Lecture

Unit 2 DISCRETE TIME RANDOM PROCESSES

10
Topics Principles and Types of Plant Layout
Bloom’s
Learning Outcome (LO) At the end of this lecture, students will be able to
Knowledge Level
LO1 Students will learn the fundamental principles and types of plant layout. Remembering

LO2 Students will understand the application of these principles in designing Understanding
an efficient plant layout and will be able to analyze the impact of various
layout types on production efficiency.
Plant location:

Plant location is a strategic decision several factors influence this decision. The main objective
of any business is to optimize its cost and revenue that is, minimize its costs and maximize its
returns.
The degree of significance for the selection of location for any enterprise mainly depends on its
size and nature large scale industries requiring huge amount of investment there are many
considerations other than the local demand in the selection proper plant location these plants
cannot be easily shifted to other place and an error of judgment in the selection of site can be vary
expensive to the organization. However, small-scale industry mainly selects the site where in
accordance with its capacity; the local market is available for its products. It can easily shift to
other place when there is any change in the market.
Factors affecting plant location:
1. Nearness to Market: If the plant is located close to the market the cost of transportation can be
minimized. This also helps the producers to have direct knowledge of the requirements of the
customers.

2. Nearness to supply of raw materials: As far as possible the site selected should be near the
source of raw materials, so that the cost of transportation can be minimized and storing cost can
be reduced due to shorter lead time.

3. Availability of labour: Availability of right kind of labour force in required number at

reasonable rates is also a deciding factor in selection of site

4. Transport and communication facilities: Generally, industries have a tendency to locate the
industrial units near the railway station, highway or port areas. Availability of power and fuel:
Coal, electricity, oil and natural gas are the important sources of power in the industries.

Ex: Tata iron and steel industry is established near the coalmines of Bihar. Climatic conditions:
Climatic conditions largely affect certain production processes and also the efficiency of the
employees.
Ex: Textile mills require moist climate that why these plant located at Mumbai and Ahmedabad.
5. Availability of water: Water is used in industries for processing as in paper in chemical
industries, for generation of power in hydroelectric power, plants and also required for drinking
sanitary purpose also.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 6. Ancillary industries: Many industries such as processing and assembly industries are not
producing al the parts of their product but purchase some of the parts from ancillary industries
producing it.

7. Financial and other aids: For the development of backward regions central as well as state
government provide certain incentives and facilities such as cash- subsides, concession financial
assistance, land, power and other facilities at cheaper rates, tax concession etc.
Plant Layout:
A technique of locating machines, processes and plant services within the factory in order to
secure the greatest possible output of high quality at the lowest possible total cost of production
Type of plant layout:
1. Product or line layout: This type of layout is developed for product-focused systems. In this
type of layout only one product, or one type of product, is produced in a given area. In case of
product being assembled, this type of layout is popularly known as an assembly line layout.

The work centers are organized in the sequence of appearance. The raw material centre at one
end of the line and goes from one operation to another rapidly with minimum of work-in-process
storage and material handling

2. Process or Functional layout: This type of layout is developed for process focused systems.
The processing units are organized by functions into departments on the assumption that certain
skills and facilities are available in each department similar equipments and operations are
grouped together, e.g., milling, foundry, drilling, plating, heat treatment etc.
The use of process-focused systems is very wide in both manufacture and
other service facilities such as hospitals, large offices, municipal services, etc.

3. Cellular or group layout: It is special type of functional layout in which the facilities are
clubbed together into cells. This is suitable for systems designed to use
the concepts, principles and approaches of „group technology‟. Such a layout offers the
advantages of mass production with high degree of automation even if the numbers of products

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 are more with flexible requirement. In such a system the facilities are group in to cells which are
able to perform similar type of functions for a
group of products.

4. Job Shop Layout: It is a layout for a very general flexible system that is processing job
production, The preparation of such a layout is dependent on the analysis of the possible
populations of orders and is a relatively, complex affair.

5. Project or Fixed position Layout: This is the layout for project type systems in which the
major component is kept at a fixed position and all other materials, components, tools machines,
work etc. are brought and assembly or fabrication is carried out. This type of layout is now not
used very commonly as the machines required for manufacturing work are big and complicated.
The fixed position layout is used only when it is difficult to move the major component and
fabrication is to be carried out. Ex: production of ships.
Factors influencing plant layout:
1. Management policy: Management has to decide on many matters e.g. nature and quality of
products, size of the plant, integration of production process, plans for expansion, amount of
inventory in stock, employee facilities

2. Manufacturing process: The type of manufacturing process e.g. synthetic/analytical,

continuous/intermittent and repetitive/non-repetitive, will govern the type of plant layout.

3. Nature of product: Small and light products can be moved easily to the machines, whereas for
heavy and bulky products the machines may have to be moved.

4. Type of equipment: The use of single purpose and multi-purpose machine substantially affects
the plant layout. Similarly, noisy and vibrating machines require special attention in the plant
layout decision.

5. Types of buildings: The plant layout in a single storey building will be different from that in a
multi storey building. The covered areas, the number of storey‟s, elevators and stairs, parking
and storage area all affect the layout.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 6. Availability of total floor area: The allocation of space for machines, work-benches, sub-store
aisles etc., is made on the basis of the available floor area use of overhead space is made in case
of shortage of space.

7. Arrangement of materials handing equipment: Provide sufficient aisles for free movement of
material handling equipment such as hand truck, fork truck etc. Service facilities: The layout of
factory must include proper service facilities required for the comfort and welfare of workers.
These include canteen, lockers, drinking water, first aid etc.

8. Possibility of future expansion: Plant layout is made in the light of future requirement and
installations of additional activities.
Principles of plant layout:
Principle of integration: The best layout is one which integrates the men, materials, machinery,
supporting activities and any other such a factors that results in the best compromise.
Principle of minimum movement: The number of movement of workers and materials and the
distance moved should be minimized. The materials should be transported in bulk rather than in
small amounts.
Principle of smooth and continue flow: It states that bottlenecks, congestion points and bulk
tracking should be removed by proper line balancing techniques. Principle of cubic space: Space
of a room, it the ceiling height is also utilized, more materials can be accommodated in the same
space.
Principle of satisfaction of safety: Working places-safe, well-ventilated and free from dust, noise
fumes, odors and other hazardous conditions, help to increase the efficiency of the workers and
improve their morale.
Principle of flexibility: It means the best layout in one which can be adopted and re-arranged at a
minimum cost with least inconvenience.
Productivity:
Definition: Productivity is defined as the rate at which the goods and services are produced.
It refers to the relationship between the inputs and the output. It is calculated as a ratio between
the amount produced and the amount of resources (land, labour, capital, technology etc.) used in
the course of production in other words
Productivity = Output / Input
And also defined productivity as human efforts to produce more and more with less and less
inputs of resources as a result of which the benefits of production are distributed among maximum
number of people.

Assessment questions to the lecture

Qn Bloom’s
Question Answer
No Knowledge Level
1 Which layout type is most suitable for mass Correct Answer: Remembering
production? c) Product
a) Process Layout Layout

b) Fixed-Position Layout
c) Product Layout
d) Cellular Layout

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 2 What is the main advantage of a process Correct Answer: Understanding
layout? b)
Flexibility
a) High efficiency in handling
b) Flexibility in handling a variety of a variety of
products products

c) Reduced material handling

d) Suitable for large-scale manufacturing

3 Which of the following is a key principle in Correct Answer: Remembering

plant layout design? c) Ensuring
smooth
a) Minimizing safety measures material
b) Reducing space utilization flow

c) Ensuring smooth material flow

d) Increasing supervision difficulty

Students have to prepare answers for the following questions at the end of the lecture

Marks CO Bloom’s
Qn
Question Knowledge
No
Level
1 Define the term 'plant layout' and list any two key 2 Marks CO2 Remembering
principles of plant layout design.
2 Explain the concept of flexibility in plant layout design 6 Marks CO2 Understanding
and its importance in modern manufacturing..
3 Compare and contrast the advantages and limitations of 8 Marks CO2 Understanding
the product layout and process layout in manufacturing.
4. given a scenario where a manufacturing company is 13 Marks CO2 Analysing
facing high material handling costs and frequent
production delays, design a suitable plant layout to
address these issues. Discuss the principles and factors
that would guide your design.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 Lecture
Unit 2 DISCRETE TIME RANDOM PROCESSES
11
Topics Methods of Production: Job, Batch, and Mass Production
Bloom’s
Learning Outcome (LO) At the end of this lecture, students will be able to
Knowledge Level
LO1 Students will understand the definitions, characteristics, and applications Remembering
of Job Production, Batch Production, and Mass Production.
LO2 Students will learn to analyze and compare these production methods and Understanding
apply the concepts to select the appropriate method based on specific
business scenarios.

Method of Production:
1. Job production: In this system, goods are produced according to the orders with this method,
individual requirements of the consumers can be met. Each job order stands alone and is not likely
to be repeated. This type of production has a lot of

flexibility of operation and hence general purpose machines are required. Factories adopting this
type of production, are generally small in size.
1. It is the only method, which can meet the individual requirement.

2. There is no managerial problem, because of very less number of workers, and small size of
concern.

3. Such type of production requires less money and is easy to start.

Disadvantages:
1. There is no scope for continuous production and demand

2. As the purchase of raw materials is less, hence cost of raw materials per unit will be slightly
more.

3. For handling different type of jobs, only skilled and intelligent workers are needed, thus labour
cost increases.

2. Batch production: This type of production is generally adopted in medium size enterprise.
Batch production is in between job production and mass production. Batch production is bigger in
scale than the job production. While it is smaller than that of mass production, batch production
requires more machines than job production and fewer machines that the of mass production.

Advantages:
1. While comparing with mass production it requires less capital

2. Comparing with job production, it is more advantageous commercially.

3. If demand for one product decrease then production, for another product may be increased, thus
the risk of loss is very less.

Disadvantages:
1. Comparing with mass production cost of scales and advertisement per unit is more

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

2. Raw materials to be purchased are in less quantity than that in mass production; therefore it is
slightly costlier than that of mass production because less quantity discount is available.

3.Mass production: This method of production is used by concerns where manufacturing is

carried on continuously in anticipation of demand though demand of the product may not be
uniform through the year.
In mass production, simplification and standardization of products are made
with the help of specialized (one purpose) machine, articles of standardized
nature can easily and economically be produced on a large scale.
There is a small difference between mass production and continuous production. This is mainly in
the kind of product and its relation to the plant. In mass production plant and equipment are
flexible enough to deal with other products, involving same production process. Where as in
continuous or process production only standardized product in a sequence produced. In this
method layout and requirement of additional tools and equipment
Advantages:
1. A smooth flow of materials from one work station to the next in logical order.

2. Since the work from one process is fed directly into the next, small in process inventories result

3. Total production time per unit short

4. Simple production planning control system are possible

5. Little skill is usually required by operations at the production line, hence training is simple,
short and inexpensive.

Disadvantages:
1. A breakdown of one machine may lead to a complete stoppage of the line that follows the
machine. Hence maintenance and repair is challenging job.

2. Since the product dictates the layout, changes in product design may require major changes in
the layout.

3. Generally high investment are required owing to the specialized nature of the

machines and their possible duplication in the line

Assessment questions to the lecture

Qn Bloom’s
Question Answer
No Knowledge Level
1 Which production method is most suitable for Correct Answer: Remembering
highly customized products? a) Job
a) Job Production Production

b) Batch Production
c) Mass Production

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 2 In which production method is automation Correct Answer: Understanding
most extensively used? c) Mass
Production
a) Job Production
b) Batch Production
c) Mass Production

3 What is a significant disadvantage of batch Correct Answer: Remembering

production? c)
Downtime
a) High unit cost due to setup
b) Lack of customization changes

c) Downtime due to setup changes

Students have to prepare answers for the following questions at the end of the lecture

Marks CO Bloom’s
Qn
Question Knowledge
No
Level
1 Define mass production and mention one industry where 2 Marks CO2 Remembering
it is commonly used.
2 Discuss the advantages and limitations of job 6 Marks CO2 Understanding
production.
3 Explain how batch production can balance the need for 8 Marks CO2 Understanding
variety and efficiency in manufacturing.
4. Compare and contrast job production, batch production, 13 Marks CO2 Understanding
and mass production in terms of customization, cost,
and flexibility. Provide examples to support your
analysis.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 Lecture
Unit 2 DISCRETE TIME RANDOM PROCESSES
12
Topics Work Study: Method Study and Work Measurement
Bloom’s
Learning Outcome (LO) At the end of this lecture, students will be able to
Knowledge Level
LO1 Students will understand the definitions, objectives, and techniques of Remembering
Method Study and Work Measurement.
LO2 Students will learn to apply these concepts to identify inefficiencies, Understanding
suggest improvements, and determine standard times for tasks in a
workplace setting.

Work Study:
Work study is one of the most important management techniques which is employed to improve the
activities in the production. The main objective of work study is to assist the management in the
optimum use of the human and material resources.
Definition: Work study refers to the method study and work measurement, which are used to
examine human work in all its contexts by systematically investigating into all factors affecting its
efficiency and economy to bring forth the desired improvement.

1. Method Study:
Definition: The systematic recording and critical examination of existing and proposed ways of
doing work, as a means of developing and applying easier and more effective methods and reducing
cost it is also called motion study.

• Flow Process Charts: These charts help in visualizing the entire process, identifying
unnecessary steps, and suggesting improvements. For example, in a manufacturing process,
a flow chart can show how materials move through different stages, highlighting areas where
delays or redundancies occur.
• Motion Study: By analyzing worker movements, unnecessary motions can be identified
and eliminated. This not only speeds up production but also reduces worker fatigue and the
risk of injury. For instance, rearranging tools to minimize movement can significantly
improve efficiency.
• Process Mapping: This technique helps in identifying bottlenecks or redundant steps in a
process. For example, a process map of a customer service workflow may reveal that

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 multiple handoffs between departments are causing delays, leading to a recommendation to
streamline communication channels.

2. Work Measurement:

Definition: Work measurement is the application of techniques designed to establish time for a
qualified worker to carry out a specified job at a defined level of performance.
Work study has two parts, Method Study and Work Measurement. Method study deals with the
techniques of analyzing the way to do a given job better, Work Measurement seeks to measure the
time required to perform the job.

• Time Study: Involves breaking down a task into its components, timing each one, and
adding allowances for fatigue and delays. This method is particularly useful in repetitive
tasks like assembly line work, where slight improvements in timing can lead to significant
productivity gains.
• Predetermined Motion Time Systems (PMTS): This technique provides a detailed
analysis of work by assigning standard times to basic motions like reaching, grasping, and
moving. It is particularly useful in complex tasks where precise timing is crucial.
• Work Sampling: This method is cost-effective for large-scale operations where it is
impractical to time every task. By observing a sample of activities, managers can estimate
how time is distributed across different tasks and identify areas where efficiency can be
improved.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 Advantages and Limitations
1. Method Study
o Advantages:
▪ Improves efficiency by eliminating unnecessary steps.
▪ Enhances worker safety by optimizing movements.
▪ Increases productivity by streamlining processes.
o Limitations:
▪ Time-consuming to analyze and implement changes.
▪ May require significant retraining of workers.
▪ Resistance to change from workers accustomed to existing methods.
2. Work Measurement
o Advantages:
▪ Provides accurate time standards for task completion.
▪ Aids in workforce planning and resource allocation.
▪ Helps in identifying and addressing inefficiencies.
o Limitations:
▪ Requires precise measurement, which can be challenging in non-repetitive
tasks.
▪ May lead to stress if workers are pressured to meet time standards.
▪ Can be costly in terms of equipment and time required for studies.

Assessment questions to the lecture

Qn Bloom’s
Question Answer
No Knowledge Level
1 What is the primary objective of Method Correct Answer: Remembering
Study? b) To
a) To establish time standards for tasks improve
efficiency
b) To improve efficiency by analyzing by
work methods analyzing
c) To measure worker productivity work
methods
2 Which technique is used in Work Correct Answer: Understanding
Measurement to determine the standard time c) Time
for a task? Study

a) Process Mapping
b) Flow Process Chart
c) Time Study

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 3 Which of the following is a limitation of Work Correct Answer: Remembering
Measurement? b) It
requires
a) It is time-consuming to implement precise
b) It requires precise measurement measureme
nt
c) It does not provide time standards

Students have to prepare answers for the following questions at the end of the lecture

Marks CO Bloom’s
Qn
Question Knowledge
No
Level
1 Define Work Measurement and mention one technique 2 Marks CO2 Remembering
used in it.
2 Discuss the advantages and limitations of Method 6 Marks CO2 Understanding
Study.
3 Explain how Work Study can be used to improve 8 Marks CO2 Understanding
productivity in a manufacturing process.
4. Compare and contrast Method Study and Work 13 Marks CO2 Understanding
Measurement in terms of their objectives, techniques,
and impact on productivity. Provide examples to
support your analysis.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 Lecture
Unit 2 DISCRETE TIME RANDOM PROCESSES
13
Topics Business Process Reengineering (BPR)
Bloom’s
Learning Outcome (LO) At the end of this lecture, students will be able to
Knowledge Level
LO1 Students will understand the definition, principles, and objectives of Remembering
Business Process Reengineering.
LO2 Students will learn to analyze existing processes, identify inefficiencies, Understanding
and apply BPR concepts to design more efficient and effective processes.

1. Definition of BPR
o Definition: Business Process Reengineering is the radical redesign of core business
processes to achieve substantial improvements in productivity, cycle times, and
quality.
o Objectives:
▪ Enhance efficiency by eliminating redundant steps.
▪ Improve quality by streamlining processes.
▪ Reduce costs by optimizing resource use.
▪ Increase customer satisfaction by aligning processes with customer needs.
2. Principles of BPR
o Focus on Processes, Not Tasks: BPR emphasizes the importance of entire processes
rather than individual tasks.
o Customer-Centric Approach: Processes should be designed to meet the needs of
the customer, whether internal or external.
o Use of Technology: Leverage information technology to enable new ways of doing
work.
o Empowerment of Employees: Decentralize decision-making and empower
employees to take ownership of processes.
o Cross-Functional Teams: Utilize teams from different departments to provide
diverse perspectives and drive innovation.
3. Factors for Success in BPR
o Strong Leadership: Commitment from top management is crucial for driving and
sustaining change.
o Clear Vision: A clear understanding of the goals and objectives of the reengineering
effort is essential.
o Effective Communication: Transparent communication at all levels of the
organization helps manage resistance to change.
o Involvement of Stakeholders: Engage all stakeholders, including employees,
customers, and suppliers, in the reengineering process.
o Continuous Improvement: BPR should be viewed as an ongoing effort rather than
a one-time project.
4. Challenges in Implementing BPR
o Resistance to Change: Employees may resist radical changes due to fear of job loss
or uncertainty.
o High Costs: The initial investment in technology and training can be substantial.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 o Complexity: Redesigning processes can be complex, particularly in large
organizations with interconnected processes.
o Risk of Failure: If not managed properly, BPR can lead to disruption without
delivering the expected benefits.
Detailed Explanations of Key Points
1. Focus on Processes, Not Tasks
o BPR requires a shift in mindset from focusing on individual tasks to optimizing
entire processes. For example, instead of improving just the data entry task, BPR
might redesign the entire customer order process to eliminate unnecessary steps,
automate manual tasks, and reduce cycle time.
2. Customer-Centric Approach
o BPR emphasizes designing processes that meet customer needs. For instance, if
customers value speed, a reengineered process might include faster response times,
simplified order processing, and real-time tracking to enhance customer satisfaction.
3. Use of Technology
o Information technology is a key enabler in BPR. Technologies such as enterprise
resource planning (ERP) systems, customer relationship management (CRM)
software, and automated workflows can significantly enhance process efficiency and
data accuracy.
4. Empowerment of Employees
o BPR encourages decentralization of decision-making, giving employees more
control over their work. This not only improves efficiency but also increases
employee satisfaction and innovation. For example, empowering frontline
employees to resolve customer issues can lead to faster service and higher customer
satisfaction.
5. Cross-Functional Teams
o The involvement of cross-functional teams is crucial for identifying inefficiencies
that span multiple departments. By bringing together diverse perspectives, BPR
teams can develop more innovative and effective solutions.
Advantages and Limitations of BPR
1. Advantages:
o Significant Improvement: BPR can lead to dramatic improvements in efficiency,
cost savings, and customer satisfaction.
o Competitive Advantage: Organizations that successfully implement BPR can gain
a competitive edge through superior processes.
o Innovation: BPR encourages out-of-the-box thinking and innovation by challenging
the status quo.
2. Limitations:
o High Risk: The radical nature of BPR means that there is a higher risk of failure if
not managed correctly.
o Costly: The initial investment in technology, training, and process redesign can be
substantial.
o Disruption: BPR can cause significant disruption to existing operations, leading to
temporary declines in performance.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 Assessment questions to the lecture

Qn Bloom’s
Question Answer
No Knowledge Level
1 What is the primary objective of Business Correct Answer: Remembering
Process Reengineering (BPR)? b) Radical
a) Incremental improvement of tasks redesign of
core
b) Radical redesign of core business business
processes processes
c) Implementation of new technology

2 Which of the following is a key principle of Correct Answer: Understanding

BPR? c)
Customer-
a) Focus on individual tasks centric
b) Centralized decision-making approach

c) Customer-centric approach

3 Which framework can be adapted for BPR to Correct Answer: Remembering

ensure data-driven decision-making? b) Six
Sigma
a) ISO 9001:2015 DMAIC
b) Six Sigma DMAIC
c) APQC Process Classification
Framework

Students have to prepare answers for the following questions at the end of the lecture

Marks CO Bloom’s
Qn
Question Knowledge
No
Level
1 Define Business Process Reengineering and mention 2 Marks CO2 Remembering
one key objective of BPR.
2 Discuss the advantages and limitations of 6 Marks CO2 Understanding
implementing BPR in an organization.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 3 Explain the role of technology in Business Process 8 Marks CO2 Understanding
Reengineering, providing examples of how it can be
used to redesign processes.
4. Compare and contrast BPR with incremental process 13 Marks CO2 Understanding
improvement approaches. Discuss the risks and rewards
associated with BPR and provide examples of
successful and unsuccessful BPR projects.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 Lecture
Unit 2 DISCRETE TIME RANDOM PROCESSES
14
Topics Statistical Quality Control: Control Charts for Variables and Attributes
Bloom’s
Learning Outcome (LO) At the end of this lecture, students will be able to
Knowledge Level
LO1 Students will understand the principles of Statistical Quality Control, the Remembering
concept of control charts, and the distinction between control charts for
variables and attributes.
LO2 Students will learn to construct, interpret, and apply control charts to Understanding
monitor and improve quality in various production processes

1. Statistical Quality Control (SQC)

o Definition: SQC is the application of statistical methods to monitor and control a
process.
o Purpose: The primary purpose of SQC is to detect and correct problems before they
result in defects or product non-conformance.
o Types of Control Charts:
▪ Control Charts for Variables: Used to monitor quantitative data, such as
measurements.
▪ Control Charts for Attributes: Used to monitor qualitative data, such as
defect counts.
2. Control Charts for Variables
o Types of Control Charts for Variables:
▪ X̅ Chart (Mean Chart): Monitors the central tendency of a process.
▪ R Chart (Range Chart): Monitors the variability within a sample.
▪ S Chart (Standard Deviation Chart): Monitors the standard deviation
within a sample.
o Construction of X̅ and R Charts:
▪ X̅ Chart: Plot the mean of each sample group over time and compare it to
the control limits.
▪ R Chart: Plot the range of each sample group over time and compare it to
the control limits.
o Interpretation:
▪ In-Control Process: Points are within control limits, and there is no
evidence of special causes of variation.
▪ Out-of-Control Process: Points fall outside control limits or exhibit non-
random patterns, indicating a need for investigation.
3. Control Charts for Attributes
o Types of Control Charts for Attributes:
▪ P Chart (Proportion Chart): Monitors the proportion of defective items in
a sample.
▪ NP Chart (Number of Defectives Chart): Monitors the number of defective
items in a fixed sample size.
▪ C Chart (Count of Defects Chart): Monitors the number of defects per unit.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 ▪ U Chart (Defects per Unit Chart): Monitors the average number of defects
per unit in a sample.
o Construction of P and C Charts:
▪ P Chart: Plot the proportion of defects in each sample over time and
compare it to the control limits.
▪ C Chart: Plot the number of defects in each sample over time and compare
it to the control limits.
o Interpretation:
▪ In-Control Process: Proportion or count of defects is within control limits,
indicating process stability.
▪ Out-of-Control Process: Proportion or count of defects exceeds control
limits, signaling a need for corrective action.
4. Factors Influencing Control Chart Selection
o Type of Data: Variables vs. attributes.
o Sample Size: Large vs. small sample size impacts the choice of control charts.
o Process Stability: Consideration of process variability and whether the process is in
a state of statistical control.
Detailed Explanations of Key Points
1. Control Charts for Variables
o X̅ and R Charts: These charts are used together to monitor both the central tendency
and variability of a process. For instance, in a manufacturing process where the
thickness of a material is critical, an X̅ chart can monitor the average thickness, while
the R chart can monitor the variation in thickness across different samples.
2. Control Charts for Attributes
o P Chart: This chart is ideal for monitoring processes where the output can either
pass or fail inspection. For example, in a production line producing electronic
components, the P chart can monitor the proportion of defective components over
time.
3. Interpretation of Control Charts
o In-Control Process: A process is considered in control when all the plotted points
fall within the control limits and no specific patterns are observed. This indicates
that the process variation is due to common causes and is predictable.
o Out-of-Control Process: If points fall outside the control limits or exhibit a non-
random pattern (e.g., a run of seven points above the center line), it suggests that
special causes of variation are present, and the process needs to be investigated and
corrected.
Relevant Code Books and Clauses
• ISO 7870-2:2013 - Control Charts: General guidelines for the selection and use of control
charts.
• ISO 11462-1:2001 - Guidelines for implementation of Statistical Process Control (SPC).
• AIAG SPC Manual: Provides industry-standard practices for statistical process control,
including control chart construction and interpretation.
Problem Solution Example
Problem: A car manufacturing company needs to monitor the diameter of a piston to ensure it meets
the specified tolerance of 100 mm ± 0.5 mm. They take samples of 5 pistons every hour and measure
the diameter. How can they use control charts to monitor the process?
Solution:
• Step 1: Construct an X̅ chart to monitor the average diameter of the pistons. Calculate the
mean diameter for each sample and plot it on the X̅ chart.
• Step 2: Construct an R chart to monitor the range of the diameters in each sample. Calculate
the range (difference between the largest and smallest diameters) for each sample and plot
it on the R chart.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 • Step 3: Determine control limits using the appropriate formulas:
o For the X̅ chart: \bar{X} \pm A_2 \times R̅
o For the R chart: D_3 \times R̅ to D_4 \times R̅
• Step 4: Interpret the charts. If all points are within control limits, the process is in control.
If any points fall outside the limits, investigate and correct the process.
Reference: ISO 7870-2:2013 for guidelines on constructing control charts.
Advantages and Limitations of Control Charts
1. Advantages:
o Early Detection: Control charts provide early detection of process deviations,
allowing for timely corrective actions.
o Process Improvement: They help in identifying process variations, which can be
used to improve process capability and quality.
o Cost-Effective: Continuous monitoring with control charts reduces the likelihood of
producing large quantities of defective products.
2. Limitations:
o Requires Expertise: Proper construction and interpretation of control charts require
statistical knowledge.
o Not Foolproof: Control charts may not detect small shifts in the process mean or
variation.
o Assumption of Normality: Control charts typically assume that the process data
follows a normal distribution, which may not always be the case.

Assessment questions to the lecture

Qn Bloom’s
Question Answer
No Knowledge Level
1 Which of the following is used to monitor the Correct Answer: Remembering
central tendency of a process? b) X̅ Chart
a) R Chart
b) X̅ Chart
c) P Chart

2 What type of data does a P Chart monitor? Correct Answer: Understanding

b)
a) Quantitative data Qualitative
b) Qualitative data data

c) Range of data

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 3 Which ISO standard provides guidelines for Correct Answer: Remembering
the use of control charts? b) ISO
7870-
a) ISO 9001:2015 2:2013
b) ISO 7870-2:2013
c) ISO 14001:2015

Students have to prepare answers for the following questions at the end of the lecture

Marks CO Bloom’s
Qn
Question Knowledge
No
Level
1 Define Statistical Quality Control and mention the 2 Marks CO2 Remembering
purpose of using control charts.
2 Discuss the construction and interpretation of an X̅ 6 Marks CO2 Understanding
and R Chart in quality control.
3 Explain the differences between control charts for 8 Marks CO2 Understanding
variables and control charts for attributes, providing
examples of each.
4. Analyze a case where a manufacturing process is 13 Marks CO2 Understanding
monitored using both P and C Charts. Discuss the steps
involved in constructing these charts and how they help
in maintaining process control.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 Lecture
Unit 2 DISCRETE TIME RANDOM PROCESSES
15
Topics Acceptance Sampling and Objectives of Inventory Control
Bloom’s
Learning Outcome (LO) At the end of this lecture, students will be able to
Knowledge Level
LO1 Students will understand the Acceptance Sampling and Objectives of Remembering
Inventory Control concepts.
LO2 Students will learn to analyze existing processes, identify inefficiencies, Understanding
and apply Acceptance Sampling and Objectives of Inventory Control
concepts to design more efficient and effective processes.

Acceptance Sampling is a statistical quality control technique used to determine whether to

accept or reject a batch of products. It is widely used in manufacturing processes to ensure that
products meet predefined quality standards while minimizing the need for exhaustive inspections.
Objectives of Inventory Control focus on managing inventory levels to ensure that materials are
available when needed, minimizing costs, and avoiding stockouts or overstock situations.
Effective inventory control is crucial for maintaining a balance between meeting customer
demand and optimizing costs.
Key Points and Factors
1. Acceptance Sampling:
o Definition and Purpose
o Types of Sampling Plans
▪ Single Sampling Plan
▪ Double Sampling Plan
▪ Multiple Sampling Plan
o Operating Characteristic (OC) Curve
o Producer’s Risk (α) and Consumer’s Risk (β)
o Acceptance Quality Level (AQL)
o Lot Tolerance Percent Defective (LTPD)
o Acceptance and Rejection Criteria
2. Objectives of Inventory Control:
o Ensuring Availability of Materials
o Minimizing Inventory Costs
▪ Ordering Costs
▪ Holding Costs
▪ Shortage Costs
o Optimizing Order Quantity
▪ Economic Order Quantity (EOQ)
o Managing Lead Time
o Avoiding Stockouts and Overstock
o Improving Production Efficiency
Detailed Explanations
1. Acceptance Sampling:
o Definition and Purpose: Acceptance sampling is a quality control process where a
random sample is taken from a lot to determine if the lot should be accepted or
rejected. It reduces the need for 100% inspection, thus saving time and resources.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 o Types of Sampling Plans:
▪ Single Sampling Plan: A fixed number of units (n) are inspected, and the
lot is accepted if the number of defective units is below a certain threshold
(c); otherwise, it is rejected.
▪ Double Sampling Plan: If the result of the first sample is inconclusive, a
second sample is taken, and the decision is made based on combined
results.
▪ Multiple Sampling Plan: Multiple small samples are taken sequentially
until a decision is made.
o Operating Characteristic (OC) Curve: The OC curve represents the probability
of accepting a lot as a function of the lot’s quality level. It helps in understanding
the effectiveness of a sampling plan.
o Producer’s and Consumer’s Risk:
▪ Producer’s Risk (α): The risk of rejecting a good-quality lot.
▪ Consumer’s Risk (β): The risk of accepting a poor-quality lot.
o Acceptance Quality Level (AQL): AQL is the maximum acceptable percentage
of defective items in a lot. It reflects the quality level that the producer aims to
achieve.
o Lot Tolerance Percent Defective (LTPD): LTPD is the worst tolerable process
average that the consumer is willing to accept.
o Acceptance and Rejection Criteria: Criteria based on sampling plans are
established to decide whether to accept or reject a lot based on the number of
defects found.
2. Objectives of Inventory Control:
o Ensuring Availability of Materials: Ensuring that materials are available to meet
production and customer demand without delay.
o Minimizing Inventory Costs:
▪ Ordering Costs: Costs associated with placing orders for inventory.
▪ Holding Costs: Costs of storing and maintaining inventory.
▪ Shortage Costs: Costs incurred when inventory is insufficient to meet
demand.
o Optimizing Order Quantity (EOQ): EOQ is a formula used to determine the
most cost-effective quantity to order, balancing ordering and holding costs.
o Managing Lead Time: Managing the time between placing an order and receiving
the inventory to ensure timely availability.
o Avoiding Stockouts and Overstock: Balancing inventory levels to avoid the costs
associated with both stockouts (missed sales or production delays) and overstock
(excess inventory holding costs).
o Improving Production Efficiency: Streamlined inventory management leads to
more efficient production processes and reduced downtime.
Relevant Code Books and Clauses
• ISO 2859-1:1999: Sampling procedures for inspection by attributes. Provides procedures
and tables for lot-by-lot inspection by attributes.
• MIL-STD-105: A military standard that provides a detailed sampling procedure.
Problem Solution
Problem: A company uses a single sampling plan for inspection with a sample size of 50 units.
The acceptance number is set at 2. If a lot contains 1000 units and 3 defects are found in the
sample, should the lot be accepted or rejected?
Solution: According to the single sampling plan, if the number of defects (3) exceeds the
acceptance number (2), the lot should be rejected.
Advantages and Limitations
Acceptance Sampling:

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 • Advantages:
o Reduces inspection costs.
o Less time-consuming than 100% inspection.
o Applicable to destructive testing.
• Limitations:
o Risk of accepting defective lots (Consumer’s Risk).
o Requires careful selection of sampling plans.
Inventory Control:
• Advantages:
o Optimizes inventory levels.
o Reduces carrying costs and minimizes waste.
o Improves cash flow management.
• Limitations:
o Complex to manage for large inventories.
o Requires accurate demand forecasting.

Assessment questions to the lecture

Qn Bloom’s
Question Answer
No Knowledge Level
1 Which of the following is a risk associated with Correct Answer: Remembering
acceptance sampling? c) Both a
a) Producer’s Risk and b

b) Consumer’s Risk
c) Both a and b
d) None of the above
2 The Economic Order Quantity (EOQ) formula Correct Answer: Understanding
is used to: b) Optimize
order
a) Minimize holding costs quantity
b) Optimize order quantity
c) Maximize production efficiency
d) Reduce inspection time

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 3 In acceptance sampling, LTPD refers to: Correct Answer: Remembering
a) Lot
a) Lot Tolerance Percent Defective Tolerance
b) Low Tolerance Product Defect Percent
Defective
c) Lot Tolerance Product Design
d) Low Tolerance Percent Defective

Students have to prepare answers for the following questions at the end of the lecture

Marks CO Bloom’s
Qn
Question Knowledge
No
Level
1 Define Producer’s Risk and Consumer’s Risk in the 2 Marks CO2 Remembering
context of acceptance sampling.
2 Explain the key objectives of inventory control and 6 Marks CO2 Understanding
how they impact production management.
3 Describe the process of acceptance sampling and 8 Marks CO2 Understanding
discuss its advantages and limitations.

4. Discuss the role of Economic Order Quantity (EOQ) in 13 Marks CO2 Understanding
inventory control and how it balances ordering and
holding costs. Provide a detailed explanation with an
example calculation.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 Lecture
Unit 2 DISCRETE TIME RANDOM PROCESSES
17
Topics Purchase Procedure, Stores Management, and Store Records
Bloom’s
Learning Outcome (LO) At the end of this lecture, students will be able to
Knowledge Level
LO1 Students should learn the fundamental concepts and processes involved in Remembering
purchase procedures, stores management, and store records.
LO2 Students should understand and apply the methods and strategies used in Understanding
purchasing, managing stores, and maintaining accurate store records.

Efficient management of purchasing, stores, and store records is crucial for any organization’s
operational success. The purchase procedure ensures that necessary materials are acquired at the
right time, quantity, and cost. Stores management involves the systematic control of the storage
and distribution of materials. Store records maintain accurate tracking of inventory, ensuring that
resources are available when needed and preventing losses due to mismanagement. This lecture
covers the essential aspects of these processes, providing insights into their significance in
production and operations management.

1. Purchase Procedure
• Requisitioning: The process begins with a purchase requisition raised by the concerned
department, specifying the required materials or services.
• Supplier Selection: Suppliers are evaluated based on criteria such as cost, quality,
reliability, and delivery time.
• Purchase Order: A formal order is placed with the selected supplier, outlining the terms
and conditions.
• Follow-up: Ensuring that the supplier fulfills the order on time and according to
specifications.
• Receipt and Inspection: Upon delivery, materials are inspected for quality and quantity
before acceptance.
• Payment: After satisfactory receipt, payment is processed according to agreed terms.
Impact: A well-structured purchase procedure helps in acquiring the right materials at optimal
costs, ensuring smooth production operations.
2. Stores Management
• Location and Layout: Efficient layout of stores facilitates easy access and management
of inventory.
• Inventory Control: Methods such as perpetual inventory and periodic stocktaking are
used to maintain control over stock levels.
• Storage Conditions: Ensuring that materials are stored under conditions that prevent
damage or deterioration.
• Security: Measures to prevent theft, loss, and unauthorized access to the store.
• Issue and Receipt of Materials: Proper documentation and procedures for issuing
materials to departments and receiving goods from suppliers.
Impact: Effective stores management ensures the availability of materials when needed, reduces
storage costs, and prevents wastage.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

3. Store Records
• Bin Cards: Cards attached to storage bins, recording the quantities of materials received,
issued, and on hand.
• Stock Ledger: A detailed record of all transactions related to inventory, including
receipts, issues, and balances.
• Material Requisition Forms: Documents used by departments to request materials from
the store.
• Goods Received Note (GRN): A record of materials received from suppliers, used to
update inventory levels.
• Stock Valuation: Methods such as FIFO, LIFO, and Weighted Average are used to value
the inventory.
Impact: Accurate store records provide transparency, prevent discrepancies, and facilitate efficient
inventory management.

Problem Solution
Problem: Calculate the reorder level for a material with the following data:
• Average usage per week: 50 units
• Lead time: 3 weeks
• Safety stock: 100 units
Solution: Reorder Level = (Average usage per week × Lead time) + Safety stock Reorder Level =
(50 × 3) + 100 = 250 units
Reference: Chapter on Inventory Control in the Kanishka Bedi textbook.

Advantages and Limitations

Advantages
• Purchase Procedure: Ensures that the right materials are available at the right time,
reducing production delays.
• Stores Management: Optimizes storage space, reduces carrying costs, and prevents
stockouts.
• Store Records: Provides accurate tracking of inventory, aiding in financial reporting and
decision-making.
Limitations
• Purchase Procedure: Time-consuming, especially if approval processes are lengthy.
• Stores Management: Requires continuous monitoring and can be costly to implement.
• Store Records: Maintenance of accurate records can be labor-intensive and prone to
human error.

Assessment questions to the lecture

Qn Bloom’s
Question Answer
No Knowledge Level
1 What is the first step in the purchase Correct Answer: Remembering
procedure? b) Requisitioning
a) Supplier Selection
b) Requisitioning
c) Follow-up
d) Payment

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 2 Which document records the quantities of Correct Answer: Understanding
materials received, issued, and on hand in the c) Bin Cards
store?
a) Stock Ledger
b) Goods Received Note
c) Bin Cards
d) Material Requisition Form

3 What is the primary purpose of stores Correct Answer: Remembering

management? c) To manage
storage and
a) To purchase materials inventory
b) To sell goods
c) To manage storage and inventory
d) To inspect quality

Students have to prepare answers for the following questions at the end of the lecture

Marks CO Bloom’s
Qn
Question Knowledge
No
Level
1 Explain the role of requisitioning in the purchase 2 Marks CO2 Remembering
procedure.
2 Describe the key aspects of stores management and 6 Marks CO2 Understanding
their importance.
3 Discuss the various types of store records and their 8 Marks CO2 Understanding
significance in inventory management.

4. Illustrate the complete purchase procedure, from 13 Marks CO2 Understanding

requisitioning to payment, and analyze its impact on an
organization's operations.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 Lecture
Unit 2 DISCRETE TIME RANDOM PROCESSES
18
Topics JIT System and Supply Chain Management
Bloom’s
Learning Outcome (LO) At the end of this lecture, students will be able to
Knowledge Level
LO1 Students should learn the fundamental concepts of Just-In-Time (JIT) Remembering
systems and Supply Chain Management (SCM).
LO2 Students should understand and apply the principles of JIT and SCM to Understanding
improve operational efficiency and minimize costs.

The Just-In-Time (JIT) system and Supply Chain Management (SCM) are crucial methodologies
in production and operations management. JIT aims to minimize inventory and reduce waste by
producing goods only when they are needed. SCM, on the other hand, involves the coordination
of all activities involved in the production, sourcing, and delivery of goods and services. Both
concepts are vital for enhancing efficiency, reducing costs, and ensuring that products are
delivered to customers in a timely manner. This lecture explores these systems, their benefits,
challenges, and how they complement each other in modern operations.

Key Points and Detailed Explanations

1. Just-In-Time (JIT) System
• Definition: JIT is a production strategy aimed at improving efficiency by producing only
what is needed, when it is needed, and in the quantity needed.
• Reduction of Waste: JIT focuses on eliminating waste in all forms—excess inventory,
defective products, overproduction, and unnecessary processes.
• Inventory Minimization: By keeping inventory levels low, JIT reduces storage costs and
the risk of obsolescence.
• Continuous Improvement (Kaizen): JIT encourages continuous improvement in
processes, with a focus on quality and efficiency.
• Supplier Relationships: Strong, reliable supplier relationships are essential for JIT to
work effectively, as materials must be delivered precisely when needed.
Impact: JIT can significantly reduce costs and improve product quality, but it requires precise
coordination and reliable supply chains.
2. Supply Chain Management (SCM)
• Definition: SCM encompasses the planning and management of all activities involved in
sourcing, procurement, conversion, and logistics.
• Integration: SCM requires the integration of supply and demand management within and
across companies.
• Coordination: Effective SCM coordinates all activities from raw material procurement to
product delivery, ensuring smooth operations.
• Technology in SCM: The use of technology, such as ERP systems, helps in better
coordination and real-time tracking of goods.
• Risk Management: SCM also involves managing risks associated with supply
disruptions, delays, and quality issues.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

Impact: Efficient SCM enhances customer satisfaction, reduces costs, and provides a competitive
advantage by ensuring timely delivery of quality products.

Relevant Code Books and Clauses

• Kanishka Bedi, Production and Operations Management, Oxford University Press,
2007.
• Relevant chapters: Lean Manufacturing, Just-In-Time Systems, and Supply Chain
Management.

Problem Solution
Problem: A company implements a JIT system and wants to reduce its inventory holding costs.
Currently, they order 1,000 units every month and hold an average inventory of 500 units. The
holding cost per unit per year is $10. If they switch to JIT and hold only 100 units on average,
what would be the new holding cost?
Solution: Current Holding Cost = Average Inventory × Holding Cost per Unit = 500 units × $10
= $5,000 New Holding Cost = 100 units × $10 = $1,000
Reference: Chapter on Just-In-Time Systems in the Kanishka Bedi textbook.

Advantages and Limitations

Advantages
• JIT System:
o Reduces inventory carrying costs.
o Enhances product quality through continuous improvement.
o Decreases waste and increases efficiency.
• SCM:
o Improves coordination across the supply chain.
o Enhances customer satisfaction by ensuring timely delivery.
o Reduces overall operational costs through better resource management.
Limitations
• JIT System:
o Requires highly reliable suppliers; any disruption can halt production.
o Limited flexibility in responding to sudden changes in demand.
o High implementation cost and requires a cultural shift in the organization.
• SCM:
o Complexity in managing a global supply chain.
o Vulnerability to risks such as natural disasters, strikes, or political instability.
o Requires significant investment in technology and infrastructure.

Assessment questions to the lecture

Qn Bloom’s
Question Answer
No Knowledge Level
1 What is the primary goal of a Just-In-Time Correct Answer: Remembering
(JIT) system? b) Minimize
a) Increase inventory levels waste and improve
efficiency
b) Minimize waste and improve efficiency
c) Reduce supplier relationships
d) Increase production time

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE

 2 Which of the following is NOT a key Correct Answer: Understanding
component of Supply Chain Management d) Marketing
(SCM)? Strategy

a) Sourcing
b) Procurement
c) Customer Relations
d) Marketing Strategy

3 What is a critical requirement for Correct Answer: Remembering

implementing a JIT system successfully? b) Reliable
suppliers
a) High inventory levels
b) Reliable suppliers
c) Extensive product range
d) Long lead times

Students have to prepare answers for the following questions at the end of the lecture

Marks CO Bloom’s
Qn
Question Knowledge
No
Level
1 What is the role of continuous improvement in the JIT 2 Marks CO2 Remembering
system?
2 Explain the importance of supplier relationships in the 6 Marks CO2 Understanding
effective implementation of JIT.
3 Discuss the key components of Supply Chain 8 Marks CO2 Understanding
Management and their impact on overall business
operations.
4. Analyze the benefits and challenges of integrating JIT 13 Marks CO2 Analyzing
with SCM in a manufacturing organization.

OIM352- Management Science Prepared by: Dr.J.Suresh, Prof-CSE