OPERATIONS MANAGEMENT

ASSIGNMENT A

(Q 1) Plant location decisions are important because of the following reasons

The location of the facility will fix the production technology and cost structure. E.g. a manufacturing facility which is located in an under developed country will choose a labour intensive process to utilize the availability of low cost labour and in the same way a manufacturing facility which is located in a developed country will choose capital intensive manufacturing processes since the cost of labour is high in that region

The location of the facility depends also on the size and nature of the business. A small scale business firm will select the location near to the market. But for the big firm, the amount of investment required largely depends on the location selection selected. Since these investments are irreversible in nature at least in the short run the management of the firm should be careful in selecting a site. For instance an automobile manufacturing unit cannot be shifted from one place to other.

The location of the facility affects the companys ability to serve its customers quickly and conveniently. For example in nationwide commercial trucking business, wants to locate a truck terminal. Since the trucking business is highly dependent on interstate highway, the truck terminal s must be located along the highways or close as close to highways as possible.The factors which need to be considered to arrive at the ideal location of a plant are as follows. Market proximity: This factor is very important because when the facilities are located close to the market helps firms not to only reduce transport costs but also serve their customers better. The firms can provide just in time delivery, respond to changes in demand and react quickly to field or service problems Integration with Other Parts of the Organization: An organization/group that already has some plants and wants to start or establish a new plant would like to locate it near to the existing plants so that its work can be integrated with that of other plants. This helps firms view the entire group as a single entity rather than as a number of independent units. . Availability of Labour and Skills: The availability of labour and skills is one of the important factors in production. Labour may be readily available in some areas than in other areas. Availability of skilled as well as unskilled labour in the required proportion in one area is usually not possible. Firms that emphasize more on technology require skilled people and so prefer a location where the skilled people are available. On the other hand, firms with more labour intensive processes prefer the area where the cost of labour is cheap and the labour is available plenty in number. . Site Cost: The management of the firm should ensure that the cost of the site is reasonable for the benefits that it is going to provide.

. Availability of Amenities: Locations with good external amenities such as housing, shops, community services, communications systems, etc. are more attractive than those located in the remote areas. For instance, personal and transport system like bus and train service is considered very important by many companies. . Availability of Transportation Facilities: The five basic modes of physical transportation are air, road, rail, water and pipeline. Firms consider the relative cost, convenience and suitability of ach mode and then select the transportation method. For instance, the firms that produce goods that are to be exported may choose a location near seaport or large airport. . Availability of Inputs: Though goods transportation helps in obtaining and delivering goods and services readily, a location near to the suppliers helps the firms reduce costs. It also enables the management of the firm to meet the suppliers easily and discuss aspects like quality, technical or delivery problems. . Availability of Services: Electricity, water, gas, drainage, and disposal of waste are some of the important services that need to be considered while selecting a location. For example, the food and textile units require considerable quantities of water and power. Rapid communication network is required for financial services, and effective drainage and disposal system is required for process industry as it produces lot of waste. . Suitability of Land and Climate: Climatic conditions such as humidity, temperature and atmosphere, and the geology of the area should be considered while selecting a location. If geographic conditions are not favorable, firms have to use modem building techniques (and incur high costs) to overcome these disadvantages. For instance, a hilly, rough and rocky terrain is not suitable for a plant location, since leveling the area needs a lot of expenditure. . Regional Regulations: Firms should ascertain that the proposed locations not violate any local regulation and laws. The laws and regulations concerning the recruitment of employees and the disposal of affluent have to be carefully studied while selecting the location. . Room for Expansion: While selecting a location, firms should ensure that there is adequate room for expansion of the firm's operations in the future. . Safety Requirements: Some units such as nuclear power stations and other chemical and explosive factories may present potential threat to the surrounding neighborhood. So firms should ensure that such units are located in remote areas where the damage will be minimal in case of an accident. . Political, Cultural and Economic Situation: Firms should be aware of political, cultural and economic environment of proposed location as these factors might affect the smooth running of the plant. For instance, firm suffer losses if their plants are located in politically and socially sensitive places. . Regional Taxes, Special Grants and Import I Export Barriers: For developing production facilities in locations such as export promotion zones, technology parks and industrial estates, governments offer some special grants like tax holidays, infrastructure support, low-interest loans, etc. Firms can prefer to locate their units in these places. For instance, Andhra Pradesh government is offering special incentives for export oriented firms willing to establish in special export zones.

(Q2)It is true that effective planning and control guarantees better utilization of machines and labour. Before going into details of how can effective planning and control guarantees better utilization of machines and labor we need to know what is planning and controlling.

PLANNING

Planning involves collection and maintenance of data regarding time standards, materials, and their specifications, machines and their quantities, tools and their process capabilities, drawings and operational layouts. Planning is seeing that requirements, tools, machines, men, instructions authorizations and the like will be available at right time and in the right quantities and are of proper quality. It also involves preparation of load charts and fitting various work orders into uncommitted time available on the companys facilities (men and machines). Planning includes preparations of all necessary forms and paper work and designing suitable feedback as to what may happen. It also involves forward thinking regarding the remedial action to be taken if the job falls behind schedule.

CONTROL

Control involves dissemination of data, preparation of reports regarding output, machines and labour efficiency, percentage of defectives etc. Control is seeing that the requirements are actually made available at right place and in the right quantities. It involves seeing that jobs are started and completed as schedule prepared by the scheduling cell of the production planning and control, and it goes up to the actual issue of forms and paper work. Control involves keeping track of what is happening and collecting information as to what has happened, it also gives suggestions remedial action when the job is falling behind schedule.

So planning without control is like a bank without a manager. What has been planned need to be followed by a control so that things should be achieved as planned? After explaining the meaning of planning and control above then we are able to know that effective planning and control guarantees better utilization of machines and labour because the planning of machine will be in line with the specifications of job to be carried out e.g. quantity of output and quality of output which will make sure that there is no idle time for the machine and no loss of usage and repairs due to using required machine capacity as per requirement of output. This is the same with labour if there is effective planning and control there will be no waste of labour hours, paying of idol time and producing more than required. This will assist utilization of labour accordingly by not using more than necessary manpower to produce the required output which will result to lower cost of output. Effective planning and control will make sure that when job is behind schedule due to labour or machine problems then suggestion remedial action is taken to rectify the problem before much of the labour and machine is used for nothing which can make the output so expensive for nothing. This also will avoid paying of overtime if machine and labour are effectively planned and controlled. Therefore taking into account the facts mentioned above, it is true that effective planning and control guarantees better utilization of machines and labour(Q3)The physical disposition of the facilities of a plant and its various parts for the purpose of achieving quickest and smoothest production is referred to as the layout of the plant.

TOOLS AND TECHNIQUES FOR LAYOUT ANALYSIS The development of good layout is dependent upon the quality and quantity of data on various factors influencing the layout. Data needs to be collected regarding various materials, processes, routing, material flow, space requirements, different activities and their relationships etc. Important tools and techniques helpful in the layout analysis are as follows:

(A). Process Charts

(B). Diagrams

(C). Travel Chart

(D). REL Chart

(E). Templates

(F). Scale Models

(A). Process Chart

Two well known process charts are: Operation Process Chart, and Flow Process Chart.

Operation Process Chart is the graphic representation of the major activities and entry point of materials. The chart depicts the major operations and inspections performed on the materials.

Flow Process Chart sets out the flow and activities of a component/man through a series of operations, inspections, transportations; delays and storages. The chart also provides information on distance and time.

(B). Diagrams Diagrams are useful to:

Study different layout alternatives and thereby select the most optimum layout.

Study the extent of traffic over the different routes of the plant.

Identify extent of backtracking, cross traffic and obstacles encountered during movement of materials.

Study the activity relationships between departments/ work centres.

Diagrams are of two types: flow diagrams and string diagrams.

Flow diagrams are the scale plans on which the movements of an object (men/material) are traced by lines.

String diagrams are the scale plans on which the movements of an object (men/material) are indicated by a string.

,

(C). Travel Chart

Travel chart presents the quantitative data on material flow by recording distance and frequency of movements between different pairs of departments. Travel charts are prepared in process type of layouts and are useful to determine the degree of closeness desired between different departments in terms of material interaction. Efforts are made in layout design to place those departments close to each other which have high degree of material interaction and thereby minimize the materials handling.

(D). REL Chart

REL chart is known as "Relationship Chart" and it exhibits the relationship between pairs of departments in terms of degree of closeness desired.

(E). Templates

Templates are the two dimensional cutouts of card board (or coloured paper). They are to scale and are placed on the scaled plan of the building drawn on a board, or on a cross hatched surface or on a graph paper. Templates show the plan of the various activities machine tools, work benches, storage racks, fitting etc.

Templates offer number of advantages:

The congestion, bottlenecks and backtrackings can be better visualized with templates.

They can be conveniently moved on the graph paper providing the flexibility to evaluate various feasible arrangements of facilities.

They are less laborious and save lot of time which otherwise is spent making drawings for each alternate plant layout arrangement.

Templates, however, have few limitations

Overhead facilities cannot be visualized.

Non-technical person find it difficult to comprehend the arrangement.

(F). Scale Models Three dimensional models are the scale models of the facilities resembling the actual in length, width and height. They are usually made of wood or plastic. Typical examples of the uses of three dimensional models are layout plans of chemical factories, refineries etc.

Three dimensional models have numerous advantages:

Non-technical persons find it easy to comprehend.

Overhead facilities can be shown.

Services such as lighting, ventilation, safety features can be easily incorporated. Like templates, models too can be shifted easily and quickly.

ASSIGNMENT B

(Q1)Aspects which a manager should consider before making a decision to make or buy are:

(a) If it cost less to buy rather than to manufacture the component internally.

(b)If the return on the necessary investment to be made to manufacture the component is not attractive enough.

If the company does not have the requisite skilled manpower to make the component. (d) If it feels that manufacturing internally will mean additional labour problem.

(e) If adequate managerial manpower is not available to take charge of this extra work of manufacture.

(f) If the component to be manufactured shows much seasonal demand or upswings and downswings of demand resulting in a considerable risk of maintaining inventories of it; also if the raw material for the component faces much seasonal fluctuations, which makes the manufacture of the product more risky for the buying company.

(g) If there is no difficulty in transporting the component from the supplier to the buying company.

(h) If the process of making the product is confidential or is patented.

(i) If the same component is not needed year in and year out and there is much risk of technological obsolescence discouraging investment in capital equipment to manufacture the component internally(Q2)

Two basic aspects of function of plant maintenance are preventive and correctivePreventive maintenancePreventive maintenance is the maintenance system wherein certain maintenance activities are carried out in a planned manner with an explicit objective of detecting weak spots and the perfect functioning of the plant is ensured by suitable preventive measures including replacement of plants which could still be used.

Preventive maintenance works because almost no equipment fails without showing the sign of malfunctioning. If a fault is detected when it is still in a pre matured minor stage, eventual breakdown of the equipment can be protected. Preventive maintenance advocates maintenance procedure whereby the condition of the plant is constantly watched through systematic inspection to unearth unhealthy conditions and prevent action.Corrective maintenance

It is the process of keeping the plant or restoring the plant back to its original performance without waiting for the plant to completely becomes inefficientPreventive maintenance differs with corrective maintenance in such way that preventive maintenance is based o the idea of prevention is better than cure. It is mainly for making the plant not to break down while corrective maintenance is a maintenance which restores the plant back to its original performanceActivities considered under preventive maintenance are:

1) Preventive Inspection.

2) Planned Lubrication.

3) Cleaning & Upkeep.

4) Minor adjustments and repair.

5) Equipment Records.

6) Spare controls

7) Condition Monitoring.

1) Preventive Inspection Preventive Inspection is an integral part of preventive maintenance program. Inspection is carried out systematically, at periodical intervals, by the staff specially trained, to determine the condition of the equipment. Preventive inspection identifies:

Parts which are might have worn out or deteriorate.

Surfaces which might have been corroded.

Bolts and nuts which might have been loose due to vibration.

Elements (e.g. lead screw and nuts) which might have developed excessive play (or backlash).

Alignment which might have gone out of order.

Defects which might have been caused due to over gearing.

Other hoist of defects.

2) Planned Lubrication Planned lubrication is said to be nervous system of equipment .regular lubrication with carefully selected lubricants is an essential factor in the maintenance of high grade machine tools working under continuous loads.

Lubricants help to-

Retard the rate of wear and tear of moving parts by converting solid frictions into liquid frictions.

Keep the temperature of bearings within the allowable limits.

Protect parts from moisture and dust.

Keep power consumption within allowable limits.

Planned lubrication involves the following activities:

Proper identification of lubrication points.

Periodical cleaning of oil sumps

Cleaning of plunger pumps

Lubrication of bearing in motors.

Replacement of wicks

Replacement of damaged oil nipples

Replacement of gaskets

Table lubrication

3) Cleaning and upkeep Cleaning and upkeep of the new machine is another important activity of preventive maintenance. Periodical cleaning of the machine is required to prevent ingression of the duct into components. Dust gets mixed with the lubricants, forms an abrasive substance and causes premature failure of machinery. The collection of dust on machinery also leads to destruction of protective coating which further accelerates the rate of wear and tear of the equipment. Besides periodic cleaning of machines and surrounding areas provides tidy and clean working environment which itself improves maintenance efficiency.

The activity of periodic cleaning of machines is usually assigned to workmen. However, machine elements and accessories which require dismantling are attended to by the maintenance department. A well designed preventive maintenance system incorporates periodic cleaning of plant and equipment schedules as a part of its preventive maintenance activity.

4) Minor adjustments and replacements Preventive inspection may identify certain points which require minor adjustments or replacements. Typical examples are:

Tightening of loose parts

Replacement of oil filter and oil seals

Replacement of damaged oil nipples

Depending upon the urgency of work these preventive maintenance jobs are required to be scheduled.

5) Equipment records Good record keeping is the essence of good preventive maintenance.

The following documents and records must be maintained for smooth working of the department.

Instruction manual

Spare parts catalog

Electrical and hydraulic diagram

Equipment cards

Equipment history cards

6) Spares control Spare parts must be available as per need otherwise the down time unnecessarily increases. A suitable system of inventory control of spares, therefore, should be evolved to ensure availability of spares with minimum capital lock up.

7) Condition monitoring It is the maintenance work initiated on a result on knowledge of the condition of an item from routine or continuous checking. Corrective maintenance initiated by the maintenance engineer to replace a bearing of a motor based on observation of his maintenance management during a preventive maintenance check up by touching the outer casing of motor is nothing but condition monitoring.

Activities considered under corrective maintenance are:

1. Servicing & Overhauling.

2. Rebuilding/reconditioning.

3. Modifications and Improvements.

4. Planned replacement of worn & torn out Parts.

5. Emergency Repair.

6. Breakdown maintenance.

1) Servicing & Overhauling To get trouble free service from equipment, it is always necessary to carry out certain periodic activities such as servicing and overhauls. The frequency of such maintenance activities should be predetermined so that work can be scheduled in advance to fit into the idle period of the equipment.

2) Rebuilding/Reconditioning Reconditioning is the process of withdrawing the equipment from the production line, dismantling it unit wise, visualizing defects ,effecting adjustments ,replacing worn-out parts and finally building it to get desires accuracies. Reconditioning helps the firm to:

Eliminate Problem, frequent breakdown.

Increase the lift of the components.

Plan the requirement of the replacement spares.

3) Design Modifications and Improvements Design Modifications and Improvements in equipment are carried out either with a view to eliminate the need for maintenance and to reduce breakdown frequency (called design-out maintenance) or reduce time and efforts required in carrying out maintenance work (called design-in-maintenance)

4) Planned Maintenance of worn-out Parts Replacement of worn-out parts (e.g. gears, shafts) is an important activity of corrective maintenance. Replacement activity of corrective maintenance. Replacement of worn-out parts should be planned in a manner that reduces the down time of the machine. This can be done by synchronizing the activity of the machines due to non-availability

of work etc.

5) Emergency repairs Emergency repairs are the maintenance necessary to be undertaken immediately to avoid serious consequences of loss of production, extensive damage to equipment or to correct unsafe conditions.

6) Breakdown Maintenance Breakdown Maintenance is the Maintenance work carried out after the equipment has failed which may include replacement of worn-out parts also.

(Q3)Total Quality Management It is a philosophy that seeks organization-wide improvement through the involvement of every individual in the organization. It differs from the traditional quality control methods in the fact that in TQM maintaining quality standards is the responsibility of everyone in the organization. The traditional systems restricted quality only to quality personnel and manufacturing departments. Ensuring quality was narrowly focused on products meeting the set specifications. Thus any quality related problem could be attributed to the manufacturing department. This narrow view did not take into consideration the fact that the performance of the manufacturing department is dependent upon the services rendered to it by other departments. For example, if the purchasing department did not properly evaluate the raw material supplier, the final quality of the product would be affected adversely. Moreover, delays in processing documents within the company often results in delayed delivery to the consumers. This has a negative impact on the company's image. The TQM philosophy seeks to remove these discrepancies by making quality control the responsibility of everyone in the organization. The entire organization is directed toward serving the customer most effectively. TQM divides customers into two categories external customers, who consume final goods and services offered by the company, and internal customers, the employees of the organization. The TQM philosophy believes that each department should treat other departments as its customers. A number of tools and techniques are used to give shape to TQM philosophy. The main focus of these tools is on team building and empowering employees. Some of these tools are:

Kaizen or continuous improvement in process, skill sets, systems and operations

Participation of shop floor employees through initiatives like quality circles

Improvement in interdepartmental coordination and functioning through initiatives like QITs (Quality Improvement Teams)

Proper maintenance of machinery and other capital equipment through initiatives like Total Productivity Management.

CASE STUDY

ASSIGNMENT

(1) The major factors that should be considered in choosing one of the three location are(A)Availability of skilled or unskilled labour (B)Availability of Transportation Facilities ( C) Availability of Services:

(D)Room for Expansion

(E)Total cost (F) Safety Requirements (G)Availability of InputsFor the Blue Powder plant, the factors developed in NO 1 only

(A)Availability of skilled or unskilled labour(B)Availability of Transportation Facilities: (C) Availability of Services:

(D)Room for Expansion:

(G)Availability of Inputs:

should be weighted heavily because of the following reasonsSince the production processes at Blue Powder require about 300 production workers and 200 engineering and management personnel then Availability of labour and skills cannot be taken as less important because if the work force is less than the required then what is supposed to be produced per day will not be achieve hence the company can be operating on loss(a) Blue powder plant require large amount of water and other utilities therefore, availability of resources is also more important because without much of water and other utilities the production processes cannot go well(b) Blue powder production processes require large expanses of land because of that then large land for expansion is very important for the production processes otherwise any location with a small land is not ideal for this plant

(c) The production processes at Blue Powder require large volumes of materials in and out of the plant because of that then availability of inputs and transport should be weighted heavily otherwise without these two factors the production processes can be in a total messFor the other factors like Total cost and Fire and Explosion tolerant areas should not be weighted heavily because the total cost can be reduced if all the operation are being managed properly regardless of wherever the plant has been located which is the same with fire and explosion tolerant areas of which do not happen every day so that cannot be weighted heavily because even if the plant is located in the areas of low fire and explosion tolerant it may happen that years can pass without any occurrence of fire and explosion.(3)

The factors listed above can be analyzed as follows

. Availability of Labour and Skills: The availability of labour and skills is one of the important factors in production. Labour may be readily available in some areas than in other areas. Availability of skilled as well as unskilled labour in the required proportion in one area is usually not possible. For the Blue Powder Company it requires 300 unskilled people and 200 skilled people so the plant should be located where the unskilled people are available. . Availability of Transportation Facilities: The five basic modes of physical transportation are air, road, rail, water and pipeline. For the Blue Powder Company, require large volumes of materials to be shipped in and out of the plant therefore the plant should be located to a site which is close to a seaport or large airport.

. Availability of Inputs: Though goods transportation helps in obtaining and delivering goods and services readily, a location near to the suppliers helps the firms reduce costs. It also enables the management of the firm to meet the suppliers easily and discuss aspects like quality, technical or delivery problems .For the Blue Powder Company, the plant should be located near for the reasons pointed out above to the suppliers

. Availability of Services: Electricity, water, gas, drainage, and disposal of waste are some of the important services that need to be considered while selecting a location. Since the Blue Powder Company requires large amount of water and other utilities then the best site for location of the plant should be where availability of the water and other utilities is not a problem

. Suitability of Land and Climate: Climatic conditions such as humidity, temperature and atmosphere, and the geology of the area should be considered while selecting a location. If geographic conditions are not favorable, firms have to use modem building techniques (and incur high costs) to overcome these disadvantages. For instance, a hilly, rough and rocky terrain is not suitable for a plant location, since leveling the area needs a lot of expenditure

. Room for Expansion: While selecting a location, firms should ensure that there is adequate room for expansion of the firm's operations in the future. For the Blue Powder Company which requires large expenses of land then the site area where the plant will be located should have a large area of land to carte for the production processes .. Safety Requirements: Some units such as nuclear power stations and other chemical and explosive factories may present potential threat to the surrounding neighborhood which is the same with the Blue Powder Company of which its plant should be located in areas which is fire and explosion tolerant where the damage will be minimal in case of any fire and explosion occurrence Total cost: The total cost of operations of a company is very important to be taken into account when one wants to know which location the company should choose for its plant. Any site with less total cost is good for the location of a plant. For the Blue Powder Company the best location of the plant is the location with less total cost but also with all the important factors developed in NO 1. For the Blue Powder the best area where the plant should be located is Las Vegas since it has less total cost as compared with Santa Fe and Yuma that is if it has also all the factors or all the most important factors listed in NO 1 or SANTA Fe should be chosen that is if Les Vegas has less of the most important factors developed in NO 1thus if it has also all the factors or all the most important factors listed in NO 1 because the total cost can be reduced by better utilization of resources or Yuma should be the better location if it has also all the factors or all the most important factors listed in NO 1 that is if Santa Fe and Les Vegas have failed to qualify for location of the plant. The high total cost can be reduced by better utilization of resource at Yuma.WORKINGS

TOTAL COST FOR EACH LOCATION

FIXED COSTVARIABLE COSTTOTAL COST

LAS VEGAS3,000,0005,000,0008,000,000

SANTA FE2,700,0007,000,0009,700,000

YUMA2,200,00011,000,00013,200,000

LAS VEGAS

VC/POUN=.0500

POUND PRODUCED=100,000,000

TOTAL VARIABLE COST=.0500*100,000,000=5,000,000SANTA FE

VC/POUND=.0700

POUND PRODUCED=100,000,000

TOTAL VARIABLE COST=.0700*100,000,000=7,000,000

YUMA

VC/POUND=.1100

POUND PRODUCED=100,000,000

TOTAL VARIALE COST=.1100*100,000,000=11,000,000

ASSIGNMENT C

1A11A21C31C

2A12B22D32C

3C13B23C33D

4B14C24D34B

5B15A25A35B

6D16D26C36D

7D17A27B37B

8B18A28D38A

9B19A29C39A

10A20D30D40A