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  2. 2. UNIT– II INTRODUCTION TO OPERATIONS MANAGEMENT Plant Location  Need, Factors Plant Layout Types, Methods of Production, Techniques of PM Network Analysis – Programme Evaluation and Review Techniques (PERT) Critical Path Method (CPM) Crashing of Simple Networks.
  4. 4. What is Plant Location? Plant location refers to the choice of region and the selection of a particular site for setting up a business or factory. But the choice is made only after considering cost and benefits of different alternative sites. It is a strategic decision that cannot be changed once taken.
  5. 5. If at all changed only at considerable loss, the location should be selected as per its own requirements and circumstances. Each individual plant is a case in itself. Businessman should try to make an attempt for optimum or ideal location.
  6. 6. NEED FOR SELECTION ☺ When the business is newly started ☺ The existing business expansion ☺ Establishment of branches ☺ When Land lease expires ☺Due to Social, Political and Economical Reasons ☺ Other reasons Every entrepreneur is faced with the problem of deciding the best site for location of his plant or factory.
  7. 7. Plant location involves two major activities 1. To select a proper geographic region 2. Selecting a specific site with in the region Plant location
  8. 8. PLANT LOCATION is an establishment of an industry at a particular / selected place. It is of 2 types: 1. Localization /centralization means concentration of similar type of industries at some particular place. E.g. textile in Mumbai. 1. Delocalization /Decentralization- means spreading of similar type of industries at different places. E.g. banking industries.
  9. 9. Factors affecting location & site decisions 1. Availability of raw materials 2. Proximity to market 3. Integration with other parts of organization 4. Availability of labor and their skill levels 5. Availability of Infrastructure/Amenities 6. Transport & communication facilities 7. Business Climate 8. Competitive Advantage 9. Government Policies 10. Suitability of climate
  10. 10. Factors affecting location & site decisions (contd…) 11. Availability of services 12. Regional regulations 13. Room for expansion 14. Safety requirements 15. Others like low interest on loans, special grants, living standards
  11. 11. In other Words: The important considerations for selecting a suitable location are given as follows: • a)Natural or climatic conditions. • b)Availability and nearness to the sources of raw material. • c)Transport costs-in obtaining raw material and also distribution or marketing Finished products to the ultimate users. • d)Access to market: small businesses in retail or wholesale or services should be
  12. 12. • located within the vicinity of densely populated areas. • e)Availability of Infrastructural facilities such as developed industrial sheds or sites, link roads, nearness to railway stations, airports or sea ports, availability of electricity, water, public utilities, civil amenities and means of communication are important, especially for small scale businesses. • f)Availability of skilled and non-skilled labour and technically qualified and trained managers.
  13. 13. • g)Banking and financial institutions are located nearby. • h)Locations with links: to develop industrial areas or business centers result in savings and cost reductions in transport overheads, miscellaneous expenses. • I)Strategic considerations of safety and security should be given due importance. • j)Government influences: Both positive and negative incentives to motivate an entrepreneur to choose a particular location are made available.
  14. 14. • Positive includes cheap overhead facilities like electricity banking transport, tax relief, subsidies and liberalization. • Negative incentives are in form of restrictions for setting up industries in urban areas for reasons of pollution control and • decentralization of industries. • k)Residence of small business entrepreneurs want to set up nearby their homeland
  15. 15. Plant Layout  Plant layout is the physical arrangement of industrial facilities. It involves the allocation of space & the arrangement of equipment in such a manner that overall operating costs are minimized.
  16. 16. Plant Layout The efficiency of production depends on how well the various machines; production facilities and employee’s amenities are located in a plant. Only the properly laid out plant can ensure the smooth and rapid movement of material, from the raw material stage to the end product stage.
  17. 17. Factors affecting plant layout 1. Management Policy 2. Manufacturing process 3. Nature of product 4. Volume of production 5. Type of Equipment
  18. 18. Factors affecting plant layout (contd…) 6. Type of building 7. Availability of Total floor area 8. Arrangement of Material Handling Equipment 9. Service facilities 10. Possibility of future expansion
  19. 19. Types of Plant Layout 1. Product layout 2. Process layout 3. Fixed Position/ Stationary layout 4. Combination lay out
  20. 20. Product layout  Layout that uses standardized processing operations to achieve smooth, rapid, high- volume flow  Here machines are arranged acc. to the needs of product & in the same sequence as the operations are necessary for manufacture.  E.g. ‘back office’ of services such as banks and insurance companies.
  21. 21. Raw materials or customer Finished item Station 2 Station 2 Station 3 Station 3 Station 4 Station 4 Material and/or labor Station 1 Material and/or labor Material and/or labor Material and/or labor Used for Repetitive or Continuous Processing Product Layout (contd…)
  22. 22. Work Station 1 Work Station 2 Work Station 3 Product Layout (sequential) Used for Repetitive Processing Repetitive or Continuous Product Layout (contd…)
  23. 23. Advantages of Product Layout 1. High rate of output (Same Product) 2. Low unit cost 3. Labor specialization 4. Low material handling cost 5. High utilization of labor and equipment 6. Established routing and scheduling 7. Short processing time
  24. 24. Disadvantages of Product Layout 1. Creates dull, repetitive jobs 2. Poorly skilled workers may not maintain equipment or quality of output 3. Fairly inflexible to changes in volume 4. Highly susceptible to shutdowns 5. Needs preventive maintenance 6. Require large capital investment
  25. 25. Process Layout  Layout that can handle varied processing requirements  Here all machines performing similar type of operations are grouped together at one location in the process layout.  Thus here facilities are grouped together a/c to their functions.  E.g. all drilling machines are located at one place known as drilling section.
  26. 26. Dept. A Dept. B Dept. D Dept. C Dept. F Dept. E Used for Intermittent processing Job Shop or Batch Process Layout (functional) Drilling SectionBoring Section Filing Section
  27. 27. Advantages of Process Layouts 1. Can handle a variety of processing requirements 2. Machines breakdown doesn’t result in shutdown 3. Equipment used is less costly 4. Wide flexibility in production facilities. 5. Each production unit of system works independently 6. High utilization of facilities 7. Variety makes the Work/job interesting.
  28. 28. Disadvantages of Process Layouts 1. In-process inventory costs can be high 2. Challenging routing and scheduling 3. Equipment utilization rates are low 4. Material handling is slow and inefficient & is more. 5. More space is required 6. Longer processing time 7. Back tracking may occur
  29. 29. Comparison of product & process layout Factors Product layout Process layout 1. Nature Sequence of facilities Similar are Grouped together 2. Machines utilization Not to full capacity Better utilization 3. product standardized diversified 4. Processing time less more 5. Material handling less more 6. inventory High WIP Low WIP 7. breakdown Can’t tolerate Can tolerate 8. Production centre simple complex 9.flexibilty low high 10. floor space Requires less more 11. investment high low
  30. 30. FIXED POSITION LAYOUT Layout by fixed position of the product is inherent in ship building, aircraft manufacture .
  31. 31. ADVANTAGES It is possible to assign one or more skilled workers to a project from start to finish in order to ensure continuity of work It involves least movement of materials A number of quite different projects can be taken with the same layout
  32. 32. DISADVANTAGES There appears to be low utilization of labor and equipment It involves high equipment handling costs
  33. 33. COMBINATION LAYOUT A combination of process and product layouts combines the advantages of the both types of layouts. A combination layout is possible where an item is being made in different types and sizes. examples: wood saws, files etc
  35. 35. Methods/Types of Production
  36. 36. Types of Production Systems The types of production system are grouped under two categories viz.,  Intermittent production system, and  Continuous production system.
  37. 37. Methods of Production Assembly/
  38. 38. Production Size
  39. 39. Intermittent production system  Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed) intervals (time gaps).
  40. 40.  In the intermittent production system, goods are produced based on customer's orders.  These goods are produced on a small scale. The flow of production is intermittent (irregular). In other words, the flow of production is not continuous. In this system, large varieties of products are produced.  These products are of different sizes. The design of these products goes on changing. It keeps changing according to the design and size of the product.  Therefore, this system is very flexible. Intermittent production system
  41. 41. Examples of Intermittent production system
  42. 42. Features of an intermittent production system
  43. 43. The characteristics of an intermittent production system  The flow of production is not continuous. It is intermittent.  Wide varieties of products are produced.  The volume of production is small.  General purpose machines are used. These machines can be used to produce different types of products.  The sequence of operation goes on changing as per the design of the product.  The quantity, size, shape, design, etc. of the product depends on the customer's orders.
  44. 44. Continuous Production System Continuous means something that operates constantly without any irregularities or frequent halts.
  45. 45. Continuous Production System  In the continuous production system, goods are produced constantly as per demand forecast.  Goods are produced on a large scale for stocking and selling.  They are not produced on customer's orders. Here, the inputs and outputs are standardized along with the production process and sequence.
  46. 46. Examples of Continuous production system
  47. 47. Characteristics of a continuous production system  The flow of production is continuous. It is not intermittent.  The products are standardized.  The products are produced on predetermined quality standards.  The products are produced in anticipation(An expectation) of demand.  Standardized routing sheets and schedules are prepared
  48. 48. continuous production
  49. 49. 1. Mass production flows  Here, company produces different types of products on a large-scale and stock them in warehouses until they are demanded in the market.  The goods are produced either with the help of a single operation or uses a series of operations.  E.g. of mass production is the production of toothpastes, soaps, pens, etc.
  50. 50. characteristics mass production flows  There is a continuous flow of production. However, this depends on the demand in the market.  Here, there is limited work-in-progress.  Supervision is easy because only few instructions are necessary.  The material handling is done mostly by machines, i.e. conveyors and automatic transfer machines.  The flow of materials is continuous. There is little or no queuing at any stage of production.
  51. 51. Process production flows  Here, a single product is produced and stocked in warehouses until it is demanded in the market.  There is No flexibility of producing other product in this plants because only Single product can be produced.  Examples of these plants include, steel, cement, paper, sugar, etc.
  52. 52. Characteristics process production flows  There is a highly mechanized system for handling materials. Conveyors and automatic transfer machines are used to move the materials from one stage to another.  Low-skilled labour and skilled technicians are required.  There is very less work-in-progress because material flow is continuous.  The production planning and scheduling can be decided well in advance.  The full production system is designed to produce only one specific type of item.
  53. 53. The types of an intermittent production system include:  Project production flows,  Jobbing production flows, and  Batch production flows.
  54. 54. Project production flows  Here, in project production flows, company accepts a single, complex order or contract.  The order must be completed within a given period of time and at an estimated cost.  Examples of project production flows mainly include, construction of airports, dams, roads, buildings, shipbuilding, etc.
  55. 55. Examples of project production
  56. 56. Characteristics project production  The requirement of resources is not same (it varies). Generally, the resource requirement at the beginning is low. Then in mid of production, the requirement increases. Finally, it slows down when the project is near its completion phase.  Many agencies are involved in the project. Each agency performs specialized jobs. Here, coordination between agencies is important because all jobs are interrelated.  Delays take place in completion of projects due to its complexity and massiveness.  As routing and scheduling changes with fresh orders, proper inspection is required at each stage of production.
  57. 57. Job production  Here, in job production flows, company accepts a contract to produce either one or few units of a product strictly as per specifications given by the customer.  The product is produced within a given period and at a fixed cost. This cost is fixed at the time of signing the contract.  Examples of such jobbing production flows include, services given by repair shops, tailoring shops, manufacturer of special machine tools, etc.
  58. 58. Job production
  59. 59. Characteristics job production  The production of items takes place in small lots. Sometimes only one product is produced at one time.  The items are manufactured strictly as per customer's specifications.  Highly skilled labour is required to perform specialized jobs.  There is disproportionate manufacturing cycle time.  For e.g. the time needed to design the product may be more than the manufacturing time.
  60. 60. Batch production  In batch production flows, the production schedule is decided according to specific orders or are based on the demand forecasts.  Here, the production of items takes place in lots or batches.  A product is divided into different jobs. All jobs of one batch of production must be completed before starting the next batch of production.  Examples of batch production flows include, manufacturing of drugs and pharmaceuticals, medium and heavy machineries, etc.
  61. 61. Batch Production
  62. 62. Characteristics batch production  The products are made and kept in stock until their demand arises in the market.  General purpose machines and handling equipments, which can do many different jobs quickly are installed. This is because large varieties of items are to be produced.  There is a possibility of large work-in-progress due to many reasons.  There is a need for detailed production planning and control.