pod, walkman
(sony) etc

Platform Products- TV, Washing Machine, Automobiles etc Process-Incentive Products- Foods, Electricity, few of platform
products.

Customized products- Switches, Batteries etc. High-Risk Products- Softwares, Ics, technology based products. Quick-build Products- Trendy or fashion products; cellular
phones, apparels
PRODUCTION & OPERATION 4/1/2014 Complex Systems- Airplanes, Jet Engines etc. MANAGEMENT 43

Threats and Controls

Threat lack of management control during the process could cause under or over production Control proper approval of production orders by involving management earlier on in the process Control periodic status reports to management Threat inaccurate inventory control, threat is this system only shows when raw material is being used, but it does not show when/how many completed units the company has on hand Control inventory control department should update the general ledger by sending a journal voucher after production has been completed Control use RFID technology to keep track of inventory Control do a periodic physical inventory counts Control move tickets should be used to document subsequent movement of inventory.
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 44

Designing for the Customer

House of Quality

Quality Function Deployment

Ideal Customer Product

Value Analysis/ Value Engineering

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

45

DESIGNING FOR THE CUSTOMER:

QUALITY FUNCTION DEPLOYMENT

Interfunctional teams from marketing, design engineering, and manufacturing Voice of the customer House of Quality A matrix that helps a product design team
translate customers requirements into operating & engg. Goals.

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

46

Designing for the Customer: Value Analysis/Value Engineering

VA:
It deals with the products already in production and is used to analyze product specializations & requirements as shown in production docx & purchase requests. Its cost-avoidance method, To achieve equivalent or better performance at a lower cost while maintaining all functional requirements defined by the customer Does the item have any design features that are not necessary? Can two or more parts be combined into one? How can we cut down the weight? Are there nonstandard parts that can be eliminated?
PRODUCTION & OPERATION MANAGEMENT 47

VE:

4/1/2014

Measuring Product Development Performance

Performance Dimension Measures
Freq. Of new products introduced Time to market introduction Number stated and number completed Actual versus plan Percentage of sales from new products

Time-to-market

Productivity

Engineering hours per project Cost of materials and tooling per project Actual versus plan

Quality
4/1/2014

Conformance-reliability in use Design-performance and customer satisfaction Yield-factory and field

PRODUCTION & OPERATION MANAGEMENT 48

Process Flowchart

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

49

Types of Processes
Process:
It is an activity of an organization that takes i/p and transforms into o/p, thats greater value to the organization is called process.

There are two type of process:

Single stage process

Multiple stage process

Start

Stop

Stage 1
4/1/2014

Stage 2
PRODUCTION & OPERATION MANAGEMENT

Stage 3
50

Process Design
Key Terms

There are various key terms used in process design. These are as follows:

Cycle time: Average time between completions of successive units in

process.

Utilization: Ratio of time that a resource is actually activated relative

to the time that it is available for use.

Buffering: A storage area between stages where the output of a stage is

placed prior to being used in a downstream stage. Buffering allows the stages to operate independently.
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 51

Key Terms
Blocking: Activities in the stage must stop because there is no place to deposit the
item just completed.

Starving: Activities in a stage must stop because there is no work. Bottleneck: Resource that limits the capacity or maximum output of the
processes.

Make to Order: Only activated in response to an actual order

Both work-in-process and finished goods inventory kept to a minimum

Make to Stock: Process activated to meet expected or forecast demand

Customer orders are served from target stocking level

Hybrid: Combination of Make to Order & Make to Stock process.

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

52

Product and Service Strategy Options

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

53

Facility Layout and Process Choice

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

54

Process Improvement
Reduce WIP (work in progress) Add additional resources to increase capacity. Minimize non-value added activities. Reduce lead time

Redesign product layout, process etc.

Numerical
Suppose you had to produce 100 units in 80 hours to meet the demand requirements of a product. What is the cycle time to meet this demand requirement?

Answer: There are 4,800 minutes (60 minutes/hour x 80 hours) in 80 hours. So the average time between completions would have to be: Cycle time = 4,800/100 units = 48 minutes.
Answer: 48 minutes
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 56

Types of Processes
Conversion (ex. Iron to steel) Fabrication (ex. Cloth to clothes) Assembly (ex. Parts to components) Testing (ex. For quality of products)

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

57

Process Flow Structures

Job shop (ex. Copy center making a single copy of a student term paper)
Batch shop (ex. Copy center making 10,000 copies of an ad piece for a business) Assembly Line (ex. Automobile manufacturer) Continuous Flow (ex. Petroleum manufacturer)
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 58

Product Process Matrix

Low Volume, One of a Kind I. Job Shop II. Batch III. Assembly Line IV. Continuous 4/1/2014 Flow Multiple Products, Low Volume Few High Major Volume, Products, High Higher StandardVolume ization
Flexibility (High) Unit Cost (High)

Commercial Printer French Restaurant

Heavy Equipment
Automobile Assembly Burger King

These are the major stages of product and process life cycles

PRODUCTION & OPERATION MANAGEMENT

Sugar Refinery

Flexibility (Low) 59 Unit Cost (Low)

Break-Even Analysis
A standard approach to choosing among alternative processes or equipment Model seeks to determine the point in units produced (and

sold) where we will start making profit on the process or

equipment

Model seeks to determine the point in units produced (and

sold) where total revenue and total cost are equal
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 60

Break-Even Analysis (Continued)

Break-even Demand=

Purchase cost of process or equipment Price per unit - Cost per unit or Total fixed costs of process or equipment Unit price to customer - Variable costs per unit

This formula can be used to find any of its components algebraically if the other parameters are known

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

61

Break-Even Analysis (Continued)

Example: Suppose you want to purchase a new computer that will cost $5,000. It will be used to process written orders from customers who will pay $25 each for the service. The cost of labor, electricity and the form used to place the order is $5 per customer. How many customers will we need to serve to permit the total revenue to breakeven with our costs?

Break-even Demand: = Total fixed costs of process or equip. Unit price to customer Variable costs =5,000/(25-5) =250 customers
PRODUCTION & OPERATION MANAGEMENT

4/1/2014

62

Issues in Facility Location

Proximity to Customers

Business Climate
Total Costs

Infrastructure
Quality of Labor

Suppliers
Other Facilities
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 63

Issues in Facility Location

Free Trade Zones Political Risk Government Barriers Trading Blocs Environmental Regulation Host Community Competitive Advantage
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 64

PLANT LOCATION MODELS

Factor Rating method Centroid Method Linear programming or Transportation method

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

65

Plant Location Methodology: Factor Rating Method Example

Two refineries sites (A and B) are assigned the following range of point values and respective points, where the more points the better for the site location.
Sites Major factors for site location Pt. Range A B

Fuels in region Power availability and reliability Labor climate Living conditions Transportation Water supply Climate Supplies Tax policies and laws
4/1/2014

0 to 330 0 to 200 0 to 100 0 to 100 0 to 50 0 to 10 0 to 50 0 to 60 0 to 20

123 150 54 24 45 4 8 5 5

156 100 63 96 50 5 4 50 20
544

Best Site is B

PRODUCTION & OPERATION MANAGEMENT

Total pts. 418

66

Plant Location Methodology: Centroid Method

The centroid method is used for locating single facilities

that considers existing facilities, the distances between

them, and the volumes of goods to be shipped between them

This methodology involves formulas used to compute the

coordinates of the two-dimensional point that meets the distance and volume criteria stated above

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

67

Plant Location Methodology: Centroid Method Formulas

Cx =

d V V
ix i

Cy =

d V V
iy i

Where: Cx = X coordinate of centroid Cy = X coordinate of centroid dix = X coordinate of the ith location diy = Y coordinate of the ith location Vi = volume of goods moved to or from ith location
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 68

Plant Location Methodology: Example of Centroid Method Centroid method example

Several mobile showrooms are located according to the following grid which represents coordinate locations for each showroom
Y Q
(790,900)

S ho wro o m

No o f Z-Mo b ile s s o ld p e r mo nth 1250 1900 2300

D
(250,580)

A D Q
X

A
(100,200) (0,0)

4/1/2014

Question: What is the best location for a new Z-Mobile warehouse/temporary storage facility considering only distances and quantities sold per PRODUCTION month? & OPERATION
MANAGEMENT

69

Plant Location Methodology: Example of Centroid Method (Continued): Determining Existing Facility Coordinates
Y Q
(790,900)

D
(250,580)

A
(100,200) (0,0)

S ho wro o m

No o f Z-Mo b ile s s o ld p e r mo nth 1250 1900 2300

70

A D
4/1/2014 PRODUCTION & OPERATION MANAGEMENT

Plant Location Methodology: Example of Centroid Method (Continued): Determining the Coordinates of the New Facility
100(1250) + 250(1900) + 790(2300) 2,417,000 = = 443.49 1250 + 1900 + 2300 5,450
200(1250) + 580(1900) + 900(2300) 3,422,000 = = 627.89 1250 + 1900 + 2300 5,450

Cx =
Cy =

You then take the coordinates and place them on the map:
Y Q
(790,900)

D
(250,580)

New location of facility Z about (443,627)

S ho wro o m

No o f Z-Mo b ile s s o ld p e r mo nth 1250 1900 2300

71

A D

A
(100,200) (0,0) 4/1/2014

XPRODUCTION & OPERATION

MANAGEMENT

Plant Location Methodology: Transportation Method of Linear Programming

Transportation method of linear programming seeks

to minimize costs of shipping n units to m

destinations or its seeks to maximize profit of

shipping n units to m destinations

4/1/2014 PRODUCTION & OPERATION MANAGEMENT 72

PLANT LAYOUT
What is factory Layout? What is its importance? Activities:
deptt. HR wing, R&D deptt, Marketing & Sales deptt,

Maintenance deptt, Administrative deptt, Finance deptt, Production & Operation

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

73

Facility Layout Defined

Facility layout can be defined as the process by which the placement of departments, workgroups within departments, workstations, machines, and stock-holding points within a facility are determined This process requires the following inputs:
Specification of objectives of the system in terms of output and flexibility
Estimation of product or service demand on the system Processing requirements in terms of number of operations and amount of flow between departments and work centers Space requirements for the elements in the layout Space availability within the facility itself
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 74

Layout
Layout: the configuration of departments, work centers, and equipment, with particular emphasis on movement of work (customers or materials) through the system
S4

S5

S3 S1

A 40

S2 C 50

B 30
F 25

D 40 E 6

H 20

G 15

I 18

Objectives of Facility Layout

Minimize material handling costs

Utilize space efficiently

Utilize labor efficiently

Eliminate bottlenecks
Facilitate communication and interaction between

workers, between workers and their supervisors, or

between workers and customers
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 76

Reduce manufacturing cycle time or customer service time

Eliminate waste or redundant movement

Facilitate the entry, exit, and placement of material, products, or

people
Incorporate safety and security measures Promote product and service quality Encourage proper maintenance activities Provide a visual control of operations or activities Provide flexibility to adapt to changing conditions
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 77

OBJECTIVES OF PRODUCTION PLANT LAYOUT

Achieve optimal layouts with minimum capital Investment Ease of maintenance Effective utilization of factory space and vertical space Minimize material and handling costs Adhere to the site conditions and building norms Construct cafes, wash room and rest room for employees Elimination of bottlenecks and jams. Better working conditions. Provide space for production machines equipments, testing & warehousing etc
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 78

Basic Production Layout Formats

Process Layout (also called job-shop or functional layout) Product Layout (also called flow-shop layout) Group Technology (Cellular) Layout

Fixed-Position Layout
Retail Service Layout Office Layout
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 79

Process Layout: Interdepartmental Flow

Given

The flow (number of moves) to and from all departments The cost of moving from one department to another The existing or planned physical layout of the plant

Determine

The best locations for each department, where best means

maximizing flow, which minimizing costs

CRAFT technique used to analyze proper layout design

PRODUCTION & OPERATION MANAGEMENT 80

4/1/2014

Process Layout

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

81

Product Layout
IN

OUT

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

82

A U-Shaped Production Line

IN

4 5

Workers

6
OUT

10

7
83

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

Hybrid Layouts
Cellular layouts
group machines into machining cells

Flexible manufacturing systems

automated machining & material handling systems

Mixed-model assembly lines

produce variety of models on one line

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

84

Cellular Layout
Cellular Manufacturing
Layout in which machines are grouped into a cell that can process items that have similar processing requirements

Group Technology
The grouping into part families of items with similar design or manufacturing characteristics

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

85

Group Technology
One Worker, Multiple Machines
Machine 2 Machine 3 Machine 1

Materials in Machine 4 Finished goods out

Machine 5

Group Technology: Benefits

1. Better human relations 2. Improved operator expertise

3. Less in-process inventory and material handling

4. Faster production setup
PRODUCTION & OPERATION MANAGEMENT

4/1/2014

87

Group Technology
Lathing Milling Drilling

M Grinding

Assembly A A A

Receiving and shipping

Group Technology
Lathing Milling Drilling

M Grinding

Assembly A A A

Receiving and shipping

(a) Jumbled flows in a job shop without GT cells

Group Technology
Lathing Milling Drilling

M Grinding

Assembly A A A

Receiving and shipping

(a) Jumbled flows in a job shop without GT cells

Group Technology
Lathing Milling Drilling

M Grinding

Assembly A A A

Receiving and shipping

(a) Jumbled flows in a job shop without GT cells

Group Technology
L L Cell 1 M Cell 2 M
D

G A

Assembly area A

Receiving

L Cell 3

Shipping

(b) Line flows in a job shop with three GT cells

Group Technology
L L Cell 1 Receiving L Cell 3 L M
D

M
Cell 2 M

G A

Assembly area

Shipping

(b) Line flows in a job shop with three GT cells

Group Technology
L L Cell 1 M Cell 2 M
D

G A

Assembly area A

Receiving

L Cell 3

Shipping

(b) Line flows in a job shop with three GT cells

Group Technology
L L Cell 1 Receiving L Cell 3 L M
D

M
Cell 2 M

G A

Assembly area

Shipping

(b) Line flows in a job shop with three GT cells

Hybrid Layouts
Combine elements of both product & process layouts
Maintain some of the efficiencies of product layouts Maintain some of the flexibility of process layouts

Examples:
Group technology & manufacturing cells Grocery stores
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 96

Fixed-Position Layout
Used when product is large Product is difficult or impossible to move, i.e. very large or fixed All resources must be brought to the site Scheduling of crews and resources is a challenge
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 97

Fixed-Position Layout

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

98

Retail Service Layout

Goal--maximize net profit per square foot of floor space Servicescapes
Ambient Conditions Spatial Layout and Functionality Signs, Symbols, and customer comfort and convience Appealing layout Good communication in work area Appealing display Privacy in work spaece Provide sufficicent for service and waiting line
4/1/2014 PRODUCTION & OPERATION MANAGEMENT

Artifacts

99

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

100

Designing Product Layouts - continued

Step 1: Identify tasks & immediate predecessors Step 2: Determine the desired output rate Step 3: Calculate the cycle time Step 4: Compute the theoretical minimum number of workstations Step 5: Assign tasks to workstations (balance the line) Step 6: Compute efficiency, idle time & balance delay
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 101

Numerical
The Model Tata Jaguar, is to be assembled on conveyor belt. Five Hundred cars are required per day. Production Time per day is 420 mins, and the assembly steps and times for car are given below. Find the balance that minimizes the number of workstations, subject to the cycle time and precedence constraints.
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 102

Assembly Steps
Task A B C D E F G H I J K Task Time 45 11 9 50 15 12 12 12 12 8 9 Description
Position rear axle support Insert rear axle Tighten rear axle support Position front axle assembly Tighten front axle Position rear wheel & fasten hubcap Position rear wheel & fasten hubcap Position front wheel & fasten hubcap Position front wheel & fasten hubcap Position car handle shaft on front Tighten Bolt and nuts

Task that must precede ----A B --D C C E E F,G,H,I J

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

103

Step 1: Identify Tasks & Immediate Predecessors

Example 10.4 Vicki's Pizzeria and the Precedence Diagram Immediate Task Time Work Element Task Description Predecessor (seconds
A B C D E F G H I Roll dough Place on cardboard backing Sprinkle cheese Spread Sauce Add pepperoni Add sausage Add mushrooms Shrinkwrap pizza Pack in box None A B C D D D E,F,G H Total task time 50 5 25 15 12 10 15 18 15 165

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

104

Layout Calculations
Step 2: Determine output rate
Vicki needs to produce 60 pizzas per hour

Step 3: Determine cycle time The amount of time each workstation is allowed to complete its tasks
Cycle time (sec./unit ) available time sec./day 60 min/hr x 60 sec/min 60 sec./unit desiredoutput units/hr 60 units/hr

Limited by the bottleneck task (the longest task in a process):

Maximum output
4/1/2014

available time 3600 sec./hr. 72 units/hr,or pizzas per hour bottlenecktask time 50 sec./unit
PRODUCTION & OPERATION MANAGEMENT 105

Layout Calculations
(continued)
Step 4: Compute the theoretical minimum number of stations
TM = number of stations needed to achieve 100% efficiency (every second is used)
TM

task times
cycle time

165 seconds 2.75, or 3 stations 60 sec/statio n

Always round up (no partial workstations) Serves as a lower bound for our analysis
4/1/2014 PRODUCTION & OPERATION MANAGEMENT 106

Layout Calculations
(continued)
Step 5: Assign tasks to workstations
Start at the first station & choose the longest eligible task following precedence relationships Continue adding the longest eligible task that fits without going over the desired cycle time When no additional tasks can be added within the desired cycle time, begin assigning tasks to the next workstation until finished
Workstation 1 Eligible task Task Selected Task time A A 50 B B 5 C C 25 D D 15 E, F, G G 15 E, F E 12 F F 10 H H 18 PRODUCTION & OPERATION I I 15 MANAGEMENT Idle time 10 5 35 20 5 48 38 20 107 5

3
4/1/2014

Last Layout Calculation

Step 6: Compute efficiency and balance delay
Efficiency (%) is the ratio of total productive time divided by total time
t (% ) NC

Efficiency

165 sec. 100 91.7% 3 stations x 60 sec.

4/1/2014

PRODUCTION & OPERATION MANAGEMENT

108