STUDENT HANDBOOK

ADBM 106P - OPERATIONS

MANAGEMENT – PART 1

Prepared by

Suneth Jayawardene
(MBA (Colombo), BBA (Colombo), Six Sigma Black Belt (BMG
India), ACMA (UK))
 CONTENTS

• Module Descriptor
o A brief description about the module and its importance
o Module Intended Learning Outcomes (ILOs)
o Pre-requisites
o Hardware/Software requirements
o Module Evaluation Criteria
o Session Details (Session title, teaching hours, ILOs covered, Teaching mode-
Online/offline, Teaching method- Lectures/practical’s)
• Welcome note to the module (document or video) by the Module leader
• Pre-module assignment (5-10% marks)
• Pre-reading materials and video links
• An e book containing the module lecture material.
• Videos for each session
• Practical Guide (where applicable)
• Tutorials with answers (where applicable)
• Course Work with expected hand in dates.
• Sample Question paper
• Recommended Reading (including textbooks, videos and any other online resources
 MODULE DESCRIPTOR

MODULE TITLE OPERATIONS MANAGEMENT

MODULE CODE ADBM 106
CREDITS 05
DIVISION PRODUCTIVITY AND MANAGEMENT
MODULE Suneth Jayawardene
LEADER
OFFICE/BRANCH COLOMBO
E-MAIL
PHONE NUMBER 011-5321000
TIME Lectures Group Individual Self-Learning
ALLOCATION Assignment
Assignment

30 hours 20 hours 20 hours 40 hours

MODULE INTRODUCTION
Operations Management is a subject that concerns itself with making products and services for the
organization. Hence, Operations are the main breadwinner for any business. Without operations
none of the other critical functions such as Finance, Admin, IT, Marketing or HR can come into
existence. The Operations strategy must be aligned to the business strategy and goals of the
organization. Also, all Finance, Admin, IT, Marketing or HR functions must be tailor made to
complement and support the business and operations strategy of the organization. Hence, the
importance of having a good grasp of operations management concepts cannot be overstated for
any working professional regardless of the sphere of his or her area of specialization. The main
issues that arise when we produce goods and services are related to the five key operations areas
of capacity, scheduling, inventory, standards and controls. In this module students will learn many
technical and quantitative approaches to address the above common operational problems in a
clinical fashion. However, operations management is not all engineering and numbers. This is
because many operational issues are caused by employee related issues such as motivation.
Therefore, a humanistic approach where operational challenges are address by taking into
consideration the concerns of workers is essential for the success of any operations strategy.
Further, with the advent of Industry 4.0, the very nature of modern operations is itself being
digitally transformed. Therefore, many departures are expected from traditional operations
management practices currently in existence. Therefore, we will study this module from a
futuristic, technical as well as humanistic approach
MODULE AIM(S)30
Operations Management is a systematic approach to address all the issues pertaining to the
transformation process that converts some inputs into output that are useful and could obtain
revenue to the operations system. Main objective in this module is to introduce you to concepts
and techniques related to the design, planning, control, and improvement of manufacturing and
service operations.
Specifically, the module aims to
1. Explain how operations management is fundamental to both manufacturing and service
organizations.
2. Encourage the belief that Operations is one of the key primary players in an organization and
organization’s supply chain.
3. Provide examples of how operations can be used as a competitive weapon
4. Develop communication skills in order to understand client’s problems and make effective
decisions.

MODULE LEARNING OUTCOMES

On completion of this module, a successful student should be able to:
1. Demonstrate the ability to apply fundamental concepts in Operations Management and Value
analysis
2. Explain and apply product design and process design methods
3. Recognize productivity improvement techniques using work study and value analysis.
4. Demonstrate an understanding of the Operations Scheduling Techniques used in Industry
5. Describe the concept of Layout planning and Facility Location.
6. Distinguish among the various tools for improving quality and explain how each should be used.
7. Define the nature of supply-chain management for both manufacturers and service providers.
8. Compute the economic order quantity and apply it in various situations.
9. Explain safety measures and types of maintenance systems in an organization.

MODULE PRE-REQUISITES
• Students who take this module must have previously covered the basic Management
concepts
• Basic Computer Literacy in Excel, Word and PowerPoint.
HARDWARE AND SOFTWARE REQUIREMENTS
• A Desktop or laptop to join into the online sessions
• Microsoft TEAMS, Excel, Word and PowerPoint
• LMS access and an internet connection

INDICATIVE CONTENT
• Introduction to Operations Management
• Product Design and Process Design
• Work Study
• Scheduling Techniques – Many Jobs, One Machine
• Facility Location and Layout
• Quality Management Focus on Six Sigma
• Lean Production
• Supply Chain Management & • Inventory Control and Material Requirement Planning
• Group assignment presentation and discussion

Week Title Session ILO Link to Teaching Teaching Teaching

module Mode Hours Method
Learning
outcomes
1 Introduction • Define the term operations 1 Offline 3 Lectures
to management
Operations
Management • Identify the three major
functional areas of
organizations and describe
how they interrelate
• Compare and contrast service
and manufacturing operations
• Describe the
operations function
and the nature of
the operations manager’s job
and decision making
 • Differentiate between
design and operation
of production systems
• Identify current trends
in business that
impact operations
2 Product • Understand What is the 2 Online 1.5 Lectures
Design and Product Decision
Process
Design • Understand the Product Life
Cycle
• Identify factors to consider
when designing goods
• Understand how QFD is used
for Product design
• Understand How Process
Door Analysis is used for
Service Design
• Identify the future Trends in
Designing Products and
Services
3 Work Study • Understanding why small 2 Offline 3 Lectures
incremental changes smartly
done can create huge
efficiency gains
• Explain the historical
development of work study,
time study and motion study
from Taylor to Gilbreth to
modern Lean
• Study examples of work
study
• Understand steps of work
study
• Understand how work study
leads to modern job design
4 Scheduling • Explain the different kinds of 3 Offline 3 Lectures
Techniques scheduling operations and
– Many methods
Jobs, One • Develop a schedule using
Machine priority rules for a single
workstation
 • Describe the theory of
constraints
• Describe scheduling
techniques for service
applications
5 Facility • Understand the importance of 4 Offline 3 Lectures
Location and the location decision
Layout
• Identify the factors to
consider for the location
decision
• Understand the methods used
to make the location decision
• Understand the importance of
the facility layout decision
• Understand the factors to
consider for the facility layout
decision
• Understand the methods used
to make the facility layout
decision
6 Quality • Define what is quality 5 Offline 3 Lectures
Management
Focus on Six • Define What is Six Sigma
Sigma • Understand the origin and
evolution of Six Sigma
• Understand the Six Sigma
Measurement and its link
with process variation
• Understand the DMAIC
Methodology and Tools
• Understand the Six Sigma
Organization and Culture
7 Lean • Defining What is Lean 6 Offline 3 Lectures
Production
• The Origins of Lean
Manufacturing
• Link between Waste,
Friction, or Muda
 • Understand how to Calculate
Takt Time and use it for level
loading the throughput
• Understand Key Lean
Manufacturing Techniques
and tools
• Understanding the Cultural
Changes required for Lean
Management and leadership
8 Supply • Defining what is Supply 7 Offline 3 Lectures
Chain Chain Management in
Management relation to the flow of goods,
information and money
• Understanding the
importance of SCM for
strategic competitive
advantage
• Understand the Important
Elements of Supply Chain
Management: ( Purchasing,
Operations, Distribution and
Integration)
• Understand the difference
between service and product
supply chains
• Understand the key focus
areas for modern Supply
Chain Management for global
optimization and minimizing
uncertainty
• Understand the Future Trends
in Supply Chain Management
8 Inventory • Defining what is Inventory 7 Online 1.5 Lectures
Control and
Material • Understanding the cost of
Requirement holding and ordering
Planning inventory and EOQ
• Methods of inventory
prioritization and
Management
 • JIT Vs JIC
• Understand how to use
Consumption based Planning,
MPS and MRP for planning
inventory
9 Industrial • To outline the reasons for a 8 Offline 3 Lectures
Safety and safe and healthy workplace.
Maintenance
Management • To show organizations
respond to health and safety
challenges
• To outline the reasons for
maintenance management
• To show organizations
respond to maintenance
management challenges
10 Group[ assignment Presentation and Discussion 1-10 Offline 3 Lectures

Total Number of teaching hours = 30 hours 30

TEACHING AND LEARNING METHODS

The module will be delivered in a combination of lectures, videos, classroom activities, discussions
and case study. Two of the modules will be delivered online. (Product Design and Process Design
(W2) and
Inventory Control and Material Requirement Planning (W9))
Lectures will focus on the understanding and explanation of key concepts and theories of
Operations management. Group discussions and classroom activities will be arranged to stimulate
students’ interests or their awareness of practical understanding of some concepts.

ASSESSMENT
A variety of assessment tools will be used to develop and assess students’ achievement of the
subject intended learning outcomes.
Specific assessment methods/tasks % weighting
Individual Assignment 1 10
Group Assignment 2 30
Final Exam 60
Total 100

Instructions: The coursework of all weeks must be submitted as a single document to LMS by
week 10. Students are strongly advised to complete each week’s assignment without waiting for
the last moment. 5 Marks will be deducted for late submissions

MODULE GRADING
Your final grade (after rounding) will be recorded as shown below.

Range of Marks
Grade
85-100 A+
70-84 A
65-69 A-
60-64 B+
55-59 B
45-54 C+
40-44 C
35-39 C-
30-34 D+
29-25 D
24-00 E

Late work will not be accepted, and make-up exams will only be given in extreme circumstances,
for which written documentation for excuse (e.g., doctor’s note) is required.

COURSE MATERIALS
Text: Professor Chandana Perera, University of Moratuwa, 2011, Operations Management:
Concepts and Applications, 2nd edition

RECOMMENDED READING
1. Jay Heizer, Barry Render, Jagadeesh Rajashekhar, 2013,Operations Management, 9th edition
https://www.pdfdrive.com/operations-management-12ed-jay-heizer-d200790206.html
http://recursos.pearson.es/castroman/cd_data/cdrom.html
https://studfile.net/preview/5330404/
 WELCOME NOTE TO THE MODULE
Dear Students,

Welcome to Operations Management. I am super excited to join you all for a series of interesting and
interactive lectures and classroom sessions in the coming weeks. You may find some information
regarding myself using the following link.
https://www.linkedin.com/in/suneth-jayawardene-62862312/

If operations are not in existence, neither can any of the other critical functions such as Finance,
Admin, IT, Marketing or HR be existent. This is because the goods and services that make money
for the organization are made by Operations. Hence, the importance of having a good grasp of
operations management concepts cannot be overstated for any working professional regardless of
the sphere of his or her area of specialization. The main issues that arise when we produce goods
and services are related to the five key operations areas of capacity, scheduling, inventory,
standards and controls. In this module students will learn many technical and quantitative
approaches to address the above common operational problems in a clinical fashion. However,
operations management is not all engineering and numbers. This is because many operational
issues are caused by employee related issues such as motivation. Therefore, a humanistic approach
where operational challenges are address by taking into consideration the concerns of workers is
essential for the success of any operations strategy. Further, with the advent of Industry 4.0, the
very nature of modern operations is itself being digitally transformed. As a result of this digital
transformation, many departures are expected from traditional operations management practices
currently in existence. Therefore, we will study this module from a futuristic, technical as well as
humanistic approach

During these weeks of ongoing lessons, you are welcome to contact me directly via phone or e-
mail for any clarifications required. In case there is a delayed response, please drop an SMS stating
that you are one of the students in my class and I will call you back personally. Can you please
bring your laptop, tab or iPad to class so that you will be able to join the classroom activities. Due
to restrictions in screen sharing and chatting when using mobile platforms, students are requested
to join in from their home desktops and laptops when online sessions are being conducted. I shall
look forward to congratulating each one of you on the successful completion of this module

Sincerely,

Suneth Jayawardene
0776851951
 PRE-MODULE ASSIGNMENT 1 (10 MARKS)

Study the pre-reading material in the links below and answer the following questions. Write the
answers in your own words as you understand the concepts. Do not copy paste your answers from
the internet or from a textbook. (5 marks)
1. How would you define Quality management? (1 mark)
2. How would you define productivity? (1 Mark)
3. Identify and list the key technologies that are driving the digital revolution? (1 mark)
4. Identify the key challenges faced when improving productivity and quality within
Smart factories adopting industry 4.0? (2 Marks)
5. Write a brief 100-word summary each for the 10 technologies driving industry 4.0.
You must highlight the key features of each technology and how it will impact
operations. Some links are provided to start exploring. But use the web for your
own expanded research.

Additional Resources
• https://courses.lumenlearning.com/boundless-business/chapter/introduction-to-operations-
management/
• https://www.cleverism.com/operations-management-definition-principles-activities-trends/

• https://www.youtube.com/watch?v=v9rZOa3CUC8
• https://www.youtube.com/watch?v=Y990kaGbJD0
• https://www.youtube.com/watch?v=IN-vMpES6_g
• https://www.youtube.com/watch?v=2eGeOXIJ2Rw

Quality management principles

https://courses.lumenlearning.com/boundless-business/chapter/quality-management/

Defining Productivity
https://courses.lumenlearning.com/boundless-business/chapter/productivity/

Industry 4.0: The Future of Productivity and Growth in Manufacturing Industries

• https://www.bcg.com/publications/2015/engineered_products_project_business_industry
_4_future_productivity_growth_manufacturing_industries
• https://www.bcg.com/capabilities/operations/embracing-industry-4.0-rediscovering-growth
 • https://www.spotlightmetal.com/iot-basics-what-does-industry-40-mean-a-842216/?cmp=go-
ta-art-trf-SLM_DSA-
20180820&gclid=EAIaIQobChMIvunL2e6u6wIV1XwrCh3a5QBSEAAYAiAAEgIXwPD_BwE

Quality Management in Industry 4.0 Era

• https://www.researchgate.net/publication/328630839_Quality_Management_in_Industry
_40_Era

PRE-READING MATERIALS AND VIDEO LINKS

0:02 / 8:37
• https://courses.lumenlearning.com/boundless-business/chapter/introduction-to-operations-
management/
• https://www.cleverism.com/operations-management-definition-principles-activities-trends/

• https://www.youtube.com/watch?v=v9rZOa3CUC8
• https://www.youtube.com/watch?v=Y990kaGbJD0
• https://www.youtube.com/watch?v=IN-vMpES6_g
• https://www.youtube.com/watch?v=2eGeOXIJ2Rw
Assignment 2 – 30 Marks – Group assignment – Key
Operations Decisions
In this module to have learned the underlying principles, logic, techniques, technology used and
factors to consider when finalizing some key operations decisions. These decisions are common
to most organizations as any successful operation must effectively manage the challenges of
capacity, scheduling, inventory, standards and controls. However, the manner in which each
organization implements these critical decisions will vary vastly based on a large number of
factors such as size of the organization, nature of industry, capital availability, technology used,
management team, raw material availability, skill level of workers and even type of machines
being used. Therefore, one operations solution which is profitable in one organization may not
be feasible in another business scenario. Your assignment will be to select a real world
organization and study how effectively these key operations decisions have been customized to
the requirements of the business and the industry. Your assessment shod consider a technical,
futuristic as well as humanistic approach to manage operations. You must make a class
presentation on week 10. The assignment must be submitted in week 9 to LMS

• Group size – not exceeding 10

• Presentation 20 minutes followed by 10 minutes of Q&A
• The report must be uploaded to LMS by week 9
• The slides must be mailed to the relevant lecturer with cc to [email protected] by week 9
Report Structure

• Introduction to the nature of the industry

• Introduction to the organization
• Key profit drivers of the selected business
• The manner in which each of the key operations decisions are implemented
• Sustainability and risk assessment of operations decisions
• Recommendations to improve
Objectives of the assignment

• Guide students to explore how the knowledge provide by the course module may be
implemented in real life
• Develop a practical sense of the key operations concepts among the students
• Provide insight into the restrictions and challenges faced when implementing operations
decisions
• Create open discussion and knowledge sharing among the students
AN E BOOK CONTAINING THE MODULE LECTURE MATERIAL.

The E-Book will be shared separately in PDF Format containing all lecture slides for 10 weeks of
on class ad online discussions. These lecture slides must be completed with the content below as
well as the recommended text by Jay Heizer

WEEK 1 – INTRODUCTION TO OPERATIONS MANAGEMENT

Introduction
Operations Management is a subject that concerns itself with making products and services for the
organization. Hence, Operations are the main breadwinner for any business. Without operations
none of the other critical functions such as Finance, Admin, IT, Marketing or HR can come into
existence. The Operations strategy must be aligned to the business strategy and goals of the
organization. Also, all Finance, Admin, IT, Marketing or HR functions must be tailor made to
complement and support the business and operations strategy of the organization. Hence, the
importance of having a good grasp of operations management concepts cannot be overstated for
any working professional regardless of the sphere of his or her area of specialization. The main
issues that arise when we produce goods and services are related to the five key operations areas
of capacity, scheduling, inventory, standards and controls. In this module students will learn many
technical and quantitative approaches to address the above common operational problems in a
clinical fashion. However, operations management is not all engineering and numbers. This is
because many operational issues are caused by employee related issues such as motivation.
Therefore, a humanistic approach where operational challenges are address by taking into
consideration the concerns of workers is essential for the success of any operations strategy.
Further, with the advent of Industry 4.0, the very nature of modern operations is itself being
digitally transformed. Therefore, many departures are expected from traditional operations
management practices currently in existence. Therefore, we will study this module from a
futuristic, technical as well as humanistic approach
The week 1 objectives are as follows
• Define the term operations management
• Identify the three major functional areas of organizations and describe how they interrelate
• Compare and contrast service and manufacturing operations
• Describe the operations function and the nature of the
operations manager’s job and decision making
• Differentiate between design and operation of production systems
Identify current trends in business that impact operations.

Defining Operations
Operations Management is the management of
systems or processes that create goods and/or provide
services. It must create value for the business. Look at
the example of a hospital

Therefore, Operations can be defined as the process of converting inputs to outputs of greater
value. Operations Management affects:
• Companies’ ability to compete
• Nation’s ability to compete internationally

Video - Watch the video below and identify what is wrong with this operation
https://www.youtube.com/watch?v=WmAwcMNxGqM

Quality, Time, Cost, Dependability & Flexibility in Operations (Five key performance objectives
in operations
companies compete in the marketplace by virtue of one or more of the following competitive
priorities. Hence these also become priorities for operations. The big 5 of operations performance
objectives add value for customers and be better than competitors
1. Quality - providing error free goods and services will satisfy the customers, this is known as
'quality'.
2. Speed - doing things fast, to minimize the time between the order and the availability of the
product or service that gives the customer speed
3. Dependability - doing things in time for customers to receive their goods or services when they
are promised.
4. Flexibility - responding to a dynamic environment so that Organisation change their products
and services and changes the way they do business.
5. Cost – producing goods and services at less cost that competitors. This is especially where
companies compete with prices is 'cost'.

The Differences Between Goods and Services

There are many differences traditionally
identified between goods and services.
Manufacturing and Service Organizations
differ clearly because manufacturing is tangible
goods-oriented, and service is intangible act-
oriented
It is generally accepted that services are more
difficult to manage compared to goods because
of the following reasons
1. Jobs in services are often less structured
than in manufacturing
2. Customer contact is generally much higher in services compared to manufacturing
3. In many services, worker skill levels are low compared to those of manufacturing
employees
4. Services are adding many new workers in low-skill, entry- level positions
5. Employee turnover is high in services, especially in low-skill jobs
6. Input variability tends to be higher in many service environments than in manufacturing
7. Service performance can be adversely affected by many factors outside of the manager’s
control (e.g., employee and customer attitudes)

In today’s world the

differences between goods and
services have diminished.
Products are typically neither
purely service- or purely
goods- based. Hence, in
modern time the traditional
boundaries between goods and
services have blurred. For
example, McDonalds
Considers itself to be a service organization.
 Most of you have visited a fast food chain. Study the McDonalds Operations layout and
identify if it is a goods or Service manufacturer? What are the other elements within a
McDonalds operation that makes it a service provider?

The Scope of Operations Management

The scope of operations management ranges across the organization. The operations function
includes many interrelated activities and challenges such as
– Capacity planning
– Forecasting
– Scheduling
– Managing inventories
– Assuring quality
– Motivating employees
– Deciding where to locate facilities
– And more . . .

But these are mainly categorized into 5 key challenges. Each of these 5 items below will be studied
in greater detail in the weeks to come in order to understand how operations can contribute towards
profitability and strategy of the organization.
1. Capacity – how much can I produce
2. Scheduling – how am I going to do it
3. Inventory – how much inventory is there and how can I reduce it
 4. Standards – what do I consider to be an efficient production and a quality product
5. Control- is the production process working

Video - Modern Operations in Sri Lanka - Sri Lankan apparel manufacturer Hirdaramani stitches
a Smart Quality Management System
https://www.youtube.com/watch?v=-O6qsbh1RUQ

During the process of tackling the above challenges, an operation manager makes a range of
decisions. These decisions are also categorized into 2 main types. During the coming weeks we
will discuss both the design and operational angle.
1. System Design Decisions
These are typically strategic decisions that require long-term commitment of resources and
the Determining parameters of system operation. Examples include…
– Capacity
– Facility location
– Facility layout
– Product and service planning
– Acquisition and placement of equipment
2. System Operation Decisions
Operations managers spend more time on system operation decision than any other
decision area because this is part of their day to day activities. Design decisions must
be supported and implemented with operations decisions. Examples include…
a. Management of personnel
b. Inventory management and control
c. Scheduling
d. Project management
e. Quality assurance

Industry 1.0 to 4.0: The Evolution of Smart Factories

Many researchers, futurists, management thinkers and writers have categorized the evolution of
operations management using key historical influences and time periods. However, the key driver
for the evolution of operations have always been the advent of new technologies. The evolution of
operations management is categorized in to 4 main eras based on the technology used.
This classification was first proposed by Klaus Schwab, executive chairman of the World
Economic Forum, in a 2015 and subsequently in his book titled “the fourth industrial revolution”
.
The Fourth Industrial Revolution is a way of describing the blurring of boundaries between the
physical, digital, and biological worlds. It's a fusion of advances in artificial intelligence (AI),
robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing,
and other technologies - Klaus Schwab

Industry 1.0
For centuries, goods including food, clothing, houses and weaponry were manufactured by
hand or with the help of work animals. By the beginning of the 19th century, though,
manufacturing began to change dramatically with the introduction of Industry 1.0, and
operations rapidly developed from there. Here is an overview of that evolution.
In the 1800s, water- and steam-powered machines were developed to aid workers. As
production capabilities increased, business also grew from individual cottage owners
taking care of their own — and maybe their neighbors’ — needs to organizations with
owners, managers and employees serving customers.

Industry 2.0
By the beginning of the 20th century, electricity became the primary source of power. It
was easier to use than water and steam and enabled businesses to concentrate power
sources to individual machines. Eventually machines were designed with their own power
sources, making them more portable.
This period also saw the development of several management programs that made it
possible to increase the efficiency and effectiveness of manufacturing facilities. Division
of labor, where each worker does a part of the total job, increased productivity. Mass
production of goods using assembly lines became commonplace. American mechanical
engineer Frederick Taylor introduced approaches of studying jobs to optimize worker and
workplace methods. Lastly, just-in-time and lean manufacturing principles further refined
the way in which manufacturing companies could improve their quality and output.

Industry 3.0
In the last few decades of the 20th century, the invention and manufacture of electronic
devices, such as the transistor and, later, integrated circuit chips, made it possible to more
fully automate individual machines to supplement or replace operators. This period also
spawned the development of software systems to capitalize on the electronic hardware.
Integrated systems, such as material requirements planning, were superseded by enterprise
resources planning tools that enabled humans to plan, schedule and track product flows
through the factory. Pressure to reduce costs caused many manufacturers to move
component and assembly operations to low-cost countries. The extended geographic
dispersion resulted in the formalization of the concept of supply chain management.

Industry 4.0
In the 21st century, Industry 4.0 connects the internet of things (IOT) with manufacturing
techniques to enable systems to share information, analyze it and use it to guide intelligent
actions. It also incorporates cutting-edge technologies including additive manufacturing,
robotics, artificial intelligence and other cognitive technologies, advanced materials, and
augmented reality, according to the article “Industry 4.0 and Manufacturing Ecosystems”
by Deloitte University Press.
The development of new technology has been a primary driver of the movement to Industry
4.0. Some of the programs first developed during the later stages of the 20th century, such
 as manufacturing execution systems, shop floor control and product life cycle management,
were farsighted concepts that lacked the technology needed to make their complete
implementation possible. Now, Industry 4.0 can help these programs reach their full
potential.

Watch Video of Industry 4.0 Smart Factories

• https://www.youtube.com/watch?v=v9rZOa3CUC8
• https://www.youtube.com/watch?v=Y990kaGbJD0

Read the Article: The future belongs to organizations with intelligent operations
https://www.accenture.com/hu-en/insights/operations/intelligent-operations-2018

Key Technologies used in

Industry 4.0
• IOT
• Cloud Computing
• Big Data
• Autonomous Robotics
• Augmented reality
• Cyber security
• Simulation
• System integration
• Additive
manufacturing
• 3D Printing

Watch Video links and discuss if Industry 4.0 technologies are here in Sri Lanka
• https://www.youtube.com/watch?v=IN-vMpES6_g
• https://www.youtube.com/watch?v=2eGeOXIJ2Rw
Key Future Trends for Operations
The way in which business is conducted is changing. Hence, strategies and operations must adapt
to these technologies and changes. A few sweeping changes and shifts are identified in the
current era
• Internet, E-Business & E-Commerce IOT for 4.0
• Management of Technology and IT using ERP
• Globalization and global operations distribution
• Challenges of Management of Supply Chains becoming a big part of operations
• Increased Outsourcing
• Need for Operations Agility
• Increased concerns for Ethical Behavior

Assignment – Due on week 10

Write a brief 100-word summary each for the 10 technologies driving industry 4.0. You must
highlight the key features of each technology and how it will impact operations. Some links are
provided to start exploring. But use the web for your own expanded research
https://www.bcg.com/capabilities/operations/embracing-industry-4.0-rediscovering-growth
https://www.spotlightmetal.com/iot-basics-what-does-industry-40-mean-a-842216/?cmp=go-ta-art-trf-
SLM_DSA-20180820&gclid=EAIaIQobChMIvunL2e6u6wIV1XwrCh3a5QBSEAAYAiAAEgIXwPD_BwE

Recap Questions
How do you define operations management?
What are the key differences between manufacturing and service operations?
Why is it considered that service operations are more difficult to manage than manufacturing operations?
What are the 5 key focus areas of operations?
What are the examples for system design decisions?
What are the examples for system operating decisions?
Who coined the word industry 4.0?
What are the key features of industry 1.0, 2.0, 3.0 and 4.0?
What are the 10 technologies driving industry 4.0?
 Week 2 - Product Design and Process Design

Introduction to the product Decision

Although the term products may often refer to tangible goods, it also refers to offerings by service
organizations. The product decision is one of the most important strategic decisions every
organization must make. The objective of the product decision is to develop and implement a
product strategy that meets the demands of the marketplace with a competitive advantage. In
simple terms it asks what products and services must be selected, how to define their features and
how to design them in order to be profitable

Introduction to product Life Cycle (PLC)

The four phases of the product life cycle
are introduction, growth, maturity, and
decline. PLC may be any length from a
few hours to decades. The operations
function must be able to introduce new
products successfully as old products are
phased out. Product life cycles are
becoming shorter and the rate of
technological change is increasing.
Developing new products faster can
result in a competitive advantage

Product-by-value analysis is an analysis

done by making a list of products, in descending order of their individual dollar contribution to the
firm, as well as the total annual dollar contribution of the product.
Generating New product Opportunities
Product selection, definition, and design take place on a continuing basis. Changes in product
opportunities, the products themselves, product volume, and product mix may arise due to
understanding the following
Understanding the customer
• Economic change
• Sociological and demographic change
• Technological change
• Political/legal change
• Market practice, professional standards, suppliers, distributors

Product Development Tools

• Quality function deployment (QFD) —A process for determining customer requirements
(customer “wants”) and translating them into attributes (the “how’s”) that each functional
area can understand and act on.
• House of quality —A part of the quality function deployment process that utilizes a
planning matrix to relate customer wants to how the firm is going to meet those wants.
• Product development teams —Teams charged with moving from market requirements for
a product to achieving product success. j Concurrent engineering —Simultaneous
performance of the various stages of product development.
• Manufacturability and value engineering —Activities that help improve a product’s
design, production, maintainability, and use.

Modern Technologies and Trends in Product Development

• Robust design —A design that can be produced to requirements even with unfavorable
conditions in the production process.
• Modular design —A design in which parts or components of a product are subdivided
into modules that are easily interchanged or replaced.
• Computer-aided design (CAD) —Interactive use of a computer to develop and document
a product.
• Design for manufacture and assembly (DFMA) —Software that allows designers to look
at the effect of design on manufacturing of a product.
• Standard for the exchange of product data (STEP) —A standard that provides a format
allowing the electronic transmission of three-dimensional data.
• Computer-aided manufacturing (CAM) —The use of information technology to control
machinery.
• 3-D printing —An extension of CAD that builds prototypes and small lots.
 • Virtual reality —A visual form of communication in which images substitute for reality
and typically allow the user to respond interactively.
• Value analysis —A review of successful products that takes place during the production
process.
• Sustainability is meeting the needs of the present without compromising the ability of
future generations to meet their needs. Legal requirements and ISO 9001 mandates
manufacturers to do a life cycle assessment (LCA) of the environmental impact. LCA
assesses the environmental impact of a product from material and energy inputs to disposal
and environmental releases. The following are important for that
o Develop safe and more environmentally sound products
o Minimize waste of raw materials and energy
o Reduce environmental liabilities
o Increase cost-effectiveness of complying with
environmental regulations
o Be recognized as a good corporate citizen

Video – Examples of modern design for everyday use

https://www.youtube.com/watch?v=LUpQSaKuVD0

Video – designing a better safari jeep

https://planet-lean.com/lean-improvement-safari-conversion/

Service Design
Service design is more
challenging because of the
intangible nature of services and
the high customer interaction. In
modern times this interaction is
increasing

One of the most common

methods used is process door
analysis which looks at 3 things.
Process door analysis suggests
that we optimize moments of
truth and minimize disconnects
and collisions. You must open
each door and see what is behind
them
1. Moments of Truth. This is a Concept created by Jan Carlzon of Scandinavian Airways. Critical
moments between the customer and the organization that determine customer satisfaction.
There may be many of these moments. These are opportunities to gain or lose business
2 & 3. Disconnects and Collisions. These are caused by the following
• process gaps: responsibility for a given step in the process is unclear, or the process
seems to go off track
• Conflicting objectives: the
goals of one group cause
problems or errors for
another; e.g., say one group
is focusing on process
speed and another group is
oriented to error
reduction…the result
maybe that neither group
accomplishes its objectives!
• Redundancies: duplication of efforts such as when two people or groups approve a
document. Redundancies occur when different groups take action that they are
unaware is being done somewhere else in the process
Jan Calzon, who was the CEO of Scandinavian airlines
proposed several profound ideas for implementing process
door analysis to design and optimise service operations. His
success as CEO of SAS and his best-selling book titled
“moments of truth” was instrumental in popularising
process door analysis

• Everyone needs to know and feel that he or she is

needed
• Everyone wants to be treated as an individual
• Giving someone the freedom to take responsibility
releases resources that would otherwise remain
concealed
• An individual without information cannot take responsibility, an individual who is given
information cannot help but take responsibility

Recap Questions
What is the product decision and why is it so important for an organization?
What are the main stages of the product life cycle?
How does a firm identify new product opportunities?
What is QFD?
What are the modern Technologies and Trends in Product Development?
How do we use process door analysis for service design?
Who coined the phrase “moments of truth”?
 Week 3 - Work Study

Introduction to work study

Work study is one of the most powerful tools to optimize resource allocation in operations. It is
used as an improvement tool in many methodologies such as Lean and Six Sigma.

Work study can be defined as the systematic study of work systems with the purposes of
1. Developing the preferred system and Method (with lowest cost)
2. Standardizing this system and method
3. Determining standard time for the task
4. Assisting in training the worker in the preferred Method

At the heart of work study is the idea that small improvements can yield big results.
Video - https://www.youtube.com/watch?v=HZ5HrkN52j8
Look at the unbalanced workflow and identify why waiting time and inventory build-up
happens. Waiting time happens if the second person works faster/ has less work compared to
the first person. Inventory happens if the second person is works slower or has more workload
compared to the first person

The management has asked you

to streamline a 3 step process
done by 3 workers. You have
measured the time taken for each
of the 3 steps in seconds. (Step A
= 3 Minutes, step B = 6 Minutes,
Step C = 3 Seconds)
1. What is the total processing
time (lead Time)
2. In a continuous production
what is the time to produce
one Unit (cycle time )
3. Which step is a bottle neck
5. if the management wants to
produce 15 units every Hour
what is the target cycle time (TAKT Time)…is this achievable
4. If the Management wants to reduce staff from 3-2…can this be done without slowing the
rate of production
History and evolution of work study
Much of what we use as work study today was developed by 2 sets of individuals. Today both
techniques are used together side by side.
1. WORK MEASUREMENT/ Time Study Pioneered by F.W. Taylor. Time Study :
Determine the time necessary to perform a job and its elements. Taylor was the pioneer in
breaking work into small parts and measuring time taken for each part separately. F. W.
Taylor asked some fundamental questions which are still relevant even today.
• Which is the best way to do this job?
• What should constitute a day's work?
• How can we select the best worker and train him?
• How can we divide the work equally?

2. MOTION STUDY Pioneered by Frank and Lilian Gilbreth : Examine the job and finding
more efficient method to perform it. Gilbreth pioneered the study of the body motions,
eliminating unnecessary motions, simplifying necessary motions, and then establishing the
most favorable motion sequence for maximum efficiency. The Gilbreths pioneered a few
ideas and techniques that are still being used today
• There is “one best method” to perform a given task
• Micromotion study through the technique of filming motions to study, Cycle graphs
and Chorono cycle graph

Advantages of Work study

• Simplifying or modifying the methods of operation
• Reduces unnecessary or excess work
• Stops wasteful use of resources
• Contributes to industrial safety by identifying hazardous work and developing safer
methods
• Cuts down the time of performing a certain activity.

See how McDonalds use work study to deliver a faster service to customers. The time for each
activity is measured and standardised and bottlenecks minimized
Ky steps in conducting Work Study
In order to get good results, a work study must be done systematically and realistically. Time study
& Work sampling involve direct observation kills as well as analytical skills.
• Select a Job
• Decide the unit of measurement based on the process requirement
• Break it to small parts which are easily recognizable
• Carefully select workers for the study. They must be experienced workers with a good
accuracy and TAT record. If the workers being observed work unrealistically fast or
intentionally slowly…the results will be wrong
• Decide the sample size of observations to get an accurate picture
• Time each element from pick to pick. Record the data and Analyze the data
• Compute a normal time
• Compute a standard time by adding an extra allowance of 10 to 15%
• Develop a new method
• Install and implement it
• Maintain it
Video – Example of doing a simple Work Study
https://www.youtube.com/watch?v=idHmP8S16T0

Discussion - What are the things that can go wrong hen conducting a work study
Breaking a job in to small parts is essential for work study. See the example of a tying a shoe-lace
from a work study perspective. After you break the job to small parts you categorize the hand
movements to see which activities can be performed better ad faster.

Gilbreth pioneered very innovative ways of breaking the

jobs in to small parts and tracking the hand and body
movements. While F.W tailor used stop watches for his
initial work studies, Gilbreth took this a step forward by
filming the action watching the replay in slow motion. The
example below shows how they used work study methods
to design a modern Kitchen. Why do you think the kitchen
table and the wall behind has squares printed on them? Why
do you think they filmed a clock within the frame of the
action? Do you realize they have used light painting to track
movements?

Another Brilliant idea of

Gilbreth was to break the
total processing time in to 2
main components
1. Total work content –
basic essential work
content of a product
or operation
2. Total Ineffective time
– Gilbreth identified
that these were
caused by Defects in
design, inefficient
methods of manufacture, Short-comings of the management or Work-man attributes. This
is what was later explored as non-value adding activities in Lean
 Gilbreth used his own experience as a
brick layer in his younger days to develop
some of the early concepts of motion
study. Gilbreth was able to improve the
productivity of laying bricks from 120 to
350 per man per hour. The solution is
obvious (in retrospect), but first we have
to challenge the status quo of existing
methods of doing things
https://www.youtube.com/watch?v=BJWPuiqznhI

Using Work study for Modern Job design

Work study standardizes the optimum utilization of resources. This output from work study is
often used to job design. Job Design is the process by which managers decide individual job tasks
and authority

Traditionally this was done using an engineering approach where the work of every workman is
fully planned out by the management at least on day in advance and each man receives in most
cases complete written instructions, describing in detail the task which he/she has to accomplish.
This was what was advocated by F.W. Tailor who was obsessed with squeezing the maximum out
of workers

But nowadays managers take a more human approach to job design where motivation, satisfaction
and performance is built into job design. This is because setting unrealistic standard times does
not benefit the organization in the long run
Video - Work is redesigned in this garage in Botswana, so that a car can be serviced within 30
minutes. Identify how work study has been used to achieve this
https://www.youtube.com/watch?v=vsDbT2ig4iY

Video - Identify how work was redesigned in a restaurant using work study methods for job
design
https://planet-lean.com/lean-services-365-bakeries-barcelona/

Assignment – Due in Week 10

List what are potential pitfalls in doing a work study?
Recap Questions
What are the advantages of work study?
What are the 2 techniques that are combined to make modern work study?
What is the difference between work measurement and motion study?
What are the steps in conducting a work study?
What are the main hand movements that Gilbreth classified to break the work in to smaller units?
According to Gilbreth what are the differences between total work content and total ineffective time?
How do we use work study findings for job design?
 Week 4 - Scheduling Techniques – Many Jobs, One Machine

Introduction to Scheduling
Scheduling is the activity that specifies when and in what sequence resources such as labor,
equipment and facilities are needed to produce a product or provide a service. It is the last stage of
planning before production occurs. In real life this can be a very complex task often done with the
aid of complex calculations and software. The holy grail of scheduling is real time scheduling.
With the advent of industry 4.0 technologies and fully automated factories real time sequencing is
fast becoming a reality.

Scheduling involves the timing of operations to achieve the efficient movement of units through
a system. The ultimate objective of scheduling is to allocate and prioritize demand (generated by
either forecasts or customer orders) to available facilities. Hence, marshaling available resources
and carefully sequencing activities is at the very heart of scheduling

Any profitable organization must be consciously involved in some form of scheduling of

activities and resources to efficiently cater to demand. But the nature of scheduling, the types of
activities being scheduled, technology and tools used will vary significantly between industries
and organizations. Let’s, look at a few examples of diverse scheduling
Type of Organization Activities Scheduled
Maintenance of aircraft
Airlines Departure timetables
Flight crews, catering, gate, and ticketing personnel
Patient admissions
Operating room use
Hospital
Nursing, security, maintenance staffs
Outpatient treatments
Student and instructor schedules
University Classrooms and audiovisual equipment
Graduate and undergraduate courses
Delivery of fresh foods and meal preparation
Theme park with
Ushers, ticket takers, food servers, security personnel
restaurants
shows, concerts, arenas
Manufacturing Purchases of materials Workers
Plant Production of goods

Note: the scheduling method selected must closely reflect the nature of work, technology and
industry norms such as profitability drivers and customer behavior. It is a complicated balancing
act done with complex computer programs
The advantages of Scheduling
The strategic importance of scheduling is clear. All in all, efficient scheduling minimizes cost
and improve profits
• Effective scheduling means faster movement of goods and services through a facility.
This means greater use of assets and hence greater capacity per dollar invested, which, in
turn, lowers cost .
• Added capacity, faster throughput, and the related flexibility mean better customer
service through faster delivery .
• Good scheduling contributes to realistic commitments, hence dependable delivery

Four Key Scheduling Criteria

When efficiently matching demand with available
facilities, a scheduling operation must focus on 4
key things. These are called scheduling criteria. Due
to resource and time constraints, balancing these 4
conflicting objectives can be a complex task. Very
often it is done with the aid of complex software
(1) minimize completion time
(2) maximize utilization
(3) minimize work-in-process (WIP) inventory
(4) minimize customer waiting time .

This week’s lecture addresses the issues of short-term scheduling in both manufacturing and
service environments.
A very good example of efficient scheduling is e-
Channelling. Discuss how e-channelling uses technology
and scheduling to match patient demand with available
resources such as doctors, hospital rooms and equipment
https://www.youtube.com/watch?v=6meF29wNWzQ

Concepts developed for scheduling in Manufacturing

Manufacturing scheduling can be a complex activity because we are often sequencing multiple
jobs across, multiple machines with many pre-conditions. Therefore, a few key concepts are
developed to help us to bring some method in to this madness. You must know these concepts
and their definitions before understanding the priority sequencing rules that are practiced today.
Hence, do not proceed any further before you get these ideas clearly into your head.
• Capacity – amount of work loads that a given processing center can handle within a
specified period. For example, the capacity of machine A may be 200 units within 8
hours of processing
• Loading—The assigning of jobs to work or processing centers. A load is the amount of
work allocated to one processing center. You must always compare load with available
capacity
• Due date – Target date of completion. Failing to complete within due date may result in
loss of future business or penalties.
• Tardiness - difference between a late job’s due date and its completion time. This looks at
how many days have we exceeded the deadline for each job. If the job is completed on
time tardiness is zero
When Actual Completion date > due date… Tardiness = actual completed date-due date
• Flow time —The time each job spends waiting plus the time being processed. In other
words, flow time is completion time

• Processing time – The time taken to process the task excluding waiting time
• Waiting Time – Any time that the processing is not happening is called waiting time.
Waiting time is automatically created if the next activity does not start as soon as the
previous activity ends. This is also called idle time. It is important to note that even
though the machines are idling, the clock is ticking closer to the due date with every
passing second
• Slack – This looks at how many spare days we can postpone the start of processing
without exceeding the due date.
Slack = (Due date -Todays date-1) – (processing time)
(time available – time needed)
• Critical ratio (CR) — CR is an index number computed by dividing the time remaining
until due date by the work time remaining. if critical ratio is one, we are on track. If CR
is below 1, it means we are heading to tardiness. If CR is above 1, it means we have slack

CR = Time available
Time needed
• Capacity utilization – How much of the available capacity is used for productive time.
When idle time and slack increase the capacity, utilization drops. When utilization drops,
the overall profitability also drops
 Look very carefully at how Slack and Critical Ratio is calculated in the example below

Sequencing Priority Rules used for Sequencing manufacturing activities

If multiple jobs must be done using limited time and machine capacity, we must have a
methodical manner to decide which jobs must be prioritized and done before other jobs. These
are called sequencing prioritizing rules.
A sequencing activity means determining the order in which jobs should be done at each work
center. Each company must decide its own sequencing prioritizing rules based upon its business
requirement and how the business requirement impacts Scheduling Criteria

idntifying business identifying the most selecting the most

Actual sequencing of
requirements for critical Scheduling suitable seuencing
manufacturing activities
scheduling Critera Prioritizing rules

Sequencing Priority rules are rules used to determine the sequence of jobs in process-oriented
facilities. Sequencing priority rules try to minimize completion time, maximize facility
utilization, minimize number of jobs in the system, and minimize job lateness. Some of the
most common ones are as below. Each of these rules will create a different sequence. And each
scenario will have advantages as well as disadvantages. Hence, companies must be very careful
in selecting sequencing prioritization rules.
• First come, first served (FCFS) —Jobs are completed in the order in which they arrived.
FCFS performs about average on most criteria, and it appears fair to customers. Use
FCFC when operating at low-capacity levels
• Shortest processing time (SPT) First—Jobs with the shortest processing times are
assigned first. SPT is the best technique for minimizing job flow and average number of
jobs in the system. SPT most useful when shop is highly congested
• Earliest due date First—Earliest due date jobs are performed first. EDD minimizes
maximum tardiness. Use DDATE when only small tardiness values can be tolerated
 • Longest processing time (LPT) First—Jobs with the longest processing time are
completed first. Use LPT if subcontracting is anticipated.
• Lowest Critical ratio (CR) First —A sequencing rule that is an index number computed
by dividing the time remaining until due date by the work time remaining. As opposed to
the priority rules, the critical ratio is dynamic and easily updated. It tends to perform
better than FCFS, SPT, EDD, or LPT on the average job lateness criterion.

The example below

uses the CR ratio rule
to sequence the job
with the lowest CR
first. Look very
carefully at how the
priority rule is applied
and tardiness is
calculated. The CR
ratio for each job was
calculated in the
earlier example
discussed (see above)

Sequencing using Gantt Charts for Scheduling

There are many tools used to sequence activities in an organization. Gantt charts are one of the
most popular tools used for sequencing planning, loading and scheduling. Gantt Charts can be
used in both manufacturing and service.

Gantt Planning charts are used to

schedule resources and allocate
time. The Gantt load chart
shows the loading and idle times
of several departments,
machines, or facilities. It displays
the relative workloads in the
system so that the manager
knows what adjustments are
appropriate. The Gantt schedule
chart is used to monitor jobs in
progress (and is also used for
project scheduling). It indicates which jobs are on schedule and which are ahead of or behind
schedule.
 Look carefully at the Gantt chart above and answer the following questions
• What are the jobs already fully completed?
• What are the jobs ahead of schedule?
• What are the jobs behind schedule?
• What are the jobs exactly on schedule?

Real time Sequencing using finite capacity scheduling (FCS) and Industry 4.0
Manual methods of prioritizing using sequencing rules are tedious and inflexible. Available
capacity and slack are constantly changing, and prioritizing rules may not be able adapt to these
changes real time. Available capacity is finite…but it is dynamic and changes every second. Finite
capacity scheduling (FCS) stands for Computerized short-term scheduling that overcomes the
disadvantage of rule-based systems by providing the user with graphical interactive computing.
FCS is built into modern ERP systems
The holy grail of scheduling is real time scheduling. With the advent of industry 4.0 technologies
and fully automated factories real time sequencing is fast becoming a reality.

Scheduling in services
In many Service organizations demand is seasonal. But it may take a long time to train new staff.
Cyclical scheduling with inconsistent staffing needs is often the case in services. The objective
focuses on developing a schedule with the minimum number of workers. In these cases, each
employee is assigned to a shift and must be given time off. Service organization schedules need to
ensure smooth operation and still keep personnel happy. Labor is a very flexible or inflexible
resource depending on culture, labor relations and legal framework. Hence, scheduling services
can be even more complex than scheduling manufacturing plants.
• Hospitals have complex scheduling system to handle complex processes and material
requirements
• Retail stores use scheduling optimization systems that track sales, transactions, and
customer traffic to create work schedules in less time and with improved customer
satisfaction
• 24/7 operations like police/fire departments, emergency hot lines, and mail order
businesses use flexible workers and variable schedules, often created using computerized
systems
• Airlines and Shipping lines must meet complex legal, customer and union regulations and
often use mathematical models and linear programming to develop optimal schedules
• Banks use a cross-trained and flexible workforce and part-time workers

Very innovative solutions have been developed to schedule both the demand as well as the staff
availability. Study the examples below carefully
 • Demand management:
• Appointments & reservations
• Posted schedules
• Delayed services or backlogs (queues)
• Scheduling Employees:
• Staff for peak demand (if cost isn’t prohibitive)
• Floating employees or employees on call
• Temporary, seasonal, or part-time employees

Look carefully at the following

example below. Five Service
sector staff are scheduled over
a 7 day week. The objective is
to give 2 days off for each
employee per week. According
to the existing schedule, each
person is given 1 day off every
2 days. But employees have
requested to have 2
consecutive days off. See how
the schedule has been
improved to ensure staff
retention.

Assignment Due on Week 10

Carefully read the article below and identify 3 reasons why a computer-generated schedule can
never be 100% accurate

The job shop schedule: Always imperfect, ever adapting

https://www.thefabricator.com/thefabricator/article/shopmanagement/the-job-shop-schedule-
always-imperfect-ever-adapting

Recap Questions
How would you define scheduling?
Give examples of different activities that are scheduled in universities, ports, airports, hospitals,
restaurant, theme parks and manufacturing plants?
What are the advantages of scheduling?
What are the 4 key criteria of scheduling?
What makes e-channelling such an efficient example of service operations scheduling?
How do you define each of the key concepts in scheduling such as capacity, load, due date, slack,
critical ratio, waiting time, processing time, tardiness and capacity utilization?
In the example below calculate slack and Critical ratio for A, B, C and D activities?

In the example above how would you sequence the activities using the FCFS, EDD, SPT, LPT, Critical
Ration rules? Write the sequence for each rule?
What are the advantages of using a Gant Chart?
How do you identify activities that are on time, behind schedule and ahead of schedule using a Gant
chart?
What is finite capacity scheduling?
Why is scheduling more difficult and complex in service operations?
What are the things you should consider when scheduling service operations?
 Week 5 - Facility Location and Layout

Introduction to Facility Location Decision

Facility location may be defined as a place where the facility will be set up for producing goods
or services. Location decisions represent an integral part of the strategic planning process
because of 2 reasons

• One is that they entail a long-term commitment, which makes mistakes difficult to overcome.

• The other is that location decisions often have an impact on investment requirements,
operating costs and revenues, and operations itself.

For example, a poor choice of location might result in excessive transportation costs, a shortage
of qualified labor, loss of competitive advantage, inadequate supplies of raw materials, or some
similar condition that is detrimental to operations. For services, a poor location could result in
loss of customers and/or high operating costs.

Facility location decisions are not always made only once at the start up of the business. The
need for location selection may arise under any of the following conditions:

• When a business is newly started.

• When the existing business unit has outgrown its original facilities and expansion is not
possible; hence a new location has to be found.
• When the volume of business or the extent of market necessitates th establishment of
branches.
• When the lease expires, and the landlord does not renew the lease.
• Other social or economic reasons
Six Key factors that can affect location decisions

1. Process inputs.
2. Process outputs.

3. Process requirements.

4. Personal preferences.

5. Governmental issues.

6. Site and plant availabilities.

Procedures and Techniques for Selecting Facility Location

There are different techniques to select a proper facility location. Following are some common
techniques used in making location decisions:

• Weighted average model of Location rating factor

• Transport cost model of center of gravity
• Break even analysis to see which location yields adequate volume for profits
Location rating factor technique: Scoring Model

In this technique, first an organization Location Alternatives

needs to identify the factors that Chile Mexico Honduras Brazil

influence its location decision. Next, each Factor Name Weight Score out of 10

factor is provided a weight between ‘0’ Labor Productivity 0.15 8 7 3 6

to ‘1’ according to the level of Nearness to

0.18 4 6 9 7
importance, where ‘0’ denotes least Markets

important and ‘1’ denotes most Nearness to

Sources of Raw 0.25 3 5 2 8
important.
Material

In this example, the score for each Infrastructure

0.12 7 3 4 4
Facilities
location and for each factor is given in
Transportation
the table on RHS. 0.08 6 6 7 9
Facilities

For example, for labor productivity, Chile Power Availability 0.08 5 8 6 7

scored 8 points, Mexico scored 7 points, Political Climate 0.03 9 9 8 8

Honduras scored 3 points and Brazil Labor Unions 0.02 3 4 3 3

scored 6 points. Labor Cost 0.04 6 5 5 5

Illustration of calculations for total score Material Cost 0.05 7 2 1 2

for Chile are given below. Total (weighted

1.00 5.31 5.51 4.64 6.52
sums)

Score for Chile = 5.31

= (0.15 x 8) + (0.18 x 4) + (0.25 x 3) + (0.12 x 7) + (0.08 x 6) + (0.08 x 5) + (0.03 x 9) + (0.02 x 3) +

(0.04 x 6) + (0.05 x 7).

Centre-of-gravity technique:

This technique emphasizes on transportation cost in the determination of facility location.

Transportation cost mainly depends on distance, weight of merchandise and the time required for
transportation.
Transportation costs include the combined costs of moving raw materials to the plant and of
transporting finished goods from the plant to one or more warehouses.
Example: Columbus and St. Louis locations are being compared. The cost of setting up
operations is the same. But the transport cost varies.
o Total transportation costs to and from Columbus plant are $6 + $2 = $8 per unit;
o Total transportation costs for St. Louis are $3 + $4 = $7 per unit.
o Other things being equal, the company should choose St. Louis.

Breakeven Technique

Breakeven analysis looks at how many units of throughput need to be sold in order to recover costs
(variable and fixed) and breakeven?

• Variable (Direct) Costs- Variable (direct) costs per unit are the costs of input resources that tend
to be fully chargeable and directly attributable to each unit of the product. Total variable costs,
TVC = C*Q, where C is variable cost per unit and Q is the number of units produced.

• Fixed (indirect) Costs - Fixed costs must be paid, whether one unit is made or thousands. These
costs are bundled together as overhead costs.

• Total revenue, TR = P*Q, is the volume Q multiplied by the price per unit P.

• BEP = Fixed Cost/ Contribution

• Contribution = Selling price – variable cost

• Musuk Spices Company (MSC), Delhi, India, plans to set up a new plant at one of the following
two locations: Bhopal and Agra in India. The fixed costs per year will be $ 450,000 and $
300,000 per year for Bhopal and Agra respectively. The variable costs per pound are expected
to be $ 10/lb. for Bhopal and $ 14/lb. for Agra respectively. The selling price is expected to
be $ 30/lb for both locations

• Breakeven Point (BEP) = Fixed Cost/ (Selling Price – Variable Cost)

• BEP (Bhopal) = 450,000/ (30-10) = 22,500 lbs.

• BEP (Agra) = 300,000/ (30- 14) = 18,750 lbs.

• Bhopal will generate profits only if the volume of demand is more than 22,500 lbs.

• Agra will start generating profits if the volume is more than 18,750.

• If demand is likely to be about 20,000, then Agra is chosen.

 Say demand will exceed 25,000, which plant should be selected?

• Find the point of indifference.

• Find revenue if Q lbs. of spices are produced and sold by each plant.

Revenue (Bhopal) = Q (30-10) - 450,000 = 20 Q - 450,000

Revenue (Agra) = Q (30-14) - 300,000 = 16 Q - 300,000

Equate the two revenues to find the point of indifference – the value of Q.

Q = (450,000 – 300,000)/ (20-16) = 150,000/4 = 37,500.

Facility Layout Introduction

Facility layout refers to the arrangement of machines, departments, workstations, storage areas,
aisles, and common areas within an existing or proposed facility. Layout decisions significantly
affect how efficiently workers can do their jobs, how fast goods can be produced, how difficult it
is to automate a system, and how responsive the system can be to changes in product or service
design, product mix, and demand volume.

The advantages of effective layout are as follows

➢ 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
➢ Reduce manufacturing cycle time and customer service time
➢ Eliminate wasted or redundant movement
➢ Facilitate the entry, exit, and placement of material, products, and 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.

Basic Layouts

There are some common types of layouts

➢ Process layout
➢ Product layout
➢ Cellular Layout/ Grouped technology layout
➢ Fixed layout
➢ Retail layout
➢ Office layout
➢ Warehouse layout

Process Layouts/ Job Shop Layout

Process layouts, also known as functional layouts, group similar activities together in
departments or work centers according to the process or function they perform. For example, in
a machine shop, all drills would be located in one work center, lathes in another work center, and
milling machines in still another work center. In a department store, women's clothes, men's
clothes, children's clothes, cosmetics, and shoes are in separate departments.
 A process layout in service A process layout in manufacturing

Discussion – Can we do a one-piece flow with a process layout? Discuss why.

https://www.youtube.com/watch?v=JoLHKSE8sfU
https://www.youtube.com/watch?v=OOoDv4I7SI0

Product Layout

Product layouts, better known as assembly lines,

arrange activities in a line according to the sequence of
operations that need to be performed to assemble a
product. Each product or has its own "line" specifically
designed to meet its requirements. The
flow of work is orderly and efficient,
moving from one workstation to another
down the assembly line until a finished
product comes off the end of the line
Fixed Position Layout

Fixed-position layouts are typical of projects in

which the product produced is too fragile, bulky,
or heavy to move. Ships, houses, and aircraft are
examples. In this layout, the product remains
stationary for the entire manufacturing cycle.
Equipment, workers, materials, and other
resources are brought to the production site.

Warehousing and Storage layouts

The Objective is to optimize trade-offs between handling costs
and costs associated with warehouse space. Maximize the total
“cube” of the warehouse – utilize its full volume while
maintaining low material handling costs
Retail layout
Objective is to maximize profitability per square foot of floor space. A few techniques used are
as follows
1. Locate high-
draw items
around the
periphery of
the store
2. Use prominent
locations for
high-impulse
and high-
margin items
3. Distribute
power items to
both sides of an aisle and disperse them to increase viewing of other items
4. Use end-aisle locations
5. Convey mission of store through careful positioning of lead-off department

Office layout
Grouping of
workers, their
equipment, and
spaces to provide
comfort, safety,
and movement of information. The movement of information is
main distinction
Cell Layout
Reorganizes people and machines
into U shaped cells to focus on
single products or product
groups. U-shaped line may reduce
employee movement and space
requirements while enhancing
communication, reducing the
number of workers, and
facilitating inspection. It can also reduce WIP inventory and speed up work. This type of layout
was popularized in Toyota LEAN System.

Activity – See the traditional straight-line work

layout and the time taken for each workstation
in this figure. Can you redesign this activity done
by using a cell layout? Instead of 4 people, can
you do this job with 3 people without slowing
down the work

Recap Video
https://www.youtube.com/watch?v=TG7kzh2Uz08

Recap Questions
How would you define the facility location decision?
What are the advantages of a well thought out location decision?
What are the factors to be considered when deciding a facility location?
What are the common methods and tools used to make a location decision?
What is the facility layout decision?
What are the advantages of a well thought out facility layout decision?
What are the common types of facility layout?
What are the differences between a product layout and a process layout?
When do you use a fixed position layout and a cellular layout?