Operations Management

Process design
PRODUCTION SYSTEM
 Operation Systems/Process

Is the sequence of activities that are

used in transforming the inputs into
outputs
Concerned with the production
activities of goods or services
 Types of processes

Continu Semi- Intermitt Project

ous continuous ent
process (repetitive/asse processe
es mbly/mass) s
processes
Batch processes Job Shop processes
Continuous Production
Production facilities are arranged as per the
sequence of production operations from the
first operations to the finished product
Continuous Production is characterised by
Dedicated plant and equipment with zero
flexibility
Material handling is fully automated
Process follows a predetermined sequence
of operations
Component materials cannot be readily
identified with final product
Planning and scheduling is a routine
action
Advantages Limitations
Standardisation of product Flexibility to
and process sequence accommodate and
process number of
products does not
exist
Higher rate of production Very high investment
with reduced cycle time for setting flow lines
Higher capacity utilisation Product
due to line balancing differentiation is
limited
Manpower is not required for
material handling as it is
completely automatic
Person with limited skills can
be used on the production
Mass Production
Manufacture of discrete parts or assemblies
using a continuous process are called Mass
Production.
Mass Production is characterised by
Standardisation of product and process sequence.
Dedicated special purpose machines having
higher production capacities and output rates.
Large volume of products.
Shorter cycle time of production.
Lower in process inventory.
Perfectly balanced production lines.
 Flow of materials, components and parts is
continuous and without any back tracking.
Production planning and control is easy.
Advantages Limitations
Higher rate of Breakdown of one
production with machine will stop an
reduced cycle time entire production line
Higher capacity Line layout needs
utilisation due to linemajor change with the
balancing changes in the
product design
Less skilled operators High investment in
are required production facilities
Low process inventory The cycle time is
determined by the
slowest operation
Manufacturing cost
Batch Production
A form of manufacturing in which the job pass
through the functional departments in lots or
batches and each lot may have a different
routing
Characterised by
the manufacture of limited number of products
produced at regular intervals and stocked
awaiting sales
Shorter production runs
Plant and machinery are flexible
Plant and machinery set up is used for the
production of item in a batch and change of set
up is required for processing the next batch.
Manufacturing lead-time and cost are lower as
compared to job order production
Advantages
Better utilisation of plant and machinery
Promotes functional specialisation
Cost per unit is lower as compared to job order
production
Lower investment in plant and machinery
Flexibility to accommodate and process number of
products
Job satisfaction exists for operators
Limitations
Material handling is complex because of irregular and
longer flows
Production planning and control is complex
Work in process inventory is higher compared to
continuous production
Higher set up costs due to frequent changes in set up
 Job-Shop Production
 manufacturing one or few quantity of products designed and
produced as per the specification of customers within prefixed
time and cost
 The distinguishing feature of this is low volume and high
variety of products
 A job-shop comprises of general-purpose machines arranged
into different departments
 Each job demands unique technological requirements,
demands processing on machines in a certain sequence
 Characterised by
High variety of products and low volume
Use of general purpose machines and facilities
Highly skilled operators who can take up each job as a
challenge because of uniqueness
Large inventory of materials, tools, parts
Detailed planning is essential for sequencing the
requirements of each product, capacities for each work centre
and order priorities
Advantages
Because of general purpose machines and facilities
variety of products can be produced
Operators will become more skilled and competent,
as each job gives them learning opportunities
Full potential of operators can be utilised
Opportunity exists for Creative methods and
innovative ideas
Limitations
Higher cost due to frequent set up changes
Higher level of inventory at all levels and hence
higher inventory cost
Production planning is complicated
Larger space requirements
Process Classification based on
Order
Make-to-Stock Process (MTS)
Make-to-Order Process (MTO)
Assemble-to-Order Process (ATO)
 COMPARISON OF MAKE TO
STOCK PROCESS AND MAKE TO
ORDER PROCESS
Characteristics Make - to – Make - to -
Stock Order
1. Product Producer Customer
specified, low specified, high
variety, variety, expensive
inexpensive
2. Objectives To balance To manage
inventory, delivery lead time
capacity and and capacity
customer service
3. Main Operating Forecasting Delivery time
Problems production
planning,
inventory
management
FLEXIBLE MANUFACTURING SYSTEM
(FMS)

It is s an automated job shop process

Process is done rapidly from loading the

materials to machines

It can produce variety of products rapidly

and in large volumes
 COMPUTER NUMERICALLY
CONTROLLED MACHINES (CNC) AND
COMPUTER AIDED MANUFACTURING
(CAM)
 Computers operate CNC machines
 CNC Machines perform a variety of
operations in sequence
 There is an Automatic loading system of
materials with automated changing tool
system
 COMPUTER AIDED DESIGN –
COMPUTER AIDED
MANUFACTURING: CAD – CAM

 Design specifications developed by the CAD

system are automatically encoded as machine
instructions in the computers of relevant CNC
machines
 COMPUTER INTEGRATED MANUFACTURING
A CIM system controls all phases of production and
delivery

It takes bill and customer orders from CRM system,

and uses them to create material requirement plans for
all components

It issues purchase orders for components whose

production has been outsourced

It releases production orders for components which

are produced in-house

It develops a schedule for the CNC machines, which

take machine instructions from the CAD system
OPTIMIZED PRODUCTION TECHNOLOGY
 Operation that takes the longest time is
called bottleneck operation

 Bottleneck operation determines the

production rate of the production system

 Time lost at bottleneck operation is time

lost for the production system

Focus should always be on bottleneck

operation
 Process Planning Design
the elements of process planning and design and
its inputs and outputs
Process Planning Outputs
Inputs
Design
1.Product/service
1. Technological process
Information 1. Select process type in
Product/service Coordination with strategy
Design of specific processes
Demand 2.Vertical integration studies
Linkages among processes
Prices/volume -vendor capabilities
(work design)
Patterns -Acquisition decisions
Competitive environment -Make or buy decisions
2 Facilities
Consumer wants/needs 3. Process/product studies
Desired product characteristics -major technological steps
Building design
-minor technological steps
Layout of facilities
2. Production system -product simplification and
Selection of equipment
information Standardization
Resource availability -product design for productivity
3. Personnel estimates
Production economics 4. Equipment studies
Known technologies -level of automation
Skill level requirements
Technologies that can be -linkages of machine
Number of employees
acquired -equipment selection
Training/retraining requirements
Prominent strengths -tooling
supervision
And weaknesses 5.Production procedure studies
-production sequence
3. Operations Strategy -materials specifications
Positioning strategies -personnel requirements
Competitive weapons needed 6. Facilities studies
Outsourcing plans -building design
Allocation of resources -layout of facilities
Major factors affecting Process design
decisions
Nature of product/service demand-pattern of
demand and price volume relationships
Degree of vertical integration-forward and
backward integration
Production flexibility: (product and volume
flexibility and whether capital intensive or not
etc-ability to change production system from
one product to other)
 Degree of automation
 Product/service quality
Process selection and capacity planning
influence process system design
Inputs Outputs

Facilities and
Forecasting equipments

Capacity
planning

Produce and
Layout
Service design

Process
selection
Technological Work design
change
 Types of process design
Product focused
 Used to describe a form of production processing organization in which
production departments are organized according to the product or service
being produced.
 All of the production operations required to produce a product/service are
ordinarily grouped into one production department.
 Also called production line or continuous production ie raw materials ,
components subassemblies, assemblies and finished products follow
continuous path in the production of the product
 Product focused organization is applied to two general forms of production
Discrete units manufacturing (automobiles, assembly line, dish washers
etc-batch type) or
 The system may be dedicated to only one product and never changed.
This is called process manufacturing or continuous manufacturing like
brewing, petroleum refining, paper manufacturing etc
 Fixed position material handling equipment, specialized manufacturing
equipment and capital intensive etc are one its trade mark
 Flexibility is low
 Lower skill for labor, reduced supervision, ease of planning and production
are its character.
 Process focused
 used to describe a form of production in which production
operation are grouped according to type of process
 all production operation that have similar technological
processes are grouped together to form a production
department all paintings in painting department, all machines
work in machine departments etc) These process focused
systems are referred to as job shops or intermittent production
 In job shops, job spend time in waiting to be processed
 Process focused system includes hospital auto repair shops etc
 flexibility i.e ability to produce small batches of wide variety of
products is its advantage
 Additionally they require less initial investment since they are
using general purpose machines and mobile material handling
equipment
 But system requires greater employee skill and employee
training, more supervision and more complex production
planning and control.
 GROUP TECHNOLOGY or CELLULAR
MANUFACTURING
 Components with similar characteristics
and which are also manufactured similarly
are identified – data

 Equipments to make these similar

components are grouped together – product
layout

 The basis of cellular process is group

technology

 Group technology is used for scheduling

The advantages claimed by cellular manufacturing is
Machine change over between batches of parts are
simplified there by reducing cost of change over and
increasing production capacity
 variability of tasks on a particular machine is reduced
and training period of workers shortened
 There are more direct routes through production allowing
parts to be made faster and shipped quicker
 Parts spent less time in waiting and in process inventory
levels are reduced
because of parts are made under condition of less part
design variability, quality tend to improve
 with less material handling cost (direct routes) production
planning and control is made simpler
 as a result of reduced part variety and similarity of
tooling and machines with in cells, automation of cells is
simplified. The formation of cells may therefore be viewed
as in intermediate step in the automation of job shops
large
Product focused
Dedicated system

Product focused
Batch system

Cellular
manufacturing

Process focused
Job shop

small

few Many no. of product designs

 PROCESS SELECTION
 For line flows, it is common to Make to stock, but
a line can also Make to order
 Projects are usually Make to order, but they can
Make to stock too
Cost and quality differ with the change in
production planning and inventory planning
A project can be managed on a small scale
The primary questions to be addressed in
process selection are
1)How much variety in products or services
will the system need to handle?
2) What degree of equipment flexibility is
needed?
3) what is the expected volume out put?
Answers to these questions will serve as
 EVALUATION OF
PROCESSES

Product Process
Matrix

EVALUATIO Crossover analysis

N / Breakeven
PROCESS analysis

Present value
analysis: Net
present value
Product – process matrix
 Line flow is the appropriate process for producing a
standard product in large volume
 Job shop is the most appropriate process for producing
large number of products in small volumes
Crossover analysis / Breakeven analysis
If an equipment has high fixed cost, its variable cost is
low, and if an equipment has low fixed cost, its variable
cost is high
If a company predicts that it will sell in large volume, it
should buy an equipment with high fixed cost and low
variable cost, and if a company predicts that it will sell in
Present value analysis: Net present
value
An amount of money is worth less in future
than it is now
Money earned in a future time period has
to be discounted to arrive at value that
would be equal to having the money now
An investment is good if the discounted
value of future benefits exceeds the value of
 VERTICAL INTEGRATION

 A company is more vertically integrated if it

itself performs most of its processes

 Backward integration is upstream

movement towards sources of raw materials
and components

 Forward integration is downward movement

towards channels of distribution
 PROCESS PERFORMANCE
 Run time
 Set-up time
 Operation time
 Cycle time
 Throughput time
 Throughput rate
 Value-added time
 Process velocity or throughput ratio
 Throughput time
 Efficiency
 Productivity