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National University of Sciences & Technology

School of Chemical and Material Engineering

Department of Chemical engineering Code: Che 01

Subject: MGT 301 Production & Operations ManagementCredit Hours: 3 hours per week

Pre- requisites:.

Course Outlines

Introduction to Operations Management, Operation system inputs and outputs

Generic model of Operation System, Operations Strategy for Competitive

Advantage, Operations in a global environment , Plant location and layout

Material handling and equipment , Demand forecasting and its modeling

Types of Productions System , Material Requirement Planning (MRP) and

Manufacturing Resources Planning (MRPII), Production planning and scheduling

Inventory Management, Just-in-Time System, Work study and its techniques

Managing Quality, Productivity and its concept, measurements and improvement

techniques

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Recommended Books

1. Production and Operation Management, 6 Th Edition by Alan Muhlemann, John

Oakland and Keith Lockyer 1995 reprint Pitman Publishing London2. Production and Operation Management, 8 Th Edition by Norman Gaither and

Greg Fazier, South-Western College Publishing

3. Modern Production and Operation Management by Elwood S. Buffn, 7 th Edition

John Willey and Sons

4. Operation Management, Heizer, J and Barly, R. (1999). 7 th Edition, PHIPE

5. Operation Management by Roger G. Schroeder 3 rd edition McGraw Hill

Grading:

a. Quizzes / Homework 15%

b. Mid Term Exam 20%c. Term Project 15%

d. Final Exam 50%

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PRODUCTION / OPERATION

MANAGEMENT

Production is the creation of goodsand services

Operations management (OM) isthe set of activities that creates

value in the form of goods andservices by transforming inputsinto outputs

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BUSINESS

TECHNICAL(STRATEGY & COSTING)

(STRATEGY, ECONOMICS& PRICING)

BUSINESSFUNCTION

(BF)

ENGINEERINGFUNCTION

(EF)

A BUSINESS SYSTEM MODEL

RELATIONSHIP OF BUSINESS AND PRODUCTION SYSTEM

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BUSINESSVISION

& STRATEGY(BF)

PRODUCTIONVISION

& STRATEGY(EF)

MARKETING

FUNCTION(BF)

PRODUCTION

FUNCTION(EF)

MARKETSYSTEM DESIGN

1. R & D2. FORECASTING

PRODUCTIONSYSTEM DESIGN

1. R & D2. FORECASTING

RELATIONSHIP OF BUSINESS AND PRODUCTION SYSTEM

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BFDRIVER EFDRIVEN

MARKETSYSTEM

PRODUCTIONSYSTEM

LINKING OF BUSINESS AND PRODUCTION SYSTEM DESIGN

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2b.PROCESSDESIGN

PROCESS

FLOWCHART

1. MARKETINGSYSTEMDESIGN

2. PRODUCTIONSYSTEMDESIGN

2a.PRODUCTDESIGN

(CAD/CAM)

LAYOUT

DESIGN

RELATIONSHIP OF BUSINESS AND PRODUCTION SYSTEMDESIGN

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THE CUSTOMER NEEDS AND

SATISFIERS

ORGANISATIONNEEDS SATISFIER

CUSTOMER CUSTOMER

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THE CLOSED LOOP OF CUSTOMERSATISFACTION

ORGANISATION

NEEDS SATISFIER

CUSTOMER

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A GENERIC MODEL OFPRODUCTION SYSTEM

TOTALTRANSFORMATION

PROCESS

TOTAL INPUTS1. MEN

2. MATERAIL3. MACHINES

4. MONEY

TOTAL OUTPUTS

1. PRODUCTS

2. SERVICES

TOTAL TRANSFORMATION FROM INPUTS TOOUTPUTS

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SOURCES OF VARIATION IN PRODUCTION PROCESSES

Inputs OutputsProcess

Operators Methods

Materials

Tools

Machines Environment

MeasurementInstruments

HumanInspectionPerformance

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VARIATIONS

Production processes face variationin:

Strength, thickness or moisture contentof materials Strength & composition of cutting tools Measurement gauges used Human inspection capabilities

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Variation occurs at random, butcombined effect can be predictedstatistically

Common causes of variation factorspresent as natural parts of process

Result from design of system

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Special causes of variation (assignablecauses) Arise from external sources not inherent

in the process

Bad material batch from supplier Poorly trained operators Excessive tool wear Improper calibration of equipment

Unnatural variation easily detectable Economical to correct

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System governed only by commoncauses is stable Understanding of differences between

common & special causes Less variation benefits:

Producers (higher productivity due toless inspection, scrap & rework)

Customers (products with similarquality characteristics)

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INPUT - OUTPUT DIAGRAMS FOR CUSTOMERSATISFACTION

IDENTIFICATION ANDFORECASTING FACILITY

ANALYSING ANDINTEGRATING FACILITY

SUPPLYING FACILITY

TRANSFORMATIONFACILTIY

DISTRIBUTINGFACILITY

CUSTOMERNEEDS EXPLICITFORECASTS

EXPLICITFORECASTS

RESOURCEPLANS

RESOURCEPLANS

PRODUCTION/ OPERATIONINPUTS

PRODUCTION/ OPERATIONINPUTS

OUTPUTS

OUTPUTS SATISFIERCUSTOMER

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FROM CUSTOMER TO CUSTOMERA CLOSED LOOP

(i) IDENTIFICATIONAND FORECASTING

FACILITY

(iii) SUPPLYINGFACILITY

(ii) ANALYING ANDINTEGRATING FACILITY

(iv) TRANSFORMATIONFACILITY

(v) DISTRIBUTIONFACILITY

CUSTOMER

OUTPUTS

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THE MARKETING AND PRODUCTION/OPERATIONS TASKS

DistributionFacility

Identification andforecasting facility

Marketing

Explicit forecastsAnalysis andintegrating Facility

SupplyingFacility

TransformationFacility

PRODUCTION/OPERATIONS

Outputs

Consumer

Satisfiers

Production Operating

Inputs

ResourcePlans

The Marketing and production/operations tasks

(i)

(v)

(ii)

(iii)

(iv)

Needs

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THE EFFECTS OF SEPARATING THEMARKETING AND PRODUCTION FUNCTIONS

MARKETING

MARKETING

MARKETING

PRODUCTION

PRODUCTION

PRODUCTION

INCREASINGSUCCESS DECREASINGVIABILITY

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THE PRODUCTIONS/ OPERATIONSMANAGERS TASK (5Ps)

1.PRODUCT

2. PLANT5.PEOPLE

3.PROCESSES

4.PROGRAMMES

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THE PRODUCTION MANAGERSRESPONSIBILITIES (5Ps)

1. THE PRODUCT

Performance Aesthetics

Quality

Reliability

Quantity Selling cost or Production operating cost

Delivery dates and/or times

2. THE PLANT Future possible demands Design and layout of buildings and offices Performance and reliability of equipment Maintenance of performance Safety of installation and operation Social responsibilities

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3. THE PROCESS Available capacity Available skill Type of production/ operation Layout of plant and equipment

Safety Maintenance requirement Costs to be achieved

4. THE PROGRAMMES Purchasing Transforming Maintenance Cash Storage Transport

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5. THE PEOPLE Wages /salaries safety Conditions of work Motivation Trade unions Education and training

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Production Strategy

Make to order Make to stock

Forecasting (Types) Forecasting (Types)

Types of Production System

Job shop BatchProductionMass

productionGroup

Technology

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TYPES OF PRODUCTION SYSTEMS

JOB PRODUCTION

BATCH PRODUCTION

MASS PRODUCTION

GROUP PRODUCTION

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TYPES OF PRODUCTIONSYSTEMS VERSES LAYOUTS

JOB PRODUCTION - FIXED LAYOUT / PROCESS LAYOUT

BATCH PRODUCTION - PROCESS LAYOUT / GROUP LAYOUT

MASS PRODUCTION - PRODUCT LAYOUT

GROUP PRODUCTION - GROUP LAYOUT / CELLULAR LAYOUT

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JOB PRODUCTION

JOB, ONE -OFF, PROJECT, OR MAKE COMPLETE ARE

DESCRIPTIONS GIVEN TO THE ORGANIZATION WHEREBY THE

COMPLETE TASK IS HANDED BY SIGNAL WORKER OR GROUP

OF WORKERS. THE HAIRDRESSER WHO CUTS, WASHES AND

PERMS THE CUSTOMERS HAIR, THE TAILOR WHO MAKES THE

ENTIRE SUIT ARE ALL EXAMPLES OF TASKS WHICH ARE

ORGANIZED USING THE JOB APPROACH .

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BATCH PRODUCTION

SUCH METHODS REQUIRE THAT THE WORK FOR ANY TASK IS

DIVIDED INTO PARTS OR OPERATIONS AND THAT EACH

OPERATION IS COMPLETED THROUGHOUT THE WHOLE BATCH

BEFORE THE NEXT OPERATION IS UNDERTAKEN. THIS

TECHNIQUE IS PROBABLY THE MOST COMMONLY USED

METHOD FOR ORGANIZING MANUFACTURE, TYPICAL

EXAMPLES BEING THE PRODUCTION OF ELECTRONICINSTRUMENTS, TRANSFORMERS AND SO ON.

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MASS PRODUCTION

MASS / FLOW HAS BEEN DEFINED AS A METHOD OF

ORGANIZATION SUCH THAT THE TASK IS WORKED ON

CONTINUOUSLY OR ALTERNATIVELY AS A SYSTEM WHEREBY

THE PROCESSING OF MATERIAL IS CONTINUOUS AND

PROGRESSIVE.

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GROUP PRODUCTION

THE GROUP APPROACH, SOMETIMES REFERRED TO AS GROUP

TECHNOLOGY (GT) OR CELLULAR MANUFACTURING, CAN BE

THOUGHTHT OF AS AN ATTEMPT TO CAPITALIZE ON THE

BENEFITS OF BOTH BATCH AND FLOW. ESSENTIALLY, THIS

INVOLVES SEEKING SIMILARITIES, RATHER THAN LOOKING

FOR DIFFERENCES. SIMILAR TASKS / JOBS / PRODUCTS ARE

IDENTIFIED AND FORMED INTO FAMILIES AND THE RESOURCES

REQUIRED FOR THESE ARE FORMED INTO GROUPS OR CELLS.

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Operations Strategy for Competitive Advantage, Operations in a globalenvironment

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PLANT LOCATION AND LAYOUTFACTORS TO BE CONSIDERED;

1. PROXIMITY TO THE MARKET

2. INTEGRTATION WITH THE ORGANIZATION

3. AVAILIBILITY OF LABOUR AND SKILLS

4. AVAILABILITY OF AMENITIES

5. AVAILABILITY OF TRANSPORT

6. VAILIBILITY OF INPUTS

7. AVAILIBILITY OF SERVICES

8. SUITABILTY OF LAND AND CLIMATE

9. REGIONAL REGULATION

10. ROOM FOR EXPANSION11. SAFETY REQUIREMENTS

12. SITE COST

13. POLITICAL, CULTURAL AND ECONOMIC SITUATION

14. SPECIAL GRANTS, REGIONAL TAXES AND IMPORT / EXPORT BARRIERS

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Bulk Material Handling and EquipmentCost of Material Handling = 25 % of cost of product

Aids to material Handling

1. Correct identification of material and documentation2. correct packing of material and documentation

3. Capacity of equipment

4. Size of load

5. Weight of container

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Bulk Material Handling Equipment1. Crane

2. Hoist / bucket

3. Conveyor4. Chute / Channel

5. Dumper

6. Fork lifter

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Cost Reduction in Material Handling

1. Use of manpower

2. Use of Gravity3. Use of power

4. Use of package load

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Demand forecasting and its modeling

The estimation of demand for future to gain

some lead time.

Demand is done for:

Raw material

semi finished goods

Finished goods

service material

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Demand Forecasting Techniques

Nave Technique

Fixed average

Moving Average

Weighted Moving Average (3 5 Points)

Exponential Weighted Moving Average

Associated Factors Trend Line

Seasonal Effect

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Error Estimation in Demand Forecasting

To calculate error in forecasting and actual

uses?

Standard Deviation= 1.25 x Mean Absolute

Deviation Mean Absolute Deviation = Sum of

difference between absolute forecast value

absolute actual use / number of periods

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INVENTORY MANAGEMENT

Task of material holding department:

Determine the material requirement

Receiving and storing material and its safety

in good condition

Issue material upon receipt of appropriate

authority Identify surplus stock

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INVENTORY MANAGEMENT

Types of material to be stored:

Raw material and bought in items

Work in Progress (WIP) - semi finished

goods

Finished goods

service materialLead Time: It include ordering time, delivering

time and receiving time etc

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DEMAND SITUATIONS / APPROACHED TO

MATERIAL S CONTROL

INDEPENDENT DEMAND SITUATION

Material requiring planning (MRP)

DEPENDENT DEMAND SITUATION

Manufacturing resource planning (MRP II)

THESE SITUATIONS CAN BE FURTHER DIVIDED

INTO FIXED RE-ORDER QUANTITY

FIXED RE-ORDER TIME

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ECONOMIC ORDER QUANTITY (EOQ)

/ ECONOMIC BATCH SIZE (EBS)

EOQ / EBS calculation is based on total cost

of ordering, holding cost and ancillary cost

Price break on EOQ/EBS

Two Methods are used for its calculations: Graphical method

Analytical method

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WORK STUDY Work study is a management service based on those

techniques, particularly method study and workmeasurement which are used in the examination of

human work in all its context and which lead to the

systematic investigation of all the resources and factorswhich affect the efficiency and economy of the situation

being reviewed, in order to effect improvement

(productivity)

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WORK STUDY TECHNIQUES

METHOD STUDY

WORK MEASUREMENT (TIME MEASUREMENT)

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