question notes on production management (final)

8/2/2019 Question Notes on Production Management (Final)

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Question Notes

On

ProductionManagement

By

Dr. Vineet WaliaDr. Pradeep Tomar


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and Loss responsibility as a key metric for evaluating product managerperformance. In some companies, the product management function is the hub ofmany other activities around the product. In others, it is one of many things thatneed to happen to bring a product to market and actively monitor and manage itin-market.

Product management often serves an inter-disciplinary role, bridging gaps withinthe company between teams of different expertise, most notably betweenengineering-oriented teams and commercial-oriented teams. For exampleproduct managers often translate business objectives set for a product byMarketing or Sales into engineering requirements. Conversely they may work toexplain the capabilities and limitations of the finished product back to Marketingand Sales. Product Managers may also have one or more direct reports whomanage operational tasks and/or a Change Manager who can oversee newinitiatives.

PRODUCTION PROCESS SYSTEM

INPUTS

MEN

MACHINES

MATERIALS

MONEY

METHODS

OUTPUT

Goods

Produced

Or

Services

Rendered

PROCESS

Transformation

Control/Feedback

PRODUCTION
http://en.wikipedia.org/wiki/Change_managementhttp://en.wikipedia.org/wiki/Change_management


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INPUT PROCESS OUTPUTInformationManagement Organization TransformationMaterial & land Goods & ServicesLabour, capital

Labour, capitalThus the basis of Production is the transformation of inputs into goods andservices. The main objectives of a production process are :(i) Optimum use of resources at optimum cost.(ii) Manufacture of the desired quality and quantity of goods and services.

Meaning of Production Management

Production management is a branch of management which is related to the

production function. Production may be referred to as the process concerned withthe conversion inputs (raw materials, machinery, information, manpower, andother factors of production) into output (semi finished and finished goods andservices) with the help of certain processes (planning, scheduling and controllingetc.) while management is the process of exploitation of these factors ofproduction in order to achieve the desired results. Thus production managementis the management which by scientific planning and regulation sets into motionthe part of an enterprise to which it has been entrusted the task of actualtransformation of inputs into output.

In other words Production management deals with the decision making related

to production process of that the resulting goods and service is producedaccording to specifications in the amounts and at the scheduled demanded andat minimum cost.

But Production & Operation Management is defined as under tounderstand the meaning of the term clearly: Production management deals withdecision making related to production process so that the resulting goods orservices are produced according to specifications in amounts and by theschedules demanded and at a minimum cost. Thus production management isconcerned with the decision making regarding the production of goods andservices at a minimum cost according to the demands of the customers throughthe management process of planning, organizing and controlling. In order toattain these objectives, effective planning and control of production activities isvery essential. Otherwise, the customers shall remain unsatisfied and ultimatelycertain-activities may have to be closed.

Difference between Production Management and OperationManagement


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Production Management Operation Management

1. It is concerned with manufacturing

2. Out put is tangible3. In this, job useless labour and moreequipment4. There is no customer participation

1. It is concerned with services

2. Output is intangible3. In this, job use more labour and lessequipment4. Frequent customer participation

Tasks of Production & Operation ManagementProduction and operation management, thus, is assigned with the following tasks

(i) Specifying and accumulating the input resources, i.e., management, men,information, materials, machine and capital.(ii) Designing and installing the assembly or conversion process to transform theinputs into output, and(iii) Coordinating and operating the production process so that the desired goodsand services may be produced efficiently and at a minimum cost.

Product development

Identifying new product candidates

Gathering the Voice of customer Defining product requirements

Determine business-case and feasibility

Scoping and defining new products at high level

Evangelizing new products within the company

Building product roadmaps, particularlyTechnology roadmaps

Developing all products on schedule, working to a critical path

Ensuring products are within optimal price margins and up to specifications

Product marketing

Product Life Cycle considerations

Product differentiation

Product naming and branding
http://en.wikipedia.org/wiki/Voice_of_customerhttp://en.wikipedia.org/wiki/Product_requirements_documenthttp://en.wikipedia.org/wiki/Technology_roadmaphttp://en.wikipedia.org/wiki/Product_Life_Cycle_Managementhttp://en.wikipedia.org/wiki/Product_differentiationhttp://en.wikipedia.org/wiki/Voice_of_customerhttp://en.wikipedia.org/wiki/Product_requirements_documenthttp://en.wikipedia.org/wiki/Technology_roadmaphttp://en.wikipedia.org/wiki/Product_Life_Cycle_Managementhttp://en.wikipedia.org/wiki/Product_differentiation


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7 functions of marketing

Product positioning and outbound messaging

Promoting the product externally with press, customers, and partners

Conduct customer feedback and enabling (pre-production, beta software)

Launching new products to market

Monitoring the competition

Question -3. What is the Scope and characteristics of Productionand Operation Management?

Ans :Production management is mainly associated with the factory managementcrept with the development of factory system. Before the evolution of factorysystem, manufacturing activities were carried on by single person that posed noor very insignificant problem of production and therefore question of productionmanagement did not arise. But with the inception of factory system, the situationchanged and so many problems of production were begun to creep up andnecessity arose to tackle with the problems of quality control, layout facilities,

meeting the schedules and organization of production activities. Thus the scopeof production management began to develop. In early stage, the stress was oncontrolling the labour costs because labour cost was the major element of thetotal cost of production. With the continuing development of factory system, thetrend towards mechanization and automation developed and it resulted in theincreased costs of indirect labour higher than the direct labour costs. So concernsfound it difficult to run the business in these circumstances and evolved manycontrolling devices to regulate the cost of production. They had developeddevices like designing and packing of products, indirect labour cost control,production & inventory control and quality control. Since the level of productionhas increased tremendously, so many other production problems have been

added to its scope. In the present era of intense competition, the scope ofproduction management is very wide. The production department in anenterprise is not only concerned with the full exploitation of production facilitiesbut also the human factor that indirectly affects the production, utilization oflatest techniques of production and the production of quality goods to thesatisfaction of customers of the product.


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Scope of production and operations management Dispatching is concerned with

the starting the processes. It gives necessary authority so as to start a particular

work, which has already been planned under Routing and Scheduling.

Therefore, dispatching is release of orders and instruction for the starting of

production for any item in acceptance with the route sheet and schedule charts.

The function of follow-up is to report daily the progress of work in each shop in a

prescribed proforma and to investigate the causes of deviations from the planned

performance.

The various activities that form scope of production function can be studied in thefollowing broad areas 1. Product Selection and Design :The product mix makes the production systemeither efficient or inefficient. Choosing the right products, keeping the missionand overall objectives of the organization in mind is the key to success. Design ofthe product, which gives it enough functional and aesthetic value, is ofparamount importance. It is the design of the product which makes the

organization competitive or noncompetitive. Value engineering does help toretain enough features, while eliminating the unnecessary ones.2. Activities Relating to Production System Designing : Decision related to theproduction system design is one of the most important activity of the productionmanagement. This activity is related to production engineering and includesproblems regarding design of tools and jigs, the design, development andinstallation of equipment and the selection of the optimum size of the firm. Allthese areas require the technical expertise on the part of the production managerand his staff.3. Facilities Location: The selection of an optimum plant location very muchdepends upon the decision taken regarding production engineering. A wrong

decision may prove disastrous. Location should as far as possible cut down theproduction and distribution cost. There are diverse factorsto be considered for selecting the location of a plant.4. Method Study : The next decision regarding production system designconcerns the use of those techniques which are concerned with workenvironment and work measurement. Standard methods should be devised forperforming the repetitive functions efficiently. Unnecessary movements shouldbe eliminated and suitable positioning of the workers for different processesshould be developed. Such methods should be devised with the help of timestudy and motion study. The workers should be trained accordingly.5. Facilities Layout and Materials Handling : Plant layout deals with the

arrangements of machines and plant facilities. The machines should be soarranged that the flow of production remains smooth. There should not beoverlapping, duplication or interruption in production flow. Product layout, wheremachines are arranged in a sequence required for the processing of a particularproduct, and process layout, where machines performing the similar processesare grouped together are two popular methods of layout. The departments arelaid out in such a way that the cost of material handling is reduced.


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6. Capacity Planning : This deals with the procurement of productive resources.Capacity refers to a level of output of the conversion process over a period oftime. Full capacity indicates maximum level of output. Capacity is planned forshort-term as well as for long term. Process industries pose challenging problemsin capacity planning, requiring in the long run, expansion and contraction of

major facilities in the conversion process.7. Production Planning :The decisions in production planning include preparationof short-term production schedules, plan for maintaining the records of rawmaterials, finished and semi-finished stock, specifying how the productionresources of the concern are to be employed over some future time in responseto the predicted demand for products and services. Production planning takes agiven product or line of products and organizes in advance the manpower,materials, machines and money required for a predetermined output in a givenperiod of time8. Production control : After planning, the next managerial production function isto control the production according to the production plans because production

plans cannot be activated unless they are properly guided and controlled. For thispurpose, production manager has to regulate work assignment, review workprocess, check and remove discrepancies, if any, in the actual and plannedperformances.Thus production control involves the following stages :(i) Planning setting targets of production.(ii) Routing to decide the route or flow-of production activity.(iii) Dispatching to issue materials and authorizations for the use of machinesand plant services.(iv) Follow-up it compares the actual production with the targeted production.Deviations are found out and corrected and reasons are investigated.

9. Inventory Control : Inventory control deals with the control over raw materials,work-in-progress, finished products, stores, supplies, tools, and so is included inproduction management. The raw materials, supplies etc. should be purchased atright time, of right quality, in right quantity, from right source and at right price.This five Rs consideration enables the scientific purchases. Store-keeping is alsoan important aspect of inventory control. The raw materials, work-in-progress,finished goods, supplies, tools etc. should be stored efficiently. The differentlevels of inventory should be managed properly and the issue of materials todepartments should be made promptly and effectively. Proper records shouldalso be kept for various items of inventory control.The production manager has to look after the inventory control activities at three

levels (i) Control of inventories such as raw materials, purchased parts, finished goodsand supplies through the inventory control technique;(ii) Control of flow of materials into the plants through the techniqueof judiciouspurchasing;(iii) Control of work-in-progress through production control.10. Quality control : The other important decision taken by the productionmanager concerns quality control. Product quality refers to the composite product


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characteristics of engineering and manufacturing that determines the degree towhich the product in use will meet the expectations ofthe customers. Quality control can be ensured through the techniques ofinspection and statistical quality control.11. Maintenance and Replacement: In this we cover preventive methods to avoid

machine break-downs, maintenance, policies regarding repair and replacementdecisions. Maintenance manpower is to be scheduled and repair jobs are to besequenced. There are some preventive replacements also. Machine condition isto be constantly monitored..12. Cost Reduction and Control : Cost reduction ultimately improves productivity.The industry becomes competitive. Essentially cost reduction and cost eliminationare productivity techniques. Value engineering, budgetary control, standardcosting, cost control of labourand materials etc. help to keep costs optimal. AllProduction decisions are subject to control measures, after receivingproper feed-back.

Characteristics features of production system

1. Production is an organized activity.

2. Production involves the step by step convertion of one form of material into

another through chemical or mechanical process with a view to enhance the

utility of the product or services.

3. The system transforms the various inputs into useful outputs.

4. Production system does not operate in isolation from the other organizational

systems.

5. There exists a feed back about the activities which is essential to control and

improve system proformation.

Question -4. What are the objectives and specific functionsof Production & Operation Management?orQuestion- 5. Write detail notes on objectives and functionsof production management. (July 2010)

OrQuestion - 6. Explain different function of ProductionManagement.

orQuestion - 7. How Production functions are performed in asequence to achieve organisational objectives?

Ans : OBJECTIVES OF PRODUCTION MANAGEMENTThe major objective of production management is to produce quality goods

and services. In present day position, the objective of any firm is to increase


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profitability through higher efficiency, higher productivity, by improving qualityand to give customer more confidence by providing him products of quality at theright price and at the right time.1. RIGHT QUALITY - The quality of product is established based upon thecustomers needs. The right quality is not necessarily best quality. It is determined

by the cost of the product and the technical characteristics as suited to thespecific requirements.2. RIGHT QUANTITY - The manufacturing organization should produce theproducts in right number. If they are produced in excess of demand the capitalwill block up in the form of inventory and if the quantity is produced in short ofdemand, leads to shortage of products.3. RIGHT TIME - Timeliness of delivery is one of the important parameter tojudge the effectiveness of production department. So, the production departmenthas to make the optimal utilization of input resources to achieve its objective.4. RIGHT MANUFACTURING COST - Manufacturing costs are established beforethe product is actually manufactured. Hence, all attempts should be made to

produce the products at pre-established cost, so as to reduce the variationbetween actual and the standard (pre-established) cost.

This can be achieving through:

Optimal use of resources

By maximizing use of manpower and machines, or minimizing waste ofmaterials.

Ensuring quality of goods at minimum cost.

Contributing towards all round productivity through decision-making.

Production Management Functions

Production management is viewed as a continuous process of planningorganizing and controlling:

1. Planning: It includes all activities that establish a course of action.These activities guide future decision-making. It involves productplanning, facility planning and designing of the conversion process.

2. Organizing: It includes all activities that establish a structure of tasksand authority. Thus, it determines the activities required to achieve theoperations, sub-systems goals and assign authority and responsibility for

carrying them out.

3. Controlling: It includes all activities that ensure that actualperformance is in accordance with planned performance. This is done bydeveloping standards and communication networks necessary to ensurethat the organizing, staffing and directing functions are pursuingappropriate plans and achieving objectives


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But Functions of production Management are very versatile throughout the

production process. There are several functions of Production management which

are mentioned as below

1. Production planning

2. Production control

3. Factory building

4. Provision of plant services

5. Plant layout

6. Physical Environment

7. Method study

8. Inventory control

9. Quality control

10. Product department

Question -8. What are the objectives and specific functionsor activities of Production & Operation Management?Ans. Activities in Production Managements

Production and operations management concern with the conversion ofinputs into outputs, using physical resources, so as to provide the desiredutilities to the customer while meeting the other organizational objectives

of effectiveness, efficiency and adoptability. It distinguishes itself fromother functions such as personnel, marketing, finance, etc., by its primaryconcern for conversion by using physical resources. Following are theactivities which are listed under production and operations managementfunctions:1. Location of facilities2. Plant layouts and material handling3. Product design4. Process design5. Production and planning control6. Quality control

7. Materials management8. Maintenance management.LOCATION OF FACILITIES

Location of facilities for operations is a long-term capacity decisionwhich involves a long term commitment about the geographically staticfactors that affect a business organization. It is an important strategic leveldecision-making for an organization. It deals with the questions such aswhere our main operations should be based?


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The selection of location is a key-decision as large investment is made inbuilding plant and machinery. An improper location of plant may lead towaste of all the investments made in plant and machinery equipments.Hence, location of plant should be based on the companys expansion planand policy, diversification plan for the products, changing sources of raw

materials and many other factors. The purpose of the location study is tofind the optimal location that will results in the greatest advantage to theorganization.PLANT LAYOUT AND MATERIAL HANDLING

Plant layout refers to the physical arrangement of facilities. It is theconfiguration of departments, work centers and equipment in theconversion process. The overall objective of the plant layout is to design aphysical arrangement that meets the required output quality and quantitymost economically.

According toJames Moore, Plant layout is a plan of an optimumarrangement of facilities including personnel,

operating equipment, storage space, material handlingequipments and all other supporting services along with the design of beststructureto contain all these facilities.

Material Handling refers to the moving of materials from the storeroom to the machine and from one machine to the next during the processof manufacture. It is also defined as the art and science of moving,packing and storing of products in any form. It is a specialized activity for amodern manufacturing concern, with 50 to 75% of the cost of production.This cost can be reduced by proper section, operation and maintenance ofmaterial handling devices. Material handling devices increases the output,

improves quality, speeds up the deliveries and decreases the cost ofproduction. Hence, material handling is a prime consideration in thedesigning new plant and several existing plants.PRODUCT DESIGNProduct design deals with conversion of ideas into reality. Every businessorganization have to design, develop and introduce new products as asurvival and growth strategy. Developing the new products and launchingthem in the market is the biggest challenge faced by the organizations.The entire process of need identification to physical manufactures ofproduct involves three functions: marketing, product development,manufacturing. Product development translates the needs of customers

given by marketing into technical specifications and designing the variousfeatures into the product to these specifications. Manufacturing has theresponsibility of selecting the processes by which the product can bemanufactured. Product design and development provides link betweenmarketing, customer needs and expectations and the activities required tomanufacture the product.PROCESS DESIGN


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Process design is a macroscopic decision-making of an overallprocess route for converting the raw material into finished goods. Thesedecisions encompass the selection of a process, choice of technology,process flow analysis and layout of the facilities. Hence, the importantdecisions in process design are to analyse the workflow for converting raw

material into finished product and to select the workstation for eachincluded in the workflow.PRODUCTION PLANNING AND CONTROL

Production planning and control can be defined as the process ofplanning the production in advance, setting the exact route of each item,fixing the starting and finishing dates for each item, to give productionorders to shops and to follow up the progress of products according toorders. The principle of production planning and control lies in thestatement First Plan Your Work and then Work on Your Plan. Mainfunctions of production planning and control includes planning, routing,scheduling, dispatching and follow-up.

Planning is deciding in advance what to do, how to do it, when to do it andwho is to doit. Planning bridges the gap from where we are, to where we want to go. Itmakes it possible for things to occur which would not otherwise happen.Routing may be defined as the selection of path which each part of theproduct will follow, which being transformed from raw material to finishedproducts. Routing determines the most advantageous path to be followedfrom department to department and machine to machine till raw materialgets its final shape.Scheduling determines the programmed for the operations. Schedulingmay be defined as the fixation of time and date for each operation as well

as it determines the sequence of operations to be followed.Dispatching is concerned with the starting the processes. It givesnecessary authority so as to start a particular work, which has already beenplanned under Routing and Scheduling. Therefore, dispatching is releaseof orders and instruction for the starting of production for any item inacceptance with the route sheet and schedule charts. The function offollow-up is to report daily the progress of work in each shop in aprescribed Performa and to investigate the causes of deviations from theplanned performance.QUALITY CONTROL

Quality Control (QC) may be defined as a system that is used to

maintain a desired level of quality in a product or service. It is a systematiccontrol of various factors that affect the quality of the product. Qualitycontrol aims at prevention of defects at the source, relies on effectivefeedback system and corrective action procedure. Quality control can alsobe defined as that industrial management technique by means of whichproduct of uniform acceptable quality is manufactured. It is the entirecollection of activities which ensures that the operation will produce theoptimum quality products at minimum cost.


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The main objectives of quality control are: To improve the companies income by making production more

acceptable to the customers i.e., by providing long life, greaterusefulness, maintainability, etc.

To reduce companies cost through reduction of losses due to defects.

To achieve interchangeability of manufacture in large scaleproduction.

To produce optimal quality at reduced price. To ensure satisfaction of customers with productions or services or

high quality level, to build customer goodwill, confidence andreputation of manufacturer.

To make inspection prompt to ensure quality control.

To check the variation during manufacturing.MATERIALS MANAGEMENT

Materials management is that aspect of management function whichis primarily concerned with the acquisition, control and use of materials

needed and flow of goods and services connected with the productionprocess having some predetermined objectives in view.The main objectives of materials management are:

To minimize material cost.

To purchase, receive, transport and store materials efficiently and toreduce the related cost.

To cut down costs through simplification, standardization, valueanalysis, import substitution, etc.

To trace new sources of supply and to develop cordial relations withthem in order to ensure continuous supply at reasonable rates.

To reduce investment tied in the inventories for use in otherproductive purposes and to develop high inventory turnover ratios.

MAINTENANCE MANAGEMENTIn modern industry, equipment and machinery are a very important part ofthe total productive effort. Therefore, their idleness or downtime becomesare very expensive. Hence, it is very important that the plant machineryshould be properly maintained.The main objectives of maintenance management are:

To achieve minimum breakdown and to keep the plant in goodworking condition at the lowest possible cost.

To keep the machines and other facilities in such a condition that

permits them to be used at their optimal capacity withoutinterruption. To ensure the availability of the machines, buildings and services

required by other sections of the factory for the performance of theirfunctions at optimal return on investment.


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Question9. Explain briefly Importance of Production &Operation Management?Ans: IMPORTANCE OF PRODUCTION MANAGEMENTProduction management has become an important now a day that it is treated to

be a separate, independent functional area of management. Production

management has assumed its importance because of the following reason:

1. It is the foundation for earning profits by producing goods or services and

selling them into the market.

2. It ensures that produced goods or services are of desired quality, in required

quantity and according to time-schedules.

3. It facilitates optimum inventory level.

4. It ensures proper co-ordination and necessary control, which are required foradequate, time and cost-conscious production.

5. It ensures coping with the changes in demands in the market and maintains

stability in the production department.

6.Effective production and operations management can:

a. lower a firms costs of production.

b. boost the quality of its goods and services.

c. allow it to respond dependably to customer demands.

d. enable it to renew itself by providing new products.

Benefits of Production and Operation management

The efficient Production Management will give benefits to the various sections ofthe society. They are:

Consumer benefits from improved industrial Productivity, increased usevalue in the product. Products are available to him at right place, at right

price, at right time, in desired quantity and of desired quality. Investors:They get increased security for their investments, adequate

market returns, and Creditability and good image in the society.

Employee gets adequate Wages, Job security, improved workingconditions and increased Personal and Job satisfaction.

Suppliers: Will get confidence in management and their bills can berealized without any delay.


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Community: community enjoys Benefits from economic and socialstability.

The Nation will achieve prospects and security because of increasedProductivity and healthy industrial atmosphere.

This is the Strategic Importance of Production and Operation Management.

Question-10. What is the Difference between Product and

Service?

Or

Question-11. Differentiate Product and Service. Whose

production system is more challenging and why?(July 2010)

Or

Question- 12. What are the major difference between

products and services? In which of them is production

management more challenging and why? (Dec 2010)

Ans

Product Services1. Products are Tangible. Productsare in physical possession.

2. Products are manufactured inproduction houses and delivered atretail ends. Shampoo, Cars.

3. Products are properly designedbefore the actual production starts.

4. Process of manufacturing ofProducts is generally not exposed tocustomers or end users.

5. Products are designed according

Services are intangible. Servicesgive peace of mind.

Services are created and deliveredat the same time e.g. haircut, carwash.

Services in many cases are notproperly designed in prior areinstantly discovered by thecustomers.In case of Services, Process Designis exposed to customer to attractthem.


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to the demand of market because itis the oldest equation of demandand supply or consumption &production.

6. Products are generallyinventoried. So significance ofcapacity design is fixed.

7. In product design and choice oflocation are not closely linked ascompared to service design.

8. Products have very high andsensitive barriers to entry due to so

many restrains such as productioninventory, geographical location,economy.

Services highly visible to customersand should be designed with that inmind. This adds an extra dimension

to process design which is absent inproduct design

Services cannot be inventoried. Thisposes on restriction on flexibility andleads to an increased importance incapacity design

Location is important to servicedesign. In fact design of services andchoice of location are often closely

linked.

Services have low barrier to entry.Some services (Non InformationTechnology BASED) have lowerbarriers to entry and exit. Thisplaces an additional pressure onservice design to be innovative andcost effective

UNIT - II

Question-13. What do you mean by Production system?Explain different type of production system.

Ans. TYPES OF PRODUCTION SYSTEMS AND SYSTEMA system is a logical arrangement of components designed to achieve particularobjectives according to a plan. According to Webster, System is a regularlyinteracting inter-dependent group of items forming a unified whole. A system

may have many components and variation in one component is likely to affectthe other components of the system e.g. change in rate of production will affectinventory, overtime hours etc. Production system is the framework within whichthe production activities of an organization are carried out. At one end of systemare inputs and at the other end output. Input and output are linked by certainprocesses or operations or activities imparting value to the inputs. Theseprocesses, operations or activities may be called production systems. The nature


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of production system may differ from company to company or from plant to plantin the same firm.

Elements of Production System(i) Inputs : Inputs are the physical and human resources utilised in the production

process. They consist of raw materials, parts, capital equipments, human effortsetc.(ii) Conversion Process : It refers to a series of operations which are performed onmaterials and parts.(iii) Outputs : Outputs are the prodl1;cts or completed parts resulting from theconversion process. Output generates revenue.(iv) Storage : Storage take place after the receipt of inputs, between oneoperation and the other and after the output.(v) Transportation : Inputs are transported from one operation to another in theproduction process.(vi) Information : It provides system control through measurement, comparison,

feedback, and corrective action.

Types of Production SystemsThere are two main types of production systems :

(i) Continuous System(ii) Intermittent System

i) Flow or Continuous System : According to Buffa, Continuous flowproduction situations are those where the facilities are standardised as toroutings and flow since inputs are standardised. Therefore a standard set ofprocesses and sequences of process can be adopted. Thus continuous or flow

production refers to the manufacturing of large quantities of a single or at most avery few varieties of products with a standard set of processes and sequences.The mass production is carried on continuously for stock in anticipation ofdemand.

Characteristics :(i) The volume of output is generally large (mass production) and goods areproduced in anticipation of demand.(ii) The product design and the operations sequence are standardised i.e.identical products are produced.(iii) Special purpose automatic machines are used to perform standardised

operations.(iv) Machine capacities are balanced so that materials are fed at one end of theprocess and finished product is received at the other end.(v) Fixed path materials handling equipment is used due to the predeterminedsequence of operations.(vi) Product layout designed according to a separate line for each product isconsidered.


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Merits(i) The main advantage of continuous system is that work-in-progress inventory isminimum.(ii) The quality of output is kept uniform because each stage develops skillthrough repetition of work.

(iii) Any delay at any stage is automatically detected.(iv) Handling of materials is reduced due to the set pattern of production line.Mostly the materials are handled through conveyer belts, roller conveyers, pipelines, overhead cranes etc.(v) Control over materials, cost and output is simplified.(vi) The work can be done by semi-skilled workers because of their specialization.

DemeritsContinuous system, however, is very rigid and if there is a fault in one operationthe entire process is disturbed. Due to continuous flow, it becomes necessary toavoid piling up of work or any blockage on the line.

Continuous production is of the following types :

(a) Mass Production : Mass production refers to the manufacturing ofstandardised parts or components on a large scale. Mass production systemoffers economies of scale as the volume of output is large. Quality of productstends to be uniform and high due to standardization and mechanisation. In aproperly designed and equipped process, individual expertise plays a lessprominent role.(b) Process Production : Production is carried on continuously through a uniformand standardised sequence of operations. Highly sophisticated and automatic

machines are used. Process production is employed in bulk processing of certainmaterials. The typical processing Industries are fertilizers plants, petrochemicalplants and milk dairies which have highly automated systems and sophisticatedcontrols. They are not labour intensive and the worker is just an operator tomonitor the system and take corrective steps if called for. On the basis of thenature of production process, flow production may be classified into Analyticaland Synthetic Production.(c) Assembly Lines : Assembly line a type of flow production which is developed inthe automobile industry in the USA. A manufacturing unit prefers to develop andemploy assembly line because it helps to improve the efficiency of production. In

an assembly line, each machine must directly receive material from the previousmachine and pass it directly to the next machine. Machine and equipment shouldbe arranged in such a manner that every operator has a free and safe access toeach machine. Space should be provided for free movement of fork lifts, trucksetc. which deliver materials and collect finished products.(ii) Intermittent Production SystemAccording to Buffa, Intermittent situations are those where the facilities must beflexible enough to handle a variety of products and sizes or where the basic


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nature of the activity imposes change of important characteristics of the input(e.g. change. in the product design). In instances such as these, no singlesequence pattern of operations is appropriate, so the relative location of theoperation must be a compromise that is best for all inputs considered together.In the industries following the intermittent production system, some components

may be made for inventory but they are combined differently for differentcustomers. The finished product is heterogenous but within a range ofstandardized options assembled by the producers. Since production is partly forstock and partly for consumer demand, there are problems to be met inscheduling, forecasting, control and coordination.

Characteristics :(i) The flow of production is intermittent, not continuous.(ii) The volume of production is generally small.(iii) A wide variety of products are produced.(iv) General purpose, machines and equipments are used so as to be adaptable to

a wide variety of operations.(v) No single sequence of operations is used and periodical adjustments are madeto suit different jobs or batches.(vi) Process layout is most suited.

Intermittent system is much more complex than continuous production becauseevery product has to be treated differently under the constraint of limitedresources. Intermittent system can be -effective in situations which satisfy thefollowing conditions:(i) The production centres should be located in such a manner so that they canhandle a wide range of inputs.

(ii) Transportation facilities between production centres should be flexible enoughto accommodate variety of routes for different inputs.(iii) It should be provided with necessary storage facility.Intermittent Production May be of two types :(a) Job Production :Job or unit production involves the manufacturing of singlecomplete unit with the use of a group of operators and process as per thecustomers order. This is a special order type of production. Each job or productis different from the other and no repetition is involved. The product is usuallycostly and non-standardised. Customers do not make demand for exactly thesame product on a continuing basis and therefore production becomesintermittent. Each product is a class by itself and constitutes a separate job for

production process. Ship building, electric power plant, dam construction etc. arecommon examples of job production.Characteristics :(i) The product manufactured is custom-made or non-standardised.(ii) Volume of output is generally small.(iii) Variable path materials handling equipment are used.(iv) A wide range of general purpose machines like grinders, drilling, press,shaper etc. is used.


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Merits :It is flexible and can be adopted easily to changes in product design. A fault inone operation does not result into complete stoppage of the process. Besides it iscost effective and time-effective since the nature of the operations in a group aresimilar. There is reduced material handling since machines are close in a cell. The

waiting period between operations is also reduced. This also results in a reducedwork-in-progress inventory.Demerits :Job shop manufacturing is the most complex system of production e.g. in buildinga ship thousands of individual parts must be fabricated and assembled. Acomplex schedule of activities is required to ensure smooth flow of work withoutany bottlenecks. Raw materials and work-in-progress inventories are high due touneven and irregular flow of work. Workloads are unbalanced, speed of work isslow and unit costs are high.

(b) Batch Production : It is defined as The manufacture of a product in small

or large batches or lots at intervals by a series of operations, each operationbeing carried out on the whole batch before any subsequent operation isperformed. The batch production is a mixture of mass production and jobproduction. Under it machines turn out different products at intervals, eachproduct being produced for comparatively short time using mass productionmethods. Both job production and batch production are similar in nature, exceptthat in batch production the quantity of product manufactured is comparativelylarge.

Demerits :Work-in-progress inventory is high and large storage space is required. Due to

frequent changes in product design no standard sequence of operation can beused. Machine set-ups and tooling arrangements have to be changed frequently.The main problem in batch production is the idle time between one operation andthe other. The work has to wait until a particular operation is carried out on thewhole batch.

Question 14 What do you mean by Plant Location andwhich factors affect Plant locations? Explain the differentPlant locations and their evaluations.Or

Question- 15. What is the importance of Plant Locationsystem? How are various locations evaluated?

Ans: PLANT LOCATIONPlant : A plant is a place, where men, materials, money, machinery etc. arebrought together for manufacturing products. The objective of minimisation ofcost of production can be achieved only when the plant is of the right size and at


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a right place where economies of all kinds in production are available. Theplanning for where to locate the operations facilities should start from what areorganizations objectives, priorities, goals and the strategies required to achievethe same in the general socio-economic-techno-business-legal environmentcurrently available and expected to be available in the long-term future. Unless

the objectives and priorities of an organization are clear i.e. the general directionis clear, effective functional or composite strategies cannot be designed. And, it isthese strategies of which the location design is a product.

Plant Location and Site SelectionThe major requirements for an Effective plant location are very crucial for thelong term success of the production organization. Production and Industrial plantsare almost always located very close to basic raw material plants and other basicnecessities to reduce transportation expenses, as the transportation is expensivedue to industrial tendencies. The plant considered must be adjacent to an

industrial outfit of same nature. The most optimum location would be in a wellorganized industrial area where there is a market for the concerned industrialgoods. The other considerations are as follows:1. Location, with respect to the marketing area2. Raw material Supply3. Transport facilities4. Availability of labor5. Availability of utilities: water, fuel, power6. Environmental impact, and effluent disposal7. Local community considerations.8. Climate

9. Availability of suitable land10. Political and strategic considerations

Plant location refers to the choice of region and the selection of a particular site

for setting up a business or factory. But the choice is made only after considering

cost and benefits of different

alternative sites. It is a strategic decision that cannot be changed once taken. If

at all changed only at considerable loss, the location should be selected as per its

own requirements and circumstances. Each individual plant is a case in itself.

Businessman should try to make an attempt for optimum or ideal location.

But question arises that What is an ideal Plant location?An ideal location is one where the cost of the product is kept to minimum, with a

large market share, the least risk and the maximum social gain. It is the place of

maximum net advantage or which gives lowest unit cost of production and

distribution. For achieving this objective, small-scale entrepreneur can make use

of locational analysis for this purpose.


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Factors Affecting Plant Location Decisions

Hardly there is any location which can be ideal or perfect. One has to strike abalance between various factors affecting plant location. Some factors are crucialin deciding the location of the plant while some other factors are less important.

In taking the decision of location of plant, due regard should be given tominimisation of cost of production & distribution and maximisation of profit. Thedecision of plant location should be based on nine Ms, namely money, material,manpower, market, motive power, management, machinery, means ofcommunication and momentum to an early start. The following are some of theimportant factors which the management must carefully bear in mind in selectingan optimum site for the plant :(i) Nearness to Raw Material : It will reduce the cost of transporting raw materialfrom the vendors end to the plant. Especially those plants which consume rawmaterial in bulk, or raw material is heavy weight, must be located close to thesource of raw material. If the raw materials are perishable, the plant is to be

located near the source of material. This is true of fruit canning industry. Sugarand paper and other industries using weight losing materials are also locatednear point of supply. Industries which depend for their raw materials on otherindustries tend to be located near such industries e.g. the petrochemicalsindustries are located near refineries. Similarly, Thermal Power Stations aresituated near coal mines. In case the raw material are imported, the unit must beestablished near the port. When a company uses a number of raw materials andtheir sources are at different location, the ideal site for the plant shall be a placewhere the transportation costs of various raw materials are the minimum. Apartfrom these considerations, a promoter must view the supply of raw materialsfrom the following angles also :

(a) If supply of raw materials is linked with finance, it must be set up where theraw material is available at reduced or concessional rates.(b) Reliability and continuity of the source of supply, and(c) The security of means of transport.(ii) Nearness to Markets : It reduces the cost of transportation as well as thechances of the finished products getting damaged and spoiled in the way.Moreover a plant being near to the market can catch a big share of the marketand can render quick service to the customers. Industries producing perishable orfragile commodities are also attracted towards the market because of savings intime and transportation costs. Industrial units have a tendency to disperse if theyfind a new market for their products.

(iii) Availability of Labour : Stable labour force, of right kind, of adequate size(number) and at reasonable rates with its proper attitude towards work are a fewfactors which govern plant location to a major extent. The purpose of themanagement is to face less bycotts, strikes or lockouts and to achieve lowerlabour cost per unit of production.(iv) Availability of Fuel and Power : Because of the wide spread of electric power,in most cases fuel (coal, oil etc.) has not remained a deciding factors for plant


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location. It is of course essential that electric power should remain availablecontinuously, in proper quantity and at reasonable rates.(v) Availability of Water : Water is used for processing, as in paper and chemicalindustries, and is also required for drinking and sanitary purposes. Dependingupon the nature of the plant, water should be available in adequate quantity and

should be of proper quality (clean and pure). A chemical, fertilizer, thermal powerstation etc. should not be set-up at a location which IS famous for water shortage.(vi) Climatic Conditions : Climate conditions also influence the location decision.Some industries need special type of climate to run the unit effectively. Forexample, cotton industry requires a humid climate and therefore it is mainlylocalised at Bombay, Ahmedabad, etc. But the scientific development and newinventions have lowered down the importance of the factor. So due to thedevelopment of artificial humidification, cotton textile industry can now bestarted in any region of the county. The question of climate is more important foragricultural product like tea, coffee, rubber, cotton etc. even today.(vii) Government Policy : Certain states give aid as loans, machinery, built up

sheds etc. to attract industrialists. In planned economy, Government plays animportant role on the location of industry. In India Government follows the policyof balanced regional growth of the country which is very important from the pointof view of defence and social problems like slum, disparity of income & wealthand optimum use of resources. In order to implement this policy, Governmentoffers several incentives to entrepreneurs to locate their industrial units inbackward regions or no-industry regions. It offers tax concessions or loan facilitiesor factorysheds at cheaper rates. Sometimes Government announces certain disincentivesto industries located at a certain place. Thus Government policy plays animportant role in the location of industry.

(viii) Land :The shape of the site, cost, drainage, the probability of floods,earthquakes (from the past history) etc. influence the selection of plant location.(ix) Community Attitude : Success of Industry depends very much on the attitudeof local people and whether they want to work or not.(x) Security : Considerations like law and order situation, political stability andsafety also influence the location decision. No entrepreneur will like to start theindustry at a place which is not safe and where there are law and orderdisturbances off and on.(xi) Transport Facilities : A lot of money is spent both in transporting the rawmaterial and the finished goods. Depending upon the size of raw material andfinished goods, a suitable method of transportation like roads, rail, water or air is

selected and accordingly the plant location is decided. Transportation costsdepend mainly on the weight carried and the distance to be covered. In someindustries, weight of the raw material is much higher than that of finishedproduct. e.g. in a weight losing industry like sugar manufacturing four to five tonsof sugarcanes have to be carried per ton of sugar. Similarly in Iron and SteelIndustry two tons of iron is required to produce one ton of pig iron. Therefore thetransport costs can be saved by locating near the source of materials. In case ofweight gaining industry, location near the market may result in savings in


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transportation costs. e.g. in soft drink the weight of finished product is higherthan raw material.(xii) Momentum of an early start : Another factor of some importance has beenthe momentum of an early start. Some places got localised only because one ortwo units of that industry started production there. With the passage of time,

these places gained importance and attracted other units of the industry. As aplace gains importance, certain facilities usually beg in to develop. For example,(i) transport facilities are developed because railways and other agencies find iteconomical to serve that centres, (ii) specialised firms start to take up repair andmaintenance job for such units, (iii) banking facilities are made available and (iv)labour possessing various skills are attracted there. These facilities further attractmore industries.(xiii) Personal Factors : Personal preferences and prejudices of an entrepreneuralso play an important role in the choice of location. Economic consideration donot weight much. For instance, Mr. Ford started cars manufacturing motor inDetroit because it was his home town. It must however, be recognized that such

location cannot endure unless they prove to be economical enough in the longrun.(xiv) Communication Facilities : Every business firm requires every type ofbusiness information regarding the position of labour, market, raw materials andfinished goods and this facility is available only when communication facilities arethere. As communications facilities are not adequately available in rural areas,industries are very much reluctant to start their business there.(xv) Other Considerations : There are certain other considerations that influencethe location decisions which are :(a) Presence of related Industry(b) Existence of hospitals, marketing centres, schools, banks, post office, clubs

etc.(c) Local bye-laws, taxes, building ordinances etc.(d) Facility for expansion(e) New enterprise owned or operated by a single group of companies should beso located that its work can be integrated with the work of the associatedestablishments.(f) Industries like nuclear power stations, processes explosive in nature, chemicalprocess likely to pollute the atmosphere should be located in remote areas.(g) Historical factors etc.

Question 15 Explain the different Plant locations and their

evaluations.OrQuestion - 16. Why are the location dicision are strategicdecision? Which factors affect the location of a plant?

(dec. 2010)

Ans :


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Locational analysis is a dynamic process where entrepreneur analyses and

compares the appropriateness or otherwise of alternative sites with the aim of

selecting the best site for a given enterprise. It consists the following:

(a) Demographic Analysis: It involves study of population in the area in terms

of total population (in no.), age composition, per capita income, educational level,

occupational structure etc.

(b) Trade Area Analysis: It is an analysis of the geographic area that provides

continued clientele to the firm. He would also see the feasibility of accessing the

trade area from alternative sites.

(c) Competitive Analysis: It helps to judge the nature, location, size and

quality of competition in a given trade area.

(d) Traffic analysis: To have a rough idea about the number of potential

customers passing by the proposed site during the working hours of the shop, the

traffic analysis aims at judging the alternative sites in terms of pedestrian and

vehicular traffic passing a site.(e) Site economics: Alternative sites are evaluated in terms of establishment

costs and operational costs under this. Costs of establishment is basically cost

incurred for permanent physical facilities but operational costs are incurred for

running business on day to day basis, they are also called as running costs.

Two sites A and B are evaluated in terms of above mentioned two costs as

follows:

Comparative Costs of Alternative Locations

Costs Site A (Rs.) Site B (Rs.)Cost of establishments:

Land and Buildings 350000 230000

Equipment 60000 60000

Transport facilities 20000 30000

Cost of operations:


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Materials, freight and

carriage

34000 24000

Taxes and insurance 10000 7500

Labour 100000 70000

Water, power and fuel 10000 8000

Total 429500 429500

The above cost statement indicates that site B is preferable to site A keeping in

mind economic considerations only although in some respects site A has lower

costs. By applying the definition of ideal location which is the place of maximum

net advantage or which gives lowest unit cost of production and distribution, siteB would be preferred.

SELECTION CRITERIAThe important considerations for selecting a suitable location are given asfollows:a) Natural or climatic conditions.b) Availability and nearness to the sources of raw material.c) Transport costs-in obtaining raw material and also distribution or marketingfinished products to the ultimate users.d) Access to market: small businesses in retail or wholesale or services should belocated within the vicinity of densely populated areas.e) Availability of Infrastructural facilities such as developed industrial sheds orsites, link roads, nearness to railway stations, airports or sea ports, availabilityof electricity, water, public utilities, civil amenities and means ofcommunication are important, especially for small scale businesses.f) Availability of skilled and non-skilled labour and technically qualified andtrained managers.g) Banking and financial institutions are located nearby.h) Locations with links: to develop industrial areas or business centers result insavings and cost reductions in transport overheads, miscellaneous expenses.i) Strategic considerations of safety and security should be given due importance.j) Government influences: Both positive and negative incentives to motivate anentrepreneur to choose a particular location are made available. Positiveincludes cheap overhead facilities like electricity, banking transport, tax relief,subsidies and liberalization. Negative incentives are in form of restrictions forsetting up industries in urban areas for reasons of pollution control anddecentralization of industries.k) Residence of small business entrepreneurs want to set up nearby their


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homelandsVarious different Situations for Plant Location Decision are as under

(i) To select a proper geographic region : The organizational objectivesalong with the various long-term considerations about marketing, technology,

internal organizational strengths and weaknesses, region specific resources andbusiness environment, legal-governmental environment, social environment andgeographical environment suggesta suitable region for locating the operations facility.(ii) Selecting a specific site within the region : Once the suitable region isidentified, the next problem is that of choosing the best site from an availableset. Choice of a site is much less dependent on the organizations long-termstrategies. It is more a question of evaluating alternative sites for their tangibleand intangible costs if the operations were located there. Cost economies nowfigure prominently at this final stage of facilities-location problem.(iii) Location choice for the first time : In this case, there is no prevailing

strategy to which one needs to confirm. However, the organizational strategieshave to be first decided upon before embarking upon the choice of the location ofthe operating facility/facilities. The importance of the long-term strategies can notbe over emphasized. Cost economics are always important but not at the cost oflong-term business/ organizational objectives.(iv) Location choice for an ongoing organization : A new plant has to fit intomulti-plant operations strategy as discussed below :(a) Plant Manufacturing Distinct Products or Product LinesThis strategy is necessary where the needs of technological and resource inputsare specialized fir distinctively different for the different products/productlines.For example, a high quality precision product-line should preferably not be

located along with other product-line requiring little emphasis on precision. It maynot be proper to have too many contradictions such as sophisticated and oldequipment, highly skilled and not so skilled personnel, delicate processes andthose that could permit rough handling, all under one roof and one set ofmanagers. Such a setting leads to much confusion regarding the requiredemphasis and the management policies. Product specialization may be necessaryin a highly competitive market; it may also be necessary in order to fully exploitthe special resource potential of a particular geographical area. Instances ofproduct specialization could be many : A watch manufacturing unit and amachine tools unit; a textile unit and a sophisticated organic chemical unit; aninjectible pharmaceuticals unit and a consumer products unit; etc. All these pairs

have to be distinctively different-in technological sophistication, in process, and inthe relative stress on certain aspects of management. The more decentralisedthese pairs are in terms of the management and in terms of their physicallocation, the better would be the planning and control and the utilization of theresources.(b) Manufacturing Plants Each supplying to a Specific Market AreaHere, each plant manufactures almost all of the companys product. This type ofstrategy is useful where market proximity consideration dominates the resources


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and technology considerations. This strategy requires a great deal of coordinationfrom the corporate office. An extreme example of this strategy is that of soft-drinks bottling plants.(c) Manufacturing Plants Divided According to the Product/Product Line beingManufactured; and these Special-Product Plants Located in Various Market Areas.

(d) Plants Divided on the Basic of the Processes or Stages in ManufacturingEach production process or stage of manufacturing may require distinctivelydifferent equipment capabilities, labour skills, technologies, and managerialpolicies and emphasis. Since the products of one plant feed into the other plant,this strategy requires much centralized coordination of the manufacturingactivities from the corporate office who are expected to understand the varioustechnological and resources nuances of all the plants. Sometimes such a strategyis used because of the defence/national security considerations. For instance, theOrdnance Factories in India.(e) Plants Emphasizing Flexibility in Adapting to Constantly Changing ProductNeeds

This needs much coordination between plants to meet the changing needs and atthe same time ensure efficient use of the facilities and resources. The new plantor branch-facility has to fit into the organizations existing strategy, mainlybecause the latter has been the product of deep thinking about the long-termprospects and problems, and strengths and weaknesses for the organization as awhole.

Question 17Explain the meaning, concept, objectives andtypes of Plant Layout.

Or

Question. 18. Discuss the objectives and Characteristics ofgood layout. What is the linkage between plant layout and

material handling?(July 2010)

Ans. MEANING OF PLANT LAYOUTPlant layout means the disposition of the various facilities (equipments, materials,manpower etc.) within the area of the site selected. Plant layout begins with thedesign of the factory building and goes up to the location and movement of work.


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All the facilities like equipments, raw materials, machinery, tools, fixtures,workers etc. are given a proper place. In the words of James Lundy, It identicallyinvolves the allocation of space and the arrangement of equipment in such amanner that overall costs are minimised. According to Mo Naughton Waynel, Agood layout results in comforts, convenience, appearance, safety and profits. A

poor layout results in congestion, waste, frustration and inefficiency.Plant layout is very complex in nature as it involves concepts relating to suchfields as engineering, architecture, economics and business administration. Sincea plant layout, when properly designed, encompasses all production and servicefacilities and provides for the most effective utilization of men, with materials andmachines constituting the process, is a master blue print for coordinating alloperations.

Objectives of a Good Plant Layout

The principal objective of a proper plant layout is to maximize the production at

the minimum of the costs. This objective should be kept in mind while designing alayout for a new plant as well as while making the necessary changes in theexisting layout in response to changes in management policies and processesand techniques of production. Besides, it must satisfy the needs of all peopleassociated with the production system, i.e. workers, supervisors and managers. Ifa layout is to fulfil this goal, it should be planned with the following clearobjectives in mind :i) There is the proper utilization of cubic space (Le. length, width and height).Maximum use of volume available should be made. For example, conveyors canbe run above head height and used as moving work in progress or tools andequipments can be suspended from the ceiling.

The principle is particularly true in stores where goods can be stored atconsiderable heights without inconvenience.ii) Waiting time of the semi-finished products is minimised.iii) Working conditions are safer, better (well ventilated rooms etc.) and improved.iv) Material handling and transportation is minimised and efficiently controlled.For this, one has to consider the movement distances between different workareas as well as the number of times such movements occur per unit period oftime.v) The movements made by the workers are minimised.vi) Suitable spaces are allocated to production centres.vii) Plant maintenance is simpler.viii) There is increased flexibility for changes in product design and for futureexpansion. It must be capable of incorporating, without major changes, newequipment to meet technological requirements or to eliminate waste.ix) A good layout permits materials to move through the plant at the desiredspeed with the lowest cost.x) There is increased productivity and better product quality with reduced capitalcost.


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xi) Boosting up employee morale by providing employee comforts andsatisfaction.xii) The workers should be so arranged that there is no difficulty in supervision,coordination and control. There should be no hiding-places into which goods canbe mislaid. Goods raw materials and ready stocks must be readily observable

at all times. It will reduce the pilferageof material and labour. It should be noted here that the above stated objectivesof plant layout are laudable in themselves, it is often difficult to reconcile all ofthem in a practical situation. And as such, the highest level of skill and judgementare required to be exercised. For this, close association between theentrepreneurs and experienced engineers is a must.Types of Plant LayoutThere are three basic types of plant layout : (i) Functional or process layout, (ii)product or line layout, (iii) stationary layout. However the choice of one or theother type of layout depends upon the machines and techniques used in theproduction.

(a) Process Layout : It is also known as functional layout and is characterised bykeeping similar machines or similar operations at one location (place). In otherwords, separate departments are established for each specialised operation ofproduction and machines relating to that functions are assembled there. Forexample, all lathe machines will be at one place, all milling machines at anotherand so on. This type of layout is generally employed for industries engaged in joborder production and non standardised products. The process layout may beillustrated in the diagram given below :Reciving Services, Shipping, Milling Surface, Packaging Deptt, Deptt. Finishing,Assembling, inspection O F F I C E SAdvantages :

i) Wide flexibility exists as regards allotment of work to equipments and workers.The production capacity is not arranged in rigid sequence and fixed rate capacitywith line balancing. Alteration or change in sequence of operations can easily bemade as and when required without upsetting the existing plant layout plan.ii) Better quality product, because the supervisors and workers attend to one typeof machines and operations.iii) Variety of jobs, coming as different job orders make the work more interestingfor workers.iv) Workers in one section are not affected by the nature of operations carried outin another section. e.g. a lathe operator is not affected by the rays of welding asthe two sections are quite separate.

v) Like product layout, the breakdown of one machine does not interrupt theentire production flow.vi) This type of layout requires lesser financial investment in machines andequipment because general purpose machines, which are usually of low costs,are used and duplication of machine is avoided. Moreover, general purposemachines do not depreciate or become obsolete as rapidly as specialisedmachines. It results in lower investment in machines.


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IN OUTOperation 1 Operation 2 Operation 3 Operation 4

Operation 5

vii) Under process layout, better and efficient supervision is possible because ofspecialisation in operation.Disadvantages :i) Automatic material handling is extremely difficult because fixed materialhandling equipment like conveyor belt cannot be possible to use.

ii) Completion of same product takes more time.iii) Raw material has to travel larger distances for getting processed to finishedgoods. This increases material handling and the associated costs.iv) It is not possible to implement the group incentive schemes on the basis ofquantity of the products manufacturing.v) This type of layout requires more floor space than the product layout becausea distinct department established for each operation.(vi) Compared to line layout inventory investments are usually higher in case ofprocess layout. It increases the need of working capital in the form of inventory.(vii) Under process layout, cost of supervision is high because (i) the number ofemployees per supervisor is less that resu1t in reduced supervisory span of

control, and (ii) the work is checked after each operation.(b) Product Layout : It is also known as line (type) layout. It implies that variousoperations on a product are performed in a sequence and the machines areplaced along the product flow line i.e. machines are arranged in the sequence inwhich a given product will be operated upon.This type of layout is preferred for continuous production i.e. involving acontinuous flow of in-process material towards the finished product stage. The fig.given below shows a product type of layout :

Advantages :

i) Automatic material handling, lesser material handling movements, time andcost.ii) Product completes in lesser time. Since materials are fed at one end of thelayout and finished product is collected at the other end, there is notransportation of raw materials backward and forward. It shortens themanufacturing time because it does not require any time consuming intervaltransportation till the completion of the process of production. Line balancing

may eliminate idle capacity.iii) Smooth and continuous flow of work. This plan ensures steady flow ofproduction with economy because bottlenecks or stoppage of work at differentpoints of production is got eliminated or avoided due to proper arrangement ofmachines in sequence.iv) Less in-process Inventory. The semi-finished product or work-in progress is theminimum and negligible under this type of layout because the process ofproduction is direct and uninterrupted.


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v) Effective quality control with reduced inspection points. It does not requirefrequent changes in machine set-up. Since production process is integrated andcontinuous, defective practice can easily be discovered and segregated. Thismakes inspection easy and economical.vi) Maximum use of space due to straight production flow and reduced need of

interim storing.

Disadvantages :

i) Since the specific product determines the layout, a change in product involvesmajor changes in layout and thus the layout flexibility is considerably reduced.ii) The pace or rate of working depends upon the output rate of the slowestmachine. This involves excessive idle time for other machines if the productionline is not adequately balanced.iii) Machines being scattered along the line, more machines of each type have tobe purchased for helping a few as stand by, because if one machine in the line

fails, it may lead to shut down of the complete production line.iv) It is difficult to increase production beyond the capacities of the productionlines.v) As the entire production is the result of the joint efforts of all operations in theline, it is difficult to implement individual incentive schemes.vi) Since there are no separate departments for various types of work,supervision is also difficult.vii) Under this system, labour cost is high because (a) absenteeism may createcertain problems because every worker is specialist in his own work or hespecialises on a particular machine. In order to avoid the bottleneck, surplusworkers who are generalists and can be fitted on a number of machines will have

to be employed; (b) monotony is another problem with the workers. By doing thework of repetitive nature along assembly line, they feel bore (c) as machines playthe dominant role in production under this system, workers have no opportunityto demonstrate their talent; (d) noise, vibrations, temperature, moisture, gas etc.may cause health hazards. In this way, labour costs are high.It is now quite clear from the above discussion that both the systems have theirown merits and demerits. Advantages of one type of layout are generally thedisadvantages of other type. Thus with a view to securing the advantage of boththe systems a combined layout may be designed.

(c) Static Product Layout or Project Layout or Stationary Layout

The manufacturing operations require the movements of men, machines, andmaterials, in the product layout and process layout generally the machines arefixed installations and the operators are static in terms of their specified workstations. It is only the materials which move from operation to operation for thepurpose of processing. But where the product is large in size and heavy in weight,it tends to be static e.g. ship building. In such a production system, the productremains static and men and machines move performing the operations on theproduct.


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Advantages of stationary Layout : The advantages of this type of layout areas under :1. Flexible : This layout is fully flexible and is capable of absorbing any sort ofchange in product and process. The project can be completed according to the

needs of the customers and as per their specification.2. Lower labour cost : People are drawn from functional departments. They moveback to their respective departments as soon as the work is over. This iseconomical, if a number of orders are at hand and each one is in a different stageof progress. Besides, one or two workers can be assigned to a project from startto finish. Thus it reduces labour cost.3. Saving in time :The sequence of operations can be changed if some materialsdo not arrive or if some people are absent. Since the job assignment is so long,different sets of people operate simultaneously on the same assignment doingdifferent operations.4. Other benefits : (i) It requires less floor space because machines and

equipment are in moving position and there is no need of fixing them.(ii) This arrangement is most suitable way of assembling large and heavyproducts.

Disadvantages of stationary layout :The disadvantages of this type of layoutare :(i) Higher capital investment : Compared to product or process layout, capitalinvestment is higher in this type of layout. Since a number of assignments aretaken, investment in materials, men and machines is made at a higher cost.(ii) Unsuitability : This type of layout is not suitable for manufacturing or

assembling small products in large quantities. It is suitable only in case where theproduct is big or the assembling process is complex.

Question 19. What are the various factors affecting PlantLayout?

Factors influencing Plant Layout

The following are some important factors which influence the planning ofeffective layout to a significant degree.

1. Nature of the product :The nature of product to be manufactured willsignificantly affect the layout of the plant. Stationary layout will be most suitablefor heavy products while line layout will be best for the manufacture of lightproducts because small and light products can bemoved from one machine to another very easily and, therefore, more attentioncan be paid to machine locations and handling of materials.2. Volume of Production :Volume of production and the standardisation of theproduct also affect the type of layout. If standardised commodities are to be


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manufactured on large scale, line type of layout may be adopted. If production ismade on the order of the customers, the functional layout is better to be adopted.3. Basic managerial policies and decisions :The type of layout depends verymuch on the decisions and policies of the management to be followed inproducing a commodity with regard to size of plant , kind and quality of the

product; scope for expansion to be provided for, the extent to which the plant isto be integrated, amount of stocks to be carried at any time, the kind ofemployee facilities to be provided etc.4. Nature of plant location : The size, shape and topography of the site atwhich plant is located will naturally affect the type of layout to be followed in viewof the maximum utilisation of space available. For example, if a site is near therailway line the arrangement of general layout for receiving and shipping and forthe best flow of production in and out the plant may be made by the side ofrailway line. If space is narrow and the production process is lengthy, the layoutof plant may be arranged on the land surface in the following manner :IN Out IN

Out5. Type of industry process :This is one of the most important factorsinfluencing the choice of type of plant layout. Generally the types of layoutparticularly the arrangement of machines and work centres and the location ofworkmen varies according to the nature of the industryto which the plant belongs. For the purpose of layout, industry may be classifiedinto two broad categories :(i) intermittent and (ii) continuous. Intermittent type of industries are those whichmanufacture different components or different machines. Such industries maymanufacture the parts, when required according to the market needs. Examplesof such industries are shipbuilding plants. In this type of industry functional layout

may be the best. The second type of industry in continuous industry. In this typeof industry raw materials are fed at one end and the finished goods are receivedat another end. A continuous industry may either be analytical or synthetical. Asanalytical industry breaks up the raw material into several parts during thecourse of production process or changes its form, e.g. oil and sugar refineries. Asynthetic industry, on the other hand mixes the two or more materials tomanufacture one product alongwith the process of production or assemblesseveral parts to get finished product. Cement and automobile industries areexamples of such industry. Line layout is more suitable in continuous processindustries.6. Types of methods of production :Layout plans may be different according

to the method of production proposed to be adopted. Any of the following threemethods may be adopted for production (i) Job order production, (ii) batchproduction, and (iii) Mass Production. Under job production goods are producedaccording to the orders of the customers and therefore, specifications vary fromcustomer to customer and the production cannot be standardised. The machinesand equipment can be arranged in a manner to suit the need of all types ofcustomers. Batch production carries the production of goods in batches or groupsat intervals. In this type of manufacturing the product is standardised and


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production is made generally in anticipation of sales. In such cases functional orprocess layout may be adopted. In case of mass production of standardisedgoods, line layout is most suitable form of plant layout.7. Nature of Machines : Nature of machines and equipment also affects thelayout of plant. If machines are heavy in weight or creates noisy atmosphere,

stationary layout may reasonably be adopted. Heavy machines are generallyfixed on the ground floor. Ample space should be provided for complicatedmachines to avoid accidents.8. Climate : Sometimes, temperature, illumination and air are the decidingfactors in deciding the location of machines and their establishments. Forexample, in lantern manufacturing industry, the spray painting room is built alongthe factory wall to ensure the required temperature control and air expulsion andthen the process of spray painting may be undertaken.9. Nature of Materials :Design and specifications of materials, physical andchemical properties of materials, quantity and quality of materials andcombination of materials are probably the most important factors to be

considered in planning a layout. So, materials storage and materials handlingshould be given due consideration. For materials storage factors such as rate ofconsumption of raw materials, space, volume and weight of raw materials, floorload capacity, ceiling height method of storing should be given specialconsideration. This will affect the space and the efficiency of the productionprocess in the plant. It will facilitate economic production goods and promptmaterials flow and a soundly conceived materials handling system.10. Type of machine and equipment :Machines and equipment may be eithergeneral purpose or special purpose. In addition certain tools are used. Therequirements of each machine and equipment are quite different in terms of theirspace, speed and material handling process and these factors should be given

proper consideration while choosing out a particular type of layout. It should alsobe considered that each machine and equipment is used to its fullest capacitybecause machines involve a huge investment. For instance, under product layout,certain machines may not be used to their full capacity so care should be takento make full use of the capacity of the machine and equipment.11. Human factor and working conditions :Man is the most important factorof production and therefore special consideration for their safety and comfortsshould be given while planning a layout, specific safety items like obstruction-freefloor, workers not exposed to hazards, exitetc. should be provided for. The layout should also provide for the comforts to theworkers such as provision of rest rooms, drinking water, lavatory and other

services etc. Sufficient space is also to be provided for free movement of workers.For this, provisions of Factories Actshould be followed strictly.12. Characteristics of the building : Shape of building, covered and openarea, number of storeys, facilities of elevators; parking area, storing place and soon also influence the layout plan. In most of the cases where building is hired,layout is to be adjusted within the space available in the building. Although minermodifications may be done to suit the needs of the plant and equipment. But if


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new building is to be constructed, proper care should be given to construct itaccording to the layout plan drawn by experts. Special type of construction isneeded to accommodate huge or technical or complex or sophisticated machinesand equipment. It is clear from the above description that several factors areconsidered while choosing out a plan for plant layout because they affect the

production and its cost to a great extent.The parameters considerations for the plant layout - The varioussignificant parameters considered to arrive at the plant layout are:

1. Economic considerations:

1.Construction and operating costsThe cost of construction can be minimized by adopting a layout that gives theshortest run of connecting pipe between equipment and the least amount ofstructural steel work

2. Process RequirementsThe location of certain pieces of equipment are based on the processrequirement. For example, a condenser is placed sufficiently high so as to have a

barometric leg.3. OperationEquipment that needs to have frequent operator attention should be locatedcon

question notes on production management (final)

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