M.

com (2017-2018) Operation and Production Management

Operation and
Production Management
Teacher:
Syed Hamza Rasool

Compiled by: Saif Ali

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M.com (2017-2018) Operation and Production Management

Special Thanks

Mehak Saleem, Saba Younus, Arooj, Madiha, Hajra

Faiqa, Ayesha Mughal,
Roshan, Eman, Kainat, Mehak Ghafoor, Ayun Butt,
Zainub, Sidra, Anita,
Sumbal Shah, Asma Hammad
Madiha, Naila (G.R), Kinzah,
Abdullah, Atique, Nasir, Kamran, Faisal
And Whole M.com (part II)
You guys did well
And Finally thanks to:
Sir Syed Hamza Rasool

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M.com (2017-2018) Operation and Production Management

Operation and Production Management Course Outline:

Chapter 1: Introduction:-
 Definition of operations management  Traits of a good operations manager
 Nature and scope of operation  Importance of operation management
management  Interaction of operations with other
 Types of operations functional areas of business
 Primary functions of operations
management
Chapter 2: Administration Vs. Management Business:-
 Defining business  Profit and profit only
 Business model and profitability  Service and service only
 Objectives of business  Profit through services
Chapter 3: Capital Formation:-
 Sources of finance  Anticipation, acquisition and allocation
 Merits and demerits of owner's equity of funds
 Merits and demerits of debt equity
Chapter 4: Business Feasibility Study:-
 Introduction  Dimensions of business viability
 Importance of feasibility study  Outline of business feasibility study
Chapter 5: Location, Planning and Analysis:-
 Objectivity of location  Professional decision making through
 Factors influencing the location weighted index.
 Best possible choice of plant location
Chapter 6: Process Selection:-
 Processor types  Product and service processes
Chapter 7: Plant Layout:-
 Importance of plant layout  Product layout
 Kinds of layout  Selection of best layout
 Process layout
Chapter 8: Purchase Policy:-
 Importance of purchasing  Purchasing interfaces
 Duties of purchaser  The purchasing cycle
Chapter 9: Functions of Purchasing Department:
 Purchasing function  Purchasing policy
Chapter 10: Planning and Controlling Production:
 Routing  Inventory control
 Scheduling  Follow up
Chapter 11: Role Of Foreman:-
 Features  Human relations
 Technical contribution  Organizational contribution
Chapter 12: Product and Service Design:-
 Features of a product  Development of design
 Reasons for product or service design
Chapter 13: Standardization:-
 Kinds of standards:  Merits and demerits of standardization:
 Industrial standards  To the manufacturer
 Customer standards  Who the wholesaler
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 To the customer
Chapter 14: Simplification:-
 Meaning  Progress of manufacturer
 Steps in simplification  Objectives of simplification
Chapter 15: Quality Control And Inspection:-
 Meaning  Development of inspection program
 Dimensions of quality  Types of inspection
 Quality control  Onsite inspection
 Inspection  Centralized inspection

Q. Briefly explain the evaluation of scientific management and its development?

Outline:
 Evolution of scientific management.
 Time theory by Fredrick Winslow Taylor.
 Motion study by Fredrick & Gilbert.
 Implementation of scientific management by Henry Ford.
Introduction:-
Modern management theory was ban 1911, might be logical choice. That’s why the year
Fredrick Winslow Taylor’s “Principles of Science management” was published. Its contents widely
accepted by managers around the world. The scientific management era brought wide spread change
to management of factories. Taylor believed in scientific management “based on observation,
measurements, analysis and improvement of methods and economies incentives.” Taylor also believe
that management should be responsible for planning, carefully starting & training workers, finding the
best way to perform each job, achieving corporation between management and workers and
separating management activities from work activities.
Industrial Revolution:-
The industrial revolution was a period from ‘18th’ to ‘19th’ century where major change in
organization, transportation and technology had a deep effect on socio-economic and cultural
conditions of Britain. The revolution spread from Britain to throughout Europe and North America and
eventually the world.
Definition:-
“It is the art of knowing exactly what is to be done in the best and the cheapest way.”
Founder and Developer:-
 Fredrick W. Taylor
 Henry L. Gantt
 Frank & Lillian
1. Time Theory Major Contribution to Scientific Management:
Fredrick Taylor (mechanical engineer) published “Principle Scientific Management” (1911) “One
best way to do job” appropriate solution of workers training and environment.
“Experiments with loading iron blocks and shovel size, financial incentives; the fundamentals are:
1. Find a best practice and use a benchmarking.
2. Decompose the task into constituents- new called business process redesign.
3. Get rid of things that don’t add value.
 Scientific Management Principles:-

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1. Scientific Job Analysis:-
Replacing the rule by thumb scientific method. The job requirements and skills required to
perform that very job should analyzed scientifically.
2. Solution of Personnel:-
Selecting, training and develop the workman according to scientifically.
3. Management corporation:-
Divisions of work and responsibility methods are being followed.
4. Functional Supervision:-
Cooperation between management and worker divide work equally.
Explanation:-
Scientific studies show that a person can be handled between 47 – 48 tons per day (1st p). We
observed a ------- for 3-4 days. Selected the best for finally selected Schmidt____________, Dutchman
2nd P SALARY WAS INCREASE FROM $1.15 to $ 1.85 per day. Schmidt had to load 47 tons per day and
management world provide a man instruct him in attaining this goal 3P. a man from management
accomplished him, instructed him, corporates him. 4P.
Result:-
Schmidt Loaded 47.5 tons per day, increment of more than 200 1/2 , Schmidt got high salary maximum
benefit to both employees and employee.
Limitation of Theory by Fredrick Time Theory:-
The following are the limitations of Fredrick time theory;
1. Exploitation of Workers:-
Taylor’s scientific management put unnecessary pressure on the employees to perform the work
faster.
2. Problem of Unity of Command:-
Taylor used functional foremanship so the workers have to report eight bosses.
3. Mechanical Report:-
He gave too much importance to efficiency; he did not consider the human elements.
4. Problem of Separation of Planning from doing:-
He believed in separation, where as we cannot separate planning from doing. The planner should
be engaged.
5. Individualistic Approach:-
The successes of organization depend not only on individual performance of worker but also on
group performance.
6. Workers Assumption:-
He assumed that workers are only motivated by money. However in reality workers are motivated
not only financial incentives but by some needs and personal ego.
7. Narrow Application:-
His studies can be applied only when the performance of workers can be measured quantitatively.
Motion Study by Bunker Gilbert
Motion study is the study of individual human motions that are used in a job tasks. The purpose of
motion study is to try ensure that the job does not include any unnecessary motions or movements by
workers and to select sequence of motion that ensure the job is being carried out in the most efficient
manner possible.
Frank & William Gilbert (used camera and micro chronometer to analyze the motion of bricks laying;
fatigue and motion studies.
Definition:-

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“Analyzing an activity into its smallest possible element, and from the result synthesizing a
method of performing the activity that shall be more efficient.”
Principles of Motion Economy:-
The following are the four principles of motion economy.
1. Reduce the Number of Motion:-
Eliminate or reduce the number of motion.
2. Perform Motion Simultaneously.
Design improvement in methods and tools which allows both hand to be used at the same time.
3. Shorten Motion Distance:-
Reduce working; reduce stretching, squatting and troy.
4. Make Motion Easier:-
Work should be smooth and rhythmical reduce fatigue and promote safety.
Motion Economy Types:-
Principles concerning the economy of movement which have been developed from direct
experimentation and form goods basis for the development of improved method as the work place
they are classified as three main types.
a) Use of human body.
b) Arrangement of workplace.
c) Design tool and equipment.
A. Use of Human Body:-
When possible:
1. The two hands should begin and complete their movement at the same time.
2. The two hands should not be idle at the same time except during period of rest.
3. Motion of body arms should be made at the best lowest classification at which it is possible
to work.
4. Work should be managed so those eye movements are confined to a comfortable area
without the need for frequent change of forces.
B. Arrangement of the Workplace:-
1. Definite and fixed station should be provided for all tools and material to permit formation.
2. Tools and material should be pre-positioned to reduce searching.
3. Material and tools should be arranged to permit the best sequence of motion.
4. The colors of workplace should contrast with that of the work and thus reduce eye fatigue.
C. Design of Tools and Equipment:-
1. The hand should be relieved of all work of holding the work price.
2. Two or more tools should be combined whatever possible.

Location 2

Location 3 Location 1

Workers

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Implementation of Scientific Management by Henry Ford:-
Greatest industrialist, employed scientific management techniques in his factories.
 Henry Ford was a “Pioneer in mass production”.
 Implemented the “assembly line”.
 Increase production ten-fold (ten times).
 Product price reduction led to increase market which led to increase profit.
 Replaced workers with machine for heavy lifting and moving.
 Applied to total car assembly, improving car efficiency and reducing work hours required to
produce a model-t Ford to less than two.

1. Role of Operation Manager

A primary function of operation manager is to guide the system by design making:

 System design decisions
 System operation decision
1. System Design Decisions:
“Decision concerning capacity, location, arrangement of Departments, product and services
planning and acquisition and placement of equipment"
i. Capacity:
Capacity means ability of production. The operation manager takes decision about capacity which
support all production goals including technology and resources. Operation manager need to know
how much capacity will be needed? How can the organization best meet capacity requirements?
ii. Facility Location:-
Location has a great impact on the overall risk cost and profit. Operation manager takes decision
about selecting new location and changing existing location. In developing a location strategy
considered supply chain and how the location will receive supplies the movement of goods services
internally and to customer's and the role of marketing and Public Relations in the location choice.
(What Is A Satisfactory Location For A Facility (Factory, Store Etc.)
iii. Facility Layout:-
Arranging resources with structure of organization so that all available resources are utilized in
better manner is called facility layout design. Operation manager take decision considered the
placement of desks, workstation's and how materials are delivered and used.
iv. Product AND SERVICE DESIGN:-
Production manager take design to find out what goods or services should we offer? What do
customers want? How can products and services are improved. This includes looking for ways to
implement consistency in costs, quality e and resources across all business decisions.
v. Acquisition And Placement Of Equipment:-
Operation manager decides where to get acquisition of required equipment? And how to place
these equipment in production plant? So that the use of this equipment increases the level of
output, wrong placement of equipment can disturb the overall flow of production.
These are typically strategies decisions that require:
1) Long Term Commitment of Resources:-
The goal of operations management is to maximize efficiency while producing goods and services
that effectively fulfill customer needs. Operations decisions include decisions that are strategic in

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nature, meaning that they have long-term consequences and often involve a great deal of expense
and resource commitments.
2) Determine Parameters Of System Design:-
Design parameters. Qualitative and quantitative aspects of physical and functional characteristics
of a component, device, product, or system that are input to its design process. Design parameters
determine cost, design, and risk trade-offs in the item's development.
2. System Operation Decision
System Operation:
“Decision concerning personal, inventory, scheduling, project management and quality assurance."
1) Inventory Management And Control:-
Operation manager plans and takes decisions for inventory management and control such as how
much to order? Which items should get the most attention? The famous techniques are FIFO LIFO
and average method. Operation management managers and controls the Inventory of the company
and innovative methods, search has just-in-time inventory control.
2) Scheduling:-
Scheduling is a process of arranging, controlling and optimizing work and workload in a production
process or manufacturing process, considered both production and people. Also questions such as
how much product is required to be produced for the customers in the required time? How many
machines are required to do the job effectively and efficiently?
3) Project Management:-
Project management involves planning and Organization of a company's resources to more a
specific task, event or duty towards completion. Which activities are the most critical to the
resources of a project? What are the pros of a project? Resources will be needed and when will
there be needed?
4) Quality Control:-
Quality control may be defined as a system that is used to maintain a desired level of quality in a
product or service. The manager identifies project defects and Rectifier them to ensure equality.
They take necessary decisions for ensuring that are process is performing quality e? What
standards to should be used? Are standards being met?
5) Management Of Personnel:-
Management of personnel can be defined as obtaining, using and maintaining a satisfied work it is
a significant part of Management concerned with employees at work and their relationships with
organization. Duplication managers focus on what is the best way to motivate employees? Can
productivity be improved? How to improve work methods?
Operation manager spend more time on system operation then other decision are:
They have virtual stake in system decision
Historical Evolution of Operational Management
Operation management was first recognized in the late 1700s or early 1800s. It can be e defined as
b set off of activities that creates goods and services throughout the transformation of inputs into
outputs. Operation management pertains to the production of services as well as physical goods
but it originated in manufacturing.
1. The Industrial Revolution:-
The industrial revolution began in Great Britain and many of the technological innovations were
of British origin. By the mid of 18th century British was the world's leading commercial Nation
global Trading Empire. Industrial revolution substituted power of human power. In the earliest day
of manufacturing goods was produced using crop production system in which highly skilled workers

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used. Simple and flexible tools to produce small quantities of customized goods crops production
had major shortcomings;
What Did Take Place?
 Production becomes first and low costly one.
 No-Economics of scale.
 Government of standard gauging systems.
 Success view rapidly.
 Provided countless jobs.
Despite the major changes that were taking place, theories and practice hair not progressed much
from early days. What was needed wan and enlightened and more systematic approach to
management?
2. Scientific Management:-
The scientific era brought widespread changes to the management of factories. The movement was
developed by Frederick Winslow Taylor who is often referred to as father of scientific
management.
Taylor believed in a "science of Management" it based on observations, measurement, analysis and
improvement of work methods and economic incentives.
 He is studying at work methods in great detail to identify the best method for doing each job.
 Taylor's methods emphasized maximizing output. It was one of the earliest attempts to apply
science to the engineering of processes and Management.
 Scientific management is sometimes known as Tylorism after its founder name, Fredrick
Winslow Taylor.
 Taylor began the theory's development in the United States during the 1880's and 1990's within
manufacturing industries specially steel mills.
Pioneer and contribution:-
Frank Gilberth:
Frank Gilberth was an industrial engineer who is often referred to as the father of motion study. He
developed the principles of motion economy that could be applied to incredibly small portions of a
task.
Henry Gantt:-
Henry Gantt recognized the value of non-monetary rewards to motivate workers and develop a
widely used system for scheduling, called a Gantt chart.
Herring Emerson:-
Herring Emerson applied Taylor's ideas to organization structure and encouraged the use of expert
to improve organizational efficiency.
Henry Ford:-
The great Industrialist employed scientific management techniques in his factories.
Concepts of scientific management:-
1. Mass production:-
Ford introduced the concept of mass production to the automotive industry, a system of
production in which large volumes of standardized goods are produced by low-skilled or semi-
skilled workers using highly specialized and often costly equipment. Ford was able to do this by
taking advantage of a number of important concepts
Definition:-
”Parts of product made to such precision that they do not have to be custom filled.”

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2. Interchangeable Parts:-
The concept of interchangeable was applied by Ell Whilney, an American inventor. The basis for
interchangeable parts is to standardize parts so that any part in a batch of parts would fit any
automobile coming down the Assembly line. This meant that parts did not have to be custom field,
as they were in craft production. The result was a tremendous decrease in assembly time and cost.
3. Division Of Labour:-
Second concept used by ford was the division of labour which Adam Smith wrote about in his book
"wealth of nation" (1776).
“Breaking up a production process into small talk so that each worker performs a small portion of
the overall job"
And operation is divided up into series of many small tasks, individual workers are assigned to one
of those talk unlike craft production where each worker was responsible for doing many tasks and
thus required skills, which division of labour the toss the were so narrow that Virtually no skill was
required. Together these concepts enable Ford to tremendously increase the production rate at his
factories using readily in expensive labor.
4. The Human Relations Movement:-
Whereas the scientific management movement heavily emphasized the technical aspects of work
design, the human relations movement emphasized the importance of the human element in job
design. A brief overview of major theories release during this period presented below:
In the following decades there was much emphasis on motivation:
Frederick W Taylor give principles of scientific management (1857 to 1911) led to the evolution of
scientific human resource management approach.
During 1930's Elton Mayo conducted studies at the Hawthorne division of Western electric. His
studies revealed that in addition to physical and Technical aspects of work, what motivation is
critical for improving productivity
Abraham Maslow developed motivational theories which Frederick Hertzberg predefined in
1950's.
Decision Models And Management Science:-
The factory movement it was accompanied by the development of several quantitative techniques.
F.W Harris develops a mathematical model for inventory order size in 1915.
H.F Dodge, H.G Romig and W. Shehart developed statistical procedures for Sampling and qualify
control in 1930.
C.H.C Tippett conducted studies that provided the groundwork for statistical sampling theory.
Those qualitative models were widely used in World War II.
These decision models were also used for forecasting, inventory management, and project
management other areas of Operation Management.
The influence of Japanese manufacturers:-
Japanese manufacturers developed management practices that increased the productivity and
quality of their products.
The new approaches emphasized equality and continual improvement, worker teams and
empowerment it and achieving customer satisfaction.
Japanese can be credited with spawning the "quality revolution" that is occurring in industrialized
countries and with generating widespread interest in time based management.
Companies which were outside Japan were interested in their approaches. Names of Japanese
companies are continuing for the foreseeable future.
Keys decisions of operation manager:

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The chief role of an operation manager is there of planner / decision maker. In this capacity the
operation manager expert considerable influence over the degree of which the goals and
objectives of the organization or realized. Most decisions involve many possible alternatives that
can have quite different impacts on cost or profits. Operations management professionals make a
number of key decisions that affect the entire organization.
Key Seasons typically include:
What:- what resources will be needed and in what amount.
When:- when will each resource be needed? Worker is scheduled? Materials and other supplies or
ordered? What is correct action needed?
Where:- where will the work done?
How:- How will the product or service be designed? How will the work be done? How will the
resources be allocated?
Who:- who will do the work?
Operational management decision making:-
It describes the general approaches two decision making including the use of models, quantitative
method and ethics etc.
Models:-
A model is an abstraction of reality, a simplified representation of something. For example a child's
toy car is a model of a real automobile. Models are of following three types.
Physical model:- they look like their real life components; e.g. Toy car and toy animals.
Schematic model:- they are more abstract than their physical components. e.g. Graphs and charts.
Mathematical models:- they are the most abstract but do not look like real life components; e.g.
Formulas and symbols.
Models play a significant role in OPM in decision making. They help the managers to you take
proper / good decisions, but they have some limitations too. The managers must use appropriate
models to avoid loss.
1. Quantitative Approaches:-
Approaches that are used to solve managerial problems mathematically are called quantitative
approaches. In large measures quantitative approaches to decision making in operational
management have been accepted because of calculations and computer capable of handling the
required calculations.
 Linear programming and related techniques are used for optimal allocation of scarce
resources.
 Inventory models are used for controlling inventory.
 Forecasting techniques are used for planning and scheduling.
 Quantitative approaches widely used for decision making but typically managers used a
combination of quantitative and qualitative approaches.
2. Performance Metrics:-
All managers use Matrix to manage and control operations. There are many matrices in use,
including those related to profits, cost, quality, productivity, flow-ability, assets, inventories,
schedules and forecast accuracy. Such techniques help the managers to make proper decision.
3. Analysis Of Trade Off:-
Operation managers encounter decision that can be described as trade off decisions. For example
in selecting a piece of equipment, manager must evaluate the merits and extra features relative to
the cost of those extra features. Managers sometime deal with these decisions by listing the

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advantages and disadvantages of a course of actions to better understand the consequences of the
decision they must make.

4. A Systems Approach:-
A system can be defined as a set of interrelated parts that must work together. In a business
organization the organization can be thought of as a system composed of subsystems. For example
marketing subsystem, finance and operations subsystem.
A system approach is essential whenever something is being designed, redesigned, implemented,
improved or otherwise changed. For example if the upcoming model of an automobile will add
anti-lock brakes the designer must take into account, how customer will view the change,
installation, re-installation cost and it's advertisement.
5. Establishing Priorities:-
In virtually every situation managers discover that certain issues or items are more important than
other recognizing this enables the managers to direct their efforts to where they will do the most
good.
"A few factors accounts for a high percentage of the occurrence of some events". This well noun
effect is referred to as the Pareto Phenomenon. It is an important concept of operation
management. It is an important concept of Operation Management.
6. Ethics:-
Operation managers like all other managers have the responsibility to make ethical decisions.
Ethical issues arise in many aspects of operations management, including work safety, product
safety, quality, the environment, the community, and workers’ rights.
In making decisions managers must consider how decision will affect shareholders, management,
employees and community at large.

Outline:
 Capital Formation
 Sources of Finance
 Merits and Demerits of Owner’s Equity
 Merits and Demerits of Debt Equity
 Anticipation, Acquisition and Allocation of Funds

Capital Formation (Introduction):-

A term is used to describe net capital accumulated during an accounting period. Capital formation
refers to net addition of capital stock such as equipment, building and other intermediate goods. A
nation uses capital stock in combination with labor to provide services and produce goods, an increase
in this capital stock is known as capital formation.
Definition:
“The act of increasing the stock of capital in the economy is given the name of capital formation”
Sources of Finance:
 It is rightly said that finance is the life blood of business.
 No business can be carried out without source of finance.
 There are several sources of finance and as such the finance has to be raised from the right
kind of source.

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Equity Fund:-
“Represent the personal investment of the owner(s) of a company.”
Debt Fund:-
“The financing that a small business owner has borrowed and must repay with interest.”
Source of Equity Funds:-
a. Personal savings e. Corporate venture capital
b. Friends and family members f. Venture capital companies
c. Angles g. Public stock sale
d. Partners
Sources of Debt Funds:-
a. Commercial banks
b. Non-banks
c. Federally sponsored programs
d. Internal method of financing
“Advantages and Disadvantages of Equity Finance”

1. Advantages of Equity Finance:-

“Equity finance, the process of raising capital through the sale of shares.”
i. The funding is committed to your business and your intended project. Investor only
realizes their investment if business is doing well. Through stock market.
ii. You will not have to keep up with cost of serving bank loan or debt finance allowing
you use the capital for business activities.
iii. Outsider investor expects the business to deliver value helping you explore and
execute ideas.
iv. Some businesses angles and venture capitalistic can bring valuable skills, contracts
and experiences to your business.
v. Investors have a vested interest in the business success, its growth profitability and
increase in value.
vi. Investors are often prepared to provide follow up funding as the business grows.
vii. Stable position in this case there is not burden of fixed interest charges. So business
concerns can
Face the crises of recessions.
viii. The asset of the business will remain with owner if business is liquidated.
ix. No financial problem, in the case of equity financing the business concerns has a
freedom from the financial worries of borrowing.
Disadvantages of Equity Funds:-

However, there are drawbacks of equity finance too,

i. Raising equity finance is demanding costly and time consuming and may take
management focus away from core business activities.
ii. Potential investors will seek comprehensive background information on you and
your business. They will look carefully at past results and faucets and will probe
the management team.
iii. Depending on the investors, you will lose certain of your power to make
management decisions.

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iv. You will have to invest management time to provide regular information for
investors to monitor.
v. Payments of income tax, in case of equity financing a firm pay more income tax
as compared to credit financing.
vi. Idle funds, sometimes funds obtained from owner funds remain un-utilized
which may cause more losses.
vii. Inability to make payment, increase of crises or lump sum a firm have sufficient
to pay day to day expenditures.

“Advantages and Disadvantages of Debt Funds”

When a firm obtains funds for business through borrowing is called debt financing.
i. Economy of Large Scale, by borrowing the capital business can be expanded on
large scale. Due to this various types of economies can be availed by the firms.
ii. Low Income Tax, when income tax is calculated, interest is deductible expenses
for income tax, so credit offer tax advantages.
iii. Short Term Loan, short term loans can be taken by the business concerns from
the banks and other sources to meet the urgent expenses.
iv. Earning of Profit, the rate of interest is usually less as compared to the rate of
return received from the invested capital.
v. Controls of Business, the entire control of business remain in hand of the
borrower.
vi. Credit is Flexible, the credit may be obtained when needed and it may be
returned when it is no more required. There is flexibility in creditors fund nature.

Disadvantages of Debt Fund

The use of creditor’s funds has the following disadvantages.

i. Interest Payment, interest is regularly paid by the business whether firm is earning
profit or bearing loss.
ii. Payment of Credit, the principal amount will be paid at due date without any regard to
the financial condition of the firm.
iii. Rate of Interest in Crises, during the depression period rate of interest remain same but
the rate of return on capital fall and business suffer a loss.
iv. Maturity of Loan, at the time of maturity of loans if sufficient funds are not available to
meet the loans, the business can be closed.

The 3 ‘A’s of Finance:

1. Anticipation
2. Acquisition
3. Allocation

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Now let us have a look at what these 3A’s mean. We will begin with anticipation. ‘Successful
investing in anticipating the anticipation of others.’

1. Anticipation:-

Anticipation being a care of finance refers to identifying, predicting future financial needs. It
required looking not only at the future perspective but toward the past as well. Having an
insight at past enables business entities to seek guidance from mistakes encountered in the
past and avoid these mistakes in the future. The question which arises in how to envisage
future needs, short term and long term goals of business.

 Short Term, short term goals comprises the quest to have immediate profits.
Satisfying stakeholders and cost reduction.
 Long Term, long term goals are inclined toward expansion of business through
investment in new projects, venture and investment.
 Sources Required, Anticipating the source required fee short term and long term
goals achievement cannot be achieved without proper budgeting, capital budget.
 Budgeting, include making the road map for allocation of funds aligned with
business future objectives (short term, long term) keeping in view the previously
applied budget and incorporating the changes as well as amendments in new
projects venture and vehicles, organization use the renowned techniques of ‘Capital
Budget’.
 Capital Budget, it refers to anticipating and identifying business opportunities and to
invest in the best alternatives available these techniques include payback, period,
net present value, internal rate of return.

2. Acquisition:

Once the future financial needs have been identified and screened, the role of “Acquisition”
(being the second of finance) starts.

 Acquisition, it refers to the accumulation of fund sources required to fund the

financial needs encountered as per the anticipation. Once the future financial needs
have been anticipated, the next point of concern to the financial managers is how to
acquire money for financing the continual business operations and intended project.
Two major source of funds.
 Leverage/Debt, usage the leverage/debt (an external source of funds) provide
organization with tax shield by mean the reduction in taxable profit due to financing
cost of debt. Debt provides DFT, Bank.
 Equity, using equity (as an internal source of fund) provides companies with
exposure to growth opportunity by mean of re-investment of profit without financial
obligations. Issuing shares to public.
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3. Allocation:-
It refers to a systematic distribution of pooled sources as per the decided budget. Asset
allocations are future divided into two types.
i. Strategic Assets Allocation.
ii. Tactical Assets Allocation.
 Strategic Assets Allocation is allocating many among various assets classes and
investment project. This is done by keeping in view the planned scheme of investment
as well as company’s long term goals.
 Tactical Assets Allocation is intended at getting benefit from short term opportunity
that may arise during the various stage of business life cycle.
”it is pertinent to mention that these 3A’s must be in same order/sequence
otherwise the essence will completely be lost. For Example, acquisition cannot
be done before anticipating the need.”

Summing Up
Financing is nothing more than coming of 3A’s together,
Anticipating, Acquisition and Allocation, predicting future needs, acquiring desire source
of fund and their distribution as per the budget.
Business Feasibility Study

Introduction:-

Business feasibility study can be defined as a controlled process for identifying problem and
opportunities, determining objectives and assessing the range of costs and benefits associated
with several alternatives for solving a problem. The business feasibility study is used to support
the decisions making process based on cost benefit analysis of the actual business or project
viability.
The feasibility is conducted during the deliberation phase of the business development cycle
prior to commencement of formal business plan. It is an analytical tool that includes
recommendation and limitation, which are utilized to assist the decision makers when
determining if the business concept is viable.
Definition:-
“An analysis of a proposed project to determine whether it is feasible and should go ahead
economic, technical, operational or schedule feasibility.”

“The feasibility study is an evaluation and analysis of the potential of a proposed project
which is based on extensive investigation and research to support the process of decision
making.”
Importance of Business Feasibility:
a) Feasibility study will help you to determine Profitability of the business venture.
b) Identify logistical and other Business related problems and solutions.
c) Effective ways to safeguard against wastage.

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d) Research study by feasibility will support the business planning stage and reduce the
research time.
e) A feasibility study report will help prove to the entrepreneur, venture, capitalistic,
lender and investors the existence of market share, the liquidity of the business venture
and the expected return on investment.
f) Study contains clear supporting evidence.
g) Feasibility study helps you in establishing budget plan.
h) Feasibility study provides knowledge to stakeholders.
Business Viability Dimensions:
Feasibility study will assessed by potential investors and stakeholders regarding their credibility
and depth of arguments. The business feasibility study places the finding of the dimensions of
business viability model assessment into a formal business report.
1. Market Viability:-
 Market size, environment, and  Similar products
sustainability.  Pricing
 Potential market, target market  Distribution to market
and potential value competitors. promotion / advertising.
 Competitors.
2. Technical Viability:-
 Capacity  Supply chain implication.
 Availability and quality of  Manufacturing process.
resources, inclusive of raw  Ability to apply IP.
material, labor and professional
expertise.
3. Business Model Viability:-
 Uniqueness of model in terms of  Ability to create wealth.
competitive advantage.  Ability to duplicate and delegate,
 Availability of competitor to documentation of tacit & explicit
duplicate. knowledge.
 Ability to create value through
priority knowledge process, IP
4. Management Model Viability:-
 Application of knowledge and  Ability to delegate to staff
skill.  Suitable organizational structure.
 Training  Suitability of management and
 Employee management and quality protocols
recruitment  Ability to measure business
 Management of intellectual process.
property
 Management of risk
5. Economic and Financial Model Viability:-
 Startup costs.  Overall return on investment
 Working capita  Over profitability
 Operating costs  Breakeven point
 Raw material

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 Sustainability of market verses  Ability to generate economic

projected revenue value
Business Feasibility Study Outlines:
A. Cover sheet
B. Executive Summary
C. Table of Contents
 Introduction  Marketing & sale strategy
 Product and services  Production requirement
 Technology  Management & personnel
 Market environment requirement
 Competition  Intellectual property
 Industry  Regulation
 Business model
I. Financial Projection:-
In its simplest form, a financial projection is a forecast of future revenues and expenses.
Typically, the projection will account for internal or historical data and will include a
prediction of external market factors. In general, you will need to develop both short- and
mid-term financial projections.
II. Cover Sheet:-
 Business environment  Communication and networking
knowledge  Negotiation and conflict
 Familiarity with organization management
procedures  Teamwork
 Planning and organization  Stress tolerance
 Critical thinking  Computer competences
 Problem-solving orientation
III. Executive Summaries:
The executive summary is a summary of all key sections of the business feasibility study and should
work as separate, stand-alone documents. Interested parties will read these sections first in the
conjunction with a glance at the financial section when deciding whether or not they read the rest of
the plan;
Key pints to remember include;
 Write this document after the content section of business feasibility study is completed.
 Although executive summary is written last, it is presented first.
 The executive summary should be no more than one page long.
6. Table of Content:-
A table of contents, usually headed simply Contents and abbreviated informally as TOC, is a list, usually
found on a page before the start of a written work, of its chapter or section titles or brief descriptions
with their commencing page numbers.
I. Product Service:-
 Describe the enterprises, product or services in simple language. Give product mix if the
enterprise will initially be focusing on more than one product.
 Describe how customer would use and buy to help the reader judge the effectiveness of your
marketing and positioning plans.

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 Describe key components or raw material that will be used in the product, how available they
are.
 Describe plans to test the product to ensure it works as planned and it is sufficiently durable,
rugged secure etc. (e.g. company product test, beta test with major company.
 Describe plans to upgrade product or expand product line.
II. Technology:-
 As necessary, provide further technical information about the product or services.
 Describe additional ongoing research and development needs.
 Keep the description in lay terms and / or explain technical terms enough to be understood by
business. Savvy but not necessarily technology expert readers.
III. Market Environment:-
 Define and describe the target markets distinguish between end user and customers.
 Be clear how End user and customers benefit how and why would they buy the product or
services?
 What are the projected needs your product or services fulfill so beautifully? How big is the
opportunity? What level of actual market demand can be measured verses projected?
IV. Competition:-
 Describe direct and indirect competition (as it pertains to the target market only).
 For key competitors, give market share, resources, product and market focus, goal strategies,
strength and weakness.
 List all key barriers to entry.
 Describe what is unique about the enterprise product/services compared to the competition
make sure this is consistent with the unmet needs of the target markets.
 State how difficult it will be for competition to copy the enterprise’s product/ services.
V. Industry :-
 Clearly define and describe the industry in which the enterprise operates/ include the size,
growth rate and outlook.
 Describe demand and supply factors and trends.
 Describe the larger force that derives the market, innovation, calculate change, regulation,
whatever.
VI. Business Model:-
 Describe the proposed enterprise’s business model. How will the business generate revenue
(sell the product, charge licensing, retail sales)? Will there be recurring revenue?
 Describe the model in enough detail to support financial projections presented later.
VII. Marketing and Sale Strategy:-
 Lay out the basic marketing and sales strategies.
 Describe any strategy partnership the enterprise has or is planning to form. Do they provide
critical market areas or other resources? What are their rights and responsibilities?
 Describe the distribution strategy.
 Describe the pricing strategy and justification includes the expected gross profit margin.
 Describe the intended typical payment terms for customers.
 Other issues and their impact e.g. warranty.
 Quantify the marketing budget for at least the first year.

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VIII. Production/ Orienting Requirement:-

 Describe enough of how and where the enterprise will manufacture, source or create and
deliver the final product or services to be able to estimate costs.
 What physical premises required? Give location, size, age, conditions and capacity of planned
productions and warehouse facility and number of shifts planned.
 Will space be owned or leased? Will renovations be required? At what cost?
 How complex is the manufacturing process?
 Describe equipment’s needed and costs.
IX. Management and Personnel Requirement:-
 List the proposed key manager, title, responsibilities, relevant background, experience, skill
and costs.
 Sketch personnel requirements, what people will be needed now in a year, in the long term?
What skills and qualification are required and what financial implication result?
X. Intellectual Property:-
 Briefly describe patents, copy rights and trade mark in process. Give al names that are on
issued patents, summaries results of patents searches.
 If enterprise is operating under a licensing agreement of patent assignment, give name of
licensor/ assignor, describe key terms (e.g. exclusivity, rights and responsibilities) and give
termination or renewal data.
 Often business planning associated with intellectual property must occur prior to a business
(science-research and development) concept being developed and validated so that the
strength and ownership of the finding can be assured.
XI. Regulation and Environment Issues:-
 Outlines non-economic forces that might affect the prospects of the firm.
 Any environment problems on property, plans to address the problem, and their cost.
 Key government regulations and the enterprise plans for compliance.
 Environmental factors, waste disposal plans, if needed.
 Political stability, if applicable.
 Any other regulatory or political issues. This may deal with proposed industry regulatory
changes, stables versus unstable environment.
XII. Financial Protection:-
Include a narrative highlighting key underlying assumption and the logic governing, your
projection, include financial history if any (equity and debt) and likely financing stages including
information about funding sourcing and uses. Some core components of part of the report are
listed below;
 Balance Sheet Projection:-
Three year and highlight inflow of capital.
 Income Projection:-
Year 1, monthly or quarterly, year 2, 3 annually.
 Cash Flow Projection:-
Year 1, monthly or quarterly, year 2, 3 annually.
 Breakeven Analysis:-
When will the firm begin to term a project?
 Cost Benefit Analysis:-
Will the business provide a viable return on investment for the owner and/ or the investor?

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Define location? Discuss the factors that affect location decisions? Also discuss the reason for involving in
location decision? Determinants of location design?
Outline:
 Objectives of location.
 Factors influencing the location.
 Best possible choice of plant location.
 Professional decision making through weighted index.
Introduction:-
Plant location of the facilities location problem is an important strategic level decision making for
an organization. The location decision has a direct effect on an operation’s cost as well as its ability to
secure customer (and therefore its revenue).also location decision once made, are difficult and costly to
undo. The costs of moving an operation are after significant and run the risk of inconveniencing customer
and staff. It is always best to get the location decision right first time.
Definition:
“The physical space where your business exists.”
Another definition of location:-
“Facility location is the selection of switchable location or site where the factory or facility will be
installed and form where it will function.”
Objectives of Location Decision:-
The following are the objectives of location decision.
i. Expanding Existing Facilities:-
The first objective of location is to expand existing facilities. This objective can be achieved it there is
adequate room for expansion, especially if the location has desirable features that are not readily
available elsewhere. Expansion costs are after less than there of other alternatives.
ii. Maintain Existing and Add-Site:-
A location strategy is a plan for obtaining the optimal location for a company by identifying the
existing and able to choose sites that will best serve their needs and help them to achieve their goals.
iii. Closing Existing and Relocating:-
The objective of relocation is to close the existing facilities and open new facilities. Relocation can
take place at predetermined times. The objective function is to minimize the total location and
relation costs.
iv. Profit Potential:-
By selecting best suitable location is to minimize the cost an operation due to decrease in
transportation cost, advertising cost etc. it increases the profit potential by attracting investors and
customers & for increasing revenues.
v. No Single Location May Be Better Than Others:-
If your business is static and confined to only a single location you have lesser opportunities to grow
and expand your business. While when you transfer your business operations to some other location
you experience new opportunities and face new challenges.
vi. Identify Several Locations From Which to Choose:-
In location decision, the competitors spend huge costs in finding the best suitable locations for
business and from several locations select the most appropriate one. The main purpose behind all
such findings is to make location near to the source of raw material consumers which is more
beneficial for the business.
Need For Location Decision

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i. Marketing Strategy:-
Companies after seek opportunities for expanding markets for their goods and services, as well as
better serving existing customers by being more attended to local needs and having a quick response
time when problem occur. Marketing strategies depend upon the short term and long term
achievements.
ii. Growth:-
A similar situation occurs when am organization experiences a growth for old products or services
that cannot be satisfied by the expansion at an existing location. The addition of new location to
complaint an existing system in after a legalistic alternative.
iii. Cost of Doing Business:-
Some form face location decision through depletion sort basic inputs mining and petroleum
operations face the some sort of situations although usually when longer time horizon. The cost of
doing business at a particular location reach a point where location beings to look more attractive.
Factors of Location
 Regional Factors:-
The following are the regional factors:
i. Availability of Raw Material:-
Availability of two materials is the most important factor in plant location design. Usually
manufacturing units where there is he conversion of raw material into finished goods is the main task
than suck organization should be located in a place where the raw material is maximum and cheap.
ii. Nearness of Market:-
Nearness of market for the finished goods not only reduces the transportation costs, but it can
render quick services to the customer. If the plant is located for away the markets then the chances of
spoiling and breakage become high during transport. If the industry is near to the market then it can
grasp the market share by offering quick services.
iii. Availability of Labor:-
Another most important factor which influences the plant location design is the availability of
labor. The combination of adequate number of labor with suitable skills and reasonable labor wages
can highly benefit the firm. However, labor-intensive firms should select the plant location which is
nearer to the sources of manpower.
iv. Suitability of Climate & Taxes:-
Climate is really an influencing factor for industries such as agriculture, lather and textile etc.
climate can affect the labor efficiency and productivity. Before the selection of location it is also
important to know the local existed government policies such as licensing and taxes policies.
v. Increase Revenues:-
Another most important feature in operation production management is to increase revenues.
The selection of location is highly based on its outcomes and their approach. There are only “4” to
increase revenues. Increasing the number of customers, increase average transaction price, increasing
the frequency of transactions per customer and raising your prices.
Multiple Plant Strategy:-
vi. Product Plant Strategy:-
Products or product lines are produced in separate plants and each plant is usually responsible for
supplying the entire domestic market. It is a decentralized approach as each plant focuses on a
narrow set of requirements that includes specialization of labor, material and equipment along
product lines. Specialization involved scale and compare to multipurpose plants, lower operating
costs.

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vii. Market Area Plant Strategy:-

Here plants are designed to serve a particular geographic segment of a market. The individual
plants can produce wither most, or the company’s entire product and supply a limited geographical
area. The operating cost of this strategy are after times higher than those of product plants, but
serving an shipping costs for comparable products can be made. This strategy is useful when shipping
costs are higher due to volume, weight or other factors.
viii. Process Plant Strategy:-
Here different plants concentrate on different aspects of a process. This strategy is most useful when
products have numerous components, separating the production of components results in less
confusion than it all the production were done in the same location. A major issue with this strategy is
the co-ordination of production throughout the system, and it requires a highly informed, centralized
administration in order to be an effective operation.
ix. General Purpose Strategy:-
Being in the right location is a key ingredient in any business services. The plants are designed to
achieve the growth of business (Plant). If it selects the wrong location it may have adequate access to
customers, workers, transportation, and material and so on. Consequently, location after plays a
significant role in a company’s profit and overall success.
Community Consideration:-
x. Quality of Life:-
Good school, recreational facilities, cultural events and an alternative lifestyle contribution to quality
of life. This factor is relatively important on its own, but it can make the difference in location designs.
xi. Utilities Taxes and Real Estate Costs:-
Other important factors that may emerge include utility costs (telephone, energy and water) local and
state taxes financing incentives offered by local or state government’s relocation costs, and land costs.
xii. Attitude:-
The attitude of person where the firm is located is also very important for the well-being of the
business because the firm should face the people of the area in the business as a workers and clients.
So the firm may select the area where the attitude of community suites to business.
xiii. Developer Support:-
The developer support is very important factor for running of business smoothly. It entails tasks and
provides a grassroots self-help approach to development, offering support & advice and process to
develop and implement growth opportunities within and between organizations.
xiv. Environmental Regulations:-
Environmental regulation is the collection of laws, agreements and common laws that given how
human interact with their environment. The purpose of environmental laws is not only aim to protect
the environment from harm but they also determine who can use natural resources and on what
terms.
Site Related Factors
xv. Suitability of Land:-
It is also very important factor for the firm to choose a suitable land where the plant of firm is located.
The firm should select a suitable place or land which is more effective for production.
xvi. Transportation Facilities:-
Speedy transport facilities endure timely supply of raw material to the company and finish goods
to the customers. The transport facility is a perquisite for the location of the plant. The choice of
transport method and hence the location will depend on relative cost convenience and suitability.
Thus transportation cost to value added is one of the criteria for plant location.

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xvii. Environmental:-
……????
Best Possible Choice of Plant Location:-
It is appropriate to divide the factors which include controllable and uncontrollable factors for all type
of organization.
1. General Location Factors:-
It does include controllable and uncontrollable factors for all types of organizations.
i. Proximity to Market:-
Every company is expected to secure its customers by providing goods and services for the time
needed and at reasonable price organizations may choose to locate facilities close to the market or
away from the market depending upon the product. When it buyers for the product are concentrated.
It is advisable to locate the facilities close to the market. Locating nearer to the market is preferred if;
 The products are delicate and susceptible to spoilage.
 After sales services are promptly required very often.
 Transportation cost is high and increase cost significantly.
 Shelf life of the product is low.
ii. Supply of Raw Material:-
It is essential for the organization to get raw material in right qualities and time in order to have an
uninterrupted production. The factors become very important if the materials are perishable and cost
of transportation is very high.
iii. Transportation Facilities:-
Speedy transportation facilities ensure timely supply of raw materials to the company and finished
goods to the customers. The transport facility is a perquisite for the location of the plant. There are
five (5) basic modes of physical transportation air, road, railway, water and pipelines. The choice of
transport method will depend on relative costs, convenience and suitability.
iv. Information Availability:-
The basic information facilities like power, water and waste disposal etc. become the prominent
factors in deciding the location. Certain types of industries are powers hungry e.g. Aluminum and
Steel and they should be located close to the power station.
v. Labor and Wages:-
The problem of securing adequate number of labor and with skills specific is a factor to be considered
both at territorial as well as at community level during plant location. Prevailing wage pattern cost of
living and industrial relation and beginning power of the union’s form in important consideration.
vi. External Economic of Scale:-
External economies of scale can be described as urbanization and locational economies of scale. It
refers to advantages of a company by setting up operations in a large city while the second refer to
the “setting down” among other companies of related industries. In the case of urbanization
economies, firm’s desire from locating in larger cities rather than in smaller ones in a search of having
access to a large pool of labor, transport facilities etc.
vii. Capital:-
By looking at capital as location condition, it is important to distinguish the physiology of fixed capital
in buildings and equipment from financial capital. Fixed capital costs as building construction cost vary
from region to region. But on the other hand building also is rented and existing plants can be
empowered. Financial capital is highly mobile and does not vary much influence decision e.g. Coca
Cola multinational company.

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Uncontrollable Facilities:-
viii. Government Policy:-
The policies for the state government and local bodies concerning labor laws, building codes safety
etc. are the factors that demand attention. In order to have a balanced regional growth of industries
both central and state government in our country offer the package of incentives to entrepreneur in
particular locations. The incentive package may be in the form of exemptions from a sales tax and
excise duties for a specific period.
ix. Climate Conditions:-
The geology of the area needs to be considered together with climate conditions (humidity,
temperature). Climate greatly influences human efficiency and behavior. Some industries require
specific conditions e.g. textile mill will require humidity.
x. Supporting Industries and Services:-
Now a day the manufacturing organizations will not make all the components and parts by itself and it
subcontracts the work to vendors. So the source of supply of component parts will be the one of the
factors that influences the location.
xi. Community and Labor Attitudes:-
community and Labor attitudes community attitudes towards their work and towards the
perspective industry can make the industry community attitudes towards Sporting Trade Union and
trees are important criteria facility location in specific location is not visible even though all factors or
favoring because of labor attitude towards Management which drinks very often this strikes and
lockouts.
xii. Community Infrastructure and Amenity:-
All manufacturing activities required access to a community infrastructure most not ably economic
overhead capital. Such as roads Railways port facilities power lines service facilities and social
overhead capital like schools and Universities etc.
2. Specific Location Factors (Dominate Factors of Manufacturing):-
Specific location factors can further be divided into two following categories;
i. Favorable Labor Climate:-
A favorable labor climate may be the most important factor in location decisions for labor
intensive forms in industries such as textile furniture and consumer electronics labor climate include
wages training requirements attitudes towards work productivity and union strength many adjectives
consider work week Union or at low probability of union organizing efforts as a distinct advantages.
ii. Proximity of Markets:-
After determining where the demand for goods and services is greatest management must select
a location for the facility that will supply the that demand locating near markets is particularly
important when the final goods or bulky or heavy and outbound transportation rates are high for
example manufacturers of products such as plastic pipe and heavy metals are emphasized proximity
to their markets.
iii. Quality to Suppliers and Resources:-
Good schools recreational facilities cultural events and an attractive Lifestyle contribute to quality of
life these factors or relative Lee an important on its own, but it can make the difference in location
decisions.
iv. Proximity to Suppliers and Resources:-
In many companies plants supply parts to other facilities or rely on other facilities for management
and staff support. These require frequent coordination and communication which can difficult as
distance increases.
v. Utilities, Taxes and Real State Costs:-
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Other important factors that may emerge include utility cost (telephone, energy, and
governments local and state taxes) financing incentives offered by local or state governments
relocation cost and land cost.

Security Factors:-
There are some other factors needed to be considered including room for expansion, construction
cost accessibility to multiple modes of transportation, the cost of shifting people and materials
between plants, competition from other firms for the workforce, community and many others for
global operations, firms are emphasizing local employee skills and education and the local
infrastructure.
Primary Dominate Factors of Services:
 Proximity to Customers
 Transportation Cost
 Location of Competitions
Secondary Factors:
 Residential density
 Traffic flow
 Site versatility
vi. Professional Decision Making Through Weighted Index:-
Factors rating general approach to evaluating location that include quantitative and qualitative inputs;
Procedure is Used to Develop a Factor Rating:
i. Identify the important location factors.
ii. Assign a weight to each factor that indicates its relative important compared with other factors.
iii. Decide on a common scale for all factors e.g. 1 to 100. And set a minimum acceptable score if
necessary.
iv. Score is location alternatively.
v. Multiply the factors weight by the score for each factor and sum the results for each location
alternatively.
vi. Choose the alternative Li that has highest composite score unless it fails to meet the minimum
acceptable score.
(Example)
A photo processing company intended to open new brand store. The following table contains information
on to potential location which is the best alternative.
Score (out of 100) Weighted Score
A1 A2
Factors Weight A1 A2
(weight x A1) (Weight x A2)
Proximity .10 100 60 10 6
Traffic Volume .005 80 80 4 4
Rental Cost .40 70 90 28 36
Size .10 86 92 8.6 9.2
Layout .20 40 70 8 14
Operation
.15 80 90 12 13.5
Cost
70.6 82.7

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Procedure Of Making Location Decision

As with capacity planning managers need to follow three steps procedure when making facility
location decisions. These steps are as follows;
Step 1 Identify Dominant Location Factors:-
Managers identify the location factors that are dominant for the business. This requires
managerial judgment and knowledge.
Step 2 Location Alternatives:-
Once managers know that what factors are dominant they can identify location alternatives that
satisfy the selected factors.
Step 3 Evaluate Location Alternatives:-
After a set of location alternatives have been identified. Managers evaluate them and make a final
selection. This is not easy because one location may be preferred based on one set of factors, whereas
another may be better based on a second set of factors.
Procedures For Evaluating Location Alternatives:-
A number of procedures can help in evaluating location alternatives. These are decision support
tools that help structure the decision making process. Some of them help with qualitative factors that are
subjective, such as quality of life. Others help with quantitative factors that can be measured, such as
distance. A manager may choose to use multiple procedures to evaluate alternatives and come up with a
final decision. Remember that the location decision is one that company will have to live with for a long
time. It is highly important that managers make the right decision.

Reason Of Service And Product Manufacturing Consideration

Manufacturing / Distribution Service
1. Focus
Manufacturing concerns focus on cost of the Services concerns focus on Revenue of a service
product. They focus how much cost they occur on provided.
a product by they try to reduce cost to their
maximum.
2. Products
Manufacturing concern produce tangible products. Service concerns provide services which are
Consumer products or products which we can see intangible they cannot be seen and touched.
and touch.
3. Location
Generally located near the place where there is an Located close to markets location and proximity to
easy access of resources needed to produce the users of services is vital.
products such as raw material.
4. Capital
Manufacturing concerns require more capital to There is generally less capital is required. Training
invest as there is needed to purchase land and education can cost more or high.
machinery and a proper system is required.
5. Inventories
Product can be inventoried. Product cannot be inventoried.
6. Perishability
Once the product is used it can be used again. It is Services of perishing nature once used services
not perishable. cannot be used again.

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7. Contact with Customer

There is less contact with customer as the institution There is high contact with customers as the
is not selling directly the product to the customers. services provider directly met with customers.

8. Risk
There is high risk involved as the manufacturer has This server only at once the demand for a service is
to invest first and then manufacture products the identified. Hence there is less risk.
produced products may not be sold in this case the
manufacturers suffer loss.
9. Operation Facility
There is large production facility. There is a small service facility.
10. Re-usability
The product can be resold. The service cannot be resold.
11. Quality
The quality of a product is easily measured. The quality of service is not measured easily.
12. Patents
A product can be patented. Assamese can be patented with difficulty.
13. Warranty
Quality of a product is backed by warranty. Service is not backed by warranty but in some
cases maybe.

1. Planning and control in production

Outline:-
 Routing
 Scheduling
 Inventory Control
 Follow up
Planning and Control
Introduction:-
Production control creates a well-defined set of procedures for coordinating people, material, and
machinery. According to the British standards Institute, there are four stages, techniques or Essentials in
the process of production planning and control.
1. Production Planning Routing
nd
2. 2 step also relates to production planning Scheduling
3. Production control Dispatching
4. Also relates to production control Follow up
Definition:
“Production management is the process of effective planning and regulating the operations of that
section of an enterprise which is responsible for the actual transformation of raw materials into finished
products.”
(E.L. Breach)
Scope of Production Management
1. Production Selection and Design:-

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The product mix marks the production system is efficient and inefficient. Choosing the right products
keeping the mission and overall objective of the organization in mind if the key to success. Is the design of
the product, which makes the organization competitive or noncompetitive.

2. Activities Relating to The Production System Design:-

Decision related to the production system design is one of the most important activities of the production
management. This activity is related to production engineering and includes problems regarding design of
tools and Jigs, the design, development and installation of equipment and the selection of the optimum
size of the firm. All these areas required the technical expertise on the part of the production manager
and his staff.
3. Facilities Location:-
The selection of optimum plant location very much depends upon the decision taken regarding
production engineering. A wrong decision may prove disastrous location should as far as possible cut
down the production and distribution cost. There are diverse factors to be considered for selecting the
location of a plant.
4. Method Study:-
The next decision regarding production system design concerns the use of those techniques, which are
concerned with work environment and work measurements. Standard method should be devised for
performing the repetitive function efficiently. Unnecessary movement should be eliminated and suitable
positioning of the workers for different processes should be developed. Such method should be devised
with the help of time study and motion study. The workers should be trained accordingly.
5. Facilities Layout and Material Handling:-
Plant layout deals with the arrangements of Machines and plant facilities. The machine should be so
arranged that the flow of production remains smooth. There should not be overlapping, duplication or
interruption in production flow. Product layout where machines are arranged in a sequence required for
the processing of a particular product, process layout. Where machines performing the similar processes
are grouped together are two popular methods of layout. The Apartments are layout in such a way that
the cost of material handling is reduced. There should be proper choice of material handling equipment.
6. Capacity Planning
The decision is concerned with the procurement of fixed assets like plant and machinery. The decision is
regarding the size of the plant, output etc., and is decided at this stage. The capacity planning activity is
again a function of volume of demand. The operational level decisions are short term decisions. There are
mainly concerned with planning and control of production activities.
7. Production Planning:-
The decision in production planning include preparation of short term production schedules, plan for
maintaining the record of raw materials, and semi-finished stock, specifying how the production
resources of the concern are to be employed over some future time in response to the predicted demand
for products and services.
8. Production Control:-
After planning, the next managerial production function is to control the production according to the
production plant they are properly guided and controlled because production plans cannot be activated
unless; they are properly guided and controlled. According to Seriebal and Lansburg " production control
is the process of planning" production in advance of operations, exact route for each individual item,
what are assembly, setting, starting and finishing dates for each important item, assembling and finished
products and releasing the necessary orders as well as initiating the required follow-up to affect the
smooth functioning of the Enterprise.
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9. Inventory Control:-
Inventory control deals with the control over raw materials, works in process, stores supplies, and tools
and so is included in production management. The raw materials, surprise etc. Should be purchased at
right time, right quality, in right quality, from right source and at right price.

ROUTING
Introduction:-
Routing is the process of forwarding packets from one network to the destination address in another
network. Router, a packet forwarding device between two networks, is designed to transmit packets
based on the various routes stored in routing tables. Each route is known as a routing entry. Routing may
be defined as the selection of path which each part of the product will follow, which been transformed
from raw material to finished products routing determines the most advantageous path to be followed
from department to department and machine to machine till raw material gets its final shape.
Definition:-
“Selecting the minimum cost, distance and / or time path from several alternatives for a good or message
to reach its destination.”
 Techniques of Routing:-
While converting raw material into required goods different operations are to be performed and the
selection of a particular path of operations for each piece is termed as routing. The selection of a
particular path i.e. Sequence of operations must be the best and cheapest to have lowest cost of the final
product. The various routing techniques are;
1. Route Card:-
This card always accompanies with the job throughout all operations. This indicates the material used
during the manufacturing and their progress from one operation to another. In addition to this the details
scrap and good work produced are also recorded.
2. Worksheet:-
It contains
a) Specification to be followed while manufacturing.
b) Instructions regarding routing of every part with identification number of Machines and this sheet
are made for manufacturing as well as for maintenance.
3. Route Sheet:-
It deals with specific production order. Generally made from operation sheets. One sheet is required for
each part or the component of the order. This includes the following:
a) Symbol and identification of parts.
b) Number of Pieces to be made.
c) Number and other identification of order.
d) Number of pieces in each lot if put through in lots.
e) Operation data which includes:
i. List of operation on the part.
ii. Department in which operations are to be performed.
iii. Machine to be used for each operation.
iv. Fixed sequence of operations, if any.
4. Move Order:-
Through this is document needed for production control, it is never used for routing system. Move order
is prepared for each operation sheet. On this the quantity fast forward, scrapped and to be rectified are
recorded. It is returned to planning office when the operation is completed.
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Steps or Procedures of Routing in Production

1. Product Analysis Determines:-
Product analysis is the first step in routing project procedure. This is done to find out what parts should
be manufactured and what parts should be purchased. This depends mainly on the the relative costs. It
also depends on other factors such as (technical consideration, policies availability of personal, availability
of equipment etc.) generally, during less busy periods most of the parts near manufactured in the factory.
However, during the busy period of many parts are purchased from outside.
2. Determine Required Material:-
Product analysis is done again to find out what materials are required for production and their quality and
quantity.
3. Fix Manufacturing Operations:-
The next step in the routing is to fix the manufacturing operations and their sequence. The detailed
production procedure is then scheduled. Information required for this is derived from technical
experience and by analyzing the machine capacity.
4. Determine Size of Path:-
The number of units to be manufactured in any one lot should be decided. This is done concerning
customer’s order necessary provision should also be made for rejection during the production process.
5. Estimate Margin of Scrap:-
The amount of scrap in each lot should be estimated. Generally a Scrap margin is between 2% to 5% of
production.
6. Analyze the Production Cost:-
Analyze the cost of manufactured goods is actually the function of Costing department. However, The
routing section provides necessary data to the costing department that enables it to analyze the
production cost.
7. Prepare Production Control Forms:-
.Production control forms such as (job cards, inspection cards, tour tickets etc.) should be prepared.
Forms should contain complete information for effective routing.
8. Prepare Route Sheet:-
Route sheet it is prepared on a production control form. The part number, description of the part at the
material required. It is prepared by a route clerk. Separate rout sheet is required for each part of
customer’s order.

2. Scheduling
Introduction:-
Scheduling can be defined as" prescribing of when and where each operation necessary to
manufacture the product is to be performed." it is also defined as" establishing of X at which to be
gain and complete each event or operation comprising a procedure." this principle am of scheduling is
to plan the sequence of work so that production can be systematically arrange toward the end of
completion of all product by due date.
Definition:-
“Scheduling consists of the assignment of starting and completion time for the various operations to
be performed.”
(According to James Lunday)
Example:-
 Timetabling scheduling of the computer: A number of different courses (tasks) have to be e
given using the PC room (resource).
 Workforce scheduling: Assign shifts for or nurses and doctors in a hospital.
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 Sports Scheduling.
 Drug Scheduling.
 Scheduling Strategy:-
Scheduling strategies vary widely among firms are range from 'no scheduling' to very sophisticated
approaches
These strategies are grouped into four classes:
1. Detailed Scheduling:
Detailed scheduling for specific jobs that are arrived from customers is impracticable in actual
manufacturing situation. Changes in orders, equipment breakdown, unforeseen events deviates the
Planes.
2. Cumulative Scheduling:-
Communicative scheduling of total work load is useful especially for long range planning of capacity
needs. This may load the current period excessively and under load future periods. It has some means
to control the jobs.
3. Cumulative Detailed:-
Communicative detailed combination is both feasible and practical approach. If master schedule has
fixed and flexible options.
4. Priority Decision Rules:-
Priority decisions cruise are schedule guides that are used independently and in-conjunction with one
of the above strategies i.e. first come first serve. These are useful in reducing work in progress
inventory.
 Scheduling Types:-
Begins the schedule as on the requirements are known
 Jobs performed to customer orders.
 Schedule can be accomplished even if due date is missed.
 It often causes to build up work in progress.
Forward scheduling determines start and finish time to next priority. It determines when the job will
be finished in that work center. This type is simple how to use and it gets job done in shorter Lead
time, compared to backward scheduling.
 Backward Scheduling:-
Backward scheduling determines the short and finish times for waiting jobs by assigning them to the
latest available time slot that enable each job to be completed just when it is due. This type of
scheduling minimizes the inventories since a job is not completed until it must go directly to the next
work center on its routing.
 Charts and Bonds:-
Gantt charts and associated scheduling boards have been extensively e used scheduling devices in the
past, although many of the charts or no drawn by computer. Gantt shorts are extremely easy to
understand and can quickly reveal the current or land situation to all concerned. They are used in
several forms, namely,
a) Scheduling or progress charts, depicts the sequential schedule;
b) Load charts, work assigned to a group of workers or machines; and
c) Record a chart, to record the actual operating Times and delays of workers and machines.
9. Priority Decision Rules:-
Priority decision rules are simplified guidelines for determining the sequence in which jobs will be
done. In some firms these rules take the place of priority planning system search for MRP systems.
Following are some of the priority rules followed.

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Symbols Priority Rules

FCFS First come, first served
EDO Earliest due date
LSL Least stock (that is, time dues less processing time)
SPT Shortest processing time
LPT Longest processing time
PCO Preferred customer order
RS Random selection

Mathematical Planning Methods

Scheduling is a complex resource allocation problem. Firms process capacity, labour skills, and
materials and seek to allocate their use so as to maximize a profit or service objective, or perhaps
meet a demand while minimizing costs.
The following are some of the models used in scheduling and production control.
A. Linear Programming Model:-
Here all the constraints and objective functions are formulated as a linear equation and then problem
is solved for optimality. Simplex methods and assignment methods for Major methods used here.
B. PERT/CPM Network Model:-
PERT/CPM network is the network showing the sequence of operations for a project and the
procedure relation between the activities to be completed.
Note: Scheduling is done in all the activities of an organization i.e. Production, maintenance etc.
Therefore, all the methods and techniques of are used for maintenance management.
 Scheduling Criteria:
There are several different criteria to consider when trying selecting the best scheduling algorithm for
a particular situation and environment.
Different Criteria:-
Many criteria exist for comparing various scheduling algorithm namely.
1. CPU Utilization:-
We want to keep the CPU as busy as possible. It may range from 0 to 100%. In real time system, it
suits range from 40% (it suits for a highly loaded system) to 90% (for heavily loaded systems).
2. Throughput:-
If the CPU is busy e executing processes, then work is being done. Of work is the number of processes
completed per time unit for throughput. For time processes, maybe a one process for one minute. For
shorter transactions, throughput might be 10 processes per minute.
3. Turnaround Time:-
From the submission time of a process to its completion time is turnaround time. Is sum of total time
period spends waiting to get it into memory, ready queue, and input / out operations.
4. Waiting Times:-
The CPU scheduling algorithm does not affect the amount of the time that a process spends waiting in
the ready queue. Is the sum of periods of spends waiting in the ready queue.
5. Response Time:-
In an interactive system, a process can produce some output early and can continue, computing new
results, previous results are being displayed the user. Another is the time from the submission to the
request until the first response is produced. It is called response time.
Dispatching

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Dispatching is the third step in production planning and control. It is the action, or implementation stage.
It comes after routing and scheduling. Means starting the process of production. It the necessary
authority to start the work.
It is based on route sheet and schedule sheets. Dispatching includes the following;
1. Issue the material, tools, fixture etc. Which are necessary for actual production.
2. Maintaining the proper record of the starting and completing job on time.
3. Moving the work from one process to another as per the schedule.
4. Starting the control procedure.
5. Recording the idle time of machines.
6. Dispatching may be centralized and decentralized.
7. Under centralized dispatching, orders are issued by the concerned department directly by a
centralized authority.
8. Under decentralized dispatching, orders are issued by the concerned department.
Follow up
Follow up for expediting is the last step in production planning and control. It is controlling device. It is
concerned with the evaluation of the results." follow up find out and remove the defects, delays,
limitations, bottlenecks loophole etc. In the production process". It measures the actual performance.
It maintains proper record of work, delays and bottlenecks. Records are used in future to control
production." follow up" is performed by "expedition" or" or stock chases".
Follow-up is necessary where production decrease even where there is proper routing and scheduling.
Production may be disturbed due to the breakdown of materials, strikes, absenteeism, etc.
Follow up remains these difficulties and allows a smooth production.
Inventory Control
Production management also includes inventory control. The production manager must monitor the
level of inventory. Must be neither overstocking nor under stocking of inventories. If there is
overstocking, then working capital will be blocked, and the material may be spoiled, Wasted or
misused. If there is an under stocking, then production will not take place as per schedule, and
delivered will be affected.
Definition:- (According to Gordon Carson)
“Inventory control is the process whereby the investment in materials and pots carried in stocks is
regulated, with in predetermined limits set in accordance with the inventory policy established by the
management.”
Meaning of Inventory Control:-
Inventory control means to monitor the stock of goods used for production, distribution and captive
(self) consumption. For a specific time Stock of goods is placed add some particular location. Of goods
includes raw materials, work in progress, finished goods, packaging, spares, components and
consumable items etc. Inventory control maintaining the inventory at a desired level. The desired
level keeps on fluctuating as per the demand and supply of goods. Following important points give
broad meaning of inventory control;
1. Inventory control mainly focuses on location, storage, recording the quantity and accounting
for the amount of inventories.
2. It helps to supply inventories to different departments or units whenever demand requisition
is raised, mostly; it supplies inventories to the production department.
3. It keeps a record of inventory issued to the concerned department located at a specific place.
4. It provides prompt and proper service to all concerned departments or units.
5. It also helps to maintain inventories at lowest costs.
6. It bifurcates high value and low value stock of goods.
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7. It also avoids over stocking and under stocking of raw materials

Reasons:-
There are three basic reasons for keeping an inventory:
1. Time:-
The time lags present in the supply chain, from supplier to were at every stage, requires that you
maintain certain amount of inventory to use in the “lead time”.
2. Uncertainty:-
Inventories are maintained as buffers to meet uncertainties in demand, supply and movements of
goods.
3. Economies of Scale:-
Idea condition of “one unit at a time at a place where a user needs it, when he needs it” principle tens
to occur lots of costs in term of logistics. So bulk buying movement and storing brings in economies of
scale, thus inventory.
Techniques to Inventory Control:-
There are following techniques of inventory control which are as follow:
1. ABC Analysis:-
It means "always better control". Under this the inventory is classified into 3 categories A, B and c.
These categories are based upon the inventory value and cost significance.
Items of high value and small in number are termed as "A".
Items of moderate value and moderate in number are termed as "B".
Items of small value and lodge in number are in category "C".
Economic Order Quantity (EOQ):-
EOQ is a quantity of inventory which can reasonably be ordered economically at time. In determining
this point, ordering costs and carrying costs are taken into consideration. Ordering costs are basically
the cost of placing an order. Carrying costs includes costs of storage facilities and loss of value
through physical determination, cost of obsolescence.

EOQ = 2 x AR x AC
CC

2. Inventory Turnover:-
This ratio is computed by dividing the cost of goods sold by average inventory.
Stock Turnover Ratio = Cost of Goods Sold
Average inventory
It is way of measuring how many times a business use inventory in a given time period. Business use
inventory turnover to assess competitiveness, project profits and generally figure out how will they
are doing in their industry.
3. Just in Time:-
It is a philosophy that focuses attention on eliminating waste by purchasing or manufacturing just
enough of the right items just in time. It is a Japanese Management Philosophy applied in
manufacturing which involves “having the right items of the right quality and quantity in the right
place and at a right time.” It involves having products arrive as soon as the customer’s order them.
4. Safety Stock:-
Safety stock is the stock held by the company in excess of its requirements for the load time.
Companies hold safety stock to guard against stock out.
5. Ordering Cost:-

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Ordering costs are basically the cost of placing an order and securing the supplies, it consists cost of
ordering goods, expenses incurred for transportation of goods, inspection costs and stationery etc.
6. Carrying Costs:-
Which can be incurred for holding inventories, It consists capital invested in inventories, storage
costs, loss of material due to deterioration and obsolescence, insurance cost, cost of spoilage in
handling of materials.
Objectives, Benefits/Importance of Inventory Control:-
The following discussion briefly covers all the above mentioned objectives, benefits or importance of
inventory control.
1. Protect from Fluctuation in Demand:-
Many a times, the demand forecast of a product is not accurate. There is always a small difference
between demand forecast and actual demand. However, sometimes there is big difference between
the demand forecast and actual demand.
So, there are always chances of fluctuations in the demand of a material. These fluctuations can be
adjusted if there are sufficient items in the stock of inventory. Therefore proper inventory control
protects the company from fluctuations in demand.
2. Better Services to Customers:-
If the company maintains a proper inventory of raw material then it can complete its production in
time. So it can deliver the finished goods to the customers in time. Similarly if the company has a
proper inventory of finished goods then it can satisfy the additional demand of the customers.
3. Continuity of Production Operations:-
Proper inventory control helps to maintain continuity of production operations. This is because it
maintains a smooth flow of raw materials so there are no shortages of raw materials required for
production process.
4. Reduce the Risk of Loss:-
Proper inventory e control helps to reduce the risk of loss due to you of obsolescence (outdated) or
deterioration of items. This is because it checks all the items regularly. It sells all the slow moving
items at the market prices. It only maintains the right stock at all times. So, the chances of any item
getting outdated are reduced.
5. Minimize the Administrative Workload:-
Proper inventory control helps to minimize the administrative workload of purchasing, inspection
warehousing etc. This will reduce the manpower requirements and will minimize the labour cost too.
6. Protects Fluctuation in Output:-
Inventory control tries to reduce the gap between planned production and actual production. There
are cases where the production schedule cannot be followed because of: Of sudden breakdown of
Machines.
I. Problems in a supply of material.
II. Sudden labors strikes.
III. Loss due to failure of Manpower, supply etc.
7. Effective Use of Working Capital:-
Proper inventory control helps to make effective use of working capital. Control helps in maintaining
the right amount of stocks of materials and components. Overstocking is avoided therefore the
working capital will not be blocked in excess of inventory.
8. Check on Loss of Material:-
Inventory control helps to maintain a check on the loss of material due to carelessness or or stealing.
If there is no proper inventory control then there are more chances of carelessness and pilferage
(stealing) by the employees especially in the store keeping department.
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9. Facilitates Cost Accounting Activities:-

Inventory control facilitates cost accounting activities this is because inventory control provides a
means of allocating materials cost of products, departments and other operating accounts.
10. Avoids Duplication in Ordering:-
Inventory control avoids duplication in ordering of stock. This is done by maintaining a separate
purchase department. This department will do all the purchasing for the full organization. No other
department is allowed to do purchasing so there will not be any application in ordering of stock.
11. Make Stability in Price:-
An effective inventory management system minimizes the effect of regular price fluctuation. This is
Turn helps to gain the stability in selling prices.

Project Management
“Is the planning, organizing, directing and controlling of company resources for a relatively short term
objectives that has been established to complete specific goals and objectives.”
Explanation:
Project management is designed to make better use of existing resources by getting work to flow
horizontally as well as vertical within the company. The vertical flow of work is the responsibility of line
manager. The horizontal flow of work is the responsibility of project manager.
Explanation through a diagram;

With goods customer relation

Time Cost

Resources

Performance/technology
Overview of Project Management:-
i. Purchasing and Procurement:-
The project management is greatly relates to the purchasing and procurement in the organization.
Because project management guides that which methods and procedures will be used for purchasing
and low wastage of time, cost and material etc.
 Purchasing:-
”Purchasing is buying materials, products and services for business purpose.”
 Procurement:-
“Procurement is the act of purchasing.”
Explanation:-
There is a difference between purchasing and procurement. The purchasing is small and
procurement is a is a broader term in a sense that purchasing is only the process to order and receive the
goods and services but procurement is a process that involve two parties with different objectives who
interact on a given system to purchase goods and services. All purchasing activities include the
procurement.
Types of Procurement Strategies:-
All procurement strategies are framework by which an organization attains its objectives. There are two
basic procurement strategies.

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 Corporate procurement strategy.

 Project procurement strategy.
These are explained below;

1. Corporate Procurement Strategy:-

The relationship of specific procurement action to the corporate strategy with the goals and
objectives set by the top management.
Example:
Centralized procurement.
2. Project Procurement Strategy:-
The relationship of specific procurement action to the operating environment of the project.
Example:- Purchasing one ounce of a special chemical for research and development project.
Purchasing Key Concepts:
There are some key concepts and term relating to the purchasing we discuss it one by one.
1. Purchasing Cycle:-
Purchasing cycle consisting in step of purchasing. It start with identifying the needs of purchasing and
ends with payment and approval of invoice. This guide the project manager how to conduct the
purchasing and which method will use for purchasing.
2. Invitation to Tender:-
Invitation to tender is another concept which is used in purchasing and procurement. It is a process in
which qualified suppliers and contractors are invited to submit the sealed bids of specific and clearly
defined goods and services during a specific period of time.
3. Negotiation:-
Negotiation is also used in purchasing especially for setting prices of goods and services. Negotiation is
a good way in which both the parties get maximum benefit from the contract.
4. Ethical Issue in Purchasing:-
The purchase officer follows a code of conduct for purchasing. It may include;
 Avoid misuse of position.
 Maintain your integrity.
 Confidential and correct information about purchase.
5. Sourcing (Purchasing + Procurement)
Sourcing is an un-situational procurement process that continuously improve and re-evaluate the
purchasing activities of a company. The project manager should adopt the strategic sourcing to
improve the purchasing activities.
6. Product Definition:-
A good idea, method, information, object or services created as a result of a process and serves as a
need or satisfied need or want. Before conducting the purchases product definition and its benefits
should be kept in mind.

Purchasing Importance in a Project;-

There is much importance of purchasing in project. Without the purchasing the firm production
activities cannot be started. It is important due to following reasons.
1. Primary Activity (Purchasing):-
Purchasing is the most primary activity in any production related organization because purchasing of
material is basic necessity of organization and without purchasing the organization cannot fulfill its
order of finished goods.

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2. Major Cost:-
In any production related organization the purchasing is the major cost like to need finance for;
 Equipment/capital goods.  Contractor service etc.
 Labour
3. Efficient Purchasing:-
The effective, efficient and economic purchasing lead to low cost of production and which in term
increase the profit margin of the firm.

4. Barriers in Purchasing:-
Due to difficulties, shortage and delay in purchasing the goods and services become the problem in
completion of project. The right kind of purchasing at right time also improve the reputation by
completing the project at time.
5. Material Management:-
Purchasing is the key store of material management. Most organizations have developed material
management around purchasing. Purchasing helps the organization to keep minimum inventory and its
optimal use.
6. Import Substitution:-
Purchasing can effectively contribute in import substitution thus enable the saving of foreign exchange.
Purchasing Objectives
There are some objectives behind purchasing. The purchase manager should kept in mind while
purchasing.
Classic definition:-
“The right goods, quality, source, time and price”
In other words:
“To provide inference between customer and supplier in order to plan, obtain, store and distribute as
necessary supplies of material, goods services to enable to organization to satisfy its internal and
external customers.”
1. Quality Improvement:-
By obtaining the best raw material enhances the chances of best product and improves the quality of
purchase and product continuously.
2. Best Quality of Raw Material:-
To obtain the better quality of raw material is the organization objective which in turn will produce the
better product and obtain competitive advantages.
3. Selection of Best Vendor:-
To select the vendors and supplier for providing goods material is another organization purchasing
objective.
4. Saving of Time:-
If organization make material own it may take a lot time then purchasing saves the time by providing
material earlier than manufacturing of material.
5. Reduce Cost of Product:-
Another objective of purchasing is to reduce the cost of product by purchasing the material from those
vendors who agree to sell at low cost with good quality. All of which ultimately reduce the cost of
product.
6. Reduce Wastage:-
The material purchases when needed and the wastage and helps to keep minimum inventory and
carrying cost associated with purchasing.
7. Fulfill the Requirement of Project:-
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The purchasing is the primary activities in fulfilling the requirements of project to complete the project
the purchases are necessary.

8. Right Quality:-
Right quality is another purchasing objective; the right quality helps the organization from shortage and
surplus of material.
9. More Satisfaction:-
The purchasing will increase the satisfaction of its internal and external customer by
purchasing raw material converting in finished goods as soon as possible.
10. Relation with Supplier:-
The purchasing builds the relationship between the supplier and organization. The organizations should
build good relation with suppliers for getting maximum benefits.
Project Purchasing Cycle:-
The project purchasing cycle is a process of purchasing goods and services. This cycle conducting by the
purchase department in the organization and it has the benefit for project users.
1. Identify the Project Needs:-
The first step in purchasing cycle to identify the project needs. One organization may carry more than
one project for carrying its business. In this step the purchasing department identify the specific project
needs to fulfill at timely.
2. Specify the Goods:-
After identifying the project needs the next step in the purchasing cycle is to specify the goods. It means
decide which goods are to be bought to fulfill the project at its specified time.
3. Short List Vendors:-
There are many vendors in the market, short list the one who will provide the goods and services
according to the requirement.
4. Invite Vendors:-
After short list the manager conducts the meeting with vendor and asks different questions. These
questions may be about price, quality and discounts etc.
5. Choose the Vendor and Order:-
After meeting with the different vendor choose a single vendor and give the order of your required
goods and services.
6. Monitor and Expedite:-
Monitor and expedite check the choose vendor and take that they provide the goods and services at
timely.
7. Receive and Inspect:-
After monitoring the purchasing department receive the goods and inspect that receiving goods
whether match with our order or not.
8. Approve and Pay Invoice:-
After receiving goods the purchasing department approves the receiving of goods is matched with order
and pay invoice and bill to the supplier.
9. Feed-Back:-
The last step in cycle is receiving the feedback from internal as well external customers fro
improvement in purchasing cycle. It may help to detect the errors and provide a chance for betterment
in future.
Conventional Purchasing Cycle:-
Beside the project purchasing the conventional purchasing cycle still in many organizations that starts
with requirement and ends with the payment of order.

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Overview of Cycle:-
Requirement Requisition Approval Quotation Order
Order Receipt Checking Acknowledgement of Receipt Receipt of
Invoices Matching Error Correction Approval Payment of invoice
1. Requirements:-
All the requirements of material about price quality, quantity, size in project is mentioned and
requirement pass to the supplier.
2. Requisition:-
After passing requirement then supplier provides information about price, cost, discount and price
setting methods etc.
3. Approval:-
After requisition approval is given by the purchase officer to supplier whether interested buying or not.
4. Quotation:-
In quotation the quality, quantity, price, size and weight etc. will be mentioned.
5. Order:-
After quotation the order is given to the supplier.
6. Order Receipt:-
After placing the order receipt will be received and one copy of receipt to be kept by the supplier.
7. Checking:-
At the delivery time when the goods are received a comparison is made between requirement and
actual goods received.
8. Acknowledgement:-
After the goods pass the gate will be sent to the store room store keeper sign the receipt after signing
the receipt by the gate keeper and store keeper forwarded to the accountant.
9. Receipt of Invoice:-
With receiving of goods the store keeper also receive the invoice total price sent by the supplier.
10. Matching:-
In this step invoice is being matched with the material physically received by the store keeper.
11. Error Correction:-
After matching if any fault found is recognized and defect will be informed to the supplier.
12. Approval:-
In this step, the accountant receives the invoice from store keeper and informed or approved that all
matters are right.
13. Payment:-
In the last the accountant after receiving and approving the invoice will make payment of invoice to the
supplier and cycle ends.

Purchasing Inferences:-
Purchasing inferences develop the link between the organizational different departments and direct
connection between the organization and supplier. The organization department may be the operation,
legal, accounting, data processing, design of product, receiving and the supplier.

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Purchasing Inferences:-
Legal Accounting
Operation
Purchasing Data Processing
Supplier
Receiving Design
1. Operation Units:-
Operating unit in the organization is main source of request for conducting purchases because this
department converts the raw material into the finished goods. This department determines the need
and quantity of purchases.
2. Legal Department:-
Legal department also make link with the purchasers. Purchasers require some legal formalities which
should be implemented. Assistance of the legal department is required is bid specification and contract
negotiation.
3. Accounting:-
Accounting plays a vital role in payment and records of purchases. This department is mainly
responsible to inform accounts payable when material is received.
4. Date Processing :-
This is mainly relating to computer recording of data about purchases. In small organization this process
is done by accountant and no separate department is required.
5. Design and Engineering:-
This department prepares the material specification and communicated to purchase department.
Purchasing also inform the design and engineering about new product and material improvement. The
design and engineering department work together to see whether changes in design and specification
can reduce the cost of material purchased.
6. Receiving:-
Gate keepers check incoming shipment for the quality, quality and timing, information is sent from
receiving department to purchasing and supplier.
7. Supplier:-
Purchases also develop a link with the supplier. Because purchasing in only possible when material can
be received from supplier and information about specification, quality and timing will be received.
Purchasing Polices:-
Definition:-
“It provides guidance and support to the professional purchasing also support the staff.”
In Other Words:-
“Purchasing policies refer to the set of purpose, principles and rules of actions that guide an organization
relating to purchase.”
Explanation:-
Purchasing policy guides about the way, method procedure, guideline to conduct purchases. It also guide
form whom, where and who purchase the material. This policy is general outline which clears the
purchasing management on a specific subject about purchasing a specific good material equipment etc.
Guideline while Making Purchasing Policy:-
There are some points that should be kept in mind while making a purchasing policy of the organization.
 The role of purchasing in any organization.
 The conduct of purchasing personnel.
 Social and minority business objective.

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 The buyer seller relationship.
 Operational issue while making a product.
 Compare offers from several vendors to avoid excessive valiance.
 Create opportunities for the comers.
Role of Purchasing:
The purchasing plays its role in three areas.

Role

Objectives of Purchasing officer Policies to conduct

purchasing function responsibilities purchasing

Objectives of Purchasing Function:-

The first role of purchasing plays in the objective of purchasing function;
1. Purchase Requirements:-
Purchasing helps to select supplier that meet purchase requirement. The supplier will provide only that
material which required by an organization.
2. Quality Purchase:-
To purchase only those material and services that comply with the engineering and quality standard,
always choose quality material that leads to better product than your competitor’s products.
3. Buyer Seller Relationship:-
It is another objective to purchase to establish a relationship between buyer and seller. To encourage
the supplier contribution in production to gain the maxim um benefits from supplier.
4. Treat Equally:-
Treat all your suppliers fairly and ethically that are working closely with other departments also.
5. Benefits for Employees:-
Conduct the purchasing operations in such a way that it enhances the benefit for employees and
community and smooth working of organization.
6. Support Corporate Objectives:-
Purchases should be done in such a way that its support the objectives formulated by top management.
It should meet the organizational goals.
7. Professional Capabilities:-
Purchasing helps to maintain a qualified purchasing staff and to develop the professional capabilities of
the staff by providing them training in conducting purchases.
Responsibilities of Procurement/Corporate Purchasing Officer/Purchaser/Project Manager:-
It plays the various roles and has certain duties and responsibilities.
“A purchasing officer plan and schedules the delivery of goods and services for industrial, commercial
and government establishment.”
Purchasing Officer:-
“Purchasing manager appointed by the city manager. The purchasing officer shall be the head and have
the general supervision of all purchasing functions.”

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1. Execute the Policies:-
The purchasing officer’s main duty is to execute and implement the policies made by the top level
management to achieve the organizational goals.
2. Purchasing Policies:-
He develops and publishes the functional purchasing and material policies and procedures to support
the efficient and effective operation level at level of organization.
3. Coordinating Strategy:-
He develops coordinate strategy between the purchasing departments and centers to maximize the
purchasing leverage of critical commodities.
4. Evaluation of Purchasing Activities:-
The purchasing officer evaluates the effectiveness of purchasing operations for the attainment of
organizational goals.
5. Provide Experts:-
The purchasing officer hires the experts to support the purchasing operations for the attainment of
organizational goals.
6. Other Tasks:-
He also performs the other tasks detailed by the corporate officers other than the purchasing tasks.
7. Selection of Vendor:-
There are many vendors in the market. The purchase officer selects those vendors that provide quality
material at low cost than other vendors.
8. Purchasing Negotiation:-
Purchasing officer also negotiates about the price of material, purchases etc. to gain maximum benefit
from the contract.
Policies Defining the Conduct of Purchasing Personnel:-
The purchasing also plays a role in defining the policies of personnel conduct that how to purchase. It has
two policies that will be followed while purchasing.
 Reciprocity Policy
 Ethics Policy
1. Reciprocity Policy:-
“A formal policy often exist detailing management to reciprocate purchases agreement.”
Explanation:-
Usually describe management opposition to the practice and list the type of behavior avoid.
2. Ethics Policy:-
“A document that defines the essential of how people within organization will interact with one another
as well as how they interact with any customer or client they seen.”
Explanation:-
This policy follows the rule of conduct of behavior. It expresses how people should with internal as well
as external customers ethically and avoid misbehavior with other.

Organizational Structure of the Purchasing Department:-

Organization structure refers to the hierarchy of decision making with in a department. The structure of
the structure of one purchasing department differs from other organizations.
1. Directors:-
The department director may be given any number of titles, including procurement manager director of
procurement or lea buyer. This individual is ultimately responsible for purchasing.
2. Deputy Director:-
The deputy director essentially takes cues from the director, helping operate the daily activities of the
department.
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3. Senior Buyer:-
In a manufacturing business, a senior buyer must know which materials are needed and what quantity
they should be purchased. The purchasing department must maintain a balance between the amount of
material coming in and what will be used in manufacturing process.
4. Assistant Buyers:-
Assistant buyers answer to the senior buyer but have their own responsibilities for staying a breast of
current inventory and tenders. He also evaluates the supplier funding the reliable supply source at the
greatest cost saving to the company.
5. Supporting Staff:-
Administrative assistants and clerks are the part of purchasing team. They are capable of handling any
number of tasks at once in order to help the department work as a cohesive unit.

Foreman:-
Definition:-
“A foreman is a skilled person with experience who
Is in charge of and watches over a group of workers.”
“A foreman is a supervisor, often in a manual trade
or industry.”
“A foreman is responsible for managing and overseeing
activity at work side, including assigning jobs, ensuring
safety and making sure projects remain on time and on
budget.”
Introduction:-
Foreman may be involved in recruiting, hiring training the workers necessary to successfully complete
projects. The foreman assigns duties and is responsible
for monitoring the progress of a project and keeping it on track from a time and budgetary standpoint.
Role/features of foreman:-
1. Supervision:-
Foreman supervises the construction site. This includes planning work for the day and assigning workers
to necessary task. Throughout the job, he be monitor both his workers and sub-contractors.
2. Scheduling and Planning:-
Foreman making sure that tasks are completely correctly and on schedule. In addition, he regularly
communicates with site engineers, projects manager and contractors about work scheduling and changes
that need to be made on the plane.
3. Safety:-
Foreman must ensure a safe job site for workers. He must know and enforce the relevant safety
regulations. This includes making sure workers use appropriate safety equipment and operate machinery in
a safe manner.
4. Quality Assurance:-
The foreman must monitor work around the site to ensure it is quality work that will pass the required
inspections any problem or mistakes must be reported to the project manager and corrected.
5. Administration:-
The foreman documents the work completed including hours worked and material used on each part of
the project. He may also be responsible for recommending the order of supplies and equipment or placing
orders himself.
6. Construction:-
Construction is also included in the roles of foreman. Foreman may also arrange for materials to be at the
construction site and evaluate planes for each construction job.
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7. Employee Relation:-
The foreman has direct rule in production in the organization so the relationship between foreman and
employees must be created. If any problem occurs the foreman must be informed.
Knowledge, skills and Attitude:-
1. Knowledge and understands:-
1: Company and project safety program.
2: Occupational health and safety and environment issue.
3: WSIB instruction provision.
4: Employee standard and company policies.
5: How to read plans.
2. Skills:-
Has ability to;
1: lead the crew.
2: Effectively communicate orally and in writing.
3: Coaches and teach crew members.
4: Apply good problem solving.
5: Managing different and diversity at work site.
6: Organize and delegate work.
7: Handle the administrative duties of position.

3. Attitude:-
Shows that he/she;
1: Is needy to take a new challenges and willing to learn.
2: Has good work ethics.
3: Can adjust to change.
4: Can be role model and one who leads by example.
5: Is willing to motivate and monitor new members.
6: Is a team player.
7: Takes responsibility.
8: Is honest and act with integrity.
4. Education:-
High school diploma or general education diploma (GED) preferred.
5. Experience:-
1: Foreman has three to five years’ experience.
2: Three years roads operations, supervisory experience desirable.
Human relations of a foreman:-
6. Human Relations:-
Good human relations are people getting along well together.
Appointing a foreman is not a matter of giving the post to the worker who has had the longest service, but
of selecting the man who has the talent to lead.
The foreman is the keystone in the production arch. He has to bridge the gap between responsibility for
just his own job and responsibility for the work of other. He is the link between workers and management.
He plays a major role in management labor relation.
Role of foreman in human relations
1: Winning support.
2: About personality.
3: Sense of responsibility.
4: Other supervisions.
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5: Discipline.
6: Don’t strangle.
7: Praise and criticism
8: Seeking production.
9: Constructive.
10: Communication.

1. Winning Support:-
The foreman close to the workers must know the points of view and the problems of the rank and file of his
workers. He must know the strong and the weak points his workers.
2. Sense Of Responsibility:-
A foreman should have a deep sense of responsibility for the everyday conditions under which his
employees work. Has should not be content until he has done everything within his power to make those
conditions good.
3. Discipline:-
No group of people can live together without organized control. Having business is a clear and
responsibility of management. Foreman arranges things that every man does his fair share of the work.
4. Praise And Criticism:-
Probably foreman among the techniques of handling man is the building of morale through praise
and encouragement. Quality praise as the facts warrants, but never let it be faint.
5. Construction:-
The foreman make it clear by his actions that he is not going around all the day seeking in his staff, but
to make their jobs better.
6. Communication:-
Effective communication is aimed at building a team of efficient and hearty workers. At whatever effort
of organization, the foreman must make his communication with his workers produce results.
7. Seeking Production:-
The foreman seriously seeking production in quantity and quality knows that success is attained
when he wins the willing and interested service of his subordinates.
8. About Personality:-
You need only look at any group of foreman to realize that they comprise a wide variety of social,
economic and cultural patterns. There is no single set of inherent qualifications automatically fitting a
person into the supervisory rank.
9. Other Supervisors:-
The foreman comes up against many departmental problems which have interdepartmental
ramifications. These may be handled in two ways;
By agreement between department heads or by a ruling handled down by supervisor authority.
10. Don’t Stagnate:-
Many a potentially great foreman never realizes his hopes simply because he defeats himself in little
ways. Foreman should be his own inspector, examining constantly his relations with those around him.
Stress handled.

Products

Definitions of Product:-

According to Philip Kotler:-

“Product is anything that can be offered to someone to satisfy a need for a what."

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According to William Stanton:-
“Product is complex of tangible and intangible attributes, include packaging, color, price, prestige and
services that satisfy needs and wants of people."
According to W. Alderson:-
“Product is a bundle of utilities consisting of various product features and accompanying services."
Characteristics / features of a product:-
1. Functionality:-
Whatever else a product does it must fulfill its purpose in a large context. It must function what exactly
should be product do? When should it do it? When should not do something? Some products work better if
they exhibit certain physical characteristics.
Example:-
Consider a laptop computer; it must be light in order to be portable. This affects usability, but it also affects
functionality. After all what good is a laptop computer that is too heavy to carry around?
2. Durability:-
Durability is the capacity of a product to maintain performance of the functions for which it was engineered
over its lifetime. We say maintain performance because we expect a product actual performance to vary
with time within some range.
3. Quality:-
Quality is the ability of a product to conform its requirement. This includes all the requirements not just the
engineering requirements. Quality is usually treated from the perspective of the customer, so it is
important that requirements prioritized from the customer's point of view to determine which
requirements will most affect product quality.
4. Aesthetics:-
This is really a special kind of customer requirement, but it really only impacts on a fraction of the products
that are designed.
For example; an automobile and a 10 must both satisfy certain aesthetic requirements, but the
automobiles engine and the pen's cartridge do not.
5. Affordability:-
Cost and quality are often seen as the dominant drivers in product development, but acting in opposition to
one another. In every general way the higher the quality of a product; the higher its cost. Finding an
appropriate balance of quality and cost is a key task of any designer. Cost is not price.
6. Fabric-Ability:-
Boy fabric ability, we mean that combination of manufacturability (the creation of actual parts) and
assemble ability (put in together of those parts into whole product or assembles thereof). Each aspect of
fabric ability has its own particular issues. Often the issues can conflict.
7. Instability:-
Many engineers forget that between the end of fabrication and the beginning of a product's useful life,
missing this can lead to serious problems for the customers. Instability includes distribution from the
fabrication facility to the operating location.
8. Usability:-
Usability contributes to quality a usable product will be perceived as being of higher quality. Usability is,
however, primarily a matter of design, whereas quality is a matter of both design and manufacturing.
9. Maintainability:-
Is regular maintenance required for desirable? How does the frequency of maintenance affect product
cost? Who should perform the maintenance: A qualified operator, or the end user? How does maintenance
affect warranty issues?

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10. Safety:-
One of the most important considerations especially these days when products tend to be so complex is the
safety of the product. Are there any regulations governing the product's performance with regards to
safety?
11. Marketability:-
For how long is the product marketable? Is it likely to remain in production for 20 years for six months? This
impacts the design approach and market interaction with competitors, tooling policy, manufacturing
facilities etc. Note that some products like spans or shrinking rapidly.
For example: Shop changes its calculator designs approximately every six months people used to buy a
television every 10 years, now they tend to buy a new one year 3 years or less. How does this shrinking
product life affect design process?
12. Performance:-
Performance refers to a product's primary operating characteristics this dimension of quality involves
measurable attributes; brands can usually be ranked objectively on individual aspect of performance.
13. Useful / Featuring:-
Usefulness or features are additional characteristics that enhance The Appeal of the product or service to
the user.
14. Reliability:-
Reliability is the likelihood that a product will not fail with in a specific time period. This is a key element for
users who need the product to work without fail.
15. Conformance:-
Conformance is the precision with which the product or service needs the specific standards.
16. Serviceability:-
Serviceability is the speed with which the product can be put into service When it breaks down, as well as
the competence and the behavior of the service person.
17. Goal first:-
As a great product manager, you must establish a goal first approach for your product and the features you
will add. The product team must agree on strategic initiatives first, then along the road map and
requirements against them.
18. Load With Conviction:-
There is a reason that PM's are considered the CEOs of their product. Competing interests will incite debate
over which features should be added to a product. Even on great games where consensus and trust come
easy, someone must make a final call when there are real reasons for disagreement.
19. Write More (And Less) Down:-
Engineers often complain that there is not enough written down, which makes it impossible to focus their
efforts. Resist the urge to write long requirements documents. Instead, capture features and their related
stories or requirements as bite-sized chunks.
20. Rank Features Based On Business Value:-
If you are taking the first the three actions, the final step is to quantify the value of features against metrics
that matter to your business. Then rank these features based on those scores. Use a simple "effort" scale to
rank these features based on projected maximum return.
The design development process in 6 steps:-
“Make it beautiful like this, but better and put my photo in the logo."
The quote above is funny because it's also true. A lot of customers don't have a very solid idea of what they
are looking for at the early stages of the graphic design development process. That's why it takes a skilled
team like ours to put together a good design development process.

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1. Communicate With The Customer Before Starting Design And Development Process:-
The first step of the whole design process begins with the customer. We discuss all of the important details
with them in order to better understand the project's purpose, the audience it caters to, the problem it can
solve at the overall vision of the customer.
2. Do The Research:-
After taking with the customer, we begin our research. We look at particular details about the product in
order to you better understand the market it is going into.
At the very least, we:
 Define the project's target audience. A project for everybody is a project for Nobody and it will not
be in demand.
 Study competitors in the market, strong and weak point.
 Decide on an approximate style of the site or application.
 Form a collection of elements that will fit in the product.
 Select graphic styles, conceptual materials, and think over colors games and force.
Once we have completed our research, we show everything to the customer. We provide our customers
with a detailed document that includes our findings and a graphic, mood board that helps assess the visual
look of the project and adjust it if needed. After discussion these with the customer and getting their
feedback will provide an estimate of time required for development.
3. Wire-Frame Design Process:-
If the customer gives the project concept a "go" the next step is to create wireframes.
Wireframes are interactive scheme schematic pages of the site or applications screens, like a screen
blueprint. Although the wireframes have the little design "go" into them initially, they allow us to make a
skeleton for the project that shows how different screen blocks connect and what the products
functionality will be like
This is an abstract three legged stool, the legs of which represent:
1) The business and its problems.
2) The users their needs and habits of information perception.
3) Technologies, opportunities and resources.
If you take any of the legs away the product will not work. All three legs are extremely important and each
of them should be equally taken into account while developing the product's interface.
4) Determining The Design Development Process:-
Wire framing helps us begin to helping the project visual features. With the wireframes we can move on
to designing a conceptual logo and the application's homepage or first few screen designs. To do so, we
take into account the wireframes and mood-boards which was created after doing the research. It is often
the case that early design ideas stick and become a part of the final product as the customer gets
accustomed to the look and feel of it. Once we complete the logo and finalize the rest of the homepage
designs, we get feedback from the customer and make any correction required.
After the homepage is approved we begin working on the design of the site or application's internal
pages. This stage takes a lot of development time because there is a large volume of simple to complex
pages and various interface elements that must be created. The smallest details need to be considered in
advance, things like entry field, drop down menus, potential mistakes, and lost pages designs for all
factored in at this stage of the process.
5) Preparing Resources For Post Lunch:-
As the customer checks the final designs of the product pages, our team has time to prepare the
resources needed after product launch. When designing on application, all of the icons and pictures must
be adjusted to fit the platform being used and colors and fonts sizes nefarious is screens should be
described.

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For web projects, a mock up with all of these elements, including color palettes, force and vectors icons
should be provided to the customer. This will be necessary for future developers to familiarize themselves
with the project's style and design quickly and easily.
At this stage the designer no longer needs to communicate with the customer as the project is over.
These resources are only needed in the case that there will be further development to the project and we
are happy to provide this documentation to our customers.

Use standard components

Concept
Development Post it note feedback from
peers
Concept
testing

6) Enjoy The Final Product Of The Design And Development Stages:-

After all of this hard work has been done after you have taken the six steps of the design process, the
final product is launched and your customers can reveal in the celebrations! If you are looking for a team of
designers for your project or if you have more questions about the design process, please do not hesitate to
contact us:
Top management support Knowledge management

Technology Market Orientation

New Product
New product development Development Success
teams New product development
process

New product development New product development

strategies speed

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Product design related to its manufacturing
Product design:-
"Product design as a verb is to create a new product to be sold by a business to its customers. A very broad
coefficient and effective generation and development of Ideas through a process that leads to new
products. Thus it is a major aspect of new product development.”
Explanation:-
Product design and manufacturing engineering involves the study of the design methodologies, materials
and this election and control of manufacturing process used in the development, design and manufacturing
of engineering products.
The product designer's role is to combine art, science and technology to create new products that people
can use.
(product design and development generally proceeds in a series of phases)
 Idea generation:-
Idea can come from a variety of sources. They can be:
1. Supply chain based
2. Competitor based
3. Research-based
1. Supply Chain Based:-
A supply chain can be a rich source of Ideas, customers, suppliers, distributors, employees and maintenance
and repair personnel can provide valuable insights. Customer input can be obtained from surveys, focus
groups etc.
2. Computer Based:-
One of the strongest motivators for new and improved products or services is competitor's products and
services. By studying a competitor's product or services and how the competitor operates an organization
can glean menu ideas.
3. Research-based:-
Research is another source of ideas for new or improved products or services. Research and development
(R&D) refers to organized efforts that are directed toward increasing scientific knowledge and product or
process innovation.
 Legal And Ethical Consideration:-
Designers must be careful to take into account a word array of legal and ethical considerations. Moreover,
if there is a potential to harm the environment, then those issues also become important. Most
organizations are subject to numerous government agencies that regulate them. Among the more familiar
Federal Agencies are:
 The food and drug administration
 The occupational health and safety administration
 The environmental protection agency
 Various state and local agencies
Example:-
Automobile pollution standards and safety features, such as seat belts, air bags, safety glass and energy
absorbing bumpers and frames have had a substantial impact on automotive design.
1. Product Liability:-
Product liability can be a strong incentive for design improvement. Product liability is the responsibility of a
manufacturer for any injuries or damages caused by a faulty product because of poor workmanship for
design.
2. Uniform commercial code:-
Uniform commercial code which says that product carries and implication of merchantability and fitness.
Other considerations in product and service design:-
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Beside of legal, environmental and ethical issues, designers must also take into account product or service
life cycles, how much standardization to incorporate, product or service reliability and the range of
operating conditions under which a product or service must function.
3. Degree of standardization:-
An important issue that often arises in both product service design and process design is the degree of
standardization. Standardization refers to the extent to which there is absence of variety in a product,
service or process.
Example:-
Standardized products are made in large quantities identical items, calculators; computers and 2% milk (are
examples).
4. Designing For Mass Customization:-
(Companies like standardization because it enables) mass customization, strategy of producing
standardized goods or services, but incorporating degree of customization in the final product or service,
but incorporated some degree of customization in the final product or service. Several tactics make this
possible. One is delayed differentiation, and another is modular design.
5. Robust design:-
It is the design that results in products or services function over a broad range of conditions. The more
robust a product or service, the less likely it will fail due to a change in the environment in which it is used
or in which it is performed.
Consider a pair of fine leather boots, obviously not made for tracking through mud or snow. Now consider a
pair of heavy rubber boots. Just the thing for mud or snow. The rubber boots have a design that is more
robust than that of the fine leather boots.
6. Degree Of Newness:-
Product or service design change can range from the modification of an existing product or service to an
entirely new product or service.
The degree of change affects the newness to the organization and the new nurse to the market. For the
organization a low level of newness can mean a fairly quick and easy transition for producing the new
product, while a high level of newness would likely mean a slower and more difficult and therefore costly
transition.
7. Human Factors:-
Human factors issue often arises interior design of consumer product. Safety and liability or two critical
issues in many instances and they must be carefully considered.
Example:-
The crash-worthiness of vehicles is of much interest to consumers, insurance companies, automobile
producers and the government.
Cultural Differences / Cultural Factors:-
Product designers in companies that operate globally also must take into account any cultural differences
of different countries or regions related to the product.
8. Global Product Design:-
Organizations that operate globally or discovering advantages in global product design, which uses the
combined efforts of a team of designers who work in different countries and even on different continents.
Such virtual teams can provide a range of comparative advantages over traditional teams.
9. Environmental Factors:-
Environmental impact at different stages of the product life cycle; climate change and greenhouse gases,
reducing environmental impact by design, develop product design proposals which reflect the potential
impact on the environment.

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10. Computer Aided Design (CAD):-
CAD is the product design using computer graphics. Computers are increasingly used for product design.
CAD used computer graphics for product design. Designer can modify an existing design or create a new
design on a monitor by means of a light pen a keyboard, a joystick or a similar device.
Computer aided design is used to design components of and products to exact measurement and detail.
Example:-
At general motors in Michigan a design team works on a new card design at the computer.
11. Computer Aided Engineering System:-
Some CAD systems allowed the designer to perform engineering and cost analysis on proposed designs.
Example:-
The computer can determine the weight and volume of a part and do stress analysis as well.
12. Prototype Development / Prototype Design:-
With product and process specifications complete, one (or a few) units are made to see if there are any
problems with the product or process specifications.
13. Manufacturability:-
Manufacturability is a key concern for manufactured goods. Ease is of fabrication and / or assembly is
important for cost, productivity and quality. With services ease of providing the services, cost, productivity
and quality or of great concern.
14. Feedback and testing:-
Product design is a process of constant iteration and refinement. Through the cyclical process of data
analysis, getting feedback from real users and testing the product team will constantly refine its solutions.
Challenges Of Service Design:-
Service design results some special challenges that are less likely to be encountered in product design, in
part because service design also involves design of the delivery system. Among the challenges are the
following:
1. Requirements or variable. This creates a need for a robust design that will accommodate a range of
inputs and perhaps a range of outputs.
2. Services can be difficult to describe. By their very nature, verbal description can be somewhat
imprecise.
3. Customer contact is usually much higher in services.
4. Service design must take into account the service-customer and counter. There can be a relative Lee
lodge number of variables to deal with in the service-customer encounter.
Guidelines For Successful Service Design:-
1. Define the service package in detail. Service blueprint may be helpful for this.
2. Focus on the operation from the customer perspective. Consider how customer expectations and
perceptions are managed during and after the service.
3. Consider the image that the service package will present both to the customer and prospective
customers.
4. Recognize that designers’ familiarity with the system may give them a quite difficult perspective
than that of the customer, and take steps to overcome this.
5. Make sure that managers are involved and will support the designers once it is implemented.
6. Define quality for both tangible and intangible. Intangible for more difficult to define, but they must
be addressed.
7. Make sure that recruitment, training and reward policies for consistent with service Expectations.
8. Establish procedures to handle both predictable and unpredictable events. Establish systems to
monitor maintain and improve services.

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Operation and Production Management

Standardization:-

Introduction:-
Standardization is the process of implementation of those strategies to improve the quality of the
production and developing technical standards based on the concern of different parties that include firms
users, users, inherent groups standardization of organization. Has a different effect on limiting the
undesirable outcomes of market failure. It is orderly or systematic formulation and adoption application
and review of industrial variety reduction.
Definition:-
“Standardization is the way, process or strategy to improve the production in the industry.”

“Standardization is the act of establishing a best practice of how to carry out a process and making sure
that the entire organization follows it.” (According to William J-Steven)

“Standardization is the dynamic process by which use set standards of terminology principles methods and
process within our organization.”
Example:-
Automobile producers standardize key e such as brakes electrical system and other under the skin
parts would be the same of all car models. By reducing variety companies save time and money while
increasing quality and reliability for their products.
Steps Involved in Standardization:-
1. Develop a platform for standardization.
2. Identify your most labor incentives areas.
3. Focus on executive and measure results.
Importance:-
Standardization brings innovation and it provides organizations. In addition, it brings loyalty for
customers. Standardization apart is a development tool for the organization which brings customers trust
for products services and system.
Standardization (ISO):-
“Activity of establishing with regard to actual and potential problems, provisions for common and
repeated use aimed at the achievement of optimum degree of order in a given context.”
Standard (ISO)
“Document established by consensus and approved by a recognized body that provides for a
common and repeated use, rules, guidelines or characteristics for achievement of the optimum degree of
order in given context.”
Kinds of Standardization:-
There are two kinds of standards:
 Customer/consumer standards
 Industrial standards
These are explained below:
A. Consumer Standards:-
“Consumer is an individual member of general public purchasing or using property, product or services
for private purposes.”
The first main section begins with an overview of standards development procedures, cited from
ISO/TEC GWD 59, Code of gods practice for standardization and briefly presents the history of consumer’s

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participation in standard work. Moreover general information is given on the duties, responsibilities and
managements of ISO and IEC Technical committee.
Also provides is the list of recommendations made by ISO and IES to their member in context of
consumer representation which states that national level should:

1. Support ISO and IEC Initiative:-

National level should support ISO and IEC initiative aimed at encouraging consumer representation in
standardization organize a plan that is complicated.
2. Orchestrate Consumer Participate:
Orchestrate consumer participate in relevant policy matters and in initiation and planning of standards
work programs.

3. Invite consumer interests:

Invite consumer interests to participate in all technical committees working on standards projects of
interest to the consumer.
4. Encourage the Active Participation of Consumer:-
Standardization encourages in national delegations to technical committees that and developing
consumer relevant international standards.
5. Guide Consumer Representatives:-
Guide consumer representatives on standards procedures and provide them with technical briefings.
6. Communicate the Results:-
National level should communicate the results of their work to public.
7. Finance Consumer Representation:-
Help find solution to find finance consumer representation when required.
8. Keep In Contact:-
Keep in contact with the public to sound out consumer opinion.
9. Improve Their On National Structure:-
Study the way other consumer committee works, so as to improve their own National structure, where
appropriate.
10. Co-Ordinate All Activities:-
Co-ordinate all activities arising from their recommendation within the same country.
How International Standards Affects Consumers
Consumers expect that services and products will be consistent in quality, durability and ease of use.
International standards for voluntary rules and guideline for that helps to and sure:
 Safer, healthy, more environmentally / sound products and services.
 Products with improved quality and reliability.
 Better operational compatibility between product and greater consistency in the delivery of
services.
 Improved choice and access to services.
 Lower cost for consumer.
 Better product and service information.
B. Industrial Standards:
During World War II simplified standards were established to increase material output. The present
Japanese standards Association was established after Japanese defeated in World War II in 1945. The
Japanese industrial standards committee regulation pro in 1946, Japanese standard was formed.
Industrial standardization law was revised in 2004 and the"Jis mark". Product certificate system was
changed and the new jismark was applied since October 1st 2005 upon re-certification.
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Japanese Industrial Standards (JIS):-
Japanese industrial standards (JIS) Nippon Kogyo Kikaku specified the standards used for industrial
activities in Japan. The standardization process is coordinated industrial standards committee list
through Japanese standards Association.
Industrial Standardization:
1. Functions Contribution to Economic Activity:-
There are following functions of industrial standardization contributing to economic activity:
i. Appropriate Product Quality Standards:-
There is appropriate product quality standard in industrial standardization contributing to economic
activity.

ii. Product Information:-

(A standardized product provides complete product information) history can get the complete
information of a product through standardization process.
iii. Dissemination of Technology:-
True standardization, technology is disseminated throughout the industry for the betterment of
organization.
iv. Product Efficiency:-
The production efficiency can be increased through industrial standardization when a company is
death of best practice of how to carry out a process and making sure that entire organization
follows it.
v. Competitive Environment:-
vi. Standardization create a competitive environment in the market as it is the way, process or
strategy to improve the production in the industry.
vii. Securing compatibility and Interface:-
The main function of standardization contributing to economic activity is securing compatibility and
interface.
2. Functions as a Means to Achieve Social Goals:-
Industrial standardization can promote the proactive activities of companies and consumers:
Without imposing regulation by technical stands defined by mandatory legislation. If they are working
opt as a means to pursue policy goods such as:
i. Enhancement of industrial competitiveness.
ii. Preservation of environment safety and drives.
iii. Promotion of energy conservation and resource conservation.
3. Functions as Action Rules to Promote Mutual Understanding:-
Functions of industrial standardization as action rules to promote a mutual understanding are:
i. Unify Technical Infrastructure:-
Industrial standardization can unify technical infrastructure such as turns, mark, measurement units,
best assessment method, production methods, safety level, format display of specifications etc.
ii. Means to Mutually Communicate Technical Requirements:-
Industrial standardization can unified the technical infrastructure as a means to mutually
communicate technical requirements and technical data between related practices like:
 Manufacturing
 Distributors
 Users
 Consumers
 Researchers

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4. Functions of Promoting Trade:-
As trade has become globalized and trade volume increased the maintaining of different national
standards as technical standards by individual countries, as defined by individual countries, as defined
by mandatory legislation,
Many under international trade. It's difficult to ensure that all countries bring their mandatory technical
standards legislation into line with each other’s standards.
Merits of Standardization:-
To Manufacturer:
Merits or benefits of standardization (of products) to manufacturer are as follow:
i. Low Unit Cost:
With the help of standardization the manufacturer can reduce their per unit cost by implementing
strategies to improve their quality product. Can be employed but the cost should remain stable
along with it.

ii. Better Quality Product:-

Standardization assists in quality control. It lay down standard parameters and provides better
quality products by applying various international standards on products.
iii. Increase Interchangeability of Parts:-
Standardization helps to increase interchangeability of parts which make standardized products
more attractive / effective. Interchangeable parts greatly affect the cost of production while
increasing productivity and making replacement it (or repair relative Lee easy compare.)

iv. Better Utilization Of Manpower And Equipment:-

It helps to better utilize the manpower and equipment need to make a product standardized.
v. Accurate Delivery Data:-
Standardization provides accurate delivery data to manufacturer to better deal with business or
parties involved.
vi. Better service: -
Standardization or applying standards in in production can provide better service for production
control, stock control and purchasing etc.
vii. More effective training:-
It provides more effective training to their employees or working labor to make a simple product
more standardized and how to better perform their job / work.
viii. Better Methods And Tooling:-
Standardization of products can be more beneficial for manufacturer in providing better methods
and tools to make their products more effective and attractive.
ix. Rationalization Of Different Products:-
Manufacturer also gain benefits of rationalization of different products by buy red using three
numbers of products that you sell in order how to invest more in the products that makes the most
profit.
x. Improved Management Design:-
It provides the benefits to manufacturer by improved the management and design of the product at
cost
xi. Effective Manners. Facilitate The Exports And Marketing Of Products:-
It facilitates the exports of goods on international level and by marketing of products e.g. in order to
confirm to form standards 84% of German companies Europe up standards part of the export
struggle.
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xii. Increase In Goodwill:-
When a manufacturer provides standardization products or creates few standards of the products
then this increase the Goodwill of manufacturing.
Merits / benefits to consumer:-
Benefits of standardization to consumer or as follow:
i. Protection Of Safety And Health:-
Has been standardized products standards for already noun so it provides protection to consumer
regarding safety and health or ore production of safety and health.
ii. Environmental Protection:-
The main benefit of standardization to consumers is that they can easily get environmental
protection if a product or service is standardized.
iii. Ease Of Use:-
The standardized products provide an ease of use to their consumers.
iv. Quality And Reliability:-
Consumers are show about quality and reliability if a product is standardized by international or
national standards.
v. Consistency In Delivery Service:-
There is consistency in the delivery service in case of products which are standardized.
vi. Available For The Most People:-
Standardized products are available for the most people who only rely and use standardized
products.
vii. The Best Goods And Services:-
If a product is standardized by national or International standards it provides the best goods and
services.
viii. Reduce Uncertainty:-
There is no uncertainty to consumers about quality and reliability in standardized products.
ix. Protection From False And Misleading Claims:-
Consumer get protection from false and misleading claims in case of standardized products.
x. Compatibility Between Products:-
xi. Transparency of Pro Information:-

Demerits of Standardization:-
i. Design Maybe Frozen:-
In case of standardized products the design may be frozen with too much Imperfection remaining.
ii. High Cost Of Design Changes:-
High cost of design changes increases resistance to improvements.
iii. Decrease Variety Results:-
Standardization decreased variety results in less consumer appeal.
iv. Tend To Favor Only Large Company:-
Standardization tends to favor only large company which is the main drawback of it.
v. Standards Once Set Resistant Change:-
One of the biggest drawbacks of standardization is that the standards ones set resistant change.
vi. Lack Of Adoption:-
Standardization has Lack of adoption since Markets and different dynamic standardization is always
challenged to meet these changes.

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vii. Lack Of Uniqueness:
It has lack of uniqueness different outlets and regions offer unique opportunities which may be
beneficial to the company but due to standardization these opportunities are not acted upon since all
outlets are forced to conform to the standard practice.

Simplification
Outline:-
 Meaning
 Steps in simplification
 Objectives of simplification
 Pros and cons of simplification
 Difference between standardization and simplification
Meaning:-
The word simplification means the process of making something simpler or easier to do or understand. In
operational management simplification means gross simplification of a complex process. You can use
simplification to refer to the think that is produced when you make something simpler or when you reduce
it to its basic elements. The concept of occasion is closely related to the standardization.
Definition
According to Dr. M.K. Rastogi:-
"Simplification is the process of reducing the variety of products manufactured."
According to William:-
"Simplification is a process of product analysis through which unnecessary varieties and Designs are
eliminated. Only a limited number of grades, types and size of the product are retained."
According to Elbert Eirstern:-
"Everything should be made as simple as possible but not simpler."
Simplification in an enterprise cannot the elimination of excessive and undesirable or marginal line of
product to hang out waste and to attain economy couplet with the main object of improving quality and
reducing the cost and price leading to increased sales.
Steps In Simplification:-
The most important productivity factors in work simplification process are linked with human resources
(workers, specialist and managers) product design, technology, plant and equipment, materials and energy,
work methods and Organization and management styles.
Improved work methods involving cars capital, and Labor intensive methods constitute the most promising
area for productivity improvement. Work simplification in words seven steps. Resort described as follows:
Step 1: Identification Of The Problem:-
The first step in simplification is locating work problems and properly identifying the various factors
involved is the only reliable method of determining where improvements can be made, how much efforts
are justified in developing an improved work method that can most effectively be developed. The proper
identification of work problem may be facilitated by a preliminary survey.
Step 2: Method Analysis:-
Cutting the effects of the problem requires objective thinking in in terms of functions. Determine the main
objectives of the work under study, and how these can be attained. With a detailed description of each step
in chronological order, the possibilities for improvement become obvious.
How to analyses the method:
 Determine the job and decide on the subject is selected for analysis
 Record every detail as it occurs
 Make several short charts then a long single chart
 Standard symbols used in the flow process chart properly
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Step 3; Challenge Every Detail and List All Possibilities for Improvement:-
The third step in the work simplification pattern is when the job is put on the witness and questions are
asked that lead to possibilities for improvement.
 Ask questions:-
Knowing what questions to ask of the job or its details is crucial. The six questions used in work
simplification are;
What, why, when, how, where and who.
The question 'why' specially has been credited with affecting the greater improvements.
Step 4: Develop A Better Method:-
Step 3 should be re-examined in step 4. With clear thinking one can assess the merits of the individual
possibilities, and with imagination can visualize how these individual possibilities can be utilized and related
to the overall job. This detailed consideration of each and every possibility for improvement should lead to
the selection of the several most meritorious and promising suggestions for improvements and it
developed a better method for the solution of problem.
Step 5: Review the Problem and Analysis:-
After 12th in the different methods the final selection of one of the alternative proposals may be deferred
until after the validation of the proposals by trials under typical conditions of work. The soundness,
accuracy and competence of all work done up to this point should be checked. Any error or omission should
be e rectified by appropriate corrective action. When the proposed method or methods have been
thoroughly checked then one is ready to evaluate these proposals.
Step 6: Validate the New Proposal:-
Validation main may involve extensive experimentation and Research to test assumptions or to develop
equipment, processing, or materials or it may involve a simple trial run for the proposed methods. The main
objective of the testing is to gather information about the work-ability of the proposed methods and to
supply verification for the information presented in the comparative analysis of step 5.
Step 7: Install New Methods Effectively:-
This is the final step aimed with the facts and ready to face the challenge. How to do it? How to get people
to accept the change? How to get Corporation?
There are three common of getting results:
1. Telling 2. Selling 3. Consulting
Tell them about the change, without showing the authority. Sell them by explaining why, and consult them
for their opinions on how father improvement can be made.
Objectives of simplification:-
1. Reduce Manufacturing Operations:-
Simplification involves fewer parts, varieties and changes in product that reduce the manufacturing
operations, because when process of producing different varieties of product it it definitely reduce the
manufacturing operation.
2. Increased Volume of Product:-
Simplification reduces variety. Thanks volume of remaining product may be increased. When the production
manager reduces the variety of product then production manufacturer increase the volume of remaining
products.
3. Quick Delivery:-
Simplification provides quick delivery and better after Sales Services. Simplification eliminates the
unnecessary variety so remaining products are easy to manufacture and in large volume so quick delivery of
products is easy for manufacturer.
4. Better Inventory Control:-
Simplification reduces inventory and thus results in better inventory control. Inventory control means
coordination provision of tea supply, shortage, distribution and recording of materials to maintain quantities
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adequate for current needs without excessive oversupply or loss. So due to simplification it is easy to control
the inventory.

5. Lower Production Cost:-

Simplification lowers the production cost because when the varieties of product reduced then product
manufacturer produce the limited units of products and need of material is also of same nature that reduce
the production cost.
6. Reduce Price of Product:-
Simplification reduces the price of product. By producing the same nature of product it increase the volume
of product and as a result price of product reduces.
7. Improve Product Quality:-
Due to simplification process variety of product produced and manufacturer produce the limited product that
improves the quality of that product.

8. Better Brand Image:-

Because of Limited variety of product and better quality of product, it increased the brand image and people
are more interested in boiling of that product.

9. Reduce Excessive Work:-

Simplification reduces the excessive work of employees. Simplification process reduces the variety of product
that reduces the unnecessary production of different products and as a result of excessive work of employees
is also reduced.
10. Stop Wasteful Use of Resources:-
Simplification is a process of product analysis through which unnecessary varieties and designs are
eliminated; only a limited number of products are retained that stops the wasteful use of resources.
Merits and Demerits of Simplification / Pros and Cons of Simplification:-

Merits / Pros of Simplification:-

1. Save Storage Space:-
Simplification is a process of reducing the variety of products manufactured that increase the storage space.
More variety of products need more space and vice versa.
2. Reduce Inventory of Material and Finished Goods:-
Simplification is a process of reducing the variety of product, it also reduced the material for more products
and as a result Inventory of finished goods also reduced.
3. Reduce Investment in Plant and Equipment:-
Simplification eliminates the unnecessary varieties and designs of products and produce only limited number
of products, so there may be less investment in plant and equipment. Varieties of products demand more
equipment and Limited products demands less equipment for production.
4. Simplified Planning and Production Method:-
The main purpose of simplification is to simplify the process of planning and production method. Because it
also reduces the cost of product manufactured and not required more investment.
5. Simplify Inspection and Control:-
Simplification is processes of eliminating the unnecessary production of goods that as a result produce
Limited products therefore it also simplify the process of inspection for the control of products.
6. Reduce Required Technical Personnel:-

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Simplification is a process of elimination of excessive and undesirable or marginal line of product that reduces
the variety of products and as a result there is no need for more equipment, so it reduced the required
technical personnel.
7. Reduce Sales Price:-
As simplification require The Limited production of products that demands the same type of material so same
material may reduce the cost of that material because of large quantity of material and as a result sale price
of product also reduced.

8. Expand Market:-
The main purpose of simplification is to increase the demand of product by improving the quality of product
and produce only that goes that have a name in the market. Because of of more demand of product it
expands the market.

9. Lower Production Cost:-

Simplification lowers the production cost because the variety of product reduced then product manufacturer
produced The Limited variety of products and need of material is also of same nature that reduced the
production cost.
10. Better Quality:-
Due to simplification process variety of products produced and manufacturer produced The Limited products
that improve the quality of products.

Demerits / Cons of Simplification:-

1. Decrease In Activity:-
E oversimplification may result in decrease in activities and selectivity. Simplification maybe come the
product manufacturer lazy, it reduces the activities of making more products that result in production of
Limited products.
2. Creates Complicated Issues:-
Over simplification of goods and services creates more complicated issues. Because oversimplification may
result to decrease the demand for products of company.
3. Decrease in Selectivity:-
Over simplification may result in decrease in selectivity. Simplification process reduces the variety of products
as a result consumer has limited opportunity for selectivity.
4. Market Failure:-
Over specification may result in decrease the market share because when customer have limited products for
selectivity then and they demand for other products that have more option for consumers.
5. Limited Variety:-
Simplification process eliminates the variety of products but it also reduces the option for customer to
choose or select the product according to their taste, like or dislike, it reduces the variety of products.
6. Outdated Tools and Equipment:-
Simplification process produces the limited variety of products and they not focus on modern methods of
production to improve the quality of product because they just focus on the limited variety of production and
not their methods.
7. Limited target boundary: -
Over simplification process more likely to reduces the target boundary site. They attract and interactive only
a limited number of customers.

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8. Reduces The Profits:-
Specification reduces the variety of products and focus on a limited number of products the consumer switch
to other products that reduces the sales ultimately the profits of the company also suffers.
Difference between Standardization and Simplification:-
Standardization Simplification
1. Definition
It is a dynamic process by which we set standards of
Is a process by which reducing variety of a product
Technology, principles, methods and processes
by limiting product range, design or type of material.
within our organization.
2. Meaning
Simplification means eliminating unnecessary
Standardization means maintaining standard among diversity of product, size and types.
size, type, weight, and measure and quality of the
product.

3. Approach
In standardization modular and core product
In simplification and analytic approach is adopted.
approach is being followed.
4. Objectives
Production in material cost reduction of storage and Its objective is to simplify handling by reducing and
inventory. eliminating unnecessary movement and equipment.
5. Steps
It was the three steps: It also involves three steps:
 Develop a platform for standardization.  Pick a job to improve.
 Identify your most labor intensive areas.  Break down the job in detail.
 Focus on executive and measure results.  Challenge the job.
6. Standard Production
The production of goods and services are Co-level of standard products is used in
standardized. simplification.
7. Features
Design activity to reduce variety among group
Elimination of complex features.
products on parts.
8. Cost
Standardization requires high cost than In simplification less cost is used for production of
simplification. goods.
9. Follow up
Standardization process starts with automate;
Simplification follows up the rules and regulations of
reduce cost, continuously improvement and control
standardization process.
to simplify products.
10. Market Failure
Standardization has a significant effect on limiting Simplification has non-signification effect on
the undesirable outcomes of market failure. unlimited desirable outcomes of market failure.
11. Complicated Issue

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Over simplification of goods and services creates
Standardization creates less complicated issues.
more complicated issues.
12. Process
It is the process of implementing and developing Simplification is a process of design techniques that
technical standards based on conversion of different reduce the variety of products and make process
parties. more feasible or manageable.
13. Variety
It is the extent to which there is an absence of It is the process of product analysis through which
variety in a products, services and process. unnecessary varieties of designs are eliminated.
14. Limited Number of Grades
Standardization having selecting the variety and the
Simplification produces the limited number of
products to be retained as much its manufacturing
grades and size of the product that they retained.
details.
15. Tool and Techniques
Standardization requires JIT initiative to replace It is the JIT initiative to identify and eliminate any
inconsistent methods with standard routine. unnecessary step through process analysis techniques.
16. Physical Performance
No physical performance involves in simplification.
In standardization physical performance require for
setting standards.
17. Efficiency
Work is done according to high efficiency. Simplify the production with low efficiency.
18. Improvements
We can improve the quality of products in
In standardization we cannot improve products, we
simplification.
can only set standards.
19. Interchangeable parts
Standardization using commonly interchangeable
The number of parts assembled option in a product.
parts.
20. Work Process
Standardization works with units and it can also Simplification provides quick delivery and work
measurable. better post sales services.
21. Durability
Standardization enhances durability by setting Simplification reduces complex materiality and not
standards. produces more durability than standardization.

Reasons for Product and Services Design:-

Product and service design has difficulty and strategic implication of success and for prosperity of an
organization.
Organizations become involved to product and service design or redesign for a variety of reasons.
The main forces that initial design or redesign are the market opportunities and threats.
Factors rice to market opportunities and threats can be one or more changes involves as follows:

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Main Reasons

Phase 1 economic
Phase 2 social and demographic
Phase 3 political, liability or legal
Phase 4 competitive
Phase 5 cost or availability

Reasons:-
These are the reasons:
1. Economic conditions:-
The main reason behind for the product and service design or redesign is the certain economic conditions
that involves the sign of both market opportunities and market Trends that affects a product or service
design through micro as well as through macro levels
Examples:-
(a):- This market conditions leads towards the low demand and specific buying patterns.
(b):- Through these faces they also include the excessive warranty claims.
(c):- The basic threat is to maximize the production level up to certain limit while reducing the costs.

2. Social And Demographic:-

Another reason for changing the demand of the people as socially and demographically, the product and
service design or redesign decisions are made to fulfill the requirements of market up to their standards. For
that it has an impact on future activities.
Examples:-
(a) The ageing baby boomers and the different populations shift.
(b) The changing of age structure.
(c) Human population in terms of size, density, location, age is targeted by tracking a new product design.
(d) These activities lead to words increases diversity and changing their demand with certain conditions.
3. Political Liability And Legal Forms:-
, the product and service design free shapes changes with the innovative market environment conditions. Has
it has an impact on future activities, consequently, e decisions in this area or some of the most fundamental
that managers must make for the enforcement of government. Changes rules on the basis of Health and
insurance, their safety needs, the new rules, laws and regulations must be and forced for the success of an
organization development process through:
Examples:-
(a) Government agencies, laws and rules that influence and limit various organizations and individual in a
given society.
(b) Different legal forms made for the development of both industrial for agriculture development.
4. Competitive Advantage:-
The design of a product and service can easily be changed, modified because product is a bundle of utilities
consisting of various product features and accompanying services. Competitive advantage may take by many
organizations by adding unique features into a product design through as following:
Examples:-
(a) Adding new features in a product design
(b) Changing or modifying product or service design
(c) Using new advertisement services

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(d) Attracting sales promotion techniques
(e) Increase the demand of product and service
(g) It of product design and keeping a myopic view of all these activities.
5. Cost Or Availability:-
The cost or availability of materials, components, labor, and water and energy e is being available for the
fulfillment of desired production requirements. Being an organization wants to change the product design
because of the no availability of cost, material for transportation problems.
 Analysis of power, energy reasons.
 Reduces the raw material cost
 Cheaper cost but quality standards
 Reduce labor conflicts
 24 hours availability of power to run out the Plant production activities
 Smoothly maximum output while minimum input
6. Technological Changes:-
"The change is constant." the change in product component and its procedures for satisfying consumers'
wants, needs and demands. Hence, it is said that “forces that create new technologies creating a new product
and new market opportunities."
Examples:-
With the advancement of Technology, American apparel uses "RFID" (radio frequency identification
development) process does in many retail stores they try to track and manage the product and service
inventory system.

Outlines:-
 Meaning  Development of Inspection
 Dimensions of Quality Control Program
 Quality Control  Types of Inspection
 Inspection  On Site Inspection
 Centralized Inspection

Quality Control:-
Introduction:-
Quality control may be defined as “system that is used to maintain a derived level of quality in
product or services. It is systematic control of various factors that affect the quality of product. It
depends on material, tools, machines, types of labor etc. Quality control term, it involves inspection at
particular stages but more inspection does not mean quality control. Quality control aims at
prevention of defects at source relies on effective feedback system and corrective action procedures.
Quality control uses inspection as a quality management.

Definition:-
According to Juran:-
“Quality control is the regulatory processes through which we measure actual quality performance
compare it with standard and act on the difference."

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ISO 9000 Defines QC as:-

"A part of quality e management focused on fulfilling the quality requirements."
General Definition:-
"Quality control is a process through which a business seeks 24 their product quality is maintained
improved and manufacturing errors are reduced or eliminated."
Inspection:-
Introduction:-
Inspection is an important tool of modern manufacturing process. It helps to control quality,
producers manufacturing costs, laminate scrap losses and arrigable cause defective work. It is the cost
art of controlling the production quality after comparison with the established standards and
specifications. It is the function of quality control. If the said item does not fall within the zone of
susceptibility it will be rejected and corrective measures will be applied to see that the item in future
conform to specialized standards
Definition:-
"An inspection is an organized evaluation for formal examination exercise, which determines whether
something is up to stander."
“It is an activity of measuring, examining, testing one or more characteristics of a product or service and
comparing the results with specified requirements in order to establish weather conformity is achieved of
each characteristic."
Types of Quality Control
1. Off-Line Quality Control:-
Offline quality control methods for quality and cost control activities conducted at the product and
process design stages to improve product manufacturability and reliability and to reduce product
development and lifeline cost. Parameter design is an offline quality control method. At the product
design stage the goal of performance less sensitive to the effect of environment variables,
deterioration and manufacturing variations. Because parameters design reduce performance variation
by reducing the influence of the sources of variation rather than by controlling them.
2. Statistical Process Control:-
Statistical process control is an industry standard methodology for measuring and controlling quality
during the manufacturing process. Quality data in the form of product or process measurements are
obtained and real time during manufacturing status control limit for determined by capability of the
process. Whereas specification limit are determined by the client’s needs.

3. Acceptance Sampling Plan:-

A plan in which management specifies two sample sizes and to acceptance number if the quality of the lot
is very good or very bad; customer can make a decision to accept or reject the lot on the basis of the first
sample, which is a smaller than in a single sampling plan.
Steps in Quality Control:-
1. Identify Organizational Goals:-
The process of quality assurance starts by defining how employee’s jobs are tied to your company or
organization’s goals. Employees need to know the organization’s mission, vision, values how they
relate to the company and their role in it. Knowing their individual goals and how it relates to the
organization’s goes in the process of quality assurance.
2. Identify Critical Success Factors:-
The factors that make an organization’s quality Assurance system successful should be identified.
These factors can be a well design production process, great product, technical support, customer
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support, financial security or employee’s satisfaction. Make a list of a primary factors that influence
the process of quality assurance in order to continuously and consistency manage those factors.
3. Identify Internal And External Customers:-
Identify the key group of customers that make your Quality Assurance system works. Knowing his
customers and their needs can help you to develop program and services for those people. Often
customers are vendors, supplier, employees, and volunteers or direct customers.
4. Customer Feedback:-
Customer feedback is essential in the process of quality assurance consistent customer feedback
enables organizations to detect and solve quality problems. Customer feedback could be obtained
through regular customer service, by phone calls, email focuses group are in person.
5. Implement Continuous Improvement:-
Quality Assurance is synonymous with continuous improvement. These results or information
gleamed from an organization’s survey or other customer feedback tools must now be used to make
the necessary changes to the quality assurance process. This could entail more leadership
development, customer services training, higher level of staffing, and correction to the production or
services you manufacture or deliver.
6. Select Quality Management Software:-
Select Quality Assurance software that not only helps you to implement a quality assurance process,
but also maintain and improve the process.
7. Measure Results:-
Though there may be many reasons for implementing a process of quality assurance, one of your
main goals is to ensure your organization meets the needs of your customers. When an organization
does not reach this goal, it is difficult to show a positive ROI (Return on Investment) and the existence
of the organization is brought into question.
Dimensions of Quality Control:-
1. Performance:-
Performance refers to a product primary operation characteristics. This dimension of quality involves
measurable attributes; brands can usually be ranked objectively on individual aspects of performance.
2. Features:-
Features are additional characteristics that enhance The Appeal of the product or services to the user.
3. Reliability:-
Reliability is the likelihood that a product will not fail with in a specific time period. This is a key
element for users who made product to work without fail.
4. Conformance:-
Conformance is the precious with which the product or services meet the specified standards.
5. Durability:-
Durability measure the length of a product's life. When the product can be repaired, estimating
durability is more complicated. The item will be used it is no longer economical to operate it.
6. Serviceability:-
Serviceability is the speed with which the product can be put into service when it breaks down, as well
as the acceptance and the behavior of the service person.
7. Aesthetics:-
Aesthetics is the subjective dimension indicating the kind of response a user has to a product. It
represents the individual’s personal preferences.
8. Reputation:-
Reputation means the first performance and other intangibles, such as being ranked first.
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9. Perceived Quality:-
Perceived quality is the quality attributed to a good or service based on indirect measure.
Objective Of Inspection:-
1. Measurement;-
Obtain Assurance that the project has been completed in reasonably close conformity with plans and
specifications including authorized changes and extra work. Provide a basis for acceptance of the
project and costs with federal aid funds.
2. Continuous Improvement:-
Acquire information on problem and construction changes. Provide an opportunity for timely
remedial action where acceptable provide documentation of solution to problem or commitments.
Encourage other STA unit’s involvement and Awareness of problem to avoid future re-occurrence.
3. Effective Controlling:-
Assess the state's abilities and effectiveness in managing and controlling federal aid construction
projects with respect to items such as these:
Qualifications training, certificate return guidance, stuffing, equipment, and facilities project
documentation, including inspection diaries test report etc.
4. Development Program:-
Promote the development and implementation of quality management programs.
5. Technical Recommendations:-
Offer technical and procedural advice requirement improve Construction Techniques and Engineering
supervision.
6. Innovations:-
Report on special or innovation construction materials, methods, procedures, new equipment and
other technological innovations.
7. Professionalism:-
Professional development of FHWA (Federal High-Way Administration) and state review personnel.
8. Other Supporting Items:-
 Establish contact and communications with project staff
 Become familiar with project
 Attend partnering workshops and project progress meetings
 Monitor and evaluate progress of work
 Follow up previous inspection findings
 Lessons learned
Development Of Inspection Program:-

1. Determine Existing Maintenance Costs:-

The most difficult step in the initial justification of a predictive maintenance program is the
determination of actual controllable costs most plants do not track all controllable costs that are
directly driven by the maintenance operations. In most cases, the cost accounting function limits cost
tracking to actual labor and material used to maintain plant equipment. They do not include the
impact of maintenance on availability, production capacity, operation costs, product quality and
myriad of other factors that limit plant effectiveness.
2. Select Predictive Systems And Vendors:-
Total plant predictive maintenance program must use a combination of monitoring and diagnostic
technique to achieve maximum benefits. None of the individuals Technologies such as the thermal

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imaging and vibration provide all of capabilities that are required to evaluate critical plant program
and Systems.
3. Training Requirements And Support:-
Most predictive maintenance vendors will offer some level of training however most of these training
programs are directed towards the use of a specific system i.e. Software and instrumentation, rather
than the comprehensive use of the technology. In general independent training campaigns, with no
Association with equipment manufacturers, can provide high quality training with an unbiased
approach.
4. Get Management Support:-
Lack of a total commitment from plant or corporate management to provide the resources required
to implement and maintain a program is the single largest reason for failure of predictive
maintenance programs. These are a number of reasons for lack of long term commitment.
5. Develop A Program Plan:-
A definite program plan that includes all activities required by a total plant predictive maintenance
program must be developed before implementation your program. The program plan should include:
 Specific scope of program
 Goals and objectives
 Method that will be used to implement, maintain and evaluate the program.
6. Dedicate Personnel:-
Part of a successful program is a full-time dedicated staff. The program cannot be implemented or
maintained with part-time personnel. Regardless of predictive maintenance techniques used for the
program regular, periodic monitoring of artificial plant parameters is an absolute necessity.
7. Establish Accountability:-
The predictive maintenance team must understand division for implementing the program and be
accountable for its success or failure stuff commitment is an absolute requirement for a successful
program. Without this total commitment the program will probably failed.
8. Maintain Program:-
Many programs fail because the plant stuff did not follow through after the document stage. Meet
each of the schedules and milestones developed in the program plan. Constantly evaluate the
programs progress and correct any errors or problem that may exist. A successful predictive
maintenance program must be dynamic.
9. Communication:-
Communication is absolutely necessary for long term success. All successful programs have a well-
defined communication plan that includes transmittal of corrective actions identified by the program,
feedback from manufacturing and a regular Program status report that is circulated throughout the
plant and corporate management team.

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