Introduction to Production and Operations Management

Definition and Concept

 Production Management focuses on the manufacturing of goods, while Operations Management

extends to services.
 Production involves transforming inputs into outputs through mechanical or chemical processes.

Production System

 Organized activity with specific objectives.

 Converts inputs into useful outputs.
 Includes feedback mechanisms for improvement.

Types of Production

 Job Shop: Small-scale, custom production.

 Batch Production: Manufacturing in lots at intervals.
 Mass Production: Large-scale, continuous production.
 Continuous Production: Fully automated and sequential manufacturing.

Production Management

 Involves planning, organizing, directing, and controlling production.

 Key objectives: Producing the right quantity, quality, at the right time and cost.

Operations Management

 Focuses on planning, organizing, and controlling human and material resources.

 Includes frameworks like aggregate planning and break-even analysis.

Scope of POM

1. Facility Location: Choosing optimal locations for operations.

2. Product Design: Converting ideas into marketable products.
3. Plant Layout & Material Handling: Efficient placement of equipment and material movement.
4. Production Planning & Control: Scheduling and monitoring manufacturing processes.
5. Quality Control: Ensuring defect-free products and customer satisfaction.
6. Material Management: Efficient handling and storage of materials.
7. Maintenance Management: Ensuring minimal downtime for machines and facilities.

Production and Operations Management ensures efficiency in manufacturing and service industries by optimizing
production processes, resource utilization, and quality control.

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Plant Location and Layout

Introduction

 Plant Location refers to selecting an optimal site for a business or factory to ensure efficiency and cost-
effectiveness.
 Selection Process involves choosing a region, then a specific site within that region.

Need for a Suitable Location

 For New Organizations: Based on market, resources, legal, and environmental factors.
 For Existing Organizations: Expansion strategies based on product lines and market needs.
 For Global Locations: Can offer tax benefits, lower costs, and better customer proximity.
Factors Influencing Plant Location

 Controllable Factors: Proximity to markets, raw materials, labor availability, infrastructure, and capital.
 Uncontrollable Factors: Government policies, climate, community attitudes, and local competition.

Location Theories & Models

 Weber’s Theory: Minimize transport and labor costs while benefiting from agglomeration (clustering
industries together).
 Factor Rating Method: Assigning scores to different locations based on key factors.
 Load-Distance & Center of Gravity Method: Used to determine the best location based on transportation
costs and demand.

Plant Layout

 Definition: Physical arrangement of machines, departments, and workflow.

 Objectives: Optimize material flow, minimize handling costs, and maximize efficiency.

Principles of Plant Layout

1. Integration: Efficient coordination of resources.

2. Minimum Distance: Reducing unnecessary movement.
3. Cubic Space Utilization: Using both floor and vertical space.
4. Flow Principle: Ensuring smooth forward movement of materials.
5. Flexibility: Ability to adapt to future changes.
6. Safety & Security: Prioritizing worker well-being and equipment protection.

Types of Layouts

1. Process Layout: Machines are grouped by function, suitable for batch production.
2. Product Layout: Arranged by product sequence, ideal for mass production.
3. Combination Layout: Mix of process and product layouts.
4. Fixed Position Layout: The product remains stationary while workers and equipment move around it.
5. Group Layout (Cellular Layout): Machines performing similar operations are grouped together.

Design of Layouts

 Assembly Line Layout: Used for mass production, involves workstations linked by conveyors.
 Process Layout Design: Focuses on functional work centers and efficient material flow.
 Service Layout: Organized based on customer needs or technology.

Factory Facilities & Work Environment

 Building Design: Single vs. multi-story buildings, considering flexibility and expansion.
 Lighting & Ventilation: Essential for worker productivity and safety.
 Work-Related Facilities: Includes drinking water, rest areas, medical services, and childcare.

A well-planned plant location and layout optimize costs, productivity, and efficiency. Key considerations include
proximity to resources, market access, infrastructure, and operational flexibility

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Introduction to Material Handling

 Definition: Material handling involves moving, storing, and controlling materials within a facility using
manual, mechanized, or automated systems.
 Importance: It does not add value to the product but affects costs, efficiency, and workplace safety.

Objectives of Material Handling

1. Improve efficiency and productivity by minimizing material movement time.

2. Reduce handling costs by optimizing workflows and minimizing waste.
3. Ensure workplace safety through ergonomic designs and automation.
4. Optimize space utilization in warehouses and production areas.
5. Enhance material flow and implement lean manufacturing principles.
6. Improve inventory management using tracking systems (RFID, barcodes).
7. Increase equipment utilization and reduce downtime.
8. Support sustainability by reducing energy consumption and waste.

17 Principles of Material Handling

1. Planning Principle – Pre-planning for efficiency.

2. System Integration Principle – Coordinating handling with production and supply chains.
3. Unit Load Principle – Standardizing materials into uniform loads (e.g., pallets, bins).
4. Ergonomic Principle – Reducing worker strain and injury risks.
5. Energy Efficiency Principle – Minimizing power usage.
6. Space Utilization Principle – Maximizing storage space.
7. Simplification Principle – Eliminating unnecessary movements.
8. Obsolescence Principle – Ensuring proper equipment policies to maximize economic advantage.
9. Standardization Principle – Using uniform handling methods and equipment.
10. Automation Principle – Implementing robotics and automated systems.
11. Flexibility Principle – Adapting to changing production needs.
12. Safety Principle – Ensuring compliance with safety regulations.
13. Maintenance Principle – Preventing equipment breakdowns through scheduled servicing.
14. Cost Principle – Minimizing total handling expenses.
15. Ecology Principle – Reducing environmental impact through sustainable practices.
16. Gravity Principle – Using gravity for movement to save energy.
17. Layout Principle – Optimizing the operational sequence for efficiency.

Types of Material Handling Systems

1. Manual Handling – Workers lift and move materials (low-cost but labor-intensive).
2. Mechanized Systems – Use forklifts, conveyors, cranes to assist handling.
3. Automated Systems – Includes robotics, Automated Guided Vehicles (AGVs).
4. Smart Handling (Industry 4.0) – AI, IoT, and automation for optimized material flow.

Categories of Material Handling Equipment

1. Transport Equipment:

o Conveyors: Belt, roller, chain conveyors.

o Industrial Trucks: Forklifts, pallet jacks, AGVs.
o Cranes & Hoists: Overhead cranes, jib cranes.

2. Storage Equipment:

o Shelving & Racks: Pallet racks, mezzanine storage.

o Automated Storage Systems: Vertical Lift Modules (VLMs), AS/RS.
 3. Bulk Material Handling Equipment:

o Hoppers & Silos: Storage for bulk materials.

o Screw Conveyors, Pneumatic Systems: Move loose materials efficiently.

4. Smart Handling Systems:

o AI-driven robotics, drones, IoT-enabled tracking for real-time inventory management.

Factors in Selecting Material Handling Equipment

 Material Properties: Size, weight, and type (solid, liquid, or gas).

 Building Layout: Ceiling height, floor strength, space constraints.
 Production Flow: Continuous vs. intermittent movement needs.
 Cost Considerations: Initial investment, maintenance, and operation costs.
 Nature of Operations: Temporary vs. permanent handling requirements.
 Safety & Reliability: Compliance with safety regulations and equipment durability.

Relationship Between Plant Layout and Material Handling

 A well-planned plant layout minimizes material movement and increases efficiency.

 Reduces unnecessary backtracking and delays by integrating handling systems.
 Improves worker productivity by ensuring minimal travel time.

Material handling is a crucial part of industrial operations, affecting efficiency, costs, and safety. By selecting the
right equipment and applying best practices, businesses can optimize material flow, reduce waste, and enhance
workplace safety.

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Materials Management

Introduction

 Definition: Materials management is an integrated function in an industrial setup that oversees purchasing,
inventory control, material planning, storage, and material handling.
 Objective: Ensures a smooth supply chain, cost reduction, and efficient material utilization.

Scope/Functions of Materials Management

1. Material Planning and Control – Forecasting and determining raw material requirements.
2. Purchasing – Procuring materials at the right price, quality, and time.
3. Stores Management – Proper storage and maintenance of materials.
4. Inventory Control – Managing stock levels to avoid shortages or excess.
5. Standardization & Simplification – Reducing variety and improving efficiency.
6. Value Analysis – Identifying unnecessary costs and improving product value.
7. Ergonomics – Enhancing worker efficiency and safety.
8. Just-in-Time (JIT) Manufacturing – Reducing waste and optimizing production.

Material Planning and Control

 Material Planning: Uses macro (market trends, government policies) and micro (inventory levels, plant
capacity) factors to determine material needs.
 Techniques: Forecasting, demand analysis, lead time calculation.

Purchasing

 Objectives: Ensure a steady supply of materials at the best cost, develop supplier relationships, and
optimize procurement.
  Ten R’s of Purchasing: Right time, right price, right quality, right quantity, right source, right material, right
attitude, right contract, right transportation, right delivery.
 Purchasing Procedure: Recognizing needs, selecting suppliers, placing orders, follow-ups, receiving
materials, inspecting, invoice payment, record maintenance, and vendor management.

Stores Management

 Functions: Receiving, storing, issuing materials, preventing obsolescence, and maintaining stock records.
 Codification: Assigning unique codes to items for efficient identification and tracking.

Inventory Control

 Definition: Managing stock levels to balance supply and demand while minimizing costs.
 Reasons for Keeping Inventory:

o Ensuring production continuity.

o Taking advantage of bulk discounts.
o Preventing loss of sales.
o Adapting to market fluctuations.

 Objectives: Prevent stockouts, optimize working capital, minimize storage costs, and ensure timely
replenishment.

Standardization and Simplification

 Standardization: Establishing uniform specifications for materials to reduce variety and improve efficiency.
 Simplification: Reducing product variations to improve production speed, lower costs, and enhance
quality.

Value Analysis

 Definition: A systematic approach to eliminate unnecessary costs while maintaining product quality.
 Process: Identify function → Evaluate cost-effectiveness → Develop alternatives.
 Principles: Use vendor expertise, optimize designs, and apply industry standards.

Ergonomics (Human Engineering)

 Definition: Designing work environments that fit human capabilities to improve productivity and safety.
 Objectives: Increase efficiency, reduce fatigue, and enhance working conditions.

Just-in-Time (JIT) Manufacturing

 Definition: A strategy focused on minimizing waste by producing only what is needed, when it is needed.
 Seven Wastes Identified by Toyota’s JIT System:

1. Overproduction
2. Waiting time
3. Transportation
4. Over-processing
5. Excess inventory
6. Unnecessary motion
7. Defective products

 Benefits of JIT: Lower production costs, improved quality, increased flexibility, and better market
responsiveness.
Materials management ensures the efficient flow of materials from procurement to production. Effective planning,
inventory control, supplier management, and JIT manufacturing help reduce costs, optimize resources, and
improve overall productivity.

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Production Planning and Control

Introduction to Production Planning and Control (PPC)

 Production Planning: Pre-determines manufacturing needs such as manpower, materials, machines, and
processes.
 Production Control: Ensures planned production meets actual production by monitoring and taking
corrective actions.
 Objectives:
o Ensure production meets quality, quantity, cost, and time targets.
o Maintain uninterrupted production flow.
o Utilize resources effectively.

Need for Production Planning and Control

 Helps maintain continuous production to meet customer demands.

 Prevents issues like material shortages, machine breakdowns, and scheduling conflicts.

Phases of Production Planning and Control

Planning Phase

 Prior Planning (Pre-production):

o Product Development & Design: Creating new product specifications.

o Forecasting: Predicting future demand.
o Aggregate Planning: Determining production levels over a set period.
o Material Requirement Planning (MRP): Calculating material needs.

 Active Planning (Production-level):

o Process Planning & Routing: Assigning production steps.
o Tool Planning: Identifying necessary tools.
o Loading & Scheduling: Allocating jobs to machines and setting timelines.

Action Phase

 Dispatching: Issuing job orders and materials.

 Job Order, Store Issue Order, Inspection Order, Move Order: Managing production steps and materials
flow.

Control Phase

 Progress Reporting: Tracking production.

 Corrective Actions: Adjusting operations for efficiency.

Functions of Production Planning and Control

 Pre-Planning: Forecasting demand, analyzing data, setting policies.

 Planning: Managing machines, methods, materials, and manpower (4M’s).
 Control: Ensuring production runs smoothly and resolving delays.

Key Elements of PPC

 Materials Management: Ensuring materials are available when needed.

  Machine Utilization: Scheduling and maintaining equipment.
 Process Planning (Routing): Determining production sequences.
 Scheduling: Setting deadlines for each operation.
 Dispatching: Issuing work orders to begin production.
 Expediting: Identifying and removing bottlenecks.
 Inspection: Quality control during production.
 Evaluation: Reviewing performance for improvements.

Production Scheduling

 Forward Scheduling: Starts jobs as soon as possible.

 Backward Scheduling: Begins production just in time for delivery.
 Techniques:

o Gantt Charts: Visual tracking of production timelines.

o Mathematical Models (PERT/CPM, Linear Programming): Optimizing production flow.
o Priority Decision Rules: Determines job sequence based on urgency.

Operations Planning and Scheduling Systems

 Aggregate Production Planning: Balances market demand with production capacity.

 Master Production Scheduling (MPS): Specifies production quantity and timing.
 Material Requirement Planning (MRP): Ensures materials are available for production.
 Capacity Planning: Manages facility resources for current and future needs.

Capacity Planning

 Measurement Types:

o Design Capacity: Maximum output under ideal conditions.

o System Capacity: Practical output considering real-world limitations.
o Installed Capacity: Facility’s original designed capacity.
o Rated Capacity: Maximum tested output rate.

 Strategies:

o Long-Term: Expanding facilities, introducing new products.

o Short-Term: Adjusting inventory, hiring/firing workers, subcontracting.

Routing and Scheduling

 Routing: Defines the production path from raw materials to finished goods.
 Scheduling: Determines when each operation should occur.
 Techniques:

o Route Cards: Tracks material flow.

o Move Orders: Authorizes material movement.
o Forward/Backward Scheduling: Determines job start and finish times.

Production Planning and Control ensures efficient manufacturing by managing resources, scheduling tasks, and
maintaining quality. Effective PPC minimizes costs, reduces delays, and optimizes production flow.
Problem Solving

Weighted factor rating method - In this method to merge quantitative and qualitative factors, factors are
assigned weights based on relative importance and weightage score for each site using a preference matrix is
calculated. The site with the highest weighted score is selected as the best choice.

Load distance method

Summing the scores for all tracts gives a total load-distance score of 239 when the facility is located at
(5.5, 4.5) versus a load-distance score of 168 at location (7, 2). Therefore, the location in census tract F is
a better location.

Centre of Gravity - Centre of gravity is based primarily on cost considerations. This method can be used to assist
managers in balancing cost and service objectives. The centre of gravity method takes into account the locations
of plants and markets, the volume of goods moved, and transportation costs in arriving at the best location for a
single intermediate warehouse.
SOLUTION:
To calculate the centre of gravity, start with the following information, where population is given in
thousands.

Next we find Cx and Cy:

Cx = 453.5/68 = 6.67
Cy = 205.5/68 = 3.02
● The centre of gravity is (6.67, 3.02). Using the centre of gravity as starting point, managers can now
search in its vicinity for the optimal location

LOCATIONAL ECONOMICS

An ideal location is one which results in lowest production cost and least distribution cost per unit.

The various costs which decide locational economy are those of land, building, equipment, labor, material, etc.

Economic analysis is carried out to decide as to which locate the best location.

From the following data select the most advantageous location for setting a plant for making transistor
radios.
From the following data select the most advantageous location for setting a plant for making transistor radios.