CHAPTER FOUR

The Design of the Operations

system
 Design of the operation system
• Product and Service Design
– Product and service design plays a strategic role in
the degree to which an organization is able to
achieve its goals.
– Product design is the process of deciding on the
unique characteristics and features of the
company’s product
 Product and Service Design

• Product design affect

– product quality
– product cost, and
– customer satisfaction.
• The quality connection is two fold:
– Performance
– Consistency
 Product and Service Design

• Cost –using materials, equipment, and labor skills

that are efficient and affordable; otherwise, its cost
will be too high for the market.
• Finally, to achieve customer satisfaction, it must
have the combined characteristics of
– good design
– competitive pricing and
– the ability to fill a market need
.
Reasons for product or service Design
• Organizations become involved in product or
service design for a variety of reasons such as:
– to become competitive
– to make the business grow and make profit
– to develop new products or services as an
alternative to downsizing
 Service Design
Approaches to Service Design:

• Substitute Technology for People

• Get the Customer Involved
• Provide High Level of Customer Attention
 Service Design
• A usefull tool in service design is service blueprinting,
which is a method for describing and analyzing a
service or proposed service.
• Difference between service design and product
design
– Products are tangible, services are generally
intangible. So that service design often
focuses more on intangible factors.
 Product Design Process
• Steps in the development of most product
designs. They are
– Idea generation
– Product screening
– Preliminary design and testing
– Final design
 Product Design Process
1. Idea Development- All product designs begin with an idea.
The idea might come from
A. Internal sources
– a product manager who spends time with customers and
has a sense of what customers want,
– from an engineer with a flare for inventions, or
– from anyone else in the company.
B. External Sources
– customers
– Suppliers
– Competitors
 Product Design Process (cont’d)
2. Product Screening- - After a product
idea has been developed it is evaluated
to determine its likelihood of success.
• In the evaluation, executives from each
functional area may explore issues such
as the following:
– Operations
– Marketing
– Finance
 Product Design Process (cont’d)
3. Preliminary Design and Testing -
– Translate general performance
specifications into technical specifications.
Prototypes are built and tested
4. Final Design
– The final specifications are then translated
into specific processing instructions to
manufacture the product
 Process Selection
• Though product design is important for a
company, it cannot be considered
separately from the selection of the
process.
• Types of Processes
– Intermittent operations and
– Repetitive operations.
 PROCESS SELECTION
• Intermittent Operations are used to produce
a variety of products with different processing
requirements in lower volumes.
• Continuous operations are used to produce
one or a few standardized products in high
volume.
 Differences between Intermittent and
Continuous Operations

Decision Intermittent Continuous

Product Variety Large Small
Degree of Standardization Low High
Path through Facility Varied pattern Line Flow
Critical Resource Labor Equipment
Importance of Work Skills High Low
Type of Equipment General Purpose Specialized
Degree of Automation Low High
Throughput Time Longer Shorter
Work-in-Process Inventory More Less
 Facility Layout

• Layout is the configuration of departments, work

centers, and equipment with a particular emphasis
on movement of work (customers or materials)
through the system.
• Facility layout means planning:
– For the location of all machines, utilities, employees work
stations, customer service areas, material storage areas,
offices and computer rooms.
– For the flow patterns of materials and people around , into
and within buildings.
 Facility Layout

• Objectives of Facility Layout

– minimize material handling costs
– utilize space efficiently
– utilize labor efficiently
– facilitate communication and
interaction among workers
 Basic production layout formats

• There are four alternative layout types that

are appropriate for different product mixes
and production volumes
 Basic production layout formats

• A process layout
– is a format in which similar equipment or functions are
grouped together.
– A part being worked on them travels, according to the
established sequence of operations, from area to area,
where the proper machines are located for each
operation.
– This layout may be appropriate when there are many
different products.
– In this type of layout the machines of a similar type are
arranged together at one place.
– This type of layout is used for batch and job production
 Process Layout (cont’d)
• Uses general purpose equipment
• Uses skilled and semiskilled workers
• Is quite common in service organizations
 Basic production layout formats

• Advantages of Process layout:

– There is high degree of machine utilization
– Breakdown of one machine does not disturb the
production process.
– Greater flexibility of resources
• Disadvantages of Process layout:
– Material handling costs are high due to
backtracking
– More skilled labor i
– Work in progress inventory is high
 Basic production layout formats

• A product layout also called a flow shop layout/line layout

– is one in which equipment or work processes are arranged
according to the progressive steps by which the product is
made.
– In this type of layout the machines and equipment's are
arranged in one line depending upon the sequence of
operations required for the product.
– The material moves to another machine sequentially
without any backtracking or deviation i.e. the output of
one machine becomes input of the next machine.
– It requires a very little material handling. It is used for
mass production of standardized products
 Basic production layout formats

• Advantages of Product layout: 

– Low cost of material handling, due to straight and short
route and absence of backtracking  
– Smooth and continuous operations  
– Lesser inventory and work in progress
– Optimum use of floor space
– Lower manufacturing cost per unit
• Disadvantages of Product layout:
–    Higher initial capital investment in special purpose
machine (SPM)
–   Breakdown of one machine will disturb the production
process.
– Lesser flexibility of physical resources.
 Basic production layout formats

• Fixed position layout,

– the product (by virtue of its bulk or weight)
remains at one location.
•  Advantages of Fixed position layout:
– The investment on layout is very small.
– The layout is flexible as change in job design and
operation sequence can be easily incorporated.
– Adjustments can be made to meet shortage of
materials or absence of workers by changing the
sequence of operations.
 Basic production layout formats

•  Disadvantages of Fixed position layout:

– As the production period being very long so the
capital investment is very high.
– Very large space is required for storage of material
and equipment near the product.
– As several operations are often carried out
simultaneously so there is possibility of confusion
and conflicts among different workgroups.
 Mixed layout
• Is the combination of the above layout
systems. It is an eclectic layout systems as it
takes the characteristics of the above layout
systems.
 Line Balancing
• Is the process of deciding how to assign tasks
to work stations
• Goal:
– To obtain task groupings that represent equal time
requirements. This minimizes the idle time along
the line and results in high utilization of labor and
equipment.
 Line balancing
• How a line is balanced? Mangers employee Heuristic
(intuitive) rules which provide good or sometimes
optimal assignments. These are
• Assign tasks in order of most following tasks
(greatest number of followers)
• Assign tasks in order of greater positional
weights ( positional weight is the sum of each
task time and the times of all following tasks
• Tie breaker- assign the task with longest task
time
 Discussion

1. What is the location decisions

2. What are the disadvantages of wrong location decisions?
3. List and discuss the basic location decision factors?
4. List the three multiple plant strategy related to location
decisions and discuss each of them
5. What is capacity?
6. List the three capacity measurement and discuss each of
them.
7. What are the two types of measures of system/capacity
effectiveness? Discuss each of them
 Location Decisions
• Location decisions are crucial because
– they commit organizations to long lasting
financial, employment and distribution patterns.
– Location decisions has an impact on investment
requirements, operating costs and revenues
 Location decision…

2. What are the disadvantages of wrong location

decisions?
• A poor/wrong choice of location result in:
– Excessive transportation cost
– Shortage of qualified labor
– Loss of competitive advantage
– Inadequate supplies of raw materials
 Location Decision Factors
3. List and discuss the basic location decision factors?
A. Regional factors B. Site related factors
• Regional Factors
– Location of raw materials
• Necessity- mining, forestry, farming
• Perish ability- vegetables, fishing
• Transportation cost
– Location of markets
• Distribution cost
• Perish ability
– Labor factors
– Climate and taxes
• Community Considerations
– Quality of life, Services, Attitudes
 Location Decision Factors
• Site Related Factors
– Land, Transportation, Environmental, Legal
4. List the three multiple plant strategies related to
location decisions and discuss each of them
• Multiple Plant Strategies
– Product plant strategy
– Market area plant strategy-
– Process plant strategy
 Location Decision Factors
• Product plant strategy-
– assign different products to different plants
– entire product/product lines are produced in
separate plants
– each plant usually supplies the entire domestic
market
– There is product specialization so economies of
scale could be achieved
 Location Decision Factors
• Market area plant strategy-
– assign different market areas to different plants
– Plants are designed to serve a particular
geographic market
– Benefits
• Rapid delivery
• Local needs
• When shipping costs are high
 Location Decision Factors
• Process plant strategy
– Different plants concentrate on different aspects
of a process
– Best suited when a product has many
componenets
 Service locations
• Nearness to raw material is usually not a
factor, nor is concern about processing
requirements, but customer access is usually a
prime consideration
 Capacity Planning
5. What is capacity?

• Capacity – refers to an upper limit on the rate of output

6. List the three capacity measurements and discuss each
1. Design capacity 2. Effective capacity 3. Actual Output

1. Design capacity-
- is the maximum output rate or service capacity an operation process
or facility is designed for
- is the maximum rate of output achieved under ideal conditions
 Capacity Planning …
2. Effective Capacity
– Is designed capacity minus allowances such as
personal time and maintenance
– Effective capacity is always less than design
capacity owning to realities of:
• Changing product mix
• The need for periodic maintenance
• Lunch and coffee breaks
• Problems in scheduling
 Capacity Planning …
3. Actual Output - cannot exceed effective
capacity and is often less because:
– Machine breakdowns
– Absenteeism
– Shortage of materials
– Quality problems
– Factors outside of the operations managers
 Measures of system Effectiveness
7. What are the two types of measures of system/capacity
effectiveness? Discuss each of them
• There are two types of measures of system effectiveness:
– Efficiency – is the ratio of actual output to effective capacity
– Utilization – is the ratio of actual output to design capacity
– The real key to improving capacity utilization is to increase
effective capacity by correcting quality problems, maintaining
equipment, fully training employees, fully utilizing bottleneck
equipment
 Reading Assignment
Job Design and Work Measurement

• Job design is a function that specifies the

content and methods of the job
• Why do we need to design a Job
– The main reason in job design is just to develop
jobs that meet out:
• The requirements of the organization
• The requirements of the jobholders
• The requirements of the technology
 Job Design and Work Measurement

• Evolution of scientific Job design process

– During the era of industrial revolution the grand
principles of manufacturing improvement is
specialization. Due to this, companies were involved
in breaking down jobs into components so that
efficiency can be achieved through specialization.
– However current practices in job design contains
the elements of different schools of thought
including the old schools- school of efficiency and
behavioral school of thought
 Job Design and Work Measurement
• School of efficiency focus on systematic and logical approaches in
job design
– Introduced the notion of specialization so as to design the job of an
organization.
• Behavioral schools of thought focuses on satisfying the needs and
wants of job holders in the process of job design.
• They introduced the given below job expansion strategies
• Job enlargement
• Job rotation
• Job enrichment
• Empowerment
• Self directed teams
• In the process of job design one should also include Psychological components
 Job Design Continuum

Self-directed
Teams
Increasing reliance on
Empowerment employees’
contribution and
increasing acceptance
of responsibility by
employee
Enrichment

Enlargement

Specialization
Job Expansion 44
 Job Specialization
 Involves
 Breaking jobs into small component parts
 Assigning specialists to do each part

 Benefit and shortcoming specialization

 Increase per capita output through cost reduction due to:
 Greater dexterity & faster learning
 Less lost time changing jobs or tools

 Use of more specialized tools

 Pay only for needed skills

 Increase per capita boredom of employees

 Job Expansion
• Process of adding more variety to jobs
• Intended to reduce boredom associated with
labor specialization and to create an opportunity
for job holders to encounter challenging tasks
• Methods
– Job enlargement
– Job rotation
– Job enrichment
– Employee empowerment
 Self-Directed Teams
• Group of empowered individuals working
together for a common goal
• Reasons for effectiveness
– Provide employee empowerment
– Provide core job characteristics
– Meet psychological needs (e.g., belonging)

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