Material Management

1. Operations Management : Principles and Types of management, work study, statistical quality
control, R chart, c chart, p chart, simple problems,-
Materials Management: Need for inventory control, EOQ, ABC analysis (simple problems)
and types of ABC Analysis, HML, SDE, VED, FSN analysis.
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. 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. A good location of a production or service facility will give cost advantage to production or
services and may also reduce the raw material and distribution costs. The location aspect is particularly
advantageous to small business enterprises and service units. Location adds to competitive advantages
and improved profits.
Factors affecting the plat location
The ten main factors that affect a plant location are as follows:
1. Law and order situation,
2. Availability of infrastructure facilities,
3. Good industrial relations,
4. Availability of skilled workforce,
5. Social infrastructure,
6. Investor friendly attitude,
7. Nearness to market,
8. Nearness to raw-materials' source,

2. 9. Nearness to supportive industries and services, and
10. Must meet safety requirements.
Nearness to raw-materials source:
Plant location must be usually near to the source of raw-material. Raw-materials' costs are about
50% of the total cost. So, it is important in the business to get the raw materials in time and at a
reasonable price. Therefore, a business must be located close to the source of raw material,
especially in the case of “Gross Materials.”
Nearness to market
Plant location must be near a market. Every business unit depends on a market for selling its
goods and services. The goods and services must reach the market on time, and it must be
available to the consumers at a low price. Therefore, this factor is given importance while
selecting location of a plant.
Good industrial relations
Plant location must be at those places where good industrial-relations are maintained. Industrial
relations become bad, because of militant and selfish trade unions. Entrepreneurs do not want to
locate their business at places where anti-social elements are rampant, although there are other
favorable factors such as good infrastructure facilities, cheap labor, etc.
Availability of infrastructure facilities
Plant location which is selected must have proper infrastructure facilities. Without good
infrastructure facilities, it will be difficult to do business efficiently. The infrastructure facilities
are the backbone of all industries. Without it, business cannot be done.
Crucial infrastructure facilities that help industries to grow:
1. Transport and communications,
2. Banking and insurance services,
3. Regular fuel supply,
4. Continuous supply of electricity and water, etc.
Law and order situation
Plant location must be at that place where law and order situation is in control. Entrepreneurs
give a lot of importance to this factor while locating a business unit in any state or region. If a
state has bad law and order situation, then the business must not be located within that state,
unless it has other important factors such as availability of heavy or bulky raw materials.

3. Availability of skilled workforce
Plant location must be convenient and easily accessible to skilled workforce. Most businesses
require skilled-labor force such as engineers, management experts, computer programmers, etc.
The entrepreneurs must consider the availability of competent and skillful-workforce at a
particular place to locate their business.
Social infrastructure
Plant location must have good a social infrastructure. There is a need for social-infrastructure not
only for employees but also for the development of their families. The availability of social-
infrastructure will increase the employees' welfare.
There must be suitable social infrastructure facilities like;
• Education institutions,
• Hospitals and health centers,
• Community centers like worship place, garden, meditation center, etc.
• Recreation facilities like theaters, clubs, communication facilities, etc.
Investor friendly attitude
Plant location must be in those states whose governments have an investor-friendly attitude.
Government must give attractive incentives and concessions to those who start business units in
their states. There must not be any bureaucratic control for starting a business.
An investor-friendly attitude will not only attract investment, but will also result in the overall
development.
Must meet safety requirements
Plant location must meet all essential safety requirements. Due to air, water and sound pollution,
some factories have a bad effect on the health of the people. Therefore, these factories must be
located away from residential areas. Safety of environment must also be given priority in this
regards.
Miscellaneous factors
Following miscellaneous factors also affect a plant location:
• Availability and cost of land,
• Suitability of land - soil and topography,

4. • Climatic conditions,
• Location of a similar unit, etc.
Plant Layout:
Plant layout is primarily concerned with the internal set up of an enterprise in a proper manner. Plant
Layout is the physical arrangement of equipment and facilities within a Plant. Optimizing the
Layout of a Plant can improve productivity, safety and quality of Products. Un-necessary efforts
of materials handling can be avoided when the Plant Layout is optimized.
Definitions of Plant Layout:
“Plant layout is the arrangement of machines, work areas and service areas within a factory”. —George
R. Terry
“Any arrangement of machines and facilities is layout”. —F.G. Moore
Objectives of a good plant layout are –
1. Providing comfort to the workers and catering to worker’s taste and liking.
2. Giving good and improved working conditions.
3. Minimizing delays in production and making efficient use of the space that is available.
4. Having better control over the production cycle by having greater flexibility for changes in the design
of the product.
5. To achieve economies in handling of raw materials, work in- progress and finished goods.
6. To reduce the quantum of work-in-progress.
7 To have most effective and optimum utilisation of available floor space.
Principles of Plant Layout:
Principles of Plant Layout:
According to Muther there are six basic principles of “best layout”.
These are:
1. Principle of Overall Integration:

5. According to this principle the best layout is one which provides integration of production
facilities like men, machinery, raw materials, supporting activities and any other such factors
which result in the best compromise.
2. Principle of Minimum Distance:
According to this principle, the movements of men and materials should be minimized.
3. Principle of Flow:
According to Muther, the best layout is one which arranges the work station for each operate
process in same order or sequence that forms treats or assembles the materials.
4. Principle of Cubic Space Utilization:
According to this, the best layout utilizes cubic space i.e. space available both in vertical and
horizontal directions is most economically and effectively utilized.
5. Principle of Satisfaction and Safety:
According to this principle, best layout is one which provides satisfaction and safety to all
workers.
6. Principle of Flexibility:
In automotive and other allied industries where models of products change after sometime, the
principle of flexibility provides adoption and rearrangements at a minimum cost and least
inconvenience.
Tyeps of Layout:
They are four types
1. Product layout
2. Process layout
3. Fixed layout
4. Combines layout
1.Product Layout:
Product or Line Layout is the arrangement of machines in a line (not always straight) or a
sequence in which they would be used in the process of manufacture of the product. This type of
layout is most appropriate in case of continuous type of industries where raw materials is fed at

6. one end and taken out as finished product at the other end. For each type of product a separate
line of production will have to be maintained.
This type of layout is most suitable in case of metal extraction industry, chemical industry, soap
manufacturing industry, sugar industry and electric industry. It should be noted that this method
is most suitable in case of mass production industries.
Advantages:
1. In process layout machines are better utilized and fewer machines are required.
2. Flexibility of equipment and personnel is possible in process layout.
3. Lower investment on account of comparatively less number of machines and lower cost of
general purpose machines.
4. The diversity of tasks and variety of job makes the job challenging and interesting.
5. Supervisors will become highly knowledgeable about the functions under their department.
Limitations
1. Backtracking and long movements may occur in the handling of materials thus, reducing
material handling efficiency.
2. Material handling cannot be mechanised which adds to cost.
3. Process time is prolonged which reduce the inventory turnover and increases the in-process
inventory.
4. Lowered productivity due to number of set-ups.
5. Throughput (time gap between in and out in the process) time is longer.
2. Process or Functional Layout:
The process layout is particularly useful where low volume of production is needed. If the
products are not standardized, the process layout is more low desirable, because it has creator
process flexibility than other. In this type of layout, the machines and not arranged according to
the sequence of operations but are arranged according to the nature or type of the operations.
This layout is commonly suitable for non repetitive jobs.
Same type of operation facilities are grouped together such as lathes will be placed at one place,
all the drill machines are at another place and so on. See Fig. 8.4 for process layout. Therefore,
the process carried out in that area is according to the machine available in that area.

7. Advantages of Process Layout:
(i) There will be less duplication of machines. Thus, total investment in equipment purchase will
be reduced.
(ii) It offers better and more efficient supervision through specialization at various levels.
(iii) There is a greater flexibility in equipment and man power thus load distribution is easily
controlled.
(iv) Better utilization of equipment available is possible.
(v) Break down of equipment can be easily handled by transferring work to another
machine/work station.
(vi) There will be better control of complicated or precision processes, especially where much
inspection is required.
Limitations of Process Layout:
(i) There are long material flow lines and hence the expensive handling is required.
(ii) Total production cycle time is more owing to long distances and waiting at various points.
(iii) Since more work is in queue and waiting for further operation hence bottle necks occur.
(iv) Generally, more floor area is required.
(v) Since work does not flow through definite lines, counting and scheduling is more tedious.
(vi) Specialization creates monotony and there will be difficult for the laid workers to find job in
other industries.

8. 3. Fixed Position Layout:
This type of layout is the least important for today’s manufacturing industries. In this type of
layout the major component remain in a fixed location, other materials, parts, tools, machinery,
man power and other supporting equipment’s are brought to this location.
The major component or body of the product remain in a fixed position because it is too heavy or
too big and as such it is economical and convenient to bring the necessary tools and equipment’s
to work place along with the man power. This type of layout is used in the manufacture of
boilers, hydraulic and steam turbines and ships etc.
Advantages Offered by Fixed Position Layout:
(i) Material movement is reduced
(ii) Capital investment is minimized.
(iii) The task is usually done by gang of operators, hence continuity of operations is ensured
(iv) Production centers are independent of each other. Hence, effective planning and loading can
be made. Thus total production cost will be reduced.
(v) It offers greater flexibility and allows change in product design, product mix and production
volume.
Limitations of Fixed Position Layout:
(i) Highly skilled man power is required.

9. (ii) Movement of machines equipment’s to production centre may be time consuming.
(iii) Complicated fixtures may be required for positioning of jobs and tools. This may increase
the cost of production.
4. Combination Type of Layout:
Now a days in pure state any one form of layouts discussed above is rarely found. Therefore,
generally the layouts used in industries are the compromise of the above mentioned layouts.
Every layout has got certain advantages and limitations. Therefore, industries would to like use
any type of layout as such.
Flexibility is a very important factory, so layout should be such which can be molded according
to the requirements of industry, without much investment. If the good features of all types of
layouts are connected, a compromise solution can be obtained which will be more economical
and flexible.

10. Work Study
Work study investigates the work done in an organization and aims at finding the best and the most
efficient way of utilizing the available resources (man, material, money and machinery) to achieve
best possible quality work in minimum possible time.
Definition:
Definition by ILO: Is a generic term for techniques, particularly method study and time study, which are
used for the examination of human work in all its contexts, and which lead systematically to investigation
of all the factors which affect the efficiency and economy of the situation being reviewed, in order to seek
improvements.
Benefits of Work Study:
• It directly leads to standardisation of the job process
• It determines the cost of the work performed
• It save and minimises time since the unnecessary movements are eliminataed
• It enhances productivity of the workers and mahcines
• It helps to evaluatae the pereformance of the employee or deparatment as against hard
targets
• It enables the workers to earn incentives
• It contributes to cost savings
• It enahces the employee morale
Method Study:

11. Method Study is the systematic recording and critical examinaton of existing and proposed ways
of doing work, as a means of developing and applying easier and more effective methods and
reducing costs.
Method-study concerned with “the way in which work is done (i.e., method)”. It is used to
simplify the way to accomplish a work and to improve the method of production. Method-study
results in a more effective use of material, plant, equipment and manpower
Select : select the work to be studied.
• The job should be selected for the method study based upon the following
considerations:
a) Economical aspect
b) Technical aspect
c) Human aspect
2. Record: record the relevant facts about the job by direct observation
• Recording techniques used for method study are charts and diagrams.

12. 3. Examine:
Examine the way the job is being performed and test its purpose, place, sequence and method of
performance.
 In this step, the information provided by charts and diagrams is critically examined and
screened by asking some searching questions. Like, what is done?, why it is done?, what
else might be done? Etc.
 This examination is carried out with a view to eliminate, combine, rearrange and/or
simplify the activities.
4. Develop:
Develop the most practical, economical, and effective method. After critical examination of
records is complete, it is necessary to transform the learning’s into the development of new
methods. Some approaches are:
a) Eliminate unnecessary activities.
b) Combine two or more activities. For example, if one uses a combination tool for two
operations, say, facing and drilling, the total set-up time will reduce.
c) Re-sequence activities so as to reduce time and effort.
d) Simplify process to reduce number of operations or reduce effort or reduce throughput,
etc.
e) Attack on constraints, which are preventing the method to perform better.
5. Evaluate:
Evaluate different alternatives to develop a new improved method comparing the cost-
effectiveness of the selected new method with the current method of performance.
6.Define:
Define the new method in a clear manner and present it to those concerned, i.e., management,
supervisors and worker.
A report on new improved method should be prepared. It should include:
 Description of the method.

13.  Cost of installing the new method, including cost of new equipment and of relaying out
shops or working areas.
 Diagram of the work place layout.
 Tools and equipment to be used and diagrams of jigs/fixtures etc.
 Executive actions required to implement the new method.
7. Install:
Install the new method as a standard practice and train the persons involved in applying it.
8. Maintain:
Maintain the new method and introduce control procedures to prevent a drifting back to the
previous method of work.
Work measurement
Work measurement is the application of techniques designed to establish the time for a qualified
worker to carry out specified jobs at a defined level of performance or at a defined rate of
working.
A qualified worker is one who has acquired the skill, knowledge and other attributes to carry out
the work in hand to satisfactory standards of quantity, quality and safety. Defined rate of
working is the amount of work that can be produced by a qualified worker/employee when
working at normal space and effectively utilizing his time and where work is not restricted by
process limitation.
Work measurement is the application of techniques designed to establish the time for an average
worker to carry out a specified manufacturing task at a defined level of performance. It is
concerned with the length of time it takes to complete a work task assigned to a specific job .
Uses of work measurement:
 To compare the efficiency of alternative methods.
 Cost estimation
 Pricing of products and services
 Incentive pay systems
 Capacity planning
 Production scheduling
 To provide information on which estimates for tenders, selling prices and delivery
promises can be based

14. Technique of work measurement:
a) Time study: short cycle repetitive jobs
b) Work sampling: Long cycle jobs
c) Predetermined motion time standards: manual operations confined to one work centre