ORGANISALIUN cis Secretary ——} B.0.D. | Legal adviser Accounts officer — Sales Manager {GM Personal manager S| Use > sPerehiage engine Design engineer Suptd-A Suptd-B ee ee Dei a FIM FIM FIM FM Aer ce Eat WORM ERS B.O.D.+ Board of Directors G.M.: General Manager W.M.: Works Manager Suptd.: Superintendent F/M: Foreman Fig. 37, Line and staff organisation, — Thefinal decision whether to acceptand implement the recommendations of thestaif executive remain in the hands of the line executive. — Fig.3.7showsalineandstaff organisation. The line executives are marked vertically whereas staff ‘executives are placed horizontally. — _Avariation of line and staff organisation is Line and Functional Organisation in which the staff orspecialist executive has full authority (ie., a higher degree of authority than ina line and staff organisation) over his particular function which may be inspection, work study, purchasing, ‘employment, etc, ‘Advantages of Line and Staff Organisation 1. Expert adviee from specialist staff executives can be made use of. 2. Line executives are relieved of some of their loads and are thus able to devote more attention towards production. 3. Less wastage of material, man and machine hours. 4, Quality of product is improved. ‘5. There is no confusion as exists in functional organisation. 6. Line and staff organisation possesses practically all the advantages of both the line and functional organisations.MANAGEMENT CONCEPTS 15-20 (4) The Contingency Approach School of Management ‘The major contributors to this school of thought are Joan Woodward, Fiedler, Lorsch and. Lawrence. ‘Theorists of the process school, quantitative, behavioural andsystems schools often assume that their concepts and techniques have universal applicability, which is not so. These concepts may, work in some situations and not in others. ‘The Contingency Approach to management is based upon the fact that there is no one best way to handle any of the management problems. The applications of management principles and practices should be contingen¢ upon the existing circumstances. Process, behavioural, quantits- tive and systems tools of management should be applied situationally. There are three major parts of the overall conceptual framework for contingency management: @ Environment (i) Management concepts, principles and techniques, (ii) Contingent relationship between (i) & (i) above, ‘The environmental variables are independent. Management variables (process, quantitative, behavioural and systems too!s) are dependent. Every manager has to apply the.various schools of thought (approaches) to management according to the demands of the situation Itis the basic function of managers to analyse and understand the environments in which they function, before adopting any techniques, processesand practices. The choice ofapproaches and also their effectiveness is contingent on the behaviour and dynamics of situational variables. ‘There is no universally valid one best way of doing things. Contingency thinking helps managers in several ways in performing their functions of planning, organising, direction and control. It widens their horizons beyound the theory of management, its concepts, principles, techniquesand methods. [t leads them to be sensitive, alert and adaptive to situation. behavioural variables, while tailoring their approaches and styles. Contingency thinking enlarges the area of freedom of operation of managers. They are not handicapped by having to apply the same approach to diverse situations. They can even think of ablend of known approaches as demanded by the existing situations. “The contingency approach seems to hold a great deal of promise for the future development of management theory and practice. x 1522, PRINCIPLES OF MANAGEMENT “Principles of Management’ implies alist of current management practices. ‘Though F.W. Taylor developed principles of management, credit goes to Henri Fayol, a French management theorist for advocating and publicizing certain priticiples (or laws) for the sound- ness and good working of the management, Henri Fayol warned that the principles of management should be, (Flexible and not absolute—mvust be usable regardless of changing conditions, (i) Used with intelligence and with a sense of proportion, etc. Henri Fayol listed 14 principles, that grew out of his experience; they are briefed as under. 1. Division of Work (or Labour) Division of work means dividing the work on the principle that different workers (and different places) are best fitted for different jobs (or things) depending upon influences arising from geography, natural conditions, personal aptitude arid skills.15-21 INDUSTRIAL ENGINEERING AND MANAGEMENT — Division of work leads to specialization. = Concept of division of labour can beapplied toall kinds of work, managerial as wellas technical, Advantages of Division of labour. Since the samé worker does the same work repeatedly. @ he gains proficiency and skill on the jobs, (i rate of production increases, (ii) product quality improves, (#7) heis in a position to suggest changes in products, processing or methods ‘of doing that work. Disadvantages of Division of Labour @ Division of labour gives rise to loss of craftsmanship; workers becomie machine-minders and no more. (i) With the passage of time, the same job becomes dull and monotonous, (iif) Workers do not remain all-round and one cannot work in place of another if he is absent. 2. Authority and Responsibility ~ Authority and responsibility should go together, hand-in-hand and must be related. — An executive can do justice with his responsibility only when he has the proper authority. — Responsibility without Authority or vice versa is meaningless. [For details refer Chapter 3]. 3. Discipline = . Discipline is absolutely necessary for efficient functioning of all enterprises. — Discipline maybe describedas —respect for agreements that are directed at achieving obedience, application, and the outward marks of respect. [For details refer Chapter 20}. 4. Unity of Command — Unity of command means, employees should receive orders and instructions from one boss (or supervisor) only. In other words a worker should not be under the control of more than one supervisors. = Unity of command avoids confusion, mistakes and delays in getting the work done. 5. Unity of Direction = Itis broader concepr than the unity of command, ~ Unlike unity ofcommand which concerns itself with the personnel, unity of direction deals with the functioning of the body corporate, — Unity ofdirection implies that thereshould be one plan andone head for each group of activities having the same objective, In other words, there should be one common plan for an enterprise as a whole. 6. Subordination of Individual to General Interest —, The interests of an individual person should not be permitied to supersede or prevail upon the general interests of the enterprise. = This is necessary to maintain unity and to avoid friction among the employees. ‘7. Remuneration — Remuneration is the price paid 7, the employees for the services rendered by them for the enterprise,MANAGEMENT CONCEPTS 15-24 i, Lay down the company objectives/ targets. ii, Collect and classify the information relating to company objectives. iii, Develop alternative course of action to do the things, iv. Compare the alternatives in terms of objectives, feasibility and consequences. v, Select the optimum course of action yielding maximum benefit/gain. vi. Establish policies, procedures, methods, schedules, programmes, systems, standardsand budgets for the optimum course of action selected. 2. Organising — After determining the course and make-up of action, the next step, in order to accomplish the task, is to distribute the necessary work among the working groups. = The process of organising involves:- i, Divide the work into Component activities. ii. Assign people to task ( component activities). iti, Define responsibilities. iv. Delegate authority. v. Establish structural relationship (Le., organisation structure) to secure coordination. 3, Actuating (move to action) — Actuating means carying out physically the activities resulting from planning and organising. ~The process of actuating involves:- i. Provide effective leadership. Integrate people and tasks and convince them to assist in the achievement of the overall objectives. iii. Ensure effective communication. iv, Provide climate for subordinates’ development. 4, Controlling — Controlling means checking up (or follow up) tb ensure that the planned work is progressing as perschedule andifnot, then to applycorrective action toachieve the pre-determined objectives. = The Process of controlling invotves:- § i, Observe continuously and study the periodic results of performance. ii, Compare this performance with the present standards. iii, Pinpoint deviations if any. i, Ascertain the exact causes of deviations. v, Initiate and implement the corrective action. 15.25. FUNCTIONS OF MANAGEMENT = Onewaytolookat the process of management is to identify the (basic) functions which together make up the process. — Since some functions are basic to managerial activities at all levels from the foreman to the ‘manager, they are applicable to all business enterprises, — Though Fayol, Urwick, Davis, Koontzand O'Donnel have specified different number of manage- ment functions, the author feels that the following eight functions may be used to describe the job of management.15-25 INDUSTRIAL ENGINEERING AND MANAGEMENT 1. Forecasting. 2. Planning. & 3. Organising, 4, Staffing. | Leadership | |— Communication 5. Directing —-| Motivation | |___supervision | 6. Coordinating, 4 7.Controlling. | 8. Decision making. = Theabove list of the functions of management is a useful analytical devige for stressing the basic 1 elements inherent in the job of management, ; : 1. Forecasting — Forecasting is a necessary preliminary to planning. — Forecasting estimates the future work or what should be done in future; may beas regards Sales or Production or any other aspect of business activities. — Forecasting begins with the sales forecast and is followed by production forecast and forecasts | for costs, finance, purchase, profit or loss, etc. 2. Planning ~ Planning all aspects of production, selling, etc. are essential in order to minimise intangibles. — Planningisa process by which amanager anticipates the future and discovers alternative courses ofaction open to hint. — Planningisa rational, economic, systematic way of making decisions today which will affect the future eg, what will be done in future, who will do it and where it will be done. — In fact, every managerial act, whether it be mental or physical, is inexorably intertwined with planning. Without proper planning, the activities of an enterprise may become confused, haphazard and ineffective; for example if.a refrigerator making concern does not plan in advance—how many refrigeratorsand of what capacities are to be made before the summer starts and thus it does not procure necessarymaterial, tools, supplies and personnel in time, it cannotreach the production targets and hence may not run profitably. — Priorplanhingisvery essential for utilizing theavailable facilitics (men, materials, machines etc.) é to the best of advantage. 3. Organising = Organising is the process by which the structure and allocation of jobs is determined. = Organising involves determining activities required to achieve the established company objec- tives, grouping these activities in a logical basis for handling bysubordinate (persons), managers, and finally, assigning persons to the job designed. In carrying out the above, the manager will delegate necessary authority to his subordinates (persons) and they, in turn, will take the neGessary responsibility. — Organising means, organising people, materials, jobs, time etc.,and establishing framework in which responsibilities are defined and authorities are laid down.7-3 INDUSTRIAL ENGINEERING AND MANAGEMENT ~ Tocheck the work as regards quantity and quality. + Tokéep abreast with the modern develdpments in his own field of work. 173. QUALIFICATIONS OF A FOREMAN ( Suitable engineering qualification to understand the technical aspects of the job, production processes, equipments, etc. (i) Skill 10 meet the demands of the job. (iii) Mechanical ability. (iv) Skill in imparting instructions to the workers. (v) Familiarity with Production control Quality control Safety practices Machine management Record keeping Merit rating Costing and Estimating, etc. (vi) Ability to train workers, (vii) Ability to handle (ce. supervise and control) workers properly. (vili) Elementary knowledge of labour psychology. (x) Familiarity with modern developments in the field, etc. 174. QUALITIES OF A FOREMAN (@ Democratie leadership. (i) Result consciousness (ii) Judgement and decision makiug in an existing situation, (i) Full knowledge of men, materials and machines. (») Versatility and ingenuity. (vi) A cooperative sympathetic and helpful attitude towards others. (vii) Just, fair and impartial attitude towards all his subordinates, (vii) Self-control and firmness. (a Ability to develop an organisation. (©) Ability to plan and control work. (vi) Wilful acceptance of responsibility. (xii) Constructive and independent thinking, etc. 17.5, LEADERSHIP Definition and concept = Leadership is the knack of getting other people 10 follow you and to do willingly the things you want them to do. — Leadershipmeans to inspire confidence and trustso thatthere’ employees within the control of manager. aximum cooperation from the — Leadership isthe ability to pgrsuade others o seek defined objectives enthusiastically. Itis theSUPERVISORY AND LEADERSHIP w-4 human factor which binds a group together and motivates it toward goals. Leadership may also be defined as the proces$ of influencing a group is'a particular situation at a givenpointof imeand inaspecifieset of circumstances thatstimulatepeopletostrivewillingly to attain company objectives. ‘Styles (Types) of Leadership ‘The three relatively distinct leadership styles are 1, Authoritarian, 2. Democratic, and 3, Laissez-Faire. 1. Authoritarian Leadership — Itis felt that this technique is old-fashioned, { ut it works well in many cases. — ‘Theleader makesall the decisions (no matter itis right or not) and demands obedience from the people he supervises. — All policies are determined by the Ieader without consulting the subordinates. — ‘The leader dictates to the subordinates, the techniques and activity steps, he tells them what to do next, he does not inform them about future plans and thus future steps always remain uncertain toa large degree. — Theleaderdecides the particular work task fora personand the work companion of each person (worker), — Theleader tends tobe personal inhis praise and criticism of the work of cach member (worker). The leader remains aloof from active group participation except when demonstrating. — Authoritafian leadership is negative because the subordinates remain uninformed, they fecl insecure and remain afraid of the leader. — Inauthoritarian ieadership, there is a tighter control and supervision over the persons \-€. sub- ordinates). — Authoritatian leadership succeeds where ( Subordinates shirk work but want security. (i) Subordinates do not want to take initiative. — "The advantages of Authoritarian leadership is that (@ Decisions can be taken quickly. a Some people who simply work for fear of punishment remain disciplined and devoted towards the tasks given to them. 2 Democratic Leadership — Democratic leadership is most popular today. —_‘Theleader discusses and consults his subordinates. Hedraws ideas froth them, supervises and lets them help set policy.19-10 INDUSTRIAL ENGINEERING AND MANAGEMENT ‘Methods to Improve Morale A number of methods employed for improving morale of employees are : (1) Introduction of profit sharing scheme in which the employees in addition to their wages share a definite percentage of profits. ; (2) Giving proper status and recognition to all concerned. - a (3) Consulting the group on the matters related to work to be done by them. (4) Basing decisions on the concept of Democratic Leadership. 4 (5) An effective two-way communication between the workers and the management. (© Suitable Suggestion System. (7) Adequate grievance handling procedure. (8) Periodic conferences between workers and management to discuss employee-problems and difficulties. : ai (9) Informal talks between individual workers and the management. (10) Adequate welfare schemes for the employees and their families. (11) Recreational facilities and social get-together programmes for the employees and their families. 19.11. MOTIVATION Definition and Nood of — Certain workers generally come late, take more sick leaves or produce low quality products— perhaps they are less motivated or not motivated at all as compared to other workers. = Motivation is the means or inducements which inspire or impel a person (to behavein acertain 7 manner and) to intensify his willingness to use his capabilities and potentialities for achieving ‘goals of the organisation in which he works. — Behind Motivation (or the will 1 dofachieve) is mainly the psychological force ; physical or physiological factors exert comparatively lesser influence. = What morale does to work-group, motivation does to an individual. Motivation moves: ‘an individual into action and urges him to work with sincerity and loyalty. — Motivation of workers is very important when a supervisor wants to get things accomplished by them at right time, in right quantity and of right quality. ‘Workers not properly motivated may not mentally accept the orders or directions with the result that the confpany goals may not be achieved effectively and efficiently. Motive — “A detective or police seeks the motive (or reason) for crime, ie., why the accused did the crime. Once the motive for crime has been uncovered, it provides an explanation for the crime. — Therefore Motive is a reason for the expression-of a particular ability. — Motive isan idea or emotion which prompts an individual to take a certain course of action. ‘Motive influences the behaviour of an individual. 4i INDUSTRIAL PSYCHOLOGY 19-11 _ Motives are basédl on physiological drives such as the innate tissue conditions of the organism to avoid pain, to need food, water, sleep, etc. be _ Besides those based on physiological drives, there are social motives also, e.g, self-respect, social approval or recognition, etc. jntemnal and External Motives _ Internal motives motivate people internally. Internal motivation starts from the ego needs of an individual. — Examples of internal motives are : (The need to get the job of one’s choice. i (i) The illusion of self-determination and freedom. (ii) A sense of accomplishment in doing a job well. a — External motivation is stimulated by pay, incentives, praise or punishment. q Positive and Negative Motivation eR = Positive motivation adds to an individuals existing set of satisfactions, eg ‘ABetter and more responsible job. Higher wages, etc. — Negative motivation influences the behaviour of an individual through a threatened loss e.g., Fear of losing one’s present job. Reduced wages, etc. Factors Affecting Motivation (@) Factors leading primarily towards motivation 1. Achievement, Personal satisfaction in job completion and problem solving. 2 Advancement. Promotion to the higher job/level. 3. Growth. Learning new skills which will offer greater possibility for advancement. 4, Recognition. Acknowledgement of a job done well. 5. Responsibility and Authority in relation to one’s job. 6 Work itself. Actual job content and its positive or negative effect on the worker. ©) Factors leading primarily towards dissatisfaction 1. Company Policy and Administration. Feelings about the inadequacy of company organization and management, policies and procedures. 2. Job Security. Tenure, company stability or instability. 4. Interpersonal Relations. Relations with supervisors, subordinates and peers. 4. Salary. Pay and fringe benefits. 5. Status. eg, size of office, private secretary, air-conditioner, etc, 6, Supervision. Competency or technical ability of supervision. 7. Working Condinons. Physical environment associated with the job. '& Personal Life. Personal factors (eg, family problems) which affect the job. Motivational Techniques 1. Praise the workers and give them credit for ‘all good work done by them.aes INDUSTRIAL ENGINEERING AND MANAGEMENT — A democratic leader promotes participation of subordinates and develops strong team work. ~ Alll policies come out of group discussions, the subordinates being constantly encouraged and assisted by the leader. ~ Theleader gives decision only afier consulting his subordinates. Actually the decision emerges ‘ut of the subordinate group itself. ~ Subordinates know the long term plans on which they are supposed towork, thus theyare kept well informed. — Division of tasks is left upon the group; individuals are free to work with whomsoever they choose. — Ademocratic leader is objective or fact-mindedin his praiseand criticism; he tries tobea regular group member in spirit without doing too much of the work. — Democratic leadership () Motwvates subordinates to work, and improves their attitude towards work, (i) Promotes healthier relations between workers and management. (ii) Minimizes employee-grievances. {iv)) Raises the employee-morale, ~ Democratic leadership works very well if the subordinates (also) feel their responsibility, tend to be reasonable and do not take undue advantage of the democratic leadership. 3. Free Rejn or Laissez-Faire Leadership — This is the most difficult to use type of leadership. ~The leader acts aan information centre and exercises minimum of control. — The leader depends upon subordinate’s sense of responsibility and good judgement to get the work done. — There is a complete freedom for group or individual decision, with a minimum of leader Participation — The leader supplies various materials, gives information when asked but takes no other part in work discussion, — The leader makes no attempt to appraise or regulate the course of events. — Actually, a Free Rein leader does not lead the subordinates but leaves them entirely to themselves; the responsibility for accomplishing most of the work lies on the shoulders of the subordinates. = The subordinate group establishes its own goals and solves its own problemas. ~The leader is simply a contact man, he ignores leader's contribution, he intervenes least and avoids power. ~ Free Rein leadership can work only ifthe subordinates are highly educated, brilliant and they possess good sense of responsibility.‘ INDUSTRIAL. ENGINEERING AND MANAGEMENT 17-6 176. QUALITIES OF (GOOD) LEADERSHIP 1. Asense of mission. A devotion to the people and the organisation in which one seryes. 2. Accomplishment. Erfective use of time’in mecting company goals and objectives. 3, Education : broad as well as technical. a 4, Acceptability. From the subordinates ; respect from and confidence of others. e 5, Self-denial. A willingness to forgoself-indulgences and the ability to bear the headaches the job entails. 6. Acutencss. A Icader remains mentally alertand readily comprehends instructions, explanations and unusual circumstances. 7. High intelligence. A leader should be able to come down tothe level nevessary for the subordinates he is leading. 8. High character. Includes honesty, sincerity, and the courage to face hard facts, unpleasant situations, etc. 9, Administration. Ability to planand organise the work, delegationof responsibility and authority, controlling position activities, etc. 10. Maturity. In coping with situations and making decisions, emotionally stable and unlikely to break down with frustration. 11. Job Competence. A leader knows well the job he supervises. 12. Analysis and Judgement. A leader performs critical evaluation of potential current problem ‘areas ; he possesses wisdom to look into future. 1B. Initiative and drive. Self-starting to achieve both personal and company objective 14, Energy. Good health, good nerves and boundless energy make even tough jobs casie 45. Attitude. Enthusiasti¢, Optimistic, and Loyal attitude towards the organization. 16. Personal compliance. Degree {o which leader does what is expected of him, such as setting ‘good example by béing punctual, tionest, just etc. 47. Constructive, creative and independent thinking. Ability to originate and develop ideas intelligently and 10 make constructive suggestions and improvements. 18 Depéndability. A leader mects schedules and dead lines and adheres to company policies. 19. Group Spirit. 20, Flexibility. A leader is adaptable, and quickly adjusts to changing conditions. 21. Knowledge of Industrial psychology and human relations. A leader understands personnel interactions, has feel for individuals and recognises their problems; is considerate towards others; can ‘motivate and get people to work together. ‘2. Approachability. The extent, 10 which he is willing to sit and talk with his subordinates and to which theyarc willing to talk things over with him. 23. Open-mindediness. A leader has open-mind and makes decisions without the influence of per- Sonal or emotional interests. 2A. Self-confidence. Self assurance; self-reliance; inner security, etc. 25. Cheerfulness and Socialness. A leader remains always cheerful, he makes friends casily and has sincere interest in people. 26. Verbal ability and communication. Articulate; communicative and 1s generally understood ty people at different organizational levels. 27. Good poise and bearing. 28: Vision. Possesses foresight,sees new trenids and opportunities; anticipates future events, ct.INDUSTRIAL OWNERSHIP 16-6 association and articles of association. (jv) A public company has to issue a prospectus to the public. (v) Ithas to allot shares within 180 days front the date of prospectus. (vi) It can start only after receiving the certificate to commence business. (vii) It has to hold a Statutory Meeting and to issuea Statutory Report to all members and also to the Registrar within a certain period. (viii) There is no restriction on the transfer of shares. (a) Directors of the company are subject to rotation. (2) The public company must get its account audited every year by registered auditors. (xi) It has to send financial statements to all members and to the Registrar. (xii) Ithas to hold a general meeting every year. (sii?) The Managing Agent gets a fixed percentage of net profit as remuneration. ‘Advantages of Joint Stock Companics (@ A huge sum of money can be raised. ii) It associates limited liability with it. (ii) Shares are transferable. (iv) Company's life is not affected by the life (death) of shareholders. (v) Services of specialists can be obtained. (vi) Risk of loss is divided among many shareholders. (vii) The company associates with it stability, efficiency and flexibility of management. Disadvantages of Joint Stock Companies (@ A good deal of legal formalities is required for the formation of a joint stock company. (ii) Company is managed by big sharetolders only. (iti) High paid officials manage the whole shows; they cannot haveas high interests in the company as the proprietors can have. (iv) People can commit frauds with the company. (0) Board of directors and managers who remain familiar with the financial position of the company may sell or purchase shares for their personal profits. (vi) Itis difficult to maintain secrecy as in partnership. (vii) The team spirit with which partnership works, is lacking in a joint stock company. (viii) Divided responsibility. Applications of Joint Stock Companies @ Steel mills, (W Fentiliser factories, and (iii) Engineering concerns, etc. 16.6. COOPERATIVE ORGANISATION (OR SOCIETIES) Concept — It isa form of private ownership which contains features of large partnership as well as some features of the corporation.INDUSTRIAL OWNERSHIP 16-4 Applications. General Partnership does very weil in Law firms, : Retail trade organisation, Medical clinics, i ‘Small engineering firms, etc. | Disadvantages (@) Each partner has unlimited liability for the debts of the firm. (ii) Danger of disagreement and distrust among the partners. (ii) Authority being divided among the partners. (iv) Partnership lacks permanence and stability ; it has limited life. Partnership may dissolve if a partner dies. { (») Investors and lenders hesitate to provide money because of the lak of stability ofa partnership firm. (vi) All partnezs suffer because of the wrong steps taken by one partner. (i) Limited Partnership — Limited partnership type of ownership overcomes the two main disadvantages [e.g. number (i) and (¥) mentioned above] of general partnership. — Limited partnership is an association of one or more general partners who manage the business and oneor more limited partners whose liability is limited to the capital they have invested in the business. — Limited partners share the profit but they do not participate or interfere with the control or managementof the firm. Moreover limited partners have their liabilities limited to the amount | of their investment. | — Thus, those investors and lenderswho used to hesitate investingin the venturecandoso without much risk. — Limited partnership type of ownership is easy and less cosily to form, and personal incentive to succeed is retained. — Acdisadvantageassociated with limited partnerships that the limited partner, though he invests in the business, has no voice in the management. 165. JOINT STOCK COMPANY | Concept — Joint Stock Company overcomes many of the disadvantages associated with Parmership types of industrial ownership, such as: @ Difficulties in raising capital, (W Easy disruption, (ii) Lack of facility for centralised management, and G) Unlimited tiabitity, etc. — A joint stock company is an Association of individuals, called shareholders, who join together for profit and agree to supply capital divided into shares that are transferable for carryingon a specific business. — Death, insolvency, disablement or lunacy of the shareholders does not affect the joint stock company. — Ajointstock company consists of more than twenty persons for carrying any business other than16-5 INDUSTRIAL ENGINEERING AND MANAGEMENT. the banking business. ~ These persons givea name tothe confpany, mention the purpose for whichitis formed,andstate ~ Themanaging body ofa joint stock companyis the Board of irectorsclected by theshare holders The Board of Directors (® makes policies ; (ii) takes decisions ;and (i) runs the company efficiently. ~ Thetiablity of the members (or shareholders) ofa joint stock company is limited to that capital only of which they hold the shares. — Finance is raised by issuing shares, debentures, bank loans, loans from industrial and finance corporations. ‘Types of Joint Stock Company. There are two types of joint stock companies: (@) Private limited company, (©) Public limited company. (@) Private Limited Company (© The capitals collected from the private partners ;some of them may be active while, othersbeing sleeping. (Private limited company restricts the right to transfer shares, avoids publicto take ‘up shares or debentures. (i) The number of members is between Zand 50, excluding employee and ex-employee sharchold- ers, {G) The company need not fle documents such as consent of directors listof directors, etc, with the Registrar of Joint Stock Companies. (© The company need not obtain from the Registrar, a certificate of commencement of business, {0 The company need not circulate the Balance Sheet, Profit and Loss Account, etc, among its Members j but it should hold its annual general meeting and place such financial statements ince meeting. (vii) A private company must get its accounts audited. (vill) A private company has to send a certificate along with the annual return to the Registrar of Joint Stock Companies stating that it docs not have shareholders more than fifty excluding the employee and ex-cmployee shareholders. Actually, a private joint stock company resembles much with partnership and has the advantage ‘hat big capital can be collectedthan could be done so in partnership, (©) Public Limited Company (© InPublic limited company, the capital is collected from the publicby issuing shares havingsmall face value (Rs. 50, 20, 10). @ The number of shareholders should not be less than seven, but there is no limit to their maximum number, (G2) 4 public imited company has to file with the Registrar of Joint Stock Cuanpanies, documents Such as consent ofthe directors, list of directors director's contract,etc, along with the memorendinn ay ‘eam reenter rere ereef 16 Industrial Ownership 16.1. INTRODUCTION ganisation’, ‘Forms of Ownership of Industry’, Types of Organisation in Industry’, Business Enterprises’, Types of Ownership',etc, all convey thesame meaning. — To start a business enterprise the most important thing required is the capital. ~ Ifthe capital is provided by single individual, it is known as Individual ownership, Individual , ‘entrepreneur organisation, Single ownership or Individual proprietorship, etc. ~ the capital is supplied by two or more persons, it refers to partnership organisation. ~ Ifthe capital is provided by many persons in the form of shares to an institute with a legal entity, it is called a Joint Stock Company. — There are other forms of ownership also, but they are merely outgrowths of the three types mentioned above. 162. TYPES OF OWNERSHIP ‘The different types of ownership are 1. Single ownership (Private Undertaking), 2. Partnership. 3. Joint Stock Companies. 4, Cooperative organisation, 5. State and central Government owned. 163. SINGLE OWNERSHIP Concept — Ownership when applied to an industrial enterprise means title to and possession of the assets ofthe enterprise, the power to determine the policies of operation, and the right to receive and dispose of the proceeds. — Itis called a singe ownership when an individual exercises and enjoys these rights in his own interest. — A business owned by one man is called single ownership. — Single ownership does well for those enterprises which require little capital and lend themselves readily 10 control by one person, ~ Examples of enterprises run by single owner are printing press, auto repair shop, wood working Plant, a Small fabrication shop, etc., ie, retail trades, service industries and small engineering firms. — _Inssingle ownership, one person contributes the original assets to start the business, maintains and controls business operations, reaps full benefit in terms of profit and is fully liable for allMANAGEMENT CONCEPTS ie — Remuneration should @ betfair, and (i bring maximum satisfaction to both employees and the employer. 8. Centralisation of Authority — Contralisation of authority means that the authority isin the hands of center, ie,, the authority isnot dispersed among different sections. = Ina business organisation, authority should be centralised only to that degree or extent which is essential for the best overall performance, — The degree of centralization is decided by keeping in view the nature, Size and complexity of the (business) enterprise. 9. Scalar Chain — Managers may be regarded as a chain of superiors, Theréshould bean unbroken line of authority and command through all levels from the highest (ie, general manager) to the lowest ranks (employee). — Thechain ofsuperiors should be short-circuited, when following it strictly will be detrimental to performance, 10. Order — This promotes theidea thateverything eg, materials) and everyone (human being) has his place in the organisation. — Materials and human beings should be arranged such that right material (thing)/person fs in the right place. 11. Equity of Treatment — Manager should have fairness in treatment for all his subordinates, — Manager should deal with his subordinates with kindness and je:tice. — This will make employees more loyal and devoted towards the managemenventerprise: 12 Stability Stable and secure work force is an asset to the enterprise, because unriecessary labour tumover is costly. — “Anaverageemployee who stays with theconcern is much better than outstanding employeeswho merely comeand go. "Instability is the result of bad management. 13. Initiative — Initiative is one of the keenest satisfactions for an intelligent employee. — Managers should sacrifice their personal vanity in orderto permit their subordinates to exercise their own initiative. — A manager should encourage his subordinates to take initiative, 14, Esprit de Corps = This principle of management emphasizes the neod for teamwork (harmony, and proper understanding) among the employees and shows the importance of communications in obtain- ing such team-work. 1523. PRINCIPLE OF EXCEPTION — The distinguishing fedturesof this approach are frequent measurement and evaluation of actual progress and comparison with the appropriate target figures. ESE PSORGANISATION son 3.17. DEPARTMENTATION Introduction — Whén the size of an enterprise grows, the number of employees (persons) also increases. There is a limitation on the number of persons an enterprise can manage directly. This limitation restricts the size of enterprise if the enterprise does not opt for the device. of Departmentation (ie. horizontal differentiation). ~ Henve, deparimentation or grouping of activities into departments is very essential because it limits the number of subordinates (man power) to be supervised by a manager ; it would have otherwise been very difficult to manage a team of large number of subordinates by a single superior and thus the size of the business enterprise would be very limited. : | — Departmentalisation is the process of breaking down an enterprise into various departments. — Identifying and grouping of similar activities on some logical basis so that a team of persons can be organized in order to attain the objectives of the enterprise may be called departmentation, — Adepartment is a work group combined together for performing certain functions of similar nature, The process of division of the enterprise into different parts is broadly called departmentation or departntentelisation and it is done for the purpose of administration. Aims of Departmentation © To group activities and personnel 10 make manageable units. (i To bring specialisation in the performance of various activities. (ii) To fix responsibility of the heads of various departments for the achievement of orgenization ' po if 8 goals. Advantages of Departmentation @ ‘Since every-one knows precisely his dutics and authority, the efficiency of the enterprise increases. (i) As jobsare well-defined and responsibilities well clarified, itis easy to fix accountability for the Tesults, (i) The departmental managers are given opportunity to take initiative and learn new managerial skills. (#) Departmentation provides # basis on which top management can coordinate the activities of different departments. Methods of Departmentation Departmentation is the process which is used to group the activities of the enterprise into various divisions for the purpose of efficient management. Different methods of creating departments in an enterprise are discussed below :- (a) By Function — Departmentalization by function is shown in Fig.3.11, wherein the activities of thoorganization are divided into the primary functions to be performed—manufacturing, marketing, engineering, research and development, enployee relations and finance.3-2 INDUSTRIAL ENGINEERING AND MANAGEMENT — Organisation structure marks lines of authority, responsiblity and co-ordination. — A few commonly known forms of organisation structures or types of organisations are: (@) Line, Military or Scalar Organisation. (©) Functional Organisation. (©) Line and Staff Organisation. 3.11.1. Line, Military or Scalar Organisation = Itis the simplest form of organisation structure, (Fig.35). _Ttwas called military organisation because it resembled to olden military organisations. = Line organisation is based upon relative authority and responsibility rather than on the nature and kind of operation or activities. The authority flows directly from the Works Manager (WM) to Superintendent to Foremen (F/M) and from them to: workers. = Line organisation is direct and people at different levels know to whom they are accountable, — ‘Theimmediate superior (or boss) gives orders 0 thesubordinates, assigns duties, dismisses and takes disciplinary action against them. — Any enterprise that starts small probably starts with a line type of organisation. WM | FIM FIM FIM FIM aq mh rh WwoRKERS Fig. 35. Line Organisation. Advantages @ Itis simple and easy to understand. (a) Itis flexible; casy to expand and contract. (ii) It makes clear division of authority. (iv) There is clear channel of communication, with no confusion at all. (v) encourages speedy action. (vi) It is strong in discipline as it fixes responsibility on an individual.ORGANISATION om (vii)Itis capable of developing the all-round executive at the higher levels of authority. (@ Itneglects specialists. (i) Ioverloads a few key executives. (ii) Itrequires a high type of supervisory personnel to meet the challenges imposed in the absence of specialists as advisors. (i) Itis limited to very small concerns. (&) Itencourages dictatorial way of working. (vi) In line organisations provisions are seldom made to train, develop and replace top executives. (bil) Due to lack of specialisation perhaps there is more wastage of materials and manhours. Applications. Line organisation is suitable for, ®_ small concerns free from all complexities; and (ii) automatic and continuous process industries such as paper, sugar, textile, etc. 341.2 Functional Organisation (Fig. 3.6) — FLW. Taylor suggested functional organisation because it was difficult to find all-round persons qualified to work at middle management levels in the line organisation, — Functional organisation isalso a line type of organisation with the difference that instead of one foreman (which being master or specialist of everything and therefore hard to find) there are ‘eight functional foremen; fourof them located on theshop floor and remaining fourin the office, ‘but everyone having direct and equal authority over the workers. — Each functional foreman who is a specialist in an acitivity is incharge of one function, e.g. SUPERINTENDENT [ OFFICE i) [ SHOP ] “ify |, | Sloe le earn a INSTRUCTON. | GANG | REPAIR # CLERK DISCIPLI- BOSS } BOSS | ROUTE NARIAN SPEED | | CLERK TIME & COST Boss INSPECTOR (CLERK WoO KR. KB RS Fig.3.6. Taylors functional organisation,10 Network Analysis 10.1. INTRODUCTION Planning by network analysis, probably, got recognition in the year 195Swhen dramaticreductions in time (about 70%) were experienced in connection with the overhaul of generating plant by Central Electricity Generating Board in Great Britain. Network analysis is a system which plans projects both large and small by analysing the project activities, Projects are broken down to individual tasks or activities, which are arranged in logical sequence. It is also decided as which tasks will be performed simultaneously and which others sequen- tially. A network diagram is constructed, which presents visually the relationship between all theactivities involved. Time, costs and other resources are allocated to different activities. Network analysis helps designing, planning, coordinating, controlling and in decision making in order to accomplish the project economically in the minimum available time with the limited available resources, Network techniques were developed from the Milestone chart and Bar chart. These conventional planning methods, because of their inherent limitations could not be utilized for planning large and complex projects. They had the following Disadvantages: (a) A bar chart becomes too cumbersome while dealing with big and complex projects when the activitiesare tobe consideredin detailand theirinteraction orinterdependenciesareto bestudied clearly. (b) Abarchart does not point ovt as which tasks should be given priorities as regards the resources (ée,, men, money, matefials, and machinery). (c) The effects of changes in schedule cannot be evaluated with the help of a bar chart. (dA bat chart neither satisfactorily tells the times at which the activities begin and end nor it indicates tolerances in activity timings. q (e) A bar chart does not show the continuing interrelationship of the activities, especially ittte number of activities is large and they change in time scale and resources. (f) Abar chartdoes not predict satisfactorily, well in advance the effects of inevitable snags and thus a corrective action cannot be taken in time. (g) Bar charting is simply a scheduling operation, whereas network techniques plan as well as schedule, (i) A bar chart does not normally indicate work progress, which is very essential. 10.2, NETWORK TECHNIQUES A number of network techniques have been developed and a few of them are named below : 1. PERT. : Programme Evaluation and Review Technique. 2 CPM. : Critical Path Method. 3. RAMS. : Resource Allocation and Multiproject Scheduling, 4 PEP. : Programme Evaluation Procedure, 5, C.O.P.AC. : Critical Operating Production Allocation Control. 310-10 INDUSTRIAL ENGINEERING AND MANAGEMENT Path (2) involves much less time, so its probability of completing in 38 days is very high. Paths (a) and (c) are independent ofeach otherand the probabilities of paths (a) and (c) to complete in due time of 38 days are 0.841 and 0.888 respectively. Therefore the probability of their both being completed in 38 days is = 0.841 x0.888 = 0.7468, D-T, 35-33 @agin Z=2—S*= SSS nos From Table 10.4 for Z = 0.4, he probability of meeting due date is 0,655; and hence the probability of not mecting the due date = 1- 0.655 = 0.349 (@ From Table 10.4, for the probability of 94.5% of 0.945, the value of Z = 1.6 D-T, D-3 and Z= 5 * therefore 1.6 = —> and thus D=41 days. 105. CRITICAL PATH METHOD (CPM), CRITICAL PATH PLANNING (CPP), CRITICAL PATH ANALYSIS (CPA) Introduction. The E.1 du Point de Nemours Company (USA) in the year 1958 while overhauling ‘a chemical plant employed a technique called Critical Path Method to schedule and control the project and experienced a good amount of saving, Unlike PERT, CPM developed in civilian business and engineering industry where activity timings were relatively well known, CPM is applicable to both large and small projects taking from space programmes to wedding or hhorseshows. Its widely recognizedand is the most versatile and potent management planning technique. CPM isa technique, used for planning and controlling the most logical and economic sequence of operations for accomplishing a project: The project is analysed into different activities whose relation- ships, asin PERT, are shown on the network diagram, The network is then utilized for optimising the use Of resources, progressand control. Dillerence between PERT and CPM. The fundamental network of PERT and CPM are though identical, yet there are (certain) differences in details as mentioned below : PERT CPM (1)_ A probabilistic mode! with uncertainty A deterministic model with well-known activity inactivity duration, Expected time is (Single) times based upon past experience. calculated from r,,f, andt,, Tt assumes that, the expected time is actually the ime taken. (2) Anevent-oricnted approach. An activity-oriented system. (3) PERT terminology uses words like CPM terminology employs words like arrow network diagram, events, and slack. diagram, nodes, and float. (4) The use of dummy activities is required ‘The use of dummy activities is not necessary. The for representing the proper sequencing. arrow diagram thus becomes slightly simpler. (9) PERT basically does not demarcate CPM marks critical activities. between critical and non-critical activities. ( (6) PERT finds applications in projects CPMis employed to those projects where where resources (men, materials and minimum overall costs is of primary importance. specially money) are always made ‘There is better utilization of resources. available as and when required.1-28 INDUSTRIAL ENGINEERING AND MANAGEMENT sce’ sonic faa te Ba ey wy me : =) a Paes | cd me) Ee — : es a Pind # ware] GY Te Gs Te Pena = wan) 2] 2} Ta Pins = ee Tey Tel Te) Ts] — pemano w “ cod “ as ss ‘Fig 7.14. Distribution matrix with capacity, demand and cost values. In orderto find optimum solution consider the distribution matrixof Fig 7.14 where capacities ant demands have been shown alongwith the various cost values. The costs have been calculated by assuming that c=Rs.5, r=Rs.25, ¢=Rs.30 and b=Rs2. This distribution matrix can be solved by using the North-West corner method as described in Chapter 11. The solution matrix thus Obtained will show the number of units which should be. ‘assigned to regular production, and to over-time production in three different periods in order to minimin: tke total cost. 4 49. PROCESS PLANNING \ Definition and Concept ~_ Process planning means the preparation of work detail plan, ~ Since a process is required 10 manufacture a product, itis necessary to plan the process, ~ Process planning is determining the most economical method of performing an operation or activity. ~ Process planning comes after it has been decided as what is to be made. ~ Process planning develops the broad plan of manufacture for the component or product, ~ Process planning takes a itsinput the drawings or other specifications which show what isto be made and forecasts or orders which indicate the product quantity to be manufactured. Information Required to do Process Planning ~ Quantity of work to be done along with product specifications.1-37 INDUSTRIAL ENGINEERING AND GEME the job will takeon a particular machine. The black strips in Fig. 7.24 correspond to the coloured bottoms ofthe cards and indicate which machine will bebusy during which period. The progress made against each _ order can also be shown by strips of other colours. 4 7.15. MANUFACTURING SCHEDULE, — Amasterschedule is too general to permit adequate day-to-day planningby linesupervision, and. is usually unnecessary in a small organisation. : — Weekly departmental manufacturing schedules supplement the master schedule and must made to reflect immediate factors, some of which are (1) Tool downtime duc to broken and worn tools, (2) Equipment downtime for repair and maintenance, (3) Shortages and defects in materials, (4) Absenteeism and (8) Cancellations and rush orders. — Theweekly schedule should take advantage of the most economical setup sequence in a process where more than one part is produced on the same line, It is important to arrange the order of work on the weekly schedule, to minimize setup time, Sometimes much of the same tooling can be used for certain operations on parts A and. Part B, requiring a different setup on thesame machine, should then follow part C rather than precede it. The ‘operating supervisor can help greatly in working out these combinations. — Successive master schedules are corrected from the variations reflected in the manufacturing schedules. Weekly manpower requirements are based on the manufacturing schedules and excessive flyctuations must be avoided, 7.16. SCHEDULING AND THE COMPUTER — Since Scheduling is the main process carried out in production control, itis worth to consider the relationship between the computer and scheduling, \ — The computer isan extremely versatile tool which can be programmed to undertake almost any data processing task. — Inmany types of industry, much of the data required for scheduling is relatively fixed in relation to time. In this category can be included the data contained in parts lists, route cards and plant lists, Many of the data processingneeds of production controluse this typeofdata. Examples re, ‘explosion’ to find parts requirements, implosion” to find the requirement of common materials and loading to calculate forward loads on machines and direct workers. For these types of data processing, the computer is ideal — Continuous data (such as siore receipts, store issues, products dispatched etc.) is used by production control in the compilation of stock records, shortage lists and operations statistics. * An explosive industry produces & snail number of different products, by joining a large number of different components... Machine Assembly. ** An implosive indusay produces a large number of different products from a small number of different material items or componentseg, Founcry.the various shops. Dispatch function deteimines—y whom the job shall be done and it co-ordinates production. It is the key point of a production communication system. It creates a direct link between production aid sales. ‘Adispatcher's familiar with the productive capacity ofeach equipment. Healways keepsan eye over the progress of orders which move at different speeds on different routes. Dispatch Procedure. The product is broken into different components and components into operations. A routesheet for the part (component) C having three operations om itis shown in Fig. 7.26, ‘The various steps of dispatch procedure for each operationare listed below, imsequence. . (a) Store Issue Order. Authorise stores (department) to deliver re- quired raw material, (b) Tool Order, Authorise toolstoreto release the nzcessary tools. The tools can be collected by the tool room attendant. (c) Job Order. Instruct the worker to proceed with the operation, ROUTE SHEET PARTC operations and forms the basis for worker's pay. Fig 7.26. Route sheet. {¢) Inspection Order. Notify the inspectors to carry out necessary inspections and report the quality of the component. (f) Move Order. Authorise the movement ‘of materials and components from one facility (machine) to another for further operations. In addition, there are certain other dispatch aspects which have to be taken care of, 1. All production information should be available before hand. 2. Various order cards, and specification drawings should be ready. 3. Equipments should be ready for use. 4. Progress of various orders should be properly recorded on the Gantt charts or display boards. 5. All production records should be properly maintained. Centralized and Decentralized Dispatching. Dispatch function may be centrelizedor decentralized. In a Centralized dispatch system, a central dispatching department, orders direcily 10 the Work station, It maintains a full record of the characteristics and capacity of cach equipment and work load against each machine. The orders arc given to the shop supervisor, who runs his machines accordingly. In most of the cases, the supervisor can also give suggestions as regards loading of men and machines under him. A centralized system has thé following advantages : 1. A greater degree of overall control can be achieved. 2. Effective co-ordination between different facilities is possible. 3. It has greater flexibility. 4. Because of urgency oforders, changes in schedules can be affected rapidly without upsetting the whole system. 5, Progress of orders can be readily assessed at any time because all the information is available at a central place. 6. There is effective and better utilization of manpower and machinery. - Ina Decentralised dispatching system the shop supervisor performs the dispatch tunctions. He decides the sequence of handling different orders. He dispatches the orders and materials to each equipment and worker, and is required to complete the work within the prescribed duration. In case he 7-39 é INDUSTRIAL ENGINEERING AND MANAGEMENT (d) Time Ticket, It records the beginning and ending time of thePRODUCTION PLANNING AND CONTROL, 7-42 @ The next step is 10 determine the lot size or the number of components to be manufactured in ‘one lot or batch. In thecasc ofan order froma particular customer, itis generally equal toa number within 40% of the order quantity. In other cases the principle of economic batch quantity can be applied (refer Chapter 24) to determine the batch size. (@) Standard scrap factors (Single or cumulative) and the places (Le, aftera particular operation or assembly) where scrap is verylikely to occur are identified. The actual serap in each batch can berecorded ‘onthecontrol chart. Causes for points out of control limits are exploredandcorrected. The variables like workers, machinery and schedules may also be adjusted to minimize scrap. (P) The cost of the component is analysed and estimated through the information obtained insteps (a) 10 @ above, The cost consists of material and labour charges, and other specific and general indirect expenses. 7.20, PROGRESS CONTROL Introduction. Once the actual production has started, it becomes essential to Keep an eye at the ogress of the work so that, if required, timely corrective action can be taken. Progress control means— trying to achieve the standards set, ic, a certain level of efficiency or a certain volume of production in a specified duration. The system of progress control should besuch that it furnishes timely, udequateand accurate information about the progress made, delays and under- or over-loading. Steps Involved in Progress Control (@) Setting up a system to watch and recomd the progress of the operating facility (production section). (8) Making a report of the work progress or work accomplishment, (c) Transmission of report to: 1. Control group for necessary control action, and 2. Accounting group for recording material and labour expenditures. (@ Interpretation ofthe information coatained in the progress report by the control group. (c) Taking corrective action, if necessary. ‘The above-mentioned five steps have been briefly discussed as under = (@ System to Record the Work Accomplishmeat. Progress charts are normally employed for this purpose. They compare the work progress against a prescribed target, and point out the failure toachieve the same; thus progress charts draw attention for an action or investigation. ‘The chart construction may have the following four forms : 1. The Bar chart, 2. The Curve chart, 3,'The Gantt chart, and 4, Mechanical chart. 1. The Bar Chart (Fig. 7.28) consists ofa number of bars. Each bar hasiits length proportional to the activity duration. A bar chart is generally used to point out andanalyze interrelated data which otherwise is difficult to read. 2.A Curve Chart is a graph between two variables (like, number of days and number of items produced) marked along ¥ and Yaxis. As the days pass, the number of items being produced are marked over the graph. When all such points are joined they indicate the production trend (See Fig. 7.29). Both the bar and curve charts show the past data. They are not readily adaptable to current or future: action.q-41 INDUSTRIAL ENGINEERING AND MANAGEMENT temporary storage of J-process inventory and material handling. Routing in continuous industries does néi present any problem because of the product typeof _ layout, where the equipment is laid as per the sequence of operations required to be performed'on the components (from raw material to the finished products). : Inopen job shops, since, every time the job isnew , though operation sheets (sometimes) may serve the purpose, but the route sheets will have to be revised and this involves a greater amount of workat expertise. if Routing Procedure. Various procedural steps are as follows * (a) The finished product is analysed from the manufacturing standpoint in order to decide how ‘many components can be madein the plant and how many others wll be purchased (Make/Buy decision), from outside through vendors, by subcontracting, etc. Make/buy decision depends upon the workload in the plant, availability of equipment and personnel to manufacture all components, and the economy associated with making all components within the plant itself. (&) A parts list and a bill of materials is prepared showing name of the part, quantity, material specifications, amount of materials required, etc, The necessary materials, thus, can be procured. E (c) From production standards ~machine capacities, machine charactoristics and the operations which must be performed at each stage of manufacture are established and listed in proper sequence on aan operation and route sheet, (See fig. 7.27). The place where these operations will be performed is also decided. Actwally, operation sheet and route sheet are separate, An operation sheet shows every thingabout the operations,i.e, operation description, their sequence, type of machinery, tools, set up and operation times, whereas a route sheet besides listing the sequence of operations and relation between operation ‘and machine, also details the section (department) and the machines to whom the work will flow. First ‘wo columns of Fig. 7.27 are mainly those of route sheet which show the manufacturing route for given component, OPERATION & ROUTE SHEET Component Ko. Nome of Component . Drawing . Quontity \ Tobe completedon.._. ae aorrre | | sreerra youl eto] PE scr [oace| SS | sesceroriow| nevo| 459] Jovem] v5, tow | WES el ones THOM Fig. 727. Operation and route sheet The difference between an operation sheet and a route sheets that an operation sheet remains same for the components if the order is repeated but the route sheet may have to be revised ifcertain machines are already committed to other orders (jobs) on hand. Except this small difference, both the sheets contain practically the same information and thusare generally combined into oneshee! known as ‘operationand route sheet’,DUCTION PLANNING AND CONTROL 7-3 ‘Computer, again, can do the actual data processing much more accurately and quickly than is possible manually. a q AB.C. Co., Lid. Period : 2nd Quarter 1991 Production Date : 15.3.1991 order Ttem April May | June 1 Ton Air conditioners 550 450 350 g | 15‘Ton Airconditioners | 600 500 400 a Water coolers 500 400 300 I | Approval PPC Manager Fe | Sales Manager Production Manager a Fig 7.25. Production order. "1,17. CONTROL OF PRODUCTION (PRODUCTION CONTROL) Scheduling completes the planning phase of Production Planning and control. The next is ‘Dispatching’, the action phase which has been discussed under Section 7.18. After dispatching is the control phase or control of production which consists of two parts (a) Progress reporting, and (6) Corrective action. Both these parts have been discussed in the Section7.20 under Progress control Production control phase or progress control means the same thing. The concept of control and control of production is as follows ‘Acontrol system involves four stages namely:: (7) Observation, (i) Analysis, (ii) Corrective action, and (iv) Post-operationevaluation. A production control system considers these elements in its different - functions. ‘The control of production is necessary to be sure that the production schedules are being met and the job will be delivered as per the predecided (scheduled) plans. Production control involves an information feedback mechanism and a system of corrective action. Production control follows up the scheduled plans, compares theactualouiput with theplanned one, nd points out deviation, ifany,s0 that the same can be corrected through the adjustments of men, materials and machines. In brief, a production control group: (@) receives work progress reports; "> @)oomipares them with the scheduled plans; (©) removes causes of delays in production; (@ modifies the schedules or plant capacities; and (© eExpedites the work. 718. DISPATCHING Introduction. Dispatch function executes planning function. It is concerned with getting the work started. Dispatching ensures that the plans are properly implemented. It is the physical handing over of ; a manufacturing order to the operating facility (a worker) through the release of ordersand instructions a in accordance with a previously developed plan of activity (time and sequence) established by the "scheduling section of the production planning and control department. Dispatcher transmits orders to‘PRODUCTION PLANNING AND CONTROL 7-40 = suspects delay, with due feasons of the same, he informs the production control department. A | decentralised dispatching system has the following gdvantages : 1. Much of the red tape is minimized. 2. Shop supervisor knows best about hisshop, therefore, the work can be accomplished by the most ‘appropriate worker and the machine. 3, Elaborate reports and duplication of postings can be avoided. 4. Communication gap is reduced. 5. It is easy to solve day-to-day problems. 6. It keeps the natural urge ofa section to be self-sufficient. ‘The advantages of a centralized system, more or less give an idea about the disadvantages of the decentralized system and vice versa. ‘Level of Dispatch Office. Dispatching can be introduced at Plant Manager's level, Shop Superin- tendent’s level, at the level of Shop Supervisor or at a Specialist’s level. Dispatching, at the level of Plant Manager though keeps him informed aboutall the plantactivities and seeks his guidance, yet it may not work very well; because, firstly he (Plant Manager) does not have time to go through each and every detail carefully and secondly it takes a long time for the information to pass down the line to the workers. Dispatching at Shop Superintendent's level, again, though keeps him bettcr informed, put does not function well because his basic nature of duties (to look whether the operating facility is performing the scheduled work at an acceptable level of performance or not) do not leave much spare time: with him to take care of the overall dispatch function in detail. Dispatching when introduced at Shop Supervisor's level, seems to be the ‘best. This system possesses the following Advantages : 1. Higher levels are not disturbed. 2. Shop supervisor knows best about his shop and thus dispatching can be more’ effective. 3, The schedule is passed on to the workers in no time. ‘The Disadvantage in this case is that: clerical work for the supervisor increases. Introducing dispatching at the level ofa Specialist (a dispatcher not from within the line organiza- tion) has the follawing advantages and disadvantages. “Advantages (1) Shop supervisor is relieved of the clerical work. (2) The system provides extra manpower. (G) The system provides special guidance and advice. (4) Dispatching is done more efficiently. (5) Effective co-ordination can be attained. Disadvantage Thetraditionally acceptable practice, thatasupervisor assigns the job to theworkers under himand supervises them, is lost. 7.19, ROUTING Introduction. Routing lays down the flow of workin the plant. It determines whatworkis to bedone ‘and where and how it will be done. Taking from raw material to the finished product, routing decides the path and sequence of operations to be performed on the job from one machine to another. The purpose is to establish the optimum sequence of operations. Routing is related to considerations of layout,PRODUCTION PLANNING AND CONTROL 7-32 Scheduling and Control of production have one stage in between them, which is known as tching and’ it will be discussed “under Sec. 7.18. Ingeneral, first of all the order is. scheduled, then it jsdispatched for necessary operation (on the raw material) and lastly the progress of the order is tracked, ‘to be certain that the schedule is being met. ‘This (last) phase of tracking the progress of an order and ‘making corrections (if necessary) is known as control of production. 1.14. SCHEDULING ‘Concept. In brief, scheduling means—when and in whatsequence: the work will be done. It involves deciding 2s to when the work will start and in acertain duration of time how much work will be finished. ‘Scheduling deals with orders and machines, ie, it determines which order will be taken up on which machine and in which department by which operator. While doing so, the aim is to schedule as large ‘amount of workas the plant facilities can conveniently handle by maintaining free flow of material along | the production line. ‘Scheduling may be called the time phase of Loading. Loading meansthe assignmentof taskor work toa facility whereas scheduling includes in addition, the specification of time and sequence in which the ‘order /work will be taken up. ‘A production scheduleis similar to a railway time table and shows which machine is doing what and when. A productionschedule, isa statement of targot cates forall orders or operationsin hand and reveals their starting and finishing dates. Scheduling finalises the planning phase of Production Planning and Control System. Factors Affecting Scheduling. The following factors affect production scheduling and are consi- dered before establishing the scheduling plan. (@) External factors: 1. Customer's demand, 2. Customer's delivery dates, and 3. Stock of goods already lying with the dealers and retailers. (®) Internal factors : 1. Stock of finished goods with the firm, 2. Time interval to process finished goods fromraw material. In other words—how much timewill be required to manufacture each component, subassembly and then assembly (-e., the final product), Availability of equipment and machinery ; their total capacity and specifications, Availability of materials; their quantity and specifications, Availability of manpower (number, type and kind of skills), Additional manufacturing facilities if required, and Feasibility of economic production runs. Scheduling Procedure and ‘Techniques. Scheduling normally starts with the Master ‘Schedule. Figure 7.18 shows the master schedule for a foundry shop. ‘A master schedule resembles central office which possesses information about all the orders in hand. Master schedule, in Fig. 7.18, is a weekly breakdown of the production requirements. The total capacity in any week is of 100 hours of workin the foundry shop. ‘Asthe ordersare received, depending upon their delivery dates (or priorities, fany) theyaremarked ‘on the masterschedule. When the shop capacity is full for the present week the newly acquired orders are carried over to the next week and so on. A master schedule is thus updated continuously, it depicts a running total of the production requirements and shows the work ahead—yet to be completed. Master aayNETWORK ANALYSIS 10-11 (7) Especially suitable in defence projects Suitable for problems in Industrial setting, plant and R & D where activity times cannot ** maintenance, civil construction projects, etc. be reliably predicted. ‘Technique. CPM employs the following steps for accomplishing a project planning, (1) Break down the project into various activities systematically. (2) Label all activities. 3) Arrange all the activities in logical sequence. (4) Construct the arrow diagram. (5) Number all the nodes (events) and activities. (© Find the time for each activity. (7) Mark the activity times on the arrow diagram. (8) Calculate carly and late, start and finishing times. (9) Tabulate various times and mark EST and LFT on the arrow diagfam. (10) Calculate total float for each acti (11) Identify the critical activities and mark the critical path on the arrow diagram. (12) Calculate the total project duration. (13) Ifitis intended to reduce the total project duration, crash the critical activities of the nenvork. (14) Optimise the cost (15) Update the Network (16) Smooth the network resources. Example 10.3 explains CPM technique in detail. Example 103: \tis required to fabricate tanks for an electroplating shop. The activities involved are as follows : (a) Order material forthe tanks, (b) Await delivery of the material, (¢) Collect tooling equipment for tank fabrication, (@) Fabricate the tanks, (c) Test the tanks against leakage, (f) Obtain precut rubber ining from the market, (g) Fix lining on the inside of the tanks, and (/t) Paint the tanks from outside, ‘Using theactivities listed above constructan arrow diagram for the fabrication of tanksand explain in detail the CPM-planning scheduling and control technique. \ ‘Solution : From the given data, the following arrow diagram has been constructed (Fig. 10.5) Fig. 105. Arrow diagram. E.103(a). ESTIMATING ACTIVITY TIME (DURATION) ‘After the arrow diagram has been drawn and various activities marked on the same, the next step is to estimate time for each activity. The time estimate should be as realisticas possible and preferably ‘based upon past experience, ie, time values can be taken from similar/same activities accomplished earlier. Estimation of duration is no problem for an experienced estimator, but for a new person if past datais notavailable, itisbetter touse PERT technique for estimating time. The estimatorafterconsultingNETWORK ANALYSIS 0-7 (b) Most likety time (f,). Its the time in which the activity is normally expected to comiplete under normal contingencies. + (©) Pessimistic time (,)-Itis the time which an activity will take tocomplete in case of difficulty, Le, if mostly the things go wrong. It is the longest of all the three time estimates. ‘The f, t,’and ¢, are combined statistically'to develop the expected time (f,) for an activity. The fundamental assumption in PERT is that the three time estimates form the end points and mode of Beta distribution (Fig. 10.3), Its further assumed that +, and, are about equally likely to occur whereas the probability of occurrence of 1, i8 4 times that of, or, Therefore; #, given. by, Figi03. PERT time estimates teed, Beta distebution eee (2) Estimation of Variability of Activity Times. The purpose is to find, how reliable—"," 2s got from equation (1) is Assume Case I Case It 1,25 1-5 126 1,=10 7 54 (6x4) 47 1r7h5-4 dks) +21 1=6 5 111 fF tty 4, is not equal tor, ‘This indicates that, if the time required for an activity shows high variability (Case Il) and there is ‘wide range of (21—5=16) three times estimates, the certainty and confidence to correctly anticipate the factual time from relation (1) decreases and thus the need to measure the variability in the time of an activity arises, Knowing the variability, the reliability of, values can be assessod. PERT, using statistical probability concept,employsstandard deviation (S}) andvariance (Vas measures of variability. They re given by, Ftc Me 7 6 | =o 2 ben's icy z | sy -@) ‘Thus for cases Land II above 7-5] 4 (= [24 ] + iO): Ack ae Oe [EP = tienen ‘This supports the above concept, Coming to the actual problem : (a) the ‘Table 10.2 gives the values of 4, and 1, for each activity. The values of r, S, and V, are calculated by using equations (1), (2), and (3) and have been added in the Tabie 10.2. LYNETWORK ANALYSIS 10-3 (1) Latest finish time (LFT).1t i calculated by moving backward, ie., from last event to first event of the network diagram. It is the last event time of the head event. (Latest start time (LST). Is the latest possible time by which an activity can start. LST=LFT —duration of that activity. Example 10.1 explains the method of calculating EST, EFT, LFT and LST. (i) Float or slack. Slack is with reference toan event and float is with respect toan activity. In other words, slack is used with PERT and float with CPM--but in general practice, they may be used inter- changeably. It may be float or siack, it means spare time, a margin ofextra timeover andabove its duration which anon-criticalactivity can consume without delaying the project. Float is the difference between the time available for completing an activity and the time necessary to complete the same (i) Total Float. Itis the additional time which a non-critical activity can consume without increasing the project duration. However, total float may affect the floats in previous and subsequent activities. Total float=(LST—EST) ot (LFT-EFT) and it can be negative also. (i) Free Float. fall the non-critical activities start as early 28 possible, the surplus time fs the free float. Free float ifused, does not change the float in later activities. In other words ifan activity isdelayed by the free float period, the succeeding activity will not be delayed, in turn. Free float=EST of tail event—EST of head event—activity duration. (ii) Independent Float. The use of independent float of an activity does not change the floatin other activities. Independent float can be used to advantage iffone is interested to reduce the effort on a non- critical activity in order to apply the same (effort) on a critical activity thereby reducing the project duration. The independent float associated with anactivity is not reduced by delaying previous operations whereas such a reduction can be noticed with free float, Independent float=EST of tail (succeeding) event =LFT of head (preceding) event—activity dure- tion. Independent float, if it turns out to be negative, is taken as zero. (& Network diagram or Arrow diagram. Network diagram is the basic feature of network planning. Itisa diagram (Fig. 1011) whieh represents all the events and activities in sequence (in which they ate required to be performed to complete the project), slong with their interrelationships and inter- dependencies. i \ Time ty (t) Aart Ph derat TW EVENT OR NODE-1 ACTIVITY A 6 days, (, = 4 days, ¢, = 3 days lays, s Fig. 10.1. Network (Arrow) diagram, Arrow diagram is the visual presentation of the complete task (activities) by means of arrows. Itis the most frequently used form of network diagram where every activity is represented by anarrow andthe activity sequences are indicated by the direction of arrows. For example, Fig. 10.1 shows that activity C and Dcanstart only afterA and Bare complete. Dotted arrow (dummy activity) shows that A and B finish atthesame time 1,) and Cand Dstartat thesame time. Thereare two paths tocomplete the project r 1-3-4.5,