BUS 2C 12 OPERATIONS MANAGEMENT

Module III
Operations decisions: Production planning and control in mass production systems, batch/ job
order manufacturing. Facility location; capacity planning- models; Process planning- aggregate
planning- scheduling- Maintenance management concepts; Industrial safety.

OPERATIONS DECISIONS:
It is a short term decision taken by a company in lieu of long term strategies at the time
of acquisition of company assets. These involve the day-to-day operations of the company, and
therefore need to be addressed before any grand scheme issues.

Decision Areas of Operations Management

1. Design of Goods and Services.
2. Quality Management.
3. Process and Capacity Design
4. Location Strategy
5. Layout Design and Strategy
6. Human Resources and Job Design.
7. Supply Chain Management
8. Inventory Management
9. Scheduling
10. Maintenance

PRODUCTION PLANNING AND CONTROL IN MASS PRODUCTION SYSTEMS

(refer unit I also additionally)
Henry Ford is considered as the father of modern mass production. His Ford motor
company was the first to start assembly line production of vehicles.Mass production, as the
name suggests follows the concept of assembly line. The task or the production process is
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broken down or divided into simplest possible components. These components are the
grouped to follow production procedures.Extensive effort is required for detailed planning
before production starts.
ASSEMBLY LINE consists of work stations or arrangement of labour and equipment in a
sequence. At each work station, a pre decided task is completed. This facilitates the production
in large quantities. On an assembly line, the materials move continuously at a uniform average
rate. At different work stations, a portion of work is done. Industries such as toys, automobiles,
televisionsand computers are all assembly line productions. Assembly line productions can be
manual or through conveyor belts carrying materials at a pre decided rate so that there is
sufficient time at each work station to perform the allotted task. The conveyor belts are of belt
type, chain type, overhead type or screw type.

Advantages of Mass Production:

1. There is a smooth flow of material from one work station to the next.
2. There are in built inventories at each work station because output of one work station
becomes the input of the next.
3. Production time is shorter in assembly line productions.
4. The material is more efficiently handled since work stations are spaced closely together.
5. Training cost is lesser.
6. Production planning and control is simpler.
Disadvantages of Mass Production:
1. Since the proper functioning of all the machines is required in an assembly line
production, maintenance is a challenge.
2. Assembly lines are rigid inflexible set ups. Any change in the design layout proves
difficult.
3. The production speed is determined by the slowest machine.
4. Assembly line set ups are capital intensive since they require installation of specific
types of machine

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PRODUCTION PLANNING AND CONTROL IN MASS PRODUCTION:
i) Mass production
Mass production refers to the process of creating large numbers of similar products
efficiently. Mass production is the manufacture of large quantities of standardized products,
frequently utilizing assembly line technology.
Mass production pertains to a large quantity of production with standardized products
having more or less, the same features. This single standard product is manufactured on a
continuous basis over a period of time. The determining factor is the demand on the basis of
which continuous or batch type production is chosen.
Standardization of products, processes, materials, machines, uninterrupted flow of
materials are the main characteristics of this system. Example: - petrochemical industry,
cement industry, steel industry, sugar industry, cigarette industry etc.

Features of Mass Production System

o It includes manufacturing of high volume standardized products.
o There is a smooth flow material from one work station to another workstation.
o Production time of production unit as a whole is short (i.e. because of specialization
principle).
o Closely spaced work station reduce material handling.
o Production planning and control is simple.
o Work in progress inventory is less.

NOTE:Production planning and control is possible under mass production only with the help
of line balancing.

Example of Mass production systems:

Production of biscuits in a factory can be taken as an example of mass production. At
every stage a particular operation is performed using a specific machine. As is shown below,
packs of identical biscuits are produced in an industrial unit
Stage: 1: MIXING: Flour + fat + sugar + bicarbonate + additives

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Stage: 2: MOULDING: Dough is laminated in a laminator
Stage: 3: GAUZE ROLLS: Laminated dough is cut as per size and shape
Stage: 4: BAKING: Biscuits cut into shapes are baked in the oven
Stage: 5: COOLING: Biscuits are cooled in conveyors once they are baked
Stage: 6: PACKAGING: The final product is then packed into pouches and cartons

ii) BATCHMANUFACTURING:
Batch production includes jobs that move through the steps of production in groups,
such as by dozen or by hundreds. The units are all operated at the same time per batch. Batch
production allows for efficient use of equipment by moving batches around in patterns to
different areas of specialty.

iii) JOB ORDER PRODUCTION:

Job order production is the process of manufacturing unique products for specific
customers. It is also called job order manufacturing or custom production because each order
or job is a customize order placed by the customer.i.e Job order production is an authorised
order for the production of goods or services
Factories with job order production tend to use general purpose machines, which
means the company receives good value for their expense, and employees that use them
develop a wide variety of skills. However, costs for setup changes tend to be higher than other
types of production, and raw materials can be varied and costly.
Many manufacturers specialize in mass-producing custom products. Customers come to
the manufacturer with a specific design or product in mind and the manufacturer develops
and creates the custom product. A good example of a custom manufacturer is a print shop or
studio. A customer might visit his local print shop with a design for 100 graduation invitations.
This design has a custom logo, font, and picture of the graduate. Printing these invitations
would be considered one job because the print shop would have to setup its presses one time
in order to print all 100 invitations. The process of designing and printing custom invitations
is considered job order production.

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Characteristics of Job Order Production
(i)    Flow of material and parts form one location to another is intermittent or discontinuous.
(ii)    Division of labour is not economical.
(iii)    Each job order is different from the previous as regards its type, specification, quality
and quantity.
(iv)  Product design takes a lot of time.
(v)    Prior planning becomes difficult.
(vi)   Schedule is prepared for each component of the product, giving the starting and finishing
         time.
(vii)  High degree of control is essential.
(viii)    The number of items to be manufactured is very small; it may be even one item.

FACILITY LOCATION
 Facilitiesis defined as the workspace and equipments needed to carry out the
operations of the organization. This includes offices, factories, computers, and trucks.
 Facility Locationis the right location for the manufacturing facility, it will have
sufficient access to the customers, workers, transportation, etc
 Facilities / Plant Layout
Facility layout is simply the way a facility (space with equipment’s) is arranged in order to
maximize processes towards the overall organizational goal.
Facility Location decisions are the strategic decisions that require large financial
investments and they are irreversible in nature. A number of factors like market related
factors, cost factors and qualitative factors, affects the location choice.
Models and techniques such as break-even analysis, transportation method, linear
programmingand Delphi method help managers in making location decisions. Since these
models work on quantitative basis; therefore the influence of qualitative factors should be
considered by managers to decide the location choice.
The physical disposition of the facilities of a plant is referred to as the plant layout. The

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basic types of layouts are:
 A process layout is the layout in which similar machinery are grouped together and are
arranged in departments (e.g., hospitals – many depts..).
 In product layout the machines are arranged according to the progressive steps by which
a product is made. (e.g., a car assembly plant- Based on product).
 In a fixed layout, all the necessary men, materials, and equipment are brought to a fixed
location where the product is actually manufactured. (e.g., jumbo jet, Cranes)
 A hybrid or combination layout constitutes combination of two or three types of layouts.

Factors Influencing Facility Location

If the organization can find the right location for the manufacturing facility, it will have
sufficient access to the customers, workers, transportation, etc.
 Customer Proximity(Nearness): Facility locations are selected closer to the customer as
to reduce transportation cost and decrease time in reaching the customer.
 Business Area: Presence of other similar manufacturing units around the business area
makes favourable for facility establishment.
 Availability of Skill Labour: Education, experience and skill of available labour are
important to determine facility location.
 Free Trade Zone/Agreement:Free trade agreement among countries provides an
incentive to establish business, in particular, country.
 Suppliers: Continuous and quality supply of the raw materials is another critical factor in
determining the location of manufacturing facility.
 Environmental Policy: In current globalized world pollution, control is very important,
therefore understanding of environmental policy for the facility location is another critical
factor.

Facility Location for production and service operations can have a great impact on
investment and operating costs and perhaps the price at which goods or services can be
offered. Even though facility location is a factor of importance, ordinarily many alternative

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 locations can be equally good. Therefore, it is common to rate alternative locations on such
subjective factors as
 Labor supply
 Type of labor
 Labor union activity
 Community attitude
 Appearance
 Transportation
 Availability of utilities
 Recreational facilities

Site Location
 A site large enough to accommodate present floor plan needs and room for expansion,
parking, transportation facilities and the like. Normally, a site size five times the actual
plant area is regarded as the minimum.
 A provision for necessary transportation facilities, utilities and waste disposal.
 A soil structure that can carry the required bearing foundation loads.

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CAPACITY PLANNING
 Capacity would be the ability of a given system to produce output within the specific time
period.In general, terms capacity is referred as maximum production capacity, which can be
attained within a normal working schedule.

 Capacity planning is the process of determining the production capacity needed by an

organization to meet changing demands for its products.

In capacity planning, design capacity is the maximum amount of work that an
organization is capable of completing in a given period. Effective capacity is the maximum

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 amount of work that an organization is capable of completing in a given period due to
constraints such as quality problems, delays, material handling, etc
Capacity planning is essential to determine the optimum utilization of resource and plays an
important role decision-making process, for example, extension of existing operations,
modification to product lines, starting new products, etc.
The ultimate goal of capacity planning is to meet the current and future level of the
requirement at a minimal wastage.
TYPES OF CAPACITY PALNNING:
i) Strategic Capacity Planning
A technique used to identify and measure overall capacity of production is known as strategic
capacity planning. Strategic capacity planning is essential as it helps the organization in
meeting the future requirements of the organization.
ii) Long Term Capacity:It is dependent on various other capacities like design capacity,
production capacity, sustainable capacity and effective capacity.
iii) Medium Term Capacity: The strategic capacity planning undertaken by organization for
2 to 3 years of a time frame is referred to as medium term capacity planning.
iv) Short Term Capacity: The strategic planning undertaken by organization for a daily
weekly or quarterly time frame is referred to as short term capacity planning.

Factors Affecting Capacity Planning:

Effective capacity planning is dependent upon factors like production facility (layout, design,
and location), product line or matrix, production technology, human capital (job design,
compensation), operational structure (scheduling, quality assurance) and external structure
( policy, safety regulations)

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AGGREGATE PLANNING:
Aggregate planning' is a marketing activity that does an aggregate plan for the
production process, in advance of 6 to 18 months, to give an idea to management as to what
quantity of materials and other resources are to be procured and when, so that the total cost of
operations of the organization is kept to the minimum over that period

2. What is the purpose of aggregate planning? -is planning ahead because it takes time to
implement plans. The second reason is strategic of the company and third aggregate
planning help synchronize flow throughout the supply chain; it affects costs, equipment
utilization, employment levels and customer satisfaction.

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What is Aggregate Planning ? - Importance and its Strategies
An organization can finalize its business plans on the recommendation of demand
forecast. Once business plans are ready, an organization can do backward working from the
final sales unit to raw materials required. Thus annual and quarterly plans are broken down
into labor, raw material, working capital, etc. requirements over a medium-range period (6
months to 18 months). This process of working out production requirements for a medium
range is called aggregate planning.

Importance of Aggregate Planning

Aggregate planning plays an important part in achieving long-term objectives of the
organization. Aggregate planning helps in:
 Maximum utilization of the available production facility
 Provide customer delight by matching demand and reducing wait time for customers
 Aggregate planning will ensure that organization can plan for workforce level,
inventory level and production rate in line with its strategic goal and objective.
 Aggregate planning as an Operational Tool
 Aggregate planning helps achieve balance between operation goal, financial goal and
overall strategic objective of the organization. It serves as a platform to manage capacity
and demand planning.
 In a scenario where demand is not matching the capacity, an organization can try to
balance both by pricing, promotion, order management and new demand creation.
 In scenario where capacity is not matching demand, an organization can try to balance
the both by various alternatives such as.
 Laying off/hiring excess/inadequate excess/inadequate excess/inadequate workforce
until demand decrease/increase.
 Including overtime as part of scheduling there by creating additional capacity.
 Hiring a temporary workforce for a fix period or outsourcing activity to a sub-contrator.

Objectives of Aggregate Planning

 Is to minimize total cost over the planning horizon.
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  maximize customer service
 minimize inventory investment
 minimize changes in workforce levels
 minimize changes in production rates
 maximize utilization of plant and equipment

Factors Affecting Aggregate Planning

 A complete information is required about available production facility and raw
materials.
 A solid demand forecast covering the medium-range period
 Financial planning surrounding the production cost which includes raw material, labor,
inventory planning, etc.
 Organization policy around labour management, quality management, etc.

Aggregate Planning Strategies

There are three types of aggregate planning strategies as follows.
1. Level Strategy
As the name suggests, level strategy looks to maintain a steady production rate and
workforce level. In this strategy, organization requires a forecast demand to increase or
decrease production based on customer demand.
2. Chase Strategy
The chase strategy looks to match demand with production. Advantage of chase
strategy is lower inventory levels. Disadvantage is lower productivity, quality and
depressed work force.
3. Hybrid Strategy: looks to balance between level strategy and chase strategy.

TECHNIQUES FOR AGGREGATE PLANNING

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Techniques for aggregate planning range from informal trial-and-error approaches, which
usually utilize simple tables or graphs, to more formalized and advanced mathematical
techniques. This general procedure consists of the following steps:
1. Determine demand for each period.
2. Determine capacity for each period. This capacity should match demand, which means
it may require the inclusion of overtime or subcontracting.
3. Identify company, departmental, or union policies that are pertinent. For example,
maintaining a certain safety stock level, maintaining a reasonably stable workforce.
4. Determine unit costs for units produced. These costs typically include the basic
production costs (fixed and variable costs as well as direct and indirect labor costs).
5. Develop alternative plans and compute the cost for each.

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SCHEDULING
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.
It is an important tool formanufacturing and engineering. In manufacturing, the
purpose of scheduling is to minimize the production time and costs, by telling a production
facility when to make, with which staff, and on which equipment. Production scheduling aims
to maximize the efficiency of the operation and reduce costs

Objective of scheduling: is to see that all production operations are completed in a given
time. If the production is completed in an allotted time, only, then, the delivery of goods can be
made on time. If this happens, it will increase the goodwill of the company.

The meaning of scheduling:

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Functions of scheduling is as follows:
1. Make a list of all the production activities.
2. Fix the starting time for each activity.
3. Fix the finishing time for each activity.
4. Prepare the time-table.

Types of scheduling:
1. Master scheduling: The date of completion of production is assigned or fixed along with
stage wise operation schedule.
2. Operation scheduling: The time required to do some amount of work (task or job) with
a given machine or process is fixed.

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 3. Detail operation scheduling: First, all details necessary to do some amount of work with
a given machine or process are identified. Later, time required to complete each detail
operation of work is fixed.
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MAINTENANCE MANAGEMENT

Maintenance- is concerned with day-to-day problem of keeping the physical plant ingood
operating condition.
Maintenance is primarily concerned with a day to day problem of machinery equipment
in maintaining good working condition. It is very essential to ensure a continuous production
flow by utilizing maximum capacity of plant.

Maintenance Management- Concernedwith planning,organising and directing theresources

in order to control the availabilityand performance of the industrial plants tosome specified
level.
CategoriesTwo categories of maintenance-
1. Maintaining buildings,parking lots, lawns, fences,services and utilities.
2. Maintaining equipments, machinery, materialhandling

Objectives:
• Minimizing loss of productive time
Minimizing loss of productive Cost
• Minimizing the repair time & repair cost
• Minimizing the loss due to production stoppage
• Efficient use of maintenance personnel &equipments
• To keep all productive assets in good working
• To maximize efficiency & economy
• To improve the quality of products & to improveproductivity

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 ************************************

INDUSTRIAL SAFETY SYSTEM

An industrial safety system in any hazardousplants such as oil and gas plants and
nuclear plants. They are used to protect human, industrial plant, and the environment in case
of the process going beyond the allowed control margins.

Industrial safety in the context of occupational safety and health refers to the
management of all operations and events within an industry, for protecting its employees and
assets by minimizing hazards, risks, accidents and near misses.

USES - safety in industry:

(i) Increasing the production rate.
(ii) Reducing the cost of production.
(iii) Reducing damage to machinery and equipment.
(iv) Preventing unwanted suffering and pain to employees of the organization.
(v) Preventing premature/untimely death of talented workers who may be an asset to the
enterprise and society.

OBJECTIVES OF INDUSTRIAL SAFETY:

1. It is needed to eliminate accidents causing work stoppage and production loss.

3. It is needed to prevent accidents in industry by reducing any hazard to minimum.

4. It is needed to reduce workman’s compensation, insurance rate and all the cost of accidents.

5. It is required to educate all members regarding the safety principles to avoid accidents in
industry.

6. It is needed to achieve better morale of the industrial employees.

7. It is required to have better human relations within the industry.

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8. It is needed to increase production means to a higher standard of living.

** THE END **

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