PRODUCTION AND OPERATIONS MANAGEMENT

UNIT -1

Operation Management – Definition – Objectives – Types of production systems – historical development of

operations management – Current issues in operation management.

Product design – Requirements of good product design – product development – approaches – concepts in product
development – standardization – simplification – Speed to market – Introduction to concurrent engineering.

OPERATIONS MANAGEMENT: -
Operations management (OM) is the administration of business practices to create the highest level of efficiency
possible within an organization. It is concerned with converting materials and labor into goods and services as
efficiently as possible to maximize the profit of an organization. Operations management teams attempt to balance
costs with revenue to achieve the highest net operating profit possible.
Operations management is an area of management concerned with overseeing, designing, and controlling the process
of production and redesigning business operations in the production of goods or services.
In simple words, operation management as a systematic design direct and control of the process.
Operation management involves the systematic direction and control of the process that transform resources (input)
into finished goods or services for customers or clients (output).

This basic model applies equally in manufacturing and services organizations and both the private and non-
profit sectors.
• If the customers are dissatisfied, then the overall system should be revised.
• If the customer is being satisfied with the current process, then the process should be continued until the system/
process provides customer satisfaction.
• Finally, a transformation process is any activity or group of activities that takes one or more inputs, transfers, and adds
value to them and provides for customers or clients.

UNDERSTANDING OPERATIONS MANAGEMENT (OM)

Operations management involves utilizing resources from staff, materials, equipment, and technology. Operations
managers acquire, develop, and deliver goods to clients based on client needs and the abilities of the company.
Operations management handles various strategic issues, including determining the size of manufacturing plants and
project management methods and implementing the structure of information technology networks. Other operational
issues include the management of inventory levels, including work-in-process levels and raw materials acquisition,
quality control, materials handling, and maintenance policies.

OBJECTIVES OF OPERATIONS MANAGEMENT

Customer Service: The primary objective of operations management, is to utilize the resources of the organization,
to create such products or services that satisfy the needs of the consumers, by providing “right thing at the right price,
place and time”.
Resource Utilization: To make the best possible use of the organization’s resources to satisfy the wants of the
consumers, is another important objective of the operations management.
In operations management, the formation of goods or services encompasses conversion of inputs into outputs, wherein
different inputs such as capital, labour, material, machinery and information are combined and used to create output,
by using the conversion process. For this purpose, the organization measures different points in the process and then
compares the same with the set standards, to ascertain whether corrective action is required or not.

SCOPE OF OPERATIONS MANAGEMENT

Location of Facilities: The most important decision with respect to the operations management is the selection of
location, a huge investment is made by the firm in acquiring the building, arranging and installing plant and machinery.
And if the location is not suitable, then all of this investment will be called as a sheer wastage of money, time, and
efforts.
So, while choosing the location for the operations, company’s expansion plans, diversification plans, the supply of
materials, weather conditions, transportation facility and everything else which is essential in this regard should be
taken into consideration.
Product Design: Product design is all about an in-depth analysis of the customer’s requirements and giving a proper
shape to the idea, which thoroughly fulfils those requirements. It is a complete process of identification of needs of
the consumers to the final creation of a product which involves designing and marketing, product development, and
introduction of the product to the market.
Process Design: It is the planning and decision making of the entire workflow for transforming the raw material into
finished goods, It involves decisions regarding the choice of technology, process flow analysis, process selection, and
so forth.
Plant Layout: As the name signifies, plant layout is the grouping and arrangement of the personnel, machines,
equipment, storage space, and other facilities, which are used in the production process, to economically produce the
desired output, both quality wise and quantity wise.
Material Handling: Material Handling is all about holding and treatment of material within and outside the
organization. It is concerned with the movement of material from one go down to another, from go down to machine
and from one process to another, along with the packing and storing of the product.
Material Management: The part of management which deals with the procurement, use and control of the raw
material, which is required during the process of production. Its aim is to acquire, transport and store the material in
such a way to minimize the related cost. It tends to find out new sources of supply and develop a good relationship
with the suppliers to ensure an ongoing supply of material.
Quality Control: Quality Control is the systematic process of keeping an intended level of quality in the goods and
services, in which the organization deals. It attempts to prevent defects and make corrective actions (if they find any
defects during the quality control process), to ensure that the desired quality is maintained, at reasonable prices.
Maintenance Management: Machinery, tools and equipment play a crucial role in the process of production. So, if
they are not available at the time of need, due to any reason like downtime or breakage etc. then the entire process
will suffer.

IMPORTANCE OF OPERATION MANAGEMENT

Helps in achievement of objectives: Operations management has an effective role in the achievement of pre-
determined objectives of an organization. It ensures that all activities are going as per plans by continuously
monitoring all operations of organization.
Improves Employee productivity: Operation management improves the productivity of employees. It checks and
measures the performance of all people working in the organization. Operation manager trains and educate their
employees for better performance.
Enhance Goodwill: Operation management helps in improving the goodwill and presence of the organization. It
ensures that quality products are delivered to all customers that could provide them better satisfaction and makes them
happy.
Optimum utilization of resources: Operation management focuses on optimum utilization of all resources of the
organization. It frames proper strategies and accordingly continues all operations of the organization. Operation
managers keep a check on all activities and ensure that all resources are utilized on only useful means and are not
wasted.
Motivates Employees: Operation management helps in motivating the employees towards their roles. Operation
managers guide all peoples in performing their roles and provide them with better atmosphere. Employees are
remunerated and rewarded according to their performance level.
PRODUCTION
Definition: Production is the method of turning raw materials or inputs into finished goods or products in a
manufacturing process. In other words, it means the creation of something from basic inputs.

INPUTS OF PRODUCTION
Factors of production are the inputs needed for creating a good or service, and the factors of production include land,
labor, organization, capital and Technology.
PRODUCTION FUNCTION
Q=F(L,L1,K,T,O)
Where Q=Quantity
F= functional relationship
L=land ,L1 = labour K= capital T= Technology O= organization

PRODUCT:
A product is any item or service you sell to serve a customer’s need or want. This definition might seem simple, but
as you will learn in this guide, there is a lot more to a product than its at-first-glance attributes and what the customer
thinks they are paying for.
A product is the item offered for sale.
Or product can be a service or an item. It can be physical or in virtual or cyber form
There are four types of products and each is classified based on consumer habits, price, and product characteristics:
convenience goods, shopping goods, specialty products, and unsought goods .

TYPES OF PRODUCTION SYSTEMS

Production systems can be classified as
• Job-shop
• Batch
• Mass
• Continuous

1. Job-Shop Production
Job-shop production are characterized by manufacturing one or few quantity of products designed and produced as
per the specification of customers within prefixed time and cost. The distinguishing feature of this is low volume and
high variety of products.
Job production tends to be labour intensive, and often highly skilled labour is required. Examples include building
ships, bridges and buildings, handmade crafts like furniture and made-to-measure clothes.
In the job production flows, the company accepts a contract to produce one or a few units of a product strictly according
to the specifications given by the customer. The product is produced within a certain period and at a fixed cost. This
cost is fixed at the time of signing the contract.
Example: wedding dress for bride
Characteristics of jobbing production flows:
1. The production of items takes place in small batches.
2. Items are manufactured according to customer specifications.
3. Highly skilled labor is needed for specialized jobs
4. There is a disproportionate manufacturing cycle time.
2 Batch Productions
American Production and Inventory Control Society (APICS) defines batch Production as a form of manufacturing in
which the job pass through the functional departments in lots or batches and each lot may have a different routing.
In batch production flows, the production schedule is decided according to specific orders or is based on demand
forecasts. Here, the production of items takes place in lots or lots. A product is divided into different jobs. All jobs in
a production batch must be completed before starting the next production batch.
Examples: Baked goods, Clothing, Computer chips, Computer software, Die- or mold-making, and Electrical goods.
Flat-pack furniture, Jet engine production.
Characteristics of batch production flows:
1. Shorter production runs.
2. Plant and machinery are flexible.
3. Plant and machinery set up is used for the production of item in a batch and change of set up is required for
processing the next batch.
4. Manufacturing lead-time and cost are lower as compared to job order production
3. Mass production flows:
Here, the company produces different types of large-scale products and stores them in warehouses until they are
demanded in the market. Products are produced with the help of a single operation or use a series of operations.
E.g. Mass production is the production of toothpaste, soaps, pens, etc.
Characteristics of mass production flows:
1. Continuous production flow, depends on market demand.
2. Here, there is limited work in progress.
3. Supervision is easy: few instructions are necessary.
4. The material is mainly handled by machines.
5. The flow of materials is continuous with little or no glue.

4.Continuous Production
Production facilities are arranged as per the sequence of production operations from the first operations to the finished
product. The items are made to flow through the sequence of operations through material handling devices such as
conveyors, transfer devices, Oil refining chemicals synthetic fibers fertilizers etc.
Continuous Production is characterized by
1. Dedicated plant and equipment with zero flexibility.
2. Material handling is fully automated.
3. Process follows a predetermined sequence of operations.
4. Component materials cannot be readily identified with final product.
5. Planning and scheduling is a routine action.

HISTORICAL DEVELOPMENT OF OPERATIONS MANAGEMENT

Business did not always recognize the importance of operations management. In fact, following World War II the
marketing and finance functions were predominant in American corporations. The United States had just emerged
from the war as the undisputed global manufacturing leader due in large part to efficient operations. At the same time,
Japan and Europe were in ruins, their businesses and factories destroyed.
U.S. companies had these markets to themselves, and so the post-World War II
Period of the 1950s and 1960s represented the golden era for U.S. business. The primary opportunities were in the
areas of marketing, to develop the large potential markets for new products, and in finance, to support the growth.
Since there were
No significant competitors, the operations function became of secondary importance, because companies could sell
what they produced. Even the distinguished economist John Kenneth Galbraith observed, “The production problem
has been solved.”

Historical Milestones -When we think of what operations management does namely, managing the transformation of
inputs into goods and services—we can see that as a function it is as old as time. Think of any great organizational
effort, such as organizing the first Olympic Games, building the Great Wall of China, or erecting the Egyptian
pyramids, and you will see operations management at work. Operations management did not emerge as a formal field
of study, however, until the late 1950s and early 1960s, when scholars began to recognize that all production systems
face a common set of problems and to stress the systems approach to viewing operations processes. Many events
helped shape operations management. We will describe some of the most significant of these historical milestones
and explain their influence on the development of operations management. Later we will look at some current trends
in operations management.

The Industrial Revolution

The Industrial Revolution had a significant impact on the way goods are produced today. Before this time, products
were made by hand by skilled craftspeople in their shops or homes. Each product was unique, painstakingly made by
one person. The Industrial Revolution changed all that. It started in the 1770s with the development of a number of
inventions that relied on machine power Instead of human power. The most important of these was the steam engine,
which was invented by James Watt in 1764. The steam engine provided a new source of power that was used to replace
human labor in textile mills, machine-making plants, and other facilities. The concept of the factory was emerging. In
addition, the steam engine led to advances in transportation, such as railroads, that allowed for a wider distribution of
goods

About the same time, the concept of division of labor was introduced. First described by Adam Smith in 1776 in The
Wealth of Nations, this concept would become one of the important ideas behind the development of the assembly
line. Division of labor means that the production of a good is broken down into a series of small, elemental tasks, each
of which is performed by a different worker. The repetition of the task allows the worker to become highly specialized
in that task. 3 Division of labor allowed higher volumes to be produced, which, coupled with the advances in
transportation of steam-powered boats and railroads, opened up distant markets. A few years later, in 1790, Eli
Whitney introduced the concept of interchangeable parts. Prior to that time, every part used in a production process
was unique. Interchangeable parts are standardized so that every item in a batch of items fits equally. This concept
meant that we could move from one-at-a-time production to volume production, for example, in the manufacture of
watches, clocks, and similar items

Scientific Management:
Scientific management was an approach to management promoted by Frederick W. Taylor at the turn of the twentieth
century. Taylor was an engineer with an eye for efficiency. Through scientific management he sought to increase
worker productivity and organizational output. His concept had two key features. First, it assumed that workers are
motivated only by money and are limited only by their physical ability. Taylor believed that worker productivity is
governed by scientific laws and that it is up to management to discover these laws through measurement, analysis,
and observation. Workers are to be paid in direct proportion to how much they produce. The second feature of this
approach was the separation of the planning and doing functions in a company, which meant the separation of
management and labor. Management is responsible for designing productive systems and determining acceptable
worker output. Workers have no input into this process—they are permitted only to work. Many people did not like
the scientific management approach, especially workers, who thought that management used these methods to unfairly
increase output without paying them accordingly. Still, many companies adopted the scientific management approach.
Today many view scientific management as a major influence in the field of operations management. For example,
piece-rate incentives, in which workers are paid in direct proportion to their output, came out of this movement. Also,
Taylor introduced a widely used method of work measurement, stopwatch time studies. In stopwatch time studies,
observations are made and recorded of a worker performing a task over many cycles. This information is then used to
set a time standard for performing the particular task. This method is still used today to set a time standard for short,
repetitive tasks. The scientific management approach was popularized by Henry Ford, who used 4 the techniques in
his factories. Combining technology with scientific management, Ford introduced the moving assembly line to
produce Ford cars. Ford also combined scientific management with the division of labor and interchangeable parts to
develop the concept of mass production. These concepts and innovations helped him increase production and
efficiency at his factories.

The Human Relations Movement:

The scientific management movement and its philosophy dominated in the early twentieth century. However, this
changed with the publication of the results of the Hawthorne studies. The purpose of the Hawthorne studies, conducted
at a Western Electric plant in Hawthorne, Illinois, in the 1930s, was to study the effects of environmental changes,
such as changes in lighting and room temperature, on the productivity of assembly-line workers. The findings from
the study were unexpected: the productivity of the workers continued to increase regardless of the environmental
changes made. Elton Mayo, a sociologist from Harvard, concluded that the workers were actually motivated by the
attention they were given. The idea of workers responding to the attention they are given came to be known as the
Hawthorne effect. The study of these findings by many sociologists and psychologists led to the human relations
movement, an entirely new philosophy based on the recognition that factors other than money can contribute to worker
productivity. The impact of this new philosophy on the development of operations management has been tremendous.
Its influence can be seen in the implementation of a number of concepts that motivate workers by making their jobs
more interesting and meaningful. For example, the Hawthorne studies showed that scientific management had made
jobs too repetitive and boring. Job enlargement is an approach in which workers are given a larger portion of the total
task to do. Another approach to giving more meaning to jobs is job enrichment, in which workers are given a greater
role in planning. Recent studies have shown that environmental factors in the workplace, such as adequate lighting
and ventilation, can have a major impact on productivity. However, this does not contradict the principle that attention
from management is a positive factor in motivation.
Management Science
While some were focusing on the technical aspects of job design and others on the human aspects of operations
management, a third approach, called management science, was developing that would make its own unique
contribution. Management science focused on developing quantitative techniques for solving operations problems.
The first mathematical model for inventory management was developed by F.W. Harris in 1913. Shortly thereafter,
statistical sampling theory and quality control procedures were developed. World War II created an even greater need
for the ability to quantitatively solve complex problems of logistics control, for weapons system design and
deployment of missiles. Consequently, the techniques of management science grew more robust during the war and
continued to develop after the war was over. Many quantitative tools emerged to solve problems in forecasting,
inventory control, project management, and other areas. A mathematically oriented field, management science
provides operations management with tools to assist in decision making. A popular example of such a tool is linear
programming.
The Computer Age
In the 1970s the use of computers in business became widespread. With computers, many of the quantitative models
developed by management science could be employed on a larger scale. Data processing became easier, with important
effects in areas such as forecasting, scheduling, and inventory management. A particularly important computerized
system, material requirements planning (MRP), was developed for inventory control and scheduling. Material
requirements planning was able to process huge amounts of data in order to compute inventory requirements and
develop schedules for the production of thousands of items, processing that was impossible before the age of
computers. Today the exponential growth in computing capability continues to impact operations management. Just-
in-Time Just-in-time (JIT) is a major operations management philosophy, developed in Japan in the 1980s, that is
designed to achieve high-volume production using minimal amounts of inventory. This is achieved through
coordination of the flow of materials so that the right parts arrive at the right place in the right quantity; hence the term
just-in-time. However, JIT is much more than the coordinated movement of goods. It is an allinclusive organizational
philosophy that employs teams of workers to achieve continuous improvement in processes and organizational
efficiency by eliminating all organizational waste. Although JIT was first used in manufacturing, it has been 6
implemented in the service sector, for example, in the food service industry. JIT has had a profound impact on the
way companies manage their operations. It is credited with helping turn many companies around and is used by
companies such as Honda, Toyota, and General Motors. JIT promises to continue to transform businesses in the future.
Total Quality Management
As customers demand ever higher quality in their products and services, companies have been forced to focus on
improving quality in order to remain competitive. Total quality management (TQM) is a philosophy—promulgated
by “quality gurus” such as W. Edwards Deming—that aggressively seeks to improve product quality by eliminating
causes of product defects and making quality an allencompassing organizational philosophy. With TQM, everyone in
the company is responsible for quality. Practiced by some companies in the 1980s, TQM became pervasive in the
1990s and is an area of operations management that no competitive company has been able to ignore. Its importance
is demonstrated by the number of companies achieving ISO 9000 certification. ISO 9000 is a set of quality standards
developed for global manufacturers by the International Organization for Standardization (ISO) to control trade into
the then-emerging European Economic Community (EEC). Today ISO 9000 is a global set of standards, with many
companies requiring their suppliers to meet the standards as a condition for obtaining contracts.
Business Process Reengineering
Business process re -engineering means redesigning a company’s processes to increase efficiency, improve quality,
and reduce costs. In many companies things are done in a certain way that has been passed down over the years. Often
managers say, “Well, we’ve always done it this way.” Re-engineering requires asking why things are done in a certain
way, questioning assumptions, and then redesigning the processes. Operations management is a key player in a
company’s re-engineering efforts.

Flexibility Traditionally, companies competed by either mass-producing a standardized product or offering

customized products in small volumes. One of the current competitive challenges for companies is the need to offer
to customers a greater variety of product choices of a traditionally standardized product. This is the challenge of
flexibility. For example, Procter and Gamble offers 13 different 7 product designs in the Pampers line of diapers.
Although diapers are a standardized product, the product designs are customized to the different needs of customers,
such as the age, sex, and stage of development of the child using the diaper. One example of flexibility is mass
customization, which is the ability of a firm to produce highly customized goods and services and to do it at the high
volumes of mass production. Mass customization requires designing flexible operations and using delayed product
differentiation, also called postponement. This means keeping the product in generic form as long as possible and
postponing completion of the product until specific customer preferences are known.

Time-Based Competition
One of the most important trends within companies today is time-based competition—developing new products and
services faster than the competition, reaching the market first, and meeting customer orders most quickly. For example,
two companies may produce the same product, but if one is able to deliver it to the customer in two days and the other
in five days, the first company will make the sale and win over the customers. Time-based competition requires
specifically designing the operations function for speed
Supply Chain Management
Supply chain management (SCM) involves managing the flow of materials and information from suppliers and buyers
of raw materials all the way to the final customer. The network of entities that is involved in producing and delivering
a finished product to the final customer is called a supply chain. The objective is to have everyone in the chain work
together to reduce overall cost and improve quality and service delivery. Supply chain management requires a team
approach, with functions such as marketing, purchasing, operations, and engineering all working together. This
approach has been shown to result in more satisfied customers, meaning that everyone in the chain profits. SCM has
become possible with the development of information technology (IT) tools that enable collaborative planning and
scheduling. The technologies allow synchronized supply chain execution and design collaboration, which enables
companies to respond better and faster to changing market needs. Numerous companies, including Dell Computer,
WalMart, and Toyota, have achieved world class status by effectively managing their supply chains. SCM is as
important in the service industry as it is in manufacturing, even in pure service industries such as the creative arts.
Consider the publishing industry, which 8 is responsible for delivering the creative art of literature to readers. In the
traditional publishing supply chain, the publisher is typically responsible for all the functions involved in transforming
the author’s literary creation into a tangible product to be placed on a bookshelf. This includes editing, printing,
distribution, inventory management, and marketing. Many writers have seen the traditional publishing supply chain
as a setback to maintaining control and innovation over their art. Large publishing houses maintain control of many
critical functions of the supply chain, resulting in the commoditization of the literary arts being sold in chain-type
retailers.
Global Marketplace
Today businesses must think in terms of a global marketplace in order to compete effectively. This includes the way
they view their customers, competitors, and suppliers. Key issues are meeting customer needs and getting the right
product to markets as diverse as the Far East, Europe, or Africa. Operations management is responsible for most of
these decisions. OM decides whether to tailor products to different customer needs, where to locate facilities, how to
manage suppliers, and how to meet local government standards. Also, global competition has forced companies to
reach higher levels of excellence in the products and services they offer. Regional trading agreements, such as the
North American Free Trade 9 Agreement (NAFTA), the European Union (EU), and the global World Trade
Organization (WTO), guarantee continued competition on the international level.
Sustainability and Green Operations
There is increasing emphasis on the need to reduce waste, recycle, and reuse products and parts. This is known as
sustainability or green operations. Society has placed great pressure on business to focus on air and water quality,
waste disposal, global warming, and other environmental issues. Operations management plays a key role in
redesigning processes and products in order to meet and exceed environmental quality standards. The importance of
this issue is demonstrated by a set of standards termed ISO 14000. Developed by the International Organization for
Standardization (ISO), these standards provide guidelines and a certification program documenting a company’s
environmentally responsible actions.
Electronic Commerce Electronic commerce (e-commerce)
Is the use of the Internet for conducting business activities, such as communication, business transactions, and data
transfer. The Internet, developed from a government network called ARPANET created in 1969 by the U.S. Defense
Department, has become an essential business medium since the late 1990s, enabling efficient communication between
manufacturers, suppliers, distributors, and customers. It has allowed companies to reach more customers at a speed
infinitely faster than ever before. It also has significantly cut costs, as it provides direct links between entities. The
electronic commerce that occurs between businesses, known as B2B (business-to-business) commerce, makes up the
highest percentage of transactions. The most common B2B exchanges occur between companies and their suppliers,
such as General Electric’s Trading Process Network. A more familiar type of e-commerce occurs between businesses
and their customers, known as B2C (business-to-customer) exchange, as engaged in by on-line retailers such as
Amazon.com. E-commerce also occurs between customers, known as C2C (customer-to-customer) exchange, as on
consumer auction sites such as eBay. E-commerce is creating virtual marketplaces that continue to change the way
business functions.
Outsourcing and Flattening of the World
Outsourcing is obtaining goods or services from an outside provider. This can range from outsourcing of one aspect
of the operation, such as shipping, to outsourcing an entire part of the manufacturing process. The practice has rapidly
grown in recent years. Management guru Tom Peters has been quoted as saying, 10 “Do what you do best and
outsource the rest.” The convergence of technologies at the turn of this century has taken the concept of outsourcing
to a new level. Massive investments in technology, such as worldwide broadband connectivity, the increasing
availability and lower cost of computers, and the development of software such as e-mail, search engines, and other
software, allow individuals to work together in real time from anywhere in the world. This has enabled countries like
India, China, and many others to become part of the global supply chain for goods and services and has created a
“flattening” of the world. Such “flattening,” or leveling of the playing field, has enabled workers anywhere in the
world to compete globally for intellectual work. The result has been the outsourcing of virtually any job imaginable.
Manufacturers have outsourced software development and product design to engineers in India; accounting firms have
outsourced tax preparation to India; even some hospitals have outsourced the reading of CAT scans to doctors in India
and Australia. The “flattening” of the world has created a whole new level of global competition that is more intense
than ever before.
Today’s Operations Management Environment
Today’s OM environment is very different from what it was just a few years ago. Customers demand better quality,
greater speed, and lower costs. In order to succeed, companies have to be masters of the basics of operations
management. To achieve this ability, many companies are implementing a concept called lean systems. Lean systems
take a total system approach to creating an efficient operation and pull together best practice concepts, including just-
in-time (JIT), total quality management (TQM), continuous improvement, resource planning, and supply chain
management (SCM).
The need for efficiency has also led many companies to implement large information systems called enterprise
resource planning (ERP). ERP systems are large, sophisticated software programs for identifying and planning the
enterprise-wide resources needed to coordinate all activities involved in producing and delivering products to
customers. Applying best practices to operations management is not enough to give a company a competitive
advantage. The reason is that in today’s information age best practices are quickly passed to competitors.
To gain an advantage over their competitors, companies are continually looking for ways to better respond to
customers. This requires them to have a deep knowledge of their customers and to be able to anticipate their demands.
The development of customer relationship management (CRM) has 11 made it possible for companies to have this
detailed knowledge.
CRM encompasses software solutions that enable the firm to collect customer-specific data, information that can help
the firm identify profiles of its most loyal customers and provide customer-specific solutions. Also, CRM software
can be integrated with ERP software to connect customer requirements to the entire resource network of the company.
Another characteristic of today’s OM environment is the increased use of cross functional decision making, which
requires coordinated interaction and decision making among the different business functions of the organization. Until
recently, employees of a company made decisions in isolated departments, called “functional silos.” Today many
companies bring together experts from different departments into cross-functional teams to solve company problems.
Employees from each function must interact and coordinate their decisions, which require employees to understand
the roles of other business functions and the goals of the business as a whole, in addition to their own expertise.
Operations Management
in Practice Of all the business functions, operations is the most diverse in terms of the tasks performed. If you consider
all the issues involved in managing a transformation process, you can see that operations managers are never bored.
Who are operations managers and what do they do? The head of the operations function in a company usually holds
the title of vice president of operations, vice president of manufacturing, V.P., or director of supply chain operations
and generally reports directly to the president or chief operating officer. Below the vice president level are midlevel
managers: manufacturing manager, operations manager, quality control manager, plant manager, and others. Below
these managers are a variety of positions, such as quality specialist, production analyst, inventory analyst, and
production supervisor.
These people perform a variety of functions:
1) Analyzing production problems,
2) Developing forecasts,
3) Making plans for new products,
4) Measuring quality,
5) Monitoring inventory, and
6) Developing employee schedules.
Thus, there are many job opportunities in operations management at all levels of the company. In addition, operations
jobs tend to offer high salaries, interesting work, and excellent opportunities for advancement. Many corporate CEOs
today have come through the ranks of operations. For example, the third president and CEO of Wal-Mart from January
2000 to January 2009, H. Lee Scott, came from a background in operations and logistics. Also from the operations
background are the former CEO of Home Depot, Bob Nardelli, and the former CEO of Lowe’s, Robert Tillman

CURRENT ISSUES IN OPERATION MANAGEMENT

There are multiple challenges that operations managers face on a daily basis; this blog highlights the following five:
globalization, sustainability, ethical conduct, ineffective communication, and system design.
Globalization
Globalization101.org defines globalization as: “a process of interaction and integration among the people, companies,
and governments of different nations.” It is driven by a reduction in trade barriers, advancements in information
technology, and transportation technology. Operation managers face competition from the company across the street,
as well as, from across the country and across the world. Tishta Bachoo, Accounting Professor at Curtin University in
Australia, explains that companies who compete with others abroad will have to improve quality while lowering prices
to remain competitive. This falls on the operations manager as he or she is the one who “engages in the four functions
of planning, organizing, leading, and controlling to ensure that the product or service remains competitive in the
market.” Batchoo adds that the operations manager must tap into their creative skills as innovation will be a key factor
of success as will knowledge about international business and the myriad cultures of the businesses around the globe.

Sustainability
In her article, Business Definition of Operational Sustainability, Kay Miranda, journalist for the Houston Chronicle,
defines business operational sustainability as a “method of evaluating whether a business can maintain existing
practices without putting future resources at risk.” When discussing the concept of sustainability, it is often referred
to as the Three Pillars of Sustainability which are social, environmental, and economic. Operations managers must
concern themselves with the outcomes of each of the pillars including how their work affects safety, welfare,
communities, the environment and economic sustainability.
Effective operations managers must implement best practices with a concern for all three pillars of sustainability. They
also need to initiate and verify corrective action when any outcome of one of the three pillars becomes jeopardized.

Ethical Conduct
Education site ManagementStudyGuide.com takes special note of the role ethics plays in production. Ethics is defined
as a subset of business ethics that is “meant to ensure that the production function and/or activities are not damaging
to either the consumer or the society.” In particular organizations should consider the effects new technologies,
defective services, animal testing and business deals have on people, safety, and the environment.

Unethical behavior has significantly contributed to the demise of successful corporations like Enron, Tyco, and many
varied firms doing business on Wall Street. Being ethical across all business functions such as accounting, human
resource management, marketing and sales, and production are clearly within the purview of the operations manager.
Unethical behavior, regardless of its origin, becomes a stain on the company as a whole. The recently noted ethics
breach at Wells Fargo is just one poignant example.

Effective Communication
Being consistent and effective when communicating can be difficult anyone in any position within an organization.
The challenge for the operations manager is to be able to communicate effectively with all internal and external
stakeholders. Whether they are talking to someone on the factory floor, or in the boardroom, they must be able to
effectively communicate their message as well as process the messages being directed to them. Mastering oral, written,
and non-verbal communication is integral to making day-to-day operations run smoothly.
Effective and efficient communication is also necessary for building employee morale and deepening trust with
management. Operations managers who take the time to be self-reflective, the initiative to be authentic, and the effort
to work on their communication skills are bound to be both productive and successful. The development of these skills
are frequently the most requested of upper level management of their new and mid-level managers and required to be
successful in any company.

System Design
In Key Issues in Operations, a blog detailing the relationship between system design and operational management, the
main theme is that organizations must develop systems capable of “producing quality goods and services in demanded
quantities in acceptable time frames.” Designing the system, planning the system, and managing the system present a
wide variety of challenges to even the savviest operations managers.

As operations managers work in multidisciplinary environments, they must be aware of and effectively respond to the
challenges presented by globalization, sustainability, ethical conduct, effective communication, and system design.
Doing this calls for operations managers to excel in the business, technical, and interpersonal aspects of their work as
they actively support the mission and vision of their organization.

PRODUCTION DESIGN
Product design is the process designers use to blend user needs with business goals to help brands make consistently
successful products. Product designers work to optimize the user experience in the solutions they make for their
users—and help their brands by making products sustainable for longer-term business needs.
Product design consists of all the designing activities. These enable the designer to create thelook and feel of the
product. These include deciding the architecture of the product and choosing the required materials. It is also important
to understand the best design that willsuit the customer. The aim is to develop a design that will appeal to target
customers. Product design is appliedin the following fields:
⚫ developing medical equipment
⚫ Tableware
⚫ furniture
⚫ electronics
⚫ kitchen appliances
⚫ jewellery

The key to successful product design is understanding the end-user customer, the person for whom the product is
being created. Product designers attempt to solve real problems for real people by using empathy and knowledge of
their prospective customers’ habits, behaviors, frustrations, needs, and wants.

Ideally, product design’s execution is so flawless that no one notices; users can intuitively use the product as needed
because product design understood their needs and anticipated their usage.

Good product design practices thread themselves throughout the entire product lifecycle. Product design is essential
in creating the initial user experience and product offering, from pre-ideation user research to concept development to
prototyping and usability testing.
Stages of Product Design
The various stages of product design are:
1) Ideation
In this process, designers generate ideas for the design. This can originate from internal and external sources. Internal
sources include employees, market analysis, research and development and reverse engineering. In reverse
engineering, the competitors products are examined. This helps in generating new ideas. External sources include
feedback from customers, the current market trends, and bench-marking. Bench-marking helps in analysis an
organization product. A comparison with the best product in the current market helps in this process.
2) Feasibility study Here, the officials will carry out the following feasibility studies: Market, Economic, Technical,
Strategic, Risk analysis of the product The performance specifications are then determined for the particular product
concept. If they pass the feasibility study, they might get approved for development.
3) Preliminary design Here the design engineers transform the performance specifications into technical
specifications. The procedure involves developing a prototype and testing it. Based on its performance, the designer
revises the design and retests it.
4) Testing The prototype is tested many times before finalization. It is also tested in actual market surroundings.
This is required for gaining feedback from the target customer group.
5) Product launch After finalization of all decisions, the product is finally launched for the target customers.The
entire management, marketing and production team will work together during this phases

REQUIREMENTS OF GOOD PRODUCT DESIGN

Some essential factors of product design:
Before manufacturing, each product manufacturer would go through a lot of considerations. They need to ensure some
essential factors of product design before beginning sales. These are listed as follows:
1. Fitness for Purpose:
Every product is designed for a unique purpose. Before creating a product, the designer must know the product's
demand and what the customers require from the product. They should design the product with newer features that
are essential and desirable.
For example, mobile is essential for communications, but mobile phones with better camera quality are preferred.
2. Materials and Finish:
Before manufacturing a product, the designer must decide the material to be used. The designer must ensure that their
choices are compatible with each other. Since the materials used in their products also define its quality and guarantee,
the designer must have perfect knowledge about the product's materials.
3. Maintenance:
Most of the designers concentrate more on functions and aesthetics, and forget about maintenance. Proper maintenance
can prolong the longevity of the product. Using durable materials for easy maintenance adds to the overall cost of the
product. But this cost can be justified.
4. Efficiency:
The efficiency of a product depends directly on the quality of the product. Product designers must design their products
to ensure complete customer satisfaction. Only then will the product be in greater demand.
5. Cost Ratio:
Designers are trained to design a cost-efficient and higher quality product that will attract more consumers. While
designing a complementary product, the designer must consider the primary product's price and make their plans
accordingly.

PRODUCT DEVELOPMENT
Organizations have to come up with new ideas and new designs for their products. This is to maintain its position in
the market. Product development is the complete cycle of all such steps. This starts from the conceptualization to the
product deployment. The main goal of the product development process is to develop products according to customer
requirements.This will, in turn, increase the market share of the company. But every product might not satisfy all
customer demands. So, companies carry out a thorough analysis of their customer base. This helps them to identify
their target market and develop products accordingly

Product development is the complete process of taking an idea from concept to delivery and beyond. Whether you are
delivering a brand new offering or enhancing an existing product, the product development cycle begins long before
anything gets built.
Product development strategies are important to ensure value for your potential customers, as well as ensuring that
there is demand and that your final products are of the highest possible quality before your take the products to market.

The very best products also help society improve, whether through the product line itself or through the employment
and income generation the new items deliver.

On the business side of things, a new product can improve market share and create growth in a company, providing
economic sustainability through new revenue streams. Of course, it can take years for development teams to take a
product from the design process through to the point where it is ready to market and distribute. As a result, it is
important that a plan is put in place for any new or existing products to be successfully developed.
Stages of Product Development
The different stages of product development are
1) Idea Generation & Screening
2) Concept development
3) Business analysis
4) Product development
5) Test marketing
6) Commercialization
1) Idea Generation & Screening This stage involves the search for new ideas about a new product. In most
organizations,there is an idea on team that develops the ideas. The employees may choose only a handful of ideas.
The R & D team may also develop these ideas. External sources like their distributors and suppliers
can also contribute. In most cases, these have to meet client demands.Here, analysis and filtering of ideas
take place. Officials keep the best ones and discard the rest. The companies aim to look for ideas that can be profitable
products

2) Concept development After selection of an idea, the company has to transform it into a concept. The marketer
then creates alternative product concepts from the new concept. The company then compares the different alternatives.
They observe whether these alternatives will meet the customers needs.
3) Business analysis Here the officials analyse the sales, profit and costs associated with the product. By this, they
are able to understand whether the product is commercially feasible. Moreover, it has to meet the users demands. For
this, they conduct market surveys. Sales history of similar products is also analyzed.Additionally, it is important to
identify possible risks. This helps to reduce problems and developmental errors in the future
4) Product development If the product idea passes through all the previous stages, it is converted into a tangible
product. This helps to check how well it might work in the market. Thus, the R&D team might launch a prototype
model of the product concept. Additionally, the marketing team develops a strategy for distributing the product. The
finance team will calculate the finances associated with it. The advertising team will develop a strategy
for promoting the product.
5) Test marketing For obtaining customer feedback, the company launches a prototype. Through this,
the officials are able to test different strategies. These include marketing, positioning, advertising, targeting,
packaging, and financing. The customer feedback is taken into account. According to this data, the developers make
the required changes and enhancements
6) After test marketing, the company officials get a basic understanding of how the product might work in real life.
So, before the commercialization of the product, all the major decisions are taken. This will include the
identification of the target markets. The launch strategies are also prepared. After that, all the departments
collaborate and work on the product.
Role of a product developer

⚫ They analyze sales data, customer feedback, and product reviews. They also assess their competitors’ products
⚫ Consulting the manufacturing, design, finance and engineering team to develop product specifications
⚫ Supervising the final design and evaluating the prototype
⚫ The developer submits proposals to the project head for reviewing.
⚫ This enhances the development process

HOW TO CREATE A PRODUCT DEVELOPMENT PLAN

A product development plan should cover the journey from concept to market and engage as many stakeholders as
possible in the process to ensure their needs and concerns are addressed, while also engaging with the market to ensure
the final product will have market value.
The stages of development required for a product team can be broken down into the following areas:

1. Identify Market Need

The first stage in creating a product is determining if there is a need for it in the market. By speaking with customers
and taking on other research activities, such as test marketing and surveys, you should be able to tell if there is interest
in your product and the problems that it will solve.

2. Quantify the Opportunity

Just because there is a problem to be solved or an indication of market interest, does not necessarily mean that a
product should be created. Not every problem needs a product-based solution and there should also be a willingness
for a customer to pay the required price for the solution too.

3. Conceptualize the Product

You team can now begin to get creative and brainstorm ideas to design solutions that solve the problem and meet
market needs. This can lead to the creation of several potential solutions that will need to be assessed.

4. Validate the Solution

Prototype design and creation can be costly, so it is worth taking time to assess and validate your concepts. This
assessment can be carried out at a conceptual level to weed out those designs that are not worth pursuing further.

5. Build a Product Road map

Once the proposed concepts have been settled, it is time for the product management team to create a road map for
your product. This will identify which themes and goals are to be developed first to solve the most important parts of
your challenge. This step should lead to the creation of an early version of the product that can be tested and examined
by sections of the market. See below for more information about product road maps.

6. Develop a Minimum Viable Product (MVP)

Following your product road map should lead to the creation of a product that has enough functionality to be used by
your customer base. It may not be the finished product but should be enough to test the market and gain initial
feedback.

7. Release MVP to Test Users

The MVP should be released to sections of the market to test interest, gain feedback and allow you to begin to
determine marketing messages, channels and sales team plans. This can go further than the product itself and also
encompass packaging design ideas and pricing. This important stage provides a feedback loop between you and you
customer base to provide ideas, complaints, and suggestions to improve your final product.
8. Ongoing Assessment and Development
Using the feedback gained from the MVP release, you can now begin to work on enhancements and changes to your
product. By following the feedback from your customers you can make sure your design aligns with their needs. This
requires strategic goal setting and may involve several iterations before you achieve a finished product that is ready
for market. This step can feed back into the product road map and then lead to the subsequent stages being repeated
several times. Even when a finished product has been achieved, this stage can continue in order to optimism your
product further for later adaptations or improvement.

PRODUCTION DEVELOPMENT APPROACH

Design Thinking Approach

Design thinking incorporates the user experience into the design process, moving beyond the simple look and feel part
of product design. Design thinking was popularized by IDEO founder Tim Brown, who describes it as “a human-
centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities
of technology, and the requirements for business success.”

One of the aspects of design thinking that makes it so successful is the prototyping phase. Designers can help lower
the risk of launching a new product by testing the product design with small groups of users throughout the
development process. A prototype helps validate that the product is something a customer can understand, will use,
and that the design is appealing before the product goes to mass production.

Lean UX Approach
The Lean Start-up and Lean UX approaches take design thinking a step further, putting the prototyping process front
and center. Lean Start-up is an approach to starting a business venture that takes an idea, translates it into a product or
service, measures how customers respond, and then takes the leanings to pivot or iterate. Lean UX takes that same
approach and applies it specifically to design.

Lean UX focuses on the human experience behind the design. The deliverable s of the entire product development
strategy are less important than the learning the design process delivers. “The core objective is to focus on obtaining
feedback as early as possible so that it can be used to make quick decisions,” explains one UX blog.

The goal of Lean UX is to get feedback quickly and use it to continuously improve. It’s an approach that is particularly
collaborative – as if the customer is designing the product alongside the company. The drawback is that this approach
to design can ignore other factors related to development; Lean UX can lead to somewhat of a product design bubble.

Design Sprint Approach

The design sprint is a subset of the design thinking approach. There are five phases to the design sprint process that
takes place on five separate days:
• Map
• Sketch
• Decide
• Prototype
• Test
Design sprints focus on a small part of the problem, or one aspect of the design, rather than building a completely new
product. The process allows designers to work with their customers in the prototyping and testing phases, and to learn
quickly – within five days – to continue to design a winning product. Obviously, design sprints integrate elements
from the other approaches, but with a more focused, disciplined aspect to product design.

Which approach is right for you? It depends on the maturity of your company and the resources at your disposal.
Speak to one of the experts at Gembah to learn how our experts can help with product development strategy or Bombyx
PLM on how they can support your product development through digital transformation

STANDARDIZATION IN PRODUCT DEVELOPMENT

Product standardization is a process and strategy of manufacturing and selling products or services consistently. It
involves making sure that a product upholds certain standards for item quality, service delivery or appearance in every
market
The marketing of products sold internationally may be standardized to keep a uniform image among the varying
markets. For example, the Coca-Cola Company uses global standardization in marketing by keeping the appearance
of the product relatively unchanged between different markets.
It is a process of marketing a good or service without making any changes to it. If a product is changed at all, it is only
changed superficially. Otherwise, the characteristics of the good or service remain uniform. It is made using the same
materials and processes, has the same packaging and is marketed under the same name.

The strategy of product standardization requires a particular industry or organization to follow certain guidelines in
order to maintain the consistency of a product’s nature, appearance, and quality. These guidelines are ones that are
accepted on a general basis and are adhered to when producing a good or carrying out a service. The guidelines may
apply to one organization or one industry and may be applicable on a national level or an international level.

ADVANTAGES
Standardization has many benefits, especially in manufacturing.
1. Greater clarity & predictability
Standardization avoids any unpleasant surprises. Your processes (inputs & outputs) become predictable, and you can
plan them more easily. You know exactly how they’re configured, what steps they’re made up of, and how much time
they take. This is reassuring for staff and managers alike, as managers can then steer processes more easily and staff
know in advance what the outcomes should be.
2. Knowledge retention
Knowledge is the key to success, especially in our modern-day information society. By standardizing processes and
tasks, it becomes easier to document and then retain knowledge. Standardization involves drafting clear instructions,
which means it’s far less likely that you’ll lose important knowledge when someone leaves the company to find a new
job or retire. What’s more, it also helps you onboard new staff more quickly.
3. Greater flexibility
Standardization makes it easier to rotate staff because they have a clear blueprint guiding them and allowing them to
pick up other tasks more easily. What’s more, if you also standardize products and tools, it reduces the time needed
to find the right replacement components or parts when something breaks.
4. Consistent quality
Is everyone performing a certain task in exactly the same way? If so, then output and ultimately your end product will
be of a consistently high quality. In effect, this establishes an internal system of quality standards that can help set you
apart from your competition.
5. Easier compliance
Most manufacturers have to comply with international, national, or sector-specific standards, for example ISO 9000.
Non-compliance simply isn’t an option. In such a case, standardization acts as a control mechanism to help you comply
with all the rules, regulations, and requirements.

6. Reduced waste
When everyone in your organization is performing a task in the same way, it then becomes easier to spot any
bottlenecks or sources of waste. Once you’ve resolved these issues, your organization will become more economical
with its use of energy, raw materials, and human capital.

PROCESS OF STANDARDIZATION
Fundamentally, process standardization describes the establishment of a set of rules governing how people in an
organization are supposed to complete a given task or sequence of tasks
Standardization is generally thought of as a process that involves four stages. We need not think of them as being
chronological. Indeed, the process of standardization is an on-going one, and a whole range of forces are at work.
Selection
Variability is a fact of life for almost all languages. There are different regional dialects, class dialects, and situational
varieties. Standardization represents an attempt to curtail, minimize if not eliminate this high degree of variability.
The easiest solution seems to be to pick (although not arbitrarily) one of these varieties to be elevated to the status of
the standard.
Acceptance
The ‘acceptance’ by the community of the norms of the variety selected over those of rival varieties, through the
promotion, spread, establishment and enforcement of the norms. This is done through institutions, agencies, authorities
such as schools, ministries, the media, cultural establishments, etc. In fact, the standard language comes to be regarded
not just as the best form of the language, but as the language itself (eg consider the claim that Mandarin is Chinese in
Singapore). The other varieties are then dialects, which tend implicitly to get stigmatized as lesser forms, associated
with the not too highly regarded people, who are seen as less educated, slovenly, uncouth, etc.
Elaboration
For the variety selected to represent the desired norms, it must be able to discharge a whole range of functions that it
may be called upon to discharge, including abstract, intellectual functions. Where it lacks resources to do so, these are
developed. Thus a standard language is often characterized as possessing ‘maximal variation in function, minimal
variation in form’.
Codification
The norms and rules of grammar, use, etc. Which govern the variety selected have to be formulated, and set down
definitively in grammars, dictionaries, spellers, manuals of style, texts, etc.

PRODUCT SIMPLIFICATION, DIVERSIFICATION

An organization has to continuously evolve to create and modify an offering to stay in the market. With time, consumer
preferences change and if an organization fails to meet the needs and satisfy the wants of the target market, its products
will become outdated. For example, Nokia had to face severe challenges and had to be sold off as customers were
offered a better offering that exceeded their expectations. It continued with its ‘symbian’ operating system while
majority of the consumers preferred ‘android’ and ‘apple’ operating systems. Nokia since losing majority of its market
share had been striving to regain that lost position by introducing phones with Windows Operating system and also
android operating system on some of its phones.

Basis the market feedback and sales of its products, an organization adds new products to its product mix
or discontinue production of a product.
Product simplification or Product contraction refers to discontinuation of a certain product from a range of products
(product mix) by an organization to thin out the product line.
Product diversification happens when a new product is added to the product mix of an organization.
Product elimination is withdrawal of a product from the market. Thus, product simplification is achieved by product
elimination or termination.
Product simplification and product diversification are opposite to each other. Product diversification is done in two
ways – by adding a product to an existing product line and by creating an additional product line. It is done to ensure
that the firm doesn’t rely completely on existing products or product lines. For example, Samsung and Micromax
added laptops to its existing range of electronic items which is adding a new product to its product line. Mahindra and
Mahindra who have their core business of making Tractors and four wheelers started a new product line by getting
into two wheeler manufacturing like motorbikes and scooters.
The management of an organization have to face big challenge in decision making for product simplification and
diversifications. There could be a product not doing good and eating away the profits earned by other products.
Sometimes these products are marketed for hard core loyal customers. Then there could be products that are profitable
but the management believes that the resources used to manufacture this product could be utilized more efficiently to
make more profits.

Product elimination is elimination or complete withdrawal of a product from the market. For example, withdrawal of
ZEN model of car by Maruti Suzuki from Indian markets. The process of evaluation of a product’s performance falls
into the below categories-
1) Performance – sales, market share, costs involved in manufacturing, promotion and profit made
2) Product line/mix – if the product elimination will have impact on the sale or other products (product mix), brand,
and customer needs. For example, pharmaceutical companies ensure that their product elimination doesn’t affects the
need in the market.
3) Customer need – ability/ inability of the product to satisfy the need of the customer.
4) Operations – impact on manufacturing activity, marketing, resources, management’s and employee’s time, support
activities line servicing and maintenance.
5) Distributors and Suppliers – how the product elimination will impact the profits and relationships with suppliers
and distributors. The organisation has to assess how they will react to its decision.
6) Competitors – will the product elimination give advantage to competitors?

ADVANTAGES OF PRODUCT SIMPLIFICATION –

• Cost reduction – economies of scale are achieved as this process results in discontinuation of a product or a
product line. Various costs related to manufacturing, consultation, promotion, and time are diverted towards
other products.

• Better brand image – as unsuccessful products, which are not accepted in the market on large
• scale, are discontinued, the risk of them spoiling the organizations image is reduced to a large extent.

• Effectiveness in overall activities – the organization can focus on less products which brings specialisation
in all the functions of the organization.
 • Increase in profits – Low performing products, which were eating into the profits of successful products,
when eliminated increase the overall profits for the organization.

• Better relations with distributors – the less accepted products in markets when discontinued also help the
distributors who usually face the challenge of storing products and convincing buyers to buy the product.

• The wholesalers and retailers no longer need to invest their time and effort of selling low performing product .

SPEED TO MARKET
Speed to Market, or STM, refers to the speed by which you're able to establish your business presence through your
product or service. This can be considered an effective strategy and marker of success

Speed to market is a common catchphrase for insurance product development. Carriers with a focus on growth strive
to rapidly launch new and enhanced products to capture market share in targeted customer segments.

Speed-to-value refers to the need to continually develop innovative products and get them to market quickly. In our
industry, much of this responsibility falls to insurance carriers

They also speed the movement of a product to market. Profits on a mobile phone, for example, can be boosted by as
much as 50 percent if it hits the market a month ahead of schedule.

WHY IS SPEED TO MARKET IMPORTANT?

Your speed to market is important because it dictates how fast you'll get your product to your customers and whether
you're faster than your competition.
Delivering your product before your competitors is a market advantage and can help you develop a reputation as an
industry leader.

BENEFITS OF INCREASING INTERNATIONAL SPEED TO MARKET

There are a number of benefits associated with international speed to market including innovation, competitive
advantage and experiential learning. Let’s explore a few of these advantages in more detail.

PROMOTE COMPETITIVE ADVANTAGE

By entering a new market quickly and efficiently, your company is in a better position to gain a competitive advantage.
Many firms choose to expand globally to test their product or service with a fresh, new consumer base. In addition,
it’s common that your new customers may be experiencing your product or service for the first time, depending on
the category or industry you serve and country you choose to enter.
When you enter the market at a rapid rate, you can attract a larger customer base. As a result, you can establish loyalty
before your competitors. This will pay off in long-term gains as new companies enter the market.

CREATE A POSITIVE REPUTATION

When your company quickly enters a new country, you’ll have more time to partner with local experts and build your
reputation in the marketplace. Plus, if you’re late to the game, your company may start to lose credibility.

Decreased international speed to market may cause your company to develop a reputation for being a follower rather
than an industry leader.

ESTABLISH MARKET DOMINATION

In some international markets, obtaining complete domination in your industry can be a struggle. For example,
Shanghai Jahwa in China has managed to successfully defend their home turf against such multinationals as Compaq
and Unilever.

Instead of accepting defeat, multinational organizations like yours can learn from these examples of companies in
emerging markets. This allows your team to gain insight into your own strategic options.

Be sure to visit your target country and assess the competitive landscape before committing to the market. Determine
if there’s a need for your product or service and if you have tough competition that is already well established. After
a thorough assessment, you can make a decision based on your likelihood of success with the current competitive
landscape.

METHOD FOR INCREASING INTERNATIONAL SPEED TO MARKET

Now that you understand the benefits and importance of increasing your international speed to market, it’s time to
learn how you can establish a legal presence in your target country fast

We highly suggest avoiding a permanent subsidiary, which consists of high costs and lengthy lead times. Instead, use
an agile global expansion solution such as International PEO. This employer or record (EOR) service allows
companies to quickly and easily enter a desired market. An International PEO handles risk mitigation, compliance,
payroll, benefits, and basically everything that makes going global hard.

To learn more about the benefits of working with Velocity Global experts, and see how our services can help you establish a legal
presence overseas, give us a call today

CON –CURRENT ENGINEERING

Concurrent engineering, also known as simultaneous engineering, is a method of designing and developing products,
in which the different stages run simultaneously, rather than consecutively. It decreases product development time
and also the time to market, leading to improved productivity and reduced costs.

Concurrent Engineering is a long term business strategy, with long term benefits to business. Though initial
implementation can be challenging, the competitive advantage means it is beneficial in the long term. It removes the
need to have multiple design reworks, by creating an environment for designing a product right the first time round

Concurrent engineering is a systematic approach to the integrated, concurrent design of products and their related
processes, including manufacture and support. This approach is intended to cause the developers from the outset, to
consider all elements of the product life cycle from conception to disposal, including quality, cost, schedule, and user
requirements.
Concurrent engineering or Simultaneous Engineering is a methodology of restructuring the product development
activity in a manufacturing organization using a cross-functional team approach and is a technique adopted to improve
the efficiency of product design and reduce the product development cycle time. This is also sometimes referred to as
Parallel Engineering. Concurrent Engineering brings together a wide

Concurrent engineering or Simultaneous Engineering is a methodology of restructuring the product development

activity in a manufacturing organization using a cross-functional team approach and is a technique adopted to improve
the efficiency of product design and reduce the product development cycle time. This is also sometimes referred to as
Parallel Engineering. Concurrent Engineering brings together a wide
WHY CONCURRENT ENGINEERING?
Increasing product variety and technical complexity that prolong the product development process and make it more
difficult to predict the impact of design decisions on the functionality and performance of the final product.
• Increasing global competitive pressure that results from the emerging concept of reengineering.
• The need for rapid response to fast-changing consumer demand.
• The need for shorter product life cycle.
• Large organizations with several departments working on developing numerous products at the same time.
• New and innovative technologies emerging at a very high rate, thus causing the new product to be
technological obsolete within a short period.
CE is the application of a mixture of all the following techniques to evaluate the total life-cycle cost and quality.
1. Axiomatic design
2. Design for manufacturing guidelines
3. Design science
4. Design for assembly
5. The Taguchi method for robust design
6. Manufacturing process design rules
7. Computer-aided DFM
8. Group technology
9. Failure-mode and effects analysis
10. Value engineering
11. Quality function deployment

BASIC PRINCIPLE IN CONCURRENT ENGINEERING

• Start all tasks as early as possible
• Utilize all relevant information as early as possible
• Work structuring: systematically structure the work or work environment so that each task can be performed
independently of each other either by a machine, human or computer
• Everyone participates in defining the objectives of their work Operational understanding is achieved for all
relevant information as team will work better if they know what other members are doing e.g. what
constraints a team member could encounter when certain parameters will be changed.
• A strong commitment is made to adhere to the decisions taken earlier.
• Decisions are made in a single trade-off space.
• Decisions are robust, overcoming a natural tendency to resort to quick, novel decisions.
• Trust among teammates Trusting members, if they agree to accept responsibility for a task, prefer to work
together rather in isolation. This will also lead to better teamwork affinity.
• The team strives for consensus.

UNIT – II
VALUE ENGINEERING
Value engineering – objective – types of values – function & cost – product life cycle- steps in value engineering –
methodology in value engineering – FAST Diagram – Matrix Method.

Location – Facility location and layout – Factors considerations in Plant location- Comparative Study of rural and
urban sites – Methods of selection plant layout – objective of good layout – Principles – Types of layouts – line
balancing.

VALUE ENGINEERING
What Is Value Engineering?
Value engineering is a systematic, organized approach to providing necessary functions in a project at the lowest cost.
Value engineering promotes the substitution of materials and methods with less expensive alternatives, without
sacrificing functionality. It is focused solely on the functions of various components and materials, rather than their
physical attributes. Value engineering is also called value analysis.
Value engineering refers to the systematic method of improving the value of a product that a project produces. It is
used to analyze a service, system, or product to determine the best way to manage the important functions while
reducing the cost.

Understanding Value Engineering

Value engineering is the review of new or existing products during the design phase to reduce costs and increase
functionality to increase the value of the product. The value of an item is defined as the most cost-effective way of
producing an item without taking away from its purpose. Therefore, reducing costs at the expense of quality is simply
a cost-cutting strategy.

The concept of value engineering evolved in the 1940s at General Electric, in the midst of World War II.1 Due to the
war, purchase engineer Lawrence Miles and others sought substitutes for materials and components since there was a
chronic shortage of them. These substitutes were often found to reduce costs and provided equal or better performance.

Special Considerations
Miles defined product value as the ratio of two elements: function to cost. The function of an item is the specific work
it was designed to perform, and the cost refers to the cost of the item during its life cycle. The ratio of function to cost
implies that the value of a product can be increased by either improving its function or decreasing its cost. In value
engineering, the cost related to production, design, maintenance, and replacement are included in the analysis.
For example, consider a new tech product is being designed and is slated to have a life cycle of only two years. The
product will thus be designed with the least expensive materials and resources that will serve up to the end of the
product’s life cycle, saving the manufacturer and the end-consumer money. This is an example of improving value by
reducing costs.

OBJECTIVES
The basic objective of value engineering is to achieve equivalent or better performance at a lower cost while
maintaining all functional 7 quality requirement. It does this largely by identifying & alimenting hidden,
invisible & unnecessary costs. Value engineering helps in improving efficiency as well as effectiveness of
products, system & procedures. The objectives of value engineering are as follows:

1) To enable people to pinpoint areas that needs attention & improvement.

2) To provide a method of generating ideas 7 alternatives for possible solution to a problem.
3) To provide a means of devaluing alternatives including intangible factors
4) To provide a vehicle for dialogue.
5) To document the rationale behind decisions.
6) To materially improves the value of goods & services.

STEPS IN VALUE ENGINEERING

Value engineering can be broken down into the following phases:
1. Information
The information phase involves gathering project information and refining the goals of the project. Data is collected
and analyzed, and the information obtained is used to finalize the priorities of the project and areas of improvement.
The potential issues are broken down into constituent components, which are elements to be addressed. This phase
also involves identifying the methods that the team will use to evaluate the progress of the project.
2. Function Analysis
The function analysis phase involves determining the functions of the project and identifying them with a verb/noun
combination for every element under evaluation. The function is defined as the set targets to be attained through the
execution of an element or a set of elements.
Each of the identified functions is analyzed to determine if there are improvements to be made and if a new function
is required. An example of a function can be “disinfect water.”
The function should be as non-specific as possible, to leave room for multiple options that perform the function
presented by the project. A cost is assigned to each identified function.
3. Creative
The creative phase follows the function analysis phase, and it involves exploring the various ways to perform the
function(s) identified in the function analysis phase. This allows team members to brainstorm alternatives to existing
systems or methods that are in use.
Brainstorming forces people to be creative and allows team members to speculate on all possible solutions to the
problems presented, or alternatives to the function. The team is required to develop a list of potential solutions to the
function formulated by the verb/noun combination.
4. Evaluation
In the evaluation phase, the merits and demerits of each of the suggested solutions and alternatives from the creative
phase are listed. The team should describe each advantage and disadvantage in general terms.
When the disadvantages exceed the advantages, the alternative is dropped in favor of other solid alternatives. The
team performs a weighted matrix analysis to group and rank the alternatives, and the best alternatives are selected for
consideration in the next phase.
5. Development
The development phase involves conducting an in-depth analysis of each best alternative to determine how it can be
implemented and the cost involved. The examination of each alternative may involve creating sketches, cost estimates,
and other technical analysis Technical Analysis - A Beginner's Guide Technical analysis is a form of investment
valuation that analyses past prices to predict future price action. Technical analysts believe that the collective actions
of all the participants in the market accurately reflect all relevant information, and therefore, continually assign a fair
market value to securities..
Team members formulate an implementation plan for the project, which describes the process to be followed in
implementing the final recommendations.
6. Presentation
The presentation phase Data Presentation Analysts need to effectively communicate the output of financial analysis
to management, investors, and business partners. is where the team meets with the management and other stakeholders
to present their final report. The team is required to present their findings to the decision-makers using reports, flow
charts, and other presentation materials to convince them that the final ideas from the development phase should be
implemented.
The ideas should be described in detail, including associated costs, benefits, and potential challenges. The final report
acts as a record of the team’s accomplishments during the study and a summary of the team’s deliberations and
findings. It can also act as a reference tool for the company in future projects.
7. Implementation
Implementation of the project begins after the management’s approval of the team recommendations. If there are
changes requested by the management or other decision-makers, these changes should be incorporated into the
implementation plan before the implementation begins.
When implementing the project, the team should ensure that the primary goal of increasing value is achieved. The
actual cost savings of the project should be determined based on the implementation of the recommendations.

DEFINITION OF VALUE ANALYSIS:

Value Analysis is a tool of management which attempts the question of saving cost from the point of view of, ‘Value’
or in other words the main aim is to study the relationship between the design function and cost of a part, keeping in
view to reduce part and cost through change in design, modification in specification of the material used by changing
the source of supply and so on. The Value Engineering is also known as value analysis.

Value Analysis is a technique of cost reduction based on systematic and organised examina-tion of every item of cost
which goes into the manufacture of the industrial product in terms of the value or customer satisfaction it adds to the
product.

Another definition of Value Analysis is “the systematic examination of all factors which contribute to the cost of a
product, part or a material with the object of uncovering these possi-bilities of cost reduction which will not in any
way reduce the quality, performance or any other attribute of the product which is sought by the customer.”

Value Analysis is “the systematic examination of all factors which contribute to the cost of a product, part or a material
with the object of uncovering these possi-bilities of cost reduction which will not in any way reduce the quality,
performance or any other attribute of the product which is sought by the customer.”

Types of Values:
1. Cost Value:
It is the cost of manufacturing a product or component.
2. Use Value:
It considers work done, functions performed or service rendered and effi-ciency/effectiveness of the product.
3. Esteem Value:
It involves the qualities and appearance of the product which attracts persons and creates a desire in them to posses
the product.

4. Exchange Value:
It considers the properties or qualities which will remain attractive enough to other people to permit market resale in
the future.
Maximum value is obtained when essential function is achieved for minimum cost.
This statement can be expressed mathematically as follows:
Vmax = F/ Cmin
where, Vmax = Maximum value, F = Functions, Cmin = Minimum cost
Functions of a Product in Value Analysis:
Functions of a product can be classified into following two categories:

1. Basic (or Primary) Functions:

These are the functions without which the product would virtually lose all of its value, and in some cases even its
identity. For example, if lead is removed from an ordinary wooden lead pencil, it would not only eliminate its basic
function of pencil but will leave us with not more than a stick.
2. Secondary Functions:
These functions support the basic functions, although they may or may not be essential functions. For example, pencil
without lead may still remain the esteem value by just being seen in the pocket.

Steps in Value Analysis Approach:

Sequence of steps for systematic approach of value analysis is:

1. Orientation:
Familiarization with needs, specifications and customer desire.
2. Information: All those facts which have bearing on the problem should be gathered.
A typical list of information gathered is given hereunder:
a. Engineering information
b. Procurement information
c. Reliability
d. Materials information
e. Cost information
f. Tooling
g. Manufacturing information
h. Quality control—rejection, tolerance.
i. Customers experience
j. Packaging and preservation
k. Testing
l. Scheduling
3. Creativity:
Use of imagination and brain storming. Adopt the process of blast, create and then refine.
4. Evaluation (Analysis):
Estimate value of ideas and explore best
5.Planning:
After selecting few alternatives or combination of alternatives, each of them investigated thoroughly. On the basis of
final outcome, detailed planning is carried out and a report is prepared for approval.
6. Execution (Implementation):
After approval of the proposals, its recommendations are implemented. Value engineers are expected to see that the
approved recommendations are implemented and hindrances, if any can be sorted out.
7. Un-Necessary Costs and Value Analysis:
Un-necessary costs are those costs which neither contributes to function nor the appearance of the product. Value
engineering/analysis attacks un-necessary costs to overcome or minimize them.
METHODOLOGY AND APPROACH
During the actual Workshop portion of the VE study, the five-step Job Plan is followed, as prescribed by SAVE
International:

The VE Job Plan follows five key steps:

• Information Phase
• Speculation (Creative) Phase
• Evaluation (Analysis) Phase
• Development Phase (Value Management Proposals)
• Presentation Phase (Report/Oral Presentation)

These five key steps are described as follows:

1. Information Phase
At the beginning of the VE Study, it is important to:
Understand the background and decisions that have influenced the development of the design through a formal design
presentation by the design A/E.
Analyze the key functional issues governing the project. The functions of any facility or system are the controlling
elements in the overall VE approach. This procedure forces the participants to think in terms of function, and the cost
and impacts associated with that function.
Define Owner's objectives and key criteria governing the project.
Determine Owner's definition of Value.
2. Speculation (Creative) Phase
This step in the VE study involves the listing of creative ideas.
The VE Team thinks of as many ways as possible to provide the necessary function within the project areas at a lesser
initial or Life-Cycle Cost which represent improved value to the client.
Judgment of the ideas is prohibited.
The VE Team is looking for quantity and association of ideas, which will be screened in the next phase of the study.
Many of the ideas brought forth in the creative phase are a result of work done in the function analysis. This list may
include ideas that can be further evaluated and used in the design.

3. Evaluation (Analysis) Phase

In this phase of the Project, the VE Team, together with the Client and/or Users,
Defines the criteria to be used for evaluation.
Analyses and judges the ideas resulting from the creative session. Ideas found to be impractical or not worthy of
additional study are discarded. Those ideas that represent the greatest potential for cost savings and value improvement
are developed further. A weighted evaluation is applied in some cases to account for impacts other than costs (such as
schedule impacts, aesthetics, etc.).
4. Development Phase
During the development phase of the VE study, many of the ideas are expanded into workable solutions. The
development consists of:
• Description of the recommended design change.
• Descriptive evaluation of the advantages and disadvantages of the proposed recommendation.
• Cost comparison and LCC calculations.
• Each recommendation is presented with a brief narrative to compare the original design method to the
proposed change.
• Sketches and design calculations, where appropriate, are also included in this part of the study.
5. Presentation Phase
The last phase of the VE Study is the presentation of the recommendations in the form of a written report. A
briefing/oral presentation of results is made to the Client and Users, as well as the Design Team representatives. The
recommendations, the rationale that went into the development of each proposal, and a summary of key cost impacts
are presented at that time so that a decision can be made as to which Value Management proposals will be accepted
for implementation and incorporation into the design documents.
• In addition to the monetary benefits, a VE Workshop provides a valuable opportunity for key project
participants to come together, then step aside and view the project from a different perspective. The VE
process therefore produces the following benefits:
Opportunity to explore all possible alternatives
• Forces project participants to address "value" and "function"
• Helps clarify project objectives
• Identifies and prioritizes Client's value objectives
• Implements accepted proposals into design
• Provides feedback on results of the study

FUNCTION & COST

THE ELEMENTS OF VALUE ENGINEERING
Initially then, value engineering does not question the manufacturing methods, although these are
ultimately considered. Instead, it questions the concept the means by which the necessary functions are
performed. For example, not "how do we best machine a radius" but "what is the function of the radius".
In different ways it asks these basic questions: -
• What is it? What does it do?
• What does it cost?
• What else will do the job?
• What will that cost?
To illustrate this difference in approach another example can be quoted from the shipbuilding industry where the
cost of decking on a particular ship had been subjected to previous cost-reduction investigations. These had yielded
changes which resulted predominantly in improvements to the manufacturing methods used.
During a recent value engineering study, detailed analysis indicated an area of high cost previously accepted as
necessary, namely the curvature of the deck itself.
When the function of this feature was questioned it was discovered that the shape was a solution resulting from ancient
limitations and that its functions could be performed today by quite different means. This permitted a flat deck to be
used making substantial savings in constructional costs throughout the cross section of the ship.

The questioning of function is one part of value engineering. What arc the essential elements? Leaving to one side the
organization and direction of the overall value programme, which is explained in subsequent sections, the elements of
value engineering can be adequately explained under six headings.
Selection Information Analysis Teamwork Procedure Attitudes Selection Function must be questioned Value
engineering need not be applied to everything. The products, assemblies, not components and systems selected for
study should result from a careful analysis every of the costs, quantities produced, future sales life and technical
complexity.
product is the areas selected are those which should yield the greatest results for the suitable least time and effort and
with the minimum risk.

Information Collation Difficulty is experienced in most companies in collecting adequate information of facts on the
subjects to be studied. Information is, of course, an essential ingredient important and time must be allowed for the
relevant costs, specifications and requirements to be collected, analyzed and prepared ready for the use of the designer
or team.

This is usually the task of a skilled value engineer or coordinator, who is frequently the only full-time person involved.
Analysis The basic the analysis of information takes two basic forms in value engineering: Cost forms of Analysis
and Functional Analysis. These two forms are used extensively either analysis separately or in combination
(Function/Cost Analysis) to select items for study, and during the course of the studies, to indicate significant cost
areas in the product or assembly.

COST ANALYSIS
It is the most usual preliminary to selecting and fixing the scope of a study. The individual costs of the component
parts of the subject are tabula ed to an appropriate degree of detail. From such an analysis of an assembly \ r system
the areas or individual items which appear to be of disproportionate cost and offer potential for study and improvement,
can be selected.

FUNCTION ANALYSIS
Accurate definition of the functions performed by joint subject under investigation. Properly to understand the subject,
desirable the definition of functions must be lucid and precise. So, for this reason it is considered desirable to describe
a function by two words, a verb and a noun. For example, a pencil "makes mark" or a bolt may "join parts". Functions
for a more complex item are illustrated in the function/cost analysis charts on page 13, which also relate to Fig. 2.
FUNCTION/COST ANALYSIS is one of the most potent weapons in value engineering's armory. It is particularly
valuable in the study of complex
The illustration (Fig. 3) shows how this analysis is made in practice with the aid of a matrix. It will be seen that the
components are listed vertically and the functions horizontally. The estimated or known cost of each part or sub-
assembly is shown in the righthand vertical column. Informed but approximate estimates are then made of how the
cost of each item can be allocated to the functions to which it contributes. The total cost of each function is found by
adding together the cost elements in each vertical column. Each total is usually converted to a percentage of the total
cost.

In this way a comprehensive cost and function/cost analysis is provided for the designer or team to make comparisons
and to decide if the cost of any of the functions is disproportionate. In the example Fig. 3, the function/cost analysis
showed that several elements were redundant. The unit was redesigned, using value engineering procedures, particular
attention being given to the "connect parts" function. The unit cost as reduced from •’19 to •’7. (See Fig. 4).

The method Analysis of this type has two main purposes. Firstly, to provide a complete also applies understanding of
the problem, since in making the analysis, it is necessary to systems to identify the purpose served by each element of
cost. Secondly, to indicate and processes significant areas of poor value for subsequent consideration. In the case of
the example illustrated, a product formed the subject for analysis, but the basic technique is equally applicable to the
analysis of systems and processes as is shown in the following example.
subjects as an aid to the designer and quite separately as a means of Poor value is locating areas of poor value in the
overheads sector and in some ad- indicated ministrative procedures. by analysis Function cost analysis requires proper
training and practice, but it can briefly be explained as follows:- Each part of a system may contribute to more than
one function, or looked at another way, each function will have a number of parts contributing to its cost. For example,
a gauge body may "withstand pressure" and " resist corrosion" as well as contribute, with other parts, to the functions
"permit servicing" and "connect pipes". It is possible, therefore, to estimate how much of the cost of each part
contributes to each function.

PRODUCT LIFE CYCLE

A product life cycle is the length of time from a product first being introduced to consumers until it is removed from
the market. A product’s life cycle is usually broken down into four stages; introduction, growth, maturity, and decline.

Product life cycles are used by management and marketing professionals to help determine advertising schedules,
price points, expansion to new product markets, packaging redesigns, and more. These strategic methods of supporting
a product are known as product life cycle management. They can also help determine when newer products are ready
to push older ones from the market.

How Does it Work?

As mentioned above, there are four stages in a product’s life cycle - introduction, growth, maturity, and decline – but
before this a product needs to go through design, research and development. Once a product is found to be feasible
and potentially profitable it can be produced, promoted and sent out to the market. It is at this point that the product
life cycle begins.
The various stages of a product’s life cycle determine how it is marketed to consumers. Successfully introducing a
product to the market should see a rise in demand and popularity, pushing older products from the market. As the new
product becomes established, the marketing efforts lessen and the associated costs of marketing and production drop.
As the product moves from maturity to decline, so demand wanes and the product can be removed from the market,
possibly to be replaced by a newer alternative.

Managing the four stages of the life cycle can help increase profitability and maximise returns, while a failure to do
so could see a product fail to meet its potential and reduce its shelf life.

Writing in the Harvard Business Review in 1965, marketing professor Theodore Levitt declared that the innovator
had the most to lose as many new products fail at the introductory stage of the product life cycle. These failures are
particularly costly as they come after investment has already been made in research, development and production.
Because of this, many businesses avoid genuine innovation in favour of waiting for someone else to develop a
successful product before cloning it.

STAGES
There are four stages of a product’s life cycle, as follows:

1. Market Introduction and Development

This product life cycle stage involves developing a market strategy, usually through an investment in advertising and
marketing to make consumers aware of the product and its benefits.

At this stage, sales tend to be slow as demand is created. This stage can take time to move through, depending on the
complexity of the product, how new and innovative it is, how it suits customer needs and whether there is any
competition in the marketplace. A new product development that is suited to customer needs is more likely to succeed,
but there is plenty of evidence that products can fail at this point, meaning that stage two is never reached. For this
reason, many companies prefer to follow in the footsteps of an innovative pioneer, improving an existing product and
releasing their own version.

2. Market Growth
If a product successfully navigates through the market introduction it is ready to enter the growth stage of the life
cycle. This should see growing demand promote an increase in production and the product becoming more widely
available.

The steady growth of the market introduction and development stage now turns into a sharp upturn as the product
takes off. At this point competitors may enter the market with their own versions of your product – either direct copies
or with some improvements. Branding becomes important to maintain your position in the marketplace as the
consumer is given a choice to go elsewhere. Product pricing and availability in the marketplace become important
factors to continue driving sales in the face of increasing competition. At this point the life cycle moves to stage three;
market maturity.

3. Market Maturity
At this point a product is established in the marketplace and so the cost of producing and marketing the existing
product will decline. As the product life cycle reaches this mature stage there are the beginnings of market saturation.
Many consumers will now have bought the product and competitors will be established, meaning that branding, price
and product differentiation becomes even more important to maintain a market share. Retailers will not seek to
promote your product as they may have done in stage one, but will instead become stockists and order takers.

4. Market Decline
Eventually, as competition continues to rise, with other companies seeking to emulate your success with additional
product features or lower prices, so the life cycle will go into decline. Decline can also be caused by new innovations
that supersede your existing product, such as horse-drawn carriages going out of fashion as the automobile took over.

Many companies will begin to move onto different ventures as market saturation means there is no longer any profit
to be gained. Of course, some companies will survive the decline and may continue to offer the product but production
is likely to be on a smaller scale and prices and profit margins may become depressed. Consumers may also turn away
from a product in favour of a new alternative, although this can be reversed in some instances with styles and fashions
coming back into play to revive interest in an older product.
Figure: -

FAST
DIAGRAM

A technique to
develop a graphical
representation
showing the logical relationships between the functions of a project, product, process or service based on the questions
“How” and “Why”.

Why is the Function Analysis System Technique important?

The Function Analysis System Technique aids in thinking about the problem objectively and in identifying the scope
of the project by showing the logical relationships between functions. The organization of the functions into a function-
logic, FAST diagram enables participants to identify of all the required functions. The FAST diagram can be used to
verify if, and illustrate how, a proposed solution achieves the needs of the project, and to identify unnecessary,
duplicated or missing functions.
Benefits of the Function Analysis System Technique:
The development of a FAST diagram is a creative thought process which supports communication between team
members.
The development of a FAST diagram helps teams to:
• Develop a shared understanding of the project
• Identify missing functions.
• Define, simplify and clarify the problem.
• Organize and understand the relationships between functions.
• Identify the basic function of the project, process or product.
• Improve communication and consensus.
• Stimulate creativity.
How To Create a FAST Diagram
Three key questions are addressed in a FAST Diagram:
• How do you achieve this function?
• Why do you do this function?
• When you do this function, what other functions must you do?
The following diagram illustrates how a function is expanded in "How" and "Why" directions in a FAST diagram.

Steps in constructing the FAST Diagram

Start with the Functions as identified using Function Analysis:
• Expand the functions in the "How" and "Why" directions:
• Build along the "How" path by asking 'how is the function achieved'? Place the answer to the right in terms
of an active verb and measurable noun.
• Test the logic in the direction of the "Why" path (right to left) by asking 'why is this function undertaken?'
• When the logic does not work, identify any missing or redundant functions or adjust the order.
• To identify functions that happen at the same time, ask "when this function is done, what else is done or
caused by the function?"
• The higher order functions (functions towards the left on the FAST Diagram) describe what is being
accomplished and lower order functions (functions towards the right on the FAST Diagram) describe how
they are being accomplished.
• "When" does not refer to time as measured by a clock, but functions that occur together with or as a result of
each other.
Example Fast Diagram: Mouse Trap
Consider the following FAST diagram for a mouse trap using the how and why logic as described above.

Plant layout
Plant layout is the arrangement of machines, work areas and service areas within a factory. Plant layout involves
the development of physical relationship among building, equipment and production operations, which will enable
the manufacturing process to be carried on efficiently.
Plant layout is the overall arrangement of the production process, store-room, stock-room, tool-room, material
handling equipment, aisles, racks and sub-stores, employee services and all other accessories required for facilitation
of the production in the factory.
It encompasses production and service facilities and provides for the most effective utilization of the men, materials
and machine’ constituting the process, it is a master blueprint for coordinating all operations performed inside the
factory
According to F G. Moore, “ A good layout is one which allows materials rapidly and directly for processing. This
reduces transport handling, clerical and other costs down per unit, space requirements arc minimized and it reduces
idle machine and idle man time.

Objectives of Plant Layout

A good plant layout strives to attain the following objectives:

• Minimization of material handling.

• Elimination of bottlenecks through the balancing of plant capacities.

• High material turnover through a shorter operating cycle.

• Effective utilization of installed capacity so that the returns on the investments may be maximized.

• Effective utilization of cubic space in the factory area.

Factors Affecting the Plant Layout Decisions

Type of production: The layout for an engineering unit will be quite different from that of a flour factory, similarly
layout of a paper mill will be different from a tool room and layout of an engine assembly line is different from the
toy-making facility.

Production System: The plant layout in a continuous production system will be totally different from the intermitted
production system.

Scale of Production: The plant layout and material handling equipment in the large scale organization will be different
from that in the small scale manufacturing activity.

Type of Machines: The use of single-purpose and multipurpose machines substantially affects the plant layout.
Similarly, noisy and vibrating machines require special attention in the plant layout decision.

Type of building facilities: The plant layout in a single storey building will be different from that in a multi-storey
building.

Type of Plant Layout

The popular types of plant layout are:

1. Process layout
2. Product layout
3. Combined layout
4. Project layout
5. Group Layout

Process Layout
This type of layout is also called functional layout. All machines performing a similar type of operations are grouped
at one location in the process layout e.g., all lathes, milling, machines, cutting machines etc. in the engineering shop
are clustered in their like groups. Thus, all forging will be done in one area and all the lathes will be placed in another
area.

n this layout, several products may share a machine to make its full use. The sequential arrangement of the machine
group is generally, but not necessarily made on the basis of labor operations.

The typical arrangement of the machines in the process layout will be as under:

Advantages of Process Layout

It eliminates the duplication of machines and enables the optimum use of installed capacity.

It facilitates flexibility in production. It is more flexible than a line layout. Different products can be made without
changes in the arrangements of the machine.

The production capacity is not arranged in rigid sequence and fixed rated capacity with line balancing.

The breakdown of one machine does not interrupt the entire production flow.

Specialization in supervision becomes possible

B. Product layout
In this type of layout, the machines are arranged in the sequence as required by the particular product. All machines
as required to balance the particular product line are arranged in a sequential line but not necessarily In this type of
layout, the product is dominating over the process, in the sense that the product is given the primary importance and
the process machine must remain present at a point where the product needs its services.
Thus, unlike the process layout, the process is given secondary importance in relation to the product. Product layout
is more suitable for continuous flow-production with few items of production. It does not require frequent changes in
machine set up.
in the straight line. It is also known as “the product line layout.”
In this layout, one product goes through all the machines lined up, in the order required by its manufacture. The best-
known example of this type of layout is seen in motor car production. To make this layout successful, the workload
on the various machines must be balanced. The process of getting even loading at each stage of production is
called line balancing.
Advantages of Product layout
• Reduced material handling cost due to straight-line production flow.

• Mechanization of material handling between fixed points.

• Line balancing may eliminate bottlenecks and idle capacity.

• Shorter operating cycle due to shorter and speedy movement of materials.

• Maximum utilization of machine and labour capacity through developing a proper balance between them.

• Effective control over production with reduced supervision by generalists supervisor. By reducing the manufacturing to
simple steps, we can often use less skilled labour.

Combined Layout
Generally pure process or pure product layout is not found in practice. Both process and product layouts are mutually
exclusive. Proper compromise reaping the benefits of both the layouts is possible to some extent. So efforts are made
to have the combined layout incorporating the benefits of process and product layout.
Combined layout is developed as under:
Product layout for the main product with a process layout for joint or by-product tapping the idle capacity of product
layout along with marginal investments required in process layout.

To diversify the production with a view to tap the idle capacity of the product layout. Products with a complete
negative correlation with the product line can make the maximum use of idle capacity of the product layout.

In the product layout, some process may be segregated from the product line e.g., objectionable, hazardous, requiring
special treatment and repetitive performance etc.

Project Layout
The manufacturing operation require the movements of men, machines and materials. Generally few inputs tend to be
static while the others are moving.

In the product layout and process layout generally, the machines have fixed installations and the operators are static
in terms of their specified work stations

It is only the materials which move form operation to operation for the purpose of processing. But where the product
is large in size and heavy in weight, it tends to be static, e.g., shipbuilding.

In such a production system, the product remains static and the men and machines move performing the operations
on the product. The production characteristics are sufficient enough to treat it as a separate type of layout, viz. static
product layout.

Group Layout

Here an attempt is made to introduce some of the advantages of a line layout into a situation where pure line layout is
not practicable. Here machines are placed in groups.

Each machine group makes maximally of parts which require similar treatment. This layout lies between process
layout and line layout. It is easier to control than a strictly process layout and has more flexibility into the
manufacturing system as regards the batch size variations and the differing operations sequences.
The objectives of a good layout are as follows:
(i) Should provide overall satisfaction to all concerned.
(ii) Material handling and internal transportation from one operation to the next is minimized and efficiently
controlled.
(iii) The production bottle necks and points of congestions are to be eliminated so that input raw materials and semi-
finished parts move fast from one work station to another.
(iv) Should provide high work in process turnover.
(v) Should utilize the space most effectively; may be cubical utilization.
(vi) Should provide worker’s convenience, promote job satisfaction and safety for them.
(vii) Should avoid unnecessary investment of capital.
(viii) Should help in effective utilization of labour.
(ix) Should lead to increased productivity and better quality of the product with reduced capital cost.
(x) Should provide easy supervision.
(xi) Should provide space for future expansion of the plant.
(xii) Should provide proper lighting and ventilation of the areas of work stations.

Concept of Facility Location

Facility location may be defined as a place where the facility will be set up for producing goods or services. The need
for location selection may arise under any of the following conditions:
a. When a business is newly started.
b. When the existing business unit has outgrown its original facilities and expansion is not possible; hence a new
location has to be found.
c. When the volume of business or the extent of market necessitates th establishment of branches.
d. When the lease expires and the landlord does not renew the lease.
e. Other social or economic reason

Need for Facility Location Planning

Facility location planning is also required for providing a cost benefit to the organization.
The location planning should help in reducing the transportation cost for the organization.
This ultimately helps in decreasing the cost of production and generating cost advantage for the organization.
It is also needed to identify proximity to the sources of raw materials and transportation facilities.
A facility should ideally be located at a place where raw materials are available. This is necessary for maintaining
continuity in the production process

Factors considerations in Plant location-

1. Nature of the product: The nature of the product to be manufactured will significantly affect the layout of the
plant. Stationary layout will be most suitable for heavy products while line layout will be best for the manufacture for
the light products because small and light products can be moved from one machine to another very easily and,
therefore, more attention can be paid to machine locations can be paid to machine locations and handling of materials.
2. Volume of production
Volume of production and the standardization of the product also affect the type of layout. If standardized commodities
are to be manufactured on large scale, line type of layout may be adopted.
3. Basic managerial policies and decisions: The type of layout depends very much on the decisions and policies of
the management to be followed in producing the commodity with regard to the size of plant, kind and quality of the
product, scope for expansion to be provided for, the extent to which the plant is to be integrated, amount of stocks to
be carried at anytime, the kind of employee facilities to be provided etc.
4. Nature of plant location: The size shape and topography of the site at which the plant is located will
naturally affect the type of layout to be followed in view of the maximum utilization of the space available .For e.g.,
if a site is near the railway line the arrangement of general layout for receiving and shipping and for the best flow of
production in and out the plant may be made by the side of the railway lines .If space is narrow and the production
process is lengthy, the layout of plant may be arranged on the land surface in the following manner:
5.Type of industry process: This is one of the most important factors influencing the choice of type of plant layout.
Generally, the types of layout particularly the arrangement of machines and work centers and the location of workmen
vary according to the nature of the industry to which the plant belongs. For the purpose of lay out, industry may be
classified into two broad categories:
(i) Intermittent and (ii) continuous.
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 three methods may be adopted for production- (1) Job order production, (2) batch
production, and (3) mass production. Under job production goods are produced according to the orders of the
customers and therefore, specification vary from customer to customer and the production cannot be standardized.
The machines and equipment can be arranged in a manner to suit the need of all types of customers.
7.Nature of machines: Nature of machines and equipment also affects the layout of plants. If machines are heavy in
weight or create noisy atmosphere, stationery layout may reasonably be adopted. Heavy machines are generally fixed
on the ground floor. Ample space should be provided for complicated machines to avoid accidents.
8. Climate: Sometimes, temperature, illumination and air are the deciding factors in the location of machines and
their establishments. For example, in lantern manufacturing industry, the spray-painting room is built along the factory
wall to ensure the required temperature control and air expulsion and the process of spray painting may be undertaken.

CLASSIFICATION OF SITES FOR INDUSTRIAL UNIT

The site to be selected for establishing an industrial unit can be classified into three kinds viz.,
Urban site or city site,
Rural site or country site, and
Sub-urban site.
Each type has its own merits and demerits. Hence, the entrepreneur should consider the relative merits and demerits
of each such site and should select one, which is comparatively most beneficial to him. Let us discuss the relative
merits and demerits of the different types of sites.

1. URBAN SITE OR CITY SITE

Plant located in cities is called urban or site layout
The merits and demerits of urban site are listed below.
MERITS OF A CITY SITE
1. There is sufficient supply of labour, both skilled and unskilled.
2. Financial institutions and banks are situated nearby.
3. Better transportation facilities are available.
4. Raw materials need not be purchased and stored in bulk.
5. Better repairing and maintenance facilities are available in cities.
6. Advantages of municipal/corporation services such as good roads, drainage facilities, fire fighting etc. are available.
7. Multi floor operations can be performed in a small sized plant.
8. Allied and subsidiary industries are also available.
DEMERITS OF A CITY SITE
1. Land is generally costly.
2. It is not an easy task to get a suitable site with required space. So future expansion of the unit is very difficult.
3. Disposal of waste always becomes a problem.
4. Cost of labour is higher.
5. There may not be good employee-employer relationship due to the close influence of organized trade unions.

2. RURAL SITE OR COUNTRY SITE

Plant located in v villages is called rural layout
MERITS OF A RURAL SITE
1. The land is generally cheap.
2. Further expansion is very easy.
3. Taxes are low.
4. Staff quarters can be constructed at a cheaper cost.
5. Pure water is available.
6. Easy disposal of waste materials is possible.
7. Dangers arising from fire and other hazards can be minimized.
8. Quick disposal of dangerous fumes and by-products is possible.
9. There is less labour problem.
10. Free from the restriction of the municipalities and other Government regulations.
11. Generally this is encouraged by the policies of the Government for economic development.

DEMERITS OF A RURAL SITE

1. Skilled labour is very difficult to be obtained due to the lack of educational and amusement facilities, and exposure
in rural areas.
2. Provision of housing facilities to the labourers and educational facilities to the children of the workers are really a
difficult one.
3. Raw materials should be purchased and stored in large quantities, which result in locking up of more capital.
4. There may be problems in availability of transport facilities.
5. There may not be quick and adequate repairing and maintenance facilities available in the rural area.

SUB-URBAN SITE
Plant located in town is called sub urban layout
MERITS OF A SUB-URBAN SITE
A sub-urban site enjoys the benefits of both the city and country sites, whereas it is free from the evils of both. Besides,
a sub-urban site has various other advantages also. Hence, a sub-urban site is more suitable in most of the cases.
1. The land is relatively cheap.
2. Adequate area of land can be purchased and so future expansion is possible.
3. Better transportation and communication facilities are available.

URBAN VS RURAL SITES – COMPARATIVE ANALYSIS

The major differences between Urban and Rural

Urban Sites Rural Sites

Urban areas usually refer to cities, and towns. Rural areas usually refer to villages

Urban areas have more development in terms of access to Rural areas usually don’t have much development in terms
infrastructure and connectivity like irports, ports, railways, of infrastructure.
housing, roads etc.

Better repairing and maintenance facilities are available in Difficult to repairing and maintenance facilities.
cities.

Difficult to disposal of dangerous fumes and by-products is quick disposal of dangerous fumes and by-products is
possible. possible.

restriction of the municipalities and other Government Free from the restriction of the municipalities and other
regulations. Government regulations.

High taxes Taxes are low.

Urban areas have a scarcity of land for plant layouts Rural areas do not have land scarcity.

There is sufficient supply of labour, both skilled and unskilled. Skilled labour is very difficult to be obtained due to the lack
of educational and amusement facilities, and exposure in
rural areas.

Problem for large quantities storage Raw materials should be purchased and stored in large
quantities, which result in locking up of more capital.

Line balancing
Line balancing is a production strategy that involves balancing operator and machine time to match the production
rate to the takt time. Takt time is the rate at which parts or products must be produced in order to meet customer
demand.
Line balancing is a flow-oriented production strategy for improving productivity and cost-efficiency in mass
production processes. An optimal time frame is designated for the production of a particular product. Tasks are then
equally distributed among workers and workstations to ensure that each operation in the line happens within the
specified time frame.
What is Line Balancing?
In a nutshell, production line balancing is simply the assignment of the right number of workers and machines to each
assembly line segment. This helps meet production rate targets with minimal idle time.
The Benefits of Production Line Balancing
Production line balancing is an excellent model for attaining improved efficiency in the production process. Some of
its benefits are:
• Reduces the amount of idle time in work stations
• Facilitates a streamlined flow of the production process
• It helps to create the right number of workstations and the number of operations to have in each station.
• Achieves high employee morale and camaraderie by consolidating processes
• Improves the rate of production and the output quality of the produced items
• Maximizes workforce utilization and production capacity
• Reduces wastage

STEPS IN ASSEMBLY LINE BALANCING

1. Outline your workstation sequence and draw a precedence diagram

This process involves breaking the whole production process into sequential stages. A product cannot proceed from
one segment to the next unless the task in a given workstation is complete.

A precedence diagram is a tabular representation of the tasks in the course of a production project. You can create
overall or partial precedence diagrams that show the whole or a specific section of the project. Your chart should detail
the production processes, events, and the dependencies between the two.

2. Estimate the needed cycle time for each workstation

You will need to perform time studies to find out the duration it takes to complete each task in the production line.
The cycle time is the maximum duration a job takes for completion at each workstation.
You can arrive at this exact figure by dividing the required product units by the production time available in a day.
That gives you the time (in minutes) between each workstation at the current machine rate and workforce.

Cycle time computation considers the total number of units produced per day in a single line. When the same product
is made in multiple lines, composite cycle time calculations would need to be done on digitized line balancing tools
for accuracy

3.Calculate the hypothetical number of workstations you will need

This calculation will help to attain a balanced task distribution in each of the workstations based on the cycle times.
You can arrive at the number of workstations you need by dividing the sum of your task times by the desired actual
times.

Algorithmic calculations through P-graph frameworks on a line balancing software are often more reliable in this
case. They take into consideration multi-period operations, machine/employee performance, and redundancies. For
manual calculations, the formula is given by:

4. Start assigning tasks to the workstations until the process times are equal
Proceed to rearrange the tasks in a way that reduces excess capacity and production bottlenecks.
that involves redistributing the number of workers from stations of minimal workloads to stations of excess workloads.
This process helps to reduce the waiting times in stations of excess capacity.

Try to share the amount of work between the number of operators in a line logically, aiming to maximize machine
utilization. The idea is to have each task taking the same amount of time for synchronicity.

Note that for efficiency in meeting customer demand, you will need to carry out Takt time calculations to inform your
distribution of workloads.
The Takt time is a measure of the time a competent worker or an unmanned machine takes to perform a task. If you
perform keg line balancing to the point that production exceeds takt time, you run the risk of overproduction and
wastage. However, producing slower than takt time can lead to delays, idle time, and frustrated clients.

5. Test the efficiency of your assembly line

After a balanced task distribution, the next step is testing the effectiveness of the undertaking. Testing can help to
reveal further areas that need efficiency improvements and rebalancing. The assembly line efficiency formula is given
by:
 UNIT-3
AGGREGATE PLANNING
Aggregate Planning – definition – Different Strategies – Various models of Aggregate Planning – Transportation and
graphical models.Advance inventory control systems push systems – Material Requirement – Terminology – types of
demands – inputs to MRP-MRP logic – Lot sizing methods – benefits and drawbacks of MRP – Manufacturing
Resources Planning (MRP –II), Pull systems
– Vs Push system – Just in time (JIT) philosophy Kanban System – Calculation of number of Kanbans Requirements
for implementation JIT -JIT Production process – benefits of JIT.

AGGREGATE PLANNING
Aggregate planning helps achieve balance between operation goal, financial goal and overall strategic
objective of the organization. It serves as a platform to manage capacity and demand planning.
In a scenario where demand is not matching the capacity, an organization can try to balance both by pricing,
promotion, order management and new demand creation.
Aggregate planning is a planning method in the production process which is also considered a marketing
activity used to determine the required resource capacity to meet expected demand. Aggregate planning
The aggregate planning is done in advance of 6 – 18 months and includes a combination of sub-contracting,
sourcing, outsourcing, employment, labor overtime, amount of inventory and planned output to match
demand and supply cost-effectively.
Aggregate planning is critical to an organization which wants to optimize its operational activity because it
helps in balancing short term production plans and long term strategic plans.

Importance of aggregate planning

Aggregate planning is a proven technique that brings an element of foresight and stability into
manufacturing. It helps the management to achieve the long-term objectives of a company. The importance
of aggregate planning include-
• Creates a satisfied and happy workforce
• Reduce changes in the levels of the workforce
• Helps to determine resources for the short-term
• Helps in maximum utilization of space
• Meets the overall goals and objectives of a company
• Helps to adjust capacity to meet demand
• Minimizes costs associated with inventory stocking
• Reduce investments related to various inventories
• Matching demand with supply and minimizing the waiting time for the customers to maximize
customer service
• Offers better customer value
• Proper utilization of production facilities
• Maximum usage of various types of equipment
The aggregate planning strategies include-

1. Level strategy
This type of aggregate planning deals with producing goods of similar quantities over equal duration. This
is done to handle a peak in market demand by filling out back orders or by sending the extra products to
inventory. The level strategy is considered a traditional aggregate planning method that maintains a steady
production rate as well as the level of the workforce by continuing consistent human resources and
production in the organization.

It is best suited where the inventory carrying costs are not high and are adopted by mainly manufacturing
companies. The advantages of using level strategy are well-trained workforce as their changes are not so
frequent, experienced workers and a low rate of absenteeism and employee turnover. An essential
disadvantage of level strategy is building up inventory costs during the lean period when the demand is
low.

2. Chase strategy
The chase strategy of aggregate planning puts its onus on reducing inventory. It keeps pace with demand
fluctuations by varying either actual level of output or the workforce number. It is considered not as rigid
as a level strategy as it allows room for some deviation from the conventional approach. This methodology
helps to minimize waste by receiving goods when needed. It often leads to stressed employees.
This strategy is popular in several industries like hospitals, hospitality business and educational centers
like schools. The advantage of chase strategy is high flexibility to meet the fluctuations in demand and the
disadvantages related to the strategy include high costs associated with hiring as well as training the
workforce.

3. Hybrid strategy for an aggregate planning

As the name indicates, the Hybrid strategy is an integration of both level and chase strategies to get a better
result. It maintains a sufficient balance between stock level, recruiting, termination and production rate. In
the hybrid strategy of aggregate planning, the organizations build up inventory before rising demands. It
uses backorders to level with high peak periods.

It can easily cover short-term peaks by hiring workers temporarily or by subcontracting production. Hiring,
lay-off and reassigning workers is a normal part of the hybrid strategy.

Importance of Aggregate Planning

Aggregate planning plays an important part in achieving long-term objectives of the organization.
Aggregate planning helps in:

• Achieving financial goals by reducing overall variable cost and improving the bottom line
• Maximum utilization of the available production facility
• Provide customer delight by matching demand and reducing wait time for customers
• Reduce investment in inventory stocking
• Able to meet scheduling goals there by creating a happy and satisfied work force

The prime objective of Aggregate Production Planning is to judge company policies and management
inputs linked to operations, distribution and marketing, materials, accounting and finance, engineering and
human resources to reduce the price and increase revenue, enhance customer service, lessen inventory
investment, decrease changes in production rates, reduce changes in work-force levels, boost utilization of
plant and equipment.

Costs relevant to aggregate production planning:

Basic production costs: material costs, direct labour costs, and overhead costs. It is customary to divide
these costs into variable and fixed costs.

Costs associated with changes in the production rate: Costs involved in hiring, training, and laying off
personnel, as well as overtime compensations.

Inventory related costs. Aggregate production planning models may be supportive as decision support
systems and to appraise proposals in union negotiations.

Aggregate planning process

Aggregate planning is a method for analyzing, developing and maintaining a manufacturing plan with an emphasis on
uninterrupted, consistent production. Aggregate planning is most often focused on targeted sales forecasts, inventory
management and production levels in the mid-term (3-to-18-month) future

Aggregate planning models/ techniques

Trial and error method
Linear programming model
Liner decision rule
Transportation model
Graphical mode

Trial and error method

A trial-and-error approach involves costing out various productions planning alternatives and selecting the one with
the lowest cost. In addition to the trial-and-error method, there are more sophisticated approaches, including linear
programming, the Linear Decision Rule, and various heuristic methods
It determines demand for each product
It determines capacities (regular time O/T Sub contracting) for each period
Identify company polices
Determine unit cost for regular

Liner programming model

Linear programming (LP) can be used in aggregate planning if the costs of various resources are assumed to be linear
functions of the amount of those resources used by the aggregate plan .LP can be used to plan production over some
horizon for an actual product or for some pseudo product.
Lp model are methods for obtaining optimal solution to problem involving the allocation of scare resources in terms
of cost minimization or profit maximization.
In order to use this approach, planner must identify capacity (supply) of regular labor time, over time subcontracting
and inventory on a period by period basis as well as related cost of each variable
Linear Decision Rule
Linear decision rule is another optimizing technique. It seeks to minimize total production costs (labor, overtime,
hiring/lay off, inventory carrying cost) using a set of cost-approximating functions (three of which are quadratic) to
obtain a single quadratic equation.
By using calculus two liner n equations can be derived from the quadratic equation, one to be used to plan the output
for each period and the other for planning the workforce for each period.
Transportation model
Transportation Model is a special case of LPP(Linear Programming Problem) in which the main objective is to
transport a product from various sources to various destinations at total minimum cost.In Transportation Models, the
sources and destinations are known, the supply and demand at each source and destinations are also known. It is
designed to find the best arrangement for transportation such that the transportation cost is minimum
For example:
Consider three companies (Company1, Company2 and Company3) which produce mobile phones and are located in
different regions.
Similarly, consider three cities (namely CityA, CityB & CityC) where the mobile phones are transported. The
companies where mobile phones are available are known as sources and the cities where mobile phones are transported
are called destinations.
• Let,
Company1 produces a1 units,
Company2 produces a2 units,
Company3 produces a3 units.
• Let,
demand in CityA is b1 units,
demand in CityB is b2 units,
demand in CityC is b3 units.
• The cost of transportation from each source to destination is given in table

The transportation of mobile phones should be done in such a way that the total transportation cost is minimum.

Graphical mode
The graphical method represents an optimization algorithm for solving linear programming problems containing two
decision variables (x1 and x2). It is one of the most popular approaches for solving simple linear programming
problems.
Generally, probabilistic graphical models use a graph-based representation as the foundation for encoding a
distribution over a multi-dimensional space and a graph that is a compact or factorized representation of a set of
independences that hold in the specific distribution. Two branches of graphical representations of distributions are
commonly used, namely, Bayesian networks and Markov random fields. Both families encompass the properties of
factorization and independences, but they differ in the set of independences they can encode and the factorization of
the distribution that they induce.
a.Undirected Graphical Model
The undirected graph shown may have one of several interpretations; the common feature is that the presence of an
edge implies some sort of dependence between the corresponding random variables. From this graph we might deduce
that B,C,D are all mutually independent, once A is known, or (equivalently in this case) that
P [A, B, C, D] =fAB [A, B]. fAC.[A,C]. fAD[A,D]
For some non-negative functions fAB ,fAC, fAD.

b.Cyclic Directed Graphical Models

The next figure depicts a graphical model with a cycle. This may be interpreted in terms of each variable 'depending'
on the values of its parents in some manner. The particular graph shown suggests a joint probability density that factors
as

c.Bayesian network

If the network structure of the model is a directed acyclic graph, the model represents a factorization of the joint
probability of all random variables. More precisely, if the events are X1,……,Xn then the joint probability satisfies
Graphical mode problems
Watch by below link
https://www.youtube.com/watch?v=8oE1FxH11wI

Advance inventory control systems push systems

The Advanced Inventory Management feature enables you to use item records to track Lead Time, Safety Stock, and
Seasonal Demand for inventory. Item records also show the quantity available for each item. These figures are used
to continually assess stock needs and modify replenishment orders.
The ‘Inventory management’ menu includes:
Purchase orders - allows you to create and save orders for the supply of products, to send orders to suppliers, to
receive products, and to save information of suppliers in the system.
Transfer Orders - allows a multiple store owner to distribute items correctly between his/her stores.
Stock Adjustments - allows you to modify the stock of items and indicate the reason for that adjustment.
Inventory history - allows the user to view records of all the changes made in the inventory, including transfers,
purchase orders, and adjustments.
Inventory Valuation Report - gives an understanding of the total cost of the inventory and potential profits from
their sale.
Inventory Counts - allows you to reconcile the expected and actual inventory for all or selected items, see the amount
of inventory loss or surplus inventory, and keep documents for each inventory.
Print Labels - this button will appear in the Items list as a part of the Advanced inventory management. The label can
contain the item’s name, SKU, price, and barcode. Labels with a barcode allow you to use the scanner to add items to
the ticket.
Productions - allows you to keep a record of the inventory of produced items, not just their components. It can be
useful for items that are made in advance, not during ordering. For example, in a bakery. Produced items can be moved
between stores by using inventory adjustments and inventory counts.
The value of the item average cost after receiving new items (New Cost) is calculated as:

Stock Before - stock before receiving new items

Stock Added - quantity of received new items
Cost Before - cost before receiving new items
Cost of Added - cost of received new items

Material requirements
Materials management is a core function of supply chain management, involving the planning and execution of supply
chains to meet the material requirements of a company or organisation. These requirements include controlling and
regulating the flow of material while simultaneously assessing variables like demand, price, availability, quality, and
delivery schedules.

Material managers determine the amount of material required and held in stock, plan for the replenishment of these
stocks, create inventory levels for each type of item (raw material, work in progress or finished goods), and
communicate information and requirements to procurement operations and the extended supply chain. Materials
management also involves assessing material quality to make sure it meets customer demands in line with a production
schedule and at the lowest cost.

Material management systems embrace all of the activities related to materials and are a basic business function that
adds value to a finished product. It can also include the procurement of machinery and other equipment needed for
production processes as well as spare parts.

Typical roles in Materials Management include inventory analysts, inventory control managers, materials managers,
material planners, and expediters as well as hybrid roles like buyer/planners.

Regardless of role, the main objective of Materials Management is assuring a supply of material with optimized
inventory levels and minimum deviation between planned and actual results.

TYPES OF DEMAND

Independent demand

The two types of demand are independent and dependent. Independent demand is the demand for finished products;
it does not depend on the demand for other products. Finished products include any item sold directly to a consumer.

For example, if a company builds and sells CD cabinets, the demand for the CD cabinet is not dependent on anything
else. The company could also sell decorative replacement hinges or handles as independent products. Figure 14-2 is a
drawing of the CD cabinet. Although you can't see inside the cabinet, it does have four shelves.

Dependent demand

Dependent demand is derived from finished products. For example, when a company makes CD cabinets it needs tops,
bottoms, feet, doors, door magnets, door hinges, door handles, screws, left sides, right sides, door catches, cabinet
shelves, and shelf holders.

The company can determine how many of each of these items is needed based on how many CD cabinets the company
plans to build. If the company builds 100 CD cabinets, operations needs 100 tops, 100 bottoms, 100 doors, 100 left
sides, 100 right sides, 200 door hinges (2 ...

The objectives of material management are sometimes referred to as the ‘Five Rs of Materials Management:’

• The right material

• At the right time
• In the right amount
• And of the quality that is:
• At the right price
• From the right sources
Material requirements planning
Material requirements planning (MRP) is a computer-based inventory management system designed to improve
productivity for businesses.

Companies use material requirements-planning systems to estimate quantities of raw materials and schedule their
deliveries.

MRP works backward from a production plan for finished goods, which is converted into a list of requirements for
the subassemblies, component parts, and raw materials needed to produce the final product within the established
schedule.

In other words, it's basically a system for trying to figure out the materials and items needed to manufacture a given
product. MRP helps manufacturers get a grasp of inventory requirements while balancing both supply and demand.

By parsing raw data like bills of lading and shelf life of stored materials—this technology provides meaningful
information to managers about their need for labor and supplies, which can help companies improve their production
efficiency.

Steps of Material Requirements Planning (MRP)

The MRP process can be broken down into four basic steps:

Estimating demand and the materials required to meet it. The initial step of the MRP process is determining customer
demand and the requirements to meet it. Utilizing the bill of materials—which is simply a list of raw materials,
assemblies, and components needed to manufacture an end product—MRP breaks down demand into specific raw
materials and components.

Check demand against inventory and allocate resources. This step involves checking demand against what you already
have in inventory. The MRP then distributes resources accordingly. In other words, the MRP allocates inventory into
the exact areas it is needed.

Production scheduling. The next step in the process is simply to calculate the amount of time and labor required to
complete manufacturing. A deadline is also provided.

Monitor the process. The final step of the process is simply to monitor it for any issues. The MRP can automatically
alert managers for any delays and even suggest contingency plans in order to meet build deadlines.

Material Requirements Planning (MRP) in Manufacturing

A critical input for material requirements planning is a bill of materials (BOM)—an extensive list of raw materials,
components, and assemblies required to construct, manufacture or repair a product or service.

BOM specifies the relationship between the end product (independent demand) and the components (dependent
demand). Independent demand originates outside the plant or production system, and dependent demand refers to
components.

Companies need to manage the types and quantities of materials they purchase strategically; plan which products to
manufacture and in what quantities; and ensure that they are able to meet current and future customer demand—all at
the lowest possible cost.
MRP helps companies maintain low inventory levels. Making a bad decision in any area of the production cycle will
cause the company to lose money. By maintaining appropriate levels of inventory, manufacturers can better align
their production with rising and falling demand.

Types of Data Considered by Material Requirements Planning (MRP)

The data that must be considered in an MRP scheme include:

Name of the final product that's being created: This is sometimes called independent demand or Level "0" on BOM.

What and when info: How much quantity is required to meet demand? When is it needed?

The shelf life of stored materials.

Inventory status records: Records of net materials available for use that are already in stock (on hand) and materials
on order from suppliers.

Bills of materials: Details of the materials, components, and sub-assemblies required to make each product.

Planning data: This includes all the restraints and directions to produce such items as routing, labor and machine
standards, quality and testing standards, lot sizing techniques, and other inputs.

INPUTS OF MRP

1. Production schedule (MPS). The master production schedule expresses how much of each item is
Wanted and when it is wanted. The MPS is developed from forecasts and firm customer orders for
end items, safety stock requirements, and internal orders. MRP takes the master schedule for end
Items and translates it into individual time-phased component requirements.

2. the product structure records, also known as bill of material records (BOM), contain
Information on every item or assembly required to produce end items. Information on each item,
Such as part number, description, quantity per assembly, next higher assembly, lead times, and
Quantity per end item must be available.

3. the inventory status records contain the status of all items in inventory, including on hand Inventory and scheduled
receipts. These records must be kept up to date, with each receipt, disbursement, or withdrawal documented to
maintain record integrity.MRP will determine from the master production schedule and the product structure records
the gross component requirements; the gross component requirements will be reduced by the available inventory as
indicated in the inventory status records.

MRP logic
MRP logic uses information received either directly from customers or from the sales forecast, calculating the material
required based on the dependencies of other materials. CBP calculates material requirements only via historical
consumption data.

In determining how much material your product needs, MRP differs from consumption-based planning (CBP). MRP
logic uses information received either directly from customers or from the sales forecast, calculating the material
required based on the dependencies of other materials. CBP calculates material requirements only via historical
consumption data. CBP does not consider the dependencies between different materials, as it presumes that future
consumption will follow the same pattern that the historical data did.
MRP synchronizes the flow of materials, components, and parts in a phased order system, considering the production
schedule. It also combines and tracks hundreds of variables, including:

• Purchase orders
• Sales orders
• Shortage of materials
• Expedited orders
• Due dates
• Forecasts
• Marketplace demand
• Material
• Inventory
• Data
• Bill of material

For all companies, MRP has a few goals in common. These include making sure that the inventory level is at a
minimum, but high enough to provide for the customer need, and that you plan all of the activities, including delivery,
purchasing, and manufacturing.

There are some terms that will come up in MRP repeatedly. Some are terms related to MRP as a concept, and some
are specific to MRP software. These terms are as follows:

Item: In MRP, an item is the name or code number used for the event you’re scheduling.

Low-Level Code: This is the lowest level code of an item in the bill of materials and indicates the sequence in which
you run items through an MRP. You use low-level code because an MRP system recognizes and connects the level
that an item appears in the product chain and uses it to plan the proper time to meet all of the system demands.

Lot Size: This is the quantity of units you order during manufacturing

Lead Time (LT): This is the time you need to assemble or manufacture an item from beginning to end. Two types of
lead time are ordering lead time and manufacturing lead time. Ordering lead time is the time it takes from starting the
purchase to receiving the purchase. Manufacturing lead time is the time it takes for the company to completely
manufacture a product from start to end.

Past Due (PD): This is the time during which you consider orders behind schedule.

Gross Requirements (GR): You generate this MRP calculation through forecast scheduling using the number of
produced units, the amount of required material for each produced unit, the current stock, and the ordered stock /stock
in transit. This is the total demand for an item during a specific time period.

Scheduled Receipts (SR): These are the open orders for products that the company currently possesses but has not
yet fulfilled.

Projected on Hand (POH): This is the amount of inventory you’ve estimated to be available after you meet the gross
requirements. To calculate this sum, you add the POH from the previous time period to the scheduled order receipts
and the planned order receipts and then subtract the gross requirements. (Current POH = Previous POH + SR + POR
– GR)

Net Requirements (NR): You generate this MRP calculation through master scheduling using gross requirements,
on-hand inventory, and other quantities. This is the actual, required quantity to be produced in a particular time period.
Planned Order Receipts (POR): The quantity of orders during a time period that is expected to be received. This
planning for orders keeps the inventory from going below the threshold necessary.

Planned Order Releases (PORL): This is the amount you plan to order per time period. This is POR offset by the
lead time.

Cumulative Lead Time: This is the greatest amount of time that it takes to develop the product. You may calculate
it by looking at each BOM and figuring out which one takes the longest.

Product Structure Tree: This is a visual depiction of the bill of materials, showing how many of each part and
how many sub-parts you need to produce the product.

Lot Sizing
Base on the requirements of product, MRP refers to the net requirements of parts or materials. But these requirements
without any change may be unsuitable for placing an order or manufacturing. Lot sizing is to unify the calculated net
requirements by a certain unit considering cost reduction and work efficiency.

There are two main types of lot sizing: a method to unify in terms of the period and another method to unify in terms
of the quantity. The former includes "Fixed Period Requirements", which, generally speaking, is suitable for the
relatively expensive items whose demand occurs irregularly. The latter includes "Fixed Period Requirements" or
"Economic Lot Sizing", which is suitable for items whose demand is relatively stable. In addition to these types, there
are any other types of lot sizing as shown in the figure.

Advantages and Disadvantages of Material Requirements Planning (MRP)

• There are several advantages to the MRP process:

• Assurance that materials and components will be available when needed
• Minimized inventory levels and costs associated
• Optimized inventory management
• Reduced customer lead times
• Increased manufacturing efficiency
• Increased labor productivity
• Increased overall customer satisfaction
• Of course, there are also disadvantages to the MRP process:
• Heavy reliance on input data accuracy (garbage in, garbage out)
• MRP systems can often be difficult and expensive to implement
• Lack of flexibility when it comes to the production schedule
• Introduces the temptation to hold more inventory than needed

Push System Vs. Pull System Inventory Control

An inventory manager must be able to develop an effective inventory control system to manage customer demand.
The demand for the product will control inventory costs, carrying costs, ordering costs and storage costs. Inventory
control systems are generally categorized as push or pull models. Knowing the definitions, advantages and
disadvantages of each system will help a company establish which inventory control method works best for their
organization.

The Push System of Inventory Control

The push system of inventory control involves forecasting inventory needs to meet customer demand. Companies
must predict which products customers will purchase along with determining what quantity of goods will be purchased.
The company will in turn produce enough product to meet the forecast demand and sell, or push, the goods to the
consumer.

An example of a push system is Materials Requirements Planning, or MRP. MRP combines the calculations for
financial, operations and logistics planning. It is a computer-based information system which controls scheduling and
ordering. Its purpose is to make sure raw goods and materials needed for production are available when they are
needed.

Disadvantages of the Push System

Disadvantages of the push inventory control system are that forecasts are often inaccurate as sales can be unpredictable
and vary from one year to the next. Another problem with push inventory control systems is that if too much product
is left in inventory. This increases the company's costs for storing these goods. An advantage to the push system is
that the company is fairly assured it will have enough product on hand to complete customer orders, preventing the
inability to meet customer demand for the product.

Pull System of Inventory Control

The pull inventory control system begins with a customer's order. With this strategy, companies only make enough
product to fulfill customer's orders. One advantage to the system is that there will be no excess of inventory that needs
to be stored, thus reducing inventory levels and the cost of carrying and storing goods.

An example of a pull inventory control system is the just-in-time, or JIT system. The goal is to keep inventory levels
to a minimum by only having enough inventory, not more or less, to meet customer demand. The JIT system eliminates
waste by reducing the amount of storage space needed for inventory and the costs of storing goods.
Disadvantages of the Pull System

One major disadvantage to the pull system is that it is likely that a company will run into ordering dilemmas, such as
a supplier not being able to get a shipment out on time. This leaves the company unable to fulfill the order and
contributes to customer dissatisfaction.

Push-Pull System

Some companies have come up with a strategy they call the push-pull inventory control system, which combines the
best of both the push and pull strategies. Push-pull is also known as lean inventory strategy. It demands a more accurate
forecast of sales and adjusts inventory levels based upon actual sale of goods .

The goal is stabilization of the supply chain and the reduction of product shortages which can cause customers to go
elsewhere to make their purchases. With the push-pull inventory control system, planners use sophisticated systems
to develop guidelines for addressing short - and long-term production needs.

Just in Time Inventory System(JIT)

Just-in-Time (JIT) is an inventory management system intended to increase production efficiency and profit by
controlling inventory and associated costs. Products are produced when they are needed and in the quantity needed.

Companies often store excess product inventory to be responsive to customer demand. This is known as the Just-in-
Case (JIC) inventory system. Opposite to Just-in-Time, the goal of the JIC system is to reduce the risk of a stock
shortage due to unexpected circumstances, such as a rise in customer orders, supplier reliability issues, and logistic
issues. Stocking up on inventory to ensure demand is satisfied may seem ideal, but it comes with a significant cost.
Companies risk capital tied to inventory, warehouse costs, and obsolescence to name a few.

This is what Just-in-Time aims to eliminate.

JIT has proven to increase operational efficiency. However, the system relies heavily on the reliability of parts and
supplies entering the production stream along with smooth operational flow on the production floor. When
implemented correctly, JIT enables companies to eliminate waste, cut unnecessary costs, and improve its overall
productivity and profitability.

History of Just-in-Time in Manufacturing

It is known that during the post-World War II era, the Japanese developed and used the concept of Just-in-Time. Due
to the aftermath of the war, Japanese companies were lacking the capital to spend on large-scale productions compared
to more highly developed countries at that time. They also faced a shortage of natural resources and space to rebuild
their factories, which forced them to carefully utilize what they had. This resulted in a smaller lot productions and
carefully designing processes to be as lean as possible.

The birth of the Just-in-Time philosophy may have come out from a necessity to survive. However, the concept had
proved to be so effective that the Japanese identified it as an essential foundation to implement a truly lean process.

JIT was seen to have been fully implemented and formalized by the automobile industry in Japan, particularly Toyota.
Taiichi Ohno, known as the father of the Toyota Production System, traveled to the United States to study and observe
their manufacturing processes. This was when he conceptualized Just-in-Time, and along with it, the Kanban
methodology.

More details click below link

https://www.slideshare.net/saxenaankit2010/ppt-on-just-in-time-technique-jit

Just-in-Time and Kanban

The Kanban methodology is a critical element in implementing the Just-in-Time inventory system. Through Kanban
companies are able to communicate their production needs in a systematic and efficient manner.

It is important to highlight that Kanban works hand-in-hand with JIT. Kanban serves as the control method that signals
when it is time to pull raw materials or parts, in the right quantity or amounts. Kanban cards are used as the “go-
signal” for upstream processes to work on the parts and make it available for the downstream processes.

The Kanban system fundamentally facilitates the implementation of Just-in-Time. It serves as the guide within the
production floor on what and when to work on an item. With Kanban’s visual manner of relaying information,
companies are able to better monitor and manage the flow of work-in-progress, goods, and demand requirements
within the process.

Benefits of Just-in-Time

When implemented correctly, Just-in-Time delivers great benefits to businesses. Some of which include:

Lower inventory storage costs – Since goods almost instantaneously delivered to customers, companies don’t need to
invest in big warehouses to store their goods.

Minimize dead stock – Since production has done as close to demand as possible, businesses lessen the risk of leaving
their goods stocked up on shelves.

Reduction in Work-in-Progress (WIP) goods – Lesser WIP moving in the shop floor allows teams to focus on getting
products out the pipeline in the highest quality possible.

Shorter production cycles – With smaller lots and a decreased throughput time, companies are able to satisfy demand
faster.

Free up cash flow for other investments – Money that would have spent on inventory costs and excess production can
allocate to other investments.

These benefits don’t come instantly though. A proper implementation of Just-in-Time requires a good understanding
of a company’s supply chain, where the reliability of both upstream and downstream process kept intact. Any
breakdown on a supplier’s process in which they are unable to keep commitments creates a domino effect that can put
production into a halt. The little room for error in JIT, all of the nuts and bolts need to be functioning properly. In
order to do this, companies must employ the use of other lean techniques to make their processes robust.

Potential Risks of Just-in-Time Inventory System

Implementing JIT greatly depends on a high level of accuracy of customer demand, supplier response, and resource
reliability. Deviations would most likely incur costs with the possibility of losing customers to competitors.

Companies using JIT will also experience difficulty adapting to sudden surges in customer demand. Any shortage of
raw materials or parts will inevitably cause delays in shipment to the customer. With time-sensitive orders, businesses
risk losing customers.
Production in smaller lots could also result in spending more rather than ordering raw materials in bulk. This is one
of the main reasons why companies prefer producing in large batches. It is because the cost of production decreases
as the amount in production increases.

Business are not confined to use JIT or JIC exclusively, as many benefit from implementing a hybrid approach. It
boils down to finding the right balance. It will work best for the business and regularly fine-tuning your processes to
improve flow, reliability, and flexibility

Production Process of JIT

 UNIT – IV
SCHEDULING
Scheduling – Policies – Types of scheduling – Forward and Backward Scheduling – Grant Charts – Flow shop
Scheduling – n
jobs and 2 machines, n jobs and 3 machines – job shop Scheduling – 2 jobs and n machines – Line of Balance.

SCHEDULING
Every business has to ensure that it uses its resources reasonably while completing orders in time. Material assets,
workers’ time, and production equipment have to be well managed to ensure that costs do not eat away the profits and
that customer expectations are met.
Production schedules are created to detail when specific workers should use specific equipment and materials to make
a specific product. Companies can use either forward or backward scheduling to allocate resources, plan production,
and make the necessary purchases that go into fulfilling customer orders.
What is Production Scheduling?
Production scheduling is the process in manufacturing where all production activities are planned or scheduled on a
timescale or for a time period. Production scheduling includes planning manufacturing activities like procuring input
goods, investment, labor, logistics etc for a specific time period in a sequential manner. It identifies that what resources
would be consumed at what stage of production. According to the estimates, a time-based schedule is made so that
the company does not fall short of resources at the time of production.
Importance of Production Scheduling
The production schedule prepares in-depth estimates of future cash flow also to identify the requirement before taking
up a project. Production scheduling tries to optimize the use of the manpower so that there are no excess manpower
or shortage of manpower during the production process.
Production scheduling was traditionally done manually using paper and later organizations started using spreadsheets
and now a no. of different software’s are available for the same. In production scheduling the process usually starts
with the identification of the deadline and then moved backward to the current date and in the process the bottleneck
processes are identified. Production scheduling takes into account all the constraints like capacity, manpower,
Inventory, Plant floor throughput and tries to optimize their use.
Production Scheduling Factors
Some of the key factors which determine the schedules of production are:
1. Total goods to be manufactured for sale or additional storage
2. The number of labors at disposal.
3. Capital invested & expected timelines for sales.
4. Time from manufacture to packaging to distribution to sale.
5. Capacity & capability to machinery.

Production Scheduling Steps

A good product schedule can be created following these steps:
1. Production Planning
A good production schedule starts with proper planning. Without planning a schedule cannot be created. A schedule
needs activities, sub-processes, assumptions etc. to be properly known before a timeline is created.
2. Smart Routing
Routing is required to show the entire journey of a product from its conversion from raw material to final finished
product. In the schedule, the transfer from one department and another has to be known. Swim-lane diagrams can be
used to show the transfer of ownership.
3. Actual Scheduling
This is the most important step with all the timelines with activities. This should be made as modular as possible. The
production schedule should be customized based on different parameters like the size of the batch to be produced.
configuration, parts and processes etc.
4. Execution & Development
This is the step where the production schedule actually becomes the real time process. The production of goods is
done through the schedule prepared. The first 3 steps act as steps or instructions to start the execution smoothly.
5. Continuous Improvement and Rescheduling
Like any good process, feedback and variances should be closely monitored and used to further improve the production
scheduling process for the next cycle. The feedback can be automated or can be manually handled. The ultimate goal
is making the process better every time.

Forward and Backward Scheduling

Forward scheduling and backward scheduling are planning strategies. Both methods are useful for strategic planning
at all levels of complexity. Whether you’re mapping delivery routes for multiple drivers or scheduling maintenance
appointments for service teams, you can benefit from using one or both of these strategies.
Forward scheduling is planning with the primary objective of completing a task as soon as possible, with plenty of
lead time. In production and manufacturing, forward scheduling typically means planning to ensure that each step in
a process is completed immediately when the time or resources are available.
For a coffee company, forward scheduling would mean planning shipments to go out as soon as the beans are roasted
and packaged.
Forward scheduling means fulfilling production orders as soon as possible, according to the availability of the
necessary resources. In a forward production schedule, tasks are scheduled in a row, in the order that they come in.
The manufacturer provides the customer with a possible delivery time as a prediction that accounts for resource
availability.
Basically, forward scheduling answers the question “When, at the earliest, can production start?”
Forward scheduling makes perfect sense, especially in serial production. When an order comes in, add it on top of the
pile. It is easy to make sure that your workstations are loaded airtight. This is a simple approach to planning: the
customer tells you what they need, and you tell them when the possible delivery time is.
However straightforward this approach is, it might not work very effectively if you make to order or produce according
to a sales forecast. It might happen that a lot of orders are filled long before they need to be shipped – they take up
storage and keep assets standing –, and other orders go overdue because the requested delivery date was not considered
while planning.
Benefits of Forward Scheduling
The clear-cut and simple premise of forward scheduling offers some convincing benefits, but it may also become a
disadvantage in some environments.
The benefits of forward scheduling are:
• Easy to schedule manually.
• High rate of labor and machinery utilization as jobs are piled on top of each other.

The disadvantages of forward scheduling are:

• Higher inventory holding costs due to jobs being completed earlier than necessary, with finished products
requiring handling and storage space.
• Longer lead times as production is always scheduled to capacity which cannot be increased when new orders
come in.
• Risk of material stock-outs due to materials being consumed in advance. When an unexpected high-priority
order comes in, there might not be enough of the necessary materials available to fulfil the order.
• There is little room for rush orders – a rush order could derail the current production, procurement, and
delivery schedule.

What is backward scheduling?

Backward scheduling is planning with the primary objective of completing tasks right on time. Backward scheduling
is optimized for flexibility and allows businesses to easily incorporate last-minute changes or customizations.
For a florist, this would mean scheduling bouquets to be arranged as close to the delivery window as possible.
Backward scheduling, also referred to as reverse scheduling or just-in-time manufacturing, means that production
orders are scheduled according to the clients’ requested delivery dates. When a customer puts in an order and requests
a specific deadline, production is scheduled so that the order is fulfilled precisely by its due time.
Simply put, backward scheduling answers the question “When, at the latest, can production start in order to
fulfill the order in time?”
Manually done, it is a cumbersome task to make sure that every single operation gets planned correctly – considering
workstation loading, planned maintenances, holidays, and much more. That is why companies that want to employ
this scheduling approach need to make use of a manufacturing ERP system that makes sure that all orders are
scheduled so that they are filled just in time. When a requested delivery date is not attainable, i.e. when resources are
not available in the necessary quantity in the timeframe the customer provides, the software will notify you instantly.

Benefits of Backward Scheduling

• Although backward scheduling is much more complex than forward scheduling due to accounting for many
moving parts, there are some substantial advantages to using it. These include:
• Lower inventory levels thanks to orders being completed just in time, resulting in lower inventory holding
costs.
• Increased production efficiency thanks to optimal use of capacity.
• Shorter lead times.
• More flexible delivery time from the customer’s perspective, which increases customer satisfaction.
Some of the disadvantages are:
Little buffer time when something unexpected occurs, which may result in missed deadlines.
Bottlenecking when suppliers are unavailable (yet the JIT method has dictated there should be minimal safety stock).
Production cannot resume until there are materials available.

Gantt Charts
A Gantt chart is a visual representation of all tasks or operations scheduled on specific resources. In this type of
chart, activity blocks (representing operations) are arranged on horizontal lines (representing resources).
A Gantt chart is a horizontal bar chart developed as a production control tool in 1917 by Henry L. Gantt, an American
engineer and social scientist. Frequently used in project management, a Gantt chart provides a graphical illustration
of a schedule that can be used to plan, coordinate and track tasks in a project.
A Gantt chart is a visual representation of all tasks or operations scheduled on specific resources. In this type of chart,
activity blocks (representing operations) are arranged on horizontal lines (representing resources). All of the blocks
are arranged on the same timeline, which allows everyone to know when the operations will start and finish.
In addition, the length of the activity block is proportional to the time required to perform the operation. This way,
you can easily see which tasks take longer than others and may decide to split those operations between resources to
meet your need dates
Gantt Charts Provide Visibility
Common benefits of task interdependence visibility aid in the the reliability of:
• On-time Delivery
• Scheduling Precision
• Production Plan Adherence
• Overall Process Control
• Cost to Produce is Lowered
• Cost Effective/Material Planning
Let’s say that you’re in charge of making the “hiking bear” that we ordered earlier from the Vermont Teddy Bear
Company. Figure 11.7 "Gantt Chart for Vermont Teddy Bear" is a Gantt chart for the production of one hundred of
these bears. As you can see, it shows that several activities must be completed before the bears are dressed: the fur has
to be cut, stuffed, and sewn; and the clothes and accessories must be made. Our Gantt chart tells us that by day six, all
accessories and clothing have been made. The stuffing and sewing, however (which must be finished before the bears
are dressed), isn’t scheduled for completion until the end of day eight. As operations manager, you’ll have to pay close
attention to the progress of the stuffing and sewing operations to ensure that finished products are ready for shipment
by their scheduled date.
PERT Charts
Gantt charts are useful when the production process is fairly simple and the activities aren’t interrelated.
For more complex schedules, operations managers may use PERT charts. PERT (which stands for Program
Evaluation and Review Technique) is designed to diagram the activities required to produce a good, specify
the time required to perform each activity in the process, and organize activities in the most efficient
sequence. It also identifies a critical path: the sequence of activities that will entail the greatest amount of
time. Figure 11.8 "PERT Chart for Vermont Teddy Bear" is a PERT diagram showing the same process for
producing one “hiker” bear at Vermont Teddy Bear.
Figure 11.8 PERT Chart for Vermont Teddy Bear
Our PERT chart shows how the activities involved in making a single bear are related. It indicates that the production
process begins at the cutting station. Next, the fur that’s been cut for this particular bear moves first to the stuffing and
sewing stations and then to the dressing station. At the same time that its fur is moving through this sequence of steps,
the bear’s clothes are being cut and sewn and its T-shirt is being embroidered. Its backpack and tent accessories are
also being made at the same time. Note that fur, clothes, and accessories all meet at the dressing station, where the
bear is dressed and outfitted with its backpack. Finally, the finished bear is packaged and shipped to the customer’s
house.

What was the critical path in this process? The path that took the longest amount of time was the sequence that included
cutting, stuffing, dressing, packaging, and shipping—a sequence of steps taking sixty-five minutes. If you wanted to
produce a bear more quickly, you’d have to save time on this path. Even if you saved the time on any of the other
paths—say, the sequence of steps involved in cutting, sewing, and embroidering the bear’s clothes—you still wouldn’t
finish the entire job any sooner: the finished clothes would just have to wait for the fur to be stuffed and sewn and
moved to the dressing station. In other words, we can gain efficiency only by improving our performance on one or
more of the activities along the critical path.
Flow shop - short characterization
In a flow shop, the manufacturing process follows a fixed linear structure. That means that all orders need to be
manufactured in the same way on the same machines.
Job shop - short characterization
In a job shop, the routing of each job can be individual. That means that all orders (potentially) need to be manufactured
differently on the same machines or a certain part of the same machines.

This gives a good first impression of the significant diversity of both manufacturing environments.
But in my eyes the best way to fully comprise the diversity, it is very useful to further characterize a flow shop and a
job shop based on common criteria of the manufacturing industry.
To keep this as easy to understand as possible in the following I refer to the most extreme forms of flow shops and
job shops possible.
In terms of a flow shop, this would be a manufacturing site with 100% standardization operated in an assembly
production line. On the other hand, a job shop would be a business with 100% customization with a typical batch size
of 1, which implies that every finished product is unique.
Characteristics to differentiate flow shops and job shops
Volatility of demand
Typically, the demand in flow shops is steady and predictable. This means that the volatility of data is low.
On the other hand, the demand in job shops is not as predicable at all but depends on the irregular occurrence of
customer orders. So the volatility of data is very high as the environment is very dynamic.
Product variety
The product variety in flow shops typically is low as there are just a few – and very standardized – products in the
portfolio.
On the other hand, the variety of products in a job shop can be – literally – unlimited. Hence the standardization is
lowest as the added value of the business comes from the ability to customize.
Flexibility of machinery equipment
In a flow shop, the machinery equipment is geared to operate low flexibility due to the high standardization.
On the other hand, job shop machinery is imperatively geared to be highly flexible due to the high customization.
Worker’s skill requirements
In a flow shop, the skill requirement of the employees is quite low. The high standardization does not require highly
educated workers. Also, it is quite likely that workers are firmly assigned to certain work cells within the
manufacturing process.
On the other hand, the skill requirement for operators in a job shop is comparably high. Furthermore the likelihood
that educated operators have the skill to operate several different machines within different work centers is also very
high.
Volume
The volume – means the total output of units of end products in a given time window – of a flow shop tends to be
high.
On the other hand, the volume of job shops is comparably low.
Importance of stocking policy
In a flow shop stocking is a core aspect of successfully running the business. This means that make to stock production
is the default way of managing the production.
On the other hand, the strategy of job shops is mainly make-to-order driven. Due to the high level of customization
holding up stock is not a productive approach.
Amount of resources & company size
Flow shop companies tend to be bigger in terms of employees, machines, and revenue.
On the other hand, job shops are comparably smaller in terms of employees, machines, and revenue.
The graph below sums up the diversity of flow shops vs. job shops:
Processing n Jobs Through Two Machines: Sequencing Models
Suppose n jobs are to be processed on two machines, say A & B. Each job has to pass through the same sequence of
operations in the same order, i.e., passing is not allowed.
After a job is completely processed on machine A, it is assigned to machine B. If machine B is not free at that moment,
then the job enters the waiting queue. Each job from the waiting queue is assigned to machine B according to FIFO
discipline. Let
Ai = Processing time forth job on machine A
Bi = Processing time for ith job on machine B
T = Total elapsed time
The problem here is to determine the sequence in which these n jobs should be processed through A & B, so that the
total elapsed time (T) is minimum.

Example
1. A book binder has one printing press, one binding machine and manuscripts of 7 different books. The times required
for performing printing and binding operations for different books are shown below.
Book 1 2 3 4 5 6 7
Printing time (hours) 20 90 80 20 120 15 65
Binding time (hours) 25 60 75 30 90 35 50
Decide the optimum sequence of processing of books in order to minimize the total time required to bring out all the
books.

Solution:
Job 1 2 3 4 5 6 7
Machine M1 20 90 80 20 120 15 65
Machine M2 25 60 75 30 90 35 50

1. The smallest processing time is 15 hour for job 6 on Machine-1. So job 6 will be processed first.
6

2. The next smallest processing time is 20 hour for job 4 on Machine-1. So job 4 will be processed after job 6.
6 4

3. The next smallest processing time is 20 hour for job 1 on Machine-1. So job 1 will be processed after job 4.
6 4 1

4. The next smallest processing time is 50 hour for job 7 on Machine-2. So job 7 will be processed last.
6 4 1 7

5. The next smallest processing time is 60 hour for job 2 on Machine-2. So job 2 will be processed before job 7.
6 4 1 2 7

6. The next smallest processing time is 75 hour for job 3 on Machine-2. So job 3 will be processed before job 2.
6 4 1 3 2 7

7. The next smallest processing time is 90 hour for job 5 on Machine-2. So job 5 will be processed before job 3.
6 4 1 5 3 2 7

According to Johanson's algorithm, the optimal sequence is as below

6 4 1 5 3 2 7

M1 M1 M2 M2 Idle time
Job
In time Out time In time Out time M2
6 0 0 + 15 = 15 15 15 + 35 = 50 15
4 15 15 + 20 = 35 50 50 + 30 = 80 -
1 35 35 + 20 = 55 80 80 + 25 = 105 -
5 55 55 + 120 = 175 175 175 + 90 = 265 70
3 175 175 + 80 = 255 265 265 + 75 = 340 -
2 255 255 + 90 = 345 345 345 + 60 = 405 5
7 345 345 + 65 = 410 410 410 + 50 = 460 5

The total minimum elapsed time = 460

Idle time for Machine-1

=460-410

=50

Idle time for Machine-2

=15+70+5+5+(460-460)

=95

Processing n Jobs Through Three Machines: Sequencing Problem

This case is similar to the previous case except that instead of two machines, there are three machines. Problems
falling under this category can be solved by the method developed by Johnson. Following are the two conditions of
this approach:
The smallest processing time on machine A is greater than or equal to the greatest processing time on machine B, i.e.,
Min. (Ai) ≥ Max. (Bi)
The smallest processing time on machine C is greater than or equal to the greatest processing time on machine B, i.e.,
Max. (Bi) ≤ Min. (Ci)

If either or both of the above conditions are satisfied, then we replace the three machines by two fictitious machines
G & H with corresponding processing times given by
Gi = Ai + Bi
Hi = B i + C i
Where Gi & Hi are the processing times for ith job on machine G and H respectively.
After calculating the new processing times, we determine the optimal sequence of jobs for the machines G & H in the
usual manner

Example

Find solution of Processing 5 Jobs Through 3 Machines Problem

Job 1 2 3 4 5
Machine-1 8 10 6 7 11
Machine-2 5 6 2 3 4
Machine-3 4 9 8 6 5

Solution:
Job 1 2 3 4 5
Machine M1 8 10 6 7 11
Machine M2 5 6 2 3 4
Machine M3 4 9 8 6 5

Since any of condition min{T1j}≥max{Tij} and/or min{Tmj}≥max{Tij}, for j=2,3,...,m-1 is satisfied.

So given problem can be converted to 2-machine problem.

Machine-G
13 16 8 10 15

Machine-H
9 15 10 9 9

1. The smallest processing time is 8 hour for job 3 on Machine-G. So job 3 will be processed first.
3

2. The next smallest processing time is 9 hour for job 4 on Machine-H. So job 4 will be processed last.
3 4

3. The next smallest processing time is 9 hour for job 1 on Machine-H. So job 1 will be processed before job 4.
3 1 4

4. The next smallest processing time is 9 hour for job 5 on Machine-H. So job 5 will be processed before job 1.
3 5 1 4

5. The next smallest processing time is 15 hour for job 2 on Machine-H. So job 2 will be processed before job 5.
3 2 5 1 4

According to Johanson's algorithm, the optimal sequence is as below

3 2 5 1 4

M1 M1 M2 M2 M3 M3 Idle time Idle time

Job
In time Out time In time Out time In time Out time M2 M3
3 0 0+6=6 6 6+2=8 8 8 + 8 = 16 6 8
2 6 6 + 10 = 16 16 16 + 6 = 22 22 22 + 9 = 31 8 6
5 16 16 + 11 = 27 27 27 + 4 = 31 31 31 + 5 = 36 5 -
1 27 27 + 8 = 35 35 35 + 5 = 40 40 40 + 4 = 44 4 4
4 35 35 + 7 = 42 42 42 + 3 = 45 45 45 + 6 = 51 2 1

The total minimum elapsed time = 51

Idle time for Machine-1
=51-42

=9

Idle time for Machine-2

=6+8+5+4+2+(51-45)

=31

Idle time for Machine-3

=8+6+4+1+(51-51)

=19

JOB SHOP SCHEDULING

A work location in which a number of general-purpose work stations exist and are used to perform a variety of jobs
Example: Car repair – each operator (mechanic) evaluates plus schedules, gets material, etc. – Traditional machine
shop, with similar machine types located together, batch or individual production
he basic form of the problem of scheduling jobs with multiple (M) operations, over M machines, such that all of the
first operations must be done on the first machine, all of the second operations on the second, etc.

Suppose m machines have to process n jobs, and each job consists of a set of operations that have to be processed in
a special sequence

Factors to Describe Job Shop Scheduling Problem

1. Arrival Pattern
2. Number of Machines (work stations)
3. Work Sequence
4. Performance Evaluation Criterion

Job shop scheduling has become a necessity for modern-day manufacturers that are seeking to boost production
efficiency and eliminate waste within their manufacturing operation. Job shop scheduling is an optimization software
that enables jobs to be assigned to resources at particular times

Characteristics/Features of Job Shop Scheduling Software

Manufacturing operations can benefit greatly from an advantageous production schedule. In order to attain
the maximum benefit, different environments will require different approaches. Job Shop scheduling is a
special case of production scheduling that is characterized by the following:
• long or complex routings
• simultaneous constraints such as labor and machines
• the need to provide the customer continual status updates
• engineer-to-order (ETO) or make-to-order
• any engineering tasks that could constrain the schedule
• necessity to provide customer continual status updates

Processing n-jobs through 2 machines

Processing n-jobs through 2 machines Consider n jobs (say 1,2, …n) to be processed on two machines A
and B, in the order AB. The processing time is and as represented in
Table

Step 1: Check the processing order, i.e., in the order AB or BA. If it is in the order AB, then the first job
would be performed on machine A and then on machine B. If the order is of BA, interchange the rows with
machine B in row l and machine A in row 2.

Step 2: From the given processing time, select the least processing time available on both machines A and
B. If the least processing time exists in row l, place that job at the beginning of the sequence table (i.e., the
sequence is from left to right of the sequence table). If the least processing time is on row 2, place the job
at the end of the sequence table (i.e., the sequence is from right to left of the sequence table).

Note: If there are two least processing times for machine A and machine B, priority is given for the
processing time which has the lowest time of the adjacent machine.

Step 3: Delete the job which has been sequenced, and repeat step 2 until all the jobs are sequenced.

Step 4: Establish a tabular column to determine the total elapsed time and also the idle time for both the
machines A and B.

1. Total Elapsed Time: Time when the last job in the sequence has finished on Machine B.
2. Idle Time for Machine A: (Total Elapsed Time) – (Time when the last job has finished on machine B)
3. Idle Time for Machine B: Time at which the first job is finished on machine

Finishes on machine B)

Example
Six jobs go first over machine I and then over machine II. The order of the completion of jobs has no
significance. The table shows the machine times in hours for six jobs and the two machines.

Find the sequence of the jobs that minimizes the total elapsed time to complete the jobs. Also find the
idle time for Machine I and Machine II.

Sol:
Establish a sequence table containing six job cells. Find the least time available for both Machine I and
Machine II. Job 1 has the least processing time, i.e., 1. Place the sequence from left to right (or the first cell)
as shown in Table, since it occurs Machine I.

Deleting job 1, we get the reduced table as shown in Table below

The least time available in the reduced table is 2, which is on Job 4 and Job 5 for Machine II. Now, compare
the adjacent time available for Machine I. Here, Job 4 time is less than that for Job 5.
Select Job 4 first and sequence it as shown in Table below:

Now select Job 5 and sequence it as shown in Table below

The reduced table is shown in Table below

Now we have Job 2, Job 3 and Job 6 having the least time which is 3. Compare these times with the adjacent
machine time and select the least time. Here we have Job 2 with least adjacent time and hence sequence is
as shown below in Table below

Now select Job 3 and sequence it, as shown in Table below

Finally, select Job 6 and sequence it, as shown in Table below

The optimal sequence thus obtained is

The total elapsed time and idle time for Machine I and Machine II is calculated as shown in Table give
below
The total elapsed time is 36 hours
Idle time for Machine I is 4 hours
Idle time for Machine II is 2 hours

Schedule Development
Line of Balance (LOB)

Line of Balance (LOB) is a management control process for collecting, measuring, and presenting facts
relating to time, cost, and accomplishment – all measured against a specific plan. It shows the process,
status, background, timing, and phasing of the project activities, thus providing management with
measuring tools that help:

Comparing actual progress with a formal objective plan.

Examining only the deviations from established plans, and gauging their degree of severity with respect to
the remainder of the project.
Receiving timely information concerning trouble areas and indicating areas where appropriate corrective
action is required.
Forecasting future performance.

Purpose of Line of Balance (LOB)

The purpose of a LOB is to enable a program manager to see at a single glance which activities of an
operation are “in balance” – i.e., whether those which should have been completed at the time of the review
actually are completed and whether any activities scheduled for future completion are lagging behind
schedule. The LOB chart comprises only one feature of the whole philosophy which includes numerous
danger signal controls for all the various levels of management concerned.

Purpose of Line of Balance (LOB)

The purpose of a LOB is to enable a program manager to see at a single glance which activities of an
operation are “in balance” – i.e., whether those which should have been completed at the time of the review
actually are completed and whether any activities scheduled for future completion are lagging behind
schedule. The LOB chart comprises only one feature of the whole philosophy which includes numerous
danger signal controls for all the various levels of management concerned.
Benefits of Utilizing Line of Balance (LOB)
The benefits of using the LOB technique are:

• A better understanding of the amount of work taking place at a certain time in a specific place.
• Optimized resources for a large number of repeated work activities.
• Allows easier cost and time optimization analysis.
• Easy to modify, update and change the schedule.
• Better management of subcontractors and resources.
• Identifies issues in advance.

Developing a Line of Balance (LOB) Chart

To do a LOB, the following is needed: [1]
A contract schedule, or objective chart;
A production plan or lead-time chart for the production process itself;
Control points cumulative inventories; and
A program status chart on which to plot LOB and the cumulative quantities of units that have passed through
the control points of the assembly/production process.

UNIT – V
Project Management – Programming Evaluation Review Techniques (PERT) – three times estimation– critical path
– probability of completion of project – critical path method – crashing of simple nature. – Total Quality
Management – ISO 9000 Series Standards – Six Sigma

Project management
Project management involves the planning and organization of a company's resources to move a specific task, event, or duty
towards completion. It can involve a one-time project or an ongoing activity, and resources managed include personnel,
finances, technology, and intellectual property.
Project management is often associated with fields in engineering and construction and, more lately, healthcare
and information technology (IT), which typically have a complex set of components that have to be completed and assembled
in a set fashion to create a functioning product.

Program Evaluation Review Technique (PERT)

Program Evaluation Review Technique (PERT) is a project management planning tool used to calculate the amount of
time it will take to realistically finish a project. PERT charts are used to plan tasks within a project — making it easier to
schedule and coordinate team members
Project Evaluation and Review Technique (PERT) depicts the activities and schedule of the activities or tasks through a
network diagram. PERT is used to estimate the complete time of the project

Example 1:
A small project consisting of eight activities has the following characteristics:

(i) Draw the PERT network for the project.

(ii) Prepare the activity schedule for the project.
(iii) Determine the critical path.
(iv) If a 30- week deadline is imposed, what is the probability that the project will be finished within the time limit?
ADVERTISEMENTS:
If the project manager wants to 99% sure that the project is completed on the schedule date, how many weeks before
that date should he start the project work?
Solution:
The network diagram for the given data is shown in fig. below. The earliest time and variance of each activity is
computed by using the formula.

(ii) Calculation activity duration and scheduling times.

(iii) The critical path of the project is 1-2-4-5 -6, critical activities being A, D, G and H.
The expected project length is the sum of duration of each critical activity. Expected project length = 5 + 15 + 4 + 5 =
29 weeks.
Variance project length is obtained by summing variance of each critical activity.

(Iv) The required probability can be determined by finding the area under the normal curve to the left of X = 30
Now, the probability of completing the project within the 30 week deadline is
(v) If the project start T weeks before the due date, the X will represent the ordinate under normal curve to the left of
which 99% of area lies.
ADVERTISEMENTS:
The area between n and X- being 99-50 or 49% and Z – value corresponding to this is 2033 (From table)

Example 2:
A small project consisting of ten activities has the following characteristics:

Determine the critical path

Solution:
Network for the given project is drawn below:
Value of expected time for each activity is shown in following Table:

Time [Earliest & latest] are calculated as follows:

As we can see there are two critical paths along which E-values and L-values are similar, but the longest network of
critical activities is known as critical path.
Critical path is 1-2-3-6-7-8
Expected length of critical path is = 6 + 3 + 4 + 2 + 2 = 17 weeks
Example 3:
Product manager has planned a list of activities culminating in the inaugurate launch of the new products.
These are given in the table below:

What is the probability that product manager will be able to complete the language launch within 80 days-time?
Solution:
Network diagram for given problem is shown in following fig:
Expected time value for each activity of given network is listed in table below along with three variance.

Value of earliest & latest time is calculated on the basis of expected time te as follows:
Value of earliest & latest time is calculated on the basis of expected time te as follows:
Hence critical path along with E-value and L- value are same i.e., 1- 2-4-5-6-7- 8-9 Expected project duration is 172.83
days
Variance of project length = Sum of variance of each critical activity = 6.25 + 0.44 + 32.11 +100+1.36+.44+0= 140.6

For Z = -2.77 Probability of completing the project with 80 days-time i.e., 0.3%.
Example 4:
A Project is composed of seven activities whose time estimates are listed in the following table. Activities are simplified
by this beginning (1) ones ending (j) Node member.
Calculate expected project length.
Solution:
Calculation of expected time for each activity is shown in following table:

E- Values and L- values are calculated on the basis of expected time are as follows:
Network diagram for given project along with E-values and L-values is shown by following Fig:

Critical path for the above network 1-3-5-6 shown by double lines; along with E- values and L-values are same.
Expect project length will be = 4 + 6+ 7 = 17 weeks.

Probability of completion of project

Problem
 PROJECT CRASHING
What Is Crashing In Project Management? The term refers to the practice used to compress schedules
(i.e.)
it is used when a person wishes to lessen the period of a project without modifying its scope. There are several methods
adopted to achieve this end result. However, few have been most successful.
Among them, there are essentially two methods for reducing the course of a project while maintaining its size. These
are referred to as fast tracking and crashing. Cost and scheduling trade-offs are measured to determine how the utmost
compression for the least incremental cost can be achieved. Crashing is a technique for analyzing and classifying
activities due to the lowest crash price per unit time. Crashing is effective only for critical path operations where
schedules can be shortened.
Define The Project Logic:
A program logic model defines the program's resources and tasks and the modifications that are likely to change due to
them. It clearly shows the relationships between the program's inputs, objectives, and activities and its organizational
and operational tools, strategies and procedures, and expected outputs and effects.
The Basic Process Involved In Generating Crash in Project Management:
Consider the following simple Project Crashing Example. Your team has been entrusted with launching a magazine to
celebrate your company's anniversary of founding. Still, delays in authorizing the lead feature have set the project
behind schedule.
To ensure that the magazine is released in time for the anniversary party, an unchangeable aspect of the project's scope,
you want to pay a rush fee to the printer. Although this project-crashing phase enabled you to meet the project's
inflexible deadline, it also increased the project's budget.

The fundamental procedure for generating a time-cost (crash) curve is to;

Set the project logic
• Add the durations of the various activities.
• Establish the critical path for the project
• Determine the cost of each activity's crash.
• Evaluate the costs to crash per unit of time.
• Quantify the most economical crash sequence
• Analyze the critical path.
• Crash the network to the point that it reaches the crash limit.

Problem 1
A project has activities with the following normal and crash times and cost:
Determine a crashing scheme for the above project so that the total project time is reduced by 3 weeks
Solution

We have the following network diagram for the given project with normal costs:
Therefore Path II is the critical path and the critical activities are A, C, E, G and H. The non-critical activities are B, D
and F.

Given that the normal time of activity A is 4 weeks while its crash time is 3 weeks. Hence the time of this activity can
be reduced by one week if the management is prepared to spend an additional amount. However, the time cannot
be reduced by more than one week even if the management may be prepared to spend more money. The normal
cost of this activity is Rs. 8,000 whereas the crash cost is Rs. 9,000. From this, we see that crashing of activity A
by one week will cost the management an extra amount of Rs. 1,000. In a similar fashion, we can work out the
crash cost per unit time for the other activities also. The results are provided in the following table.
A non-critical activity can be delayed without delaying the execution of the whole project. But, if a critical activity
is delayed, it will delay the whole project. Because of this reason, we have to select a critical activity for crashing.
Here we have to choose one of the activities A, C, E, G and H The crash cost per unit time works out as follows:

The maximum among them is Rs. 1,000. So we have to choose an activity with Rs.1,000 as the crash cost per unit time.
However, there is a tie among A, C and E. The tie can be resolved arbitrarily. Let us select A for crashing. We
reduce the time of A by one week by spending an extra amount of Rs. 1,000.
After this step, we have the following network with the revised times for the activities
The revised time for Path I = 3 + 5 + 6 + 5 = 19 weeks.

The time for Path II = 3 + 4 + 6 + 7 + 4 = 24 weeks.

Maximum of {19, 24} = 24.

Therefore Path II is the critical path and the critical activities are A, C, E, G and H. However, the time for A cannot be
reduced further. Therefore, we have to consider C, E, G and H for crashing. Among them, C and E have the least
crash cost per unit time. The tie between C and E can be resolved arbitrarily. Suppose we reduce the time of C by
one week with an extra cost of Rs. 1,000.

After this step, we have the following network with the revised times for the activities:

The time for Path I = 3 + 5 + 6 + 5 = 19 weeks.

The time for Path II = 3 + 3 + 6 + 7 + 4 = 23 weeks.
Maximum of {19, 23} = 23.

Therefore Path II is the critical path and the critical activities are A, C, E, G and H. Now the time for A or C cannot be
reduced further. Therefore, we have to consider E, G and H for crashing. Among them, E has the least crash cost
per unit time. Hence we reduce the time of E by one week with an extra cost of Rs. 1,000.

By the given condition, we have to reduce the project time by 3 weeks. Since this has been accomplished, we stop with
this step.

Result: We have arrived at the following crashing scheme for the given project:
Reduce the time of A, C and E by one week each.
Project time after crashing is 22 weeks.
Extra amount required = 1,000 + 1,000 + 1,000 = Rs. 3,000.
Project Crashing
Crashing only works for critical path activities where it is possible to shorten schedules. The project
crashing results in a high direct cost to the project, but also gives clear identification for optimal time cost.
In project management, direct cost is the basis for crashed cost calculation.
Project crashing involves shortening the expected time taken for a project. This is primarily done by adding more
resources to it. You may find diverse ways to add resources to a project depending on what is causing the delay or
taking a lot of time. This needs to be done within the constraints of budget and quality, and must be approved and
supported by important stakeholders.
Definition of Crashing
Crashing in a project is an activity that will shorten the completion time of a project within the optimum cost
increase.
You could allocate individuals from a different team to an activity that needs to be sped up.
Crashing can also be done for individual activities within the project. If shortening the length of that activity brings
down the time needed for project completion, then the cost incurred is easier to justify.
Crashing does not always involve adding resources. In some cases, it can also involve reducing the scope of a
project. For example, the plan for a four-lane highway may reduce its scope to build a two-lane highway instead to
reduce the time required for completion and to meet immediate needs.
What Prompts Crashing in Project Management?
The reason for the need to crash a project need not be about something going wrong with the project itself. Sometimes
it is also an external factor that changes the estimated delivery time or brings a need for faster completion.
If there is a heavy penalty for failing to meet a project completion deadline, then the increased cost of crashing could
be justified to an extent. A bonus for faster completion can also similarly be a reason for crashing a project.

6-5-3 Solution to Crashing problem

1. The first step is to calculate the crash cost per unit duration. You will use the formula attached here. formula-for-
calculating-the-crash-cost-per-unit-time . Do this yourself before checking your answer in the attached table shown
here crashing-example1

2. The second step is to complete the network diagram. The network diagram is also shown here. Keep in mind that
the network diagram is based on the normal duration for each task.

3. From the network diagram, you will identify all the paths in the network and their durations and thus identify the
critical path(s).

4. Using the crash cost per unit time and the potential tasks on the critical path, you identify the first task to be crashed
and calculate the result extra cost and the new duration for each path. The complete solution to the problem is shown
below.
Paths Initial 1ST step and 2nd step & 3rd step & 4th step &
Duration duration duration duration duration

ACEFH 48 47 46 45 44

ACEGH 45 44 43 42 41

ADEFH 45 45 44 43 43

ADEGH 42 42 42 41 41

BDEFH 47 47 46 45 44
 BDEGH 44 44 43 42 41
The initial critical path is ACEFH, normal project duration is 48 weeks and total normal cost is $2300.
• 1. 1st step: crash C by 1 week, extra cost is $50 and the project duration is 47 weeks with 2 critical paths.
New project total cost is $2350. This also means that if we had to reduce the duration by only 1 week, this
will be the best option and we will stop here.
• 2. 2nd step, we have to crash a task on each of the two critical paths. It is cheaper to crash F on both paths for
a cost of $75 than say to crash C on path ACEFH and task B on path BDEFH for total extra cost$50+ $45=
$95. With crashing of F, the project duration is now 46 weeks and the critical paths remain unchanged. New
project total cost is $2425. The goal of 44 weeks is not reached yet so we continue the process.
• 3. 3rd step, we can crash F by 1 more week (it can be crashed from 7 weeks to 5 weeks; see previous table).
The column shows the outcome. New total cost is $2500
• 4. Crash E by 1 week, extra extra cost = $85 and new project cost is $2585 with an expected duration of 44
weeks. Thus, by spending an extra $285 we are able to reduce the completion time by 4 weeks.

More problems
https://cbom.atozmath.com/example/CBOM/PertCPM.aspx?he=e&q=2.4

Critical path method (CPM)

Critical path method (CPM) is a resource-utilization algorithm for scheduling a set of project activities.
The essential technique for using CPM is to construct a model of the project that includes the following: A
list of all tasks required to complete the project. The dependencies between the tasks

Problem 1

The following details are available regarding a project:

Determine the critical path, the critical activities and the project completion time.

Solution

First let us construct the network diagram for the given project. We mark the time estimates
along the arrows representing the activities. We obtain the following diagram:

Consider the paths, beginning with the start node and stopping with the end node. There are two
such paths for the given project. They are as follows:
Compare the times for the two paths. Maximum of {22,19} = 22. We see that path I has the
maximum time of 22 weeks. Therefore, path I is the critical path. The critical activities are A, B,
D and F. The project completion time is 22 weeks.

We notice that C and E are non- critical activities.

Time for path I - Time for path II = 22- 19 = 3 weeks.

Therefore, together the non- critical activities can be delayed upto a maximum of 3 weeks,
without delaying the completion of the whole project.

Problem 2

Find out the completion time and the critical activities for the following project:
Solution

In all, we identify 4 paths, beginning with the start node of 1 and terminating at the end node of
10. They are as follows:
Compare the times for the four paths. Maximum of {42, 43, 45, 47} = 47. We see that the
following path has the maximum time and so it is the critical path:

The critical activities are C, F, J and L. The non-critical activities are A, B, D, E, G, H, I and K.
The project completion time is 47 units of time.
Problem 3

Draw the network diagram and determine the critical path for the following project:

Solution

We have the following network diagram for the project:

Solution

We assert that there are 4 paths, beginning with the start node of 1 and terminating at the end
node of 9. They are as follows:
WHAT IS TOTAL QUALITY MANAGEMENT (TQM)?

Quality Glossary Definition: Total quality management

A core definition of total quality management (TQM) describes a management approach to long-term success through
customer satisfaction. In a TQM effort, all members of an organization participate in improving processes, products, services,
and the culture in which they work.
PRIMARY ELEMENTS OF TQM
TQM can be summarized as a management system for a customer-focused organization that involves all employees in
continual improvement. It uses strategy, data, and effective communications to integrate the quality discipline into the culture
and activities of the organization. Many of these concepts are present in modern quality management systems, the successor
to TQM. Here are the 8 principles of total quality management:
• Customer-focused: The customer ultimately determines the level of quality. No matter what an organization does
to foster quality improvement—training employees, integrating quality into the design process, or upgrading
computers or software—the customer determines whether the efforts were worthwhile.
• Total employee involvement: All employees participate in working toward common goals. Total employee
commitment can only be obtained after fear has been driven from the workplace, when empowerment has
occurred, and when management has provided the proper environment. High-performance work systems
integrate continuous improvement efforts with normal business operations. Self-managed work teams are one
form of empowerment.
• Process-centered: A fundamental part of TQM is a focus on process thinking. A process is a series of steps that
take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to customers
(internal or external). The steps required to carry out the process are defined, and performance measures are
continuously monitored in order to detect unexpected variation.
• Integrated system: Although an organization may consist of many different functional specialties often organized
into vertically structured departments, it is the horizontal processes interconnecting these functions that are the
focus of TQM.
• Micro-processes add up to larger processes, and all processes aggregate into the business processes required for
defining and implementing strategy. Everyone must understand the vision, mission, and guiding principles as well
as the quality policies, objectives, and critical processes of the organization. Business performance must be
monitored and communicated continuously.
• An integrated business system may be modeled after the Baldrige Award criteria and/or incorporate the ISO 9000
standards. Every organization has a unique work culture, and it is virtually impossible to achieve excellence in its
products and services unless a good quality culture has been fostered. Thus, an integrated system connects business
improvement elements in an attempt to continually improve and exceed the expectations of customers, employees,
and other stakeholders.
 • Strategic and systematic approach: A critical part of the management of quality is the strategic and systematic
approach to achieving an organization’s vision, mission, and goals. This process, called strategic planning or
strategic management, includes the formulation of a strategic plan that integrates quality as a core component.
• Continual improvement: A large aspect of TQM is continual process improvement. Continual improvement drives
an organization to be both analytical and creative in finding ways to become more competitive and more effective
at meeting stakeholder expectations.
• Fact-based decision making: In order to know how well an organization is performing, data on performance
measures are necessary. TQM requires that an organization continually collect and analyze data in order to improve
decision making accuracy, achieve consensus, and allow prediction based on past history.
• Communications: During times of organizational change, as well as part of day-to-day operation, effective
communications plays a large part in maintaining morale and in motivating employees at all levels.
Communications involve strategies, method, and timeliness.

Primary Elements of Total Quality Management (TQM)

WHAT IS THE ISO 9000 STANDARDS SERIES?

Quality Glossary Definition: ISO 9000 series standards

ISO 9000 is defined as a set of international standards on quality management and quality assurance developed to help
companies effectively document the quality system elements needed to maintain an efficient quality system. They are not
specific to any one industry and can be applied to organizations of any size.
ISO 9000 can help a company satisfy its customers, meet regulatory requirements, and achieve continual improvement. It
should be considered to be a first step or the base level of a quality system.
 • ISO 9000 vs. 9001
• 30 years of ISO 9000
• ISO 9000 resources
ISO 9000 VS. 9001
ISO 9000 is a series, or family, of quality management standards, while ISO 9001 is a standard within the family. The ISO
9000 family of standards also contains an individual standard named ISO 9000. This standard lays out the fundamentals and
vocabulary for quality management systems (QMS).
ISO 9000 series of Standards
The ISO 9000 family contains these standards:
• ISO 9001:2015: Quality Management Systems - Requirements
• ISO 9000:2015: Quality Management Systems - Fundamentals and Vocabulary (definitions)
• ISO 9004:2018: Quality Management - Quality of an Organization - Guidance to Achieve Sustained
Success (continuous improvement)
• ISO 19011:2018: Guidelines for Auditing Management Systems
ASQ is the only place where organizations can obtain the American National Standard Institute (ANSI) versions of these
standards in the ISO 9000 family.
ISO 9000 history and revisions: ISO 9000:2000, 2008, and 2015
ISO 9000 was first published in 1987 by the International Organization for Standardization (ISO), a specialized international
agency for standardization composed of the national standards bodies of more than 160 countries. The standards underwent
revisions in 2000 and 2008. The most recent versions of the standard, ISO 9000:2015 and ISO 9001:2015, were published
in September 2015.
ASQ administers the U.S. Technical Advisory Groups and subcommittees that are responsible for developing the ISO 9000
family of standards. In its standards development work, ASQ is accredited by ANSI.
ISO 9000:2000
ISO 9000:2000 refers to the ISO 9000 update released in the year 2000.
The ISO 9000:2000 revision had five goals:
1. Meet stakeholder needs
2. Be usable by all sizes of organizations
3. Be usable by all sectors
4. Be simple and clearly understood
5. Connect quality management system to business processes
ISO 9000:2000 was again updated in 2008 and 2015. ISO 9000:2015 is the most current version.
ISO 9000:2015 principles of Quality Management
The ISO 9000:2015 and ISO 9001:2015 standards are based on seven quality management principles that senior
management can apply to promote organizational improvement.
ISO 9000 Quality Management Principles
1. Customer focus
o Understand the needs of existing and future customers
o Align organizational objectives with customer needs and expectations
o Meet customer requirements
o Measure customer satisfaction
o Manage customer relationships
o Aim to exceed customer expectations
o Learn more about the customer experience and customer satisfaction
2. Leadership
o Establish a vision and direction for the organization
o Set challenging goals
o Model organizational values
o Establish trust
o Equip and empower employees
o Recognize employee contributions
o Learn more about leadership
3. Engagement of people
o Ensure that people’s abilities are used and valued
o Make people accountable
 o Enable participation in continual improvement
o Evaluate individual performance
o Enable learning and knowledge sharing
o Enable open discussion of problems and constraints
o Learn more about employee involvement
4. Process approach
o Manage activities as processes
o Measure the capability of activities
o Identify linkages between activities
o Prioritize improvement opportunities
o Deploy resources effectively
o Learn more about a process view of work and see process analysis tools
5. Improvement
o Improve organizational performance and capabilities
o Align improvement activities
o Empower people to make improvements
o Measure improvement consistently
o Celebrate improvements
o Learn more about approaches to continual improvement
6. Evidence-based decision making
o Ensure the accessibility of accurate and reliable data
o Use appropriate methods to analyze data
o Make decisions based on analysis
o Balance data analysis with practical experience
o See tools for decision making
7. Relationship management
o Identify and select suppliers to manage costs, optimize resources, and create value
o Establish relationships considering both the short and long term
o Share expertise, resources, information, and plans with partners
o Collaborate on improvement and development activities
o Recognize supplier successes
o Learn more about supplier quality and see resources related to managing the supply chain
SIX SEGMA
Six Sigma is a disciplined, statistical-based, data-driven approach and continuous improvement methodology for
eliminating defects in a product, process or service. It was developed by Motorola and Bill Smith in the early 1980’s,
along with help from Mikel Harry and Mario Perez-Wilson (view Six Sigma timeline from 1984-1994). It is based on
quality management fundamentals, which became a popular management approach at General Electric (GE) with Jack
Welch in the early 1990’s. The approach was based on the methods taught by W. Edwards Deming, Walter
Shewhart and Ronald Fisher among many others. Hundreds of companies around the world have adopted Six
Sigma as a way of doing business.

Sigma represents the population standard deviation, which is a measure of the variation in a data set collected about
the process. If a defect is defined by specification limits separating good from bad outcomes of a process, then a six
sigma process has a process mean (average) that is six standard deviations from the nearest specification limit. This
provides enough buffer between the process natural variation and the specification limits.
For example, if a product must have a thickness between 10.32 and 10.38 inches to meet customer requirements, then
the process mean should be around 10.35, with a standard deviation less than 0.005 (10.38 would be 6 standard
deviations away from 10.35), assuming a normal distribution. See the example below.
 Six Sigma can also be thought of as a measure of process performance, with Six
Sigma being the goal, based on the defects per million. Once the current performance of the process is
measured, the goal is to continually improve the sigma level striving towards 6 sigma. Even if the
improvements do not reach 6 sigma, the improvements made from 3 sigma to 4 sigma to 5 sigma will
still reduce costs and increase customer satisfaction.

Here are some examples of processes from different industries and their actual sigma levels.
The video below provides a simple explanation of the different sigma levels, and how they relate to golfing.
The martial arts belt structure is used to recognize proficiency in training and application in Six Sigma, using
the following colors:
• White Belt – Overview, DMAIC, Define Phase
• Yellow Belt – White Belt + process mapping, data collection and charting, assisting with a project
• Green Belt – Yellow Belt + Project leader, core Six Sigma tools (Gage
R&R, SPC, Capability, ANOVA, Regression), change management, hypothesis tests and more
• Black Belt – Green Belt + advanced statistical analysis and experiments, change management,
nonnormal distributions
• Master Black Belt – Black Belt + Design for Six Sigma, more advanced statistical analysis, unique
tools for specific industries and processes, working with leadership, implementing successful
improvement programs
However, not all levels are consistent and equal to each other, so it is important to ask questions about
the topics covered and requirements needed to complete each belt level.
It's called Six Sigma because the term sigma refers to one standard deviation in a data set. The idea
is that six such deviations should occur before the process results in a defect. When a process achieves
Six Sigma, it reaches a point where only 3.4 errors per one million process events result in a defect
5 Lean Six Sigma Principles
• Work for the customer. The primary goal of any change you want to implement should be to deliver
maximum benefit to the customer. ...
• Find your problem and focus on it. ...
• Remove variation and bottlenecks. ...
• Communicate clearly and train team members. ...
• Be flexible and responsive.