P S V COLLEGE OF ENGINEERING AND TECHNOLOGY

DEPARTMENT OF MECHANICAL ENGINEERING

VII - SEMESTER

COURSE MATERIAL
IE6605 PRODUCTION PLANNING AND CONTROL

Prepared By
Dr.K.Anandan
Department of Mechanical Engineering
Kingston Engineering College
2024

Syllabus
IE6605 PRODUCTION PLANNING AND CONTROL LTPC
3003
UNIT I INTRODUCTION 9
Objectives and benefits of planning and control-Functions of production control-Types
of production-job- batch and continuous-Product development and design-Marketing
aspect - Functional aspects-Operational aspect-Durability and dependability aspect
aesthetic aspect. Profit consideration-Standardization, Simplification & specialization-
Break even analysis-Economics of a new design.

UNIT II WORK STUDY 9

Method study, basic procedure-Selection-Recording of process - Critical analysis,
Development - Implementation - Micro motion and memo motion study – work
Measurement - Techniques of work measurement - Time study - Production study -
Work sampling - Synthesis from standard data - Predetermined motion time standards.

UNIT III PRODUCT PLANNING AND PROCESS PLANNING 9

Product planning-Extending the original product information-Value analysis-Problems in
lack of product planning-Process planning and routing-Pre requisite information needed
for process planning-Steps in process planning-Quantity determination in batch
production-Machine capacity, balancing-Analysis of process capabilities in a multi
product system.

UNIT IV PRODUCTION SCHEDULING 9

Production Control Systems-Loading and scheduling-Master scheduling-Scheduling
rules-Gantt charts-Perpetual loading-Basic scheduling problems - Line of balance – Flow
production scheduling-Batch production scheduling-Product sequencing – Production
Control systems-Periodic batch control-Material requirement planning kanban –
Dispatching-Progress reporting and expediting-Manufacturing lead time-Techniques for
aligning completion times and due dates.

UNIT V INVENTORY CONTROL AND RECENT TRENDS IN PPC 9

Inventory control-Purpose of holding stock-Effect of demand on inventories ordering
procedures. Two bin system -Ordering cycle system-Determination of Economic order
quantity and economic lot size-ABC analysis-Recorder procedure-Introduction to
computer integrated production planning systems-elements of JUST IN TIME SYSTEMS-
Fundamentals of MRP II and ERP.

TOTAL: 45 PERIODS
TEXT BOOKS:
1. Martand Telsang, “Industrial Engineering and Production Management”, First edition,
S. Chand and Company, 2000.
2. James.B.Dilworth,”Operations management – Design, Planning and Control for
manufacturing and services” Mcgraw Hill International edition 1992.

Production Planning and Control

PPC is aimed at achieving the efficient utilization of resources (material. Men and facility
etc...) in the manufacturing organization through planning, coordinating and control of production
activities that transform the raw material into finished product in a most optimal manner.
 PPC may be defined as the direction and coordination of the organizations materials and
physical facilities towards the attainment of pre-specified goals in the most efficient way.

Production Planning and Control = Production Planning + Production Control

Objective of Production Planning and Control

• To meet delivery commitments
• The Basic Objective of Creating an Organization is to make PRODUCTS and the bottom-line
of any Business is making PROFIT.
• Flexibility in Operations subsystems to meet changing customers demand
• To increase sales turnover
• To maximize profit
• To improve earnings per share
• To attain substantial market share
• Become a world class manufacturing unit
• An edge over its competitors

Production
 Production is an organized activity of converting raw materials into useful products.
 Production planning is done in order to anticipate possible difficulties and decides in
advance as to how the production should be carried out in the best and economical way.

Production Planning
 Production planning is defined as the determination, acquisition and arrangement of all
facilities necessary for future production of products.
 Planning sets the objectives, goals, targets on the basis of available resources with their given
constraints.

Production Control
 Production control through control mechanism, tries to take corrective action to match the
plant and actual production.
 Thus production control reviews the progress of the work and takes corrective steps in order
to ensure that programmed production takes place.
 Control is the integral part of effective planning. It involves assessment of the performance
of the system /organization in an Economical way.

Phases of PPC
1. Pre-planning phase
2. Planning phase
3. Control phase
 Functions of PPC

1. Product Planning -NPD

2. Process Planning -CAPP
3. Work Study – Initial Capacity Planning and
4. Aggregate Production Planning
5. Production Scheduling – Routing
6. Inventory Control – Material Storage and Dispatch

Functions /Activities of PPC

1. Materials planning
2. Facility planning
3. Methods planning
4. Estimating
5. Process planning (routing)
6. Scheduling and loading
7. Dispatching
8. Expediting (or follow up)
9. Inspection and testing
10. Evaluation
Benefits of PPC
1. Manufacturing Excellence
2. Corporate Financial Excellence
3. Market Capitalization and Leadership
4. Timely Service to the Customer
5. Huge Profit and unconstrained Growth
6. Less or Minimum Inventory that aids in effective cash flow system in an organization
7. Integrated Operational Excellence and efficient Resource utilization

Production system
 A production system is the frame work within which the conversion of inputs into output
occurs.
 At the one end of the production system are the inputs and at the other end outputs.

Production system

Classification / Types of Production System

1. Job shop production
2. Batch production
3. Mass production
4. Process or continuous production

Production system
 Job Shop Production

1. High Variety of Products and Low Volume

2. Use of General purpose Machines and Facilities
3. Highly Skilled Operators
4. Large inventory of tools, materials and parts
5. Each job demands unique technological
6. Requirement and demand processing on machines

Limitations:
1. Higher cost due to frequent set up changes
2. Higher space requirement
3. Higher production cost
4. Huge inventory carrying cost

Batch production

1. The products are made in small batches and in large variety.

2. Each batch contains identical items but every batch is different from others.
3. When there is shorter production runs. (batch or lot manufacturing runs).
4. When plant and machinery are flexible.
5. When manufacturing lead time and cost are lower as compared to Job order
manufacturing.
Limitations:
1. Higher set up cost due to frequent changeovers.
2. Material Handling and Production planning is complex because of irregular flow.
3. WIP (Work in Progress) is high.

Mass Production
1. Large volume of Production
2. Shorter cycle time of production
3. Lower in process inventory
4. Dedicated manufacturing lines for products
5. PPC is easy and material flow can be completely automatic
6. Flow of materials, components and parts is Continuous

Limitations:

1. Breakdown of one machine will stop the entire machining line

2. Product flexibility will be difficult since the line is dedicated for certain products
3. High investment is required
4. The cycle time is determined by the slowest operation

Product Design
1. Product design is very essential before actual transformation of raw material in to finished
product.
2. Design of the product is an important activity.
3. Product design deals with form and function.
4. Form implies the shape and appearance of the product.
5. Function is related to the working of the product.
6. Product design that give an edge over competitors.

Product Development
1. Development is the work of contributing towards improvement in the existing knowledge by
way of improved ideas, system and techniques. Etc.
2. Development is the continuous process which involved design / redesign and manufacturing
of new modified product and then testing it to determine its function.

Product development divided into two main categories.

(i) Introduction of new product
(ii) Improvement of existing product.

Requirement of Product design and product development.

(i) Customer satisfaction
- Smooth functioning, high degree of accuracy, reliability and reasonable price.
(ii) An Adequate profit.
- Minimum number of operation , easy to maintenance and easy to pack and distribute.
Product Development Techniques
1. Standardization
 2. Simplification
3. Specialization
4. Diversification

Product Analysis

• Product Design is the first step immediately after accepting the concept of a product.
Various aspects in Product analysis:

1. Marketing aspect
(i) Customer Impact
(ii) Selling aspect
2. Product characteristics
(i) Functional aspect
(ii) Operational aspect
(iii) Durability and reliability aspect
(iv) Aesthetic (customer appeal) aspect
3. Economic analysis
(i) Profit consideration
(ii) Effect of standardization, simplification and Specialization
(iii) Break – even analysis
4. Production aspects
(i) Manufacturability

Product Design Analysis

 Marketing aspect
1. The proposed product should be fulfilling the demand of the market.
2. Marketability of the product should be carefully examined.
3. Determine the product size and shape up to satisfaction of customer.
4. Nature of the customers used for proposed product
5. Possible trend for the proposed product.
6. Proposed product function should be desirable and acceptable by customer.
7. Determine the buying capacity of the customer.
8. Check and compare the proposed product already exists in the market.
9. Determine the demand of the product short –term or long –term
10. Who are the competitors?
11. What is the price prevailing in the market?
12. What is the prevailing distribution system?
In Selling aspect.
1. Advertising the proposed product with all the features.
2. Provide general information & Technical information about its function of the proposed
product.

Product characteristics
Functional aspect
1. Carefully analysis and properly define the functional scope of the proposed product.
2. The proposed product functional scope will satisfy the customer needs, taste and ability to
pay.
3. Functional aspect becomes the one of the fundamental factors which affects the design
policy.
Operational aspect
• Carefully analysis and properly define the operational scope of the proposed product.
• The proposed product should be easy to handle and simple to operate.
• The proposed product is used at different operational condition

Durability and Dependability

Durability refers to the length of the active life or endurance of the product under given
working conditions.
Dependability refers to the reliability with which the product serves its intended function.

Aesthetic (/customer appeal) aspect

1. Aesthetic aspect refers to the final shape and appearance around the basic skeleton which are
required for performance of intended function
2. Product should be attractive, induce in the customer willingness to possess and creating the
deep impression about the product.
3. Styling is a dominant factor in product design.
4. Should be governed by the selection of material, color, texture and low cost
5. Economic analysis
6. Economic analysis is the key to the management decision in product design.
7. Capital expenditure required for manufacturing the desired quantity of new product
( fixed cost and variable cost)
8. Production cost per price
9. Selling Price ( total cost + profit)
10. Requirement of various direct and indirect materials.

• Economic analysis
Profit - consideration
1. Total cost of the product includes material cost, labour cost, expenses, overheads, storage and
distribution cost.
2. Total profit is determined by the margin of profit per unit and by the sales volume.
(i) Pure pricing strategy
(ii) Marketing strategy
(iii)Reduction of in –house production cost

• Production aspects
Design for manufacture (DFM)

1. Needs close coordination of production and design department at all the stages of
manufacturing the product.
2. Designer cannot design the product only and an interaction with production and other
departments to manufacture the product without any problem. This current trend is
referred as “design for manufacture” (DFM)
3. DMF - design for ease of manufacture of the product. DFM provides guidelines for
designed
(i) General approach
(ii) Selection of production process
(iii) Particular process
(iv) For assembly.
DFA - Design for assembly

• New Product Design

 Steps in New Product Design:
1. New product strategy development
2. Idea or concept generation
3. Screening and Evaluation
4. Business Analysis
5. Development
6. Testing-Real time testing
7. Commercialization

Standardization
1. Standardization means producing maximum variety of products from the minimum
variety of materials, parts, tools and processes.
2. It is the process of establishing standards or units of measure by which extent, quality,
quantity, value performance etc., may be compared and Measured.
Classification
(i) Basic Standardization - Basic elements – Scales, Weight
(ii) Dimensional Standardization - Components – Nuts, Bolts
(iii) Material Standardization - Quality , Size , Shape
(iv) Equipment Standardization – Location , Layout , performance
(v) Process Standardization – Maximum benefit , Cheapness in production
(vi) Quantity Standardization - Economical Quantity ( EOQ)
(vii) Safety measures Standardization – Rules and regulation for men and machine
(viii) Personnel Standardization – Selection , training, Wages
(ix) Administrative Standardization – office method and Procedure

Standardization (Design)

(i) Fewer specifications, drawings and part list have to prepared and issued.
(ii) More time is available to develop new design or to improve established design.
(iii) Better resource allocation.
(iv) Less qualified personnel can handle routine design work.

Standardization (Manufacturing)

(i) Lower unit cost.

(ii) Better quality products.
(iii) Better methods and tooling.
(iv) Increased interchangeability of parts.
(v) Better utilization of manpower and equipment.
(vi) Accurate delivery dates.
(vii) Better services of production control, stock control, purchasing, etc.

Standardization (Marketing)
 (i) Better quality products of proven design at reasonable cost leads to greater sales volume.
(ii) Increased margin of profit.
(iii) Better product delivery.
(iv) Easy availability of sales part.
(v) Less sales pressure of after-sales services.

Standardization (PPC)

(i) Scope for improved methods, processes and layouts.

(ii) Opportunities for more efficient tool design.
(iii) Better resource allocation.
(iv) Reduction in pre-production activities

Standardization (QC)

(i) Better inspection and quality control is possible. Quality standards can be defined
more clearly.
(ii) Operators become familiar with the work and produce jobs of consistent quality.

ADVANTAGES
1. Better utilization of equipment
2. Higher productivity
3. Greater efficiency
4. Better quality
5. Reduced production cost & hence lower unit price, and Use of standardized methods.

DISADVANTAGES
1. Reduction in choice because of reduced variety and consequently loss of business or
customer
2. Standard once set, resist change and thus standardization may become an obstacle to
progress.
3. It tends to favour only large companies.
4. It becomes very difficult to introduce new models because of less flexible production
facilities and due to high cost of specialized production equipment.

Simplification
(i) The concept of simplification is closely related to standardization. Simplification is the
process of reducing the variety of products manufactured. ( Variety reduction)
(ii) Simplification is concerned with the reduction of product range, assemblies, parts,
materials and design.
(iii) Simplification is also termed as “product line contraction”.

ADVANTAGES
1. Simplification involves fewer, parts, varieties and changes in products; this reduces
manufacturing operations and risk of obsolescence.
2. Simplification reduces variety; volume of remaining products may be increased.
3. Simplification provides quick delivery and better after-sales services.
4. Simplification reduces inventory and thus results in better inventory control
5. Simplification lowers the production costs.
6. Simplification reduces price of a product.
7. Simplification improves product quality.

Specialization
1. Specialization or expertise in particular product line, instead of diversification.
2. Specialization is the process whereby particular firms concentrate on the manufacturing of a
limited number of product or types of product.
3. The combination of simplification and standardization lead to specialization.

Diversification
1. Product diversification is completely opposite to simplification. Product diversification
involves adding new products or lines products to achieve a balanced product range.

Routing and Scheduling

Routing:
1. Routing provides the best and the most economical production sequence
2. In simple words routing considers the “where” aspects

Scheduling:
1. Whereas scheduling prepares a logical time- table showing the starting and finishing time of
each production work in accordance with some predetermined program.
2. In simple words scheduling considers the “when” aspects.

Design for manufacture

Design for manufacture (DFM) means the design for ease of manufacture of the components
of a product.

Design for assembly

Design for assembly (DFA) means the design of the product for ease of assembly.

Product simplification is the process of reducing the variety of products manufactured i.e.,
variety reduction.

Product diversification is completely opposite to simplification. Product diversification

involves adding new products or lines products to achieve a balanced product range.

Break-even analysis
1. A graphical and algebraic representation of the relationships among Volume of output, cost,
and revenues.
2. Break-even analysis, also known as cost-volume-profit analysis.
3. Is the study of inter-relationships among a firm’s sales, costs and operating profit at various
levels of output.

Break-even analysis

Break-Even-Point
1. The level of output volume for which total cost equals total revenues
2. The break-even point is the point at which revenue is exactly equal to costs. At this point, no
profit is made and no losses are incurred.
3. The break-even point can be expressed in terms of unit sales.

Break-Even-Point
 Economics of a New Design
The type of approach followed in make or buy decision are as follows

1. Simple Cost Analysis – Based on Fixed and Variable cost of making or buying a product
2. Economic Analysis –EOQ –Economic Order Quantity model
3. Break Even Analysis
• Based on the different cost involved in making (manufacturing) a product or buying will let
us know whether making is profitable than buying or vice versa.

UNIT 2 - WORK STUDY

WORK STUDY

Work study is the study of human work in all aspect in order to increase the effectiveness with which
the work is done

Work study may be defined as a discipline which analyses and evaluates all aspect of work system in
order to enhance effectiveness and functional efficiency.

WORK STUDY

Work study is a term used to embrace the techniques of method study and work measurement
which is employed to ensure the best possible use of human and other resources (material, machine,
and money) in carrying out a particular activity.

BRITISH STANDARD

Work study is a generic term for those techniques, particularly method study and work measurement,
which are used in the examination of human work in all its contexts and which leads systematically
to the investigation of all factors which after the efficiency and economy of the situation being
reviewed, in order to effect improvement.

AIM OF WORK STUDY

AIM: Achieving higher productivity by finding the most efficient use of the available resources to
create a prescribed output.

PRODUCTIVITY = OUTPUT / INPUT

Work study = Method study + Work Measurement

Work study Techniques

Method study - Develops and improved Method of doing job
Work Measurement - Find the time allowed to complete the job by the procedure.

Method study

Method study is the systematic recording and critical examination of existing and proposed ways of
doing work, as a means of developing and applying easier and more effective methods and reducing
costs.

Work Measurement

Work measurement is the application of techniques designed to establish the time for a qualified
worker to carry out a specified job at a defined level of performance.

Objective of work study

1. To find the most economical way of doing the work
2. To simplify and standardize the methods, materials, tools and equipment.
3. To determine the time required by a qualified worker to perform the work at a normal pace.
4. To plan the training program for the workers for the new methods.

Purpose of work study

1. It is direct means of raising productivity
2. Increase the productivity efficiency without much capital expenditure.
3. Eliminate / reduce waste and make better use of resources.
4. Establishing standard of performance on which effective production planning and control.
5. It provides Scientific basic for work measurement through work simplification
6. It provides a better workspace layout and work environment
7. It provides better quality product to customer at a reasonable price.
8. It provide a concept of fair day work to the worker, thus they can protect themselves from
the over load.
9. It provides a basis for negotiation between trade union and management.

Work Study Procedure

 1. SELECT,

2. RECORD, SELECT

3. EXAMINE, MAINTAIN RECORD

4. DEVELOP,

5. MEASURE, INSTALL EXAMINE

6. DEFINE,

7. INSTALL DEFINE DEVELOP

MEASURE
8. MAINTAIN.

Method Study
Method study is the systematic recording and critical examination of existing and proposed ways of
doing work, as a means of developing and applying easier and more effective methods and reducing
costs.

Method study is that part of work study that deal with systematic analysis and improvement of work
method and application of innovative techniques to achieve better utilization of resources.

Method study is mainly concerned with developing a better method of doing job.

Objectives of Method study.

1. To improve the processes and procedures.
2. To improve the design of plant and equipment
3. To improve the plant layout.
4. To improve the use of men, materials and machines.
5. To achieve efficient material handling.
6. To improve the flow of production and processes.
7. To achieve economy in human effort and reduction in unnecessary fatigue.
8. To achieve Standard Methods.
9. To improve the safety standard.
10. To develop better physical working condition.
Method Study Procedure

SELECT
1. SELECT,

2. RECORD, MAINTAIN RECORD

3. EXAMINE,

4. DEVELOP,
INSTALL EXAMINE
5. DEFINE,

6. INSTALL
DEFINE DEVELOP
7. MAINTAIN

Method Study Procedure

1. SELECT the work to be studied

2. RECORD all the relevant factors about the present method by direct observation.
 3. EXAMINE these facts critically in the order of sequence using the questioning techniques.

4. DEVELOP the most practical, economic and effective method considering all circumstance.

5. DEFINE the new method (improved method) so that it can always be identified.

6. INSTALL the method as standard practice

7. MAINTAIN that standard practice by regular routine check.

Method Study - Select

1. Economic considerations
2. Technical consideration
3. Human reactions

Economic considerations:
1. Poor use of men, materials and machine capacity. (Poor utilization of resources)
2. Bad layout and poor planning resulting in unnecessary movements of materials.
3. Existence of bottlenecks (i.e., problems obstructing smooth flow of work).
4. Inconsistencies in quality.
5. Excess scrap and reworking cost. (producing lot of scrap or defective.)
6. Operation involving excessive manpower.
7. Excessive movement of the material
8. Operation involving repetitive work.
9. Highly fatiguing work.
10. Bad working conditions and high rates of accidents.
11. Frequent complaints by employees about a particular work.

Technical Consideration:
1. Specification of the machine
2. Maximum Speed of the machine
3. Machine tool specification

Human Reactions:
1. Workers
2. Supervisors
3. Trade unions
 4. Management
Method study can improve the working condition and reduce the effort and fatigue of the
workers.

Method Study - Record

1. Record all the relevant facts pertaining to the existing method.
2. Recorded facts will provide the basis for the critical examination and the development of the
improved method.
Recording Techniques:

1. Process Charts
2. Process Diagram

Types of process Charts

Indicating process sequence
1. Outline process chart
2. Flow process chart
3. Two-handed process chart
Using Time Scale

1. Multiple Activity chart

2. Simo chart ( Simultaneous motion)
Process Sequence Charts

1. Outline process chart – Shows only principal operations and inspections.

2. Flow process chart
a. Man type- Record Sequence of activities performed by workers.
b. Material type –Record Sequence of activities performed by Materials.
c. Equipment type - Record Sequence of activities performed by Equipment.
3. Two-handed process chart -Record Sequence of activities performed by worker’s two hands.
Time scale Charts

1. Multiple Activity chart – Activity of men and or/ machine on a common scale
2. Simo chart ( simultaneous motion cycle chart) --
Activity of worker’s hands, legs, and other body movement on a common scale.

Types of Diagrams
1. Flow diagram
2. String diagram
3. Cycle graph
4. Chronocycle graph
5. Travel chart
Types of Diagrams

1. Flow Diagram & String Diagram :

 These diagrams record path of movement of men and materials.
2. Cycle Graph & Chronocycle Graph
They are used for recording high speed, short cycle operations.
3. Travel Chart:
Record movement of material and /or men between departments.

Method Study - Examine

Critical examination : Each activity is subjected to a systematic and progressive series of operation.

(a) Primary Question and

(b) Secondary Question
Primary Question: First stage of questioning technique, the purpose, place, Sequence, Person,
Means of every activity recorded is systematically queried, and a reason for each reply is sought.

Primary Question
1. Purpose – To eliminate the activity, if possible.
2. Place – To combine or re-arrange the activities.
3. Sequence – To combine or re-arrange the activities.
4. Person – To combine or re-arrange the activities.
5. Means – To simplify the activity.

Secondary Question:

The answers to the primary question are subjected to further query to determine whether possible
alternatives of place, sequence, person and /or means are practicable and preferable as a means of
improvement upon existing method.

By doing this questioning

Unwanted activities can be eliminated
Number of activities can be combined or re-arranged
Method can be simplified.
All these will reduce production time.

Method Study - Develop

The answer to the questions given below will result in the development of a better method.

1. Purpose – What should be done?

2. Place – Where should it be done?
3. Sequence – When should it be done?
4. Person – Who should do it?
5. Means – How should it be done?
(a) Record all the relevant information regarding proposed method is made on flow process chart
so as make a comparison with the original method.
 (b) The possible saving can be expected in terms of money and distance travelled by the man and
material during various stages in proposed method.
(a) Eliminate all unnecessary operation
(b) Simplify the necessary operation
(c) Sequence the various activities properly
(d) Combine two or more operation and elements

Method Study - Define

1. Once a complete study of a job has been made and a new method is developed, it is necessary
to obtain the approval of the management before installing it.
2. The work study man should prepare a report giving details of the existing and proposed
methods.
3. He should give his reasons for the changes suggested.

The report should show

(a) Brief description of the old method.

(b) Brief description of the new method.
(c) Reasons for change.
(d) Advantages and limitations of the new method.
(e) Savings expected in material, labour and overheads.
(f) Tools and equipment required for the new method.
(g) The cost of installing the new method including.
1. Cost of new tools and equipment.
2. Cost of re-layout of the shop.
3. Cost of training the workers in the new method.
4. Cost of improving the working conditions.

Method Study - Install

1. This step is the most difficult stage in method study.
2. Here the active support of both management and trade union is required.
3. Here the work study man requires skill in getting along with other people and winning their
trust.

Install stage consists of

(a) Gaining acceptance of the change by supervisor, workers and trade unions.
(b) Getting approval of management.
(c) Giving training to operators in the new method.
(d) To be in close contact with the progress of the job until it is satisfactorily executed.

Method Study - Maintain

1. The work study man must see that the new method introduced is followed.
2. The workers after some time may slip back to the old methods. This should not be allowed.
3. The new method may have defects. There may be difficulties also. This should be rectified in
time by the work study man.
4. Periodical review is made.
5. The reactions and suggestions from workers and supervisors are noted. This may lead to
further improvement.
6. Reasons for variations are analyzed.
7. Changes due to valid reasons are accepted. The instructions are suitably modified.

Recording Techniques
1. CHARTS
2. DIAGRAM

Process Chart Symbols

1. OPERATION

Operation A large circle indicates operation.

(a) An operation takes place when there is a change in physical or chemical characteristics of an
object.
(b) An assembly or disassembly is also an operation.
(c) When information is given or received or when planning or calculating takes place it is also
called operation.
Example

1. Reducing the diameter of an object in a lathe.

2. Hardening the surface of an object by heat treatment.

2. INSPECTION

A square indicates inspection.

Inspection is checking an object for its quality, quantity or identifications.

Example

1. Checking the diameter of a rod.

2. Counting the number of products produced.

3. TRANSPORT

An arrow indicates transport.

(a) This refers to the movement of an object or operator or equipment from one place to another.
(b) When the movement takes place during an operation, it is not called transport.
Example

1. Moving the material by a trolley

2. Operator going to the stores to get some tool.

4. DELAY OR TEMPORARY STORAGE

A large capital letter D indicates delay.

(a) This is also called as temporary storage.

(b) Delay occurs when an object or operator is waiting for the next activity.
Example

1. An operator waiting to get a tool in the stores.

2. Work pieces stocked near the machine before the next operation.

5. PERMANENT STORAGE
(a) An equilateral triangle standing on its vertex represents storage.
(b) Storage takes place when an object is stored and protected against unauthorized removal.
Example

Raw material in the store room.

6. COMBINED ACTIVITY

Here a circle inside a square represents the combined activity of operation and inspection.

When two activities take place at the same time or done by the same operator or at the same place,
the two symbols of activities are combined.
Example

Reading and recording a pressure gauge.

Differentiate between operation and inspection.

An operation always takes the material, component or service a stage further towards completion.

An inspection does not take the material any nearer to become a completed product. It merely
verifies that an operation has been carried out correctly as to quality and / or quantity.

SYMBOLS USED IN PROCESS CHARTS

Process charts use five common symbols for recording the nature of events. These
were developed by ASME (American Society of Mechanical Engineers) in 1947.
Method study (Chart) Symbol

CHARTS:
1. A picture or a graph which gives an overall view of the situation.
2. The chart is used to give the entire view of the process, Material, and sequence of operation.
3. The Chart shows the man-machine utilization , increment of materials and equipment.
4. Chart helps in visualizing and comprehending the full process with the help of a set of
method study symbols so that necessary improvements may be made.

Outline Process Chart / Operation process chart

An operation process chart is a graphic representation of the sequence of all operations and
inspections taking place in a process.

It gives Bird’s eye view of process and records principle operations and inspection.
Outline Process Chart
The conventions followed in preparing the chart are
1. Write title at the top of the chart.
2. Begin the chart from the right hand side top corner.
3. Represent the main component at the right extreme.
4. Represent the sequence of operations and inspections by their symbols. Connect them by vertical
flow lines.
5. Record the brief description of the activity to the right side of the symbols.
6. Number all operations in one serial order. Start from the right hand top (from number 1).
7. Similarly number all inspections in another serial order (starting from 1).
9. Continue numbering, till the entry of the second component.
10. Show the entry of purchased parts by horizontal lines.

Flow Process Chart

A flow process chart is a graphical representation of the sequence of all the activities (operation,
inspection, transport, delay and storage) taking place in a process.

Process chart symbols are used here to represent the activities. There are three types of flow process
charts.

1. Man type: Record Sequence of activities performed by worker

2. Material type: Record Sequence of activities performed by Material
3. Equipment Type: Record Sequence of activities performed by Equipment
General guidelines for making a flow process chart

1. The details must be obtained by direct observation—charts must not be based on memory.
2. All the facts must be correctly recorded.
3. No assumptions should be made.
4. Make it easy for future reference.
5. All charts must have the following details:
(a) Name of the product, material or equipment that is observed.
(b) Starting point and ending point.
(c) The location where the activities take place.
(d) The chart reference number, sheet number and number of total sheets.
(e) Key to the symbols used must be stated.
Two-handed process chart
Two-Handed Process Chart (or) Right Hand, Left Hand Chart

(a) It is the process chart in which the activities of two hands of the operator are recorded.
(b) It shows whether the two hands of the operator are idle or moving in relation to one another,
in a timescale.
(c) It is generally used for repetitive operations.
(d) Two-handed process chart can be used for assembly, machining and clerical jobs.
General guidelines for preparing the chart

1. Provide all information about the job in the chart.

2. Study the operation cycle a few times before starting to record.
3. Record one hand at a time.
4. First record the activities of the hand which starts the work first.
5. Do not combine the different activities like operations, transport etc.

Multiple Activity Chart

Multiple Activity Chart / Man-Machine chart

(a) A man-machine chart is a chart in which the activities of more than one worker or machine
are recorded.
(b) Activities are recorded on a common time scale to show the inter-relationship.
(c) It is used when a worker operates a number of machines at a time.
(d) It is also used when a number of workers jointly do a job.
(e) Activities of workers or machines are recorded in separate vertical columns (bars) with a
horizontal time scale.
(f) The chart shows the idle time of the worker or machine during the process.
(g) By carefully analyzing the chart, we can rearrange the activities.
(h) Work load is evenly distributed among the workers or machines by this the idle time of
worker or machine is reduced.
(i) Multiple activity chart is very useful in planning team work in production or maintenance.
(j) Using the chart we can find out the correct number of machines that a worker can operate at a
time.
(k) We can also find out the exact number of workers needed to do a job jointly.
(l) To record the time, ordinary wrist watch or stop watch is used.
(m)High accuracy is not needed. Man-machine chart is a type of multiple activity charts.
Types of multiple activity chart

1. Man –Machine Activity chart : One operator is working in one machine.

2. Multiman activity chart: Group of worker are working on a machine
3. Man-multi machine activity chart: single operator is working on a number of machine
4. Multiman-machine activity chart : Group of operator work on a common central machine

Simo Chart
Simo Chart ( simultaneous motion cycle chart)
(a) Record activities of worker’s two hands, legs and other body movements on common time
scale.
(b) It is commonly used on fairly short cycle operation when the machine process time is
relatively short and worker is operating only on machines.
(c) The Simo chart is usually based on film analysis to record the Therbligs or groups of
Therbligs performed by different part of the body of one or more workers.
(d) Therbligs are the symbols used to denote the various activities and movements done for
different purposes.
Diagrams
1. Flow chart does not show the path of movements, it only shows the sequence of various
activities for performing the specified work.
2. The path movement (movement between two locations and the number of times a movement
is repeated) can be better visualized by flow diagrams, string diagrams. Etc..
Flow Diagram
1. A flow diagram is a diagram which is drawn to scale.
2. The relative positions of machineries, gang ways, material handling equipment etc. are drawn
first.
3. Then the path followed by men or material is marked on the diagram.
4. Different movements can be marked in different colors.
5. Process symbols are added to the diagram to identify the different activities at different work
centers.
PROCEDURE OF FLOW DIAGRAM

1. Heading and description of the process should be given at the top of the diagram.
2. Other information's like location, name of the shop, name of the person drawing the diagram are
also given.
3. The path followed by the material is shown by a flow line.
4. Direction of movement is shown by small arrows along the flow lines.
5. The different activities are represented by the symbols on the flow lines. (Same symbols used in
flow process chart are used here).
6. If more than one product is to be shown in the diagram different colors are used for each path.

Uses Of Flow Diagram

The flow diagram are used for the following purposes:

1. To remove unwanted material movement.

2. To remove back tracking.
3. To avoid traffic congestion.
4. To improve the plant layout.
String diagram
We make use of flow diagram for recording the movement of men or material when the movement is
simple and the path is almost fixed. But when the paths are many and are repetitive, it may not be
possible to record them in a flow diagram. Here a string diagram is used.

String diagram is a scaled plan of the shop. Location of machines and various facilities are drawn to
scale in a drawing sheet. Pins are fixed at the various work centers in the drawing sheet. A
continuous colored thread or string is taken round the pins where the material or worker moves
during the process.

String
Diagram Procedure
1. Draw the layout of the shop to scale in a drawing sheet.
 2. Mark the various work centers like machines, stores, work bench etc. in the diagram.
3. Hold the drawing sheet on a soft board and fix pins at the work centers.
4. Tie one end of a colored string to the work center from which the movement starts.
5. Follow the path of the worker to different work center and accordingly take the thread to
different points on the drawing board.
6. At the end of the session note down the number of movements from one work center to
another.
7. Remove the string and measure the total length of the string. Multiply by the scale and get the
actual distance of movement.

Uses of String Diagram

1. It is used for recording the complex movements of material or men.
2. Back tracking, congestion, bottlenecks, under-utilized paths are easily found out. 3. It is used to
check whether the work station is correctly located.
3. Used to record irregular movements.
4. Used to find out the most economical route.

Travel Chart
1. Travel chart is a tabular record for presenting quantitative data about the movement of
workers, materials or equipment between any numbers of places over any given period of
time.
2. Travel chart is sometimes referred as “from-to-chart” , “Trip frequency chart” and “Cross
chart”
Cycle Graph & Chronocycle Graph
1. Cycle Graph and Chronocycle graph are used when path of movement/motion of a operator’s
hands, fingers, etc.. is to be recorded.
2. They are very useful to trace those movements which are too fast for the human eye to
pursue.
3. The Two techniques were developed by Mr. Gilberth.

Cycle Graph
1. A cycle graph is a record of path movement, usually traced by a continuous source of light
on a photograph.
2. A small electric bulb is attached to the hand , finger, or any other part of body whose motion
is to be analyzed or recorded.
3. A bulb moves through the space for one completed cycle, path is photographed by still
photograph.
4. The path of the light of bulb shows the path of the motion of operator.
5. The path of the photograph is called cycle graph.
Chronocycle graph
1. Chronocycle graph is a special form of cycle graph in which the light source is suitably
interrupted so that the path appears as a series of pear-shaped dots.
2. Pointed end of the pear-shaped dot shows the direction of the movement and shape and
spacing of these dots indicate whether the speed of working is increasing or decreasing.
3. More elongated dots with longer gaps between them indicate higher working speed.
4. The speed of the movement can be easily determined.

Work Measurement
1. Work measurement is the application of techniques designed to establish the time for a
qualified worker to carry out a specified job at a defined level of performance.
2. Work measurement is the application of techniques used to determine the time taken by a
qualified worker to carry out a specified job at a defined level of performance.
3. Work measurement means measuring the work in terms of time content, (i.e., minutes or
hours) required for completion of job.
4. Work measurement is concerned with investigating, reducing or eliminating all ineffective
time.
Objectives of work measurement
1. To determine the time required to do a job.
2. To estimate the man and machine requirements and to assess the plant capacity accurately.
3. To provide information for effective production planning and maintenance.
4. To assist in estimation of reliable delivery dates.
5. To provide a basis for fair and sound incentive schemes.
6. To standardize the rate of performance of workers.
Uses of work measurements
(a) To compare the efficiency of alternate methods. When two or more methods are available for
doing the same job, the time for each method is found out by work measurement. The method
which takes minimum time is selected.
(b) Standard time is used as a basis for wage incentive schemes.
(c)It helps for the estimation of cost. Knowing the time standards, it is possible to work out the
cost of the product. This helps to quote rates for tenders.
(d) It helps to plan the workload of man and machine.
(e)It helps to determine the requirement of men and machine. When we know the time to produce
one piece and also the quantity to be produced, it is easy to calculate the total requirement of
men and machines.
(f) It helps in better production control. Time standards help accurate scheduling. So the
production control can be done efficiently.
(g) It helps to control the cost of production. With the help of time standards, the cost of
production can be worked out. This cost is used as a basis for control.
(h) It helps to fix the delivery date to the customer. By knowing the standard time we will be able
to calculate the time required for manufacturing the required quantity of products.

TECHNIQUES OF WORK MEASUREMENT

Following methods are commonly used in work measurement. The selection of a particular method
depends on the job situation.

(a) Time study.

(b) Work sampling.
(c)Pre-determined Motion Time System (PMTS)
(d) Analytical estimating.
(e)Synthesis.
 Time study
(a) Time study is concerned with the direct observation of work while it is actually being
performed by the operator.
(b) Time study is defined as a work measurement technique, recording the time and rate or pace
of working for the elements of a specified job carried out under specified conditions, and for
analyzing the data so as to determine the time necessary for carrying out the job at a defined
level of performance.
(c)Time study is the most satisfactory and accurate technique for determining the time taken for
completing a manufacturing operation but due to its nature it is mainly used for repetitive
work.

PROCEDURE FOR TIME STUDY

The steps involved (Procedure) in taking time study are :

1. Select the job to be studied.

2. Note all the details about the operations and the operator being studied.
3. Split the work cycle into suitable elements. ‘An element is a distinct part of a job, selected for
convenience of observation, measurement and analysis’. Any non-repetitive and occasional
element in the manufacturing cycle should be noted separately.
4. Determine the number of cycles required to be timed to get desired accuracy.
5. Observe and record the actual time taken by the operator for each element of the job.
6. Simultaneously rate or judge the pace of the operator’s performance.
7. Different time readings for each element are recorded on the record sheet.
8. Average time for each element is calculated after eliminating the abnormal values. (This is
also called observed time.)
9. The observed time for every element multiplied by the corresponding rating factor (expressed
in %) gives normal time or basic time.
10. Normal Time = Observed Time × Rating Factor (%)
11. Determine the allowances to be made over and above the basic time for the operation.
12. Determine the standard time by adding all allowances to normal time. (Standard time is also
called allowed time.)

Procedures for stop watch time study

1. Selecting the job.
2. Recording the specifications.
3. Breaking operation into elements.
4. Examining each element.
5. Measuring using stop watch.
6. Assessing the rating factor.
7. Calculating the basic time.
8. Determining the allowances.
9. Compiling the standard time.

PRECAUTION

1. Before conducting the time study it should be ensured that the method being followed is
satisfactory and the operator is proficient.
2. Wrong methods and untrained workmen should not be timed.
3. Also all the constituents of the job such as materials, equipment, tools, working conditions and
method should be standardized before conducting the time study.
Selection of job

Time study is always done after method study. Job is selected for time study:

1. A new job, new component or a new operation.

2. When new time standard is required.
3. To check the correctness of the existing time standard.
4. When the cost of operation is found to be high.
5. Before introducing an incentive scheme.
6. When two methods are to be compared.
Record

The following information's are recorded

1. about the product-name, product-number, specification.
2. about the machine, equipment and tools.
3. about the working condition-temperature-humidity-lighting etc. This information's are used when
deciding about the allowances.
4. About the operator name-experience-age etc. This is needed for rating the operator.

Breaking operation into elements

1. Each operation is divided into a number of elements. This is done for easy observation and
accurate measurement.
2. The elements are grouped as constant element, variable element, occasional element, man
element, machine element etc.
Breaking a Job into Elements
It is necessary to break down a task (job) into elements for the following reasons:
1. To separate productive time and unproductive time.
2. To assess the rating of the worker more accurately.
3. To identify the different types of elements and to measure their timings separately.
4. To determine the fatigue allowance accurately.
5. To prepare a detailed work specification.
6. To fix standard time for repetitive elements (such as switch on or switch off of machine)
Classification of elements
1. Repetitive elements It is an element which occurs in every work cycle of the job.
Example: Loading the machine, locating a job in a fixture.
2. Constant element It is an element for which the basic time remains constant whenever it is
performed.
Example: Switching on the machine, switching off the machine.
3. Variable element It is an element for which the basic time varies depending on the characteristics
of the product, equipment or process.
Example: Saving a log of wood-time changes with diameter or the work.
4. Occasional element It is an element which does not occur in every work cycle of the job. It may
occur at regular or irregular intervals.
Example: Regrinding of tools, re-setting of tools.
5. Foreign element It is an element which is not a part of the job.
Example: Cleaning a job that is to be machined.
6. Manual element It is an element performed by the worker.
Example: Cleaning the machine, loading the machine.
7. Machine element It is the element automatically performed by a power driven machine.
Example: Turning in a lathe using automatic feed.
Examine each element

1. The elements are examined to find out whether they are effective or wasteful.
2. Elements are also examined whether they are done in the correct method.

Measure using a stop watch

1. The time taken for each element is measured using a stop watch.
2. There are two methods of measuring. viz., Fly back method and Cumulative method.
3. Cumulative method is preferable.
4. The time measured from the stop watch is known as observed time.
5. Time for various groups of elements should be recorded separately.
6. This measurement has to be done for a number of times.
7. The numbers of observations depend upon the type of operation, the accuracy required and
time for one cycle.

Measuring Time with a Stop Watch

There are two methods of timing using a stop watch.
1. Non - Fly back type
2. Fly back type

NON - FLY BACK TYPE

 In non-fly back stop watch, first pressing of the winding knob starts the watch and long hand begins
moving. If winding knob is pressed second time, the long hand stops and third pressing, hand return
to zero position

FLY BACK TYPE

1. Fly back system, the watch is started and stopped with the help of the
slide.
2. Pressing the winding knob brings the hands back to zero , but they do
not stop, start immediately moving forward again.
3. To stop the hand at any point, slide is used

TIME STUDY BOARD

Time study board is a flat board usually of plywood or of suitable plastic sheet on which forms for
recording the time studies are placed using a clip. The size of the time study board should be largest
than the forms to be used. Also it may have provision for fitting stop watch so that hands of the work
study engineer are free.

Assess the rating factor

1. Rating is the measure of efficiency of a worker.
2. The operator‘s rating is found out by comparing his speed of work with standard performance.
3. The rating of an operator is decided by the work study man in consultation with the supervisor.
4. The standard rating is taken as 100.
5. If the operator is found to be slow, his rating is less than 100 say 90.
6. If the operator is above average, his rating is more than 100, say 120.
7. Performance rating is also known as “rating factor” or “ leveling factor”

CALCULATION OF BASIC TIME

1. Basic time is the time taken by an operator of standard performance (rating of 100). A man
whose work is observed, may be a slow worker or a fast worker. His rating may be less than
100 or above 100.
2. The observed time cannot be taken as the basic time. Here the rating factor is applied and
basic time is calculated as follows.

Determine the allowance

1. A worker cannot work all the day continuously.
2. He will require time for rest going for toilet, drinking water etc.
3. Unavoidable delays may occur because of tool breakage etc.
4. So some extra time is added to the basic time.
5. The extra time is known as allowance.

ALLOWANCES

Various types of allowance are

1. Relaxation allowance.
(a) Personal needs allowance
(b) Fatigue allowance
2. Contingency allowance / unavoidable delay
3. Process allowance.
4. Interference allowance.
5. Special allowance.
The allowances to be provided are given as a percentage of normal time or basic time. The total of
all allowances provided usually amount to 15 percent of basic time.
Personal /Relaxation Allowances

1. Allowances for personal needs. This allowance provides for the necessity to leave the workplace
to attend to personal needs such as washing, going to the bathroom or getting a drink. Common
figures applied by many enterprises range from 5 to 7 per cent.

2. Allowances for basic fatigue. This allowance, always a constant, is given to take account of the
energy exhausted while carrying out work and to lessen monotony. A common figure is 4 per
cent of basic time. This is considered to be sufficient for a worker who carries out the job while
seated, who is engaged on light work in good working conditions.

3. Variable allowances are added to fixed allowances when working conditions differ clearly from
those stated above, for instance because of poor environmental conditions that cannot be
improved, added stress and strain in performing the job in question, and so on.

4. Relaxation allowances are given as percentages of the basic time. They are normally calculated
on an element-by-element basis.

Contingency Allowances

1. A contingency allowance is a small allowance of time which may be included in a standard time
to meet reasonable and expected items of work or unavoidable delays.
2. The exact measurement of which is uneconomical because of their rare or irregular occurrence
3. Contingency allowances should not be greater than 5 per cent, and should only be given in cases
where the analyst is absolutely satisfied that the contingencies cannot be eliminated and that
they are justified.
Process allowances

1. The allowance provided to compensate for the enforced idleness during process
2. They include loss of time due to no work, Power failure, faulty material and tools

Interference allowance

1. The allowance provided to compensate for when two or more work elements occur
simultaneously
2. One worker is attending more than one machine.

Special Allowances

1. Special allowances may be given for any activities which are not normally part of the operation
cycle but which are essential to the satisfactory performance of the work.
2. Such allowances may be permanent or temporary; wherever possible, these allowances should
be determined by time study.
Start-up allowance to compensate for time taken by any work and any enforced waiting time
which necessarily occurs at the start of a shift or work period before production can begin.
A shut-down allowance may be given for work or waiting time occurring at the end of the day.
A cleaning allowance is given when the worker has to give attention from time to time to
cleaning his machine or workplace.
Tool allowance is an allowance of time to cover the adjustment and maintenance of tools.
Compile the standard time

The standard time is the sum of basic time and allowances.

The standard time is also known as allowed time.

CALCULATION OF STANDARD TIME

1. Standard time or allowed time is the total time in which a job should be completed at standard
performance.
2. It is the sum of normal time (basic time) and allowances.
3. The standard time is obtained by adding the following allowances with the basic or normal
time.
(a) Rest and personal allowance or relaxation allowance.
(b) Process allowance or unavoidable delay allowance.
(c) Contingency allowance.
(d) Special allowance.
4. Policy allowance may be added to the standard time if the management wants.
 Work sampling
(a) This study is also known as work sampling or activity sampling.
(b) Here the ratio of the delay time and working time to the total time of an activity is found out.
(c)This is done by random (irregular) observations.
(d) It is an extremely useful work measurement technique as it is inexpensive, convenient,
reliable and it can be done without using the stop watch
(e)This study is applied to
1. Long cycle operations.
2. Activities where time study is not possible.

Steps in Making Work Sampling Study

The following steps are involved in making work sampling study :

1. Define the problem
a. State the main objective or purpose of the study.
b. Describe the details of each element to be measured.
2. Obtain the approval of the in-charge of the department / section in which the work sampling
study is to be made. Make certain that the operators to be studied and other people in the
department understand the purpose of the study and they should co-operate in the study.
3. Design the study
Determine the number of :
Observations to be made,
Observers needed (if more than one observer is required). Select and instruct
these people,
Steps in Making Work Sampling Study
Days or shifts needed for the study.
4. There is a scientific procedure to determine the number of observations to be made ,
depending on the accuracy required. However, for practical purposes 40 to 50 observations
spanning the entire period of activity of the concerned shop, office or plant are required.
 While determining the span or cycle of the period the peak periods and lean periods of the
activity should be taken into consideration.
a. Make plans for taking the observations such as time and route to be followed by the
observer. The visits to the shop for taking observations should be done randomly
w.r.t. time of visit and route to be followed.
b. Design the observation form.
i. Make the observations and record the data.
5. Summarize the data at the end of each day and at the end of the study period.
6. Make recommendations, if required.

Applications of Work Sampling

1. Work sampling is applied in the estimation of the percentage utilization of machine tools
and other equipment, workers etc.
2. It can be used to estimate the time consumed by various activities, i.e., operation,
supervision, repair, inspection etc.
3. Work sampling is also used to find out time standards, specially where job is not of
repetitive nature and where time study by stop watch method is not applicable.
4. Establishing labor and production standards.
5. Discovering how employees allocate their time for both work and non-work activity.
6. Providing the basis for staffing changes, job training, reassignments of duties, hiring,
and termination.
Advantages of Work Sampling

1. less expensive
2. no timing devices
3. little training needed
4. study can be delayed temporarily with little impact on the results
5. worker has little chance of affecting the outcome
6. less likely to generate
7. employee objections

Advantages of Work Sampling Compared to Time Study

1. It involves less cost as compared to stop watch study.

2. Many operations or activities which are difficult and costly to determine by time study can be
readily estimated by work sampling.
3. It is possible to simultaneously study a group of operators and activities by a single work study
engineer.
4. It does not involve any timing device like stop watch.
5. Observations may be taken over a period of days or weeks, thus decreasing the chance of day-to-
day or week-to-week variations affecting the results.
6. If the study gets interrupted in between it does not introduce any error in the results.
7. Operator is not subjected to long periods of stop watch observations.
8. The random observations are taken thus avoiding prolonged observations.
9. This produces less fatigue and is less tedious to the work study engineer.

Disadvantages of Work Sampling Compared to Time Study

1. It is not economical by this method to study a single operator or machine.

2. It is not economical by this method to study operators or machines located over wide areas.
3. This method does not break the job into elements and thus does not provide elemental details.
4. Workers may not be able to understand the principles of work sampling as easily as they do time
study.
5. It normally does not account for the pace at which an operator is working.
6. No record of study of an individual operator is kept, therefore a new study must be made whenever
a change occurs in any element in the method used.

SYNTHESIS FROM STANDARD DATA

1. Synthesis is a work measurement technique to work out standard time for a job by totaling the
elemental times already obtained from previous time studies.
2. Many operators in an industry have several common elements. Example: starting the machine,
stopping the machine etc. Whenever these activities occur, they take the same duration of
time. These elements are called constant elements.
3. Time for some elements vary proportionately with the speed, feed, length of cut etc. in
machining operation. These elements are known as variable elements.
4. Time for all these constant elements and variable elements are collected from the time studies
previously made. These are stored in a file. This is called time standard data bank.
5. Data bank contains data in the form of 1. Tabulated standard time for constant elements. 2.
Charts and graphs. 3. Formulae etc.

ANALYTICAL ESTIMATING

1. Setting the time standards for long and non-repetitive operations by stop watch method are
uneconomical.
2. Analytical estimating technique determines the time values for such jobs either by using the
synthetic data or on the basic of the past experience of the estimator when no synthetic or
standard data is available.
 3. In order to produce accurate results the estimator must have sufficient experience of
estimating, motion study, time study and the use of synthesized time standards.

PREDETERMINED MOTION TIME SYSTEM (PMTS)

1. Predetermined motion time system (PMTS) is a work measurement technique whereby times
established for basic human motions are used to build up the time for a job at a defined level
of performance.
2. PMTS also called predetermined time system (PTS), is a database of basic motion elements
and their associated normal time values, together with a set of procedures for applying the
data to analyze manual tasks and establish standard times for the tasks.

PREDETERMINED MOTION TIME SYSTEM (PMTS)

1. PMTS is a work measurement technique where by times, established for basic human motions
(classified according to the nature of the motion and the conditions under which it is made)
are used to build up the time for a job at a defined level of performance.
2. Few well-known systems using this concept are
1. M.T.M. : Method Time Measurement.
2. W.F.S. : Work Factor System.
3. M.T.A. : Motion Time Analysis.
4. D.M.T. : Dimensional Motion Times.
5. B.M.T. : Basic Motion Times.

Method Time Measurement

1. MTM is a procedure which analyzes any manual operation or method into the basic motions
required to perform it, and assigns to each motion a predetermined time standard which is
determined by the nature of the motion and the conditions under which it is made.
2. MTM gives values for the fundamental motions of: reach, move, turn, grasp, position,
disengage, and release. Method Time Measurement
3. Most predetermined motion time systems use time measurement units (TMU) instead of
seconds for measuring time. One TMU is defined to be 0.00001 hours, or 0.036 seconds.
These smaller units allow for more accurate calculations without the use of decimals. 1 hr =
100,000 TMU
MTM studies provided the following kinds of information
 (a) Developing effective work methods prior to production
(b) Improving existing methods to increase production and decrease labor cost per unit
(c) Establishing time standards as basis for wages and incentive plans
(d) Developing time formulas or standard data for future use
(e) Guiding product design for most efficient manufacture
(f) Developing effective tool designs for most efficient manufacture
(g) Selecting effective equipment for
most efficient manufacture

Predetermined Time Standards

•Routine, repetitive jobs are divided into basic

motions of the human body.
•These motions have been studied under
numerous conditions and assigned specific times.
•A time standard for a particular job is found by
adding these basic motion times together.

Work Measurement & Time Standards

(a) Direct Time Study

(b) Predetermined Time Study
(c)Work Sampling

Work-related interruptions

• Machine breakdowns
• Waiting for materials or parts
• Receiving instructions from foreman
• Talking to co-workers about work-related matters
• Rest breaks for fatigue
• Cleaning up at end of shift

Non-work-related interruptions

• Personal needs (restroom breaks)

• Talking to co-workers about matters unrelated to work
• Lunch break
• Smoke break
• Beverage break
• Personal telephone call
Micro motion study
1. Micro motion study provides a technique for recording and timing an activity.
2. It consists of taking motion pictures of the operation with a clock in the picture or with a
motion picture camera or video camera operating at a constant and known speed.
3. The film becomes a permanent record of both method and time and may be re-examined
whenever desired
Purposes of Micro motion Study

1. As an aid in studying the activities of two or more persons on group work,

2. As an aid in studying the relationship of the activities of the operator and the machine, As a
means of timing operations (instead of time study),
3. As an aid in obtaining motion-time data for time standards,
4. As a permanent record of the method and time of activities of the operator and the machine,
5. For research in the field of motion and time study.
6. To assist in finding the preferred method of doing work,
7. To assist in training individuals to understand the meaning of motion study

Principles of motion economy

Based on charts and cycle graph, those rules provided a way of doing work.

1. Use of the human body (How to use body movement of the operator’s)
2. Design of tools and equipment (How to locate the tools and equipment's)
3. Arrangement of the workplace (How to design the work place).
 UNIT 3 PRODUCT PLANNING PROCESS
PLANNING
The product design for each product has been developed in the design department. To convert
product design in to product, a manufacturing plan is required. This activity of developing such a
plan is called process planning.

Process planning is a detailed specification which lists the operation, tools, and facilities usually
accomplished in manufacturing department also known as operations planning

Systematic determination of the engineering processes and systems to manufacture a product

competitively and economically

Need for Product Planning

The product planning stems from the identification of a need for product.
The need for a product may evolve from several sources they are presented under two categories.

(i) Needs determined from current deficiencies:

1. These product needs are stimulated as a result of some problem deficiency occurring in a
product today.
2. These needs can be met through the development, production as use of a new product or
process.

(ii) Needs determined from anticipated deficiencies:

Anticipated needs can be determined through the prediction; societal, political, ecological,
technological, and for economic trends.

DEFINITION
Process planning can be defined as an act of preparing a detailed processing documentation for the
manufacture of a piece part or assembly

Product
design:
When the design engineers have designed the product, the assembly drawings and working drawings
of individual components are made.

The process planners have to see how the product can best be made to meet the specifications
mentioned in the part drawing.

Process plan: The detailed instructions for making a part or a component. It includes such
information as the operations, their sequence, machines, tools, speeds and feeds, dimensions,
tolerances, stock removed, inspection procedures and time standards (i.e., cycle time).

Process planning: It may be defined as the determination of the processes and the sequence of
operations required making the product. It consists of devising, selecting and specifying processes,
machine tools and other equipment to transform the raw material into finished product as per the
specifications called for by the drawings.

The purpose of process planning is to determine and describe the best process for each job so that:

(i) Specific requirements are established for which machines, tools and other equipment can be
designed or purchased.
(ii) The efforts of all engaged in manufacturing are co-ordinate.
(iii) A plan is made to show the best way to use the existing or proposed facilities.

PRODUCT PLANNING PROCESS

The product planning process is one of the most controversies within any company. Everyone wants
a hand in new product definite and almost everyone will have contributions that will make a new
product successful. With all these interested parties, we need a system to perform the product
planning process.
The product planning process often includes the following steps:

1. Marketing and marketing analysis,

2. Performance of feasibility studies, and
3. Advanced product planning.

Marketing and Marketing Analysis

Depending upon the nature of product, the aspect of marke differs.

1. For a simple product, the marketing function may not required direct engineering
involvement. However marketing help in the preparation of technical material or specification
which support the product in its promotion.
2. For more complex products, the marketing effort involve team approach, constituting the
non-technical sales promotional orientation, with the engineering role, engineering role
provides the technical support to answer questions concerning product performance feature
reliability and effectiveness characteristics, maintain requirements and so on.
3. Once the need for product planning is established, it is necessary determine whether the
technology currently exists to satisfy need, and if not, when it will be available. S Given the
availability of proper technology, the next step is determining the potential market share of
the product through preliminary market analysis. S It is easy to estimate the demand for the
existing product. But if product is entirely new, it is offered to the market first time, and then
detailed market survey is to be carried out to estimate the detra for the product.
4. In addition to market research to produce an input to prod development, the marketing also
accomplish other function including analysing sales, tracking the performance of product and
of market segments; arranging sales activities and advertise companies; developing and
managing marketing channel managing sales personnel, sales plan and promotion.

Feasibility Study

The purpose of feasibility study is to extend the market analysis with the intent of arriving at a
preferred system configuration that the firm is willing to offer the product or product-mix in response
to an identified need.

The various elements of the feasibility study include:

 a detailed need analysis;

i. Definition of system operation requirements
ii. Definition of maintenance support requirements
iii. Identification of alternative configurations
iv. Screening and evaluation of the available alternatives
v. Selection of a preferred approach.
  System operation requirements
The information that can be obtained from the system operational concept include:
i. Identification of prime mission of the system.
ii. Definition of operating characteristics (such as size, weight,
accuracy, output rate, capacity, etc) of the system.
iii. Identification of the quantity of equipment, personnel facilities, etc.
iv. Anticipated time that the system will be in operational use.
v. Anticipated usage of the system and its elements (such as hour of operation
per day, on-off sequences, operational cycles per month, etc).
vi. Identification of effectiveness factors (such as dependability, reliability, mean
time between maintenance, failure rate, maintenance down time, overall
effectiveness, etc.)
vii. Definition of environment (such as temperature, humidity, ventilation,
lighting, etc.) in which the system is expected to operate.
Maintenancy support requirements

The information that can be obtained from the system maintenacy concept includes:

1. Identification of levels of maintenance support. Levels maintenance includes organisational

maintenancy intermediate maintenance, and depot maintenance.
2. Definition of repair policies.
3. Definition of effectiveness measures,
4. Establishment of supportability requirements (such reliability, maintainability and human
factor characteristic in system/equipment design,
5. Establishment of requirements for logistic support, logistic support analysis function includes
the identification of maintenance tasks, task frequencies and team maintenance personnel
qualities and skill levels, training needs and support equipment, supply support facilities,
data.

The output report of the feasibility study should include following information:

1. A definition of the functional configuration and physical characteristics of the system.

2. A description of the system operational and maintenancy support requirements.
3. This information, combined with advanced planning data reviewed to determine whether the
firm should proceed further with the system development.

Advanced Product Planning

The combined results of the preliminary market analysis and the feasibility study help in justifying
the product in terms of need technical approach.

The advanced product planning activities include:

1. Product selection and justification.
2. Product specifications and plans.
3. Product acquisition plan,
4. Product evaluation plan,
5. Product use and logistic support plan,
 6. System proposal.

1. Product selection and justification

First the selected product must be evaluated in terms of life-cycle ' cost. Life-cycle cost includes all
future costs associated with planning, R&D, production and/or construction investment, operation
and support and system phase-out.
Then a product pricing scheme must be established, with the objective of maximizing the return on
investment.

2. Product specifications and plans

Product specifications cover the technical design requirements for product and planning
documentation includes all management-related activity.

he various elements of product specifications include:

1. System specification. It states the technical, operational, and support requirements for a
product.
2. Development specification. It states the technical requirements for any item below the top
system level. .
3. Procurement specification. It states the technical requirements below the system level for
any item.
4. Process specification. It states a service (such as heat treatment, welding, packaging, etc)
that is performed on any item.
5. Materials specifications. It states the raw material, WIP, tools, etc., that are used in the
fabrication of a product.
3. Product acquisition plan

Product acquisition refers to the process of acquiring a process or system starting from the need
identification through delivery of the product to the end user.
It involves research, design, production, and some test evaluation activities.

The information that can be obtained from product acquisition plan includes:
1. Definition of tasks (related to all acquisition functions)
2. Scheduling of tasks (using bar charts, Gantt cha PERT/CPM, line of balance, etc.)
3. Organisation of tasks into work packages.
4. Measurement of cost, performance, and effectiveness and their control.
5. Establishing a corrective action procedure.

4. Production evaluation plan

Product evaluation plan (in terms of performance effectiveness) should be established in order to
establish that I product requirements have been accomplished adequately.

The product evaluation plan usually includes:

1. Test and evaluation requirements.
2. Categories of test and evaluation.
 3. Test preparation phase.
4. Test and evaluation procedure.
5. Data collection, analysis and corrective action methods.
6. System reworks, modifications and retest procedures.
7. Test and evaluation reporting.

5. Product use and logistic support plan

(i) Product use and distribution plan covers the activities of the product marketing, sales
strategy, and the deployment and distribution of the products.
(ii) Logistic support plan describes proposed levels of maintenance and recommended
functions to be performed at each level.

6. System proposal

System or product proposal represents a recommended course of action based on the results
of the technical feasibility study and the advanced product planning.

Two broad categories of system proposals are:

(i) Internal proposal. It is a proposal generated within an industrial firm and directed to top
management for approval.
(ii) External proposal. It is a proposal generated within a firm and directed to an outside
agency (i.e., may be another firm or government organisation).

VALUE ANALYSIS

What is Value Analysis?

Value analysis aims at a systematic identification and elimination of unnecessary cost resulting in the
increased use of alternatives, less expensive material, cheaper designs, less costly methods of
manufacturing, etc., to provide the same performance, quality and efficiency and in a decrease of
overall costs and consequently greater profits.

Value analysis is one of the major techniques of cost reduction and cost prevention.

Value analysis (VA) is also known as value engineering (VE), value assurance (VA), and value
management (VM).

Value analysis is a disciplined approach that ensure the necessary functions at minimum cost without
comprising on quality, reliability, performance, and appearance.

Definition: According to the Society of American Value Enginee (SAVE), value analysis is the
systematic application of recognise techniques which identify the functions of a product or service,
establish a monetary value for the function and provide tht necessary function reliably
at the lowest overall cost.

In other words, value analysis, also known as value engineering is an organised creative technique
directed at analysing the function of a product, service or a system with the purpose of achieving 1
required functions at the lowest overall cost consistent with all the requirements, which comprise its
value, such as performance, reliability, maintainability, appearance, etc.

Concept of Value and Function

Value analysis is the study of function and value. Thus it is necessary to have better understanding of
the words 'function' and 'value'.

What is Value?
The term value is usually difficult to define, mainly because values change from person to person.
Generally speaking, there are seven classes of value—
(a) economic,
(b) moral,
(c) aesthetic,
(d) social,
(e) political,
(f) religious and
(g) judicial.

Classes of economic value:

Use value. It is the measure of properties, qualities, and features which make the product
accomplish a use. Therefore, use value is the price paid by the buyer (buyer's view) or the cost
incurred by the manufacturer (manufacturer's view) in order to ensure that the product performs its
intended functions.
Use value is the fundamental form of economic value.
An item without use value can have neither exchange value nor esteem value.

Esteem value. It is the measure of properties, features, attractiveness, fancy packaging, etc., which
increases sales appeal or which attracts customers and create in them a desire to own the product.
Therefore, the esteem value is the price paid by the buyer or the cost incurred by the manufacturer
beyond the use value.

Cost value. It is the measure of sum of all costs incurred in producing the product. Therefore, the
cost value is the sum of materials cost, labour cost, tool cost, and overheads expended to produce the
product.

Exchange value. It is the measure of properties, qualities and features of the product which make
the product possible of being traded for another product or for money.
In a conventional sense, exchange value refers to the price that a purchaser will offer for the product,
the price being dependent upon the satisfaction (value) which he derives from the product

The value of a product can be increased:

(a) By reducing the costs,

(b) By improving function,
(c) By increasing function by increasing the costs disproportionately low.

Types of functions:

Three types of functions are primary, secondary, and tertiary functions.

1. Primary functions. Primary functions are the basic functions which the product is specially
designed to perform. Therefore, primary functions are the most essential functions whose
Non-performance would make the product worthless.

2. Secondary functions. Secondary functions are those which if deleted would not prevent the
device from performing its primary function. Secondary functions are usually related to
convenience. The product can still work and fulfil its intended objective even if these functions are
deleted, but they may be necessary to sell the product.

3. Tertiary functions. Tertiary functions are usually related to esteem appearance. The tertiary
function imparts attractive appearance to the product.

Value Analysis Vs Value Engineering

Though the terms value analysis and value engineering are used synonymously, there is a
difference between the two.
The difference lies in the time and the phase of product life-cycle at which the techniques are
applied.

Value analysis is the application of a set of techniques to an existing product with a view to
improve its value. Thus value analysis is a remedial process.

Value engineering is the application of exactly the same set of techniques to a new product at the
design stage itself. Therefore value engineering is a preventive process.

Uses of Value Analysis

1. It reduces the cost of product and determines the appropriate cost for the reliable performance
of the product.
2. It helps employees to understand their jobs in a better fashion.
3. It creates new ideas and concepts for R&D department.
4. It creates cost consciousness among the employees in the firm.
5. It motivates the employees to come forward with new innovative ideas.
6. It provides the proper information to the management, the expenditure at each stage of
manufacturing a product.
7. It helps to fulfil the customer needs.
8. It prevents overdesign of components.
9. It increases the profits and deflates costs.

STEPS IN VALUE ANALYSIS

1. BLAST
(i) Identify the product
(ii) Collect relevant information
(iii) Define different functions

2. CREATE
(i) Create different alternatives
(ii) Critically evaluate alternatives

3. REFINE
(i) Develop the best alternative
(ii) Implement the alternative

Steps in value analysis

1. Identify the product
First, the product should be identified for study.
Value analysis can be applied to a product as a whole or its subunits.

2. Collect relevant information

The next step is concerned with collecting all relevant information regarding the identified product
from the point of view of
(i) Marketing and application,
(ii) engineering,
(iii) manufacturing and procurement,
(iv) Economics.
Some of the information needed to be collected includes:
(i) Technical specifications with drawings.
(ii) Production processes, machine layout and instruction sheet.
(iii) Time study details and manufacturing capacity.
(iv)Complete cost data and marketing details.
(v) Latest development in related products.

3. Define the functions

As we know the functional analysis is the heart of value analysis.
Therefore the primary, secondary, and tertiary functions of the identified product/part should be
identified and defined.
Also the value content of each function should be specified and the high cost areas have to be
identified.

4. Create different alternatives

Knowing the functions of each part and its manufacturing details, the next step is to generate the
ideas and create alternative ways of achieving the defined functions.
Brain storming technique can be used to generate ideas. Here it is important that all feasible and
non-feasible suggestions (alternatives) are only listed and are not discussed or evaluated.

5. Critically evaluate the alternatives

The ideas generated in the previous step are compared, evaluated, and critically assessed for their
virtues, validity and feasibility as regards their financial and technical requirements.
Also the ideas that are technically sound and involving lower costs should be further developed.

6. Develop the best alternative

Using the detailed development plans that are made in the previous step, the best alternative plan
should be selected.

7. Implement the best alternative

Having obtained the best alternative, then it should be converted into a prototype manufacturing
model. Then the prototype is finally implemented into operation and its results should be recorded.
Ten Commandants of Value Analysis

The following are the ten basic commandants of value analysis.

1. Do not use a component or part that does not contribute to I value of the product.
2. Do not use a component or part whose cost is proportionate to its usefulness.
3. Do not provide any features to the component or the finish product that are not absolutely
necessary.
4. Accept the change if the part of required quality can be made out of superior or inferior quality
material where the over cost is less.
 5. If a part of required quality can be made by a method process costing less, use the alternative.
6. Replace a non-standard part with a standard part where ever possible. It will cost less.
7. Use proper tooling and manufacturing methods considered the quantities required.
8. Cost of a component shall be proportional to the material and the labour, overhead and profit
allowed.
9. Where possible, use some other material or part better suit! For the purpose.
10. If a dependable supplier can provide a part for less or a better part for the same, then do not
make it yourself.

Principles of Value Analysis

Major principles underlying successful value analysis are given below.

1. Principle of functional utility.

2. Principle of balanced combination.
3. Principle of direct motivation.
4. Principle of effective communication.
5. Principle of responsibility.
6. Principle of adequate information.
7. Principle of objectivity.
8. Principle of allocation.
9. Principle of selectivity.
10. Principle of simplification
Process Planning Vs Product Planning

Process planning is concerned with the engineering and technological issues of how to make the
product and its parts. It answers the question: 'what type of equipment and tooling are required to
fabricate the parts and assemble the product?'

Production planning is concerned with the logistics issue of making the product. That is production
planning is concerned with ordering the material and obtaining the resources required to make the
product in sufficient quantities to satisfy demand for it.

It may be noted that always production is done only after the process planning.

PROCESS PLANNING
 STEPS INVOLVED (PROCEDURE) IN PROCESS PLANNING

The steps involved in process planning are:

(i) The finished product is analyzed so that its sub-assemblies and individual components are
identified from manufacturing point of view.
(ii) Prepare a Bill Of Materials [BOM] for all components of the product which forms a basis for
purchase of raw materials.
(iii) Decide which parts are to be manufactured in the plant and which parts are to be purchased
from the market depending upon the facilities available in the plant, i.e., decision with regard to
“make” or “buy” to be taken.
(iv) Choose the appropriate blank size i.e., raw material size and select the most economical
process to be followed to manufacture components of the product. This is done by comparing the
various possible methods of obtaining the final product. The basic factors of volume to be produced,
i.e., production quantity, required quality of the product and the capabilities of the equipment
available are carefully considered in this step.
(v) Decide the sequence of operations to be performed on each component in the process
selected.
(vi) Each operation is assigned to the type and size of machine or work station that will perform
the job most economically.
(vii) Depending upon the accuracies called for by the drawings, determine the machine tools to
do the operations
(viii) Determine the need for any special equipment like jigs, fixtures, cutting tools etc.,
(ix) Determine the inspection stages and instruments required and the need for designing any
inspection devices. (Gauges, etc.).
(x) Estimate the standard time for performing the job.
(xi) Determine the type of labour (skilled, semi-skilled or unskilled) required to do the job.

BASIC FACTORS AFFECTING PROCESS DESIGN

There are three basic factors that affect the design of a manufacturing process, namely:

(i) The volume or quantity of the product to be manufactured.

(ii) The required quality of the product.
(iii) The equipment that is available, or that can be procured, for the manufacture of the product.

IMPORTANCE OF PROCESS PLANNING

Process planning establishes the link between engineering design and shop floor manufacturing.
Since process planning determines how a part/product will be manufactured, it becomes the
important determinant of production costs and profitability. Also, production process plans
should be based on in-depth knowledge of process and equipment capabilities, tooling availability,
material processing characteristics, related costs, and shop practices. The economic future of the
industry demands that process plans that are developed should be feasible, low
cost, and consistent with plans for similar parts. In addition, process planning facilitates the feedback
from the shop floor to design engineering regarding the manufacturability of alternative

PROCESS PLANNING ACTIVITIES

Specific activities involved in Process planning are

1. Analysis of the finished part requirements as specified in the engineering design

2. Determining the sequence of operation required

3. Selecting the proper equipment to accomplish the required operations

4. Calculating the specific operation setup times and cycle times on each machine

5. Documenting the established process plans

6. Communicating the manufacturing knowledge to the shop floor

Analyse finished part requirements

• Component drawing should be analysed to identify its features, dimensions, and tolerance
specifications

• Part’s requirement defined by its features, dimensions, and tolerance specifications will
determine corresponding processing requirements

Determine operating sequence

Basic aim is to determine the type of processing operation that has the capability to generate
various types of features, given the tolerance requirements

There are two ways of viewing decision process

1. First view is to consider processing evaluation of part from rough state to finished
final state. In this view material is removed or modified on rough part in stages in order to transform
it into finished part

2. Second view is to consider part evaluation from finished state back to rough/ initial
state. In this view material is added back onto the part.

Select machines
 • Machine selection requires determining how the part would be processed on each of the
alternative machines so that best machine can be selected
• At this phase, firm has to decide whether to make or buy the component part
• Break even analysis is most convenient method for selecting optimum method of manufacture
or machine amongst the competing ones
• Factures which influence the selection of machine are,
1. Economic considerations
2. Production rate and unit cost of production
3. Durability and dependability
4. Lower process rejection
5. Minimum set-up and put away times
6. Longer productive life of machines or equipment
7. Functional versatility

Material selection parameters

• Function
• Appearance
• Reliability
• Service life
• Environment
• Compatibility
• Productivity
• Cost

Calculate processing time

1. Determination of set-up times requires knowledge of available tooling and sequence of steps
necessary to prepare the machine for processing given work piece
2. For establishing accurate set-up times, detailed knowledge of equipment capacity, tooling,
and shop practice required
3. Calculation of part processing time requires determination of sequence of processing steps on
each machine. This is called as OUTPLANNING
4. After calculation of processing time, appropriate times for loading, part unloading, machine
indexing, and other factors involved in one complete cycle for processing a part must be
included to compute the expected machine cycle time
5. Allowances are added with machine cycle time to calculate standard cycle time for
processing one piece
 6. Appropriate machine rates are added with calculated cycle time to calculate expected
standard cost for given operation

Document process planning

• Process plan is documented as job routing or operation sheet
• Operation sheet also called “route sheet”, “instruction sheet”, “traveler”, “planner”

Reasons for documentation

1. To have a record on hoe a part is processed in order to plan future parts with similar design
requirements in a consistent manner
2. To provide a record for future job quoting, cost estimating, and standard costing systems
3. To act as a vehicle for communication

Information provided by route sheet is,

1. Part identification
2. Description of processing steps in each operation
3. Operation sequence and machines
4. Standard set-up and cycle times
5. Tooling requirements for each operation
6. Production control information showing the planning lead time at each operation

Communicate process knowledge

• The final step in process planning is to communicate the manufacturing knowledge to the
shop floor.
• Communication is essential to ensure that part will be processed according to most
economical way
• Process documentation and communication provide basis for improved part consistency and
quality in manufacturing

BILL OF MATERIALS (BOM)

Bill of materials is a tabular statement specifying all the components required for completing an
assembly or sub-assembly.
The items listed in a bill of materials are :
(i) Name of individual part, and No. required to complete an assembly and material of the part.
(ii) Whether the individual parts are to be manufactured from within or whether it is to be bought
out. If the part is a standard item (e.g. bolts, nuts, bearings, washers, rubber/plastic molded parts)
it can be bought out economically than making it in the shop.
(iii) Name of engineer preparing the BOM, date of preparation and his signature. Bill of materials
enables planning for items to be manufactured in house, raw material required and planning for
procurement of bought out items and for making cost estimates. BOM is also known as parts list
and is generally incorporated in the drawing of assembly or subassembly.
ROUTE SHEET

The Route Sheet is a listing of the sequence of

operations which must be performed on the work
part. It is called Route Sheet, because it lists the
machines (machine tools) through which the part
must be routed in order to accomplish the sequence
of operations.
The document used to specify the process
sequence is called a Route Sheet.. Process planning
sheet and Route Sheet are one and the same. The
term “process planning sheet” is more widely used in
industries now days.
The manufacturing engineering and industrial
engineering departments and process planners are
responsible for process planning and preparation of
Route Sheets.

Calculation of Man-Hours and Machine-Hours

• A man-hour is defined as the availability of one man (operator) for one hour for doing a job.
• A machine-hour is defined as the availability of one machine for one hour.

APPROACHES TO PROCESS PLANNING

1. Manual Process planning

2. Computer Aided Process planning (CAPP)

a. Retrieval CAPP system
b. Generative CAPP system

MANUAL PROCESS PLANNING

• Manually prepared
• Task involves examining and interrupting engineering drawings, making decisions on
machining process selection, equipment selection, operation sequence, and shop practices
• Dependent on judgment and experience of process planner
Advantages
 1. Very much suitable for small scale companies
2. Highly flexible
3. Low investment costs
Disadvantages
1. Very complex
2. Time consuming
3. Requires large amount of data
4. Requires skilled process planner
5. More possibilities for human error
6. Increases paper work
7. Inconsistent process plans results in reduced productivity

COMPUTER AIDED PROCESS PLANNING (CAPP)

• To overcome drawbacks of manual process planning Computer Aided Process planning

(CAPP) is used
• Provides interface between CAD and CAM

BENEFITS

• Process rationalization and

standardization
• Productivity improvement
• Product cost reduction
• Elimination of human error
• Reduction in time
• Reduced clerical effort and paper work
• Improved legibility
• Faster response to engineering changes
• Incorporation of other application programs
STEPS INVOLVED IN CAPP

1. Design input
2. Material selection
3. Process selection
4. Process sequencing
5. Machine and tool selection
6. Intermediate surface determination
7. Fixture selection
8. Machining parameter selection
9. Cost/time estimation
10. Plan preparation
11. M/c tape image generation.

RETRIEVAL CAPP SYSTEM

1. It is also called as variant CAPP, widely used in machining applications

2. Basic idea behind is, similar parts will have similar process plans
3. Process plan for new part is created by recalling, identifying and retrieving an existing plan
for a similar part, and making necessary modification for new part
(i) Form the Part Families by Grouping Parts
(ii) Develop Standard Process Plans
(ii) Retrieve and Modify the Standard Plans for New Parts

PROCEDURE FOR RETRIEVAL CAPP SYSTEM

1. Retrieval CAPP system is based on principles of group technology (GT) and part
classification and coding
 2. For each part family, standard process plan is prepared and stored in computer files
3. Through classification and coding, code number is generated
4. Standard plan is retrieved and edited for new part

Advantages
1. Once a standard plan has been written, variety of parts can be planned
2. Requires simple programming and installation
 3. Understandable, and planner has control of final plan
4. Easy to learn and easy to use
Disadvantages
1. Components to be planned are limited to similar components previously planned
2. Requires experienced process planners to modify the standard plan for specific component

GENERATIVE CAPP SYSTEM

1. In this approach computer is used to synthesize or generate each individual process plan
automatically without reference to any prior plan
2. Generates the process plan based on decision logics and pre-coded algorithms. Computer
stores the rules of manufacturing and equipment capabilities
3. Specific process plan for specific part can be generated without any involvement of process
planner
Components of Generative CAPP system

1. Part descriptor
2. Subsystem to identify machine parameters
3. Subsystem to select and sequence individual operations
4. Database
5. Report generator
Advantages

1. Generate consistent process plan rapidly

2. New components can be planned as easily as existing components
3. It has potential for integrating with automated manufacturing facility to provide detailed
control information
Disadvantages

1. Complex and very difficult to develop

QUANTITY DETERMINATION IN BATCH PRODUCTION

As discussed already, batch production falls between job shop production and mass production.
Batch production is required when a variety of products are to be made and the volumes are not
large enough to demand a separate line for each product.

Batch production is necessary:

(a) When the demand for a product is limited, or
(b) When the rate of production is higher than the rate of consumption.

In batch production, the product is manufactured periodically in a quantity that will be sufficient to
satisfy the demand for some time until manufacture of this product is resumed. In the interval
between two production periods, the facility (plant and equipment) can be used for the manufacture
of a variety of goods in a similar fashion.
Thus in batch production, a complete production cycle can be organised in such a way that each
product in turn is manufactured in quantities corresponding to the total demand for it throughout the
cycle time.

Planning for Batch Production

During the planning of batch production, there are two decisions have to be taken by operations
manager. They are:

1. Determination of the batch size (i.e., the size of the production lot), and
2. Determination of batch scheduling

In the following sections, we shall address the decision on determination of batch size.

Trade-off Between Costs

A key trade-off in the determination of the lot size for an item is between setup costs and inventory
carrying costs. In batch production, if the stock level is kept too low (that is, a small batch is
produced), then setup costs per unit and the setup time would be high. Also it may not be possible to
produce the required quantities of all items within the specified time period if these small lot sizes
are employed.

To overcome this problem, larger lot sizes may have to be employed. However, if large batch is
produced and stocked, high inventory carrying costs are incurred.

Hence, it is necessary to compute economic batch quantity while maintaining feasibility in

scheduling batches of such lot sizes for the items to be produced.

Factors Affecting the Selection of Batch Sizes

While determining the batch sizes, the following factors should been into consideration.

1. Setup costs of machines and other costs of preparation for the run.
2. Consumption rate.
3. Production rate.
4. Interest charges per piece per unit time.
5. Average storage costs.
6. Sales price per unit.

Criteria for Selection of Batch Sizes

The four main criteria for the selection of batch sizes are:

1. Minimum costs per piece.

2. Maximum profit for the batch.
3. Maximum ratio of profit to cost of production (also known as maximum return).
 4. Maximum rate of return per unit time.

CAPACITY PLANNING
OBJECTIVES
1. When you complete this section you should be able to:

2. Have defined capacity and understood what decisions have to be taken in determining
capacity.
3. Explored options which a company has for increasing capacity.
4. Examined the approaches to capacity planning and the factors which need to be taken into.
5. Have taken a brief look at forecasting demand including qualitative approaches and time
series forecasting.
6. Understand the application of some decision-making processes involved in capacity planning.

CAPACITY

Capacity is defines as the ceiling on the maximum load a production unit can handle at a
given point of time. In other words, capacity is defined as an upper limit on the rate of output.

The capacity question does not arise alone. It comes in conjunction with:

a. New facility planning

b. Leasing or buying the equipment required to maintain the output.
c. Expansion of the existing facilities
d. While introducing new product or services
e. While finalizing the fund and energy requirements

The above mentioned situations, if come across alone, are easy to tackle. It becomes
complicated when more than one situation is encountered at the same time.

A facility’s Capacity is the rate of productive capability of a facility. Capacity is usually

expressed as maximum productive volume of output per time period. Operations managers are
concerned with capacity for capability, usually several reasons. First, they want sufficient capacity
to meet customer demand in a expressed as volume of out put per period of timely manner. Second,
capacity affects the cost efficiency of operations, the case or time. Difficult y of scheduling output,
and the costs of maintaining the facility. Finally, capacity requires an investment. Since managers
seek a good return on investment, both the costs and revenues of a capacity planning decision must
be carefully evaluated.

DEFINITION OF PRODUCTION CAPACITY

Facility planning includes, determination of how much long-range production capacity is

needed, when additional capacity is needed, where production facilities should be located and the
layout and characteristics of the facilities.

Capacity in general is the maximum production rate of a facility or a firm. It is usually

expressed as volume of output per period of time. Capacity indicates the ability of a firm to meant
market demand. Operations managers are concerned with capacity because.

(a) They want sufficient capacity to meet customer demand in time

(b) Capacity affects cost efficiency of operations, the case or difficulty of scheduling
output and the costs of maintaining the facility.

(c) Capacity requires an investment of capital.

Capacity planning

Capacity planning design is the first level planning for the inputs, conversion activities and
outputs of a production operation. Design decisions are very important because they re often
associated with significant investment of funds. The initial outlay and operating expenses are
established based on design decisions, and these in turn affect productivity of the concern in future.
So they affect fixed cost and variable cost.
DESIGN CAPACITY: preliminary estimate of capacity is done based on long-range forecast
extending 5 to 10 years into the future.

The design capacity of a system is the rate of output of goods or services under
full scale operating conditions. For example, a cement factory may be designed to produce 200
tons per day. The projected demand for period anywhere from 5 to 10 years is taken as the estimate
for the design capacity, since frequent expansion will lead to productivity loss.

SYSTEM CAPACITY: In practice, it may not be possible to achieve production to the extent of
design capacity mainly because of mismatch between required resources and available resources.
The maximum output of a specific product or product mix that the system of workers and
equipments is capable of producing as an integrated whole is calle d system capacity. This may be
less than that of the design capacity.

The actual output may be even less than the system capcity since it is affected by short-range
factors such as actual demand, equipment breakdowns, and personal absenteeism or productivity.

NEED FOR CAPACITY PLANNING

Capacity planning is necessary when an organization decides to increase its production or

introduce new products into the market. Once capacity is evaluated and a need for new or
expanded facilities is determined, decisions regarding the facility location and process
technology selection are taken.

Capacity planning is the first step when an organization decides to produce more or a new
product. Once capacity is evaluated and a need for new or expanded facilities is determined,
facility location and process technology activities occur. Too much capacity would require
exploring ways to reduce capacity, such as temporarily closing, selling, or consolidating facilities.
Consolidation might involve relocation, a combining of technologies, or a rearrangement of
equipment and process.

IMPORTANCE OF CAPACITY PLANNING

The importance of capacity planning lies in the fact that it is more fundamental. Every
organization looks at the future with its’ own focus and develop and adjusts ‘its’ strategies to reach
the goal. Capacity planning relates to the organization potential impact on the ability of the
organization to meet the future demands for it’s product / service. This is because of the fact that
the possible rate of output is limited by the capacity.

a. There is also link between the capacity and the operating cost. Every managers wants to
minimize the operating cost of the final product. Also they are interested in utilizing the
established capacity to the fullest possible extent. This trade – off puts the whole process,
into a vicious circle.

b. Minimizing the operating cost is not possible always, as the demand is a variable
factor. The demand variation is due to:

a. Increased competition (through the entry of new players; (or) due to the change in the
strategies of the existing players).
b. Technological changes (through some inventions (or) entry of MNC’s through joint
ventures)
c. User’s perception (which changes from time to time)
d. Nature of the product (accordingly the demand will be seasonal or cyclical)

Possible demand patterns are:

Growth Decline Cyclical Stable

The Initial Investment involved. This is due to the fact that, the capacity is a major determinant
of the cost of a product, which will decide about the organization’s position in the market.
Long term commitment of resources. Once a capacity is created, it is very difficult – not
impossible – to modify. In future, if modification is needed, it calls for heavy investment.
CAPACITY PLANNING DECISIONS

Capacity planning involves activities such as:

(a) Assessing existing capacity

(b) Forecasting future capacity needs.
(c) Identifying alternative ways to modify capacity.
(d) Evaluating financial, economical and technological capacity alternatives.
(e) Selecting a capacity alternative most suited to achieve the strategic mission of the firm.
Capacity planning involves capacity decisions that must merge consumer demands with
human, material and financial resources of the organization.

Often decisions about capacity are inseparable from decisions about locations: Capacity
depends upon demand and demand often depends on location. Commercial banks, for example,
simultaneously expand capacity and demand by building branch banks. Decisions about the size
and location of the branch are made according to projections about neighborhood population
densities and growth, geographic locations of market segments, transportation (traffic) flows,
and the locations of competitors. Adding a new branch offers greater convenience to some
existing customers and, management hopes, attracts new customers as well. Obviously this
decision affects the revenues, operating costs and capital costs of the organisation.
In the public sector, the capacity decision involves similar considerations. Municipalities face
ever-increasing demands for public services, strong public sentiment for tightening budgets,
and greater performance accountability. Consequently, officials have increased their efforts to
rearrange public resources so that service capacity is increased but the cost of operating is not.
Municipal emergency services, for example, are periodically expanded by adding to show
population growth and shifts. Next, municipal officials plan where to locate new
stations, taking into consideration both areas of greatest need and costs of operation and
facilities. Although the capacity may not involve direct revenues, cost savings for citizens can
be considered a form of indirect revenues. These cost savings can result in reduced tax burdens
of lower insurance rates in areas with improved emergency services.
Modelling techniques, are playing a central role in these planning processes. One study, for
example, explain how mathematical programming is used for greater ambulance effectiveness
considering time-to-scene, time-to- hospital, an distance-to-hospital factors, thereby increasing
effective service system capacity. Another study shows how mathematical modeling can
determine optimal fleet sizes and vehicle routes for a commercial common carrier. Yet another
study demonstrates the value of queuing models in a computer-based information system for
the St. Louis County Police Department. The system gives a way to allocate police patrols,
thereby using existing capacity more efficiently or reducing the size of operations without
diminishing existing service levels. All these examples show how systematic analysis and
planning can lead to effective use and improvement of capacity.
TYPES OF PRODUCTION SYSTEMS

Three types of production system can be identified certain features of which influence the actions of
production managers.

1. Small batch and unit production.

2. Large batch and mass production.
3. Continuous process production.

Woodward compared the affect of these on the span of control of the first line supervisor and levels
in the management hierarchy. She drew conclusions on how different approaches to operational
systems design affect management control over work done. The importance of information is
paramount.

A few points to note are:

Products can be divided into those a customer regards as single items or multi-component
assemblies. Few companies produce single item products n.b. packaging is a product in itself.
Subcontractors may produce single components for someone else to assemble (note bulk chemicals
also).
Most production in engineering, electronics, furniture, etc, is concerned with assemblies of
manufactured internally or ‘bought in’ components. “Make or buy” decisions are important and
considerable cost information is required. Production system are often split between the part that
produces components and the part that assembles them and certain basic organization structures can
be identified in a production plant:

Process Capability
The process must first be brought into statistical control so its performance can be predicted; then its
capability to meet specifications can be assessed.
Capable process – A process that has a greater the 1. this means that the histogram distribution and
the normal curve are contained within the actual specification dimensions.
Spec width Upper spec  Lower spec
Cp  
Natural tolerance 6

Example: suppose the Spec

width=10 units L.
S.
U
.S

and =5 units .
 UNIT 4: PRODUCTION SCHEDULING

Definition
Scheduling deals with the efficient allocation of tasks over resources
The general scheduling problem is, given a number of tasks and a number of
resources, set the dates when each task should be accomplished on each resource

Scheduling is the process of arranging, controlling and optimizing work and workloads in a
production process or manufacturing process. Scheduling is used to allocate plant and machinery
resources, plan human resources, plan production processes and purchase materials.

We are interested in scheduling in the manufacturing context, although it has many

applications in other fields
  Forward scheduling is planning the tasks from the date resources become available to
determine the shipping date or the due date.
 Backward scheduling is planning the tasks from the due date or required-by date to determine
the start date and/or any changes in capacity required.

The benefits of production scheduling include:

 Process change-over reduction

 Inventory reduction, leveling
 Reduced scheduling effort
 Increased production efficiency
 Labor load leveling
 Accurate delivery date quotes
 Real time information

Batch production scheduling

Batch production scheduling is the practice of planning and scheduling of batch manufacturing
processes.
Although scheduling may apply to traditionally continuous processes such as refining, it is especially
important for batch processes such as those for pharmaceutical active ingredients, biotechnology
processes and many specialty chemical processes.

Batch production scheduling shares some concepts and techniques with finite capacity scheduling
which has been applied to many manufacturing problems.The specific issues of scheduling batch
manufacturing processes have generated considerable industrial and academic interest.

Master Production Scheduling

Master Production Scheduling (MPS), otherwise known as an over-all schedule, focuses on a specific
time period. It includes a plan for the production of individual commodities such as staffing,
inventory, etc for the allotted time period. A MPS usually dictates when and how much of each
product is demanded, in addition to a statement of what they expect to produce and purchase.

MPS aids in decision making by generating a set of output data based on forecast demand,
production costs, inventory money, customer needs, production lead time, and capacity. The
resulting output information includes the amounts to produce, staffing requirements, quantity of
product available to promise, and projected available funds for production.

Manufacturing and Operation Scheduling

Different from MPS, this type of scheduling focuses around the production of uniform products of
the same size, color, and design in mass quantities. Found within a manufacturing process that
produces the same products regularly, manufacturing and operation scheduling is easily prepared for
manufacturers that fit the above criteria. However, the system flounders where variables arise in
production and there are multiple permutations of a single product.

Importance of MPS

A production plan is an aggregate plan that schedules product families in relatively long time
intervals.
Master production schedule is used for individual end products and in shorter time intervals.

MPS is important in the following aspects:

1. It is the link between what is expected (production planning) and what is actually to be built,
i.e., material requirement planning and final assembly schedule (FAS, to be discussed).
2. It develops data to drive the detailed planning, MRP. MPS is a priority plan for
manufacturing. It keeps priorities valid.
3. It is the basis for calculating the resources available (capacity) and the resources
needed (load). It provides devices to reconcile the customers’ demand and the
plant’s capability
4. It makes possible reliable delivery promises. It provides salespeople information on available –
to -promise (ATP) indicating when end products are available. ATP will be discussed later.
5. It is a tool that can be used to evaluate the effects of schedule changes. It is a device for
communication and a basis to make changes consistent with the demands of the marketplace
and manufacturing capacity.
6. It is a contract between marketing and manufacturing departments. It is an agreed - upon plan. t
coordinates plans and actions of all organizational functions and is a basis to measure the
functions’ performance.
7. It provides management with the means to authorize and control all resources needed to support
integrated plans.
8. In the short horizon, MPS serve as the basis for planning material requirement, production of
components, order priorities, and short-term capacity requirements.
9. In the long horizon, MPS serves as the basis for estimating long - term demands on the
company resources such as people, equipment, warehousing, and capital.

MPS as a primary Input to MRP

MRP input data include MPS, external demand for components, forecasts of independent demand
for components, BOM, and fundamental data in item master such as lead times, safety stocks, scrap
allowances and lot - sizing rules. Among the above data, MPS is the primary input to MRP. It
enables MRP to translate the end item schedules into individual component requirements. Therefore,
MRP depends on the validity and realism of the MPS for its effectiveness.

Suppose that there are 30 end products made from 5,000 components, parts, and raw materials. MPS
helps people to concentrate on the planning of the 30 independent end items, and leave the other
5,000 dependent items to be processed automatically by MRP.

External demands for components include service -part orders, interplant orders, OEM orders,
components needed for sales promotion, R&D, destructive testing, etc. Forecasts of independent
demand for components include service parts no longer used in regular production which are better
planned by time phased order point (TPOP). After reviewing forecasts, the planners input the
quantities they decide are reasonable for such items as added gross requirements. External demands
and forecasts for independent components normally are not incorporated in the MPS but are instead
fed directly into MRP as separate inputs.

Data sources for MPS

The data needed to develop an MPS include:

1. Customer orders.
2. Dealer orders.
3. Inventory replenishment orders.
4. Forecast for individual end products.
5. Interplant requirements.
6. Distribution center requirements.
7. Inventory levels for end products.
8. Safety stock.
 9. Released production orders for end products.
10. Capacity constraints.

From Production Plan to Master Production Schedule

Production plans and master production schedules differ in their precision.

Production plans are “macro” plans, while MPS are “micro” plans.

Production planning is for preparing resources to accomplish business objectives. Resource

requirement planning is used to reconcile business objectives with the resources available. MPS is
the schedule of end item production. It is a decision of manufacturing actions subject to the
constraints of capacity.

MPS Techniques
Master production scheduling is a time-phased order point (TPOP) procedure. The planned order
releases (POR) in the TPOP are the master schedules fed into the MRP system. MPS are done for the
MPS items (end products). In assemble-to-order (ATO) cases, a module is defined as an MPS item,
and all its ancestors must also be MPS items. Two -level master production schedules are used in
assemble-to-order cases. Related topics are discussed as follows.

Demand Time Fence (DTF)

DTF is a point of time in MPS. The DTF is set between the current date and the planning time fence
(PTF). The region between the current date and the demand time fence contains actual orders that are
frozen. Change of orders within DTF may cause unstable production problems. No unanalyzed and
unapproved changes are allowed Master Production Schedule for the MPS in this region.DTF is the
earliest due date for taking a customer order. Promising a customer order with a due date prior to
DTF may cause late delivery. But it does not mean that it is impossible to take an order with a due
date earlier than DTF. As long as there is enough available-to-promise (ATP) within the DTF, we
can still promise a customer order delivering before DTF.

Planning Time Fence (PTF)

PTF is set between DTF and the end of planning horizon. The region between DTF and PTF contains
actual orders and forecast orders. The region beyond PTF contains only forecast customer orders.
Between DTF and PTF, actual customer orders replace the forecast quantities.
PTF is the accumulated lead -time for the end products. Related purchase orders or manufacturing
orders may have been released. Change of customer orders within PTF may bring the necessity of
rescheduling purchase orders or manufacturing orders. A customer order with due date later than
PTF can easily be changed for related activities have not started yet.

MPS considers only the customer orders within DTF for it is not likely that any new orders will fall
in this region. MPS considers the larger of the customer orders and the forecasts from DTF to PTF
for new orders keep replacing the forecasts in this region. If customer orders exceed forecasts, it
means that the demand is underestimated, and MPS considers customer orders. MPS considers only
the forecasts for it is not likely that many customer orders are received that early.

Projected Available Balance (PAB)

Projected available balance is the projected inventory of the end items if the MPS quantities are
completed. MPS quantity is the quantity of end items that we planned to manufacture. It includes the
scheduled receipts and the firm planned orders (FPO). Firm planned order is a common approach to
describe MPS. Master schedulers are required to firm all the planned order receipts (PORC) before
PTF. That is, master schedulers have to make a decision of what to produce from now to PTF. As
shown in Figure 1, MPS system considers as independent demand only the customer orders in region
1, the larger of forecast and customer orders in region 2, and the forecast orders only in region 3.

Available-To-Promise (ATP)

Available-to-Promise is the uncommitted portion of a company’s inventory and planned production,

maintained in the master schedule to support customer order promising. The ATP quantity is the
uncommitted inventory balance in the first period and is normally calculated for each period in which
an MPS receipt is scheduled. In the first period, ATP equals on-hand inventory plus MPS (if it is
positive) less customer orders that are due and overdue. In any period containing MPS schedule
receipts, ATP equals the MPS less customer orders in this period and all subsequent periods before
the next MPS schedule receipt. A negative ATP takes over prior periods’ ATP until it turns from
negative to zero or the prior periods ATP becomes zero.

Two-Level Master Production Schedule

It is a master scheduling approach where a planning bill of material is used to master schedule end
items or product families. Key features such as options and accessories are frequently used in the
two-level MPS procedure. For forecast demand, product families are master scheduled and the usage
ratio in the “quantity-per” of planning BOM is used to calculate the gross requirement of the
modules. For customer orders, options and accessories are defined before the master production
scheduling. In this case, end items instead of families are master scheduled

Multilevel Master Production Schedule

A master scheduling approach that allows any level in an end item’s BOM to be master scheduled.
To accomplish this, MPS items must receive requirements from independent and dependent demand
sources. Higher level MPS items are scheduled before lower level MPS items.

UNIT 5 INVENTORY CONTROL AND RECENT TRENDS IN PPC

Introduction
The amount of material, a company has in stock at a specific time is known as inventory or in terms
of money it can be defined as the total capital investment over all the materials stocked in the
company at any specific time. Inventory may be in the form of,
1. raw material inventory
2. in process inventory
3. finished goods inventory
4. spare parts inventory
5. office stationary etc.

As a lot of money is engaged in the inventories along with their high carrying costs, companies
cannot afford to have any money tied in excess inventories. Any excessive investment in inventories
may prove to be a serious drag on the successful working of an organization. Thus there is a need to
manage our inventories more effectively to free the excessive amount of capital engaged in the
materials.
Inventories are needed because demand and supply can not be matched for physical and economical
reasons. There are several other reasons for carrying inventories in any organization.

1. To safe guard against the uncertainties in price fluctuations, supply conditions, demand
conditions, lead times, transport contingencies etc.
2. To reduce machine idle times by providing enough in-process inventories at appropriate
locations.
3. To take advantages of quantity discounts, economy of scale in transportation etc.
4. To decouple operations i.e. to make one operation's supply independent of another's supply.
This helps in minimizing the impact of break downs, shortages etc. on the performance of the
downstream operations. Moreover operations can be scheduled independent of each other if
operations are decoupled.
5. To reduce the material handling cost of semi-finished products by moving them in large
quantities between operations.
6. To reduce clerical cost associated with order preparation, order procurement etc.

Purpose of holding stock

• Safety stock is the amount of inventory a business carries over and above their calculations
for actual need. ie, a packaging company maintains enough plastic to manufacture packaging
ordered by customers in the amount needed until their next shipment of plastic arrives.

• But, because orders vary and shipping times vary, the company decides to keep 5% more on
hand than likely to be needed. This extra 5% is safety stock.

Effect of demand of inventories

Two bin system

1. Two bin systems is used for the material control.
2. It is that technique of material control in which we have two bins, one is used for in use
minimum stock and second bin is used for reserve stock or to keep the remaining quantity of
material.
3. This system of inventory control is also called in
USA kanban.
4. First bin is utilized for issuing the material for
production and then, second bin is used. Its record
is done on bin cards and store ledger card.
Order cycle

Inventory Costs
In order to control
inventories
appropriately, one has to
consider all cost elements that are associated with the inventories. There are four such cost elements,
which do affect cost of inventory.
1. Unit cost: it is usually the purchase price of the item under consideration. If unit cost is
related with the purchase quantity, it is called as discount price.
2. Procurement costs: This includes the cost of order preparation, tender placement, cost of
postages, telephone costs, receiving costs, set up cost etc.
3. Carrying costs: This represents the cost of maintaining inventories in the plant. It includes the
cost of insurance, security, warehouse rent, taxes, interest on capital engaged, spoilage,
breakage etc.
4. Stock out costs: This represents the cost of loss of demand due to shortage in supplies. This
includes cost of loss of profit, loss of customer, loss of goodwill, penalty etc.

If one year planning horizon is used, the total annual cost of inventory can be expressed as:

Total annual inventory cost = Cost of items + Annual procurement cost + Annual
carrying cost + Stock out cost

Variables in Inventory Models

D = Total annual demand (in units)

Q = Quantity ordered (in units)
Q* = Optimal order quantity (in units)
R = Reorder point (in units)
R* = Optimal reorder point (in units)
L = Lead time
S = Procurement cost (per order)
C = Cost of the individual item (cost per unit)
I = Carrying cost per unit carried (as a percentage of unit cost C)
K = Stock out cost per unit out of stock
P = Production rate or delivery rate
dl = Demand per unit time during lead time
Dl = Total demand during lead time
TC = Total annual inventory costs
TC* = Minimum total annual inventory costs

Number of orders per year

Total procurement cost per year = S.D / Q

Total carrying cost per year = Carrying cost per unit * unit cost * average inventory per cycle

Cost of items per year = Annual demand * unit cost = D.C

Total annual inventory cost (TC)

The objective of inventory management team is to minimize the total annual inventory cost. A
simplified graphical presentation in which cost of items, procurement cost and carrying cost are
depicted is shown in Figure. It can be seen that large values of order quantity Q result in large
carrying cost. Similarly, when order quantity Q is large, fewer orders will be placed and procurement
cost will decrease accordingly. The total cost curve indicates that the minimum cost point lies at the
intersection of carrying cost and procurement cost curves.

Inventory Operating Doctrine

When managing inventories, operations manager has to make two important decisions:
1. When to reorder the stock (i.e. time to reorder or reorder point)
2. How much stock to reorder (i.e. order quantity)
Reorder point is usually a predetermined inventory level, which signals the operations manager to
start the procurement process for the next order. Order quantity is the order size.

Economic
order
quantity (EO
Q) is the classical
inventory
model for stock held
on cycle with
assumptions
of kno wn demand
and production
lead time. The
objective is to
select an order quantity that minimizes the marginal annual costs for holding inventory and placing
orders.

Inventory Modelling
This is a quantitative approach for deriving the minimum cost model for the inventory problem in
hand.

Economic Order Quantity (EOQ) Model

This model is applied when objective is to minimize the total annual cost of inventory in the
organization. Economic order quantity is that size of the order which helps in attaining the above set
objective. EOQ model is applicable under the following conditions.
1. Demand per year is deterministic in nature
2. Planning period is one year
3. Lead time is zero or constant and deterministic in nature
4. Replenishment of items is instantaneous
5. Demand/consumption rate is uniform and known in advance
6. No stock out condition exist in the organization

The total annual cost of the inventory (TC) is given by the following equation in EOQ model.
The graphical representation of the EOQ model is shown in Figure

A numeric
illustration of
the EOQ model is
given in example 1.
ABC manufacturers produces 1,25,000 oil seals each year to satisfy the requirement of their client.
They order the metal for the bushing in lot of 30,000 units. It cost them $40 to place the order. The
unit cost of bushing is $0.12 and the estimated carrying cost is 25% unit cost. Find out the economic
order quantity? What percentage of increases or decrease in order quantity is required so that the
ordered quantity is Economic order quantity?
Economic Production Quantity (EPQ) Model

In EOQ model supply was instantaneous, which may not be the case in all industrial applications. If
supply of items is gradual to satisfy a continuous demand, then supply line will be depicted by a
slanted line (Figure).

Economic Production Quantity Model (EPQ Model)

In this situation, when the order is placed, the supplier begins producing the units and supplies them
continuously. While new units are added to inventory, other units are being used. Thus, if delivery
rate (P) > demand rate (D), the net result will be a net increase in the inventory level. The slope of
replenishment line will thus be (P-D). Similarly the slope of demand line will be (-D). The average
inventory carried per year is
 MRP

It was discussed in demand forecasting that in the dependent demand situation, if the
demand for an item is known, the demand for other related items can be deduced. For example, if the
demand of an automobile is known, the demand of its sub assemblies and sub components can easily
be deduced. For dependent demand situations, normal reactive inventory control systems (i.e. EOQ
etc.) are not suitable because they result in high inventory costs and unreliable delivery schedules.
More recently, managers have realized that inventory planning systems (such as materials
requirements planning) are better suited for dependent demand items. MRP is a simple system of
calculating arithmetically the requirements of the input materials at different points of time based on
actual production plan. MRP can also be defined as a planning and scheduling system to meet time-
phased materials requirements for production operations. MRP always tries to meet the delivery
schedule of end products as specified in the master production schedule.

MRP Objectives
MRP has several objectives, such as:
1. Reduction in Inventory Cost: By providing the right quantity of material at right time to
meet master production schedule, MRP tries to avoid the cost of excessive inventory.
2. Meeting Delivery Schedule: By minimizing the delays in materials procurement, production
decision making, MRP helps avoid delays in production thereby meeting delivery schedules
more consistently.
3. Improved Performance: By stream lining the production operations and minimizing the
unplanned interruptions, MRP focuses on having all components available at right place in
right quantity at right time.
MRP-II System
 A simple sketch of an MRP system is shown in figure It can be seen from the figure that an
MRP system has three major input components:

Material Requirements Planning System Architecture

Master Production Schedule (MPS): MPS is designed to meet the market demand (both the firm
orders and forecasted demand) in future in the taken planning horizon. MPS mainly depicts the
detailed delivery schedule of the end products. However, orders for replacement components can
also be included in it to make it more comprehensive.

Bill of Materials (BOM) File: BOM represents the product structure. It encompasses information
about all sub components needed, their quantity, and their sequence of buildup in the end product.
Information about the work centers performing buildup operations is also included in it.

Inventory Status File: Inventory status file keeps an up-to-date record of each item in the inventory.
Information such as, item identification number, quantity on hand, safety stock level, quantity
already allocated and the procurement lead time of each item is recorded in this file.

After getting input from these sources, MRP logic processes the available information and gives
information about the following:
Planned Orders Receipts: This is the order quantity of an item that is planned to be ordered so that it is
received at the beginning of the period under consideration to meet the net requirements of that period.
This order has not yet been placed and will be placed in future.

Planned Order Release: This is the order quantity of an item that is planned to be ordered in the
planned time period for this order that will ensure that the item is received when needed. Planned order
release is determined by offsetting the planned order receipt by procurement lead time of that item.
Order Rescheduling: This highlight the need of any expediting, de-expediting, and cancellation of open
orders etc. in case of unexpected situations.

Basic Types of Inventory Control Systems

„
1. Fixed-order quantity model„
2. Fixed-time period model

Fixed-Order Quantity Model

„
1. Order Quantity = Constant „
2. When to place an order = When inventory position drops to a re-order level„
3. Record keeping = Each time a withdrawal or addition is made „
4. Size of inventory = Less than fixed-time period model

Fixed-Time Period Model

1. Order Quantity = Variable „
2. When to place an order = When the review period arrives„
3. Record keeping = Counted or checked only at review period „
4. Size of inventory = Larger than fixed-order quantity model

Selective approach to Inventory Control

Focus should be on the Cost important items in inventory in order to reduce their inventory levels.

Definition of Selective Inventory Control

Selective Inventory Control means that the method of inventory control varies from item to item and
the differentiation should be on a selective basis.

Selective Inventory Control Techniques

1. A-B-C Analysis „
2. X-Y-Z Analysis„
3. V-E-D Analysis„
4. F-S-N Analysis„
5. H-M-L Analysis„
6. S-D-E Analysis„
7. S-O-S Analysis„
8. G-O-L-F Analysis
A-B-C Analysis
Criteria = Annual consumption value of the item to control inventory of raw materials and WIP
inventory.
Classification of items on the basis of A, B, C.„
1. A ITEMS: very tight control and accurate records
2. B ITEMS: LESS TIGHTLY CONTROLLED and good records
3. C ITEMS: simplest controls possible and minimal records
On the basis of Pareto’s principle “the vital few and trivial many” or, 80 / 20 rule.

Advantage of ABC Analysis

„
By controlling the inventory of ‘A ‘category items, the total inventory costs can be considerably
reduced.

Limitations of ABC Analysis

„
1. To be effective, it should be carried out with standardization and codification
2. Importance to item is given on its annual consumption value and not on its criticality for the
production
3. Periodical Review is necessary to take into account the changes in prices and consumption

X-Y-Z Analysis
„
Based on value of inventory of materials actually held in stores at a given time.„
Actual inventory value of items in stores instead of their estimated annual consumption value.

V-E-D Analysis
„
Usually applied for spare parts on the basis of criticality. „
Classification is on the basis of ‘V’ stands for vital, ‘E’ for essential, ‘D’ for desirable.

FSN Analysis

FSN stands for fast moving, slow moving and Non moving items„
The classification is based on past consumption pattern„
Useful to control obsolescence of raw materials, components, tools and spare parts
HML Analysis
„
HML stands for High value, Medium value and Low value items based on unit price of the item.„
On this basis, Materials management may delegate authority to various levels of purchase officers to
authorize and sign Purchase Orders.

SDE Analysis

SDE stands for scarce items, Difficult to produce items and Easy to procure items

SOS Analysis

SOS stands for Seasonal items and Off-Seasonal items

It may be advantageous to buy seasonal item at low prices and keep inventory or buy at high price
during off seasons

GOLF Analysis

GOLF stands for Government, Open market, Local or Foreign source of supply.

Just In Time (JIT)

Just In Time is set of strategic activities, which are formulated to achieve maximum production with
minimal maintenance of inventory. JIT as philosophy is applicable to various types of organization
but on implement side it is more relevant with manufacturing operations.

For JIT system to be successful, there are two critical elements, attitude of workers/management and
practice.

Fundamentals of JIT

Just in time (JIT) inventory is a management system in which materials or products are produced or
acquired only as demand requires. This approach to managing inventory has become increasingly
popular in the early 21st century as suppliers and retailers collaborate to try to control inventory costs
while still meeting customer demands.

Purpose
Just in time inventory is intended to avoid situations in which inventory exceeds demand and places
increased burden on your business to manage the extra inventory. Manufacturers using JIT processes
want to use materials for production at levels that meet distributor or retailer demand but not in
excess. Retailers only want to acquire and carry inventory that meets immediate customer demand.
Excess inventory requires storage and management costs.

JIT is based on the following fundamentals:

 JIT manufacturing and ordering

 Elimination of waste
 Lean management
 Signal System (Kanban)
 Push-Pull System

With the above fundamentals in place, JIT delivers the following:

 Continuous improvement of production and order processing.

 Elimination of non-value added activities and procedures.
 Simplification and advancement of the existing systems.
 Creation of safety environment and ensuring total quality management.
 Creation crossed skilled workers.

Risks

Just in time
inventory is generally regarded as an efficient inventory management system. Many suppliers
and retailers partner in the early 21st century to coordinate their JIT efforts. This benefits both as
the end customer gets the best value for the money. However, JIT is not without risks. The major
risk is that a simple glitch in the supply system can cause stock shortages. A supplier facing
erratic weather or transportation problems may have delayed shipments, causing inventory to run
dry. The more critical the products are to the end buyer, the more sensitive they are to this
precarious situation.
By using just-in-time concepts, there is a greatly reduced need for raw materials and work-in-
process, while finished goods inventories should be close to non-existent. The use of just-in-time
inventory has the following advantages:

 There should be minimal amounts of inventory obsolescence, since the high rate of inventory
turnover keeps any items from remaining in stock and becoming obsolete.
 Since production runs are very short, it is easier to halt production of one product type and
switch to a different product to meet changes in customer demand.
 The very low inventory levels mean that inventory holding costs (such as warehouse space)
are minimized.
 The company is investing far less cash in its inventory, since less inventory is needed.
 Less inventory can be damaged within the company, since it is not held long enough for
storage-related accidents to arise. Also, having less inventory gives materials handlers more
room to manoeuvre, so they are less likely to run into any inventory and cause damage.
 Production mistakes can be spotted more quickly and corrected, which results in fewer
products being produced that contain defects.

Despite the magnitude of the preceding advantages, there are also some disadvantages associated
with just-in-time inventory, which are:

 A supplier that does not deliver goods to the company exactly on time and in the correct
amounts could seriously impact the production process.
 A natural disaster could interfere with the flow of goods to the company from suppliers,
which could halt production almost at once.
 An investment should be made in information technology to link the computer systems of the
company and its suppliers, so that they can coordinate the delivery of parts and materials.
 A company may not be able to immediately meet the requirements of a massive and
unexpected order, since it has few or no stocks of finished goods.

MAR – II
Manpower planning means planning means deciding the number and type of the human
resources required for each job, unit and the total company for a particular future date in order to
carry out organizational activities.

Manpower planning may be viewed as foreseeing the human resources requirement of an

organization and the future supply of human resources and

(i) Making necessary adjustments between these two and organizational plans and
(ii) Foreseeing the possibility of developing the supply of manpower resources in order to match
it with the requirements by introducing necessary changes in the functions of human
resources management.
The process of manpower planning in an organization.

a. Analyzing the corporate and unit level strategies.

b. Demand Forecasting: Forecasting the overall human resources requirements in accordance
with the organizational plans.
c. Supply Forecasting: Obtaining the data and information about the present inventory of
manpower and forecast the future changes in the human resources inventory.
d. Estimating the net manpower requirement.
e. In case of future surplus than plan for redeployment.
f. In case of future deficit, forecast the future supply of manpower from all sources with
reference to plans of other companies.
g. Plan for recruitment, development and internal mobility if future supply is more than or equal
to net manpower requirements.
h. Plan to modify and adjust the organizational plan if future supply will be inadequate with
reference to future net requirements.
i. Degree of uncertainty and length of planning period.

The above points are discussed in details:

Demand Forecasting: The existing job design and analysis may thoroughly be reviewed keeping in
view the future capabilities, knowledge and skills of present employees. Further the jobs should be
redesigned and reanalyzed keeping in view the organizational and unit wise plans and programmes,
future work quantum, future activity or task analysis, future skills, values, knowledge and
capabilities of present employees and prospective employees. The jobs generally should be designed
and analysed reflecting the future human resources and based on future organizational plans. Job
analysis and forecast about the future components of human resources facilitate demand forecasting.
One of the important aspects of demand forecasting of the quantity of human resources (skill,
knowledge values, capabilities etc) in addition to quantity of human resources. Important forecasting
methods are:

1. Managerial Judgment: Under this method, managers decide the number of employees
required for future operations based on their past experience.

2. Statistical Techniques Include: ratio trend analysis and econometric models. Under ratio trend
analysis, ratios are calculated for the past data and these ratios are used for the estimation of the
future manpower requirements

Supply Forecasting

The first step of forecasting the future supply of human resources is to obtain the data and
information about the present human resources inventory.

Existing Inventory: The data relating to present human resources inventory in terms of humans
components, number, designation-wise and department wise would be obtained. Principal
dimensions of manpower planning are:
 1. Head counts regarding total, department wise, sex-wise, designation-wise, skill-wise, pay roll
wise etc.
2. Job Family Inventory: It includes number and category of employees of each job family i.e.
all jobs related to the same category like clerks, cashiers, sub job family i.e. all jobs having
common job characteristics (skill, qualification, similar operations) like production engineer
(mechanical) and maintenance engineer (mechanical) and broad families like general
administration, production etc.
3. Age Inventory: It includes age-wise number and category of employees. It indicates age wise
imbalances in present inventory, which can be correlated in future selections and promotions.

Estimating the Net Man Power Requirements: Net manpower requirements in terns of number
and components are to be determined in relation to the overall manpower requirements for a future
date and supply forecast for that date. The difference between overall manpower and future supply of
manpower is to be found out. The difference is the net manpower requirement.

Action Plan for Redeployment, Redundancy/Retrenchment: If future surplus is estimated, the

organization has to plan for redeployment, redundancy etc. If surplus is estimated in some
jobs/departments, employees can be redeployed in other jobs/departments where the deficit of
employees is estimated. The organization should also plan for training or re-orientation before
redeployment of employees. Redeployment takes place in the form of transfers. If the deficit is not
estimated in any job/department and surplus is estimated for the entire organization, the organization,
in consultation with the trade unions has to plan for redundancy or retrenchment.

Recruitment and Selection Plan: Recruitment and selection plan covers the number and type of
employees required, when they are required for the job, time necessary for recruitment and selection
process, recruitment sources, recruitment techniques to be used, selection procedure to be adopted
and selection techniques to be used to subsequently recruiting the required candidates. It also covers
the time factor for induction, preliminary training and placement.

ERP
ERP- DEFINITION
An Enterprise resource planning system is a fully integrated business management system covering
functional areas of an enterprise like Logistics, Production, Finance, Accounting and Human
Resources. It organizes and integrates operation processes and information flows to make optimum
use of resources such as men, material, money and machine. Enterprise resource planning promises
one database, one application, one user interface for the entire enterprise, where once disparate
systems ruled manufacturing, distribution, finance and sales.

Evolution of ERP:
 In the ever-growing business environment, the following demands are placed on the industry:
(i) Aggressive cost control initiatives
(ii) Need to analyse costs/revenues on a product or customer basis
(iii) Flexibility to respond to changing business requirements
(iv) More informed management decision making
(v) Changes in ways of doing business.

ERP-Enterprise resource planning

One or more applications and planning systems have been introduced into the business world for
crossing some of hurdles and achieving growth. They are:
(i) Management Information Systems (MIS)
(ii) Integrated Information Systems (IIS)
(iii) Executive Information Systems (EIS)
(iv) Corporate Information Systems (CIS)
(v) Enterprise Wide Systems (EWS)
(vi) Material Resource Planning (MRP)
(vii) Manufacturing Resource Planning (MRP II)
(viii) Money Resource Planning (MRP III)
 ERP has evolved from the system known as MRPII (Manufacturing Requirement planning) system
with the integration of information between Vendor, Customer and Manufacturer using networks
such as LAN, WAN and INTERNET etc.

MRPII system again evolved from MRP (Material Requirement Planning) system. MRP is a
technique that explodes the end product demands obtained from Master Production Schedule (MPS)
for the given product structure which is taken from Bill of Material (BOM) into a schedule of
planned orders considering the inventory in hand. MRPII has a number of drawbacks.
(i) The main problem is that it has not been able to effectively integrate the different functional
areas to share the resources effectively.
(ii) The traditional application systems, which the organizations generally employ, treat each
transaction separately
(iii) They are built around the strong boundaries of specific functions that a specific application is
meant to cater.
For an ERP, it stops treating these transactions separately as stand-alone activities and considers
them to be the part of the inter-linked processes that make up the business.

Why Companies Undertake ERP

(i) Integrate financial information: As the CEO tries to understand the company’s overall
performance, he may find many different versions of the truth. ERP creates a single version
of the truth that cannot be questioned because everyone is using the same system.
(ii) Integrate customer order information: ERP systems can become the place where the
customer order lives from the time a customer service representative receives it until the
loading dock ships the merchandise and finance sends an invoice. By having this information
in one software system companies can keep track of orders more easily, and coordinate
manufacturing, inventory and shipping among many different locations simultaneously.
(iii) Standardise and speed up manufacturing processes: Manufacturing companies -especially
those with an appetite for mergers and acquisitions—often find that multiple business units
across the company make the same transaction / recording / report using different methods
and computer systems. ERP systems come with standard methods for automating some of the
steps of a manufacturing process.
(iv) Reduce inventory : ERP helps the manufacturing process flow more smoothly, and it
improves visibility of the order fulfilment process inside the company. That can lead to
reduced inventories of the materials used to make products (work-in-progress inventory), and
it can help users better plan deliveries to customers, reducing the finished good inventory at
the warehouses and shipping docks.
(v) Standardise HR information: Especially in companies with multiple business units, HR
may not have a unified, simple method for tracking employees’ time and communicating with
them about benefits and services. ERP can fix that.

Benefits of ERP:

Following are some of the benefits they achieved by implementing the ERP packages:
1. Gives Accounts Payable personnel increased control of invoicing and payment processing
and thereby boosting their productivity and eliminating their reliance on computer personnel
for these operations.
2. Reduce paper documents by providing on-line formats for quickly entering and retrieving
information.
3. Improves timeliness of information by permitting posting daily instead of monthly.
4. Greater accuracy of information with detailed content, better presentation, satisfactory for the
auditors. Improved cost control.
5. Faster response and follow-.up on customers.
6. More efficient cash collection, say, material reduction in delay in payments by customers.
7. Better monitoring and quicker resolution of queries.
8. Enables quick response to change in business operations and market conditions.
9. Helps to achieve competitive advantage by improving its business process.
10. Improves supply-demand linkage with remote locations and branches in different countries.
11. Provides a unified customer database usable by all applications.
12. Improves International operations by supporting a variety of tax structures, invoicing
schemes, multiple currencies, multiple period accounting and languages.
13. Improves information access and management throughout the enterprise.
14. Provides solution for problems like Y2K and Single Monetary Unit