Production and Operations Management.pptx

Production and Operations
Management
Dr. Mangesh Bhople
MIT Arts Commerce and Science
College Alandi Pune

Production Process Mangement
PPA

Broad
Classification
Intermittent Continuous
Classification of Production System

JOB SHOP
PRODUCTION
BATCH
PRODUCTION
MASS
PRODUCTION
CONTINUOUS
PRODUCTION
Project Production
Process

• A job shop comprises of general purpose machines
arranged into different departments. Each job
demands unique technological requirements, demands
processing on machines in a certain sequence.
• Characteristics
• High variety of products and low volume.
• Use of general purpose machines and facilities.
• Highly skilled operators who can take up each job as a
challenge because of uniqueness.
• Large inventory of materials, tools, parts.
• Detailed planning is essential for sequencing the
requirements of each product, capacities for each work
centre and order priorities.

Advantages of job shop production
• Advantages of job shop production:
Because of general purpose machines and facilities variety of
products can be produced.
Operators will become more skilled and competent, as each job
gives them learning opportunities.
Full potential of operators can be utilized.
Opportunity exists for creative methods and innovative ideas.
• Limitations
Higher cost due to frequent set up changes.
Higher level of inventory at all levels and hence higher
inventory cost.
Production planning is complicated.
Larger space requirements.
Volume and standardization is low.

Example of Job Shop Production
• Examples of a job shop include
1. A machine tool shop,
2. a factory machining center,
3. paint shops,
4. a commercial printing shop,
5. A fabrication unit
https://www.youtube.com/watch?v=n6LE9BpDiwU

BATCH PRODUCTION
Batch production is defined by American Production and Inventory
Control Society (APICS)
“as a form of manufacturing in which the job passes through the
functional departments in lots or batches and each lot may have a
different routing.”
• Characteristics
• It is characterized by the manufacture of limited number of products
produced at regular intervals and stocked awaiting sales.
• Shorter production runs
• Plant and machinery are flexible.
• Frequent change of set up for different batches .
• Low lead time and cost as compared to continuous production.
• Production for consumption/customers

Advantages and Limitations of batch
production
Advantages
• Better utilization of plant and machinery.
• Promotes functional specialization.
• Cost per unit is lower as compared to continuous production.
• Lower investment in Stock, plant and machinery.
• Flexibility to accommodate and process number of products.
• Job satisfaction exists for operators.
Limitations
• Material handling is complex because of irregular and longer flows.
• Production planning and control is complex.
• Work in process inventory is higher compared to continuous production.
• Higher set up costs due to frequent changes in set up.

Batch production Examples
• Newspapers
• Magazines
• Clothing
• Computer Chips
• Computer Software
• Medicine
• Machine Tools, etc.

MASS PRODUCTION
• Mass production refers to the manufacturing of large quantities of products using
efficient methods. Mass production is typically accomplished by using assembly
lines, automation technology or robotics. Manufacturers who use mass production
techniques must establish highly organized methods of production.
• Manufacture of discrete parts or assemblies using a continuous process are called
mass production.
• This production system is justified by very large volume of production.
• The machines are arranged in a line or product layout.
• Product and process standardization exists and all outputs follow the same path.

Characteristics
Standardization of product and process sequence.
Dedicated special purpose machines having higher production capacities and output rates.
Large volume of products.
Shorter cycle time of production.
Lower in process inventory.
Perfectly balanced production lines.
Flow of materials, components and parts is continuous and without any back tracking.
Production planning and control is easy.
Material handling can be completely automatic.

Advantages and Disadvantages
Advantages of mass production:
• Higher rate of production with reduced cycle time.
• Higher capacity utilization due to line balancing.
• Less skilled operators are required.
• Low process inventory.
• Manufacturing cost per unit is low.
Limitations
• Breakdown of one machine will stop an entire production
line.
• Line layout needs major change with the changes in the
product design.
• High investment in production facilities.
• The cycle time is determined by the slowest operation.

Examples
• Today, some manufacturers use robotics to mass produce goods and keep
up with competitors.
• For example, CMC Food, a food manufacturer in New Jersey, invested in
robots to speed up the manufacturing process. One of their robots is used
for palletizing at a speed of 144,000 eggs per hour.
• In the past, workers had to feed 10 dozen eggs into a machine at one time.
• Coca Cola
• Pepsico
• Mapro
• HUL
• ITC
• https://www.youtube.com/watch?v=YtNft4FYkDw
• https://www.youtube.com/watch?v=IWBdOMHoD-U

CONTINUOUS PRODUCTION
Continuous production system involves a continuous or
almost continuous physical flow of materials. It makes
use of special purpose machines and produces
standardized items in large quantities. The examples
are petrochemical, cement, steel, sugar and fertilizer
industries, etc.
Production facilities are arranged as per the sequence of
production operations from the first operations to the
finished product. The items are made to flow through
the sequence of operations through material handling
devices such as conveyors, transfer devices, etc.

Characteristics:
Dedicated plant and equipment with zero flexibility.
Material handling is fully automated.
Process follows a predetermined sequence of operations.
Component materials cannot be readily identified with final product.
Planning and scheduling is a routine action.
Standard products are manufactured, which have large demand throughout the year.
Standardized inputs and standardized sequence of operations, machine tools and equipment are used.
Division of labour is made more efficient.
Minimum and constant material handling.
Minimum flow of work at any point of time.
Small work in progress is involved.
Use of productivity techniques is feasible.
Minimum cost of production per unit is possible.
Rigid quality control is exercised.
More maintenance is required.

Advantages and disadvantages of
continuous production:
Advantages
• Standardization of product and process sequence.
• Higher rate of production with reduced cycle time.
• Higher capacity utilization due to line balancing.
• Manpower is not required for material handling as it is completely automatic.
• Person with limited skills can be used on the production line.
• Unit cost is lower due to high volume of production.
• High accuracy,
• Reduced material handling,
• Simple control process,
• Minimum wastage,
• Better materials /inventory control,
• Higher return on investments.
Limitations
• Flexibility to accommodate and process number of products does not exist.
• Very high investment for setting flow lines.
• Product differentiation is limited.
• Entire flow can disturb if any activity is disturbed.
• Heavy loss during slack demand period
• Rigid maintenance and upkeep of machines
• Customers’ tastes cannot be met as only one standard product is manufactured.
• Difficult to adjust to new situations and specifications.
• Special purpose machine tools are required.

Automation
Meaning and Definition, The Collin’s English
dictionary defines automation as “the
technique of making an apparatus, a process,
or a system operate automatically.”
It can be defined as "the creation and
application of technology to monitor and
control the production and delivery of
products and services.”

Examples
• https://www.youtube.com/watch?v=AHzj1dIoWak
• https://www.youtube.com/watch?v=2Qm_iHgFsPw
• https://www.youtube.com/watch?v=9CSWJ0NdqFI
• https://www.youtube.com/watch?v=ljOoGyCso8s
• https://www.youtube.com/watch?v=DzGJXRvLqVw
• https://www.youtube.com/watch?v=J130wKjw4PA
• https://www.youtube.com/watch?v=TubOzvqOCmI

Need and Types of Automation
Automated production systems can
be classified into three basic types:
Fixed Automation
Programmable automation
Flexible automation

Automation in Production system
Types of production automation
Product
Variety
Product Volume
Low High
Medium
High
Medium
Low
Programmable Automation
Flexible Automation
Fixed Automation

FIXED AUTOMATION
It is a system in which the sequence of processing (or assembly) operations
is fixed by the equipment configuration. The operations in the sequence
are usually simple. It is the integration and coordination of many such
operations into one piece of equipment that makes the system complex.
The typical features of fixed automation are:
• High initial investment for custom–Engineered equipment
• High production rates
• Relatively inflexible in accommodating product changes.
• The economic justification for fixed automation is found in products with
very high demand rates and volumes. The high initial cost of the
equipment can be spread over a very large number of units, thus making
the unit cost attractive compared to alternative methods of production.
Examples of fixed automation include mechanized assembly and
machining transfer lines.
https://www.youtube.com/watch?v=9Eq4C9ch-vk

PROGRAMMABLE AUTOMATION
In this the production equipment is designed with the capability to change the sequence of operations to
accommodate different product configurations. The operation sequence is controlled by a program, which is a set
of instructions coded so that the system can read and interpret them. New programs can be prepared and entered
into the equipment to produce new products.
Some of the features that characterize programmable automation are:
• High investment in general-purpose equipment;
• Low production rates relative to fixed automation;
• Flexibility to deal with changes in product configuration; and
• Most suitable for batch production.
• Automated production systems that are programmable are used in low and medium volume production.
• The parts or products are typically made in batches. To produce each new batch of a different product, the system
must be reprogrammed with the set of machine instructions that correspond to the new product.
• The physical setup of the machine must also be changed over: Tools must be loaded, fixtures must be attached to
the machine table also be changed machine settings must be entered. This changeover procedure takes time.
Consequently, the typical cycle for given product includes a period during which the setup and reprogramming
takes place, followed by a period in which the batch is produced. Examples of programmed automation include
numerically controlled machine tools and industrial robots.
• https://www.youtube.com/watch?v=OnyXqu4h9Iw

FLEXIBLE AUTOMATION
It is an extension of programmable automation. A flexible automated system is
one that is capable of producing a variety of products (or parts) with virtually no
time lost for changeovers from one product to the next. There is no production
time lost while reprogramming the system and altering the physical setup (tooling,
fixtures, and machine setting). Consequently, the system can produce various
combinations and schedules of products instead of requiring that they be made in
separate batches. The features of flexible automation can be summarized as
follows:
• High investment for a custom-engineered system.
• Continuous production of variable mixtures of products.
• Medium production rates.
• Flexibility to deal with product design variations.
• The essential features that distinguish flexible automation from programmable
automation are:
• the capacity to change part programs with no lost production time; and
• the capability to changeover the physical setup, again with no lost production
time.
https://www.youtube.com/watch?v=A3rj4WjaVCg
https://www.youtube.com/watch?v=ok4CvBfdpTs
• https://www.youtube.com/watch?v=psDO1rPFQ1Y

Advantages and Disadvantages
Advantages
• High productivity
• High Quality
• High flexibility i.e. Human
operator and Robots
• High Information Accuracy
• High safety
• Uniformity
• Lower cost
• Higher quality of life
• Faster production
• Less error
Disadvantages
• Initial costs
• Less flexibility
• Energy consumption
• Pollution
• Affects employees’
wellbeing
• Loss of jobs for unskilled
workers

Plant Location and Layout
Definition and
Objectives of Plant
Location,
Importance of
Location,
Locating Foreign
Operations Facilities,
Location Decision
Process;
Layout Planning:
Advantages and
Functions of Layout
Planning,
Principles of Layout,
Objectives of a Good
Plant Layout, Factors
for a Good Plant
Layout, Types of
Layout

Definition and Objectives of Plant
Location Decision
Plant location refers to the choice of the region where men, materials,
money, machinery and equipment are brought together for setting up a
business or factory.
A plant is a place where the cost of the product is kept to low in order to
maximize gains.
Identifying an ideal location is very crucial, it should always maximize the
net advantage, must minimize the unit cost of production and distribution.
Plant location decisions are very important because once the plant is
located at a particular site then the organization has to face the pros and
cons of that initial decision.

Need / Objectives
for Plant Location
Decision
Starting New
Business
Identification of
Region
Dimensional
Analysis
Expanding existing
business
Manufacturing of
new product
Nearness to Target
market
Different
processes
Locating Globally
Virtual Proximity /
Logistics
Economic Factors

Importance of
Location
Determines operating
and capital costs.
Determines the
nature of investment
costs
Allocation of capacity
to respective market
area.
Location fixes some
of the physical factors
of the overall plant
design

Physical and Virtual factors fixed by
right location
Heating and ventilation requirements,
Storage capacity for raw materials taking into
consideration their local availability,
Transportation need for raw materials and finished
goods
Power need
Costs of labor
Taxes
Land
Construction
Fuel
Waste Management etc.

Global Location: Facilitating Factors
• Two key factors have contributed to the attractiveness of
globalization:
– Trade Agreements such as
• North American Free Trade Agreement (NAFTA)
• General Agreement on Tarriffs and Trade (GATT)
• U.S.-China Trade Relations Act
• EU and WTO efforts to facilitate trade
– Technology
• Advances in communication and information technology

Global Location: Benefits
• A wide range of benefits have accrued to
organizations that have globalized operations:
– Markets
– Cost savings
– Legal and regulatory
– Financial
– Other

Global Location: Disadvantages
• There are a number of disadvantages that
may arise when locating globally:
– Transportation costs
– Security costs
– Unskilled labor
– Import restrictions
– Criticism for locating out-of-country

Global Location: Risks
• Organizations locating globally should be
aware of potential risk factors related to:
– Political instability and unrest
– Terrorism
– Economic instability
– Legal regulation
– Ethical considerations
– Cultural differences

Managing Global Operations
• Managerial implications for global operations:
– Language and cultural differences
• Risk of miscommunication
• Development of trust
• Different management styles
• Corruption and bribery
– Increased travel (and related) costs
– Challenges associated with managing far-flung operations
– Level of technology and resistance to technological change
– Domestic personnel may resist locating, even temporarily

Location
Decision
Process
Step 1 Identify
Dominant
Location
Factors.
Step 2
Develop
Location
Alternatives.
Step 3
Evaluate
Location
Alternatives.

Factors affecting the plant location
Availability of
raw materials
Nearness to the
market
Availability of
labor
Transport
facilities
Availability of
fuel and power
Availability of
water
Suitability of
climate
Government
policies
Availability of
finance
Competition
between states
Availability of
facilities
Disposal of
waste
Political
conditions

Factors for determining a foreign
business location
The people
Costs
Innovation
Government regulations
Infrastructure,
Labour characteristics,
Government and political factors and economic factors.
Availability of labour force and Quality of labour force,
Existence of modes of transportation,
Quality and reliability of modes of transportation,
Quality and reliability of utilities,
Wage rates,
Motivation of workers,
Telecommunication systems,
Record of government stability and industrial relations laws.
Protection of patents,
Availability of management resources

Plant Layout
• Plant layout refers to the physical arrangement of
production facilities. It is the configuration of
departments, work centers and equipment in the
conversion process. It is a floor plan of the physical
facilities, which are used in production.

Plant Layout
According to Moore “Plant layout is a plan of an
optimum arrangement of facilities including
personnel, operating equipment, storage space,
material handling equipment and all other
supporting services along with the design of best
structure to contain all these facilities”.

Objectives of Plant Layout
Streamline the flow of
materials through the plant.
Facilitate the manufacturing
process.
Maintain high turnover of in-
process inventory.
Minimize materials handling
and cost.
Effective utilization of men,
equipment and space.
Make effective utilization of
cubic space.
Flexibility of manufacturing
operations and arrangements.
Provide for employee
convenience, safety and
comfort.
Minimize investment in
equipment.
Minimize overall production
time.
Maintain flexibility of
arrangement and operation.
Facilitate the organizational
structure.

Principles of Plant Layout
Principle of integration: A good
layout is one that integrates men,
materials, machines and
supporting services and others in
order to get the optimum
utilization of resources and
maximum effectiveness.
Principle of minimum
distance: This principle is
concerned with the minimum
travel (or movement) of man and
materials. The facilities should be
arranged such that, the total
distance travelled by the men
and materials should be
minimum and as far as possible
straight line movement should
be preferred.
Principle of cubic space
utilization: The good layout is
one that utilizes both horizontal
and vertical space. It is not only
enough if only the floor space is
utilized optimally but the third
dimension, i.e., the height is also
to be utilized effectively.
Principle of flow: A good layout is
one that makes the materials to
move in forward direction towards
the completion stage, i.e., there
should not be any backtracking.
Principle of maximum
flexibility: The good layout is one
that can be altered without much
cost and time, i.e., future
requirements should be taken into
account while designing the
present layout.
Principle of safety, security and
satisfaction: A good layout is
one that gives due consideration
to workers safety and
satisfaction and safeguards the
plant and machinery against fire,
theft, etc.
Principle of minimum
handling: A good layout is one
that reduces the material
handling to the minimum

Factors affecting on Plant Layout
Policies of management - future volume of production and expansion, size of the plant, integration of production processes; facilities to employees, sales
and marketing policies and purchasing policies etc.
Plant location - Topography, shape, climate conditions, and size of the site
Nature of the product - soap, sugar and breweries apply product type of layout. On the other hand in case of intermittent or assembly
industries, process type of layout best suited. For example, in case of industries manufacturing cycles, typewriters, sewing machines and
refrigerators etc., process layout method is best suited.
Volume of production - Job , Batch, Mass Production,
Availability of floor space
Nature of manufacturing process
Repairs and maintenance of equipment and machines.

Manufacturing processes
(i) Synthetic process:
Under this process two
or more materials are
mixed to get a product.
For example, in the
manufacture of cement,
lime stone and clay are
mixed.
(ii) Analytical process:
This is just the reverse
of synthetic process.
Under this method
different products are
extracted from one
material. For example,
from crude oil,
petroleum, gas,
kerosene and coal tar
etc. are extracted.
(iii) Conditioning
process: Under this
process the original raw
material is given the
shape of different
products and nothing is
added to it. Jute is an
important example of
this kind.
(iv) Extractive
process: This method
involves the extraction
of a product from the
original material by the
application of heat or
pressure. This involves
the process of
separation, for
example, aluminium is
separated from bauxite

• https://www.youtube.com/watch?v=YCNB-
OL9o4A HUL

Types of Plant Layout
Process layout
Product layout
Project/ Fixed position
layout
Group / Cellular layout

Process Layout / Functional Layout
Process layout is recommended
for batch production. All
machines performing similar
type of operations are grouped
at one location in the process
layout e.g., all lathes, milling
machines, etc. are grouped in the
shop will be clustered in like
groups.
Thus, in process layout the
arrangement of facilities are
grouped together according to
their functions. The flow paths of
material through the facilities
from one functional area to
another vary from product to
product. Usually the paths are
long and there will be possibility
of backtracking.
Process layout is normally used
when the production volume is
not sufficient to justify a product
layout. Typically, job shops
employ process layouts due to
the variety of products
manufactured and their low
production volumes.

Process Layout
Diagram
1
Diagram
2
https://www.youtube.com/watch?v=SFomXXXYMXw

Advantages of Process Layout
1. In process layout
machines are better
utilized and fewer
machines are required.
2. Flexibility of
equipment and personnel
is possible in process
layout.
3. Lower investment on
account of comparatively
less number of machines
and lower cost of general
purpose machines.
4. Higher utilization of
production facilities.
5. A high degree of
flexibility with regards to
work distribution to
machineries and workers.
6. The diversity of tasks
and variety of job makes
the job challenging and
interesting.
7. Supervisors will
become highly
knowledgeable about the
functions under their
department.

Limitations of Process Layout
1. Backtracking
and long
movements may
occur in the
handling of
materials thus,
reducing material
handling
efficiency.
2. Material
handling cannot
be mechanized
which adds to
cost.
3. Process time is
prolonged which
reduce the
inventory turnover
and increases the
in- process
inventory.
4. Lowered
productivity due
to number of set-
ups.
5. Throughput
(time gap between
in and out in the
process) time is
longer.
6. Space and
capital are tied up
by work-in-
process.

Product / Line Layout
In this type of layout, machines and
auxiliary services are located according to
the processing sequence of the product. If
the volume of production of one or more
products is large, the facilities can be
arranged to achieve efficient flow of
materials and lower cost per unit. Special
purpose machines are used which
perform the required function quickly and
reliably.
The product layout is selected when the
volume of production of a product is high
such that a separate production line to
manufacture it can be justified. In a strict
product layout, machines are not shared by
different products. Therefore, the
production volume must be sufficient to
achieve satisfactory utilization of the
equipment. A typical product layout is
shown in the following figure.

Product Layout
https://www.youtube.com/watch?v=LNC3O49
5ZQs

Advantages of Product Layout
The flow of product will be smooth and logical in flow lines.
In-process inventory is less.
Throughput time is less.
Minimum material handling cost.
Simplified production, planning and control systems are possible.
Less space is occupied by work transit and for temporary storage.
Reduced material handling cost due to mechanised handling systems and straight flow.
Perfect line balancing which eliminates bottlenecks and idle capacity.
Manufacturing cycle is short due to uninterrupted flow of materials.
Small amount of work-in-process inventory.
Unskilled workers can learn and manage the production.

Limitations
A breakdown of one machine in a product line may cause
stoppages of machines in the downstream of the line.
A change in product design may require major alterations
in the layout.
The line output is decided by the bottleneck machine.
Comparatively high investment in equipments is
required.
Lack of flexibility. A change in product may require the
facility modification.

Project / Fixed Position Layout
This is also called the project type of layout.
In this type of layout, the material, or major
components remain in a fixed location and
tools, machinery, men and other materials
are brought to this location.
This type of layout is suitable when one or a
few pieces of identical heavy products are
to be manufactured and when the assembly
consists of large number of heavy parts, the
cost of transportation of these parts is very
high.

Product

• https://www.youtube.com/watch?v=3iFVJgu7
Qmo
• https://www.youtube.com/watch?v=MfzufWo
8ld8

Advantages of Project / Fixed Position
Layout
Material movement is
reduced
Capital investment is
minimized.
The task is usually done by
group of operators, hence
continuity of operations is
ensured
Production centers are
independent of each other.
Hence, effective planning and
loading can be made. Thus
total production cost will be
reduced.
It offers greater flexibility and
allows change in product
design, product mix and
production volume.
Helps in job enlargement and
upgrades the skills of the
operators.
The workers identify
themselves with a product in
which they take interest and
pride in doing the job.
Greater flexibility with this
type of layout.
Layout capital investment is
lower.

Limitations of Fixed Position Layout:
(i) Highly skilled man
power is required.
(ii) Movement of
machines equipment’s to
production center may be
time consuming.
(iii) Complicated fixtures
may be required for
positioning of jobs and
tools. This may increase
the cost of production.

CELLULAR LAYOUT
Cellular manufacturing is a type of layout where machines are grouped according to
the process requirements for a set of similar items (part families) that require similar
processing.
These groups are called cells. Therefore, a cellular layout is an equipment layout
configured to support cellular manufacturing.
Processes are grouped into cells using a technique known as group technology (GT).
Group technology involves identifying parts with similar design characteristics (size,
shape, and function) and similar process characteristics (type of processing required,
available machinery that performs this type of process, and processing sequence).

CELLULAR LAYOUT
Cellular manufacturing is a manufacturing process that produces families of parts within a
single line or cell of machines operated by machinists who work only within the line or cell.
A cell is a small scale, clearly-defined production unit within a larger factory.
This unit has complete responsibility for producing a family of like parts or a product.
All necessary machines and manpower are contained within this cell, thus giving it a degree
of operational autonomy.
Each worker is expected to have mastered a full range of operating skills required by his or
her cell.
Therefore, systematic job rotation and training are necessary conditions for effective cell
development.

Advantages of cellular Layout
Cost. Cellular manufacturing
provides for faster processing
time, less material handling, less
work-in-process inventory, and
reduced setup time, all of which
reduce costs.
Reduced
Flow Time
Inventory
Reduction
Quality
Improvement
Job
Enlargement
Flexibility. Cellular
manufacturing allows for the
production of small batches,
which provides some degree of
increased flexibility. This aspect
is greatly enhanced with FMSs.
Motivation. Since workers are
cross-trained to run every
machine in the cell, boredom is
less of a factor. Also, since
workers are responsible for their
cells' output, more autonomy
and job ownership is present.

Disadvantages of cellular Layout
High Cost for small businesses
Hybrid systems
No fixed layout
Inconvenient for large variety
Skilled manpower

Cellular Plant Layout
https://www.youtube.com/watc
h?v=Ynhp8Wi2qwM

Guess the layouts suitable??
• Soup
• Paper
• Steel
• Ship
• Dam/Road
• Food Items
• Computer
• Car
• https://www.youtube.com/watch?v=oqtBtXs0mPw
• L& T Project
• https://www.youtube.com/watch?v=1zO-7tdmmMY Bat Making
• https://www.youtube.com/watch?v=bNaZy9rC-JM Patakhe making

Definition of Material Management,
Material Handling Principles and Practices
Criteria for Selection of Materials Handling Equipment,
Standardization, Codification, Simplification
Inventory Control: Definition and Importance of
Maintenance Management
Objectives of Maintenance Management
Types of Maintenance Systems
Materials and Maintenance Management

Meaning and Definition of Material
Management
‘Materials Management’ is a term used to connote
“controlling the kind, amount, location, movement
and timing of various commodities used in
production by industrial enterprises”.
Materials Management is the planning, directing,
controlling and coordinating those activities which
are concerned with materials and inventory
requirements, from the point of their inception to
their introduction into the manufacturing process.

Meaning and Definition of Material
Management
It is concerned with planning,
organizing and controlling the
flow of materials from their initial
purchase through internal
operations to the service point
through distribution.
Material management is a
scientific technique, concerned
with Planning, Organizing
&Control of flow of materials,
from their initial purchase to
destination.
https://www.youtube.com/watch?v=vb
0oCel7drY Hajmola

The Aims of Materials Management
Activities
1. The Right
quality
2. Right
quantity of
supplies
3. At the
Right time
4. At the
Right place
5. For the
Right cost
To get:

Basic needs of Material management
To have adequate materials in hand when needed
To pay the lowest possible prices, consistent with
quality and value requirement for purchases materials
To minimize the inventory investment
To operate efficiently

PURPOSE OF MATERIAL MANAGEMENT
To gain economy in
purchasing
To satisfy the demand
during period of
replenishment
To carry reserve stock
to avoid stock out
To stabilize
fluctuations in
consumption
To provide
uninterrupted client
services

Material Handling Principles and Practices
1. Effective management & supervision : It depends on managerial
functions of
• Planning
• Organizing
• Staffing
• Directing
• Controlling
• Reporting
• Budgeting
2. Sound purchasing methods
3.Skillful & hard controlled negotiations
4.Effective purchase system
5.Simplicity
6.Must not increase other costs
7.Simple inventory control programme

Points to remember while purchasing
Proper specification
Invite quotations from reputed firms
Comparison of offers based on basic price, freight & insurance, taxes and levies
Quantity & payment discounts
Payment terms
Delivery period, guarantee
Vendor reputation
(reliability, technical capabilities, Convenience, Availability, after-sales service, sales assistance)
Short listing for better negotiation terms
Seek order acknowledgement

Practices for Material Handling
Orientation – this principle promotes the assessment of any available system relationship prior to the preliminary
planning. It may include an evaluation of the problems and existing methods.
Plan : Use a team approach to design the material handling system, taking into account the organization's objectives.
Standardize : Be consistent in your choice of storage equipment, including bins, shelves and racks, as well as
equipment used to transport materials. Also, be consistent in your processes to minimize confusion and errors.
Simplify : Reduce, combine or eliminate as much movement as possible. For example, move finished goods directly to
the shipping dock rather than through the warehouse.
Energy –it considers the energy consumption during the handling process.
Ecology – it should have a minimum impact on the ecology.
https://hmhub.me/types-of-material-handling-
equipments/

Practices for Material Handling
Consider Ergonomics : Design your processes to eliminate repetitive motion, reduce manual labor and adhere to
safety standards.
Unitize : Wherever possible, move full pallets or containers to improve efficiency and reduce effort.
Organize : Working in an organized space is more efficient than working around clutter. It also means effectively
using space, including overhead space.
Systematize : Coordinate material handling across the entire enterprise. Consider all material movement when
you plan and systematize.
Go Green : Reuse and recycle equipment to reduce the environmental impact of your material handling. Reusable
packing, returnable containers and recycling packing materials can all contribute to more effective operations.
Automate : Employ automation wherever possible. Think of automated picking and put-away technologies. Invest
in conveyor systems. Automation boosts efficiency, consistency and responsiveness while increasing accuracy.
Evaluate Life-cycle Costs : When considering investing in material handling equipment, don't simply look at the
initial capital outlay. Account for the cost of consumables, training, installation, setup, maintenance and repair.
https://www.youtube.com/watch?v=M08LCcVAuUY

Material Handling Types
1. Manual Handling
This type of handling is where workers use their hands in moving individual containers.
They lift, lower, fill, empty, or carry the containers when transporting them. However, this
can be hazardous for workers since it exposes them to physical activities where they can
be injured.
In most cases, workers suffer from sprains and strains in their lower back, upper limbs,
and shoulders.
Recent ergonomic developments made to reduce the risks in manual handling of
containers.
2. Automated Handling
Equipment is used in reducing or replacing manual handling of materials when
economically and technically feasible.
In fact, many of the material handling machines available today are semi-automated due
to human operator needs such as driving, unloading, or loading of containers that are
challenging and expensive to automate.
Thanks to the ongoing improvements in machine programming, sensing, and robotics,
there is a move to completely automate the handling of materials.
https://www.youtube.com/watch?v=Kagdu9DNwMk

Criteria for Selection of Materials
Handling Equipment
The following factors may be considered while selecting a material handling equipment:
(a) Material to be moved: The size of material, its shape, weight, delicacy, nature (solid, liquid, gas) and its chances of getting damaged during handling, etc., should be
considered.
(b) Plant buildings and layout: Widths of aisles, inequality in floor levels, width of the doors, height of the ceiling, strength of floor and walls, columns and pillars etc., to a great
extent influence the choice of a material handling equipment. For example, low ceiling heights may not permit stacking of palletized materials, weak roofs limit the use of
overhead conveyors and steps between two floors will not allow trucks to operate.
(c) Type of production machines: Different machines have different outputs per unit time. The material handling equipment should be able to handle the maximum output.
(d) Type of material flow pattern: A vertical flow pattern will require elevators, conveyors, pipes etc., whereas horizontal flow pattern will need trucks, overhead bridge
cranes, conveyors, etc.
(e) Type of production: The type of production affects to a large extent the selection of the material handling equipment. Conveyors are more suitable for mass production on
fixed routes and powered trucks for batch production; because conveyors though costly, can handle more volume of production per unit time as compared to trucks, whereas
a truck is more flexible equipment.
(f) Cost of material handling equipment.
(g) Handling costs.
(h) Life of the equipment.
(i) Amount of care and maintenance required for the material handling equipment.
(j) Maintenance of Material Handling Equipments: The proper maintenance of material handling equipment is extremely essential for preventing the occurrence of
bottlenecks or points of congestions. Production line flow can be maintained only if the material handling equipment is in the proper working order.
https://www.youtube.com/watch?v=BBWPIByOEfI

Standardization
Standardization is the process of creating standards to
guide the creation of a good or service based on the
consensus of all the relevant parties in the industry. The
standards ensure that goods or services produced in a
specific industry come with consistent quality and are
equivalent to other comparable products or services in the
same industry.
Standardization also helps in ensuring the safety,
interoperability, and compatibility of goods produced. Some of
the parties involved in the standardization processes include
users, interest groups, governments, corporations, and
standards organizations.
https://www.youtube.com/
watch?v=M08LCcVAuUY

Codification
Codification of materials can
also be termed as the
identification of materials. This
deals with uniquely identifying
each item in the inventory.
For example
01 – Raw materials
02 – Purchased components
03 – Spare parts
04 – Tools
05 – Fixtures and Patterns
06 – Other supplies
07 – Work-in-process material
08 – Finished goods
09 – Capital Equipment

ABC ANALYSIS
(ABC = Always Better Control)
This is based on cost criteria.
It helps to exercise selective control when confronted with large number of items it
rationalizes the number of orders, number of items & reduce the inventory.
About 10 % of materials consume 70 % of resources

‘A’ ITEMS
Small in number, but consume large amount of
resources
Must have:
•Tight control
•Rigid estimate of requirements
•Strict & closer watch
•Low safety stocks
•Managed by top management

‘B’ ITEM
Intermediate
Must have:
•Moderate control
•Purchase based on rigid requirements
•Reasonably strict watch & control
•Moderate safety stocks
•Managed by middle level management

‘C’ ITEMS
Larger in number, but consume lesser amount of resources
Must have:
•Ordinary control measures
•Purchase based on usage estimates
•High safety stocks
ABC analysis does not stress on items those are less costly but may be vital

200000
500
20
199500
500
19
199000
500
18
198500
500
17
198000
500
16
197500
500
15
197000
500
14
196500
500
13
196000
1500
12
194500
1500
11
193000
1750
10
191250
2750
9
188500
4000
8
184500
4500
7
180000
5000
6
175000
7500
5
167500
7500
4
160000
20000
3
140000
50000
2
90000
90000
1
CUMMULATIVE
CUMMULATIVE
COST
COST [Rs.]
ANNUAL COST
ANNUAL COST
[Rs.]
ITEM
ITEM COST %
COST %
ITEM %
ITEM %
70 %
70 %
20 %
20 %
10 %
10 %
10 %
10 %
20 %
20 %
70 %
70 %
ABC
A
N
A
L
Y
S
I
S
WORK
SHEET

Systems of Codification:
The common code systems, among the many used
for stores (materials) are given below:
Alphabetic system,
Simple numeric or sequence system,
Combination system,
Block system,
Decimal system,
Numerical system,
Six letter – nine letter codes.
Barcode etc.

Advantages /Objective of Codification
To identify correctly, to avoid multiplication of items, to save time and labour, to facilitate easy location and proper
functioning of the storehouse, a proper codification is to be evolved so as to obtain the following benefits:
1. To avoid long and unwieldy description.
2. To have accurate and logical identification.
3: To prevent duplication.
4. To standardize items.
5. To reduce varieties.
6. To have an efficient purchasing department.
7. To obtain efficiency in recording and accounting.
8. To simplify and facilitate mechanical recording.
9. To simplify and facilitate pricing.
10. To have proper system of location and indexing.
11. To assure correct and efficient inspection; and
12. To implement production as planned.

Simplification
The concept of simplification is closely related to
standardization.
Simplification is the process of reducing the
variety of products manufactured.
Simplification is concerned with the reduction of
product range, assemblies, parts, materials and
design.

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

Computerized Maintenance
Management System

Inventory control
It means stocking adequate number and kind of
stores, so that the materials are available
whenever required and wherever required.
Scientific inventory control results in optimal
balance

Functions of inventory control
•To provide maximum supply service, consistent
with maximum efficiency & optimum investment.
•To provide cushion between forecasted & actual
demand for a material

Economic order of quantity
EOQ = Average Monthly Consumption X Lead Time [in months] + Buffer Stock – Stock
on hand
CARRYING
COST
PURCHASING
COST
ECONOMIC ORDER OF
QUANTITY(EOQ)

•Re-order level: stock level at which fresh order is
placed.
•Average consumption per day x lead time +
buffer stock
•Lead time: Duration time between placing an
order & receipt of material
•Ideal – 2 to 6 weeks.

VED ANALYSIS
• Based on critical value & shortage cost of an item
–It is a subjective analysis.
•Items are classified into:
Vital:
•Shortage cannot be tolerated.
Essential:
•Shortage can be tolerated for a short period.
Desirable:
Shortage will not adversely affect, but may be using more resources. These
must be strictly Scrutinized
V E D ITEM COST
A AV AE AD CATEGORY 1 10 70%
B BV BE BD CATEGORY 2 20 20%
C CV CE CD CATEGORY 3 70 10%
CATEGORY 1 - NEEDS CLOSE MONITORING & CONTROL
CATEGORY 2 - MODERATE CONTROL.
CATEGORY 3 - NO NEED FOR CONTROL

SDE ANALYIS
Based on availability
Scarce
Managed by top level management
Maintain big safety stocks
Difficult
Maintain sufficient safety stocks
Easily available
Minimum safety stocks
FSN ANALYSIS
Based on utilization.
Fast moving.
Slow moving.
Non-moving.
Non-moving items must be periodically reviewed to prevent expiry
& obsolescence
HML ANALYSIS
Based on cost per unit
Highest
Medium
Low
This is used to keep control over consumption
at departmental level for deciding the frequency of physical verification.

PROCURMENT OF EQUIPMENT
Points to be noted before purchase of an
equipment:
•Latest technology
•Availability of maintenance & repair facility, with minimum down time
•Post warranty repair at reasonable cost
•Upgradeability
•Reputed manufacturer
•Availability of consumables
•Low operating costs
•Installation
•Proper installation as per guidelines

HISTORY SHEET OF EQUIPMENT:
History sheet
Name of equipment
Code number
Date of purchase
Name of supplier
Name of manufacturer
Date of installation
Place of installation
Date of commissioning
Environmental control
Spare parts inventory
Techn. Manual / circuit
diagrams / literatures
After sales arrangement
Guarantee period
Warranty period
Life of equipment
Down time / up time
Cost of maintenance
Unserviceable date
Date of condemnation
Date of replacement
Collect the information on a paper about any equipment with reference to above list
form your home.
Eg. TV, Car, Two Wheeler, Laptop, Mobile

Class Activity
• Collect the information on a paper about any
equipment with reference to above list form
your home.
• Eg. TV, Car, Two Wheeler, Laptop, Mobile

Maintenance
Objectives of Maintenance
Management
Types of Maintenance Systems
• Preventive Maintenance
• Corrective maintenance
• Regular maintenance

Maintenance
Maintenance is the function whose objective is to ensure the fullest availability of production
equipment, utilities and related facilities at optimal cost and under satisfactory conditions of quality,
safety and protection of the environment.
Design-out
maintenance
This is also known as plant improvement maintenance, and its object is to improve the operation,
reliability or capacity of the equipment in place. This sort of work usually involves studies, construction,
installation, start-up and tuning.
Preventive
maintenance
The principle of preventive maintenance is anticipation. It is put into practice in two forms: systematic
(periodic) maintenance and condition-based maintenance.
Corrective
maintenance
Also called breakdown maintenance, palliative or curative maintenance. This form of maintenance
consists of: - troubleshooting on machines whose poor condition results in stoppage, or in operation
under intolerable conditions; repairs.
Systematic
maintenance
This consists of servicing equipment at regular intervals, either according to a time schedule or on the
basis of predetermined units of use (hours of operation or distance travelled). The aim is to detect failure
or premature wear and to correct this before a breakdown occurs. The servicing schedule is usually
based on manufacturers’ forecasts, revised and adjusted according to experience of previous servicing;
this information is recorded in the machine file. This type of maintenance is also called periodic
maintenance.
Condition-based
maintenance
This type of maintenance, also called predictive or auscultative maintenance, is a breakdown-prevention
technique which requires no dismantling, as it is based on inspection by auscultation of the equipment
involved. It requires continuous observation of an item of equipment in order to detect possible faults or
to monitor its condition.
Planned
maintenance
Maintenance which is known to be necessary sufficiently in advance for normal planning and
preparation procedures to be followed.
Unplanned
maintenance
This is maintenance which is not carried out regularly as the need for it is not predictable; it is sometimes
called unscheduled maintenance.

Objectives of maintenance management /Systems
to optimize the reliability of equipment and infrastructure;
to ensure that equipment and infrastructure are always in good condition;
to carry out prompt emergency repair of equipment and infrastructure so as to secure the
best possible availability for production;
to enhance, through modifications, extensions, or new low-cost items, the productivity of
existing equipment or production capacity;
to ensure the operation of equipment for production and for the distribution of energy
and fluids;
to improve operational safety;
to train personnel in specific maintenance skills;
to advise on the acquisition, installation and operation of machinery;
to contribute to finished product quality;
to ensure environmental protection.

Maintenance sheet:
Annual maintenance contract [AMC]
Starting date
Expiry date
Service / repair description
Materials / spares used
Cost of repairs
In-house
Outside agency

EQUIPMENT MAINTENANCE & CONDEMNATION
Maintenance & repairs:
Preventive maintenance
Master maintenance plan
Repair of equipment

PREVENTIVE MAINTENANCE
•Purchase with warranty & spares.
•Safeguard the electronic equipments with: (as per guidelines)
•Voltage stabilizer, UPS
•Automatic switch over generator
•Requirement of electricity, water, space, atmospheric conditions,
etc. Must be taken into consideration
•Well equipped maintenance cell must be available
•All equipment must be operated as per instructions with trained
staff
•Monitoring annual maintenance contracts. (AMC)
•Maintenance cell
•Communications between maintenance cell & suppliers of the
equipment.
•Follow-up of maintenance & repair services
•Repair of equipment
•Outside agencies
•In-house facility

CONDEMNATION & DISPOSAL
Criteria for condemnation:
The equipment has become:
1. Non-functional & beyond economical repair
2. Non-functional & obsolete
3. Functional, but obsolete
4. Functional, but hazardous
5. Functional, but no longer required

PROCEDURE FOR CONDEMNATION
1. Verify records.
2. History sheet of equipment
3. Log book of maintenance & repairs
4. Performance record of equipment
5. Put up in proper form & to the proper authority

DISPOSAL
1. Circulate to other units, where it is needed
2. Return to the vendor, if willing to accept
3. Sell to agencies, scrap dealers, etc
4. Auction
5. Local destruction

Case Study – Read and analyze
• https://news.sap.com/india/2020/03/inventory-
management-ananda-diary-growth/
• SAP
• https://youtu.be/lYCEQqSM08I SAP
• https://www.youtube.com/watch?v=zERrqLFotSY Amazon
• https://www.youtube.com/watch?v=Y-lBvI6u_hw Amazon
• https://www.youtube.com/watch?v=bn5jjVKhFUs
Automated Warehousing – new trend in inventory mgt
• https://www.youtube.com/watch?v=WIlS3vNSuQ4
Automated guided vehicles

CONCLUSION
Material management is an important management tool which will be very
useful in getting the right quality & right quantity of supplies at right time,
having good inventory control & adopting sound methods of condemnation &
disposal will improve the efficiency of the organization & also make the
working atmosphere healthy any type of organization, whether it is Private,
Government ,Small organization, Big organization and Household.
Even a common man must know the basics of material management so that he
can get the best of the available resources and make it a habit to adopt the
principles of material management in all our daily activities

Unit 4 - Production Planning and
Production Control
Production Planning:
Meaning,Objectives,
Scope, Importance &
Procedure of Production
Planning, Routing
Scheduling,
Master Production
Schedule, Production
Schedule, Dispatch, Follow
up.
Production Control-
Meaning, Objectives,
Factors affecting
Production Control.

Production Planning: Meaning
Production is the most important activity of an enterprise.
It occupies significant place in an organisation because
other functional areas of management viz., financing,
marketing, personnel revolve around it.
Production is concerned with transforming raw material
into finished product with the help of energy, capital,
manpower and machinery and is a very complex and
tedious process.

Meaning:
• Production planning involves the means by
which a manufacturing plan is determined,
information issued for its execution, data
collected and recorded, which will enable the
plant to be controlled through all its stages. A
few definitions are given here in order to have
clear understanding of the term ‘Production
Planning’.

Definition
• Production is carried on by following various production policies initiated
by production department of an organisation. The aim of a good
production policy is to achieve maximum output with minimum input. It is
of vital importance that production department of the organisation should
be managed in such a manner as to ensure economy in material resources
and production time.
• Production management is primarily concerned with formulation and
design of various production policies.
• According to Elwood S. Buffa, “In a broader sense, production
management is concerned with coordination of materials, men, methods,
machines and money in manufacturing goods. In a narrow sense it means
planning, scheduling and controlling the flow of materials through a
plant”.
• In simple words, it can be concluded that production management is
concerned with decision making relating to processes for producing goods
and services in accordance with the pre-determined specifications and
standards by incurring minimum costs.

• “The planning of industrial operations involves four considerations,
namely, what work shall be done, how the work shall be done and
lastly, when the work shall be done”.
—Kim bait and Kimball Jr.
• “The technique of forecasting or picturing ahead every step in a
long series of separate operations, each step to be taken in the right
place of the right degree and at the right time and each operation
to be done at maximum efficiency.
—Alford and Beatty
• “Production planning is a series of related and co-ordinated
activities performed
by not one but a number of different departmental groups, each
activity being to systematise in advance the manufacturing efforts
in its area. ”
—Bethel, At water. Smith others

Objectives of Production Planning:
1. To achieve coordination among various departments relating to production..
2. To make adequate arrangement of men, money, materials, machines tools, implements and equipment relating to production.
3. To decide about the production targets to be achieved by keeping in view the sales forecast.
4. To keep production operation continuous.
5. To achieve desired share of the market.
6. To fix right type of man for right type of job.
7. To achieve the desired level of profit.
8. To make all arrangements to remove possible obstacles in the way of smooth production.
9. To achieve economy in production cost and time.
10. To initiate production on modern lines.
11. To operate the plant at planned level of efficiency.
12. To develop alternative plans in order to meet any emergency or contingency.

Scope and importance of Production
Planning
• Effective utilization of resources.
• Steady flow of production.
• Estimate the resources.
• Ensures optimum inventory.
• Coordinates activities of departments.
• Minimize wastage of raw materials.
• Improves the labour productivity.
• Helps to capture the market.
• Provides a better work environment.
• Facilitates quality improvement.
• Results in consumer satisfaction.
• Reduces the production costs.
• https://youtu.be/-ovNi1cB7a4 Boing Air Plane

Functions of Production Planning
Materials Function - In order to adequately eliminate waste, high inventory cost, and other inefficiencies within production, production
planning measures the amount of materials that are needed within a certain time period, which then enables raw materials and other
components to be delivered to the facility within a timely manner, ultimately saving the production facility money.
Equipment - Production planning analyzes equipment downtime or maintenance schedules and enables production to keep flowing
efficiently. This further enables the production facility to stay efficient and on-time with future orders from customers.
Methods - This function of production planning analyzes possible alternatives and schedules that production is able to follow. The
software generates various schedules and then chooses the most advantageous one that is suited for the operation and locates any
constraints that are hindering production.
Routing - Routing is a feature of production planning that oversees how raw materials are transformed throughout the production
process and turned into a finished product. The software is also able to locate the most advantageous path for raw materials to follow.
Estimating - After a process sheet is available, you can then estimate total operation time. This feature of the software is carried out
utilizing analysis on areas of operations such as routing, raw materials, and various other areas of production.
Dispatching - Dispatching includes execution, in which this process pertains mainly to setting production activities in motion through
instructions. This function will then take control of production through material releasing, component, and tools to the operator.
Expediting/Evaluation - Expediting pertains to overseeing the progress of production, which then coordinates the execution of the
production plan. This is then transferred over to evaluation, in which this state includes evaluating the production process as a whole. This
aids in identifying areas where productivity is lacking and implements a strategy to improve a particular area.

Production and Operations Management.pptx

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