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National University of Sciences & Technology
School of Chemical and Material Engineering
Department of Chemical engineering Code: Che 01
Subject: MGT 301 Production & Operations ManagementCredit Hours: 3 hours per week
Pre- requisites:.
Course Outlines
Introduction to Operations Management, Operation system inputs and outputs
Generic model of Operation System, Operations Strategy for Competitive
Advantage, Operations in a global environment , Plant location and layout
Material handling and equipment , Demand forecasting and its modeling
Types of Productions System , Material Requirement Planning (MRP) and
Manufacturing Resources Planning (MRPII), Production planning and scheduling
Inventory Management, Just-in-Time System, Work study and its techniques
Managing Quality, Productivity and its concept, measurements and improvement
techniques
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Recommended Books
1. Production and Operation Management, 6 Th Edition by Alan Muhlemann, John
Oakland and Keith Lockyer 1995 reprint Pitman Publishing London2. Production and Operation Management, 8 Th Edition by Norman Gaither and
Greg Fazier, South-Western College Publishing
3. Modern Production and Operation Management by Elwood S. Buffn, 7 th Edition
John Willey and Sons
4. Operation Management, Heizer, J and Barly, R. (1999). 7 th Edition, PHIPE
5. Operation Management by Roger G. Schroeder 3 rd edition McGraw Hill
Grading:
a. Quizzes / Homework 15%
b. Mid Term Exam 20%c. Term Project 15%
d. Final Exam 50%
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PRODUCTION / OPERATION
MANAGEMENT
Production is the creation of goodsand services
Operations management (OM) isthe set of activities that creates
value in the form of goods andservices by transforming inputsinto outputs
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BUSINESS
TECHNICAL(STRATEGY & COSTING)
(STRATEGY, ECONOMICS& PRICING)
BUSINESSFUNCTION
(BF)
ENGINEERINGFUNCTION
(EF)
A BUSINESS SYSTEM MODEL
RELATIONSHIP OF BUSINESS AND PRODUCTION SYSTEM
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BUSINESSVISION
& STRATEGY(BF)
PRODUCTIONVISION
& STRATEGY(EF)
MARKETING
FUNCTION(BF)
PRODUCTION
FUNCTION(EF)
MARKETSYSTEM DESIGN
1. R & D2. FORECASTING
PRODUCTIONSYSTEM DESIGN
1. R & D2. FORECASTING
RELATIONSHIP OF BUSINESS AND PRODUCTION SYSTEM
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BFDRIVER EFDRIVEN
MARKETSYSTEM
PRODUCTIONSYSTEM
LINKING OF BUSINESS AND PRODUCTION SYSTEM DESIGN
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2b.PROCESSDESIGN
PROCESS
FLOWCHART
1. MARKETINGSYSTEMDESIGN
2. PRODUCTIONSYSTEMDESIGN
2a.PRODUCTDESIGN
(CAD/CAM)
LAYOUT
DESIGN
RELATIONSHIP OF BUSINESS AND PRODUCTION SYSTEMDESIGN
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THE CUSTOMER NEEDS AND
SATISFIERS
ORGANISATIONNEEDS SATISFIER
CUSTOMER CUSTOMER
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THE CLOSED LOOP OF CUSTOMERSATISFACTION
ORGANISATION
NEEDS SATISFIER
CUSTOMER
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A GENERIC MODEL OFPRODUCTION SYSTEM
TOTALTRANSFORMATION
PROCESS
TOTAL INPUTS1. MEN
2. MATERAIL3. MACHINES
4. MONEY
TOTAL OUTPUTS
1. PRODUCTS
2. SERVICES
TOTAL TRANSFORMATION FROM INPUTS TOOUTPUTS
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SOURCES OF VARIATION IN PRODUCTION PROCESSES
Inputs OutputsProcess
Operators Methods
Materials
Tools
Machines Environment
MeasurementInstruments
HumanInspectionPerformance
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VARIATIONS
Production processes face variationin:
Strength, thickness or moisture contentof materials Strength & composition of cutting tools Measurement gauges used Human inspection capabilities
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Variation occurs at random, butcombined effect can be predictedstatistically
Common causes of variation factorspresent as natural parts of process
Result from design of system
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Special causes of variation (assignablecauses) Arise from external sources not inherent
in the process
Bad material batch from supplier Poorly trained operators Excessive tool wear Improper calibration of equipment
Unnatural variation easily detectable Economical to correct
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System governed only by commoncauses is stable Understanding of differences between
common & special causes Less variation benefits:
Producers (higher productivity due toless inspection, scrap & rework)
Customers (products with similarquality characteristics)
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INPUT - OUTPUT DIAGRAMS FOR CUSTOMERSATISFACTION
IDENTIFICATION ANDFORECASTING FACILITY
ANALYSING ANDINTEGRATING FACILITY
SUPPLYING FACILITY
TRANSFORMATIONFACILTIY
DISTRIBUTINGFACILITY
CUSTOMERNEEDS EXPLICITFORECASTS
EXPLICITFORECASTS
RESOURCEPLANS
RESOURCEPLANS
PRODUCTION/ OPERATIONINPUTS
PRODUCTION/ OPERATIONINPUTS
OUTPUTS
OUTPUTS SATISFIERCUSTOMER
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FROM CUSTOMER TO CUSTOMERA CLOSED LOOP
(i) IDENTIFICATIONAND FORECASTING
FACILITY
(iii) SUPPLYINGFACILITY
(ii) ANALYING ANDINTEGRATING FACILITY
(iv) TRANSFORMATIONFACILITY
(v) DISTRIBUTIONFACILITY
CUSTOMER
OUTPUTS
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THE MARKETING AND PRODUCTION/OPERATIONS TASKS
DistributionFacility
Identification andforecasting facility
Marketing
Explicit forecastsAnalysis andintegrating Facility
SupplyingFacility
TransformationFacility
PRODUCTION/OPERATIONS
Outputs
Consumer
Satisfiers
Production Operating
Inputs
ResourcePlans
The Marketing and production/operations tasks
(i)
(v)
(ii)
(iii)
(iv)
Needs
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THE EFFECTS OF SEPARATING THEMARKETING AND PRODUCTION FUNCTIONS
MARKETING
MARKETING
MARKETING
PRODUCTION
PRODUCTION
PRODUCTION
INCREASINGSUCCESS DECREASINGVIABILITY
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THE PRODUCTIONS/ OPERATIONSMANAGERS TASK (5Ps)
1.PRODUCT
2. PLANT5.PEOPLE
3.PROCESSES
4.PROGRAMMES
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THE PRODUCTION MANAGERSRESPONSIBILITIES (5Ps)
1. THE PRODUCT
Performance Aesthetics
Quality
Reliability
Quantity Selling cost or Production operating cost
Delivery dates and/or times
2. THE PLANT Future possible demands Design and layout of buildings and offices Performance and reliability of equipment Maintenance of performance Safety of installation and operation Social responsibilities
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3. THE PROCESS Available capacity Available skill Type of production/ operation Layout of plant and equipment
Safety Maintenance requirement Costs to be achieved
4. THE PROGRAMMES Purchasing Transforming Maintenance Cash Storage Transport
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5. THE PEOPLE Wages /salaries safety Conditions of work Motivation Trade unions Education and training
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Production Strategy
Make to order Make to stock
Forecasting (Types) Forecasting (Types)
Types of Production System
Job shop BatchProductionMass
productionGroup
Technology
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TYPES OF PRODUCTION SYSTEMS
JOB PRODUCTION
BATCH PRODUCTION
MASS PRODUCTION
GROUP PRODUCTION
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TYPES OF PRODUCTIONSYSTEMS VERSES LAYOUTS
JOB PRODUCTION - FIXED LAYOUT / PROCESS LAYOUT
BATCH PRODUCTION - PROCESS LAYOUT / GROUP LAYOUT
MASS PRODUCTION - PRODUCT LAYOUT
GROUP PRODUCTION - GROUP LAYOUT / CELLULAR LAYOUT
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JOB PRODUCTION
JOB, ONE -OFF, PROJECT, OR MAKE COMPLETE ARE
DESCRIPTIONS GIVEN TO THE ORGANIZATION WHEREBY THE
COMPLETE TASK IS HANDED BY SIGNAL WORKER OR GROUP
OF WORKERS. THE HAIRDRESSER WHO CUTS, WASHES AND
PERMS THE CUSTOMERS HAIR, THE TAILOR WHO MAKES THE
ENTIRE SUIT ARE ALL EXAMPLES OF TASKS WHICH ARE
ORGANIZED USING THE JOB APPROACH .
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BATCH PRODUCTION
SUCH METHODS REQUIRE THAT THE WORK FOR ANY TASK IS
DIVIDED INTO PARTS OR OPERATIONS AND THAT EACH
OPERATION IS COMPLETED THROUGHOUT THE WHOLE BATCH
BEFORE THE NEXT OPERATION IS UNDERTAKEN. THIS
TECHNIQUE IS PROBABLY THE MOST COMMONLY USED
METHOD FOR ORGANIZING MANUFACTURE, TYPICAL
EXAMPLES BEING THE PRODUCTION OF ELECTRONICINSTRUMENTS, TRANSFORMERS AND SO ON.
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MASS PRODUCTION
MASS / FLOW HAS BEEN DEFINED AS A METHOD OF
ORGANIZATION SUCH THAT THE TASK IS WORKED ON
CONTINUOUSLY OR ALTERNATIVELY AS A SYSTEM WHEREBY
THE PROCESSING OF MATERIAL IS CONTINUOUS AND
PROGRESSIVE.
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GROUP PRODUCTION
THE GROUP APPROACH, SOMETIMES REFERRED TO AS GROUP
TECHNOLOGY (GT) OR CELLULAR MANUFACTURING, CAN BE
THOUGHTHT OF AS AN ATTEMPT TO CAPITALIZE ON THE
BENEFITS OF BOTH BATCH AND FLOW. ESSENTIALLY, THIS
INVOLVES SEEKING SIMILARITIES, RATHER THAN LOOKING
FOR DIFFERENCES. SIMILAR TASKS / JOBS / PRODUCTS ARE
IDENTIFIED AND FORMED INTO FAMILIES AND THE RESOURCES
REQUIRED FOR THESE ARE FORMED INTO GROUPS OR CELLS.
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Operations Strategy for Competitive Advantage, Operations in a globalenvironment
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PLANT LOCATION AND LAYOUTFACTORS TO BE CONSIDERED;
1. PROXIMITY TO THE MARKET
2. INTEGRTATION WITH THE ORGANIZATION
3. AVAILIBILITY OF LABOUR AND SKILLS
4. AVAILABILITY OF AMENITIES
5. AVAILABILITY OF TRANSPORT
6. VAILIBILITY OF INPUTS
7. AVAILIBILITY OF SERVICES
8. SUITABILTY OF LAND AND CLIMATE
9. REGIONAL REGULATION
10. ROOM FOR EXPANSION11. SAFETY REQUIREMENTS
12. SITE COST
13. POLITICAL, CULTURAL AND ECONOMIC SITUATION
14. SPECIAL GRANTS, REGIONAL TAXES AND IMPORT / EXPORT BARRIERS
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Bulk Material Handling and EquipmentCost of Material Handling = 25 % of cost of product
Aids to material Handling
1. Correct identification of material and documentation2. correct packing of material and documentation
3. Capacity of equipment
4. Size of load
5. Weight of container
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Bulk Material Handling Equipment1. Crane
2. Hoist / bucket
3. Conveyor4. Chute / Channel
5. Dumper
6. Fork lifter
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Cost Reduction in Material Handling
1. Use of manpower
2. Use of Gravity3. Use of power
4. Use of package load
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Demand forecasting and its modeling
The estimation of demand for future to gain
some lead time.
Demand is done for:
Raw material
semi finished goods
Finished goods
service material
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Demand Forecasting Techniques
Nave Technique
Fixed average
Moving Average
Weighted Moving Average (3 5 Points)
Exponential Weighted Moving Average
Associated Factors Trend Line
Seasonal Effect
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Error Estimation in Demand Forecasting
To calculate error in forecasting and actual
uses?
Standard Deviation= 1.25 x Mean Absolute
Deviation Mean Absolute Deviation = Sum of
difference between absolute forecast value
absolute actual use / number of periods
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INVENTORY MANAGEMENT
Task of material holding department:
Determine the material requirement
Receiving and storing material and its safety
in good condition
Issue material upon receipt of appropriate
authority Identify surplus stock
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INVENTORY MANAGEMENT
Types of material to be stored:
Raw material and bought in items
Work in Progress (WIP) - semi finished
goods
Finished goods
service materialLead Time: It include ordering time, delivering
time and receiving time etc
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DEMAND SITUATIONS / APPROACHED TO
MATERIAL S CONTROL
INDEPENDENT DEMAND SITUATION
Material requiring planning (MRP)
DEPENDENT DEMAND SITUATION
Manufacturing resource planning (MRP II)
THESE SITUATIONS CAN BE FURTHER DIVIDED
INTO FIXED RE-ORDER QUANTITY
FIXED RE-ORDER TIME
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ECONOMIC ORDER QUANTITY (EOQ)
/ ECONOMIC BATCH SIZE (EBS)
EOQ / EBS calculation is based on total cost
of ordering, holding cost and ancillary cost
Price break on EOQ/EBS
Two Methods are used for its calculations: Graphical method
Analytical method
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WORK STUDY Work study is a management service based on those
techniques, particularly method study and workmeasurement which are used in the examination of
human work in all its context and which lead to the
systematic investigation of all the resources and factorswhich affect the efficiency and economy of the situation
being reviewed, in order to effect improvement
(productivity)
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WORK STUDY TECHNIQUES
METHOD STUDY
WORK MEASUREMENT (TIME MEASUREMENT)
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