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Module 1

There are several factors to consider when selecting a facility location including proximity to customers and raw materials, transportation infrastructure, availability of resources like power and land, and cost factors. A multi-step process is typically used that involves defining objectives, screening locations, evaluating alternatives both quantitatively and qualitatively, and selecting the best overall option. Key location criteria center around minimizing costs and optimizing access to necessary inputs and markets.

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68 views

Module 1

There are several factors to consider when selecting a facility location including proximity to customers and raw materials, transportation infrastructure, availability of resources like power and land, and cost factors. A multi-step process is typically used that involves defining objectives, screening locations, evaluating alternatives both quantitatively and qualitatively, and selecting the best overall option. Key location criteria center around minimizing costs and optimizing access to necessary inputs and markets.

Uploaded by

anju
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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OPERATIONS

MANAGEMENT

DEMAND FORCASTING

To Forecast is to
estimate or
calculate in
advance.

Demand forecasting is predicting


the future demand of the product
or services of an organization.

To
To minimize
minimize losses
losses
associated
associated with
with
uncontrollable
uncontrollable events
events
external
external to
to the
the organization
organization

To
To provide
provide adequate
adequate
staff
staff to
to support
support
production
production
requirements
requirements

To
To offset
offset the
the actions
actions
of
of competitor
competitor
organization
organization

Reasons for
Demand
forecasting

In
In decision
decision making
making for
for
facility
facility capacity
capacity
planning
planning and
and for
for
capital
capital budgeting
budgeting

As
As an
an input
input to
to
aggregate
aggregate production
production
planning
planning and/materials
and/materials
requirement
requirement planning
planning

To develop
administrative plans
and policies internal
to an organization

To maximize gains
from the events
external to the
organization

To develop policies
that apply to people
who are not part of
the organization

FORECASTING METHODS

QUALITATIVE
METHODS

SUBJECTIVE
METHODS

QUANTITATIVE
OBJECTIVE
METHODS

METHODS

FORECASTING METHODS

QUANTITATIVE
METHODS

QUALITATIVE
METHODS

CUSTOMER
SURVEY

PAST
ANALOGY
SALES FORCE
COMPOSITE

EXECUTIVE
OPINION

TIME SERIES
ANALYSIS

CAUSAL
ANALYSIS

DELPHI
METHOD
SIMPLE
MOVING
AVERAGE

SIMPLE
EXPONENTIAL
SMOOTHING

TREND
ANALYSIS

QUALITATIVE METHODS
Customer surveys:It is the customer who
determines the demand for a product or service.
Customer directly involved in the forcasting process.
Sampling of customers will be taken here.
Time consuming and expensive:at the same
time,they may provide valuable information about
the customers changing preferances,which may not
be easily available elsewhere.

SALES FORCE COMPOSITE:


This approach to forcasting is less expensive compared to the customer surveys.
The sales force of a company is in direct contact with the ccustomes,thus they
may be advised to give their estimates about the likely sales of the product in
their region.
They may be required to give three estimates of expected demand:namely
1.PESSIMISTIC ESTIMATE(The lowest expected demand)
2.THE MOST LIKELY ESTIMATE(Having the highest chance of occurance)
3.OPTIMISTIC ESTIMATE(The highest expected demand)
.Finally the marketing manager may compile these estimates for different regions
to arrive at the overall estimates of the demand forecast for the product.

EXECUTIVE OPINION:

A Jury of top executives from the company from different functional


areas such as marketing ,finance, human resource, production etc., are
bought together to give their opinion about the forecast of a new
product to be launched.
This approach to forecasting is particularly suitable for new products
which do not have any past history of sales.

DELPHI METHOD
In this method a questionnaire email is sent to experts
from various diversified streams, seeking their opinion
on the forecast of a product.
The experts may be:
Technology forecasters
Sales persons with varied experiences in promoting
high tech products.

PAST ANALOGY
For forecasting the sales of a new product, an analogy of the
sales growth trends of other existing products may be taken.
These products may be substitute of the new product,
complementary products or products related to consumers
belonging to income groups similar to that being targeted by the
new product.

QUANTITATIVE METHODS
TIME SERIES ANALYSIS:
As the term time series analysis suggests, we require a time
series of historical data with respect to time intervals(periods)in
the past to make predictions for future demand.

Classified into two types namely.

Simple moving average


Simple exponential smoothing

CAUSAL ANALYSIS:

Trend analysis:
Trend analysis is a forecasting method used
causal quanatitative analysis.

EXPONENTIAL SMOOTHING
Exponential smoothing is a technique that can be
applied to time series data, either to produce smoothed
data for presentation, or to make forecasts.
The time series data themselves are a sequence of
observations.
This method is suitable for forecasting data with no trend
or seasonal pattern.

MODULE-2
FACILITY LOCATION-COST COMPLETION AND HIDDEN
FACTORS-STEPS IN LOCATION SELECTION-TYPES OF
MANUFACTURING SYSYTEM AND LAYOUT-FACILITY
LAYOUT-LAYOUT BY PRODUCTS AND PROCESS-LIFE
BALANCING-DESIGN OF OPERATION
SYSYEMS:AGGREGATE PLANNING AND MASTER
SCHEDULING,MRP,CRP.MATERIAL
HANDLING:PRINCIPLES.EQUIPMENTS FOR MATERIAL
HANDLING.

FACILITY LOCATION

FACILITY:

A Factory or
plant is the
manufacturing
facility of a
company.

A Warehouse is
the storage
facility of a
manufacturing or
a distribution
company.

The facility
location decision
is very important
for big business
houses as well
as new
entrepreneurs.

Wrong location
of the facility
may lead to
failure of the
complete project.

FACTORS AFFECTING FACILITY


LOCATION/STEPS IN LOCATION SELECTION.
PROXIMITY TO CUSTOMERS: When customers or markets are located near
the plant products can be easily supplied to them. This reduces the cost of the
product, as the transportation cost is not added to it.

The product thus competes well with the


competitors product.
Eg:Small ancillary units which are located near to
the automotive factories.

PROXIMITY TO RAW MATERIALS:


Easily availability of the raw material is an another important
factor for facility location selection.
Most textile units are located in Gujrat and maharahtra because
these are the largest cotton growing areas in the country.
Iron and steel plants are located in Bihar and Orissa because of
the large presence of iron ore mines in these regions.

Easily availability of raw materials reduces the


transportation cost, also it become easier to
control its quality.

GOOD TRANSPORTATION FACILITIES:


Region near metro
cities have the
advantage of good
transportation facilities
as they have good
rail,air,water and road
transportation
networks.

AVAILABILITY OF POWER SUPPLY


Uninterrupted power supply is a
basic requirement of most
industries. Some factories have to
set up their own captive power
plants if located in areas with
power problems.

For e.g.: The factories of


HINDALCO(Adithya Birla
group)as well as Kanoria
chemical Industries Ltd at
UP have their own captive
power plants.

BASIC AMENITIES
The area for location of the plant
should have water supply lines
managed by the local muncipal
corporation

Roads up to the factory premises


are always desirable.These basic
amenities are very useful even
during the consrtuction period of
the plant.

GOVERNMENT POLICIES
The government of states such as
Maharashtra,Gujrat and Karnataka
have been very successful in
including big business business
houses to set up their plants in
these states.

Pondicherry is an examples of no
sales tax regions, and therefore we
find that most of the companies
have their offices/warehouses
located there.

Local taxation policies and


various promotional efforts help
in increasing the industrial
activity.

ENVIRONMENTAL AND COMMUNITY


CONSIDERATIONS
Many state government have strict environmental
policies in place which have to be followed by the
industries operating there. The people residing in the
area should not be against the idea of having a plant in
their region as the effluents from a factory spoil the
natural environment of the region.
Opposition from the community regarding the
construction of a plant in their region can disrupt the
whole project.

PROXIMITY TO SUBCONTRACTORS
The presence of small ancilliary units manufacturing
small components/sub assemblies is important for any
new factory
If a new auto plant is set up in a place where the
maruthy suzuki plant is already located,it will get the
advantage of the subcontractors existing there.
The subcontractors can immediately start supplying the
components required by the new plant for starting its
production process.

EASY AVAILABILITY OF CHEAP LAND


Land is the basic necessity for the construction of a
new land.

LESS CONSTRUCTION COST


Construction cost of a plant may be low at a particular
place due to the cheap labour available there.
The construction material may also be cheaper at
another place, such places are preferred for locating a
plant.

AVAILABILITY OF CHEAP SKILLFULL AND


EFFICIENT LABOUR
India and other developing nations appear to have
cheap labour,however the reality is that labour turns out
to be expensive here because it is not efficient when
compared to the labour in developed countries.
Multinational companies prefer China over India to set
up their global sourcing bases because the labour in
China has become more skillfull and efficient .

RESIDENTIAL
COMPLEXES,SCHOOLS,HOSPITALS,CLUBS

Usually new factories are given land in remote


villages by the state governments. proper
facilities such as residentilal
complexes,schools,clubs,hospitals etc are not
available for the managers of these plants and
their families at such places. under such
situations company have to create these
facilities on their own.

Eg:The TISCO factory at Jamshedpur is the first example of this


kind of in India,where the company have created all such
facilities for its employees.
In UP Indian telephone industries(Mankapur)

STEPS IN FACILITY LOCATION DECISION

Define location objectives, decision criteria, basic requirements


Use politicl,social,and economic data to narrow the potential locations to a
few alternatives that satisfy the objectives
Evaluate alternatives against basic requirements, and eliminate
unacceptable locations
Compare alternatives on quantitative basis, using cost volume, linear
programming, center of gravity and other appropriate models
Compare alternatives on qualitative basis using factor rating or other
subjective methods
Select the location the best satisfies the quantitative and qualitative criteria
by using a weighted score or group decision process.

ASSIGNMENT-1
Functions of Operations Management
Explain the historical development of production and
operation management
Discuss the relation with the operation management
and other functions of management

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