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A.1) An operation may be defined “as the process of changing inputs into outputs
thereby adding value to some entity”.
Right quality, right quantity, right time and right price are the four basic
requirements of the customers and as such they determine the extent of customer
satisfaction. And if these can be provided at a minimum cost, then the value of
goods produced or services rendered increases. Thus the objectives of production
management are “to produce goods and services of the right quality, in the right
quantities, according to the time schedule and a minimum cost”.
• Producing the right kind of goods and services that satisfy customers’ needs
(effectiveness objective).
The right kind of products and good designs of the products are crucial for the
success of an organizing. A wrong selection of the product and/or poor design of the
products can render the company’s operation ineffective and non-competitive.
Products/services, therefore, must be chosen after detailed evaluation of the
product/services alternatives in conformity with the organization’s objectives.
Techniques like value engineering may be employed in creating alternate designs,
which are free from unnecessary features and meet the intended functions at the
lowest cost.
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Plant location decisions are strategic decisions and once plant is set up at a location,
it is comparatively immobile and can be shifted later only at a considerable cost and
interruption of production. Although problem of location choice does not fall within
preview the production function and it occurs infrequently, yet it is of crucial
importance because of its major effect on the performance of every department
including production. Therefore, it is important to choose the right location, which
will minimize total “delivered customer” cost (Production and distribution cost).
Locational decisions involve evaluation of locational alternatives against multiplicity
of relevant factors considering their relative importance to the organization and
selecting those, which are operationally advantageous to the organization.
Plant layout is concerned with relative location of one department (Work centre) with
another in order to facilitate material flow and processing of a product in the most
efficient manner through the shortest possible time. A good layout reduces material
handling cost, eliminates delays and congestion, improves co-ordination, provide
good housekeeping etc. while a poor layout results in congestion, waste, frustration,
inefficiency and loss of profit.
5. Capacity Planning
Production planning is the system for specifying the production procedure to obtain
the desired output in a given time at optimum cost in conformance with specified
standard of quality, and control is essential to ensure that manufacturing takes place
in the manner stated in the plan.
7. Inventory control
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Quality is an important aspect of production system and it must ensure that services
and products produced by the company conform to the declared quality standards at
the minimum cost A total quality assurance system includes such aspects as setting
standards of quality, inspection of purchased and sub-contracted parts, control of
quality during manufacture and inspection of finished product including performance
testing etc.
Work-study, also called time and motion study, is concerned with improvement of
productivity in the existing jobs and the maximization of productivity in the design of
new jobs. Two principal component of work-study are:
Method study has been defined (BS 3138) as the systematic recording and critical
examination of the existing and proposed ways of doing work, as a means of
developing and applying easier and more effective methods and reducing costs.
Method study when applied to production methods yields one or more of the
following benefits:
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Q.2) What is batch Production? What are its key characteristics? Compare
these characteristics with those of project production.
A.2) Batch production is characterized by the manufacture of a limited number of a
product (but many such quantities of different products) produced at periodic
intervals and stocked in warehouses as finished goods (or finished parts) awaiting
sales (or withdrawal for assembly). Typical examples of batch production are:
process industries such as pharmaceuticals, paints, chemicals; medium and heavy
engineering industry engaged in the manufacture of electric motors, switch gears,
heavy motor vehicles, internal combustion engines; manufacture of ready made
garments; manufacture of assembly shops such as machine tools; sub contractors
which take on machining of batches of components to the drawings of a large
manufacture etc.
Short production runs and frequent changes of set also characterize batch
production up. The equipment and the assembly set up is used for a limited
number of parts or assemblies and is then changed to make a different
product. The production is generally made to stock.
The operator may perform simpler machine set-ups but the separate machine
tool setter performs those involving complex operations.
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• Materials control and tools control functions are important. Some kind of
replenishment system needs to be used to ensure routine replenishment
• Detailed operational layout and route sheets are prepared for each part of the
product.
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Q.3) (a) Why are locational decisions important? What factors should be
taken into account while deciding location of a unit to manufacture
washing machines?
A.3) Locational decisions generally arise when:
1. Proximity to market:
Every company is in business to market and it can survive only if their product
reaches the consumers on time and at the competitive price. The ratio of selling
costs to sales generally increases with distance. Therefore, in the choice of location o
the plant, the factor of “proximity to the market” is given the highest priority.
Locating a plant nearer to the market is preferred if:
Bread, soap factories, etc. require the market to be nearby. If factory cannot be
started in Bombay, it may be started in Thane, Kalyan or Poona. If the product is
exported, location near ports is desirable. This is particularly important for producers
who sell bulky commodities, which incur high transportation costs
Nearness to market not only lowers transportation costs but also gives many other
benefits namely:
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Since raw materials usually constitute 50 to 60 percent of the total product cost, it is
important that the firm gets its requirements of raw materials at the right time and at
the reasonable price for which the plant must be located in the neighborhood of
some source which can meet the raw materials requirement of the unit “Proximity to
supply of raw materials” factor assumes still greater importance if raw materials are
of perishable nature or if they are expensive to transport, or if their weight is
substantially reduced by processing.
Proximity to sources of raw materials is equally important for small units. This is
because usually small units are not considered important customers. They get least
priority and in the event of scarcity are the one to be struck off first from the list. The
availability of materials to small units to a large extent thus depends on their follow
up and personal visits to the supplier’s plant which is possible only if the buyer’s
plant is close by.
3. Infrastructural facilities:
Certain industries, for example, aluminium, steel, etc are power intensive and must
be located close to the sites of power generation failing which the shortage of, or
increase in cost of generating power may spell problems for their survival.
Similarly, chemical process industries like paper and pulp, cement, steel, sugar
laundries, metal plating, food preparation etc. requires perennial source of water.
Mineral content of water may also be an important factor. Treatment of water is an
expense to be considered while comparing economics of different locations.
Drainage facilities are important for process industries otherwise disposal of process
waster can create lot of difficulties.
4. Transport facilities:
Transportation cost to the value added is a key determinant of the plant location.
The structure of the transportation cost depends on (i) Characteristics of the
commodity (ii) average distance of shipment (iii) medium of shipment: rail, road, and
air sea.
The need for transport arises because raw materials and fuel are to be moved to
factory site and finished goods are to be transported from factory to markets. Other
things being equal since transport cost has a major effect on product cost, the
regions well served by transport facilities are most suitable for industrial locations.
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Plant location should be such that required labour is easily available in the
neighbourhood. Importing labour from outside is usually costly and it causes lot of
administrative problems. Availability of required labour locally is better since
problem of arranging accommodation and other related problems do not arise. Since
normally workers with specific skills are required, some sort of training facility should
also be available in the neighborhood. Skilled employees are easily available if ITI’s,
or Engineering colleges are there in the neighbourhood.
The policies of the state Government and Local Bodies relating to issue of licenses,
building codes, labour laws, etc. are the factors in selecting/rejecting a particular
community/site.
In order to disperse industries and ensure balanced economic growth, both Central
and State government offer a package of incentives for setting up industries in
particular locations. Exemption from excise duty, sales tax and octroi, soft loans from
financial institutions, subsidy in electricity charges, etc. are some of the incentives
offered.
Since taxes and duties levied by the State Government and Local bodies substantially
influence product cost, the incidence of such taxes/levies must be taken into account
while selecting a community/site.
7. Climatic conditions:
Climatic factors may not have a major influence these days because of modern air
conditioning facilities available today. However, it may be important factor for
certain industries like textile mills, which require high humidity.
9. Safety requirement:
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The locational area should be fully developed, be accessible by road and should have
a convenient and efficient public transport system operating between the area and
the township to enable employees, officials, customers and suppliers to make easy
trips for their work
Community attitudes towards work (i.e. whether the people in the location are hard
working or otherwise) as well as their attitudes towards the incoming entrepreneurs
(helpful and cooperative or otherwise) can make or mar an industry. Locational
decisions, therefore, must take such factors also into account particularly while
setting up labour intensive units.
Locational factors should also include proximity of services needed by the firm. A
firm desirous of getting some or all parts made from outside or some of the
operations done from outside must see that such sub-contractors are located in the
neighbourhood. Getting a job done from units located at far off places will mean not
only additional transportation cost but also time consuming and costly. Also if units
are too far off, the control on quality of work done by them cannot be exercised.
Site selection should also take into account topography and soil structure of the land.
The soil structure must be capable of bearing loads of foundations. Though modern
building techniques can overcome the limitations of the soil, but if considerable
improvement is required then selection of a low cost and may ultimately turn out to
be expensive.
Site size (Plot size) must be large enough to accommodate the present production
facilities, parking and access facilities but also leave sufficient room for future
expansion. As a general rule, a site five times the actual plant size is considered
minimum for all these things including future expansion.
An ideal location is one where the cost of obtaining materials and processing them
into finished product plus the cost of distributing the finished product to customers is
minimum.
Step 2: Estimate expenses on materials, transport, wages, power etc for each
location on each of the above factors.
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Step 4: Analyse the tangible data for each location and calculate rate of return
on investment.
Step 6: Compare the intangible data for the different locations and select the
optimal location considering intangible data.
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Q.3) (b) What are objectives of a good layout? Discuss any six principles of
a good layout?
A.3) (b)
OBJECTIVE OF A GOOD PLANT LAYOUT
Only through an efficient layout, the organization can attain the following objectives:
(vi) Greater flexibility for changes in product design and for future expansion.
No layout can satisfy each and every principle of a good layout. Some
criterion may conflict with some other criterion and as a result no layout
can be ideal it has to integrate all factors into the best possible
compromise.
A good layout is one that permits the minimum movement between the
operations.
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A good layout is one that makes the materials move only in the forward
direction, towards stage of completion, with any backtracking.
• Area below the work tables or in the cupboards built into the wall are welcome
since they reduce requirement of space
A good layout is one that makes men, machines and materials ready observable
at all times.
A good layout is one that makes all servicing and maintenance point readily
accessible.
• Machines should be kept sufficiently apart and with reasonable clearance from
The wall so that lubrication, adjustment and replacement of belts, removal of
parts at the time of repairs etc can be done conveniently by the maintenance
staff.
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Area in front of electrical panels and fire extinguishers should be kept free
from obstructions.
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Q.4) How does production planning differ from production control? What
are the key functions of production planning and control?
A.4) Production planning versus production control.
Planning is seeing that requirements tool, Control is seeing the requirements are
machines, men, instructions, actually made available at the right place
authorization and the like-will be and in the right quantities.
available at the right time and in the
right quantities and are of proper quality.
Planning involves preparations of load Control involves actual seeing that the
charts and fitting various work orders into jobs are started and completed as per
uncommitted time available on the schedule prepared by the scheduling cell
company’s facilities (men or machines). of the PPC.
Planning involves preparation of all Control involves actual issue of forms and
necessary forms and paper work. paper work.
Planning involves designing suitable feed Control involves keeping track of what is
back as to what may happen. happening and collecting information as
to what has happened.
(i) Regular functions are those, which are generally assigned to PPC in most of
the organizations through the importance of the function, may vary from
industry to industry.
(ii) Optional functions are those, which may be assigned to PPC depending
upon policy of the management of the firm.
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Q.12 (a) What is critical path? What does it signify? How is it identified?
A.2) (a) Critical path analysis, an important aid to planning, scheduling and
coordinating the activities if large scale projects. Is a synthesis of two independent
techniques: Programme Evaluation and Review Technique (PERT) and Critical Path
Method (CPM).
Though the two techniques were developed independently, they are only superficially
different. The two method have many features in common and are now combined
into a technique called Critical Path Analysis (CPA) or Network Analysis.
There are three basic different between a PERT network and CPM network:
• PERT is event oriented while CPM is activity oriented (i.e. PERT prepares
network from events while CPM builds if from activities)
• PERT provides for an allowance for uncertainty while CPM does not (i.e. PERT
makes three time estimates for each activity while CPM makes one time
estimate)
• Activity time in CPM technique are related to costs while it is not so in PERT
since it is event oriented
(i) Forces through pre-planning. Each and every activity compromising the
project is identified and recorded. Nothing is left to memory or chance
which prevents crises in scheduling
(ii) Increases coordination of tasks as technological relationship between the
activities suggests which activities can run simultaneously and which
should succeed others.
(iii) Helps computations of different project duration’s for different level of
resources and thereby select a plan that minimizes total project cost.
(iv) Indicates optimal start and finish times of each activity of the project.
(v) Defines areas of responsibility of different departmental heads for timely
execution of the project.
(vi) Facilitates progress reporting and limits unnecessary discussion at the
progress meetings.
(vii) Identifies troubles spot often in advance and apply remedial measures.
(viii) Enables the plan to be revised in accordance with changes/changing
circumstances.
(ix) Helps to exercise “control by exception” and prevents cost overruns.
• Observe critically the way in which the various activities interact or compete
for scarce resources
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• Improve upon the original plans even before network is formally drawn and
analyzed.
A project, therefore, must be torn into a set of identifiable activities. There are no set
rules but general guidelines are as under:
Q.12) (b)
Solution:
(a) Expected time of an activity can be obtained from the three time estimates using
the formula:
te = a + 4m +b
6
te = 2 + 4 x 3 + 10
6
te = 24 = 4
6
Expected times of all activities of the network, calculated on above lines, are
tabulated below.
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1-2 02-03-10 4
1-3 02-04-06 4
1-4 02-06-10 6
2-5 01-01-01 1
3-5 04-05-12 6
4-5 02-03-04 3
4-6 02-05-08 5
5-6 03-05-13 6
4 5 6
6 3
6
3
4 6
4 2 1
1 5
Critical path is 1-3,3-5,5-6 and the duration for the project is 16 weeks (4+6+6)
Variance is
Vi = (b –a) X (b – a)
6 6
V1-3 = 4
9
V3-5 = 16
9
V5-6 = 25
9
V = 5
= 19 -16
√5
= 3
2.236
= 1.34
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Q.10) (a) What are X-R Charts? How are they made and used in controlling a
process?
A.10) X-R chart is a pair of chart consisting of a average (called X chart) and a range
Chart (called R chart) placed one below another on a piece of graph paper. The X
chart is used to control the mean value of the characteristic an R-chart is used to
restrict the range of variations in the values. X-R charts are drawn when the
characteristics are measurable. Each chart consists of three values: a central line,
upper control limit and lower control limit. The central line represents the arithmetic
average of the sample means which equals the mean of the population, u. The upper
and lower control limits are located at three standard deviation on either side of the
central line.
Samples of fixed size are drawn at regular intervals and measurements are taken.
The samples wise values of the mean and range are plotted in their respective X
and R charts.
The spread of sample points in the charts is studied to decide the remedial action (if
any) to be taken. The X chart analyses whether or not the mean of the quality
Characteristics is within control while R-chart analyses whether or not the variability
is within control.
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A The grand average, which is written as, X (X double bar) is the average
of the sample averages and is obtained by dividing the total of the
averages of all the samples by the total number of samples.
B The mean range, which is written as, R (R bar) is the average of the
ranges and is obtained by dividing the total of the ranges of the
samples by the total number of samples.
A Set up a control chart with the central line drawn at X (X double bar),
upper control limit located X + A2R (R bar) and the lower control limit
set up at X-A2R.
B Plot the averages to see whether the process was under control when
samples were drawn.
C If all points fall within the control limits, the process is said to be under
control
D If process is not under control (indicated by some points falling outside
the control limits), eliminate points outside the control limits and
compute new trial control limits for the remaining points.
E Repeat step 4 (d) until all points fall within the control limits
F Control limits in a particular situation should be revised from time to
time as additional data is accumulated.
A The control chart for range chart is set up with central line as R, upper
control limit (UCLR) located at D4R above the central line and lower
control limit (LCL) at D3R below the central line
B Plot the value of the range of each sample.
C If all points fall within the control limits no modification is necessary
unless it is desired to reduce the process dispersion
D if range chart exhibits lack of control indicated by some points falling
outside the control limits, eliminate those points out of control and
compute new trial control limits
E Repeat step 5 (d) until all points fall within the control limits.
F Control limits in a practical situation should be revised time to time
as additional data is accumulated.
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A) Solution:
(i) Collect data
(ii) Calculate mean (X bar) and range(R bar)
= 2.992
= 0.14
= 3.476
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= 2.507
= 0 x 0.14
= 0
= 2.114 x 0.14
= 0.29596
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Method study is an organized approach and its investigation rests on the following
six basic steps outlined in the block diagram
• Select the work to be analyzed.
• Record all facts relating to the existing method.
• Examine the recorded facts critically but impartially.
• Develop the most economical method commensurate with plant
Requirements
• Install the new method as standard practice.
• Maintain the new method.
Recording of facts
Besides charts, two types of diagrams-flow diagram and string diagram are
drawn when recording details of an existing layout. Travel chart is another
typical chart, which is used to record frequency of movements (weight x
distance) between work centres/departments.
Repetitive short cycle operation which involves quick hand/feel motions (i.e.
microscopic motions) may be studied with micro motion study. Glibreth,
founder father of micro motion study, also developed photographic techniques
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Critical examination
Critical examination aims to analyze the facts critically and thereby give rise
to alternatives, which form the basis of selection and development of easier,
and effective methods.
Installation
Maintenance
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• Maximum coverage:
The system should cover as many workmen as possible. A scheme if applied to a
few workmen creates a demoralizing effect on the morale of those not covered by
the scheme.
• Direct
Incentive payments should increase at least in direct proportion to the increase in
output by the operator. There are two reasons:
Firstly because it is more difficult to producer extra units and secondly because
saving in the overheads are far greater at higher levels of production.
• Period of Payment
The period of payment should be as short as possible
Further the incentive plan should be such that it provides an opportunity to all
average workers to earn reasonable earnings.
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• Safeguards
The scheme should be fair not only to the employees but also to the employer.
Safeguarding clauses as under should be incorporated to protect.
• Consistency of Plan
The plan should be consistent over a period of time. Frequent changes in the plan
make it’s functioning difficult. Faith in plan is lost if there are frequent revisions.
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• Continuous Use
The scheme should be in continuous use. The temporary use of the scheme in
good times and its discontinuation in bad times makes it’s functioning difficult.
A 13)
i)
Average Cycle time = 0.22 + 0.24 + 0.28 + 0.26 + 0.25
5
= 0.25
= 0.25 x 80
100
= 0.2
Similarly, average cycle time and normal time for all the elements are calculated
and tabulated as below
ii)
Relaxation Allowance = 15 x 0.9818
100
= 0.1473
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