A Modern Approach to Operations Management by: Ram Naresh R

A Modern Approach to Operations Management
by: Ram Naresh Roy.

345 Pages


Copyright © 2005 New Age International (P) Ltd., Publishers
Published by New Age International (P) Ltd., Publishers



Preface
While teaching the course on ‘Production Operations Management (POM)’ to my students in
India and abroad, I have felt a huge shortage of books and relevant materials on this subject.
The books available are mostly written with Western world perspective. The examples included
in those books are not very relevant to the students of developing countries. This has motivated
me to write this book which is based on my own teaching experiences and the feed back of my
students.
The book includes the background, the core concepts, and the models of POM. It is readable,
comprehensive, and contemporary in its approach. The concepts of Operations Management
have been delivered to the readers in a simple, straightforward manner, and without
mincing the words to avoid dilution of the materials itself.
The layout of the book has been organized to give the readers a sense of flow: (i) Beginning
with fundamentals of Production systems, Productivity, Location of plant, layout issues;
(ii) Core issues of POM like Forecasting, Operations planning, Purchasing systems and steps
involved in it, Inventory models, and MRP, Quality control, TQM, Project Management; and
finally (iii) the attention is focused to modern concepts on the subject like JIT, OPT, Automation,
etc. This makes the book more comprehensive in nature.
Adequate number of solved problems have been included to give the readers a chance to
enhance the learning process. Examples from local industries, agriculture sector, services (banking,
airlines, hotels, transport, etc.) have been included to make the chapters interesting and
palatable to the students’ taste.
I thank my students and colleagues for their constructive comments in making the book
more useful.
Lastly, I always believe in ‘kaizen’—the continuous improvement process in everything I
do and this goes with this book as well. I invite the readers, therefore, to send their comments
and suggestions to improve this book in its next edition.
RAM NARESH ROY, PhD



Contents
1 PRODUCTION SYSTEMS AND OPERATIONS MANAGEMENT 1
1.0 Introduction...................................... .................................................. .......................... 1
1.1 Related Issues of Operations Management .................................................. ............. 1
1.1.1 Production Function .................................................. .................................... 1
1.1.2 Productivity .................................................. .................................................. 2
1.1.3 Difference between Production and Productivity ........................................ 2
1.1.4 Effectiveness .................................................. ................................................ 3
1.1.5 Efficiency .................................................. .................................................. .... 3
1.2 Operations Function in Organizations .................................................. ..................... 4
1.2.1 Manufacturing Operations Vs Service Operations ..................................... 5
1.2.2 Types of Production System .................................................. ........................ 7
1.3 Role of Models in Operations Management .................................................. ........... 10
1.3.1 Types of Models in Production Operations Management (POM) ............. 10
1.3.2 Mathematical Models in Production and Operations Management ........ 11
1.3.3 Modeling Benefits .................................................. ...................................... 11
1.4 Classifying Problems .................................................. ............................................... 11
1.4.1 Uncertainty of Outcomes .................................................. .......................... 11
1.4.2 Maximum Rule .................................................. .......................................... 13
1.4.3 Interdependence Among Decisions .................................................. .......... 14
2 LOCATION OF PRODUCTION AND SERVICE FACILITIES 17
2.0 Introduction...................................... .................................................. ........................ 17
2.1 Reasons for Location Changes .................................................. ............................... 17
2.2 General Factors Influencing Location .................................................. .................... 18
2.2.1 Rural and Urban Sites Compared .................................................. ............ 20
2.3 General Procedures for Facility Location.......................................... ....................... 21
2.3.1 Preliminary Screening .................................................. .............................. 21
2.3.2 Selection of Exact Site .................................................. ............................... 22
2.4 Some Other Facility Location Models .................................................. .................... 23
2.4.1 Simple Median Model .................................................. ................................ 23
2.4.2 Center of Gravity (GRID) Model .................................................. .............. 26
2.4.3 Linear Programming (LP) .................................................. ......................... 27
2.4.4 Simulation .................................................. .................................................. 33
2.4.5 Break Even Analysis .................................................. ................................. 33
Preface (v)
( vii )
3 LAYOUT PLANNING 36
3.0 Introduction...................................... .................................................. ........................ 36
3.1 Effects of a Plant Layout .................................................. ........................................ 36
3.2 Factors Affecting Layout .................................................. ........................................ 37
3.2.1 Types of Industries .................................................. .................................... 37
3.2.2 Types of Production System .................................................. ...................... 37
3.2.3 Type of Product .................................................. .......................................... 38
3.2.4 Volume of Production .................................................. ................................ 38
????: Study Temple-All kinds of Study Material A Modern Approach to Operations Management by: Ram Naresh Roy
3.3 Systematic Layout Planning (SLP) .................................................. ........................ 38
3.4 Other Approaches to Plant Layout .................................................. ......................... 41
3.4.1 Principles of Plant Layout............................................ ............................... 43
3.4.2 Types of Flow Patterns .................................................. .............................. 43
3.5 Types of Layout .................................................. .................................................. ..... 43
3.5.1 Fixed Position Layout............................................ ...................................... 45
3.5.2 Process-Oriented or Functional Layout .................................................. ... 46
3.5.3 Repetitive and Product-Oriented Layout .................................................. . 51
3.5.4 Office Layout .................................................. .............................................. 55
3.5.5 Retail Layout .................................................. ............................................. 56
3.5.6 Warehousing and Storage Layouts .................................................. .......... 57
3.5.7 Combination Layout .................................................. .................................. 57
3.6 Material Handling .................................................. .................................................. . 57
3.6.1 Principles of Material Handling .................................................. ............... 58
3.6.2 Simplified Version of Principles of Material Handling ............................. 59
3.6.3 Material Handling Equipment .................................................. ................. 59
3.6.4 Relationship Between Material Handling and Factory Building
Design or Layout............................................ .............................................. 60
4 PURCHASING SYSTEMS AND VENDOR RATING 62
4.0 Introduction...................................... .................................................. ........................ 62
4.1 Functions of Material Management .................................................. ....................... 62
4.2 Objectives of Materials Management .................................................. ..................... 62
4.3 Purchasing or Procurement Function .................................................. .................... 63
4.3.1 Objectives of Purchasing Department .................................................. ..... 63
4.3.2 Activities, Duties and Functions of Purchasing Department ................... 63
4.3.3 Centralized and Decentralized Purchasing Organizations ...................... 64
4.4 Modes of Purchasing Materials......................................... ........................................ 65
4.4.1 Spot Quotations .................................................. ......................................... 65
4.4.2 Floating the Limited Inquiry .................................................. .................... 65
4.4.3 Tender .................................................. .................................................. ...... 65
4.5 Steps in One Complete Purchasing Cycle .................................................. .............. 66
4.5.1 Some Questions Related to Purchase .................................................. ....... 66
4.5.2 Tender Procedure .................................................. ...................................... 67
( viii )
4.6 Vendor Rating .................................................. .................................................. ........ 73
4.7 What is Expected of a Better Buyer .................................................. ....................... 74
4.8 Some Working Definitions .................................................. ...................................... 74
4.8.1 Quality Index (QI) .................................................. ..................................... 75
4.8.2 Delivery Reliability Index (DRI) .................................................. ............... 75
4.8.3 Flexibility Index (FI) .................................................. ................................. 76
4.8.4 Price Performance Index (PPI) .................................................. ................. 77
4.8.5 Frequency of Rating .................................................. .................................. 78
4.8.6 Use of the Indices .................................................. ...................................... 78
4.9 Stores and Material Control........................................... ........................................... 78
4.9.1 Requirements of a Material Control System ............................................. 79
4.10 Stores Management .................................................. ................................................. 79
4.10.1 Functions of Stores Department and the Duties of the Storekeeper ....... 79
4.10.2 Location and Layout of Stores .................................................. .................. 80
4.10.3 Advantages of Centralization of Stores .................................................. .... 80
4.10.4 Advantages of Decentralization of Stores .................................................. 81
5 OPERATIONS PLANNING AND CONTROL 82
5.0 Introduction...................................... .................................................. ........................ 82
5.1 Benefits of Better Operations Planning and Control .............................................. 83
5.2 Main Functions of OPC .................................................. ........................................... 83
5.2.1 Some Specific Activities of OPC............................................... ................... 83
5.3 Detailed Functions of OPC............................................... ......................................... 84
5.3.1 Planning Phases .................................................. ........................................ 84
5.3.2 Routing or Sequencing .................................................. .............................. 84
5.3.3 Loading or Assignment .................................................. ............................. 86
5.3.4 Scheduling .................................................. .................................................. 89
5.3.5 Sequencing and Disp****ing Phase .................................................. ......... 93
5.3.6 Controlling or Follow-up Phase .................................................. ................ 98
6 INVENTORY CONTROL 100
6.0 Introduction...................................... .................................................. ...................... 100
6.1 Purpose of Inventories .................................................. ........................................... 100
6.2 Objective of Inventory Management .................................................. .................... 101
6.2.1 Requirements for Effective Inventory Management ............................... 101
6.2.2 Inventory Counting Systems .................................................. .................. 102
6.2.3 A Perpetual Inventory System .................................................. ............... 102
6.2.4 Ordering Cycle System............................................ .................................. 103
6.2.5 Demand Forecasts and Lead-Time Information...................................... 104
6.2.6 Inventory Cost Information .................................................. .................... 104
6.3 Types of Inventory Control Techniques .................................................. ............... 105
6.3.1 Qualitative Techniques .................................................. ........................... 105
6.3.2 Quantitative Techniques or Models .................................................. ....... 108
6.4 Stocking of Perishables .................................................. ......................................... 125
( ix )
7 MATERIAL REQUIREMENT PLANNING 130
7.0 Introduction...................................... .................................................. ...................... 130
7.1 Need for Materials Planning .................................................. ................................. 130
7.1.1 Terms Used in MRP .................................................. ................................ 131
7.2 Basic MRP Concepts .................................................. .............................................. 131
7.2.1 Independent Demand .................................................. .............................. 132
7.2.2 Dependent Demand .................................................. ................................. 132
7.2.3 Lumpy Demand .................................................. ....................................... 132
7.2.4 Lead Time of Item .................................................. ................................... 132
7.2.5 Common Use Items .................................................. ................................. 133
7.2.6 Time Phasing .................................................. ........................................... 133
7.3 Factor Affecting the Computation of MRP............................................... .............. 134
7.3.1 Production Structure .................................................. ............................... 134
7.3.2 Lot Sizing .................................................. ................................................. 135
7.3.3 Recurrence of Requirements within Planning Horizon .......................... 136
7.4 Objectives of MRP System .................................................. .................................... 137
7.5 Prerequisites and Assumptions of MRP .................................................. ............... 138
7.5.1 Prerequisites .................................................. ............................................ 138
7.5.2 Assumptions .................................................. ............................................. 138
7.6 Inputs to MRP .................................................. .................................................. ...... 139
7.6.1 Master Production Schedule (MPS) .................................................. ....... 139
7.6.2 Bill of Material (BOM)............................................. .................................. 140
7.6.3 Inventory Record File .................................................. .............................. 141
7.7 MRP Outputs .................................................. .................................................. ....... 142
7.7.1 Primary Outputs........................................... ............................................. 143
7.7.2 Secondary Outputs .................................................. .................................. 143
7.8 MRP Logic in Brief .................................................. ................................................ 143
7.8.1 A Sample of Management Information (Output) from MRP .................. 144
7.8.2 Limitations and Advantages of MRP .................................................. ..... 152
7.9 Manufacturing Resource Planning (MRP II) .................................................. ....... 152
7.10 MRP Implementation .................................................. ............................................ 154
7.10.1 An Inventory Control System .................................................. ................. 154
7.10.2 A Production and Inventory Control System........................................... 154
7.10.3 A Manufacturing Resource Planning System .......................................... 154
7.11 How Can Industry Benefit From MRP? .................................................. ............... 156
8 JUST-IN-TIME APPROACH 160
8.0 Introduction...................................... .................................................. ...................... 160
8.1 History of Relations Between Management and Workers .................................... 161
8.1.1 Adaptation to New Production Environment .......................................... 161
8.1.2 The Kanban Control .................................................. ................................ 161
8.1.3 JIT Today .................................................. ................................................. 162
8.1.4 JIT Application Profile .................................................. ............................ 163
( x )
8.2 Keys to Successful JIT Implementation .................................................. ............... 165
8.2.1 The Kanban System .................................................. ................................ 166
8.3 Japanese Vs American Management .................................................. ................... 169
8.3.1 Downsides of Japanese Management........................................ ............... 169
8.3.2 JIT Manufacturing System Overview .................................................. .... 170
8.3.3 The Seven Wastes in JIT............................................... ............................ 172
8.3.4 Value-Added Manufacturing .................................................. .................. 172
8.4 How Japanese Manufacturing Ideally Works? .................................................. .... 173
8.4.1 Stockless Production........................................ .......................................... 173
8.5 Comparison of MRP and JIT .................................................. ................................. 174
8.5.1 Push Vs Pull System .................................................. ............................... 174
8.6 Requirements for Successful Implementation of JIT ............................................ 175
8.7 Goals of JIT Manufacturing System............................................ ........................... 176
8.7.1 Important Aspects in JIT Manufacturing ................................................ 178
8.7.2 Advantages and Disadvantages of JIT .................................................. ... 179
8.8 Theory of Constraints (TOC)............................................. ...................................... 181
8.8.1 Systems Thinking .................................................. .................................... 181
8.8.2 Five Focusing Steps of TOC .................................................. .................... 182
8.8.3 The Five Layers of Resistance .................................................. ................ 183
8.8.4 Quantifying the Improvement .................................................. ................ 183
8.9 TOC Tools .................................................. .................................................. ............. 183
8.9.1 Current Reality Tree (CRT) .................................................. .................... 183
8.9.2 Conflict Resolution Diagram (CRD) or Evaporating Cloud .................... 184
8.9.3 Future Reality Tree (FRT) .................................................. ...................... 185
8.9.4 Prerequisite Tree (PRT) .................................................. .......................... 186
8.9.5 Transition Tree (TT) .................................................. ................................ 187
9 PROJECT MANAGEMENT 188
9.0 Introduction...................................... .................................................. ...................... 188
9.1 Some Terms Related to Network Planning.......................................... .................. 188
9.2 CPM and PERT Model............................................. ................................................ 191
9.2.1 Time Estimates in PERT.............................................. ............................. 192
9.2.2 Algorithm Used in Calculating Critical Path .......................................... 193
9.3 Variability of Activity Times .................................................. ................................. 194
9.4 Probability of Completing a Project by a Given Date ............................................ 195
9.5 Project Crashing and Time-Cost Trade-off .................................................. .......... 196
9.6 Resource Leveling .................................................. .................................................. 208
9.6.1 Heuristic Methods .................................................. ................................... 208
9.7 Resource Leveling of Project Schedules .................................................. ............... 209
9.8 Project Delay .................................................. .................................................. ........ 213
( xi )
10 QUALITY CONTROL 215
10.0 Introduction...................................... .................................................. ...................... 215
10.1 Inspection .................................................. .................................................. ............. 215
10.1.1 Types of Inspection .................................................. .................................. 215
10.1.2 Purpose of Inspections .................................................. ............................. 216
10.2 Some Quality Related Terms .................................................. ................................ 216
10.3 Statistical Quality Control (SQC) .................................................. ......................... 216
10.4 Acceptance Sampling .................................................. ............................................. 217
10.4.1 Where do we use Sampling ? .................................................. .................. 217
10.4.2 Advantages and Disadvantages of Acceptance Sampling ....................... 217
10.4.3 Representative Sample .................................................. ........................... 217
10.5 Sampling Plans .................................................. .................................................. .... 218
10.5.1 Single Sampling Plan (SSP) .................................................. .................... 218
10.5.2 Double Sampling Plan (DSP) .................................................. .................. 219
10.5.3 Sequential or Multiple Sampling Plan .................................................. ... 221
10.6 Process Variability and Control .................................................. ............................ 221
10.7 Control Charts .................................................. .................................................. ..... 222
10.7.1 The p-Chart .................................................. .............................................. 223
????: Study Temple-All kinds of Study Material A Modern Approach to Operations Management by: Ram Naresh Roy
10.7.2 The c-Chart .................................................. .............................................. 225
10.7.3 Steps in Constructing S-Chart............................................. ..................... 226
10.7.4 Steps in Constructing the X Chart .................................................. ........ 227
10.8 Use of Computers in Quality Control .................................................. ................... 233
11 TOTAL QUALITY MANAGEMENT AND ISO-9000 234
11.0 What is TQM? .................................................. .................................................. ...... 234
11.1 TQM Need Commitment .................................................. ....................................... 234
11.2 Various Approaches to TQM .................................................. ................................. 235
11.2.1 Deming’s Approach to TQM............................................... ....................... 235
11.2.2 Juran’s Approach to TQM .................................................. ....................... 236
11.2.3 Crosby’s Approach to TQM .................................................. ..................... 237
11.2.4 Feigenbaum’s Approach to TQM .................................................. ............ 238
11.2.5 Ishikawa’s Approach to TQM............................................... ..................... 239
11.3 Some Quality and TQM Related Terms .................................................. ............... 240
11.4 Relationship Between ISO 9000 and Quality .................................................. ...... 248
11.5 Relationship Between ISO 9000 and TQM .................................................. .......... 248
11.5.1 Principles of ISO 9000 .................................................. ............................. 249
11.5.2 Benefits of ISO 9000 .................................................. ................................ 249
12 LINEAR PROGRAMMING 251
12.0 Introduction...................................... .................................................. ...................... 251
12.1 The LP Formulation and Underlying Assumptions .............................................. 251
12.2 The General LP Formulation .................................................. ................................ 253
( xii )
12.2.1 Graphical Solution of 2-Variables LP .................................................. ..... 254
12.2.2 A 2-Var LP with a Unique Optimal Solution ........................................... 254
12.3 Different Forms of Linear Programs .................................................. .................... 255
12.4 The Assignment Problem .................................................. ...................................... 264
12.5 Transportation Problem .................................................. ........................................ 267
12.5.1 Transportation Algorithm (Modi Method) ............................................... 271
13 METHODS ENGINEERING 273
13.0 Introduction...................................... .................................................. ...................... 273
13.1 Objective of Work Study .................................................. ........................................ 273
13.2 Tools and Techniques of Work Study .................................................. .................. 274
13.2.1 Method Study .................................................. ........................................... 274
13.2.2 Work Measurement (Time Study) .................................................. .......... 283
13.3 Standardization .................................................. .................................................. ... 293
13.3.1 What is a Standard? .................................................. ................................ 293
13.3.2 Examples of Standards .................................................. ........................... 294
13.3.3 What is Conformity Assessment? .................................................. ........... 294
13.3.4 Standards Development, Acceptance/Implementation ........................... 294
13.3.5 Benefits of Standards to Industry .................................................. .......... 295
13.3.6 Benefits of Standards to Government .................................................. .... 295
13.3.7 Benefits of Standards to Consumers .................................................. ...... 296
13.3.8 Cardinal Principles of International Standardization ............................ 296
14 MECHANIZATION, AUTOMATION AND PRODUCTIVITY 298
14.0 Introduction...................................... .................................................. ...................... 298
14.1 Assembly Line .................................................. .................................................. ...... 298
14.1.1 History of the Assembly Line .................................................. .................. 298
14.1.2 History of Moving Assembly Line.............................................. ............... 299
14.1.3 Pre Industrial Revolution .................................................. ....................... 299
14.1.4 Industrial Robot .................................................. ....................................... 299
14.2 Postal Mechanization/Early Automation .................................................. ............. 299
14.3 The Age of Automation .................................................. .......................................... 300
14.3.1 Automation........................................ .................................................. ....... 302
14.3.2 Social Issues of Automation .................................................. .................... 303
14.3.3 The Automated Workplace......................................... ............................... 303
14.4 Productivity Improvement Stories .................................................. ....................... 305
14.4.1 Story of US Agriculture .................................................. ........................... 305
14.4.2 Automation Improves Productivity in a Tire Company .......................... 305
14.4.3 Automation Sends Productivity Soaring .................................................. 306
14.4.4 Story of Increased Productivity in Photographic Industry .................... 309
14.5 Automation Systems Today .................................................. .................................. 310
( xiii)
15 VALUE ANALYSIS AND VALUE ENGINEERING 312
15.0 Introduction...................................... .................................................. ...................... 312
15.1 Some Basic Concepts .................................................. ............................................. 312
15.1.1 Definition of Value .................................................. ................................... 312
15.1.2 Reasons Behind Poor Value .................................................. .................... 313
15.1.3 Types of Values .................................................. ........................................ 313
15.1.4 Types of Functions .................................................. ................................... 313
15.2 Value Tests .................................................. .................................................. ........... 313
15.3 Steps in Value Analysis .................................................. ......................................... 314
15.4 Examples of Value Engineering .................................................. ........................... 318
15.4.1 Some Simple Case Studies of VE................................................ .............. 318
15.5 Value Engineering and Simplification Analysis .................................................. .. 319
15.5.1 The Primary Questions .................................................. ........................... 319
15.5.2 The Secondary Questions .................................................. ........................ 320
15.5.3 Checklist .................................................. .................................................. . 321
15.6 Benefits of Value Engineering .................................................. .............................. 327
Index .................................................. .................................................. ..................... 328

Rar'd PDF ~ 1.8 MB's Bookmarked A Modern Approach to Operations Management
by: Ram Naresh Roy.

345 Pages


Copyright © 2005 New Age International (P) Ltd., Publishers
Published by New Age International (P) Ltd., Publishers



Preface
While teaching the course on ‘Production Operations Management (POM)’ to my students in
India and abroad, I have felt a huge shortage of books and relevant materials on this subject.
The books available are mostly written with Western world perspective. The examples included
in those books are not very relevant to the students of developing countries. This has motivated
me to write this book which is based on my own teaching experiences and the feed back of my
students.
The book includes the background, the core concepts, and the models of POM. It is readable,
comprehensive, and contemporary in its approach. The concepts of Operations Management
have been delivered to the readers in a simple, straightforward manner, and without
mincing the words to avoid dilution of the materials itself.
The layout of the book has been organized to give the readers a sense of flow: (i) Beginning
with fundamentals of Production systems, Productivity, Location of plant, layout issues;
(ii) Core issues of POM like Forecasting, Operations planning, Purchasing systems and steps
involved in it, Inventory models, and MRP, Quality control, TQM, Project Management; and
finally (iii) the attention is focused to modern concepts on the subject like JIT, OPT, Automation,
etc. This makes the book more comprehensive in nature.
Adequate number of solved problems have been included to give the readers a chance to
enhance the learning process. Examples from local industries, agriculture sector, services (banking,
airlines, hotels, transport, etc.) have been included to make the chapters interesting and
palatable to the students’ taste.
I thank my students and colleagues for their constructive comments in making the book
more useful.
Lastly, I always believe in ‘kaizen’—the continuous improvement process in everything I
do and this goes with this book as well. I invite the readers, therefore, to send their comments
and suggestions to improve this book in its next edition.
RAM NARESH ROY, PhD



Contents
1 PRODUCTION SYSTEMS AND OPERATIONS MANAGEMENT 1
1.0 Introduction...................................... .................................................. .......................... 1
1.1 Related Issues of Operations Management .................................................. ............. 1
1.1.1 Production Function .................................................. .................................... 1
1.1.2 Productivity .................................................. .................................................. 2
1.1.3 Difference between Production and Productivity ........................................ 2
1.1.4 Effectiveness .................................................. ................................................ 3
1.1.5 Efficiency .................................................. .................................................. .... 3
1.2 Operations Function in Organizations .................................................. ..................... 4
1.2.1 Manufacturing Operations Vs Service Operations ..................................... 5
1.2.2 Types of Production System .................................................. ........................ 7
1.3 Role of Models in Operations Management .................................................. ........... 10
1.3.1 Types of Models in Production Operations Management (POM) ............. 10
1.3.2 Mathematical Models in Production and Operations Management ........ 11
1.3.3 Modeling Benefits .................................................. ...................................... 11
1.4 Classifying Problems .................................................. ............................................... 11
1.4.1 Uncertainty of Outcomes .................................................. .......................... 11
1.4.2 Maximum Rule .................................................. .......................................... 13
1.4.3 Interdependence Among Decisions .................................................. .......... 14
2 LOCATION OF PRODUCTION AND SERVICE FACILITIES 17
2.0 Introduction...................................... .................................................. ........................ 17
2.1 Reasons for Location Changes .................................................. ............................... 17
2.2 General Factors Influencing Location .................................................. .................... 18
2.2.1 Rural and Urban Sites Compared .................................................. ............ 20
2.3 General Procedures for Facility Location.......................................... ....................... 21
2.3.1 Preliminary Screening .................................................. .............................. 21
2.3.2 Selection of Exact Site .................................................. ............................... 22
2.4 Some Other Facility Location Models .................................................. .................... 23
2.4.1 Simple Median Model .................................................. ................................ 23
2.4.2 Center of Gravity (GRID) Model .................................................. .............. 26
2.4.3 Linear Programming (LP) .................................................. ......................... 27
2.4.4 Simulation .................................................. .................................................. 33
2.4.5 Break Even Analysis .................................................. ................................. 33
Preface (v)
( vii )
3 LAYOUT PLANNING 36
3.0 Introduction...................................... .................................................. ........................ 36
3.1 Effects of a Plant Layout .................................................. ........................................ 36
3.2 Factors Affecting Layout .................................................. ........................................ 37
3.2.1 Types of Industries .................................................. .................................... 37
3.2.2 Types of Production System .................................................. ...................... 37
3.2.3 Type of Product .................................................. .......................................... 38
3.2.4 Volume of Production .................................................. ................................ 38
????: Study Temple-All kinds of Study Material A Modern Approach to Operations Management by: Ram Naresh Roy
3.3 Systematic Layout Planning (SLP) .................................................. ........................ 38
3.4 Other Approaches to Plant Layout .................................................. ......................... 41
3.4.1 Principles of Plant Layout............................................ ............................... 43
3.4.2 Types of Flow Patterns .................................................. .............................. 43
3.5 Types of Layout .................................................. .................................................. ..... 43
3.5.1 Fixed Position Layout............................................ ...................................... 45
3.5.2 Process-Oriented or Functional Layout .................................................. ... 46
3.5.3 Repetitive and Product-Oriented Layout .................................................. . 51
3.5.4 Office Layout .................................................. .............................................. 55
3.5.5 Retail Layout .................................................. ............................................. 56
3.5.6 Warehousing and Storage Layouts .................................................. .......... 57
3.5.7 Combination Layout .................................................. .................................. 57
3.6 Material Handling .................................................. .................................................. . 57
3.6.1 Principles of Material Handling .................................................. ............... 58
3.6.2 Simplified Version of Principles of Material Handling ............................. 59
3.6.3 Material Handling Equipment .................................................. ................. 59
3.6.4 Relationship Between Material Handling and Factory Building
Design or Layout............................................ .............................................. 60
4 PURCHASING SYSTEMS AND VENDOR RATING 62
4.0 Introduction...................................... .................................................. ........................ 62
4.1 Functions of Material Management .................................................. ....................... 62
4.2 Objectives of Materials Management .................................................. ..................... 62
4.3 Purchasing or Procurement Function .................................................. .................... 63
4.3.1 Objectives of Purchasing Department .................................................. ..... 63
4.3.2 Activities, Duties and Functions of Purchasing Department ................... 63
4.3.3 Centralized and Decentralized Purchasing Organizations ...................... 64
4.4 Modes of Purchasing Materials......................................... ........................................ 65
4.4.1 Spot Quotations .................................................. ......................................... 65
4.4.2 Floating the Limited Inquiry .................................................. .................... 65
4.4.3 Tender .................................................. .................................................. ...... 65
4.5 Steps in One Complete Purchasing Cycle .................................................. .............. 66
4.5.1 Some Questions Related to Purchase .................................................. ....... 66
4.5.2 Tender Procedure .................................................. ...................................... 67
( viii )
4.6 Vendor Rating .................................................. .................................................. ........ 73
4.7 What is Expected of a Better Buyer .................................................. ....................... 74
4.8 Some Working Definitions .................................................. ...................................... 74
4.8.1 Quality Index (QI) .................................................. ..................................... 75
4.8.2 Delivery Reliability Index (DRI) .................................................. ............... 75
4.8.3 Flexibility Index (FI) .................................................. ................................. 76
4.8.4 Price Performance Index (PPI) .................................................. ................. 77
4.8.5 Frequency of Rating .................................................. .................................. 78
4.8.6 Use of the Indices .................................................. ...................................... 78
4.9 Stores and Material Control........................................... ........................................... 78
4.9.1 Requirements of a Material Control System ............................................. 79
4.10 Stores Management .................................................. ................................................. 79
4.10.1 Functions of Stores Department and the Duties of the Storekeeper ....... 79
4.10.2 Location and Layout of Stores .................................................. .................. 80
4.10.3 Advantages of Centralization of Stores .................................................. .... 80
4.10.4 Advantages of Decentralization of Stores .................................................. 81
5 OPERATIONS PLANNING AND CONTROL 82
5.0 Introduction...................................... .................................................. ........................ 82
5.1 Benefits of Better Operations Planning and Control .............................................. 83
5.2 Main Functions of OPC .................................................. ........................................... 83
5.2.1 Some Specific Activities of OPC............................................... ................... 83
5.3 Detailed Functions of OPC............................................... ......................................... 84
5.3.1 Planning Phases .................................................. ........................................ 84
5.3.2 Routing or Sequencing .................................................. .............................. 84
5.3.3 Loading or Assignment .................................................. ............................. 86
5.3.4 Scheduling .................................................. .................................................. 89
5.3.5 Sequencing and Disp****ing Phase .................................................. ......... 93
5.3.6 Controlling or Follow-up Phase .................................................. ................ 98
6 INVENTORY CONTROL 100
6.0 Introduction...................................... .................................................. ...................... 100
6.1 Purpose of Inventories .................................................. ........................................... 100
6.2 Objective of Inventory Management .................................................. .................... 101
6.2.1 Requirements for Effective Inventory Management ............................... 101
6.2.2 Inventory Counting Systems .................................................. .................. 102
6.2.3 A Perpetual Inventory System .................................................. ............... 102
6.2.4 Ordering Cycle System............................................ .................................. 103
6.2.5 Demand Forecasts and Lead-Time Information...................................... 104
6.2.6 Inventory Cost Information .................................................. .................... 104
6.3 Types of Inventory Control Techniques .................................................. ............... 105
6.3.1 Qualitative Techniques .................................................. ........................... 105
6.3.2 Quantitative Techniques or Models .................................................. ....... 108
6.4 Stocking of Perishables .................................................. ......................................... 125
( ix )
7 MATERIAL REQUIREMENT PLANNING 130
7.0 Introduction...................................... .................................................. ...................... 130
7.1 Need for Materials Planning .................................................. ................................. 130
7.1.1 Terms Used in MRP .................................................. ................................ 131
7.2 Basic MRP Concepts .................................................. .............................................. 131
7.2.1 Independent Demand .................................................. .............................. 132
7.2.2 Dependent Demand .................................................. ................................. 132
7.2.3 Lumpy Demand .................................................. ....................................... 132
7.2.4 Lead Time of Item .................................................. ................................... 132
7.2.5 Common Use Items .................................................. ................................. 133
7.2.6 Time Phasing .................................................. ........................................... 133
7.3 Factor Affecting the Computation of MRP............................................... .............. 134
7.3.1 Production Structure .................................................. ............................... 134
7.3.2 Lot Sizing .................................................. ................................................. 135
7.3.3 Recurrence of Requirements within Planning Horizon .......................... 136
7.4 Objectives of MRP System .................................................. .................................... 137
7.5 Prerequisites and Assumptions of MRP .................................................. ............... 138
7.5.1 Prerequisites .................................................. ............................................ 138
7.5.2 Assumptions .................................................. ............................................. 138
7.6 Inputs to MRP .................................................. .................................................. ...... 139
7.6.1 Master Production Schedule (MPS) .................................................. ....... 139
7.6.2 Bill of Material (BOM)............................................. .................................. 140
7.6.3 Inventory Record File .................................................. .............................. 141
7.7 MRP Outputs .................................................. .................................................. ....... 142
7.7.1 Primary Outputs........................................... ............................................. 143
7.7.2 Secondary Outputs .................................................. .................................. 143
7.8 MRP Logic in Brief .................................................. ................................................ 143
7.8.1 A Sample of Management Information (Output) from MRP .................. 144
7.8.2 Limitations and Advantages of MRP .................................................. ..... 152
7.9 Manufacturing Resource Planning (MRP II) .................................................. ....... 152
7.10 MRP Implementation .................................................. ............................................ 154
7.10.1 An Inventory Control System .................................................. ................. 154
7.10.2 A Production and Inventory Control System........................................... 154
7.10.3 A Manufacturing Resource Planning System .......................................... 154
7.11 How Can Industry Benefit From MRP? .................................................. ............... 156
8 JUST-IN-TIME APPROACH 160
8.0 Introduction...................................... .................................................. ...................... 160
8.1 History of Relations Between Management and Workers .................................... 161
8.1.1 Adaptation to New Production Environment .......................................... 161
8.1.2 The Kanban Control .................................................. ................................ 161
8.1.3 JIT Today .................................................. ................................................. 162
8.1.4 JIT Application Profile .................................................. ............................ 163
( x )
8.2 Keys to Successful JIT Implementation .................................................. ............... 165
8.2.1 The Kanban System .................................................. ................................ 166
8.3 Japanese Vs American Management .................................................. ................... 169
8.3.1 Downsides of Japanese Management........................................ ............... 169
8.3.2 JIT Manufacturing System Overview .................................................. .... 170
8.3.3 The Seven Wastes in JIT............................................... ............................ 172
8.3.4 Value-Added Manufacturing .................................................. .................. 172
8.4 How Japanese Manufacturing Ideally Works? .................................................. .... 173
8.4.1 Stockless Production........................................ .......................................... 173
8.5 Comparison of MRP and JIT .................................................. ................................. 174
8.5.1 Push Vs Pull System .................................................. ............................... 174
8.6 Requirements for Successful Implementation of JIT ............................................ 175
8.7 Goals of JIT Manufacturing System............................................ ........................... 176
8.7.1 Important Aspects in JIT Manufacturing ................................................ 178
8.7.2 Advantages and Disadvantages of JIT .................................................. ... 179
8.8 Theory of Constraints (TOC)............................................. ...................................... 181
8.8.1 Systems Thinking .................................................. .................................... 181
8.8.2 Five Focusing Steps of TOC .................................................. .................... 182
8.8.3 The Five Layers of Resistance .................................................. ................ 183
8.8.4 Quantifying the Improvement .................................................. ................ 183
8.9 TOC Tools .................................................. .................................................. ............. 183
8.9.1 Current Reality Tree (CRT) .................................................. .................... 183
8.9.2 Conflict Resolution Diagram (CRD) or Evaporating Cloud .................... 184
8.9.3 Future Reality Tree (FRT) .................................................. ...................... 185
8.9.4 Prerequisite Tree (PRT) .................................................. .......................... 186
8.9.5 Transition Tree (TT) .................................................. ................................ 187
9 PROJECT MANAGEMENT 188
9.0 Introduction...................................... .................................................. ...................... 188
9.1 Some Terms Related to Network Planning.......................................... .................. 188
9.2 CPM and PERT Model............................................. ................................................ 191
9.2.1 Time Estimates in PERT.............................................. ............................. 192
9.2.2 Algorithm Used in Calculating Critical Path .......................................... 193
9.3 Variability of Activity Times .................................................. ................................. 194
9.4 Probability of Completing a Project by a Given Date ............................................ 195
9.5 Project Crashing and Time-Cost Trade-off .................................................. .......... 196
9.6 Resource Leveling .................................................. .................................................. 208
9.6.1 Heuristic Methods .................................................. ................................... 208
9.7 Resource Leveling of Project Schedules .................................................. ............... 209
9.8 Project Delay .................................................. .................................................. ........ 213
( xi )
10 QUALITY CONTROL 215
10.0 Introduction...................................... .................................................. ...................... 215
10.1 Inspection .................................................. .................................................. ............. 215
10.1.1 Types of Inspection .................................................. .................................. 215
10.1.2 Purpose of Inspections .................................................. ............................. 216
10.2 Some Quality Related Terms .................................................. ................................ 216
10.3 Statistical Quality Control (SQC) .................................................. ......................... 216
10.4 Acceptance Sampling .................................................. ............................................. 217
10.4.1 Where do we use Sampling ? .................................................. .................. 217
10.4.2 Advantages and Disadvantages of Acceptance Sampling ....................... 217
10.4.3 Representative Sample .................................................. ........................... 217
10.5 Sampling Plans .................................................. .................................................. .... 218
10.5.1 Single Sampling Plan (SSP) .................................................. .................... 218
10.5.2 Double Sampling Plan (DSP) .................................................. .................. 219
10.5.3 Sequential or Multiple Sampling Plan .................................................. ... 221
10.6 Process Variability and Control .................................................. ............................ 221
10.7 Control Charts .................................................. .................................................. ..... 222
10.7.1 The p-Chart .................................................. .............................................. 223
????: Study Temple-All kinds of Study Material A Modern Approach to Operations Management by: Ram Naresh Roy
10.7.2 The c-Chart .................................................. .............................................. 225
10.7.3 Steps in Constructing S-Chart............................................. ..................... 226
10.7.4 Steps in Constructing the X Chart .................................................. ........ 227
10.8 Use of Computers in Quality Control .................................................. ................... 233
11 TOTAL QUALITY MANAGEMENT AND ISO-9000 234
11.0 What is TQM? .................................................. .................................................. ...... 234
11.1 TQM Need Commitment .................................................. ....................................... 234
11.2 Various Approaches to TQM .................................................. ................................. 235
11.2.1 Deming’s Approach to TQM............................................... ....................... 235
11.2.2 Juran’s Approach to TQM .................................................. ....................... 236
11.2.3 Crosby’s Approach to TQM .................................................. ..................... 237
11.2.4 Feigenbaum’s Approach to TQM .................................................. ............ 238
11.2.5 Ishikawa’s Approach to TQM............................................... ..................... 239
11.3 Some Quality and TQM Related Terms .................................................. ............... 240
11.4 Relationship Between ISO 9000 and Quality .................................................. ...... 248
11.5 Relationship Between ISO 9000 and TQM .................................................. .......... 248
11.5.1 Principles of ISO 9000 .................................................. ............................. 249
11.5.2 Benefits of ISO 9000 .................................................. ................................ 249
12 LINEAR PROGRAMMING 251
12.0 Introduction...................................... .................................................. ...................... 251
12.1 The LP Formulation and Underlying Assumptions .............................................. 251
12.2 The General LP Formulation .................................................. ................................ 253
( xii )
12.2.1 Graphical Solution of 2-Variables LP .................................................. ..... 254
12.2.2 A 2-Var LP with a Unique Optimal Solution ........................................... 254
12.3 Different Forms of Linear Programs .................................................. .................... 255
12.4 The Assignment Problem .................................................. ...................................... 264
12.5 Transportation Problem .................................................. ........................................ 267
12.5.1 Transportation Algorithm (Modi Method) ............................................... 271
13 METHODS ENGINEERING 273
13.0 Introduction...................................... .................................................. ...................... 273
13.1 Objective of Work Study .................................................. ........................................ 273
13.2 Tools and Techniques of Work Study .................................................. .................. 274
13.2.1 Method Study .................................................. ........................................... 274
13.2.2 Work Measurement (Time Study) .................................................. .......... 283
13.3 Standardization .................................................. .................................................. ... 293
13.3.1 What is a Standard? .................................................. ................................ 293
13.3.2 Examples of Standards .................................................. ........................... 294
13.3.3 What is Conformity Assessment? .................................................. ........... 294
13.3.4 Standards Development, Acceptance/Implementation ........................... 294
13.3.5 Benefits of Standards to Industry .................................................. .......... 295
13.3.6 Benefits of Standards to Government .................................................. .... 295
13.3.7 Benefits of Standards to Consumers .................................................. ...... 296
13.3.8 Cardinal Principles of International Standardization ............................ 296
14 MECHANIZATION, AUTOMATION AND PRODUCTIVITY 298
14.0 Introduction...................................... .................................................. ...................... 298
14.1 Assembly Line .................................................. .................................................. ...... 298
14.1.1 History of the Assembly Line .................................................. .................. 298
14.1.2 History of Moving Assembly Line.............................................. ............... 299
14.1.3 Pre Industrial Revolution .................................................. ....................... 299
14.1.4 Industrial Robot .................................................. ....................................... 299
14.2 Postal Mechanization/Early Automation .................................................. ............. 299
14.3 The Age of Automation .................................................. .......................................... 300
14.3.1 Automation........................................ .................................................. ....... 302
14.3.2 Social Issues of Automation .................................................. .................... 303
14.3.3 The Automated Workplace......................................... ............................... 303
14.4 Productivity Improvement Stories .................................................. ....................... 305
14.4.1 Story of US Agriculture .................................................. ........................... 305
14.4.2 Automation Improves Productivity in a Tire Company .......................... 305
14.4.3 Automation Sends Productivity Soaring .................................................. 306
14.4.4 Story of Increased Productivity in Photographic Industry .................... 309
14.5 Automation Systems Today .................................................. .................................. 310
( xiii)
15 VALUE ANALYSIS AND VALUE ENGINEERING 312
15.0 Introduction...................................... .................................................. ...................... 312
15.1 Some Basic Concepts .................................................. ............................................. 312
15.1.1 Definition of Value .................................................. ................................... 312
15.1.2 Reasons Behind Poor Value .................................................. .................... 313
15.1.3 Types of Values .................................................. ........................................ 313
15.1.4 Types of Functions .................................................. ................................... 313
15.2 Value Tests .................................................. .................................................. ........... 313
15.3 Steps in Value Analysis .................................................. ......................................... 314
15.4 Examples of Value Engineering .................................................. ........................... 318
15.4.1 Some Simple Case Studies of VE................................................ .............. 318
15.5 Value Engineering and Simplification Analysis .................................................. .. 319
15.5.1 The Primary Questions .................................................. ........................... 319
15.5.2 The Secondary Questions .................................................. ........................ 320
15.5.3 Checklist .................................................. .................................................. . 321
15.6 Benefits of Value Engineering .................................................. .............................. 327
Index .................................................. .................................................. ..................... 328

Rar'd PDF ~ 1.8 MB's Bookmarked
345 Pages


Copyright © 2005 New Age International (P) Ltd., Publishers
Published by New Age International (P) Ltd., Publishers



Preface
While teaching the course on ‘Production Operations Management (POM)’ to my students in
India and abroad, I have felt a huge shortage of books and relevant materials on this subject.
The books available are mostly written with Western world perspective. The examples included
in those books are not very relevant to the students of developing countries. This has motivated
me to write this book which is based on my own teaching experiences and the feed back of my
students.
The book includes the background, the core concepts, and the models of POM. It is readable,
comprehensive, and contemporary in its approach. The concepts of Operations Management
have been delivered to the readers in a simple, straightforward manner, and without
mincing the words to avoid dilution of the materials itself.
The layout of the book has been organized to give the readers a sense of flow: (i) Beginning
with fundamentals of Production systems, Productivity, Location of plant, layout issues;
(ii) Core issues of POM like Forecasting, Operations planning, Purchasing systems and steps
involved in it, Inventory models, and MRP, Quality control, TQM, Project Management; and
finally (iii) the attention is focused to modern concepts on the subject like JIT, OPT, Automation,
etc. This makes the book more comprehensive in nature.
Adequate number of solved problems have been included to give the readers a chance to
enhance the learning process. Examples from local industries, agriculture sector, services (banking,
airlines, hotels, transport, etc.) have been included to make the chapters interesting and
palatable to the students’ taste.
I thank my students and colleagues for their constructive comments in making the book
more useful.
Lastly, I always believe in ‘kaizen’—the continuous improvement process in everything I
do and this goes with this book as well. I invite the readers, therefore, to send their comments
and suggestions to improve this book in its next edition.
RAM NARESH ROY, PhD



Contents
1 PRODUCTION SYSTEMS AND OPERATIONS MANAGEMENT 1
1.0 Introduction...................................... .................................................. .......................... 1
1.1 Related Issues of Operations Management .................................................. ............. 1
1.1.1 Production Function .................................................. .................................... 1
1.1.2 Productivity .................................................. .................................................. 2
1.1.3 Difference between Production and Productivity ........................................ 2
1.1.4 Effectiveness .................................................. ................................................ 3
1.1.5 Efficiency .................................................. .................................................. .... 3
1.2 Operations Function in Organizations .................................................. ..................... 4
1.2.1 Manufacturing Operations Vs Service Operations ..................................... 5
1.2.2 Types of Production System .................................................. ........................ 7
1.3 Role of Models in Operations Management .................................................. ........... 10
1.3.1 Types of Models in Production Operations Management (POM) ............. 10
1.3.2 Mathematical Models in Production and Operations Management ........ 11
1.3.3 Modeling Benefits .................................................. ...................................... 11
1.4 Classifying Problems .................................................. ............................................... 11
1.4.1 Uncertainty of Outcomes .................................................. .......................... 11
1.4.2 Maximum Rule .................................................. .......................................... 13
1.4.3 Interdependence Among Decisions .................................................. .......... 14
2 LOCATION OF PRODUCTION AND SERVICE FACILITIES 17
2.0 Introduction...................................... .................................................. ........................ 17
2.1 Reasons for Location Changes .................................................. ............................... 17
2.2 General Factors Influencing Location .................................................. .................... 18
2.2.1 Rural and Urban Sites Compared .................................................. ............ 20
2.3 General Procedures for Facility Location.......................................... ....................... 21
2.3.1 Preliminary Screening .................................................. .............................. 21
2.3.2 Selection of Exact Site .................................................. ............................... 22
2.4 Some Other Facility Location Models .................................................. .................... 23
2.4.1 Simple Median Model .................................................. ................................ 23
2.4.2 Center of Gravity (GRID) Model .................................................. .............. 26
2.4.3 Linear Programming (LP) .................................................. ......................... 27
2.4.4 Simulation .................................................. .................................................. 33
2.4.5 Break Even Analysis .................................................. ................................. 33
Preface (v)
( vii )
3 LAYOUT PLANNING 36
3.0 Introduction...................................... .................................................. ........................ 36
3.1 Effects of a Plant Layout .................................................. ........................................ 36
3.2 Factors Affecting Layout .................................................. ........................................ 37
3.2.1 Types of Industries .................................................. .................................... 37
3.2.2 Types of Production System .................................................. ...................... 37
3.2.3 Type of Product .................................................. .......................................... 38
3.2.4 Volume of Production .................................................. ................................ 38
????: Study Temple-All kinds of Study Material A Modern Approach to Operations Management by: Ram Naresh Roy
3.3 Systematic Layout Planning (SLP) .................................................. ........................ 38
3.4 Other Approaches to Plant Layout .................................................. ......................... 41
3.4.1 Principles of Plant Layout............................................ ............................... 43
3.4.2 Types of Flow Patterns .................................................. .............................. 43
3.5 Types of Layout .................................................. .................................................. ..... 43
3.5.1 Fixed Position Layout............................................ ...................................... 45
3.5.2 Process-Oriented or Functional Layout .................................................. ... 46
3.5.3 Repetitive and Product-Oriented Layout .................................................. . 51
3.5.4 Office Layout .................................................. .............................................. 55
3.5.5 Retail Layout .................................................. ............................................. 56
3.5.6 Warehousing and Storage Layouts .................................................. .......... 57
3.5.7 Combination Layout .................................................. .................................. 57
3.6 Material Handling .................................................. .................................................. . 57
3.6.1 Principles of Material Handling .................................................. ............... 58
3.6.2 Simplified Version of Principles of Material Handling ............................. 59
3.6.3 Material Handling Equipment .................................................. ................. 59
3.6.4 Relationship Between Material Handling and Factory Building
Design or Layout............................................ .............................................. 60
4 PURCHASING SYSTEMS AND VENDOR RATING 62
4.0 Introduction...................................... .................................................. ........................ 62
4.1 Functions of Material Management .................................................. ....................... 62
4.2 Objectives of Materials Management .................................................. ..................... 62
4.3 Purchasing or Procurement Function .................................................. .................... 63
4.3.1 Objectives of Purchasing Department .................................................. ..... 63
4.3.2 Activities, Duties and Functions of Purchasing Department ................... 63
4.3.3 Centralized and Decentralized Purchasing Organizations ...................... 64
4.4 Modes of Purchasing Materials......................................... ........................................ 65
4.4.1 Spot Quotations .................................................. ......................................... 65
4.4.2 Floating the Limited Inquiry .................................................. .................... 65
4.4.3 Tender .................................................. .................................................. ...... 65
4.5 Steps in One Complete Purchasing Cycle .................................................. .............. 66
4.5.1 Some Questions Related to Purchase .................................................. ....... 66
4.5.2 Tender Procedure .................................................. ...................................... 67
( viii )
4.6 Vendor Rating .................................................. .................................................. ........ 73
4.7 What is Expected of a Better Buyer .................................................. ....................... 74
4.8 Some Working Definitions .................................................. ...................................... 74
4.8.1 Quality Index (QI) .................................................. ..................................... 75
4.8.2 Delivery Reliability Index (DRI) .................................................. ............... 75
4.8.3 Flexibility Index (FI) .................................................. ................................. 76
4.8.4 Price Performance Index (PPI) .................................................. ................. 77
4.8.5 Frequency of Rating .................................................. .................................. 78
4.8.6 Use of the Indices .................................................. ...................................... 78
4.9 Stores and Material Control........................................... ........................................... 78
4.9.1 Requirements of a Material Control System ............................................. 79
4.10 Stores Management .................................................. ................................................. 79
4.10.1 Functions of Stores Department and the Duties of the Storekeeper ....... 79
4.10.2 Location and Layout of Stores .................................................. .................. 80
4.10.3 Advantages of Centralization of Stores .................................................. .... 80
4.10.4 Advantages of Decentralization of Stores .................................................. 81
5 OPERATIONS PLANNING AND CONTROL 82
5.0 Introduction...................................... .................................................. ........................ 82
5.1 Benefits of Better Operations Planning and Control .............................................. 83
5.2 Main Functions of OPC .................................................. ........................................... 83
5.2.1 Some Specific Activities of OPC............................................... ................... 83
5.3 Detailed Functions of OPC............................................... ......................................... 84
5.3.1 Planning Phases .................................................. ........................................ 84
5.3.2 Routing or Sequencing .................................................. .............................. 84
5.3.3 Loading or Assignment .................................................. ............................. 86
5.3.4 Scheduling .................................................. .................................................. 89
5.3.5 Sequencing and Disp****ing Phase .................................................. ......... 93
5.3.6 Controlling or Follow-up Phase .................................................. ................ 98
6 INVENTORY CONTROL 100
6.0 Introduction...................................... .................................................. ...................... 100
6.1 Purpose of Inventories .................................................. ........................................... 100
6.2 Objective of Inventory Management .................................................. .................... 101
6.2.1 Requirements for Effective Inventory Management ............................... 101
6.2.2 Inventory Counting Systems .................................................. .................. 102
6.2.3 A Perpetual Inventory System .................................................. ............... 102
6.2.4 Ordering Cycle System............................................ .................................. 103
6.2.5 Demand Forecasts and Lead-Time Information...................................... 104
6.2.6 Inventory Cost Information .................................................. .................... 104
6.3 Types of Inventory Control Techniques .................................................. ............... 105
6.3.1 Qualitative Techniques .................................................. ........................... 105
6.3.2 Quantitative Techniques or Models .................................................. ....... 108
6.4 Stocking of Perishables .................................................. ......................................... 125
( ix )
7 MATERIAL REQUIREMENT PLANNING 130
7.0 Introduction...................................... .................................................. ...................... 130
7.1 Need for Materials Planning .................................................. ................................. 130
7.1.1 Terms Used in MRP .................................................. ................................ 131
7.2 Basic MRP Concepts .................................................. .............................................. 131
7.2.1 Independent Demand .................................................. .............................. 132
7.2.2 Dependent Demand .................................................. ................................. 132
7.2.3 Lumpy Demand .................................................. ....................................... 132
7.2.4 Lead Time of Item .................................................. ................................... 132
7.2.5 Common Use Items .................................................. ................................. 133
7.2.6 Time Phasing .................................................. ........................................... 133
7.3 Factor Affecting the Computation of MRP............................................... .............. 134
7.3.1 Production Structure .................................................. ............................... 134
7.3.2 Lot Sizing .................................................. ................................................. 135
7.3.3 Recurrence of Requirements within Planning Horizon .......................... 136
7.4 Objectives of MRP System .................................................. .................................... 137
7.5 Prerequisites and Assumptions of MRP .................................................. ............... 138
7.5.1 Prerequisites .................................................. ............................................ 138
7.5.2 Assumptions .................................................. ............................................. 138
7.6 Inputs to MRP .................................................. .................................................. ...... 139
7.6.1 Master Production Schedule (MPS) .................................................. ....... 139
7.6.2 Bill of Material (BOM)............................................. .................................. 140
7.6.3 Inventory Record File .................................................. .............................. 141
7.7 MRP Outputs .................................................. .................................................. ....... 142
7.7.1 Primary Outputs........................................... ............................................. 143
7.7.2 Secondary Outputs .................................................. .................................. 143
7.8 MRP Logic in Brief .................................................. ................................................ 143
7.8.1 A Sample of Management Information (Output) from MRP .................. 144
7.8.2 Limitations and Advantages of MRP .................................................. ..... 152
7.9 Manufacturing Resource Planning (MRP II) .................................................. ....... 152
7.10 MRP Implementation .................................................. ............................................ 154
7.10.1 An Inventory Control System .................................................. ................. 154
7.10.2 A Production and Inventory Control System........................................... 154
7.10.3 A Manufacturing Resource Planning System .......................................... 154
7.11 How Can Industry Benefit From MRP? .................................................. ............... 156
8 JUST-IN-TIME APPROACH 160
8.0 Introduction...................................... .................................................. ...................... 160
8.1 History of Relations Between Management and Workers .................................... 161
8.1.1 Adaptation to New Production Environment .......................................... 161
8.1.2 The Kanban Control .................................................. ................................ 161
8.1.3 JIT Today .................................................. ................................................. 162
8.1.4 JIT Application Profile .................................................. ............................ 163
( x )
8.2 Keys to Successful JIT Implementation .................................................. ............... 165
8.2.1 The Kanban System .................................................. ................................ 166
8.3 Japanese Vs American Management .................................................. ................... 169
8.3.1 Downsides of Japanese Management........................................ ............... 169
8.3.2 JIT Manufacturing System Overview .................................................. .... 170
8.3.3 The Seven Wastes in JIT............................................... ............................ 172
8.3.4 Value-Added Manufacturing .................................................. .................. 172
8.4 How Japanese Manufacturing Ideally Works? .................................................. .... 173
8.4.1 Stockless Production........................................ .......................................... 173
8.5 Comparison of MRP and JIT .................................................. ................................. 174
8.5.1 Push Vs Pull System .................................................. ............................... 174
8.6 Requirements for Successful Implementation of JIT ............................................ 175
8.7 Goals of JIT Manufacturing System............................................ ........................... 176
8.7.1 Important Aspects in JIT Manufacturing ................................................ 178
8.7.2 Advantages and Disadvantages of JIT .................................................. ... 179
8.8 Theory of Constraints (TOC)............................................. ...................................... 181
8.8.1 Systems Thinking .................................................. .................................... 181
8.8.2 Five Focusing Steps of TOC .................................................. .................... 182
8.8.3 The Five Layers of Resistance .................................................. ................ 183
8.8.4 Quantifying the Improvement .................................................. ................ 183
8.9 TOC Tools .................................................. .................................................. ............. 183
8.9.1 Current Reality Tree (CRT) .................................................. .................... 183
8.9.2 Conflict Resolution Diagram (CRD) or Evaporating Cloud .................... 184
8.9.3 Future Reality Tree (FRT) .................................................. ...................... 185
8.9.4 Prerequisite Tree (PRT) .................................................. .......................... 186
8.9.5 Transition Tree (TT) .................................................. ................................ 187
9 PROJECT MANAGEMENT 188
9.0 Introduction...................................... .................................................. ...................... 188
9.1 Some Terms Related to Network Planning.......................................... .................. 188
9.2 CPM and PERT Model............................................. ................................................ 191
9.2.1 Time Estimates in PERT.............................................. ............................. 192
9.2.2 Algorithm Used in Calculating Critical Path .......................................... 193
9.3 Variability of Activity Times .................................................. ................................. 194
9.4 Probability of Completing a Project by a Given Date ............................................ 195
9.5 Project Crashing and Time-Cost Trade-off .................................................. .......... 196
9.6 Resource Leveling .................................................. .................................................. 208
9.6.1 Heuristic Methods .................................................. ................................... 208
9.7 Resource Leveling of Project Schedules .................................................. ............... 209
9.8 Project Delay .................................................. .................................................. ........ 213
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10 QUALITY CONTROL 215
10.0 Introduction...................................... .................................................. ...................... 215
10.1 Inspection .................................................. .................................................. ............. 215
10.1.1 Types of Inspection .................................................. .................................. 215
10.1.2 Purpose of Inspections .................................................. ............................. 216
10.2 Some Quality Related Terms .................................................. ................................ 216
10.3 Statistical Quality Control (SQC) .................................................. ......................... 216
10.4 Acceptance Sampling .................................................. ............................................. 217
10.4.1 Where do we use Sampling ? .................................................. .................. 217
10.4.2 Advantages and Disadvantages of Acceptance Sampling ....................... 217
10.4.3 Representative Sample .................................................. ........................... 217
10.5 Sampling Plans .................................................. .................................................. .... 218
10.5.1 Single Sampling Plan (SSP) .................................................. .................... 218
10.5.2 Double Sampling Plan (DSP) .................................................. .................. 219
10.5.3 Sequential or Multiple Sampling Plan .................................................. ... 221
10.6 Process Variability and Control .................................................. ............................ 221
10.7 Control Charts .................................................. .................................................. ..... 222
10.7.1 The p-Chart .................................................. .............................................. 223
????: Study Temple-All kinds of Study Material A Modern Approach to Operations Management by: Ram Naresh Roy
10.7.2 The c-Chart .................................................. .............................................. 225
10.7.3 Steps in Constructing S-Chart............................................. ..................... 226
10.7.4 Steps in Constructing the X Chart .................................................. ........ 227
10.8 Use of Computers in Quality Control .................................................. ................... 233
11 TOTAL QUALITY MANAGEMENT AND ISO-9000 234
11.0 What is TQM? .................................................. .................................................. ...... 234
11.1 TQM Need Commitment .................................................. ....................................... 234
11.2 Various Approaches to TQM .................................................. ................................. 235
11.2.1 Deming’s Approach to TQM............................................... ....................... 235
11.2.2 Juran’s Approach to TQM .................................................. ....................... 236
11.2.3 Crosby’s Approach to TQM .................................................. ..................... 237
11.2.4 Feigenbaum’s Approach to TQM .................................................. ............ 238
11.2.5 Ishikawa’s Approach to TQM............................................... ..................... 239
11.3 Some Quality and TQM Related Terms .................................................. ............... 240
11.4 Relationship Between ISO 9000 and Quality .................................................. ...... 248
11.5 Relationship Between ISO 9000 and TQM .................................................. .......... 248
11.5.1 Principles of ISO 9000 .................................................. ............................. 249
11.5.2 Benefits of ISO 9000 .................................................. ................................ 249
12 LINEAR PROGRAMMING 251
12.0 Introduction...................................... .................................................. ...................... 251
12.1 The LP Formulation and Underlying Assumptions .............................................. 251
12.2 The General LP Formulation .................................................. ................................ 253
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12.2.1 Graphical Solution of 2-Variables LP .................................................. ..... 254
12.2.2 A 2-Var LP with a Unique Optimal Solution ........................................... 254
12.3 Different Forms of Linear Programs .................................................. .................... 255
12.4 The Assignment Problem .................................................. ...................................... 264
12.5 Transportation Problem .................................................. ........................................ 267
12.5.1 Transportation Algorithm (Modi Method) ............................................... 271
13 METHODS ENGINEERING 273
13.0 Introduction...................................... .................................................. ...................... 273
13.1 Objective of Work Study .................................................. ........................................ 273
13.2 Tools and Techniques of Work Study .................................................. .................. 274
13.2.1 Method Study .................................................. ........................................... 274
13.2.2 Work Measurement (Time Study) .................................................. .......... 283
13.3 Standardization .................................................. .................................................. ... 293
13.3.1 What is a Standard? .................................................. ................................ 293
13.3.2 Examples of Standards .................................................. ........................... 294
13.3.3 What is Conformity Assessment? .................................................. ........... 294
13.3.4 Standards Development, Acceptance/Implementation ........................... 294
13.3.5 Benefits of Standards to Industry .................................................. .......... 295
13.3.6 Benefits of Standards to Government .................................................. .... 295
13.3.7 Benefits of Standards to Consumers .................................................. ...... 296
13.3.8 Cardinal Principles of International Standardization ............................ 296
14 MECHANIZATION, AUTOMATION AND PRODUCTIVITY 298
14.0 Introduction...................................... .................................................. ...................... 298
14.1 Assembly Line .................................................. .................................................. ...... 298
14.1.1 History of the Assembly Line .................................................. .................. 298
14.1.2 History of Moving Assembly Line.............................................. ............... 299
14.1.3 Pre Industrial Revolution .................................................. ....................... 299
14.1.4 Industrial Robot .................................................. ....................................... 299
14.2 Postal Mechanization/Early Automation .................................................. ............. 299
14.3 The Age of Automation .................................................. .......................................... 300
14.3.1 Automation........................................ .................................................. ....... 302
14.3.2 Social Issues of Automation .................................................. .................... 303
14.3.3 The Automated Workplace......................................... ............................... 303
14.4 Productivity Improvement Stories .................................................. ....................... 305
14.4.1 Story of US Agriculture .................................................. ........................... 305
14.4.2 Automation Improves Productivity in a Tire Company .......................... 305
14.4.3 Automation Sends Productivity Soaring .................................................. 306
14.4.4 Story of Increased Productivity in Photographic Industry .................... 309
14.5 Automation Systems Today .................................................. .................................. 310
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15 VALUE ANALYSIS AND VALUE ENGINEERING 312
15.0 Introduction...................................... .................................................. ...................... 312
15.1 Some Basic Concepts .................................................. ............................................. 312
15.1.1 Definition of Value .................................................. ................................... 312
15.1.2 Reasons Behind Poor Value .................................................. .................... 313
15.1.3 Types of Values .................................................. ........................................ 313
15.1.4 Types of Functions .................................................. ................................... 313
15.2 Value Tests .................................................. .................................................. ........... 313
15.3 Steps in Value Analysis .................................................. ......................................... 314
15.4 Examples of Value Engineering .................................................. ........................... 318
15.4.1 Some Simple Case Studies of VE................................................ .............. 318
15.5 Value Engineering and Simplification Analysis .................................................. .. 319
15.5.1 The Primary Questions .................................................. ........................... 319
15.5.2 The Secondary Questions .................................................. ........................ 320
15.5.3 Checklist .................................................. .................................................. . 321
15.6 Benefits of Value Engineering .................................................. .............................. 327
Index .................................................. .................................................. ..................... 328

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