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CHAPTER 1
Chapter Outline
1 Learning Objectives
2. TOPICS:
1.1 INTRODUCTION
1.2 HISTORICAL DEVELOPMENT
1.3 CONCEPT OF PRODUCTION
1.4 PRODUCTION SYSTEM
1.5 CLASSIFICATION PRODUCTION SYSTEM
1.6 PRODUCTION MANAGEMENT
1.7 OPERATIONS SYSTEM
1.8 OPERATIONS MANAGEMENT
1.9 OPERATIONS MANAGEMENT OBJECTIVES
1.10 THE STRATEGIC ROLES OF OPERATIONS
1.11 THE STRATEGIC PLANNING
1.12 THE TREND: INFORMATION AND NON MANUFACTURING
SYSTEMS
1.13 PRODUCTIVITY
1.14 FACTORS AFFECTING PRODUCTIVITY
1.15 SCOPE OF OPERATIONS MANAGEMENNT
3 Let’s Sum Up
Learning Objectives
1.1 Introduction
Advantages
1. Because of general purpose machines and facilities variety of products can be
produced.
2. Operators will become more skilled and competent, as each job gives them learning
opportunities.
3. Full potential of operators can be utilized.
4. Opportunity exists for Creative methods and innovative ideas.
Batch Production
Advantages
1. Better utilization of plant and machinery.
2. Promotes functional specialization.
3. Cost per unit is lower as compared to job order production.
4. Lower investment in plant and machinery.
5. Flexibility to accommodate and process number of products.
6. Job satisfaction exists for operators.
Mass Production
Advantages
1. Higher rate of production with reduced cycle time.
2. Higher capacity utilization due to line balancing.
3. Less skilled operators are required.
4. Low process inventory.
5. Manufacturing cost per unit is low.
Continuous Production
Advantages
1. Standardization of product and process sequence.
2. Higher rate of production with reduced cycle time.
3. Higher capacity utilization due to line balancing.
4. Manpower is not required for material handling as it is completely automatic.
1. Right Quality
2. Right Quantity
3. Right Time
4. Right Manufacturing Cost
1.7 Operations System
Operations system converts inputs in order to provide outputs, which are required
by a customer.
It converts physical resources into outputs, the function of which is to satisfy
customer wants.
(a) Manufacturing Operations
(b) Service Operations
Everett E. Adam & Ronald J. Ebert defines as ‘An operating system is the part of
an organization that produces the organization’s physical goods and services’.
Ray Wild defines operations system as ‘a configuration of resources combined for
the provision of goods or services’.
A departmental store's has an input like land upon which the building is located,
labor as a stock clerk, capital in the form of building, equipment and merchandise,
management skills in the form of the stores manager. Output will be serviced customer
with desired merchandise. Random fluctuations will be from external or internal
sources, monitored through a feedback system.
Planning
The activity that establishes a course of action and guide future decision-making.
Organizing
They determine the activities required to achieve the goals and assign authority and
responsibility for carrying them out.
Controlling
The activities that assure the actual performance in accordance with planned
performance.
Resources
Resources are the human, material and capital inputs to the production process.
Human resources are the key assets of an organization.
Systems\
Systems are the arrangement of components designed to achieve objectives
according to the plan. The business systems are subsystem of large social systems.
The first objective of operating systems is to utilize resources for the satisfaction
of customer wants. Therefore, customer service is a key objective of operations
management. The operating system must provide something to a specification, which
can satisfy the customer in terms of cost and timing. Thus, providing the ‘right thing at
a right price at the right time’ can satisfy primary objective.
Manufacture Goods of a given, requested Cost, i.e. purchase price or cost of obtaining
commencement.
Supply Goods of a given, requested or Cost, i.e. purchase price or cost of obtaining
Service Treatment of a given, requested Cost, i.e. cost of movements. Timing, i.e.
commencement.
2. RESOURCE UTILIZATION
i.e. to provide agreed/adequate levels of customer i.e. to achieve adequate levels of resource
service (and hence customer satisfaction) by providing utilizations (or productivity) e.g. to achieve
goods or services with the right specification, at the right agreed levels of utilizations of materials,
1.13 Productivity
Capital/labor ratio
Scarcity of some resources
Work-force changes
Innovations and technology
Regulatory effects
Bargaining power
Managerial factors
Quality of work life
Location of facilities.
Plant layouts and Material Handling
Product Design.
Process Design.
Production and Planning Control.
Quality Control
Materials Management.
Maintenance Management.
Let’s Sum Up
CHAPTER 2
Operations Decision-Making
Chapter Outline
1 Learning Objectives
3. TOPICS:
2.1 INTRODUCTION
2.2 MANAGEMENT AS A SCIENCE
2.3 CHARACTERISCTICS OF DECISION MAKING
2.4 FRAMEWORK OF DECISION MAKING
2.5DECISION METHODOLOGY
2.5.1 COMPLETE CERTAINLY METHODS
2.5.2 RISKS AND UNCERTAINTY METHODS
2.5.3 EXTREME UNCERTAINTY METHODS
2.5.4 DECISION -MAKING UNDER UNCERTAINTY
2.5.5 DECISION -MAKING UNDER RISKS
2.6 DECISION SUPPORT SYSTEM
2.7 ECONOMIC MODELS (BREAK EVEN ANALYSIS
2.8 STATISTICAL MODELS
2.9 DECISION TREE
3 Let’s Sum Up
Learning Objectives;
4. Introduction
Thousand of business decisions are made everyday. Not all the decisions will
make or break the organization. But each one adds a measure of success or failure to
the operations. Hence decision-making essentially involves choosing a particular
course of action, after considering the possible alternatives. This chapter examines
management as a science and the characteristics of decisions. The use of economic
and statistical models is discussed along with decision trees.
5. Management as a Science
6. Characteristics of decisions-making
An analytical and scientific framework for decision implies the following systematic
steps
Defining the problem.
Establish the decision criteria.
Formulation of a model.
Generating alternatives .
Evaluation of the alternatives.
Implementation and monitoring.
FORMULATION OF A MODEL
Formulation of a model lies at the heart of the scientific decision-making
process. Model describes the essence of a problem or relationship by abstracting
relevant variables from the real world situation. Models are used to simplify or
approximate reality, so the relationships can be expressed in tangible form and
studied in isolation.
Modeling a decision situation usually requires both formulating a model and
collecting the relevant data to use in the model. Mathematical and statistical models
are most useful models for understanding the complex business of the problem.
Mathematical models can incorporate factor that cannot readily be visualized. With
the aid of computers and simulation techniques, these quantitative models
reflexible.
GENERATING ALTERNATIVES
Alternatives are generated by varying the values of the parameters.
Mathematical and statistical models are particularly suitable for generating
alternatives because they can be easily modified. The model builder can experiment
with a model by substituting different values for controllable and uncontrollable
variable.
8. Decision Methodology
Goal Simulation
Heuristic methods
Decision trees
Utility theory
Statistical analysis:
Objective and subjective probabilities with the use of probability and probability
distribution, Estimation and tests of hypothesis, Bayesian statistics, Decision theory,
Correlation and regression technique for forecasting demand and Analysis of
variance are some of the techniques used for decision-making.
Queuing theory:
The analysis of queues in terms of waiting-time length and mean waiting time is
useful in analyzing service systems, maintenance activities, and shop floor control
activities.
Simulation:
Simulation duplicates the essence of an activity. Computer simulations are
valuable tools for the analysis of investment outcomes, production processes,
scheduling and maintenance activities.
Heuristic methods:
Heuristic methods involve set of rules, which facilitate solutions of scheduling,
layout and distribution problems when applied in a consistent manner.
Utility theory:
Utility theory or preference theory allows decision-makers to incorporate their
own experience and values into a relatively formalized decision structure.
Maximin:
Determine the worst possible pay-off for each alternative, and choose the
alternative that has the “best worst.” The Maximin approach is essentially a
pessimistic one because it takes into account only the worst possible outcome for
each alternative. The actual outcome may not be as bad as that, but this approach
establishes a “guaranteed minimum.
Maximax:
Determine the best possible pay-off, and choose the alternative with that pay-
off. The Maximax approach is an optimistic, “go for it” strategy; it does not take into
account any pay-off other than the best
.
Minimax regret:
Determine the worst regret for each alternative, and choose the alternative with
the “best worst.” This approach seeks to minimize the difference between the pay-
off that is realized and the best pay-off for each state of nature.
Laplace:
Determine the average pay-off for each alternative, and choose the alternative
with the best average. The Laplace approach treats the states of nature as equally
likely.
Break-even Analysis
One of the techniques to study the total cost, total revenue and output
relationship is known as Break -even Analysis. ‘A Break-even Analysis indicates at
what level of output, cost and revenue are in equilibrium’. In other words, it
determines the level of operations in an enterprise where the undertaking neither
gains a profit nor incurs a loss.
Break-even point:
It is that point of activity (sales volume) where total revenues and total expenses
are equal. It is point of zero profit, i.e. stage of no profit and no loss. BEP can be used
to study the impact of variations in volume of sales and cost of production on profits.
Angle of incidence:
It is an angle at which total revenue line intersects total cost line. The
magnitude, of this angle indicates the level of profit. Larger the angle of incidence,
higher will be the profits per unit increase in sales and vice versa.
Margin of safety:
It is excess of budgeted or actual sales over the break-even sales volume i.e.
margin of safety = (actual sales minus sales at BEP)/actual sales. A high margin of
safety would mean that even with a lean period, where sales go down, the company
would not come in loss area. A small margin of safety means a small reduction in sale
would take company to cross BEP and come in red zone.
CALCULATION OF BEP
Relationship between costs and activity level (AL) is also assumed to be linear.
For every elemental cost, actual cost figures at different activity levels are plotted,
and by ‘least square analysis’ a ‘line of best fit’ is obtained. This would give a fixed
cost component and a variable cost component for the elemental cost.
This analysis is carried out for all elemental costs. The total cost function would
give total fixed cost and total variable cost for the company. The Break-even Point is
that volume where the fixed and variable costs are covered. But no profit exists.
Thus at BEP, the total revenues equal to the total costs.
Profit volume ratio (PVR) is defined as the ratio between Contribution Margin and
Sales Revenue.
i.e.
Profit Volume Ratio (f) = Contribution ⋅ Margin /Sales. Revenue
Sales turnover (STO) is defined as ratio between Sales Revenue and the Capital
Employed. It represents the number of times capital employed is turned over to
reach the sales revenue level that is called Operating management performance
[OMP].
IMPROVING OMP
A company interested in improving its OMP will have to improve its operating profit.
Following any of the strategies given below or a combination of them can do this:
(a) By reducing variable costs
(b) By reducing fixed costs
(c) By increasing sales price
(d) By increasing the activity level.
A) Reduction in variable costs will bring down BEP, increase PV ratio and increase
margin of safety.
To achieve a required Targeted Profit (Z), variable cost would have to be controlled
at
V=SR – (F+Z )
b) A reduction in fixed costs will bring down BEP and increase margin of safety. It will
have no effect on PV ratio. To achieve a required TP by controlling fixed cost alone,
the fixed cost would have to be controlled as
F=(SR – V) – Z
c) An increase in selling price will bring BEP down, it will increase PV ratio and it will
also increase the margin of safety. To get the targeted profit level the increase
required in selling price is given by
b'= (F+Z ) x b
(b-a)
Let’s Sum Up
CHAPTER 3
Project Management
Chapter Outline
1 Learning Objectives
12. TOPICS:
3.1 INTRODUCTION
3.2 PROJECT LIFE CYCLE
3.2.1 THE INITIATION PHASE
3.2.2 THE PLANNING PHASE
3.2.3 THE EXECUTION PHASE
3.2.4 THE TERMINATION PHASE
3.3 BEHAVIORAL AS[ECT OF PROJECT MANAGEMENT
3.3.1ORGANIZATION CULTURES INFLUENCE
3.3.2 PEOPLE CENTRIC PROJECT MANAGEMENT
3.3.3INSTRUMENTAL ELEMENTS FOR SUCCESSFUL
IMPLEMENTATION OF PEOPLE CENTRIC PROJECT MANAGEMENT (PCPM)
3.4 WORK BREAKDOWN STRUCTURE
3.4.1 RESOURCE BREAKDOWN STRUCTURE (rbs)
3.4.2 HOW TO CREATE A WORK BREAKDOWN STRUCTURE
3.5 PLANNING AND SCHEDULING WITH GANTT CHART
3.5.1 WHAT IS A GANTT CHART
3.6 PERT AND CPM
` 3.6.1 DEFINITION OF PERT
3.6.2 DEFINITION OF CPM
3.6.3 ADVANTAGES OF PERT
3.7 DETERMINISTIC AND PROBABILISTIC SCHEDULING
3.7.1 DETERMINISTIC SCHEDULING
3.7.2 PROBABILISTIC SCHEDULING
3.8 BUDGET CONTROL
3.8.1 PLANNING ISSUE
3.8.2 TOP-DOWN AND BOTTOM-UP SCHEDULING
3.8.3 ROLLING BUDGET
3.8.4 ACTUAL AND BUDGETED PERFORMANCE* (in thousands of
dollars) * Income taxes ignored.
3,9 RISK MANAGEMENT’
3.9.1 PROJECT RISK MANAGEMENT
3.10 PROJECT MANAGEMENT SOFTWARE
3.10.1 TYPES OF PROJECT MANAGEMENT SOFTWARE
3 Let’s Sum Up
Learning Objectives
Discuss the different concepts of project management and its life cycle.
Determine the behavioral aspect of project management.
Explain the different work breakdown and how to create its components.
Describe the importance and uses of Gantt Chart in proper scheduling.
Differentiate PERT to CPM and its importance to operations.
Determine other project management ways and risk management to operations.
Define the different project management software.
3.1 INTRODUCTION
A project life cycle is the sequence of phases that a project goes through from its
initiation to its closure. The number and sequence of the cycle are determined by the
management and various other factors like needs of the organization involved in the
project, the nature of the project, and its area of application. The phases have a definite
start, end, and control point and are constrained by time. The project life cycle can be
defined and modified as per the needs and aspects of the organization.
The generic life cycle structure commonly exhibits the following characteristics:
At the start, cost and staffing levels are low and reach a peak when the work is in
progress. It again starts to drop rapidly as the project begins to halt.
The typical cost and staffing curve does not apply to all projects. Considerable
expenses are required to secure essential resources early in its life cycle.
Risk and uncertainty are at their peak at the beginning of the project. These
factors drop over the lifecycle of the project as decisions are reached, and
deliverables are accepted.
The ability to affect the final product of the project without impacting the cost
drastically is highest at the start of the project and decreases as the project advances
towards completion.
Study: People will likely not understand this concept at the outset – since PCPM
focuses on how people function and how they apply project management to be people
centric. Managing triple constraints (Scope, Time and Cost) is the objective of healthy
project management.
Analyze: How you go about implementing PCPM varies from one organization to
another. It needs to be a part of the organizational strategy. Organizations would be
project based – where large parts of the workforce is involved in multiple projects.
Analyzing how the organization is structured helps the project manager make some of
the most important people related decisions in an effective manner.
Gain Buy-In: The challenge for most project managers is to work with senior
management and the team in tandem, to gain buy-in and decide on adjusting or
adapting. Adjusting or adapting does not happen overnight.
Implement (Kaizen): PCPM will not happen overnight but will require a cultural
transformation. PMs should quickly identify strengths and weaknesses of team
members and encourage people to identify their strengths and work with their strengths.
Some people will have competitive strengths and it is important to leverage their
competitive skills.
Behavior refers to the range of actions and mannerisms exhibited – in this case –
by people. Certain desired behavior is assumed by project managers when they stitch
and integrate several of the established project management processes. This assumption
is based on factors such as Culture, Attitudes, Emotions, Perceptions, Values, Ethics,
Authority, Rapport, Hypnosis, Mindset and Persuasion, among others.
On most occasions some of these assumptions don’t hold quite valid. When people
don’t behave like the way we originally assumed them to, their behavior seems
unpredictable to us. And, when people behavior becomes unpredictable – project
outcome is inevitably affected – either positively (success) or negatively (failure).
In PCPM, it must be the daily duty for project managers to maintain the line of
communication very open so that they keep catering to the basic needs to employees.
What needs to get communicated across and top things project managers need to
keep in mind while implementing PCPM?
Understand and believe that project managers have the most impact in opening up
communication channels.
Communicate what is expected of each team member
Establish a clear sense of what each team member’s duty or role is.
Provide recognition – this is actually part of communication!
Empower team members’ with the right tools and techniques to do the job
Keep your ears open to suggestions
Have open conversations about every aspect that requires the PCPM
framework to be adjusted.
Frequently talk to team members about their progress and provide feedback –
Learn from people on how they think they connect to the mission of the project
team and compare that with how you think they connect.
Communicate between the current state future state the gap and how is the
team member is doing.
Make Action Plans for the longer term to ensure you are actively managing
the emotional and motivational aspects of ALL the people
Gather feedback and inputs on how are people interact with each other on their
communication channel.
Finally, it is the project managers duty to ensure that interactions on ALL
communication channels yield positive results!
The output of the WBS development process might seem simple: a short
document with a list of deliverables. To create it, however, you need a thorough
understanding of the project’s scope, your team’s capabilities, and your
stakeholders’ requirements.
Here's an example of a more simplified WBS dictionary with element ID, name,
and description:
flowchart
Nowadays it's possible to use modern Gantt chart planning to better manage your
project resources and control for unexpected situations. There's a reason why we still
use this solution, because even after a century, we still haven't been able to think of
anything better. In this article we'll give your a comprehensive guide to using Gantt
charts for scheduling and planning. What exactly they are, the elements of classic and
modern day versions, and what kind of advantages you'll see when using them.
A Gantt chart is a visual project management tool that helps to plan and
schedule projects of every size.
Gantt charts look like a horizontal bar chart that shows project
management timelines, task starting and ending dates, dependencies between
different tasks, and general project task flow.
Projects dates and timeline - this gives project managers an overview of all the
project dates. From the start, to dates connected with project tasks, and to the finish.
You have the complete time frame at your fingertips!
Gantt chart bars as project tasks - projects normally consist of different tasks
and the Gantt chart is a great way to see them all in one place. A visual overview
helps you make sure that everything is in the right place on the timeline and nothing
is forgotten. Task names are normally set on the Gantt chart. Luckily, modern
charts are made so that you can easily change the location and the length of the task
bar.
Milestones - milestones are the little “wins” of the projects. They are normally
at the end of the task and hold some significance for the project. Usually,
milestones are displayed as diamond-shaped - which feels like a bonus after the
completion of the task. TIP: Always celebrate your little “wins”. They help to
break your project into more achievable pieces.
Dependencies - there are always tasks in your projects that need to be
completed before the next task can begin or end. So one task is dependent on the
other’s start or finish. In Gantt charts, dependencies between the tasks are shown
with little arrows. TIP: dependencies can help you focus on the base tasks that are
directly connected with the general project flow.
Resources - In a classic Gantt chart, you can add a resource to your task to see
who’s responsible for the task and who’s working on it. In modern Gantt charts,
there are ways to make it more visual and understandable. It’s not rare to use Gantt
charts for resource planning and project portfolio management, in addition to single
project planning.
Here are the TOP advantages of Gantt chart in scheduling management with
Gantt chart software :
Get a visual overview about the whole project
All project-related issues in a single place
Use your resources more effectively
Agile and real-time changes
Keep an eye on future, long-term planning
Solve the problems before they happen
Handle the dependencies between the tasks
They can be used in every industry
Developed in the late 1950s, Critical Path Method or CPM is an algorithm used
for planning, scheduling, coordination and control of activities in a project. Here,
it is assumed that the activity duration is fixed and certain. CPM is used to compute
the earliest and latest possible start time for each activity.
The process differentiates the critical and non-critical activities to reduce the
time and avoid the queue generation in the process. The reason for the identification
of critical activities is that, if any activity is delayed, it will cause the whole process
to suffer. That is why it is named as Critical Path Method.
The following steps are required for using CPM and PERT for planning and
scheduling:
(i) Each project consists of several independent jobs or activities. All these
jobs or activities must be separately listed. It is important to identify and distinguish
the various activities required for the completion of the project and list them
separately.
(ii) Once the list of various activities is ready the order of precedence for these
jobs has to be determined. We must see which jobs have to be completed before
others can be started. Obviously, certain jobs will have to be done first.
Many jobs may be done simultaneously and certain jobs will be dependent
upon the successful completion of the earlier jobs. All these relationships between
the various jobs have to be clearly laid down.
(iii) The next step is to draw a picture or a graph which portrays each of these
jobs and shows the predecessor and successor relations among them. It shows
which job comes first and which next. It also shows the time required for
completion of various jobs. This is known as the project graph or the arrow
diagram.
In this graph jobs are shown as arrows leading from one circle on the graph to
another. Thus, the arrow connecting the two circles represents a job. Circle one and
two represent job a i.e. forecasting of units sale which would take 14 days.
Circles 2 and 4 represent job b which will take ten days and so on. It would be
seen that job c is not dependent upon job b and therefore, the two jobs can be done
simultaneously. Once we reduce the project to network of activities and events and
we estimate activity durations, we are in a position to determine the minimum time
required for completion of the whole project.
To do so, we must find the longest path or sequence connecting the activities
through the network. This is called the ‘critical path’ of the project. The longest
path is the critical path. In our example, there are two paths. One is connecting
circle numbers 1, 2, 4 and 5. This path will take 14+10 + 10 = 34 days.
The other path, is connecting circles 1,2,3,4 and 5, this path will takes 14 + 7
+ 4+ 10 = 35 days. Obviously the 2nd path is the critical path and the project of
budget presentation will take this much of time. The students will however notice
that this time is shorter than the total time listed under Table 1 which will be 45
days. This is because jobs b and c can be done simultaneously.
The term “budget” tends to conjure up in the minds of many managers images of
inaccurate estimates, produced in tedious detail, which are never exactly achieved but
whose shortfalls or overruns require explanations. And that is what budgets are like for
many smaller businesses. This wasteful way of using budgets overlooks important
managerial objectives that budgeting can help achieve.
The top-down approach allows the owner-manager and others at the top to put
forward their comprehensive views of the organization and its economic and
competitive environments. Top management knows the company’s goals, strategies,
and available resources. Indeed, in a small company the owner-manager may be the
only one with such knowledge as others are almost totally involved with day-to-day
operations.
The bottom-up approach, on the other hand, makes use of operating management’s
detailed knowledge of the environment and the marketplace, knowledge that is
available only to those who are involved on a daily basis. The more responsibility unit
managers have for innovation, the more their inputs are needed in budget formulation,
for they are best able to decide courses of action and targets for their units. They know
what must be done, where the opportunities lie, what weaknesses need to be addressed,
and where resources should be allocated.
Risks can come from various sources including uncertainty in financial markets,
threats from project failures (at any phase in design, development, production, or
sustaining of life-cycles), legal liabilities, credit risk, accidents, natural causes and
disasters, deliberate attack from an adversary, or events of uncertain or
unpredictable root-cause. There are two types of events i.e. negative events can be
classified as risks while positive events are classified as opportunities.
For the most part, these methods consist of the following elements, performed,
more or less, in the following order.
Identify the threats
Assess the vulnerability of critical assets to specific threats
Determine the risk (i.e. the expected likelihood and
consequences of specific types of attacks on specific assets)
Identify ways to reduce those risks
Prioritize risk reduction measures
Fortunately, there are plenty of free project management software options to keep
your team on-track without breaking the bank. To streamline your process and ensure
everyone on your team is on the same page, take a look at these ten exceptional free
project management tools.
Project management software (PMS) has the capacity to help plan, organize, and
manage resource tools and develop resource estimates. Depending on the sophistication
of the software, it can manage estimation and planning, scheduling, cost control and
budget management, resource allocation, collaboration software, communication,
decision-making, quality management, time management and documentation or
administration systems. Today, numerous PC and browser-based project management
software and contract management software solutions exist, and are finding
applications in almost every type of business.
Scheduling
One of the most common project management software tool types is scheduling
tools. Scheduling tools are used to sequence project activities and assign dates and
resources to them. The detail and sophistication of a schedule produced by a scheduling
tool can vary considerably with the project management methodology used, the features
provided and the scheduling methods supported. Scheduling tools may include support
for:
Multiple dependency relationship types between activities.
Resource assignment and leveling Critical path
Activity duration estimation and probability-based simulation
Activity cost accounting.
Providing Information
Project planning software can be expected to provide information to various people
or stakeholders, and can be used to measure and justify the level of effort required to
complete the project(s). Typical requirements might include:
Overview information on how long tasks will take to complete.
Early warning of any risks to the project.
Information on workload, for planning holidays.
Evidence.
Historical information on how projects have progressed, and in particular, how
actual and planned performance are related.
Optimum utilization of available resource.
Cost maintenance.
Collaboration with each teammates and customers.
Instant communication to collaborators and customers.
Desktop
Project management software has been implemented as a program that runs on
the desktop of each user. Project management tools that are implemented as
desktop software are typically single-user applications used by the project manager
or another subject matter expert, such as a scheduler or risk manager.
Web-based
Project management software has been implemented as a web application to be
accessed using a web browser. This may also include the ability to use a smartphone
or tablet to gain access to the application. Software as a service (SaaS) is also web-
based and has become a common delivery model for many business applications,
including project management, project management information system (PMIS) and
project portfolio management (PPM). SaaS is typically accessed by users using a thin
client via a web browser.
Single user
A single-user system is programmed with the assumption that only one person
will ever need to edit the project plan at once. This may be used in small companies,
or ones where only a few people are involved in top-down project planning. Desktop
applications generally fall into this category.
Collaborative
A collaborative system is designed to support multiple users modifying different
sections of the plan at once; for example, updating the areas they personally are
responsible for such that those estimates get integrated into the overall plan. Web-
based tools, including extranets, generally fall into this category, but have the
limitation that they can only be used when the user has live Internet access. To
address this limitation, some software tools using client–server architecture provide
a rich client that runs on users' desktop computer and replicates project and task
information to other project team members through a central server when users
connect periodically to the network.
Let’s Sum Up
https://www.pmi.org/about/learn-about-pmi/what-is-project management
https://www.projecttimes.com/articles/does-people-behavior-impact-projects-
how-and-what-do-we-do-about-it.html
https://www.workamajig.com/blog/guide-to-work-breakdown-structures-wbs
https://keydifferences.com/difference-between-pert-and-cpm.html
https://hbr.org/1984/07/budget-choice-planning-versus-control
https://en.wikipedia.org/wiki/Risk_management
https://blog.hubspot.com/marketing/free-project-management-software
MODULE 2
Intended Learning Outcomes
CHAPTER 5
PRODUCT DEVELOPMENT AND DESIGN
Chapter Outline
5.1 INTRODUCTION
For any business organization, the product design is the primary step in
manufacturing venture. The processes for manufacture, the planning of production, the
processes and checks for quality, or even the logistics are structured based on the
product design. Hence, great product design is the key to success. The development of
products provides an opportunity for growing the business but this can have impacts
and changes throughout the organization and the entire supply chain.
Product design has strategic implications with the company’s overall plans and
policies. This may include decisions with respect to the specification of the
requirements on each material to be used, the suppliers or networks to be involved, the
technology requirement and processes, warehousing, and the supply chain system.
1. Marketing aspect -
2. Product characteristics
(i) Functional aspect,
(ii) Operational aspect,
(iii) Durability and dependability aspects, and
(iv) Aesthetic aspect.
3. Economic analysis
(i) The profit consideration,
(ii) The effect of standardization, simplification, and specialization, and
(iii) The break-even analysis.
4. Production aspect
Product Characteristics
As the customers’ needs and expectations are to be satisfied, the design of the
product should be functionally sound. It is important to understand the difference
between product functions and product features. As to function is the purpose for which
the product is designed while the feature is something added to the product as a special
attraction. Another aspect is the components that should be within the reach of the
organization. Moreover, the quality and durability of the materials should also be
specified.
Economic Analysis
Having obtained sufficient information about customers’ requirements and market
potentialities, the next important factor is the product feasibility on the economic ground which
involves capital expenditures, cost vale and functional value of the product
Production Aspect
It is also important to consider the operational convenience of the
manufacturer and the availability of the materials.
One of the reasons why some organizations fail is that they place most of their
attention to product design and not enough on process design. The design process is a
series of steps that product teams follow during the formulation of a product from start
to finish. It is viewed as an interactive exercise, mean to say, issues are solved
sequentially. Then after each stage, or perhaps after several stages, the previous stages
are reexamined to see if later steps have affected the best way in which these steps
should have been designed. This process is shown in Fig. 5.2.
Product Planning
Product planning and process design are integrated so that at the end of the
design stage there is a product with the optimum qualities, and a process to produce it.
There are many activities to be first recognized and then coordinated; some activities
are worked in sequence. In the early stage, the perceived needs of the customers are
identified and will be reflected in the product's proposed quality, cost, function,
reliability, and appearance.
Process Design
The micro perspective of the process design comprises the operational content
and the operational method. Operational Content concerns with the proper
arrangement of the process that should be assigned to a work station. On the other
hand, the operational method focuses on ensuring the maximum productivity of the
process.
V. Use modules
This allows for more standardization and speeds up the assembly process.
Customer service should drive the designers’ effort in creating better quality
products. Thus, the efforts should be towards design for excellence or DFx. Design for
excellence is a combination of Six sigma principles, methods on how the product has
been designed, and standards for quality contributing to the overall excellence of the
company.
References:
J.R. Evans. And W.M. Lindsay, “Total Quality Management”, Cengage Learning
Asia, 2013.
W.J Stevenson and S.C. Chuong, "Operations Management". 2nd Edition. New
York: McGraw-hill education, 2014.
CHAPTER 6
MANAGEMENT OF QUALITY
Chapter Outline
INTRODUCTION
During the middle ages, the skilled craftsperson all stages of production. Quality
assurance was informal; one person or a small group of people were responding to the
final product they produced. These themes were lost in the advent of the Industrial
Revolution where each worker was then responsible for only a small portion of each
product.
Taiichi Ohno and Shigeo Shingo both developed the philosophy and methods
of kaizen or rapid improvement process which focuses on eliminating waste, improving
productivity, and achieving sustained continual improvement.
David A. Gavin suggests that products and services have many dimensions of
quality.
Note: Adapted from “Management of Quality” by W.J. Stevenson, Operations Management (12th Edition) 2015,
New York, McGraw-hill Education. Adapted with permission.
Implications of Quality
The philosophies of Deming, Juran, Crosby, and others serve much help in the
form of "best practices" to managers around the world, leading to the development and
a lot of awards and certifications for the effective application of Total Quality
principles.
Europe's most prestigious award was designed to increase awareness of the growing
importance of quality to the competitiveness of the business in the increasingly global
market and the standards of life.
The International Asia Pacific Quality Award
This award is given to organizations in countries bordering the Pacific Ocean
and the Indian Ocean, dedicated to achieving continuous quality improvement of goods
and services and life for people around the world.
ISO 9000 is a set of standards that pertains to quality management that helps
what an organization does to ensure that its products or services meet its customer’s
and stakeholder’s needs. Its standards include the following categories:
• System requirements
• Management requirements
• Resource requirements
• Realization requirements
• Remedial requirements
Eight quality management principles form the basis of the latest version of ISO
9000:
• A customer focus
• Leadership
• Involvement of people
• A process approach
• A system approach to management
• Continual improvement
• Use of a factual approach to decision making
• Mutually beneficial supplier relationships
6.6 TOTAL QUALITY MANAGEMENT
Six Sigma
In many ways, six sigma provides a blueprint for the implementation of a total
quality system. Although they have a different approach and can be used independently,
they are compatible to be used together and increase the output of improvement.
Process Improvement
Numerous tools that an organization can use for improvement have been
proposed over the years. The tools aid in data gathering and analysis and provide the
basis for decision making. These are the seven basic quality tools.
Flowcharts are a graphical representation of a process or step. These are best developed
by having all levels involved in the process.
Check sheets are simple tools frequently used for organizing and collecting data.
The histogram is a basic statistical tool that graphically shows an empirical frequency
distribution.
Pareto Diagrams, named after an Italian economist Vilfredo Pareto, often used to
analyze data collected in check sheets by classifying problem areas according to the
degree of importance.
Scatter Diagrams are useful in deciding if there are important relationships between
two variables
Control Charts are a statistical process control tool used to monitor how a process
changes over time.
6.9 QUALITY CONTROL
6.10 INSPECTION
The rate at which a process may go out of control or the volume of the batches
being inspected is one of the most important factors to consider in determining the
frequency of inspection.
Cent Percent Inspection or 100 percent inspection involves inspecting every item
produced and incoming material to ensure that no defective product would go to market.
There are two popular statistics index that can be used to measure the
capability of the process that uses both process variability and process control
specification: process capability ratio (Cp) and process capability index (Cpk).
The process capability ratio, Cp, is computed using the following formula:
Cp is a ratio that determines whether a process fall inside the specification limits.
Example 6.1:
Computation of Cp
Adapted from Statistical Process Control (p.263) by J. Heizer and B. Render, Operations
Management (10th Edition) 2011, New Jersey: Pearson Education
The capable process has a Cp of at least 1.0, but if the Cp is less that 1.0 the
process produces products outside the specifications. Therefore, the process from the
Example 6.1 is capable.
Cpk index is used to determine the number of defects by taking the difference
between the desired and the actual dimensions of products being produced. A capable
process must have a Cpk of at least 1.0.
Chapter Outline
1 Learning Objectives
2 Topic 1 Concept of Facility Location
3 Topic 2 Concept of Facility Layout
4 Topic 3 Service Facility Layouts
5 Let’s Sum Up
Learning Objectives
Facility location may be defined as a place where the facility will be set up for
producing goods or services. The need for location selection may arise under any of the
following conditions:
a. When a business is newly started.
b. When the existing business unit has outgrown its original facilities and
expansion is not possible; hence a new location has to be found.
c. When the volume of business or the extent of market necessitates th
establishment of branches.
d. When the lease expires and the landlord does not renew the lease.
e. Other social or economic reasons.
Visualizing the layout: It represents the most common technique that is deployed
for layout planning. It involves creating duplication of machines and equipment
and arranging them in two- or three-dimensional plans for determining the
effectiveness of a layout.
Block diagramming: The block diagram can be prepared by following the steps given
below:
1. Analyze the unit load summary that provides information about the average
number of unit loads moved between different departments of an organization.
2. Calculate the composite movements (back-and-forth movement) of the unit
load between the departments and rank them from the highest movement to the
lowest movement.
3. Place the trial layouts, which are designed using the ranking between
departments, on a grid. This grid represents the relative distance between
the departments.
Richard Muther’s systematic layout planning (SLP): In this technique, a grid displays
the ratings of the relative importance of the distance between different departments
of an organization. This grid is also called ‘closeness rating chart’. In this chart, the
rating for department A relative to department B is similar to the rating of
department B to department A. Closeness ratings are given to departments in the form
of codes, which depict the desired closeness of the departments according to the
relative strength of their closeness.
New Approaches to Layout Design
➢ Product layout: This type of layout is used only in cases where services are
organized in a sequence.
➢ Process layout: These layouts are highly common in service facilities as they
successfully deal with the varied customer processing requirements.
➢ Fixed position layout: In this type of service layout, materials, labor and equipment
are brought to the customer’s place. This layout is used in services like appliance repair,
landscaping, home remodeling, etc.
Let’s Sum Up
A facility location may be defined as the place where a facility will be set up for
producing goods or services.
Selection of a suitable facility location is important as it decides the fate of a
business. A good location may reduce the cost of production and distribution to
a considerable extent.
Once established, a location cannot be changed frequently as it incurs huge
costs.
A facility layout is defined as the arrangement of machinery, equipment and
other amenities in a facility to ensure the smooth movement of materials.
The objectives of service facility layouts differ from those of manufacturing
facility layouts. This is because a service operation aims to organise all activities
and processes to deliver services to customers.
References:
J.R. Evans. And W.M. Lindsay, “Total Quality Management”, Cengage Learning
Asia, 2013.
W.J Stevenson and S.C. Chuong, "Operations Management". 2nd Edition. New
York: McGraw-hill education, 2014.
ASSESSMENT
DISCUSSION QUESTIONS:
ACTIVITY 2
To watch: The Culture and Quality at Arnold Palmer Hospital
Link: https://www.youtube.com/watch?v=U_GnYwReTzc
Guide Question:
Describe the strategies of Arnold Palmer Hospital in its effort towards quality
and continuous improvement?
MODULE 3
Intended Learning Outcomes
4. Discuss the concepts and impacts of supply chain management, OEE,
Aggregate Planning and Master Scheduling to the organization
5. Explain the principles of OEE, MRP, CRP and ERP to the performance of the
organization
6. Analyze the concepts of JIT and lean production and its relation to scheduling
and planning
Introduction
Supply Chain Management can be defined as the management of flow of products
and services, which begins from the origin of products and ends at the product's
consumption. It also comprises movement and storage of raw materials that are
involved in work in progress, inventory and fully furnished goods.
Aggregate planning is the process of developing, analyzing, and maintaining a
preliminary, approximate schedule of the overall operations of an organization. The
aggregate plan generally contains targeted sales forecasts, production levels, inventory
levels, and customer backlogs.
Material requirements planning (MRP) is a system for calculating the materials and
components needed to manufacture a product. It consists of three primary steps: taking
inventory of the materials and components on hand, identifying which additional ones
are needed and then scheduling their production or purchase.
Scheduling is the process of arranging, controlling and optimizing work and
workloads in a production process or manufacturing process. Scheduling is used to
allocate plant and machinery resources, plan human resources, plan production
processes and purchase materials.
OEE (Overall Equipment Effectiveness) is the gold standard for measuring
manufacturing productivity. Simply put – it identifies the percentage of manufacturing
time that is truly productive. An OEE score of 100% means you are manufacturing only
Good Parts, as fast as possible, with no Stop Time.
CHAPTER 8
Three Flows in SC
There are three kinds of flows in a supply chain: material, information, capital.
Downstream – Material: Products, Parts – Information: Capacity, Delivery
Schedules – Finance: Invoices, Pricing, Credit Terms
Upstream – Material: Returns, Repairs, After-sales Services – Information:
Orders, Point-of-sale Data – Finance: Payments
In the mid-1990s, the Swedish car manufacturer Volvo found itself with excessive
stocks of green cars. To move them along, the sales and marketing departments began
offering attractive special deals, so green cars started to sell. But nobody had told the
manufacturing department about the promotions. It noted the increase in sales, read it
as a sign that consumers had started to like green, and ramped up production.
Supply Chain Story VII (Gaining Competitive Advantage)
In the late 1970s, with about 200 stores, Wal-Mart was a relatively small
retailer. At that time, Sears and Kmart dominated the retail market. Since then, Wal-
Mart gained significant market share from these retailers and became the largest and
most profitable retailer in the world. Today, Wal-Mart is admired for its collaboration
and technology driven supply chain practices and is leading the retailing industry with
its innovative supply chain practices.
Customer Service
• Average Response Time is the sum of delays of ordering, processing,
and transportation between the time an order is placed at a customer
zone and the time the order arrives at the customer zone
• Weeks of Supply: how many weeks worth of inventory does the company have
on hand. High value of weeks of supply means that the firm has a lot of
inventory sitting around.
Inventory Turns
Inventory Turns is a common benchmark in retailing. Inventory turns
measures the number of times inventory is sold or used in a strictly defined time period.
The equation for inventory turnover equals the cost of goods sold divided by the
average inventory. The result displays the ratio showing how many times a company's
inventory is sold and replaced over a period.
Inventory Productivity
Inventory productivity at its simplest can be defined as the amount of sales
and gross profit dollars an inventory investment generates over a given period of time,
usually a year. And the most basic measures of inventory productivity are inventory
turnover and gross margin return on investment (GMROI).
References:
J.R. Evans. And W.M. Lindsay, “Total Quality Management”, Cengage Learning
Asia, 2013.
W.J Stevenson and S.C. Chuong, "Operations Management". 2nd Edition. New
York: McGraw-hill education, 2014.
Chapter Outline
9.1 Introduction and Meaning
9.2 Scope or Functions of Materials Management
9.3 Material Planning and Control
9.4 Purchasing
9.5 Stores Management
9.6 Inventory Control or Management
9.7 The Nature and Importance of Inventories
9.8 Requirements for Effective Inventory
9.9. Inventory Ordering Policies
9.10 How Much to Order: Economic Order Quantity
9.11 Reorder Point Ordering
9.12 How Much to Order: Fixed Interval Model
9.13 The Single-Period Model
Primary Objectives
“Making available (supply) of materials in specified quantity and quality at
economic cost and maintaining the continuity of supply. Minimization of investments
in materials and inventory costs, and assuring high inventory turnover.”
Secondary Objectives
Secondary objectives help to achieve the primary objectives. Purchasing the
items from a reliable source at economic price. Reduction of costs by using various cost
reduction techniques such as variety reduction, standardization and simplification,
value analysis, inventory control, purchase research etc. Co-ordination of the functions
such as planning, scheduling, storage and maintenance of materials.
Irrespective of the type of the organization, the basic material related functions
performed at the organization are:
1. Purchasing
2. Inbound traffic from suppliers to company
3. Receiving
4. Inventory Control
5. Production control
6. In plant storage
7. Material handling
8. Packaging and shipping
9. Outbound traffic
10. Warehousing and distribution
Purchasing:
Purchasing plays a crucial role in the materials management because it is concerned
from input stage up to the consumption in manufacturing. Purchasing functions as a
monitor, clearing house and a pipeline to supply materials needed for production.
Purchasing Cycle:
The purchase procedure followed varies from company to company and also from
one industry to other. The purchasing cycle is represented as shown in fig (1.11).
The basic elements in purchasing are:
1. The origin of demand for materials and components based upon the requisitions made
to purchase department by user departments with all the details like descriptions,
quantity and quality specifications.
2. Specifications are checked and verified and purchase plan is made for items
demanded
3. Selection of source of supply.
4. Preparation of purchase order by supplier (order acceptance) and acceptance of terms
and conditions.
5. Follow up to ensure prompt delivery of right quality and quantity of materials.
6. Incoming inspection of materials (both to check quality and quantity) to ensure
correct material as per specification.
7. Checking supply invoice against purchase order and goods received and payments
are made.
Methods of Buying:
Methods of purchasing will vary according to the nature of demand and the market
conditions.
The buyer looks for the following details before a decision regarding vendor
selection is made:
1. Production Capabilities:
(a) Capacity to manufacture the products as per the specifications and required
quantities.
(b) Availability of spare capacity.
(c) Capability to understand the needs of Buyer Company both technical and
commercial.
3. Technical Capabilities:
(g) Whether the available plant and equipment’s ere in a position to meet the quality
and quantity specifications of the customer.
(h) Whether there are enough technically skilled and trained people.
(i) Whether R&D facilities are available.
(j) What is the market standing of the vendor with respect to quality and delivery
commitments (Reliability of supply).
(k) Whether he has enough storing and warehousing facilities.
(l) Quality control procedures – whether an ISO-9000 certified supplier.
4. Other Conditions:
(m) Working conditions in the vendor company.
(n) Industrial relations and bargaining power of unions.
(o) Possible reasons for interruptions in supply.
Vendor Relations:
Purchase department should establish a sound relationship with vendors based
on mutual trust and benefit to ensure smooth supply of materials/parts as per the
quality and quantity required. So, apart from a formal commercial relationship as a
customer, a long lasting and mutually rewarding relationship is to be established.
A strategic partnership between the buyer and supplier is defined as a continuing
relationship involving a commitment over an extended time period, an exchange of
information and acknowledgment of risks and rewards of the partnership. A sound
relationship emerges from the proper help and co-ordination on the part of both
buyer and supplier.
For making JIT work, the following conditions are put on purchasing department:
1. Reduction in number of suppliers.
2. Locating the suppliers who are nearby.
The success of JIT purchasing depends on how well the firm establishes the strategy
of single sourcing. The suppliers should be seen as “Outside” partners who can
contribute to the long run well fare buying firm.
References:
J.R. Evans. And W.M. Lindsay, “Total Quality Management”, Cengage Learning
Asia, 2013.
W.J Stevenson and S.C. Chuong, "Operations Management". 2nd Edition. New
York: McGraw-hill education, 2014.
Chapter Outline
1. What is OEE?
2. What is the benefits of using OEE to improve operational performance?
3. How does OEE build and support a culture of Lean Manufacturing?
4. How is OEE used?
5. From where and when did OEE originate?
6. What are the benefits of an automated data collection?
7. How is the OEE Model implemented?
What is OEE?
The Overall Equipment Effectiveness (OEE) of a machine or set of equipment
is a Key Performance Indicator (KPI) that indicates the equipment’s overall operational
performance. In essence, OEE is a measure of the actual output that was produced
with a machine, compared with the maximum output that could be expected from the
machine over the same period of time. OEE takes into consideration the cumulative
impact of three factors: the equipment's availability (percent of scheduled production
time in which units are actually produced, also called the Machine Operating Time),
its performance rate (percent of material produced compared to standard), and the
quality of its output (percent of good material produced compared to all material
produced during the Machine Operating Time). In equation form, OEE is the
multiplication of these three factors: OEE = % Availability x % Performance x % Quality
Many manufacturers are already using OEE, both as a KPI and as a catalyst
for change.
OEE is a standard metric used to evaluate manufacturing performance by taking a broad
view of all aspects of production. By using its three factors, OEE provides a
manufacturer with the best measure of machine utilization and helps them focus on
improvements that most directly impact their profits. As part of the lean manufacturing
tool kit, OEE does this by identifying and driving all elements of waste out of
manufacturing processes.
What is the benefits of using OEE to improve operational performance?
Continuously and visibly monitoring and reporting OEE provides the basis for
achieving optimum operational efficiency. When implemented on key manufacturing
equipment, all levels of the manufacturing organization will be able to take greater
control of the daily management, and improve the utilization of those plant assets. In
short, this will save the company money while increasing production output. In
addition, utilizing automated data collection and OEE measuring systems that are
highly visible and easy to use, such as OEM Partner’s Remote Monitoring solutions,
saves enormous effort and delivers highly visible, real-time intelligence on the overall
equipment effectiveness of a machine, a work cell, or a plant. This allows operators
and supervisors to proactively track, monitor and respond to operational issues as well
as measure and justify ongoing improvement efforts.
Typically, manufacturers are able to achieve rapid improvements upon the
initial implementation of such systems, and when done well, small improvements can
result in a big impact to the bottom line:
• An increase in OEE of around 10-15% can often be realized in the first year; this can
translate to a 50% improvement in Return on Assets (ROA). [R. Hansen, OEE for
Operators]
• OEE initiatives are generally ten times more cost-effective than purchasing
additional equipment capacity, and over time can reduce major capital expenditures
by 50%.
• In many major industries, an improvement of 1% in reduced downtime of a high
value asset can translate to over $1 million in annual savings.
• As machine OEE increases, total energy consumption per unit produced is reduced.
The manufacturer’s carbon footprint is reduced, while they enjoy lower costs.
How does OEE build and support a culture of Lean Manufacturing?
The OEE metric provides for several critical elements of the most successful
Lean Manufacturing initiatives. In these cases, OEE is used by lean practitioners on the
shop floor to identify and eliminate the sources of losses in all areas of the operation.
Everyone in the organization from upper management down to the shop floor is
actively and highly visibly engaged in supporting the teams and giving them the
resources needed to be successful. In the most successful companies, measurements
become consistent, accessible, widely understood and accepted. To achieve this, they
use clearly communicated standards and automated systems for collecting and
interpreting data, as well as for reporting and distribution. In some cases, additional
incentives are created in compensation systems that incorporate an element of OEE
improvements.
When used properly, OEE is used to educate and train the workforce, to gain
a common sense of purpose; it provides an accepted system of measurement that
drives a common understanding for team problem-solving. Further, with the
completion of each project, visible OEE improvements provide a source of motivation
for the workforce by clearly showing the benefits of their efforts.
In particular, OEE dashboards and reports provide a platform for
organizations to:
• Increase output by quickly identifying and responding to the highest
priority sources of losses, thereby producing more in the same amount of time with
the same equipment, with less energy consumed;
• Empower shop floor personnel by providing clear and visible measures of
their performance compared to goals; and
• Support continuous improvement.
How is OEE used?
OEE can be evaluated for a single piece of equipment or machine, or for
multiple pieces of equipment, over a discrete period of time, or for a particular job or
product. Like many standardized metrics, OEE has a set of basic rules to follow in its
implementation, and the application of these rules can vary. The most important
consideration to follow in an implementation of OEE metrics is to be consistent in the
application of its rules, so that comparison and trending analysis from machine to
machine and in tracking improvement efforts provides valid results.
The most important aspect, which is universally recognized, is that the
practitioner should know how their particular organization’s interpretations and
definitions are applied so that they can effectively use them to obtain improvements.
Then, within a consistent framework and terminology that is accepted across the
company, OEE is used to identify losses associated with each of its components:
Availability, Performance, and Quality. Analysis of the respective losses is performed
to prioritize improvement projects and determine root causes, and then the
improvements are tracked for verification and further actions as needed. For smaller
projects, formal process improvement tools and techniques may be used, such as
FMEA, DOE, 8D, DMAIC, and Plan-Do-Check-Act. More substantial opportunities
would benefit from more systemic, business process improvement tools such as Value
Stream Mapping and Kaizen, and sometimes from department- or company-level
initiatives such as modified work schedules or supply chain changes.
Our platform is flexible enough to provide for different interpretations, and
robust enough to properly implement those differences consistently and accurately in
both how it calculates OEE components and how it displays the results. For example,
some companies differ in how they interpret what constitutes planned or unplanned
down times in the measurement of their machines’ Availability or Performance. More
advanced users of the application can tailor and automate them to fit such local
customs and interpretations from within the Downtime Tracking module, with its
assignment of individual downtime codes to different categories of downtime.
From where and when did OEE originate?
The concept of OEE was developed as a metric and tool to be used for
improving operating efficiency of manufacturing plants. Its origins come from the
framework of Total Production Maintenance (TPM), introduced by Seiichi Nakajima’s
Introduction to Total Productive Maintenance in 1988. Since then, OEE has become
widely known as the best metric from which to gain control, and then optimize the
overall operational performance, and financial return on high value manufacturing
assets
What are the benefits of an automated data collection?
If done properly, manually executed OEE systems will identify losses and
opportunities for improvement. However, collecting and interpreting data for
evaluating OEE this way is a time-intensive process that is wrought with risk of error
and inconsistency. The time and effort spent doing it this way would be much more
efficiently used to work on actual improvement projects. In addition, at higher levels
of OEE, it becomes more difficult to obtain further gains, which makes the time and
effort in manual systems seem less worthwhile. In some cases, this is because the
losses are occurring at very high rates but also in very small amounts, and these are
extremely difficult to capture with any manual data collection process.
Inevitably, most manufacturing continuous improvement projects and
facilities using a manual collection method will quickly discover the value of
automated systems. There are many benefits of automated OEE systems. They are
powerful tools used to provide automated data collection, analysis and reporting of
accurate and consistent, data-based OEE evaluation summaries and details. The
following table provides a comparison of these two methods, and shows the powerful
and cost-effective benefits of using the OEE productivity tools in OEM Partner’s
Remote Monitoring platform.
How is the OEE Model implemented?
The platform uses a cross-industry standardized model for OEE productivity
data. It provides a visual illustration for each component of OEE (Availability,
Performance, and Quality) and the component’s respective value, in a horizontal bar
format. The model is designed to visually represent the calculated value of OEE as the
amount of Good Material produced as its appropriate equivalent proportion of total
calendar time. To accomplish this, the maximum values of the components
Performance and Quality are graphically aligned with respect to their respective
parent component. For example, the theoretical maximum speed of the machine for
the amount of material produced is graphically aligned with the Machine Operating
Time. This is intuitively logical as well because Performance is measured only over the
period of time the machine is considered to be producing actual production material.
Each of the three components itself is then divided by the proportional percentages
of its respective elements, e.g. Good Material is shown graphically as the respective
percentage of the Total Material produced.
Using this model, reporting of OEE productivity data in the remote monitoring
platform is provided in two levels. The top level is an executive summary view, using
an aggregate, simplified horizontal bar chart as shown in Figure 2. This is provided any
time that a platform user requests a summary of OEE data for a discrete, i.e. non-
trending, time period. The calculated value of OEE is provided in bold font at the top
of the chart, with the equation of its components appended for reference. Then only
one bar is provided to illustrate a summary of each of the OEE components of
Availability, Performance, and Quality, with each of the components’ associated value
labeled above it. The top bar represents the full calendar time period for which the
Availability of the machine is evaluated. It is divided proportionately by color for each
of the standard types of downtime, with planned and unplanned downtime combined
into one color (grey) for simplicity. Each additional component of OEE is then
graphically aligned with its parent component as described in the model above, and is
similarly divided proportionately by its respective elements. A more detailed
description of this format is provided below.
The second level of OEE reporting provided by the remote monitoring system
is a detailed breakdown of OEE component elements with their respective values. This
format, shown here in Figure 3, provides the equivalent detailed summary data,
numerically by component, and is color coded to match the top level bar chart. This is
provided for the lean manufacturing practitioner to drill down into the details for
further analysis toward the design and execution of actionable improvement plans.
Figure 4: Example of format for OEE component details The top level summary of data
shown in Figure 2 provides the value of calculated OEE for the selected time period at
the top of the chart, above the component bars. Each component bar is defined and
formatted as follows:
Availability:
The numerical value of Availability is a measure of the time a machine has
been up and running and making any production material. This metric is dependent
upon the time that the machine has been scheduled for production. Data acquired
directly from the machine is used to compute the downtime called the Availability
Loss, as the amount of time that the machine has not been creating production
material during the Plant Operating Time. The Plant Operating Time is defined by the
operating shift schedule for the machine, and does not include Scheduled Downtime.
Availability Loss may be further sectioned into Planned and Unplanned Downtime.
This is accomplished either automatically or manually by the practitioner, through the
use of downtime codes that are acquired either directly from the machine or through
manual assignment using the platform. Planned Downtime such as operator breaks or
planned maintenance during normal operating hours are included in Availability Loss
because this is fully burdened time that is available to operate the machine. For
example, in cellular work flow designs, special arrangements can be made to rotate
break periods and operators so planned bottlenecks don’t stop running during breaks,
and maintenance can be planned during scheduled plant shutdown periods.
The Machine Operating Time is shown in a light green color, with the
remaining time portion of the Plant Operating Time shown in grey. All loss in Available
time, whether planned or unplanned downtime, is shown in this grey portion. Time
that the machine or plant is not scheduled to operate, if there is any such time in the
selected calendar time period, is shown in white (no color) on the right side of the bar.
The total length of the bar represents the calendar time period selected for the report.
Performance:
The performance portion of the OEE Metric represents the average speed at
which the machine was operated during the Machine Operating Time of the calendar
time period chosen, as a percentage of the theoretical maximum speed that the
machine can operate. It is a measure of the quantity of units actually produced as a
percentage of the quantity of units that would have been produced in that same time
period if the machine were running at maximum speed. This method is equivalent to
an evaluation in which a machine’s performance is represented by the ideal, or
minimum time it should take to produce a unit of material as a proportion of the
average time it actually took to produce a unit of material during the Machine
Operating Time of the selected calendar time period.
The maximum speed can be defined by the machine “nameplate” speed,
which is the maximum design speed of the machine. This is the default method of
evaluating OEE, which can be used for benchmarking productivity analyses across
work cells or plants. Alternately, OEE can be evaluated for specific jobs, products or
materials being produced on the machine. In this case, the maximum speed can be
defined as the “standard” or ideal speed for a particular job, product or material being
produced as determined by the manufacturing or process engineer who developed
the process for the machine. This product- or job-based method of evaluating OEE can
also be informally called the “Rated OEE”, to reflect that the evaluation was rated to
a specific product or job, and to differentiate from the default, machine nameplate
speed based OEE evaluation. In the platform, the Rated OEE is administered using the
Job Management tools.
The total quantity of units produced during the Machine Operating Time is
represented as the entire bar (light blue + grey), with the portion shown in light blue
representing the ideal time it would have taken to produce the same quantity of units
at the theoretical maximum machine speed. The type of units of production are
defined by the particular machine and its available control parameters, and set up by
the platform administrator.
Quality:
The numerical value of Quality is the quantity of Good Material produced as
a percentage of the Total Material produced during the Machine Operating Time of
the time period chosen. This is commonly referred to as First Pass Yield. More
sophisticated monitoring systems will take into account relevant, on-machine quality
assurance or inspection steps, to better represent the Quality performance of the
machine operation. In some cases, downstream inspection devices can be monitored
and directly related to production on the machine. Once the material being produced
is off the machine, however, care must be taken to consider only the quality aspects
of the particular machine operation being measured.
CHAPTER 12
MATERIAL AND CAPACITY REQUIREMENTS PLANNING
Chapter Outline
12.1 MRP and CRP Objectives 12.8 Just In Time and Lean Operations
12.2 MRP Inputs and Outputs 12.9 Building Blocks
12.3 MRP Logic 12.10 Lean Tools
12.4 System Refinements 12.11 Transitioning to Lean Tool System
12.5 Safety Stock, Lot Sizing and System Updating 12.12 Lean Services
12.6 CRP Inputs and Outputs 12.13 JIT II
12.7 Loading
By identifying precisely what, how many, and when components are needed, MRP
systems are able to reduce inventory costs improve scheduling effectiveness, and
respond quickly to market changes.
MRP focuses upon the priorities of materials, whereas CRP focuses primarily upon
time. Through CRP, variances are projected, with this the managers might consider
remedies such as alternative routings, changing or eliminating of lot sizing or safety
stock requirements, and lot splitting.
Following are some of the terminologies used to describe the functioning of MRP
systems.
Bill of materials: A listing of all the raw materials parts, subassemblies, and assemblies
that go into an assembled item.
Level code: The level on which an item occurs in the structure, or bill-of-materials format.
Time bucket: The time period used for planning purposes in MRP-usually a week.
Lot size. The quantity of items required for an order. The order may be either purchased
from a vendor or produced in-house. Lot sizing is the process of specifying the order
size.
Lead-time offset: The supply time, or number of time buckets between releasing an
order and receiving the materials.
The master production schedule specifies which end items are to be made, in
what quantities and when these are needed in accordance to the production plan. The
production plan sets the over-all level of the output.
A bill of material is the list of quantities of all the raw materials parts,
subassemblies, and assemblies that go into an assembled item to make a unit of product.
Thus, each finished product has its own bill of materials. The listing in the bill of
materials is hierarchical which shows the needed quantity for each item to produce the
parent product. Figure 12.2 shows an assembly diagram for a chair and a simple product
structure tree for the chair. The product structure tree provides hierarchical
decomposition of items form a product.
Figure 12.2 Assembly diagram and product structure tree for chair assembly
Source: Adapted from “Management of Quality” by W.J. Stevenson, Operations Management (12th
Edition) 2015 New York, McGraw-hill Education
MRP processing takes the final product requirements specified by the master
production schedule and “explodes” them into time-phased requirements for
components using the bill of materials offset by lead times.
Following are some of the terms frequently used on MRP planning forms.
Gross requirements: The total expected demand for raw materials, components,
subassemblies, or finished goods by the end of the period. For end items, these
quantities are come from the master schedule (for end items) or from the combined
needs of other items.
Scheduled receipts: Materials have been placed (open order) and are scheduled to
arrive from vendors or in-house shop due to be received at the beginning of the period.
Net requirements: Net amount required in each time period. This result of adjusting
requirements for projected inventory available from the previous period with any
scheduled receipts.
The quantities that are generated by exploding the bill of materials are gross
requirements; they do not take into account any inventory that is currently on hand or
due to be received. The inventory on hand at the end of a period is the sum of the
previous period on-hand amount plus any receipts (planned or scheduled) less the gross
requirements.
The materials that a firm must actually acquire to meet the demand generated
by the master schedule are the net material requirements. The determination of the net
requirements is the core of MRP processing. One accomplishes it by subtracting from
gross requirements the sum of existing inventory and items already on order as recorded
in the inventory status file.
Net requirements = gross requirements – (on hand/available + scheduled
receipts)
Key features of MRP systems are: the generation of lower-level requirements time
phasing of those requirements, and the planned-order releases that flow from them.
Modular and Planning Bills: Particular bills of materials depict the item structure
for essential subassemblies of parts that are normal to various end things. For instance,
a few models of a producer's cars may contain a similar transmission, drive train,
cooling, and stopping mechanisms. By booking these things as (normal) modules,
creation can once in a while be all the more successfully "smoothed" and stock venture
limited.
Safety stock: In an ideal world, there is no requirement for safety stock as this is one
reason for utilizing MRP approach in overseeing subordinate interest stock things. Be
that as it may, firms may choose for convey stock on certain things for an assortment
of reasons. For instance, deficiencies may happen if orders are late or manufacture or
gathering times are longer than anticipated and this condition carried them to the
utilization of wellbeing stock to keep up smooth tasks. In this way, holding security
stock, delude the primary reason for MRP approach
Lot sizing: Request amounts are not generally indicated ahead of time. Distinctive part
measuring techniques are being used, they are (1) fixed-request amount sums; (2) EOQ
or ERL sums; (3) parcel for part, which is requesting the specific measure of the net
necessities for every period; (4) fixed period prerequisites and (5) different least-cost
draws near, e.g., least-unit cost, least-all out expense.
System updating: MRP framework structures regularly utilize one of two strategies to
process information, update records, and guarantee that the framework data is
substantial and adjusts with real: (1) regenerative preparing or (2) net change handling.
Regenerative MRP frameworks: use cluster preparing to rethink the entire framework
(full blast everything being equal) all the time (e.g., week after week). Net change MRP
frameworks: are on the web and respond ceaselessly to changes from the ace timetable,
stock record, and different exchanges.
Early MRP establishments were to a great extent of the regenerative sort, however then
as net change frameworks got consummated, more firms started introducing them. Be
that as it may, being "movement driven," net change frameworks are here and there
"apprehensive" and will in general go overboard to changes. The significant
inconvenience of regenerative frameworks is the delay that exists until refreshed data
is joined into the framework.
Framework application: Although MRP frameworks are generally utilized, they are
generally valuable in assembling conditions where items are produced to request, or
amassed to arrange or to stock. MRP doesn't give as much bit of leeway in low-volume,
exceptionally complex applications or in constant stream forms, for example,
processing plants. It does, be that as it may, appreciate wide application in metals,
paper, food, substance, and other handling applications.
Capacity is a measure of the productive capability of a facility per unit of time. In terms
of the relevant time horizon, capacity management decisions are concerned with the
following:
12.7 LOADING
There are two fundamental methods for arranging the control of a creation framework.
One of these is stacking; the other is planning. Of the two stacking is the simpler to do.
In any case, planning can give more control and is more point by point, in spite of the
fact that it is generally accomplished for a shorter timespan. A heap is the measure of
work allocated to an office work focus or administrator, and stacking is the task of
work. Stacking doesn't determine the succession wherein the work is done or when it is
to be finished. Stacking is the total task of employments to explicit elements. Sources
of info fundamental for stacking include:
• Routing
• Standard hours per activity or work focus
• Gross machine/man-hour accessible
• Efficiency factors
• Due date. Stacking is intently attached to scope quantification as in stacking
is the main sign that limit levels need modifying.
Benefits of JIT
The most significant benefit is to improve the receptiveness of the firm to the
changes in the market place thus providing an advantage in competition.
The plan and activity of a lean framework give the establishment to achieving
the previously mentioned objectives.
1. Item structure.
2. Procedure plan.
3. Staff/hierarchical components.
4. Assembling arranging and control. Speed and effortlessness are two ongoing
themes that go through these structure squares.
Item Design
The initial two components identify with speed and straightforwardness. The
utilization of standard parts implies that laborers have less parts to manage, and
preparing times and expenses are diminished. Buying, taking care of, and checking
quality are more daily schedule and loan themselves to ceaseless improvement. Another
significant advantage is the capacity to utilize standard preparing. Measured plan is an
augmentation of standard parts. Modules are bunches of parts treated as a self-contained
unit. This significantly lessens the quantity of parts to manage, rearranging get together,
buying, taking care of, preparing, etc. Normalization has the additional advantage of
diminishing the quantity of various parts contained in the bill of materials for different
items, in this manner disentangling the bill of materials.
This section describes several tools that are used for process improvement in lean
systems.
Value stream mapping could be a visual device to efficiently look at the flow of
materials and data included in bringing an item or advantage to a customer. The
procedure begun at Toyota, where it is alluded to as “Material and Information
Flow Mapping.” The map may be a outline of a whole handle that regularly ranges
from approaching products from suppliers to shipment of
an item or conveyance of benefit to the client. The outline appears all
processes within the esteem stream, from entries of supplies to the shipping of
the item. The objective is to extend appreciation to the client,
where approval is regularly characterized in terms of quality, time, taken a toll,
or adaptability .Information collected amid the
mapping prepare might incorporate times (e.g., cycle time, setup time, changeover
time, touch time, lead time), separations traveled (e.g., by parts, specialists, printed
material), botches (e.g., item surrenders, information section mistakes), wasteful wo
rk strategies (e.g., additional movements, over the top lifting or moving.
Value improvement for a product or a service embodies the five lean principles
described earlier and repeated here. It begins by specifying value from the customer’s
standpoint. You can see where value stream mapping can help process improvement:
1. Specify value from the standpoint of the end customer.
2. Identify all the steps in the value stream and create a visual (map) of the value
stream.
3. Eliminate steps that do not create value to create flow.
4. Use next-customer-in-the-process demand to pull from each preceding process
as needed to control the flow.
5. Repeat this process as long as waste exists in the system.
Once a value stream map is completed, data analysis can uncover improvement
opportunities by asking key questions, such as:
Where are the process bottlenecks?
Where do errors occur?
Which processes have to deal with the most variation?
Where does waste occur?
This includes purchasing, accounting, order entry, and other office functions.
Office wastes might include:
1. Excess inventory —excess supplies and equipment.
2. Over processing —excess paperwork and redundant approvals.
3. Waiting times —orders waiting to be processed, requests for information
awaiting answers.
4. Unnecessary transportation —inefficient routing.
5. Processing waste —using more resources than necessary to accomplish a
task.
6. Inefficient work methods —poor layout design, unnecessary steps,
inadequate training.
7. Mistakes —order entry errors, lost files, miscommunications.
8. Underused people—Not tapping all of the mental and creative capabilities
of workers.
12.11 TRANSITIONING TO LEAN TOOL SYSTEM
2. Think about the operations carefully; choose which parts will require the
foremost exertion to change over.
5. Continuously change over operations, starting at the conclusion of the method and
working in reverse. At each arrange, make beyond any doubt the conversion has
been generally effective some time recently moving
on. Don't start to diminish inventories until major issues have been settled.
6. As one of the final steps, change over providers to JIT and be arranged to work
closely with them. Begin by narrowing the list of merchants, distinguishing those who
are willing to grasp the incline reasoning. Donate inclination to sellers who have long-
term track records of unwavering quality. Utilize merchants found adjacent in
case fast reaction time is imperative. Set up long-term commitments
with merchants. Demand on tall guidelines of quality and adherence to
strict conveyance plans.
7. Be arranged to come
across deterrents to transformation. Deterrents to transformation conversion and
converting from a traditional system to a lean system may not be smooth. Also,
manufacturers that operate with large amounts of inventory to handle varying customer
demand may have difficulty acclimating themselves to less inventory.
Some other challenges include the following:
• Eliminate disturbances. For instance, attempt to abstain from having laborers who
are adjusting clients likewise answer phones.
• Make the framework adaptable. This can cause issues except if drew nearer
cautiously. Regularly, it is alluring to normalize work since that can yield high
efficiency. Then again, having the option to manage assortment in task necessities can
be an upper hand. One methodology may be to prepare laborers with the goal that they
can deal with more assortments. Another may be to appoint work as per claims to fame,
with specific laborers taking care of various kinds of work as indicated by their forte.
• Reduce arrangement times and preparing times. Have as often as possible utilized
apparatuses and extra parts promptly accessible. Moreover, for administration calls,
attempt to evaluate what parts and supplies may be required so they will be close by,
and abstain from conveying gigantic inventories.
• Simplify the process. This incorporates mistakes and copy work. Keep the
accentuation on quality and uniform assistance.
• Simplify the procedure. This works particularly when clients are a piece of the
framework (self-administration frameworks including retail activities, ATMs and
candy machines, administration stations, and so forth.).
12.13 JIT II
References
J.R. Evans. And W.M. Lindsay, “Total Quality Management”, Cengage Learning
Asia, 2013.
CHAPTER 13
SCHEDULING AND CONTROLLING PRODUCTION ACTIVITIES
Chapter Outline
13.1 INTRODUCTION
Processing time (t j ): It is the time required to process job j. The processing time, tj
will normally include both actual processing time and set-up time. It is the time required
to process work j. The preparing time, tj will typically incorporate both real handling
time and set-up time.
Ready time (rj ): It is the time at which job j is available for processing. The ready time
of a job is the difference between the arrival time of that job and the time at which that
job is taken for processing. In the basic model, as per condition I, rj = 0 for all jobs.
It is the time at which work j is accessible for preparing. The prepared season
of an occupation is the contrast between the appearance season of that activity and the
time at which that activity is taken for handling. In the fundamental model, according
to condition I, rj = 0 for all employments.
Due date (dj ): It is the time at which the job j is to be completedIt is the time at which
the activity j is to be finished.
Completion time (Cj ): It is the time at which the job j is completed in a sequence.
Performance measures for evaluating schedules are usually function of job completion
time. Some, sample performance measures are Flow time, Lateness, Tardiness, etc
Fulfillment time (Cj ): It is the time at which the activity j is finished in an arrangement.
Execution measures for assessing plans are typically capacity of employment finish
time. A few, example execution measures are Flow time, Lateness, Tardiness, and so
forth.
Flow time (Fj ): It is the amount of time job j spends in the system. Flow time is a
measure, which indicates the waiting time of jobs in a system. This in turn gives some
idea about in-process inventory due to a schedule. It is the difference between the
completion time and the ready time of the job j i.e. Fj = Cj – rj .
Delay (Lj ): It is the measure of time by which the fruition season of employment j
varies from the due date (Lj = Cj – d). Delay is a measure which gives a thought
regarding congruity of the employments in a timetable to a given arrangement of due
dates of the occupations. Delay can be either positive delay or negative delay. Positive
delay of a vocation implies that the activity is finished after its due date. Negative delay
of work implies that the activity is finished before its due date. The positive delay is a
proportion of helpless assistance. The negative delay is a proportion of better help.
Much of the time, particular punishments and different expenses are related with
positive delay, yet by and large, no advantages are related with negative delay. In this
way, it is frequent.
Tardiness (Tj ): Tardiness is the lateness of job j if it fails to meet its due date, or zero,
otherwise Tj = max {O, Cj – dj } = Max {O, Lj }.
13.3 MEASURES OF PERFORMANCE
The different measures of performance which are used in the single machine
scheduling are listed below with their formula. The various proportions of execution
which are utilized in the single machine booking are recorded below with their
equations.
Here and there we might be keen on limiting the time spent by employments
in the framework. This, thusly, will limit the in-process stock. Additionally, we might
be keen on fast turnaround/throughput seasons of the employments. The time spent by
work in the framework is only its flowtime, and the 'fast turnaround time is its mean
stream time (F). Most brief handling time (SPT) rule limits the mean stream time.
13.5 WSPT Rule
If a job is completed beyond its due date, then it is called tardy job; otherwise it is called
non-tardy job. In many organizations, the objective may be to minimize the total number of tardy
jobs. 242 Operations Management If the EDD sequence yields zero tardy, or it yields exactly one
tardy job, then it is an optimal sequence for minimizing the total number of tardy jobs (NT), If it
yields more than one tardy job, the EDD sequence may not yield the optimal solution. An exact
algorithm for the general case is given below.
Step 1: Arrange the jobs in EDD order and assume this, as set E. Let set L be empty.
Step 2: If no jobs in E are late, then stop. Find the union of E and L (Note: The remaining
jobs in E should be in EDD order. But the jobs in L can be in any order); otherwise, identify
the first late job in E. Let it be job K.
Step 3: Identify the longest job, among the first K jobs in the sequence. Remove this job from
E and place it in L. Revise the completion times of the jobs remaining in E and return, to
Step 2. This algorithm is demonstrated using the following problem.
In flow shop scheduling problem, there are n jobs; each require processing on m different machines.
The order in which the machines are required to process a job is called process sequence of that job.
The process sequences of all the jobs are the same. But the processing times for various jobs on a
machine may differ. If an operation is absent in a job, then the processing time of the operation of
that job is assumed as zero.
The flow-shop scheduling problem can be characterized as given below:
1. A set of multiple-operation jobs is available for processing at time zero (Each job requires m
operations and each operation requires a different machine).
2. Set-up times for the operations are sequence independent, and are included in processing
times.
3. Job descriptors are known in advance.
4. m different machines are continuously available.
5. Each individual operation of jobs is processed till its completion without break. The main
difference of the flow shop scheduling from the basic single machine scheduling is that the
inserted idle time may be advantageous in flow shop scheduling. Though the current machine
is free, if the job from the previous machine is not released to the current machine, we cannot
start processing on that job. So, the current machine has to be idle for some time. Hence, inserted
idle time on some machines would lead to optimality.
As mentioned in the earlier section, the time complexity function for a general flow shop
problem is exponential in nature. This means, the function grows exponentially with an increase in
the problem size. But, for a problem with 2 machines and n jobs, Johnson had developed a
polynomial algorithm to get optimal solution, i.e., in a definite time, one can get the optimal solution.
13.9.1 Johnson’s Algorithm
Step 1: Find the minimum among various ti1 and t.
Step 2a: If the minimum processing time requires machine 1, place the associated job
in the first i2 available position in sequence. Go to Step 3.
Step 2b: If the minimum processing time requires machine 2, place the associated job
in the last available position in sequence. Go to Step 3.
Step 3: Remove the assigned job from consideration and return to Step 1 until all
positions in
sequence are filled. (Ties may be broken randomly.)
One can extend Johnson’s algorithm to the problem shown in Table 13.1 if anyone of
the following two conditions is satisfied.
If min t i1 ≤ max ti2 or
if min t i3 ≤ max t i2
If anyone of the above conditions is satisfied then, we can extend the Johnson’s
algorithm in the following way. Create a hypothetical problem with two machines and n jobs as
shown in Table 13.2. The objective is to obtain optimal sequence for the data given in the Table
13.2. Later, the makespan is to be determined for the optimal sequence by using the data of the
original problem shown in table. This concept of extending Johnson’s algorithm to this type of
problem is demonstrated using an example problem.
Table 13.2 Hypothetical
problem for Table 13.1
At stage 1
In other words, Johnson’s rule is applied to the first and mth operations and intermediate
operations are ignored.
At stage 2
That is, Johnson’s rule is applied to the sum of the first two and the last two operation
processing times.
In general at stage i,
In Job shop issue, we expect that each work has m unmistakable activities. In
case a couple of the occupations are having not as much as m tasks, required number
of fraud activities with zero get ready occasions is expected. By this doubt, the state of
ascend to number of tasks for all the occupations is guaranteed. In work shop arranging
issue, the strategy groupings of the jobs are not the equivalent. Therefore, the
progression of each activity in work shop arranging isn't unidirectional.
The time unpredictability work of the work shop issue is combinatorial in
nature. Thus, heuristic methodologies are predominant around there. Dissimilar to the
stream shop illustrate, there's no starting machine that proceeds in a manner of speaking
the essential activity of a work nor there's a terminal machine that proceeds in a manner
of speaking the last activity of a vocation.
In the stream shop, an activity number inside the activity gathering of a work
might be same as the position number of the ideal machine. Thus, there's no should
perceive between them. Be that as it may, in the work shop case, different businesses
will have particular activity courses of action. Along these lines, we can't expect a
straight stream for the work shop issue. Every activity j inside the activity gathering of
the work I in the activity shop issue will be depicted with triplet (I, j, k) where k is the
predefined machine for handling the jth activity of the ith work. Consider the taking after
data of a work shop arranging including four jobs, three tasks and henceforth three
machines. The in the first place table involves operation
Given an operation plan for each machine, there are procedures on different
machines. Inside the past case, where the finishing of an earlier procedure on a similar
machine is obliged, it might in any case be possible to find undeniable infers of
progress. In any event, when no nearby moves are possible, far off better; a much better;
a higher; a stronger; an improved and a more grounded arrangement can unmistakably
be defined by moving tasks to the got out and past different activities starting at now
anticipated a couple of machine. Such a modification in which a couple of activity is
begun earlier without deferring some other activity is known as an overall left-shift or
essentially a left-shift. The arrangement of all plans wherein no overall left-move can
be made is known as the arrangement of dynamic plans. It is plainly a subset of the
arrangement of semi-dynamic calendars.
Since, the work shop issue comes beneath combinatorial category, the time
taken to get optimum solution will be exponential in nature. In this sort of issue, the
number of doable plans will grow
exponentially, indeed for little increase in issue measure. As a
result, it'll be inconceivable to solve huge measure issues ideally. Subsequently,
we ought to resort to heuristic approach to urge near optimal arrangement
Step 2: Decide q* = min {qj } and the comparing machine m* on which q* may well
be realized. j E S.
Step 3: For each operation which has a place to S, that requires machine m*
and fulfills the condition
Pj< q*, recognize an operation concurring to
a particular need and include this operation.
Step 1: Develop a two dimensional chart in which x-axis speaks to the work 1, its
sequence of operations and their preparing times, and y-axis speaks to the work 2,
its arrangement of operations and their handling times (utilize same scale for both x-
axis and y-axis).
References:
J.R. Evans. And W.M. Lindsay, “Total Quality Management”, Cengage Learning
Asia, 2013.
W.J Stevenson and S.C. Chuong, "Operations Management". 2nd Edition. New
York: McGraw-hill education, 2014.
ASSESSMENT
DISCUSSION QUESTIONS:
ACTIVITY 1
ACTIVITY 2
To watch: Culture and Lean Production/ DAbbawalas of India
Link: https://www.youtube.com/watch?v=Z4foWqVHqsE
Guide Question:
Describe the role of dabbawalas and how they achieved 100 percent accuracy
in their field of work
ACTIVITY 3
VIDEO: MRP AT WHEELED COACH AMBULANCES
Link: https://www.youtube.com/watch?v=SLuQeOgRi0c
Guide Question: Describe how important an accurate inventory system for Wheeled
Coach.
MODULE 4
CHAPTER 14
Linear Programming
Chapter Outline
1 Learning Objectives
13. TOPICS:
14.1 INTRODUCTION
14.2 REQUIREMENTS OF A LINEAR PROGRAMMING PROBLEM
14.3 FORMULATING LINEAR PROGRAMMING PROBLEMS
14.4 GRAPHICAL SOLUTIONS TO A LINEAR PROGRAMMING
14.4.1 GRAPHICAL REPRESENTATIONS OF CONSTRAINTS
14.4.2 ISO-PROFIT LINE SOLUTIONS METHOD
14.4.3 CORNER-POINT SOLUTION METHOD
14.5 SENSITIVITY ANALYSIS
14.6 SOLVING MINIMIZATION PROBLEMS LINEAR PROGRAMMING
APPLICATIONS
14.6.1 EXAMPLE PROBLEM AXIMIZATION AND MINIMIZATION
14.7 SIMPLEX METHOD OF LINEAR PROGRAMMING
14.8 TRANSPORTATION PROBLEM OF LINEAR PROGRAMMING
14.8.1 NORTHWEST CORNER METHOD
14.8.2 STEPPING STONE METHOD
14.8.3 MODIFIED DISTRIBUTION
14.8.4 VOGEL’S
3 Let’s Sum Up
Learning Objectives
Describe the importance of Liner problem techniques to operations in the organizations.
Identify and formulate a linear program techniques that involves developing a
mathematical model to solve LP problems.
Discuss the different techniques in Solving Linear Problems using graphical methods
and other related techniques.
Discuss the different structure special LP problems using the transportation and
assignment models.
14.1 INTRODUCTION
One of the most common linear programming applications is the product-mix problem.
Two or more products are usually produced using limited resources. The company
would like to determine how many units of each product it should produce to maximize
overall profit given its limited resources.
Formulating a linear program involves developing a mathematical model to represent
the managerial problem
The steps in formulating a linear program are
1. Completely understand the managerial problem being faced
2. Identify the objective and constraints
3. Define the decision variables
4. Use the decision variables to write mathematical expressions for the
objective function and the constraints
Example:
The Flair Furniture Company produces inexpensive tables and chairs. The production
process for each is similar in that both require a certain number of hours of carpentry
work and a certain number of labour hours in the painting and varnishing. Each table
takes 4 hours of carpentry and 2 hours in the painting and varnishing. Each chair
requires 3 hours in carpentry and 1 hours in painting and varnishing. During the current
production period, 240 hours of carpentry time and 100 hours in painting and varnishing
time are available. Each table sold yields a profit of $7; each chair produced is sold for
a $5 profit.
Flair Furniture’s problem is to determine the best possible combination of tables and
chairs to manufacture in order to reach the maximum profit
The objective is to
Maximize profit
The constraints are
The hours of carpentry time used cannot exceed 240 hours per week
The hours of painting and varnishing time used cannot exceed 100 hours per
week
The decision variables representing the actual decisions we will make are
X1 = number of tables to be produced per week
X2 = number of chairs to be produced per week
Suppose, X1 = number of tables to be produced
X2 = number of chairs to be produced
We can covert the above information to formulate the problem which is as follows:
Maximize
Z=$40x1 + 50x2
subject to
The objective is to
Maximize profit
14.4.2 ISO-PROFIT LINE SOLUTIONS METHOD
We suppose profit equal to some arbitrary but small dollar amount. For the
Flair Furniture problem we may choose a profit of $210.
$210 = 7X1+5X2
We then find (X1, X2) ={(0, 42); (30, 0)}
$280=7X1+5X2
We find (X1, X2) = {(0, 56); (40,0)}
Following the same way we draw a series of parallel isoprofit lines (iso-profit
map) until we find the highest isoprofit line, that is, the one with the optimal
solution.
In point (4), we need to find the value in the intersection point of two constraints.
4X1 + 3X2 = 240 [Carpentry equation]
2X1 + 1X2 = 100 [Painting equation]
Because point (4) produces the highest profit of any corner point, the product mix
of X1=30 tables and X2=40 chairs is the optimal solution to Flair Furniture’s problem.
Thus, has the coordinates (X1 = 30, X2 = 40). We can compute its profit
point level to complete
the
analysis:
Point : (X1 = 30, X2 = 40 Point : (X1 = 30, X2 = 40
Operations managers are usually interested in more than the optimal solution to an
LP problem. In addition to knowing the value of each decision variable (the Xis) and
the value of the objective func-tion, they want to know how sensitive these answers are
to input parameter changes. For example, what happens if the coefficients of the
objective function are not exact, or if they change by 10% or 15%? What happens if
right-hand-side values of the constraints change? Because solutions are based on the
assumption that input parameters are constant, the subject of sensitivity analysis comes
into play. Sensitivity analysis, or postoptimality analysis, is the study of how sensitive
solutions are to parameter changes.
There are two approaches to determining just how sensitive an optimal solution is to
changes. The first is simply a trial-and-error approach. This approach usually involves
resolving the entire problem, preferably by computer, each time one input data item or
parameter is changed. It can take a long time to test a series of possible changes in this
way.
Decision variables
x1 = bags of Super-gro
x2 = bags of Crop-quick
Model constraints:
2x1 + 4x2 16 lb (nitrogen constraint)
4x1 + 3x2 24 lb (phosphate constraint)
x1, x2 0 (nonnegativity constraint)
No feasible solution
Exists when there is no solution to the problem that satisfies all the constraints.
No feasible solution region exists.
This is a common occurrence in the real world.
Generally one or more constraints are relaxed until a solution is found.
Unboundedness
Sometimes a linear program will not have a finite solution.
In a maximization problem, one or more solution variables, and the profit, can be
made infinitely large without violating any constraints.
In a graphical solution, the feasible region will be open ended.
This usually means the problem has been formulated improperly.
3. Iteration
Step 2:
Determine the leaving basic variable by applying the minimum ratio test as
following:
1. Pick out each coefficient in the pivot column that is strictly positive (>0)
2. Divide each of these coefficients into the right hand side entry for the same row
3. Identify the row that has the smallest of these ratios
4. The basic variable for that row is the leaving variable, so replace that variable
by the entering variable in the basic variable column of the next simplex tableau. Put a
box around this row and call it the “pivot row”
Step 3:
Solve for the new BF solution by using elementary row operations (multiply or
divide a row by a nonzero constant; add or subtract a multiple of one row to another
row) to construct a new simplex tableau, and then return to the optimality test. The
specific elementary row operations are:
Divide the pivot row by the “pivot number” (the number in the intersection of the
pivot row and pivot column)
For each other row that has a negative coefficient in the pivot column, add to this
row the product of the absolute value of this coefficient and the new pivot row.
For each other row that has a positive coefficient in the pivot column, subtract from
this row the product of the absolute value of this coefficient and the new pivot row.
Solution
Initialization
Standard form
Maximize Z,
Subject to
Z - 3X1- 5X2 =0
X1 + S1 = 4
2 X2 + S2
= 12
3X1 +2X2 + S3 = 18
X1 , X2, S1, S2, S3 0
A basic solution is an augmented corner point solution.
A basic solution has the following properties:
Each variable is designated as either a nonbasic variable or a basic variable.
The number of basic variables equals the number of functional constraints. Therefore, the number of nonbasic
variables equals the total number of variables minus the number of functional constraints.
The nonbasic variables are set equal to zero.
The values of the basic variables are obtained as simultaneous solution of the system of equations (functional
constraints in augmented form). The set of basic variables are called “basis”
If the basic variables satisfy the nonnegativity constraints, the basic solution is a Basic Feasible (BF) solution.
Initial tableau
Notes:
The basic feasible solution at the initial tableau is (0, 0, 4, 12, 18) where:
X1 = 0, X2 = 0, S1 = 4, S2 = 12, S3 = 18, and Z = 0
Where S1, S2, and S3 are basic variables
X1 and X2 are nonbasic variables
The solution at the initial tableau is associated to the origin point at which all the
decision variables are zero.
Optimality test
By investigating the last row of the initial tableau, we find that there are some
negative numbers. Therefore, the current solution is not optimal
Iteration
Step 1: Determine the entering variable by selecting the variable with the most
negative in the last row.
From the initial tableau, in the last row (Z row), the coefficient of X1 is -3 and the
coefficient of X2 is -5; therefore, the most negative is -5. consequently, X2 is the
entering variable.
X2 is surrounded by a box and it is called the pivot column
Iteration
Step 2: Determining the leaving variable by using the minimum ratio test as
following:
Step 3: solving for the new BF solution by using the eliminatory row operations as
following:
New pivot row = old pivot row pivot number
This solution is not optimal, since there is a negative numbers in the last row
This solution is optimal; since there is no negative solution in the last row:
basic variables are X1 = 2, X2 = 6 and S1 = 2; the nonbasic variables are S2 = S3
=0
Z = 36
The transportation problem deals with the distribution of goods from several points
of supply (sources) to a number of points of demand (destinations)
Usually we are given the capacity of goods at each source and the requirements at
each destination
Typically the objective is to minimize total transportation and production costs
Setting Up a Transportation Problem
The first step is setting up the transportation table . Its purpose is to summarize all
the relevant data and keep track of algorithm computations
Transportation costs per desk for Executive Furniture
In this table, total factory supply exactly equals total warehouse demand
When equal demand and supply occur, a
balanced problem is said to exist
This is uncommon in the real world and we have techniques to deal with
unbalanced problems
Once we have arranged the data in a table, we must establish an initial feasible solution
One systematic approach is known as the
northwest corner rule
Start in the upper left-hand cell and allocate units
to shipping routes as follows
1. Exhaust the supply (factory capacity) of each row before moving down to the
next row
2. Exhaust the demand (warehouse) requirements of each
column before moving to the right to the next column
3. Check that all supply and demand requirements are met.
In this problem it takes five steps to make the initial shipping assignments
1. Beginning in the upper left hand corner, we assign 100 units from Des Moines to
Albuquerque. This exhaust the supply from Des Moines but leaves Albuquerque 200
desks short. We move to the second row in the same column.
3. Assign 100 units from Evansville to Boston. The Evansville supply has now been
exhausted but Boston is still 100 units short. We move down vertically to the next
row in the Boston column.
4. Assign 100 units from Fort Lauderdale to Boston. This fulfills Boston’s demand
and Fort Lauderdale still has 200 units available.
.5. Assign 200 units from Fort Lauderdale to Cleveland. This exhausts Fort
Lauderdale’s supply and Cleveland’s demand. The initial shipment schedule is now
complete.
The stepping-stone method works by testing each unused square in the transportation
table to see what would happen to total shipping costs if one unit of the product were
tentatively shipped on an unused route
There are five steps in the process
1. Select an unused square to evaluate
2. Beginning at this square, trace a closed path back to the original square
via squares that are currently being used with only horizontal or vertical
moves allowed
3. Beginning with a plus (+) sign at the unused square, place alternate
minus (–) signs and plus signs on each corner square of the closed path just
traced
4. Calculate an improvement index by adding together the unit cost
figures found in each square containing a plus sign and then subtracting the
unit costs in each square containing a minus sign
5. Repeat steps 1 to 4 until an improvement index has been calculated for
all unused squares. If all indices computed are greater than or equal to zero,
an optimal solution has been reached. If not, it is possible to improve the
current solution and decrease total shipping costs.
Obtaining an Improved Solution
14.8.3 MODIFIED DISTRIBUTION
VAM Step 1. For each row and column of the transportation table, find the difference
between the distribution cost on the best route in the row or column and the second
best route in the row or column
This is the opportunity cost of not using the best route
VAM Step 2. identify the row or column with the greatest opportunity cost, or
difference (column A in this example)
VAM Step 3.Assign as many units as possible to the lowest-cost square in the row or
column selected
VAM Step 4. Eliminate any row or column that has been completely satisfied by the
assignment just made by placing Xs in each appropriate square
VAM Step 5. Recompute the cost differences for the transportation table, omitting
rows or columns eliminated in the previous step
VAM Step 6. Return to step 2 for the rows and columns remaining and repeat the steps
until an initial feasible solution has been obtained
Unbalanced Transportation Problems
Let’s Sum Up
References:
Le Blanc, Larry J., et al. “Nu-Kote's Spreadsheet Linear Programming Models for Optimizing Transportation.”
Interfaces 34 (March–April 2004): 139–146.
https://brilliant.org/wiki/linear-programming/
https://en.wikipedia.org/wiki/Linear_programming
https://www.analyticsvidhya.com/blog/2017/02/lintroductory-guide-o
n-linear-programming-explained-in-simple-english/
http://people.brunel.ac.uk/~mastjjb/jeb/or/morelp.html