OPERATIONS

MANAGEMENT
UNIT-1

Paper Code: II-202

SESSION-I
 INTRODUCTION
Production is the process by which raw
materials and other inputs are converted
into finished goods.

Production management techniques are

used in both manufacturing and service
industries. Production management
responsibilities include the traditional
“five M's”: men and women, machines,
methods, materials, and money.
 Managers are expected to maintain an
efficient production process with a workforce
that can readily adapt to new equipment and
schedules. They may use industrial
engineering methods, such as time-and-
motion studies, to design efficient work
methods. They are responsible for managing
both physical (raw) materials and information
materials (paperwork or electronic
documentation).
Of their duties involving money, inventory control is
the most important. This involves tracking all
component parts, work in process, finished goods,
packaging materials, and general supplies. The
production cycle requires that sales, financial,
engineering, and planning departments exchange
information—such as sales forecasts, inventory levels,
and budgets—until detailed production orders are
dispatched by a production-control division. Managers
must also monitor operations to ensure that planned
output levels, cost levels, and quality objectives are
met.
DECISION-MAKING IN
PRODUCTION
Operating Managers have to plan, organize,
staff, direct & control all the activities in the
process of converting input into output. At
each level, operating managers are expected
to make decisions and implement them too.
The Production Decisions fall into three
general categories:
 Strategic Decisions
 Operating Decisions
 Control Decisions
POM Decisions & Their
Applications
Type of Area of Involvement
Decisions Nature of Activities
Strategic decisions Product Processes, Product Technology,
(Planning Products, Facility Layout, Resource Allocation, Capacity
Processes & Planning
Facilities)
Operating Decisions Production planning system, Independent
(Planning production demand inventory systems, Resource
to meet demand) requirement planning Systems, Shop floor
planning & control, Materials Management
Control Decisions Productivity & employees, total quality control,
(Planning & Project planning & control techniques,
Controlling Maintenance Management and reliability
Operations)
Factors determining Production
Planning

 Volume of Production
 Nature of Production Processes
 Nature of Operations
 Production Planning System (PPS)
 Production planning is very complicated
procedure and is time consuming. To speed
up the production planning, you require an
efficient Production Planning system.
 There are two inter-related sub-systems in the
production planning system namely:
1. Product planning System, and
2. Process Planning System
Production Control
Definition
Methods and procedures employed in
handling materials, parts, assemblies,
and subassemblies, from their raw or
initial stage to the finished product stage
in an organized and efficient manner. It
also includes activities such as
planning, scheduling, routing,
dispatching, storage, etc.
 Benefits of Production Control
 Maintenance of a balanced inventory of
materials, parts, work-in-process and finished
goods.
 Balanced and stabilized production.
 Maximum utilization of equipment, tooling, labor
(manpower) and manufacturing and storage
space.
 Minimum investment in inventory.
 Reduction in indirect costs.
 Reduction set up costs.
Benefits of Production Control
continue…
 Reduction in scrap and rework costs.
 Reduction in Inventory costs.
 Reliable delivery to customers.
 Shortened delivery schedules to customers.
 Lower production costs and greater pricing
flexibility.
 Orderly planning & marketing of new or
improved products.
 Elements of Production Control
 Control of planning
 Control of materials
 Control of tooling
 Control of manufacturing capacity
 Control of activities
 Control of quantity
 Control of material handling
 Control of due dates
 Control of information
Factors determining Production
Control Procedures

 Nature of Production
 Complexity of Operations
 Magnitude of Operations
 OPERATIONS
MANAGEMENT
Unit-1 Continue

Paper Code: II-202

SESSION-II
 Strategic Management
A strategy is a way of doing something.
Strategic Management may be understood as
the process of formulating, implementing and
evaluating business strategies to achieve
organizational objectives.
Comprehensive definition:- That set of
managerial decisions and actions that
determines the long term performance of a
corporation. It involves environmental scanning,
strategy formulation, strategy implementation,
evaluation & control.
 Nature of Strategic Management
Strategic Management Process
Strategic Management emphasizes monitoring &
evaluating environmental opportunities and threats
in the light of a corporation’s strengths and
weaknesses.
Strategic Management involves:-
1. Analyse the opportunities & threats or constraints
that exist in the external environment.
2. Formulate strategies that will match the
organization's strengths and weaknesses with the
environment's threats and opportunities.
3. Implement the strategies.
4. Evaluate and control activities to ensure that, the
organization’s objectives are achieved.
 Steps in STRATEGIC MANAGEMENT

Evaluation
Strategy
& Control
Strategy Implementation
Environmental Formulation
Scanning
Corporate
Strategy
External Formulation
Environment Strategic
Business Unit
Procedure Control
Strategy
Program Process
Formulation
Budget &
Internal Performance
Functional Strategy
Environment
Formulation
 Role of OM in
Strategic Management
Role of Operations Management is crucial in case of
formulating and implementing business strategies.
Now operations strategies don’t exist in vacuum,
independent of the rest of the organization; rather,
they are derived from corporate objectives &
business strategies. Operations Management or
strategies provide the road map for achieving the
operations objectives and form the long-range game
plan for production of the firm’s goods and services.
Operations Management realizing the corporate
objectives, and embodied in the production plans.
Production Processes
 Production Processes
Production processes are the primary
processes and can be grouped under
three basic categories with objective to
change the shape or physical
characteristics of the raw materials,
namely:

 Forming Processes
 Machining Processes
 Assembly Processes
 Selection of a Process
Primarily a process involves the use of an
organizations’ resources to provide something of
value to the customer. No product can be made no
service can be provided without a process.
Conversely, no process can exist without service
or product. The selection of a production process
is influenced by several factors such as the
desired product quality, labor cost to be achieved
and the volume of production needed. While there
can be several manufacturing methods or
processes to produce an item, there is usually one
best method for a given set of variables.
 Service Operations
Non-manufacturing or service operations also
transform a set of inputs into a set of outputs but the
outputs are Intangible products such as, accounting,
banking, cleaning, consultancy, insurance, know
how, transportation. Sometimes services are difficult
to identify because they are closely associated with a
good; such as the combination of a diagnosis with
the administration. No transfer of possession or
ownership takes place when services are sold, and
they (1) cannot be stored or transported, (2) are
instantly perishable, and (3) come into existence at
the time they are bought and consumed.
 Process Design
Process Design is concerned with the overall
sequences of operations required to achieve the product
specifications. It specifies the type of work stations that
are to be used, the machines and equipments necessary
and the quantities in which each is required.
The sequence of operations in the manufacturing process
is determined by-
 The nature of the product
 The materials used
 The quantities being produced
 The existing physical layout of the plant
Framework for Process Design
 What are the characteristics of the product or
service being supplied or offered to
customers?
 What is the expected volume of output?
 What kinds of equipment or machinery are
available?
 Must the equipment or machinery be custom
built?
 What is the cost of equipment and machinery
needed?
 How best to handle materials?
 What types of labor skills are available, in
what quantities and at what wage rates?
 How much money can be spent on the
manufacturing process?
 Should the process be capital intensive or
labor intensive?
 Should the components or parts be ade or
purchased? (Make or buy decision)
Factors affecting Process Design

 The volume or quantity of the product to

be manufactured
 The required quality of the product and
 The equipment that is available or that
can be procured for the manufacture of
the product
Major Factors affecting Process
Design Decisions

 Nature of the product/service demand

 Degree of vertical integration
 Product/Service and volume flexibility
 Degree of automation
 Level of product/service quality
 Degree of customer contact
Types of Process Design

 Product-focused production system

 Process-focused production system
 Group technology/cellular
manufacturing system
 Process Technology
Process Technology refers to the equipment,
people and systems used to produce a firm’s
products & services.
Key process technology decisions relate to:
 Organizing the process flows
 Choosing the appropriate product-process
mix
 Adapting the process to meet strategic
requirements
 Evaluating automation & high-technology
processes
 Types of Process Technology
 Job Shop Technology is suitable for a variety of
custom-designed products in small volumes.
 Batch Technology is suitable for a variety of
products in varying volumes.
 Assemble line technology is suitable for a narrow
range of standardized products in high volumes.
 Continuous flow technology is suitable for
producing a continuous flow of products, e.g.: Oil
refineries and chemical plants.
 Project technology is suitable for producing
products that are tailor made to the unique
requirements of each customer.
 Facilities Planning
By their nature, they are one of the most important
strategic elements of a business enterprise. This is why
facility design and the strategic thinking that should
precede it are so important. Facility planning (land,
buildings, equipment, furnishings) provides the physical
capability to add value.
The strategic facility planning process can be defined
as the process by which a facility management
organization envisions its future by linking its purpose to
the strategy of the overall organization and then
developing goals, objectives and action plans to achieve
that future. The result of the strategic facility planning
process is the strategic facility plan.
 In the real world of facility management (FM),
a plethora of activities fall under the facility
manager’s responsibility, causing frequent
lapses into a reactive mode in order to
respond to all the requests, orders,
regulations, deadlines and demands of the
organization. Facility managers know that the
need to become more proactive and strategic
is important, but finding the time to devote to
strategic planning is often a struggle.
 Strategic facility planning (SFP) is a process
that can lead to better, more proactive
delivery of services from a facility
management organization to its
stakeholders. The time taken to carry out
SFP is well spent in that it helps to avoid
mistakes, delays, disappointments and
customer dissatisfaction. It can actually
allow facility plan implementations to run
more quickly and smoothly.
 OPERATIONS
MANAGEMENT
UNIT-2
Paper Code: II-202
SESSION-III
Plant Location
Every entrepreneur is faced with the problem of
deciding the best site for location of his plant or
factory.
 What is plant location?
Plant location refers to the choice of region and the
selection of a particular site for setting up a business
or factory. But the choice is made only after
considering cost and benefits of different alternative
sites. It is a strategic decision that cannot be changed
once taken. If at all changed only at considerable
loss, the location should be selected as per its own
requirements and circumstances. Each individual
plant is a case in itself. Businessman should try to
make an attempt for optimum or ideal location.
 What is an ideal location?
An ideal location is one where the cost of the
product is kept to minimum, with a large
market share, the least risk and the maximum
social gain. It is the place of maximum net
advantage or which gives lowest unit cost of
production and distribution. For achieving this
objective, small-scale entrepreneur can make
use of locational analysis for this purpose.
Plant Location Need
 When the business is newly started
 The existing business unit has outgrown its original
facilities and expansion is not possible; hence a new
location has to be found.
 The volume of business or the extent of market
necessitates the establishment of branches.
 A lease expires and the landlord does not renew the
lease.
 Other social and economic reasons; for instance,
inadequate labour supply, shifting of the market etc.
LOCATIONAL ANALYSIS
Locational analysis is a dynamic process where
entrepreneur analyses and compares the
appropriateness or otherwise of alternative sites with
the aim of selecting the best site for a given
enterprise. It consists the following:
(a) Demographic Analysis: It involves study of
population in the area in terms of total population (in
no.), age composition, per capita income, educational
level, occupational structure etc.
(b) Trade Area Analysis: It is an analysis of the
geographic area that provides continued clientele to
the firm. He would also see the feasibility of
accessing the trade area from alternative sites.
(c) Competitive Analysis: It helps to judge the nature,
location, size and quality of competition in a given trade area.
(d) Traffic analysis: To have a rough idea about the number
of potential customers passing by the proposed site during
the working hours of the shop, the traffic analysis aims at
judging the alternative sites in terms of pedestrian and
vehicular traffic passing a site.
(e) Site economics: Alternative sites are evaluated in terms
of establishment costs and operational costs under this.
Costs of establishment is basically cost incurred for
permanent physical facilities but operational costs are
incurred for running business on day to day basis, they are
also called as running costs.
Location Factors
a) Natural or climatic conditions.
b) Availability and nearness to the sources of raw material.
c) Transport costs-in obtaining raw material and also
distribution or marketing finished products to the ultimate users.
d) Access to market: small businesses in retail or wholesale or
services should be located within the vicinity of densely
populated areas.
e) Availability of Infrastructural facilities such as developed
industrial sheds or sites, link roads, nearness to railway
stations, airports or sea ports, availability of electricity, water,
public utilities, civil amenities and means of communication are
important, especially for small scale businesses.
f) Availability of skilled and non-skilled labour and technically
qualified and trained managers.
g) Banking and financial institutions are located nearby.
h) Locations with links: to develop industrial areas or
business centers result in savings and cost reductions
in transport overheads, miscellaneous expenses.
i) Strategic considerations of safety and security should
be given due importance.
j) Government influences: Both positive and negative
incentives to motivate an entrepreneur to choose a
particular location are made available. Positive
includes cheap overhead facilities like electricity,
banking transport, tax relief, subsidies and
liberalization. Negative incentives are in form of
restrictions for setting up industries in urban areas for
reasons of pollution control and decentralization of
industries.
k) Residence of small business entrepreneurs want
to set up nearby their homelands.

One study of locational considerations from small-

scale units revealed that the native place or
homelands of the entrepreneur was the most
important factor. Heavy preference to homeland
suggests that small-scale enterprise is not freely
mobile. Low preference for Government incentives
suggests that concessions and incentives cannot
compensate for poor infrastructure.
 Alfred Weber's
Plant Location Theory
He classified locational factors into two broad categories-
Primary and secondary. Materials and labour constitute
primary factors that contribute to dispersal of industries
over different regions. Industrial units are materials
oriented, if their cost of transportation to units is higher.
Industrial plants are market-oriented when cost of
transporting finished goods to markets is higher. Another
primary factor is labour. Weber assumes that centres flush
with cheap and skilled labour pull industries towards
themselves.
Bank credit, insurance, communication and rent and rates constitute
the secondary factors of location. Some of these attract industries to
certain areas from different places and some others contribute to their
dispersal from original places. The latter are called the
degglomerating factors and the former the agglomerating factors.
Plant Layout
The efficiency of production depends on how well the
various machines; production facilities and employee’s
amenities are located in a plant. Only the properly laid out
plant can ensure the smooth and rapid movement of
material, from the raw material stage to the end product
stage. Plant layout encompasses new layout as well as
improvement in the existing layout. It may be defined as a
technique of locating machines, processes and plant
services within the factory so as to achieve the right
quantity and quality of output at the lowest possible cost
of manufacturing. It involves a judicious arrangement of
production facilities so that workflow is direct.
 Definitions
 Plant layout refers to the arrangement of physical facilities
such as machinery, equipment, furniture etc. with in the
factory building in such a manner so as to have quickest
flow of material at the lowest cost and with the least
amount of handling in processing the product from the
receipt of material to the shipment of the finished product.
 According to Riggs, “the overall objective of plant layout is
to design a physical arrangement that most economically
meets the required output – quantity and quality.”
 According to J. L. Zundi, “Plant layout ideally involves
allocation of space and arrangement of equipment in such
a manner that overall operating costs are minimized.
Importance of Plant Layout

Plant layout is an important decision as it represents

long-term commitment. An ideal plant layout should
provide the optimum relationship among output, floor
area and manufacturing process. It facilitates the
production process, minimizes material handling, time
and cost, and allows flexibility of operations, easy
production flow, makes economic use of the building,
promotes effective utilization of manpower, and
provides for employee’s convenience, safety, comfort
at work, maximum exposure to natural light and
ventilation. It is also important because it affects the
flow of material and processes, labour efficiency,
supervision and control, use of space and expansion
possibilities etc.
Objectives of Plant Layout
a) Proper and efficient utilization of available floor space
b) To ensure that work proceeds from one point to another point
without any delay
c) Provide enough production capacity.
d) Reduce material handling costs
e) Reduce hazards to personnel
f) Utilise labour efficiently
g) Increase employee morale
h) Reduce accidents
i) Provide for volume and product flexibility
j) Provide ease of supervision and control
k) Provide for employee safety and health
l) Allow ease of maintenance
m) Allow high machine or equipment utilization
n) Improve productivity
Factors influencing Layout
a) Factory building: The nature and size of the building
determines the floor space available for layout. While
designing the special requirements, e.g. air conditioning,
dust control, humidity control etc. must be kept in mind.
b) Nature of product: product layout is suitable for
uniform products whereas process layout is more
appropriate for custom-made products.
c) Production process: In assembly line industries,
product layout is better. In job order or intermittent
manufacturing on the other hand, process layout is
desirable.
d) Type of machinery: General purpose machines are
often arranged as per process layout while special
purpose machines are arranged according to product
layout
e) Repairs and maintenance: machines should be so
arranged that adequate space is available between them for
movement of equipment and people required for repairing
the machines.
f) Human needs: Adequate arrangement should be made
for cloakroom, washroom, lockers, drinking water, toilets and
other employee facilities, proper provision should be made
for disposal of effluents, if any.
g) Plant environment: Heat, light, noise, ventilation and
other aspects should be duly considered, e.g. paint shops
and plating section should be located in another hall so that
dangerous fumes can be removed through proper ventilation
etc. Adequate safety arrangement should also be made.
Principles of Layout

 Principle of minimum travel

 Principle of sequence
 Principle of usage
 Principle of compactness
 Principle of safety and satisfaction
 Principle of flexibility
 Principle of minimum investment
Types of Layout

The plant layout facilitates the arrangement of

machines, equipment and other physical
facilities in a planned manner within the
factory premises. An entrepreneur must
possess an expertise to lay down a proper
layout for new or existing plants. It differs
from plant to plant, from location to location
and from industry to industry. But the basic
principles governing plant layout are more or
less same.
 In case of manufacturing unit, plant layout
may be of four types:
(a) Product or line layout
(b) Process or functional layout
(c) Fixed position or location layout
(d) Combined or group layout
Service facility layout
Service facilities exist to bring together customer and
organisation's services. Features like easy entrance,
well organized parking lots, well marked entries and
exits, powered doors, escalators and lobbies for
customers, create a convenience to customer and
increase the business. The layouts depend on degree
of customer contacts. One case, it may be designed
around the customer and other around the technology,
process materials and production efficiency. Example
Banks designed around customer and hospitals around
the technology.
 Example-Retail Service layout

 Due to rise in land prices, objective of the retail layout

is to maximize returns per unit area. Super markets try
to maximize the product exposure, bank try to provide
comfort ambiance to customer.
 Service escape – physical surroundings – consists of
ambiance, spatial layout and functionality and signs,
symbols and artifacts.
 Ambiance- all physical attributes of a place : noise
level, lightening , temperature, colour, style of fixtures
etc. These have significant effect on customers and
workers. It determines the perception of the customer.
 Spatial Layout and Functionality – Grouping of merchandises
and well designed circular paths are important features.
Grouping of merchandise is done based on customers
perception of related items. Circular paths are made so that
products can be visible to the customers.
 Sign, Symbols and artifacts - These are more visible parts of
service facilities. These provide directions, uniqueness,
advertising of brand, differentiation of services etc.
Example: In big super markets, different items at different floors
are kept and sign and symbols are used to guide the customers.
Decisions regarding these elements are taken based on type of
the service. Low customer involvement proper information is
provided by signs like in fast food restaurant.
Revision of layout
 A good plant layout involves not only
designing and installing the layout for the first
time but also revision of existing layout.
 The best layout becomes obsolete over a
period of time if it is unchanged for number
of years.
 Revisions ranging from minor alterations to a
complete dismantling of existing structure and
installation of a new layout becomes
necessary
Reasons for Revision

 Expansion
 Technological
advancements
 Improvement in the layout
Expansion
It is a natural feature of any industrial
establishment. A plant may expand
if:-

 Increase in the output of existing

product
 Introduction of a new product in the
same line
 Diversification of the lines of activity.
Technological Advancement
Industrial research is a insurance against
obsolescence of products.
 Replacement of labour by machines
 Developments in fuel and energy
 Developments in process
 Development in materials
 Improvements in product design
 Advancement in information technology
Improvement in the layout
Layout needs constant attention from the
management. The limitations in a layout go
unchecked for two reasons:-

 The evils of a poor layout are a hidden cost

not revealed even by the best accounting
method.
 Even if they are revealed, the management
will be unwilling to initiate remedial steps
Topic for Discussion
Layout or Building?
 OPERATIONS
MANAGEMENT
Paper Code: II-202
SESSION-IV
 WORK STUDY
Work Study is the systematic examination of the
methods of carrying out activities such as to improve the
effective use of resources and to set up standards of
performance for the activities carried out.
It is one of the most important techniques, which are
frequently employed by all management personnel. It
introduces the most effective method of working. Work
study has proved to be the most effective tool in the
hands of management. Every industry is facing problems
concerning the efficiency at all levels and so a systematic
attempt is needed to eliminate unnecessary work and the
make remaining work easier. Thus productivity would
automatically be increased. It is therefore, necessary to
have a constant effort to reduce the waste in every phase
of production. So, that there is a surplus available for
division to develop good life.
 According to British Standards Institute, “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 lead
systematically to the investigation of all factors which affect
the efficiency and economy of the situation being renewed,
in order to effect improvement.”

 Thus, the work study of human works in all aspects in order

to improve productivity. It is a systematic and analytical
study of work process and work methods with the objective
of increasing efficiency and reducing costs. Work study
helps to reduce waste through standardization of qualitative
and quantitative element of the job.
 Objectives of Work Study
 To analyze the present method of doing a job,
systematically in order to develop a new and better
method.
 To measure the work content of a job by measuring
the time required to do the job for a qualified worker
and hence to establish standard time.
 To increase the productivity by ensuring the best
possible use of human, machine and material
resources and to achieve best quality product/service
at minimum possible cost.
 To improve operational efficiency.
 Importance of Work Study
 It is a mean of raising productivity of a factor by
reorganization of the work involving little or no capital
expenditure on plant and equipment.
 It is systematic study where no factor of production is
overlooked.
 It is most accurate method of determining the standards
of performance on which effective planning and ctrl
depends.
 It results in savings and efficient use of resources by
increasing output reducing scrap.
 Results in improved safety.
 Reduction in training time.
 It is a tool, which can be, applied everywhere.
Relationship of Time and Motion
Study to Work Study
Both time and motion study are
concerned with the systematic
analysis and improvement of
manually controlled work situations.
However, time study is a
quantitative analysis leading to the
establishment of a time standard
whereas motion study is a
qualitative analysis of work station
leading to the design or
improvement of an
operation/activity.
Relationship of Time and Motion
Study to Work Study
 Motion and time study is considered to be the backbone
of industrial engineering, industrial technology, and
industrial management programs because the
information that time studies generate affects so many
other areas, including the following:
1. Cost estimating
2. Production and inventory control
3. Plant layout
4. Materials and processes
5. Quality
6. Safety
Motion study comes first before the setting of time
standards. Motion study is a detailed analysis of the
work method in an effort to improve it.
 Basic Work Study Procedure
1. Select the job or process to be studied.
2. Record from the direct observations everything that
happens.
3. Examine the recorded facts critically and challenge
everything that is done.
4. Develop most economic method taking in to
considerations all circumstances.
5. Measure the quantity of work involved in the method
selected and calculates a standard time for doing it.
6. Define the new method and time to standardize.
7. Institutionalize the new method and time as practice.
8. Maintain the new standards by control procedures
 Method Study or Method Analysis
 Method study is the process of subjecting work
to systematic, critical scrutiny to make it more
effective and/or more efficient. It is one of the
keys to achieving productivity improvement.
 It was originally designed for the analysis and
improvement of repetitive manual work but it
can be used for all types of activity at all levels
of an organization.
Objectives of Method Study
 To study the existing /proposed method of doing any
job, operation or activity.
 To develop an improved method to improve
productivity and to reduce the operating costs.
 To reduce excessive Materials handling or movement
and thereby reduce fatigue of workmen.
 To improve utilization of resources.
 To eliminate wasteful and inefficient motions.
 To standardize work methods or processes, working
conditions, machinery, equipments and tools.
 Factors facilitating Method Study
 High operating cost
 High wastage and scrap
 Excessive movement of material and workmen
 Excessive production and bottlenecks
 Excessive rejections & rework
 Complaints about quality
 Complaints about poor working conditions
 Increasing number of accidents
 Excessive use of overtime
Method Study Procedure
 Select (the work to be studied);
 Record (all relevant information about that
work);
 Examine (the recorded information);
 Develop (an improved way of doing things);
 Install (the new method as standard practice);
 Maintain (the new standard proactive).
1. Select
 Work selected for method study may be an
identified problem area or an identified
opportunity. It may be identified through a
systematic review of available data, normal
monitoring or control processes, high levels
of dissatisfaction and complaint or as part of
a change in management policy, practice,
technology or location, and usually because it
meets certain conditions of urgency and/or
priority.
 2. Record
 The Record stage of method study involves gathering sufficient
data (in terms of both quality and quantity) to act as the basis of
evaluation and examination. A wide range of techniques are
available for recording; the choice depends on the nature of the
investigation; the work being studied; and on the level of detail
required. Many of the techniques are simple charts and
diagrams, but these may be supplemented by photographic
and video recording, and by computer based techniques.
 Especially with "hard" (clearly defined) problems, method study
often involves the construction and analysis of models, from
simple charts and diagrams used to record and represent the
situation to full, computerized simulations. Manipulation of and
experimentation on the models leads to ideas for development.
3. Examine
 The recorded data are subjected to
examination and analysis; formalized
versions of this process are critical
examination and systems analysis. The aim is
to identify, often through a structured,
questioning process, those points of the
overall system of work that require
improvements or offer opportunity for
beneficial change.
4. Develop
 The Examine stage merges into the Develop stage of
the investigation as more thorough analysis leads
automatically to identified areas of change. The aim
here is to identify possible actions for improvement
and to subject these to evaluation in order to develop
a preferred solution.
 Sometimes it is necessary to identify short-term and
long-term solutions so that improvements can be
made (relatively) immediately, while longer-term
changes are implemented and come to fruition.
5. Install
 The success of any method study project is realised
when actual change is made 'on the ground' - change
that meets the originally specified terms of reference
for the project. Thus, the Install phase is very
important. Making theoretical change is easy; making
real change demands careful planning - and handling
of the people involved in the situation under review.
They may need reassuring, retraining and supporting
through the acquisition of new skills. Install, in some
cases ,will require a parallel running of old and new
systems, in others, it may need the build-up of buffer
stocks, and other planning to manage the change.
what matters is that the introduction of new working
methods is successful. There is often only one
chance to make change!
6. Maintain
 Some time after the introduction of new working
methods, it is necessary to check that the new
method is working, that it is being properly followed,
and that it has brought about the desired results. This
is the Maintain phase. Method drift is common - when
people either revert to old ways of workin, or
introduce new changes. Some of these may be
helpful and should formally be incorporated; others
may be inefficient or unsafe. A methods audit can be
used to formally compare practice with the defined
method and identify such irregularities.
Recording Techniques used in Method Study
 Motion Study
 Motion study is a technique of analyzing the body motions
employed in doing a task in order to eliminate or reduce
ineffective movements and facilitates effective movements. By
using motion study and the principles of motion economy the
task is redesigned to be more effective and less time
consuming.
 In a broad sense, motion study encompasses micro motion
study and both have the same objective: job simplification so
that it is less fatiguing and less time consuming while motion
study involves a simple visual analysis, micro motion study
uses more expensive equipment. The two types of studies
may be compared to viewing a task under a magnifying glass
versus viewing the same under a microscope. The added
detail revealed by the microscope may be needed in
exceptional cases when even a minute improvement in
motions matters, i.e. on extremely short repetitive tasks.
On analyzing the result of several motion studies conducted, Gilbreths concluded
that any work can be done by using a combination of some or all of 17 basic motions,
called Therbligs (Gilbreth spelled backward). These can be classified as effective
therbligs and ineffective therbligs. Effective therbligs take the work progress towards
completion. Attempts can be made to shorten them but they cannot be eliminated.
 SIMO Chart
 It is a graphic representation of an activity and shows the sequence
of the therbligs or group of therbligs performed by body members of
operator. It is drawn on a common time scale. In other words, it is a
two-hand process chart drawn in terms of therbligs and with a time
scale
 Making the SIMO Chart
A video film or a motion picture film is shot of the operation as it is
carried out by the operator. The film is analyzed frame by frame. For
the left hand, the sequence of therbligs (or group of therbligs) with
their time values are recorded on the column corresponding to the
left hand. The symbols are added against the length of column
representing the duration of the group of therbligs. The procedure is
repeated for the right hand and other body members (if any)
involved in carrying out the operation.
 It is generally not possible to time individual therbligs. A certain
number of therbligs may be grouped into an element large enough
to be measured.
 Uses of SIMO Chart
 From the analysis shown about the motions of the two
hands (or other body members) involved in doing an
operation, inefficient motion pattern can be identified
and any violation of the principle of motion economy
can be easily noticed. The chart, therefore, helps in
improving the method of doing an operation so that
balanced two-handed actions with coordinated foot and
eye motions can be achieved and ineffective motions
can be either reduced or eliminated. The result is a
smoother, more rhythmic work cycle that keeps both
delays and operator fatigue to the minimum extent.
 Motion Economy
 The principles of motion economy form a set of rules
and suggestions to improve the manual work in
manufacturing and reduce fatigue and unnecessary
movements by the worker, which can lead to the
reduction in the work related trauma.
The principles of motion economy can be classified into
three groups:
 Principles related to the use of human body,
 Principles related to the arrangement of the work place,
 Principles related to the design of tools and equipment.
 Use of Human Body

The two hands should begin motions at the same time.

The two hands should not be idle at the same time except during rest
periods.
Motions of the arms should be made in opposite and symmetrical
directions and should be made simultaneously
Hand motions should be confined to the lowest classification with
which it is possible to perform the work satisfactorily:
 Finger motions
 Wrist motions
 Forearm motions
 Upper arm motions
 Shoulder motions
Momentum should be employed to assist the worker whenever
possible, and it should be reduced to a minimum if it must be
overcome by muscular effort.
Smooth continuous motions of the hands are preferable to zigzag
motions or straight-line motions involving sudden and sharp changes
in direction.
Arrangement of the Work Place

 There should be a definite and fixed place for all tools

and materials.
 Tools, materials, and controls should be located
close in and directly in front of the operator.
 Drop delivers should be used whenever possible.
 Materials and tools should be located to permit the
best sequence of motions.
 Arrange the height of the workplace and chair for
alternate sitting and standing, when possible.
 Provide a chair of the type and height to permit good
posture.
Design of Tools and Equipment

 Combine tools whenever possible.

 Preposition tools and materials.
 Where each finger performs some specific
movement, the load should be distributed in
accordance with the inherent capacities of the
fingers.
 For light assembly, a screwdriver handle
should be smaller at the bottom.
Work Measurement
Work Measurement is a term which covers
several different ways of finding out how long a
job or part of a job should take to complete. It
can be defined as the systematic
determination, through the use of various
techniques, of the amount of effective physical
and mental work in terms of work units in a
specified task. The work units usually are given
in standard minutes or standard hours.
Objectives of Work Measurement

 Improved planning and control of activities

or operations
 More efficient manning of the plant
 Reliable ideas for labor performance
 Reliable basis for labor cost control
 Basis for sound, incentive schemes
In the business world these standard
times are needed for:
 planning the work of a workforce,
 manning jobs, to decide how many workers it would
need to complete certain jobs,
 scheduling the tasks allocated to people
 costing the work for estimating contract prices and
costing the labor content in general
 calculating the efficiency or productivity of workers -
and from this:
 providing fair returns on possible incentive bonus
payment schemes.
 Selecting the most appropriate methods
of work measurement
The method chosen for each individual situation
to be measured depends on several factors
which include:
 the length on the job to be measured in time
units
 the precision which is appropriate for the type of
work in terms of time units (i.e. should it be in
minutes, hundredths or thousandths of a
minute)
 the general cycle-time of the work, i.e. does it
take seconds, minutes or days to complete
The length of time necessary for the completion of the
range of jobs can vary from a few seconds in highly
repetitive factory work to several weeks or months for
large projects such as major shutdown maintenance work
on an oil refinery. It is quite clear that using a stop-watch,
for example, on the latter work would take several man-
years to time to measure! Thus, more "overall" large-
scale methods of timing must be employed.
The precision is an important factor, too. This can vary
from setting times of the order of "to the nearest
thousandth of a minute" (e.g. short cycle factory work) to
the other end of the scale of "to the nearest week" (e.g.
for large project work).
These are the dominant factors that affect the choice of
method of measurement.
Techniques of Work-Measurement

 Direct Time Study

 Synthesis Method
 Analytical Estimating
 Pre-determined Motion Time System
(PMTS)
 Work Sampling or Activity Sampling or
Ratio Delay Method

Discuss in detail from course book…….

Work Sampling

The process of studying the activities of a

group of workers or machines over a period
of time, in order to find out how much time is
spent on each activity that they do a method
of finding out if someone is suitable for a
job, by asking them to do an activity that is
an important part of that job.
 Characteristics of Work Sampling
The study of work sampling has some general characteristics
related to the work condition. One of them is the sufficient time
available to perform the study. A work sampling study usually
requires a substantial period of time to complete. There must
be enough time available (several weeks or more) to conduct
the study. Another characteristic is multiple workers. Work
sampling is commonly used to study the activities of multiple
workers rather than one worker. The third characteristic is long
cycle time. The job covered in the study has relatively a long
cycle time. The last condition is the non-repetitive work cycles.
The work is not highly repetitive. The jobs consist of various
tasks rather than a single repetitive task. However, it must be
possible to classify the work activities into a distinct number of
categories.
Work Sampling Procedure
Stage 1
 Preparing for work sampling:
1. Specify the main objective and make
statement 
2. Obtain approval of the concerned
department’s supervisor
3. Identify quantitative measure of activity
4. Select and train personnel
5. Plan for the procedure of observations
 Stage 2:
Start work sampling  
6. Get all details of job(s) to be measured 
7. Divide jobs into activity 
8. Conduct pilot study to:
(a) determine number of observations 
(b) check methods
(c) gain confidence 
9. Describe and classify the elements to be studied
10. Design observation sheets
11. Identify the number of days/shifts for the study
12. Identify scheme for properly randomized times of
observations
13. Observe activity; record time and compile for each
shift/day/week
14. Summarize data
Stage 3: 
Evaluate and present results 

15. Evaluate and validate data

16.Analyze data
17. Calculate proportion of time for each activity
18. Planning for future studies.

Unit-II Complete
 OPERATIONS
MANAGEMENT
UNIT-3
Paper Code: II-202
AGGREGATE PLANNING & MASTER
PRODUCTION SCHEDULING
 Aggregate Planning
Attempts to match the supply of and demand for a product or
service by determining the appropriate quantities and timing of
inputs, transformation, and outputs.  Decisions made on
production, staffing, inventory and backorder levels.
Characteristics of aggregate planning:
 Considers a "planning horizon" from about 3 to 18 months,
with periodic updating
 Looks at aggregate product demand, stated in common terms
 Looks at aggregate resource quantities, stated in common
terms
 Possible to influence both supply and demand by adjusting
production rates, workforce levels, inventory levels, etc., but
facilities cannot be expanded.
 Production Plan (manufacturing aggregate
plan):
A managerial statement of the period-by-period
(time-phased) production rates, work-force
levels, and inventory investment, given customer
requirements and capacity limitations.
 Staffing Plan (service aggregate plan):
A managerial statement of the period-by-period
staff sizes and labour-related capacities, given
customer requirements and capacity limitations.
Objectives of Aggregate Planning

Objective of aggregate planning frequently is to

minimize total cost over the planning horizon.
Other objectives should be considered:
 maximize customer service
 minimize inventory investment
 minimize changes in workforce levels
 minimize changes in production rates
 maximize utilization of plant and equipment
 Operations Planning &
Scheduling Systems
Operations Planning and scheduling
systems are concerned with the volume
and timing of outputs, the utilization of
operations capacity and balancing
outputs with capacity at the desired
levels of competitive effectiveness.

P.T.O.
 The Operations Planning and
Scheduling System
Aggregate O/P Planning Aggregate
Capacity planning
Master Production
Rough-Cut
Scheduling
Capacity planning

Material Req. Planning Detailed capacity

planning

Loading

Sequencing
Shop floor control
Short term
capacity Control
Detailed Scheduling

Expediting
 Aggregate Production Planning
It is the process of determining output levels (units) of product groups
over the next 6 to 18 months period on a weekly or monthly basis. The
plan indicates the overall level of outputs supporting the business plan.

Aggregate production planning is concerned with the determination of

production, inventory, and work force levels to meet °fluctuating
demand requirements over a planning horizon that ranges from six
months to one year. Typically the planning horizon incorporate the next
seasonal peak in demand. The planning horizon is often divided into
periods. For example, a one year planning horizon may be composed
of six one-month periods plus two three-month periods. Normally, the
physical resources of the firm are assumed to be fixed during the
planning horizon of interest and the planning effort is oriented toward
the best utilization of those resources, given the external demand
requirements.
 Aggregate Capacity Plan
It is the process of devising a plan for providing a
production capacity scheme to support the intermediate
range sales forecast.
NEED for Aggregate Capacity Planning
 It facilitates fully loaded facilities and minimizes overloading and under
loading and keep production costs low.
 Adequate production capacity is provided to meet expected aggregate
demand.
 Orderly & Systematic transaction of production capacity to meet the
peaks and valleys of expected customer demand is facilitated.
 In times of scarce production resources, getting the maximum output
for the amount of resources is enhanced.
 To manage change in operations management by planning for
production resources that adapt to the changes in customer demands.
 Steps in Aggregate Capacity Planning
 Prepare the sales forecast for each product that indicates the
quantities to be sold in each time period over the planning
horizon.
 Sum up the individual product or service forecast into one
aggregate demand for the factory.
 Transform the aggregate demand for each time period into
labour, materials, machines and other elements of production
capacity required to satisfy aggregate demand.
 Develop alternative resource schemes for supplying the
necessary production capacity to support the cumulative
aggregate demand.
 Select the capacity plan from among the alternatives
considered that satisfy aggregate demand and best meets the
objectives of the organization.
In developing an intermediate aggregate capacity plan,
the variables that may be manipulated to vary the
production capacity from month to month are:

 The size of the workforce

 The use of overtime or idle time
 The use of inventories or back orders
 The use of sub-contractors
 Leaving demand unfilled to buffer the
difference between production
capacity and variations in demand
from month to month.
 Flow chart of Aggregate plan & MPS

Market Resource base Long range(1-15Yrs)

Environment & technology major capacity
additions, product &
process decision

Forecast and Capacity,

customer order facilities, material,
Intermediate range
labor & capital (6 to 18 months)
workforce,
overtime plans,
Aggregate inventory and sub-
Production Plan contracting levels,
minor capacity
changes
Master Production
Short range
Schedule (up to 6
months)
detailed
scheduling,
routings,
Material alternate work
Capacity centers,
requirements requirements overtime etc.
 Approaches to Aggregate Planning
An aggregate plan takes into consideration the overall
level of output and the capacity that is required to
produce it. There are two basic approaches to
estimating the capacity that will be required to
produce an aggregation or grouping of a company
products.
1. Top down approach to aggregate planning involves
development of the entire plan by working only at the
highest level of consolidation of products. It
consolidates the products into an average product and
then develops one overall plan. This plan is
disaggregated to allocate capacity to product families
and individual products.
2. A bottom-up approach or sub-plan consolidation approach,
involves development of plans for major products or product families
at some lower level, within the product line. These sub-plans are
then consolidated to arrive at the aggregate plan, which gives the
overall output and the capacity required to produce it.

The bottom-up approach is more widely used. This approach starts

with plans for major products or product families and aggregates
(sums) the impact that these plans have on the capacity of the
company. If the capacity requirements for individual plans appear to
sum up to a satisfactory overall use of the company resources, the
plans are accepted to be implemented strategically. If not, some of
the individual plans are revised to improve the overall impact of the
aggregate plan. Individual plans are revised until a desirable
aggregate plan is evolved.
 Top down Aggregate Planning
 With this approach, the desirable overall plan is developed
for the periods in the planning horizon, with the plan for the
first few periods being fairly firm. This approach rests on
the assumption that if the proper amount of total capacity is
available, the right amount of capacity for all of the parts
will be available.
 Aggregate plan for a top down approach is performed in
terms of a pseudo-product which is a fictitious product that
represents the average characteristics of the entire product
line to be planned. However, difficulties may arise in
Desegregation, if the product mix varies overtime and the
different products require different production resources.
 Bottom-up Aggregate Planning
 This is also called as resource requirement
planning (sometimes called rough-cut capacity
planning) which is usually used in conjunction
with material requirement planning (MRP-1)
both capacity and materials must be available
for products to be made and hence material
plans need to be coordinated with a more
detailed production plan.
 Rough-cut Capacity Planning
 This is done in conjunction with the tentative mater
production schedule to test its feasibility in terms of
capacity before the Master Production Schedule (MPS) is
finalized.
 This ensures that a proposed MPS does not inadvertently
overload any key department, work centre or machine,
making the MPS unworkable. Although the check can be
applied to all work centers, it is typically applied only to
the critical work centers that are most likely to be
bottlenecks. It is a quick and inexpensive way to find and
correct gross discrepancies between the capacity
requirements of the MPS and the available capacity.
 Capacity Planning
 Capacity planning is the process of determining
the production capacity needed by an
organization to meet changing demands for its
products. In the context of capacity planning,
"capacity" is the maximum amount of work that
an organization is capable of completing in a
given period of time.
 Capacity Requirement Planning
 Capacity Requirements Planning, also known as CRP, in MRP parlance, is
the technique that allows business to plan ahead to determine how large
their future inventory capacity needs to be in order to meet demand. CRP
also helps companies determine how much space they will need to hold
these materials. It verifies that you have the sufficient capacity available to
meet the capacity requirement for the MRP plans. It thus helps the planners
to make the right decisions on scheduling before the problem develops.
 The key elements of the Capacity Requirements Planning process are of
establishing, measuring, and adjusting the limits or levels of the production
capacity based on the process of determining the amount of labor and
machine resources required to accomplish the tasks of production. Inputs of
the CRP process are the Order Entry modules in a MRP system which
facilitates translating the orders into hours of work by the work center by
time period via the use of parts routings and time standards.
Types of Capacity
 Fixed Capacity
 Adjustable capacity
 System capacity
 Design capacity
 Potential capacity
 Immediate capacity
 Effective capacity
 Normal capacity or rated capacity
 Actual or utilized capacity
Capacity Measurement
Capacity of a plant can be expressed as the rate
of output viz. units per day or per week or per
month, tonnes per month, gallons per hour, labor
hours/day etc. But for organizations whose
product lines are more diverse, it is difficult to
find a common unit of output. More appropriate
measure of capacity for such firms is to express
the capacity in terms of money value of output
per period of time (day, week or month).
Capacity may be measured in terms of inputs or
outputs of the conversion process.
Capacity Decisions

Major considerations in capacity decisions

are:
a. What size of plant? How much capacity to
install?
b. When capacity is needed? When to
phase-in capacity or phase-out capacity?
c. At what cost? How to budget for the cost?