1 1 PRODUCTION And OPERATIONS MANAGEMENT (IEng 6039)
Production & opeartions management
May 25, 2015
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11
PRODUCTION
And
OPERATIONS MANAGEMENT
(IEng 6039)
22
3
Process Design
Operations strategy
Design Improvement
Planning and control
Operations management
Process design
Supply network design
Layout and flow
Process technology
Job design
Product/service design
44
PROCESS DESIGNPROCESS DESIGN
Process that designs products and servicesProcess that designs products and services
Process that produces products and servicesProcess that produces products and services
Idea Generation
Screening
Preliminary Design
Final Design
Improvement
Process Selection
Supply Network Design
Layout and flow
Process Technology
Job Design
5
Design:
“To design” refers to the process of originating and developing a plan for a product, service or process.
Process:
Is any part of an organization which takes a set of input (resources) which are then used to transform something into outputs of products or services.
Design and Processes
6
Importance of Design Process Effective design can provide a competitive edge by
◦ Matching product or service characteristics with customer requirements
◦ Ensuring that customer requirements are met in the simplest and least costly manner
◦ Reducing time required to design a new product or service
◦ Minimizing revisions necessary to make a design workable
7
1. Design is inevitable – products, services and the
processes which produce them all have to be designed.
2. Product design influences process design – decisions
taken during the design of a product or service will
have an impact on the decisions taken during the design
of the process which produces those products or
services and vice versa.
Nature of the Design Activity
8
The Relation of Product/Services Design to Process Design
Decisions taken during the design of the product or service will have an impact on the process that produces them and vice versa
Products and services should be designed in such a way that they
can be created effectively
Processes should be designed so they can
create all products and services which
the operation is likely to introduce
Designing the Product or
Service
Designing the Processes that
Produce the Product or Service
9
1. Process Design and Product/Service Design are Interrelated
• To commit to the detailed design of a product or service consideration must be
given to how it is to be produced.
• Design of process can constrain the design of products and services.
• The overlap of design and process is greater in the service industry:
• Service industry - it is impossible to separate service design and process
design – they are the same thing.
• Manufacturing industry - it is possible to separate product design and
process design but it is beneficial to consider them together because the
design of products has a major effect on the cost of making them.
The relation of Product/Services Design to Process Design Contd.
10
2. Process and product/service design must satisfy customer• Customers’ satisfaction criteria for products/services designer
• Aesthetically pleasing• Reliability• Meets expectation• Inexpensive• Quality• Easy to manufacture and deliver• Speedy
• Process designer can achieve customers’ satisfaction through:• Layout• Location• Process technology• Human skills
The relation of Product/Services Design to Process Design Contd.
11
3. The design activity is itself a processFinished designs
which are:
High quality: Error-free designs which fulfil their purpose in an effective and creative way
Speedily produced: Designs which have moved from concept to detailed specification in a short time
Dependably delivered: Designs which are delivered when promised
Produced flexibly: Designs which include the latest ideas to emerge during the process
Low cost: Designs produced without consuming excessive resources
Resources to be Transformed
• Technical information• Market information• Time information
Resources to be
Transformed
• Test and design equipment• Design and technical staff
The Design Activity OutputInputs
The relation of Product/Services Design to Process Design Contd.
12
4. Early Decision Affects Costs Later
Relatively early in the design activity the decisions taken will commit the operation to costs which will be incurred later
100%
0%
Percentage of final product cost
committed by the design
Percentage of design costs
incurred
Start of the design activity
Finish of the design activity
Interrelation of Product and Services Design to its Process Design Contd.
13
Product Design and Process SelectionProduct design is the process of defining all the product characteristics
◦ Product design must support product manufacturability (the ease with which a product can be made)
◦ Product design defines a product’s characteristics of:
• Appearance,
• Materials,
• Dimensions,
• Tolerances, and
• Performance standards.
Process Selection is the development of the process necessary to produce
the designed product.
14
Product vs. Service Design Process
Product design
◦ Defines appearance of
product
◦ Sets standards for
performance
◦ Specifies which materials are
to be used
◦ Determines dimensions and
tolerances
Service design
◦ Specifies what physical
needs can and can not be
served by the service,
◦ Defines the sensual and
psychological benefits that
customer are to receive
from the service
◦ Defines the environment in
which the service will take
place
15
Product Design Process
Pilot runand final tests
New product or service launch
Final designFinal design& process plans& process plans
Ideageneration
Feasibilitystudy
Product or Product or service conceptservice concept
Performance Performance specificationsspecifications
Functionaldesign
Form design
Production design
Revising and testing Revising and testing prototypesprototypes
Design Design specificationsspecifications
Manufacturing Manufacturing or delivery or delivery specificationsspecifications
SuppliersSuppliersR&DR&D
CustomersCustomers
MarketingMarketing CompetitorsCompetitors
1616
Product Design Process contd.
Step 1 - Idea Generation
Someone thinks of a need and a product/service design to satisfy it: customers,
marketing, engineering, competitors, benchmarking, reverse engineering
Step 2 – Product/Service Screening
Every business needs a formal/structured evaluation process: fit with facility and
labor skills, size of market, contribution margin, break-even analysis, return on sales
Step 3 – Preliminary Design
Technical specifications are developed, prototypes built, testing starts
Step 4 – Final Design
Final design based on test results, facility, equipment, material, & labor skills
defined, suppliers identified
Step 5 – Improving Product Design
Step 6 – Process Selection
17
1. Idea Generation
Sources Company’s own R&D department
Customer complaints or suggestions
Marketing research
Suppliers
Salespersons in the field
Factory workers
New technological developments
Competitors
Customer orders
18
Useful Techniques
Perceptual Maps
Visual comparison of customer perceptions
Direct data collection and analysis
Benchmarking
Comparing product/service against best-in-class
Reverse engineering
Dismantling competitor’s product to improve your own product
Idea Generation (contd.)
1919
Market analysis
Evaluating product concept
Demand analysis
Product life cycle
Competition analysis
Economic analysis
Production and demand costs
Feasibility estimates
Technical analysis
Technical capability to manufacture
Product competitive strengths
Compatibility with core business
2. Product/Service Screening
2020
Product design that pass feasibility study enters preliminary design
Relationship between components and bill of materials (rapid
prototyping
Mapping out of the sequence of activities
Development of process flow charts
3. Preliminary Design
21
Rapid Prototyping Build a prototype
◦ Form design - how product will look?
◦ Functional Design – reliability, maintainability, usability
◦ Production design – simplification, standardization, modularity
Test prototype
Revise design
Retest
22
• Used to identify different types of activities.
• Shows the flow of material, people or information.
• Critical analysis of process maps can improve the process.
Process Mapping
23
Operation (an activity that directly adds value)
Inspection (a check of some sort)
Transport (a movement of some thing)
Delay (a wait, e.g. for materials)
Storage (deliberate storage, as opposed to a delay)
Process mapping symbols derived from “Scientific Management”
Decision (exercising discretion)
Process mapping symbols derived from “Systems Analysis”
Direction of flow
Input or Output from the process
Activity
Beginning or end of process
Process Mapping Symbols
24
Use of prototype
CAD and Simulation models can be used
(b) Revised design(b) Revised design
One-piece base & One-piece base & elimination of elimination of fastenersfasteners
(c) Final design(c) Final design
Design for push-Design for push-and-snap and-snap assemblyassembly
(a) Original design(a) Original design
Assembly using Assembly using common fastenerscommon fasteners
4. Final Design
25
Final Design and Process Plans Final design
◦ Detailed drawings and specifications for new product or service
Process plans
◦ Workable instructions
Necessary equipment and tooling
Component sourcing recommendations
Job descriptions and procedures
Computer programs for automated machines
2626
Design for Manufacturing
Simplification
Standardization
Modularization
Concurrent Engineering
Parallel handling of different activities during design
Used to reduce cost and development time
Used to reduce the process of redesigning the product
5. Methods for Improving Product design
2727
Quality Function Deployment
Design meets customer needs
Check the Whats and the Hows
Value Engineering
The purpose of the product or service
The basic vs. secondary functions
The cost-to-function analysis
28
Design for Manufacturing (DFM) Guidelines to produce a
product easily and
profitably
◦ Simplification - Minimize
parts
◦ Standardization - Design
parts for multiply
applications
◦ Use modular design -
Simplify operations
29
DFM Guidelines Minimize number of parts and sub-assemblies
Avoid tools, separate fasteners, and adjustments
Use standard parts when possible and repeatable, well-
understood processes
Design parts for many uses, and modules that can be combined
in different ways
Design for ease of assembly, minimal handling, and proper
presentation
Allow for efficient and adequate testing and replacement of parts
30
Concurrent Engineering A new approach to design that involves simultaneous design
of products and processes by design teams
Improves quality of early design decisions
Involves suppliers
Incorporates production process
Uses a price-minus system
Scheduling and management can be complex as tasks are
done in parallel
31
Concurrent Engineering contd.
Old “over-the-wall” sequential products design process
Each function did its work
and passed it to the next
function
Improved Concurrent Engineering process
All functions form a design
team that develops
specifications, involves
customers early, solves
potential problems, reduces
costs, & shortens time to
market
32
Quality Function Deployment (QFD) Translates voice of customer into technical design requirements
Displays requirements in matrix diagrams
◦ First matrix called “house of quality”
◦ Series of connected houses
QFD: An approach that integrates the “voice of the customer” into the product and service development process.
33
The House of Quality
Correlation matrix
Designrequirements
Customerrequirements
Competitiveassessment
Relationshipmatrix
Specificationsor
target values
Quality Function Deployment contd.
34
Customer Requirements
Importance to Cust.
Easy to close
Stays open on a hill
Easy to open
Doesn’t leak in rain
No road noise
Importance weighting
Engineering Characteristics
En
ergy
nee
ded
to
clo
se d
oor
Ch
eck
for
ce
on le
vel
grou
nd
En
ergy
nee
ded
to
op
en d
oor
Wat
er r
esis
tan
ce
10 6 6 9 2 3
7
5
3
3
2
X
X
X
X
X
Correlation:Strong positive
PositiveNegativeStrong negative
X*
Competitive evaluationX = UsA = Comp. AB = Comp. B(5 is best)
1 2 3 4 5
X AB
X AB
XAB
A X B
X A B
Relationships:Strong = 9
Medium = 3
Small = 1Target values
Red
uce
ener
gy
leve
l to
7.5
ft/lb
Red
uce
forc
eto
9 lb
.
Red
uce
ener
gy t
o 7.
5 ft
/lb.
Mai
ntai
ncu
rren
t le
vel
Technical evaluation(5 is best)
54321
B
A
X
BAX B
AX
B
X
A
BXABA
X
Doo
r se
al
resi
stan
ce
Acc
oust
. Tra
ns.
Win
dow
Mai
ntai
ncu
rren
t le
vel
Mai
ntai
ncu
rren
t le
vel
House of Quality ExampleHouse of Quality Example
35
Value Analysis (VA) Can we do without it?
Does it do more than is required?
Does it cost more than it is worth?
Can something else do a better job?
Can it be made by
◦ a less costly method?
◦ with less costly tooling?
◦ with less costly material?
Can it be made cheaper, better, or faster by someone else?
36
6. Process Selection
Product design considerations must include the process
selection.
Processes can be
◦ Intermittent processes: Processes used to produce a
variety of products with different processing requirements
in lower volumes.
◦ Repetitive processes: Processes used to produce one or
a few standardized products in high volume.
37
Product-Process Grid
38
Project
High variety and low volume
One off product to customer specification
Staff and equipment move to the product site
Limited in time frame
Example: building construction, ship manufacturing, airplane
manufacturing etc
Jobbing
One off or low volume product to customer specification
The product moves to the location of manufacturing equipment
Staff and equipment can be shared among many products
Undertake frequent setting of equipment
Example: machine tool manufacturing, precision engineering etc
Product-Process Grid contd.
39
Batch Medium variety and medium volume
Products are grouped as they move across the manufacturing process
Products move to the location of the manufacturing equipment
Setting of equipment is done between batches of products
Example: Book printing, automotive parts, assembly etc
Line Products of high volume and low variety
It can be automated for production and material handling
Time spent per unit must be equalized for each stage – line balancing
Set-up time is low
Example: car, TV, food etc
Continuous Very high volume products
Large amount of specialized and dedicated equipment
Labor is used merely to monitor and control the process
Example: water treatment, electricity, oil, gas etc
Product-Process Grid contd.
40
Intermittent VS. Repetitive Facility Layouts
41
Process Selection Considerations
Process selection is based on five principal
considerations
1. Product-Process Grid
2. Degree of vertical integration
3. Flexibility of resources
4. Mix between capital and human resources
5. Degree of customer contact
42
Linking Product Design and Process Selection
Product design and process selection are directly linked
Types of product selected defines type of operation required
Type of operation available defines broader organizational aspects such as
◦ Equipment required
◦ Facility arrangement
◦ Organizational structure
Intermittent and repetitive operations apply at different stages of the product life cycle.
◦ Intermittent is best for early in product life while repetitive is better for later when demand is more predicable.
Competitive cost priorities determine the selection of processes:
◦ Intermittent operations are typically less competitive on cost than repetitive operations.
43
Design of Services
Service design is unique in that the service and entire service
concept are being designed
◦ Must define both the service and concept
- Physical elements, aesthetic and psychological
benefits
e.g. promptness, friendliness, ambiance
◦ Must match the needs and preferences of the targeted
customer group
44
Service Design Matrix Service Characteristics
◦ Pure services
◦ Quasi-Manufacturing
◦ Mixed services
Service Package
◦ The physical goods
◦ The sensual benefits
◦ The psychological benefits
Differing designs
◦ Substitute technology for people
◦ Get customer involved
◦ High customer attention
45
Special Considerations in Service Design
Services are intangible
Service output is variable
Service have higher customer contact
Services are not perishable
Service is inseparable from delivery
Services tend to be decentralized and dispersed
Services are consumed more often than products
Services can be easily emulated
46
Performance SpecificationsPerformance Specifications
Service
Delivery SpecificationsDelivery Specifications
Physical Physical itemsitems
Sensual Sensual benefitsbenefits
Psychological Psychological benefitsbenefits
Design SpecificationsDesign Specifications Service Provider
Customer
Customer Customer requirementsrequirements
Customer Customer expectationsexpectations
ActivitiesActivities FacilityFacilityProvider Provider
skillsskillsCost and time Cost and time
estimatesestimates
ScheduleSchedule DeliverablesDeliverables LocationLocation
Service ConceptService Concept Service PackageService Package
Desired service Desired service experienceexperience
Targeted Targeted customercustomer
Service Design Process
47
Service concept
◦ purpose of a service; it defines target market and customer experience
Service package
◦ mixture of physical items, sensual benefits, and psychological benefits
Service specifications
◦ performance specifications
◦ design specifications
◦ delivery specifications
Service Design Process (cont.)
48
Production Strategy Type of operation is directly related to product and service strategy
Three basic strategies include
◦ Make-to-stock
In anticipation of demand
◦ Assemble-to-order
Built from standard components on order
◦ Make-to-order
Produce to customer specification at time of order
49
Production Strategy Contd.
50
VolumeLow High VolumeLow High
Var
iety
Lo
wH
igh
Var
iety
Lo
wH
igh
Project
Jobbing
Batch
Mass
Continuous
Professional service
Service shop
Mass service
Service process types
Manufacturing process types
Product and Service Strategy Comparison
51
Is the machines, equipment, and devices
which helps the operations transform:
Materials
Information
Customers
In order to add value and fulfill the operation’s
strategic objectives
Process Technology
52
Computer Numerically Controlled (CNC) machine tools: Machines that
use computer to control their operations instead of human hands
Robotics: An automatic position-controlled reprogrammable multi-function
manipulator
Automated Guided Vehicles (AGVs): Small and independently powered
vehicles which move materials to and from value-adding operations
Flexible Manufacturing Systems (FMS): A computer controlled
configuration of semi-independent workstations connected by automated
material handling and machine loading
Computer Integrated Manufacturing: Is the integration of separate
developments in manufacturing technology
52
53
Centralized and decentralized information
processing
Local Area Networks (LANs)
The Ethernet
The internet (reading assignment)
Decision Support Systems (DSSs)
53
54
Interaction
◦ Active: Ex. personal and internet based communication
◦ Passive: Ex. Transport, car wash
◦ Hidden: Ex. security camera
◦ Intermediary: Ex. call center, travel agent, hotel reservation
Customer training
◦ Complexity of the service
◦ Repetition of the service
◦ Variety of focus
54
55
Chapter-2 Job Design and
Work Organization
56
Three Categories of Work Systems1. Manual work system
◦ Worker performs one or more tasks without the aid of powered tools (e.g. hammers, screwdrivers, shovels)
2. Worker-machine system
◦ Human worker operates powered equipment (e.g. a machine tool)
Physical effort (less)
Machine power(more)
3. Automated work system
◦ Process performed without the direct participation of a human worker
57
Manual Work System
58
Worker-Machine System
59
Automated System
60
Some Definitions Work unit – the object that is processed by the work system
◦ Workpiece being machined (production work)
◦ Material being moved (logistics work)
◦ Customer in a store (service work)
◦ Product being designed (knowledge work)
Unit operations – tasks and processes that are treated as being independent of other work activities
◦ As opposed to sequential operations (sequence of operations required to manufacture a product or deliver a service)
61
Manual Work Systems Most basic form of work in which human body is used to
accomplish some physical task without an external source of power
With or without hand tools
◦ Even if hand tools are used, the power to operate them is derived from the strength and stamina of a human worker
◦ Hairbrush vs hair dryer
Of course other human faculties are also required, such as hand-eye coordination and mental effort
62
Manual Work Systems contd.
Involves only the physical and mental capabilities of the human
worker without machines or tools. Examples:
◦ Material handler moving cartons in a warehouse
◦ Workers loading furniture into a moving van without the use of
lifts
◦ Dealer at a clerk’s table dealing cars
◦ Office worker filing documents
◦ Assembly worker snap-fitting two parts together
63
Manual Work with Hand Tools
Manual tasks are commonly augmented by use of hand tools.
A tool is a device for making changes to objects (formally work units)
such as cutting, grinding, striking, sequeezing etc. Examples:
◦ Scissor, screwdriver, shovel, hammer etc
Tools can also be used for measurement and/or analysis purposes
Workholder to grasp or poisiton work units
64
Examples of Manual Work with Hand Tools
Machinist filing a part
Assembly worker using screwdriver
Painter using paintbrush to paint door trim
QC inspector using micrometer to measure the diameter of a shaft
Material handling worker using a dolly to move furniture
Office worker writing with a pen
65
Repetitive vs. Nonrepetitive Tasks
Repetitive Task
◦ Work cycle is relatively short (usually a few minutes or less)
◦ High degree of similarity from one cycle to the next
Nonrepetitive Task
◦ Work cycle takes a long time
◦ Work cycles are not similar
In either case, the task can be divided into work elements that consist of
logical groupings of motions
66
Cycle Time Analysis
Cycle time Tc
where
Tek= time of work element k,
k is used to identify the work elements (min)
ne = number of work elements into which a cycle is divided.
1
en
c ekk
T T
67
Example of a Repetitive Manual Task
Current method: An assembly worker performs a repetitive task consisting of
inserting 8 pegs into 8 holes in a board. A sightly interference fit is involved in
each insertion. The worker holds the board in one hand and picks up the pegs
from a tray with other hand and inserts them into the holes, one peg at a time.
68
Cycle Time of the Example Repetitive Manual Task
69
Cycle Time Variations Once the work method has been standardized using different
cycle times, the actual time to perform the task is a variable because of:
◦ Differences in worker performance
◦ Mistakes, failures and errors
◦ Variations in starting work units
◦ Variations in hand and body motions
◦ Extra elements performed in every cycle
◦ Differences among workers
◦ The learning curve phenomenon
70
Worker Performance Defined as the pace (tempo) or relative speed with which the
worker does the task.
As worker performance increases, cycle time decreases
From the employer’s viewpoint, it is desirable for worker
performance to be high
What is a reasonable performance/pace to expect from a worker
in accomplishing a given task?
71
Normal Performance (pace) A pace of working that can be maintained by a properly trained average
worker throughout an entire work shift without harmful short-term or
long-term effects on the worker’s health or physical well-being
The work shift is usually 8 hours during which periodic rest breaks are
allowed
Normal performance = 100% performance
◦ Faster pace > 100%, slower pace < 100%
Common benchmark of normal performance:
◦ Walking at 3 mi/hr (~4.83 km/hr)
72
Normal Time
The time to complete a task when working at normal
performance
Actual time to perform the cycle depends on worker performance
Tc = Tn / Pw
where
Tc = cycle time,
Tn = normal time,
Pw = worker performance or pace
73
Example of Normal Performance
Given: A man walks in the early morning for health and fitness.
His usual route is 1.85 miles. The benchmark of normal
performance = 3 mi/hr.
Determine:
(a) how long the route would take at normal performance
(b) the man’s performance when he completes the route in 30
min.
74
Example’s Solution(a) At 3 mi/hr, time = 1.85 mi / 3 mi/hr
= 0.6167 hr = 37 min
(b) Rearranging equation, Pw = Tn / Tc
Pw = 37 min / 30 min = 1.233 = 123.3 %
or an alternative approach in (b):
Using v = 1.85 mi / 0.5 hr = 3.7 mi/hr
Pw = 3.7 mi/hr / 3.0 mi/hr = 1.233
If worker performance > 100%, then the time required to complete the cycle will be less than normal time.
If worker performance < 100%, then the time required to complete the cycle will be greater than normal time.
75
Standard Performance
Same as normal performance, but acknowledges that periodic
rest breaks must be taken by the worker
Periodic rest breaks are allowed during the work shift
◦ Lunch breaks (1/2 or 1 hour)
usually not counted as part of work shifts
◦ Shorter rest breaks (15 mins)
usually counted as part of work shifts
76
Standard Performance contd.
Of course other interruptions and delays also occur during the shift
◦ Machine breakdowns
◦ Receiving instructions from the foreman
◦ Telephone calls
◦ Bathroom/toilette breaks etc.
77
Personal, Fatigue, Delay (PFD) Time Allowance
To account for the delays and rest breaks, an allowance is added to the normal time in order to determine allowed time for the worker to perform the task throughout a shift
Personal time (P)
◦ Bathroom breaks, personal phone calls
Fatigue (F)
◦ Rest breaks are intended to deal with fatigue
Delays (D)
◦ Interruptions, equipment breakdowns
78
Standard Time Defined as the normal time but with an allowance added into
account for losses due to personal time, fatigue, and delays
Tstd = Tn (1 + Apfd)
where
Tstd = standard time,
Tn = normal time,
Apfd = PFD allowance factor
Also called the allowed time
Now we are confident to say that a worker working at 100% performance during 8 hours can accomplish a task of 8 hour standard time.
79
Irregular Work Elements Elements that are performed with a frequency of less than once
per cycle
Examples:
◦ Changing a tool
◦ Exchanging parts when containers become full
Irregular elements are prorated into the regular cycle according to their frequency
80
Example Determining Standard Time and Standard Output
Given: The normal time to perform the regular work cycle is 3.23
min. In addition, an irregular work element with a normal time =
1.25 min is performed every 5 cycles. The PFD allowance factor is
15%.
Determine
(a) the standard time
(b) the number of work units produced during an 8-hr shift if the
worker's pace is consistent with standard performance.
81
Example Solution
(a) Normal time Tn = 3.23 + 1.25/5
= 3.48 min
Standard time Tstd = 3.48 (1 + 0.15)
= 4.00 min
(b) Number of work units produced during an 8-hr shift
Qstd = 8.0(60)/4.00 = 120 work units
Normal time of a task involves normal times for regular and
irregular work elements
82
Example Determining Lost Time due to the Allowance Factor
Given: An allowance factor of 15%
◦ Determine the anticipated amount of time lost per 8-hour
shift.
83
8.0 hour =(actual time worked) (1+0.15)
Actual time worked = 8/ 1.15 = 6.956 hr
Time lost = 8.0 – 6.956 = 1.044 hr
Example Solution
84
Example Production rate when worker performance exceeds
100% Given:
◦ Tsd=4.00 min.
◦ The worker’s average performance during an 8-hour shift is
125% and
◦ The hours actually worked is 6.956 hr (which corresponds to
the 15% allowance factor).
Determine daily production rate.
85
Example Solution
Based on normal time Tn=3.48 min, the actual cycle time with a
worker performance of 125%, Tc=3.48 / 1.25 = 2.78 min.
Assuming one work unit is produced each cycle, the
corresponding daily production rate, Rp=6.956(60)/2.78=150
work units
OR
125% of 120 units at 100% performance = 150 units
86
Standard Hours and Worker Efficiency
Three common measures of worker productivity used in industry are
◦ Standard hours – represents the amount of work actually accomplished during a given period (shift, week) and
◦ Quantity of work units (in terms of time) produced
Hstd = Q Tstd
where
Hstd =standard hours accomplished, hr
Q = quantity of work units completed during the period, pc
Tstd =standard time per work unit, hr/pc
87
Standard Hours and Worker Efficiency contd.
◦ Worker efficiency – work accomplished during the shift expressed
as a proportion of shift hours
Ew = Hstd / Hsh
where
Hstd =standard hours accomplished, hr
Ew =worker efficiency, normally expressed as a percentage,
hr
Hsh =number of shift hours, hr
88
Example of Standard hours and worker efficiency
Given: The worker performance of 125% in the previous example.
Determine: (a) number of standard hours produced(b) worker efficiency
Solution:
89
Example Solution(a) Hstd=150(4 min)=600 min= 10.0 hr
(Hstd = Q Tstd)
(b) Ew = 10hr / 8 hr =125 %
(Ew = Hstd / Hsh)
Note that worker efficiency is found to be equal to the worker performance (rate).
What are the reasons for that?
◦ The number of hours actually worked is consistent with 15% allowance factor.
◦ The entire work cycle consists of manual labor.
So, worker efficiency=worker performance (rate)
90
More on Worker Efficiency Worker efficiency is commonly used to evaluate workers in
industry.
In many incentive wage payment plans, the worker’s earnings are based on
◦ worker’s efficiency, Ew,
or
◦ the number of standard hours accomplished, Hstd.
Either one of these two measures can be derived from the other one. Thus, they are equivalent.
91
Concerned with the physiological aspects of job design. It deals with
the human body and how it fits to its surroundings.
91
Working ConditionsTemperature &Humidity
Ventilation
Illumination Color
Designing Environmental Conditions - Ergonomics
9292
Noise & Vibration
Causes of AccidentsSafety
Work Breaks
93
Anthropometric Aspects: Aspects related to human size,
shape and other physical abilities.
Neurological Aspects: Aspects related to human sensory
capabilities such as sight, feel, sound, and smell.
93
Designing the Technology: Human Interface – Ergonomic Workplace Design
94
Dividing the total task into smaller parts each of which accomplished by a single person is called the division of labor.
Advantages◦ Promotes faster learning
◦ Automation becomes easier
◦ Reduces non-productive work
Drawbacks◦ Monotony
◦ Physical injury from repetitive operation
◦ Low flexibility
◦ Poor robustness
94
Designing task allocation – the Division of labor
95
Method study is a systematic approach to find the best way
of doing tasks. There are six steps to do method study.
Select the work to be studied
Recording the present method
Examine the facts
Develop a new method
Install the new method
Regularly maintain performance
95
96
Basic time: The time needed by a worker to do a job based on his
rating.
basic time = observed time * worker rating
Standard time: The time allowed to do a job under different
circumstances. Standard time includes basic time and other
allowances.
Allowances: Time that is additional to the basic time intended to
provide the worker with the opportunity to recover from the
physiological and psychological effect of doing a specific task.
96
97
Job rotation
Job enlargement
Job enrichment
Employee empowerment
Team work
Flexible working
97
Designing for Job Commitment – Behavioral Approaches to Job Design
9898
Chapter 3: Capacity Planning
and Control
99
Some DefinitionsSome Definitions CapacityCapacity is the available time for production and / or the maximum
number of items that can be manufactured or delivered within a given
time.
A A BottleneckBottleneck occurs when capacity is less than the demand placed on
it.
A capacity-constrained resource (CCR)A capacity-constrained resource (CCR) is a resource where the
capacity is close to the demand placed it.
100
Capacity planning and control is the task of setting the effective capacity of the operation so that it can respond to the demands placed upon it.
This means deciding how the operations should respond to fluctuations in demand.
A capacity planning and control can either be
◦ Short-term
◦ Medium-term
◦ Long-term
Aggregate demand and capacity
100
Capacity Planning and Control
101
Capacity Planning and Control contd.
Capacity is the upper limit or ceiling on the load that an operating
unit can handle.
The basic questions in capacity handling are:
◦ What kind of capacity is needed?
◦ How much is needed?
◦ When is it needed?
102
Impacts ability to meet future demands
Affects operating costs
Major determinant of initial costs
Involves long-term commitment
Affects competitiveness
Affects ease of management
Importance of Capacity Decisions
103
Various Capacities Design capacity
◦ Maximum obtainable output
Effective capacity, expected variations
◦ Maximum capacity subject to planned and expected variations
such as maintenance, coffee breaks, scheduling conflicts.
Actual output, unexpected variations and demand
◦ Rate of output actually achieved cannot exceed effective
capacity.
◦ It is subject to random disruptions: machine break down,
absenteeism, material shortages and most importantly the
demand.
104
Efficiency and Utilization
Actual outputEfficiency =
Effective capacity
Actual outputUtilization =
Design capacity
105
Developing Capacity Alternatives
Design flexibility into systems,
◦ Modular expansion
Take a “big picture” approach to capacity changes,
◦ Hotel rooms, car parks, restaurant seats
Differentiate new and mature products,
◦ Pay attention to the life cycle, demand variability vs. discontinuation
Prepare to deal with capacity “chunks”,
◦ No machine comes in continuous capacities
Attempt to smooth out capacity requirements,
◦ Complementary products, subcontracting
Identify the optimal operating level,
◦ Facility size
106
Outsourcing: Make or Buy Outsourcing: Obtaining goods or services from an external
provider
Decide on outsourcing by considering
◦ Available capacity
◦ Expertise
◦ Quality considerations
◦ The nature of demand stability
◦ Cost competitiveness
Consider Risks associated with outsourcing: Loss of control over operations; loss of know-how; loss of revenue etc.
107
Costs will be affected by the balance of capacity and demand
Revenues will be affected by the balance of capacity and demand
Working capital will be affected if operation is decided to build inventory before demand
Quality of products will be affected by the level fluctuations observed in capacity
Speed of response to demand can be affected by capacity
107
Effects of Capacity Planning and Control
108
Measuring demand and capacity
Identifying the alternative capacity plans
Choosing the most appropriate capacity plan
108
Steps of Capacity Planning and Control
109
Forecasting demand fluctuations
◦ Although demand forecasting is a task of sales, it is also important in capacity planning. Therefore, demand forecasting should be
Expressed in terms of capacity planning and control
As accurate as possible
Give and indication of uncertainty
Measuring capacity
◦ Input capacity
◦ Output capacity
◦ Operational capacity
Design capacity: is the ideal capacity of an operation
Effective capacity: is the actual capacity of an operation after some losses
Utilization: is the ratio between actual output and designed capacity
Efficiency: is the ratio between actual output and effective capacity
109
Measuring Demand and Capacity
110
Level capacity plan
◦ Processing capacity is uniform throughout the planning period regardless of the fluctuation in forecast demand
◦ The aggregate output is the same for each production period
◦ The same level of resources will be used in all production plans
◦ At times there may be overstocking or backorders
Chase demand capacity plan
◦ Capacity is utilized close to match the varying levels of forecast demand
◦ Resources have to be utilized variably to satisfy the required output
◦ There may be overtime and idle time of physical resources
◦ Hiring and firing of employees may be experienced
◦ It may force the use of part time staff
◦ There may be a force to use subcontracting to achieve demand
110
Identifying Alternative Capacity Plans
111
Identifying alternativeIdentifying alternative capacity plans cond. capacity plans cond.
Level capacity
Capacity
Demand
Chase demand
Demand
capacity
Demand management
Demand
Capacity
112
Demand management
◦ Pricing policy
◦ Alternative products or service
◦ Increase marketing efforts
◦ Use of backorders
Use of mixed plans
112
Choosing the Most appropriate Capacity Plans
113
Managing CapacityManaging Capacity Schedule downtime during periods of low demand
Maximise efficiency duringpeaks
Use part time employees
Cross-train employees
Increase consumer participation
Rent or share extra capacity
Invest in ability for future expansion
114
Actual Demand
Actual Demand
ForecastDemand
ForecastDemand
ReplanCapacity
ReplanCapacity
Actual Capacity
Actual Capacity
AllocateCapacity
AllocateCapacity
RefineForecast
RefineForecast
Key question - “How often do you change capacity in response to deviations from demand forecasts?”
Managing capacity contd.
115
The tasks of capacity planning Some key questions
Calculate Capability of Operations Resources
Calculate Capability of Operations Resources
Allocate Resources Over Time
Allocate Resources Over Time
Design “Capacity Control” Mechanisms
Design “Capacity Control” Mechanisms
Forecast Demand or Revenue Potential
Forecast Demand or Revenue Potential
Can you predict the most likely demand at any point in time?
Can you predict the uncertainty in demand at any point in time?
Can you predict the most likely demand at any point in time?
Can you predict the uncertainty in demand at any point in time?
Do you have realistic work standards?
Do you understand the capacity constraints of all the necessary resources?
Do you have realistic work standards?
Do you understand the capacity constraints of all the necessary resources?
What are the options for capacity allocation?
What are their cost, revenue, work capital and service level implications?
What are their flexibility implications?
What are the options for capacity allocation?
What are their cost, revenue, work capital and service level implications?
What are their flexibility implications?
Do you monitor actual demand against forecast?
Do you adapt forecasts accordingly?Do you replan capacity accordingly?
Do you monitor actual demand against forecast?
Do you adapt forecasts accordingly?Do you replan capacity accordingly?
Managing capacity contd.
116116
Chapter 4: Project Planning
117
A project is a set of activities with a defined start point and a defined end state, which pursues a defined goal and use a defined set of resources.
Projects to be successful need
117
What is Project?
• Clearly defined goals
• Competent project manager
• Top management support
• Competent project team
• Sufficient resource allocation
• Adequate communications channel
• Proper control mechanisms
• Viable feedback capabilities
• Responsiveness to client requests
• Robust troubleshooting mechanisms
• Stable project staff continuity
118
The Context of Project Management
Definitions:
A project: is a temporary endeavor undertaken to accomplish a unique purpose.
Project management:
◦ Is the application of knowledge, skills, tools, and techniques to project activities in
order to meet or exceed project requirements
◦ Is the process of defining, Planning, organizing, leading and controlling the
development of the activities of a Project.
The goal of Project Management: is to deliver a product that is acceptable by users and is
developed on time within a specified budget.
119
Attributes of a Project
Time Frame
Purpose (to provide value!)
Ownership
Resources (the triple constraint)
Roles
◦ Project Manager
◦ Project Sponsor (Contractor)
◦ Project owner
Risk & Assumptions
Interdependent Tasks
120
The Triple Constraint
122
The Project Charter Together with the baseline project plan, provides a tactical plan for carrying out the project
Serves as an agreement or contract between the project sponsor and team
Provides a framework for project governance
Documents the project’s Measurable Organizational Value (MOV)
Defines the project infrastructure
Summarizes the details of the project plan
Defines roles & responsibilities
Shows explicit commitment to the project
Sets out project control mechanisms
123
What Should Be in a Project Charter? Project ID
Project Stakeholders
Project Description
MOV
Project Scope
Project Schedule (summary)
Project Budget (summary)
Quality issues/standards/requirements
Resources
Assumptions & Risks
Project Administration
Acceptance & Approval
References
Terminology (acronyms & definitions)
124
Project Management Process Phases
1. Initiating the project
2. Planning the project
3. Executing the project
4. Closing down the project
125
1. Project Initiation
This is the first phase of project management
Project phase in which activities are performed to asses the size, scope, and
complexity of the project to establish procedures to support later project activities.
Project initiation activities may include
1. Establishing the project initiation team
2. Establishing a relationship with customer
3. Establishing project initiation plan
4. Establishing management procedures
5. Establish project management environment and project workbook
126
2. Project Planning The Project Planning provides:
• Provides an overall framework for managing Project Costs and schedules.
• Takes place at the beginning and at the end of each Project Phase.
• Involves defining clear, discrete “Activities” or “Tasks” and the work needed to complete each Activity.
An ACTIVITY is any work that has a beginning and an end and requires the use of Project resources including people, time and money.
Activities are the basic units of work that Project Manager Plans, monitors so Activities should be relatively small and manageable.
Note: IF YOU FAIL TO PLAN, YOU HAVE PLANNED TO FAIL!
127
Project Planning Framework
128
Project Planning Activities1. Describing Project Scope, Alternatives and feasibility
2. Dividing the Project into manageable tasks (work breakdown structure (WBS))
3. Estimating and creating a Resources Plan
4. Developing a Preliminary Project Schedule
5. Developing a Project Communication Plan
6. Determining Project Standards and Procedures
7. Identifying and Assessing Project Risks
8. Creating a preliminary budget
9. Developing a Statement of Work
10. Setting a Baseline Project Plan.
129
3. Executing the Project
The third phase in project management process in which the plans created in the prior project phases are put to action.
If you develop a high quality project plan, it is much more likely that the project will be successfully executed.
Key activities of project execution
1. Executing baseline project plan
2. Monitoring project progress against the baseline plan
3. Monitoring changes to baseline plan
4. Maintaining the project workbook
5. Communicating the project status.
130
4. Closing Down the Project
The final Phase of Project Management process which focuses on bringing a Project to an end.
Closedown is a very important activity since a Project is not complete until it is closed and it is at closedown that projects are deemed a success or failure.
Projects can conclude with a natural or unnatural termination.
Natural termination occurs when the requirements of the Project have been met and thus the Project completed and is a success.
An Unnatural termination occurs when the Project is stopped before natural completion.
131
Stage 1: Understanding the project environment
Stage 2: Defining the project
Stage 3: Project planning and technical execution
Stage 4: Project control
131
Project Planning and Control Process
132
Geography: project location and the supply chain issues
Finance: fluctuation in money value and economic
circumstances
Politics: stability and conflict issues
Local law: employment rights and other legal obligations
National culture: language statements and understandings
Stakeholder commitments: financial, ethical and legal
conditions
132
133
The objectives: the end state that the project is trying to achieve
The scope: the exact range of the responsibilities taken on by the project management
The strategy: how the project management is going to meet its objectives
◦ The specification phase
◦ The design phase
◦ The implementation phase
◦ Module testing phase
◦ Integration testing phase
◦ The delivery phase
133
134
Identifying the activities – the work breakdown structure
Estimating time and resources
Identifying the relationship and dependencies of activities
Identifying schedule constraints
◦ Resource constraints
◦ Time constraints
Fixing the schedule
134
135
Project monitoring
Assessing project performance
The budgeted cost of work scheduled
The budgeted cost of work performed
The actual cost of work performed
Intervening to change the project
135
136
Project planning and control is traditionally done using Gantt Chart (Bar
chart) used to represent the time frame of the project activities.
Meanwhile, for ease of understanding and management of complex project
activities Critical Path Method (CPM) and Program Evaluation and Review
Techniques (PERT) are used.
136
Project Planning
137
Gantt Chart
A graphical representation of a Project that shows each task as a horizontal bar whose length is
proportional to its time for completion.
A GANTT Chart is a horizontal bar chart that illustrates a Project schedule.
In the GANTT Chart Time is displayed on the horizontal axis and the Tasks/ Activities are arranged
vertically from top to bottom, in order of their start dates.
A detailed GANTT Chart for a large project might be quite complex and hard to understand.
To simplify the chart Project manager can combine related activities into one Task.
138
Gantt chart contd.
A graphical representation of a Project that shows each task as a horizontal
bar whose length s proportional to its time for completion.
GANTT CHART do not show how tasks must be ordered (precedence) but
simply show when a task should begin and should end
GANTT Chart is often more useful to for depicting relatively simple projects
or sub projects of a large project, the activities of a single worker, or for
monitoring the progress of activities compared to scheduled completion
dates..
139
Gantt chart contd.
140
Network Diagram Is a graphical depiction of Project tasks and their inter-relationships.
The distinguishing feature of a Network Diagram is that the ordering of Tasks is shown by connecting with its predecessor and successor tasks.
Network Diagramming is used for controlling resources.
A scheduling technique of CPM or PERT can be used to describe the order and duration of task to determine the Completion Date of a Project.
We can use Network Diagram when Project Tasks:
◦ Are well defined and have clear beginning and end point
◦ Can be worked on independently of other tasks
◦ Are ordered
◦ Serve the purpose of project
141
1- Activity (→): Any individual operation which utilizes resources and has
a beginning and end is called an activity.
(a) Predecessor activity: Activities that must be completed
immediately prior to the start of another activity.
(b) Successor activity: Activities that can not be started until one or
more of other activities are completed, but immediately succeed them.
(C) Concurrent activities: Activities which can be accomplished
concurrently.
(d) Dummy activity: An activity which does not consume any kind of
resource but merely depicts the technological dependence.
141
142
2 – Event (O): An event represents a point in time signifying the
completion of some activities and the beginning of new ones. This is
usually represented by a circle, which is also called a node or connector.
(a) Merge event: When more than one activity comes and joins an event.
(b) Burst event: When more than one activity leaves an event.
(c) Merge and burst event: An event may be both merge and burst at the
same time.
142
1
2 6
8
3
4 5
7
Example
143
Remarks
1. An event its that particular instant of time at which some specific part of a project has been or is to be achieved, while an activity is actual performance of task.
2. An activity requires time and resources for its completion. Example of event: design completed. Example of activity: Assembly of parts.
3. Events are described by such words as completed, started, issued, approved, tested etc.
4. While drawing network, it is assumed
(a) Time flows form left to right
(b) Head events always have number higher than that of tail event.
5. Net work representation is based on the following two axioms.
(a) An event is not said to be completed until all the activities flowing into it are completed.
(b) No subsequent activity can begin until its tail event is reached or completed.
143
144
How to Construct a Network Diagram
Developing a network diagram is a four step process:
1. Identify each project activity to be completed
2. Determine time estimates and calculate expected completion time for each activity
3. For each activity, identify the immediate predecessor activities
4. Enter the activities with connecting arrows based on dependencies and calculate start and end times based on duration and resources.
145
Rule-1: Each activity is represented by one and only one arrow in the
network.
Rule -2 No two activities can be identified by the same end event.
Rule -3 In order to ensure the correct precedence relationship in the arrow
diagram, the following questions must be checked whenever any activity
is added to the network.
What activity must be complete immediately before this activity can start?
What activities must follow this activity?
What activities must occur simultaneously with this activity?
145
146
We shall use the following notions for basic scheduling computations.
(i,j) = Activity (i,j) with tail event i and head event j.
TE or Ei = Earliest occurrence time of event i.
TL or Lj = Latest allowable occurrence time of event j.
Dij = Estimated completion time of activity (i,j)
(Es) ij = Earliest starting time of activity (i,j)
(Ef) ij = Earliest finish time of activity (i,j)
(Ls) ij = Latest start time of activity (i,j)
(Lf) ij = Latest finish time of activity (i,j)
146
147
Before starting computation, the occurrence time of initial network event is fixed. Then, the
forward pass computation yields the earliest start and earliest finish time for each activity (i,j), and
indirectly the earliest expected occurrence time for each event. This is mainly done in three steps.
Step-1 the computation begins form the start node and move towards the end node. For easiness, the
forward pass computation start by assuming the earliest occurrence time of zero for the initial project
event
Step-2
(i) Earliest start time of activity (i,j)is the earliest event time of the tail end event
i.e (Es) ij = Ei.
(ii) Earliest finish time of activity (i,j) is the earliest starting time plus the activity time
i.e (Ef)ij = (Es)ij + Dij
(iii)Earliest event time fore event j is the maximum of the earliest finish times of all the activities
ending into that event.
That is Ej = max [(Ef)ij for all immediate predecessor of (i,j)] or Ej = max [Ei + Dij]
Step-3 The Computed ‘E’ values are put over the respective circles representing each event.
147
148
The latest event time (L) indicates the time by which all activities entering into that event
must be completed with out delaying the completion of the project. These can be computed
by reversing the method of calculation used for earliest event times. This is done in the
following steps.
Step-1 For ending event assume E=L. Remember that all E’s have been computed by
forward pass computation.
Step-2 Latest finish time for activity (i,j) is equal to the latest event time of event j
i.e (Lf)ij = Lj.
Step-3 Latest start time of activity (i,j) = the latest completion time of (i,j) minus the
activity time or (Ls)ij = (Lf)ij – Dij
Step-4 Latest event time for event i is the minimum of the latest start times of all activities
originating from that event.
Li = min [(Lf)ij –dij]
j
The computed L values are put over the respective circle representing each event.
148
149149
Dij
Tail SlackDij
Dij
Independent Float
Head SlackFree Float
Total Float
Li LjEjEi
150150
3 5
4 6
1
2
0E0=0
L0=0
E1=3
L1=6
E3=14
L3=14
E2=4
L2=4
E4=16
L4=18
E5=24
L5=24
E6=32
L6=32
8
12 9
610
10
8
4
3
151
The optimistic time (to) is the shortest possible time in which the
activity can be finished. It assumes everything goes very well.
The most likely time (tm) is the estimate of the normal time the activity
would take this assumes normal delays.
The pessimistic time (tp) represents the longest time the activity could
take if every thing goes wrong.
Expected time (te) is the average time an activity will take if it were to
be repeated on a large number of times and is based on the assumption
that the activity time follows beta distribution. This is given by the
formula.
The variance for the activity is given by the formula: 151
6
4 pmoe
tttt
2
02
6
tt p
152
Chapter 5: Improvements
152
153
Measuring and improving performance
Performance measurement
Performance standards
Historical standards
Target performance standards
Competitor performance standards
Absolute performance standards
Benchmarking
Internal benchmarking
External benchmarking
Non-competitive benchmarking
Competitive benchmarking
Performance benchmarking
Practice benchmarking
153
Operations Improvement
154
Breakthrough improvement
Continuous improvement
The PDCS Cycle
The DMAIC Cycle
Business Process Reengineering (BPR)
Input-Output Analysis
Process Mapping (Flow charts)
Scatter diagrams
Cause-effect diagram
Pareto analysis
Why-why analysis
154
155
The Basics of Productivity Improvement Nowadays global competition forces each enterprise to seek
competitive advantage through the use of:
Product improvements
Lower costs
Lower selling prices for the same of better quality
Better services etc.
An increase in production volume does not necessarily indicate an increase in productivity.
If input increases by a greater proportion than output productivity will be reduced.
In short higher productivity means “to produce more with the same or less expenditure, or with a minimum increase in expense, or the same amount is produced at less cost in terms of resources”
156
There are obviously good reasons for organizations to improve
productivity, but how can they do this.
Improve effectiveness – with better decisions;
Improve efficiency – by designing a better process to
give more output with the same inputs;
Improve performance in some other way – such as
reducing waste through higher quality, fewer accidents,
less disruption;
Improve moral – to give more co – operation and
incentives.
The Basics of productivity improvement contd.
157
The old-fashioned idea of “Getting People to Work Harder”
has very little to do with productivity.
A person digging a hole with a spade can work very hard and
still be far less productive than a lazy person with a bulldozer.
In general, about 85 percent of productivity is set by the
process.
The Basics of productivity improvement contd.
158
Some Productivity Prototypes1. Material Productivity: In producing cup from a sheet metal;
Unskilled employee may produce only 250. While experienced and
skillful employee may produce 300 cups out of the same material which
is 20 percent greater productivity.
2. Machine productivity: A machine may produce more through
Proper maintenance, improved fixtures, the use of genuine parts etc
than unattended machine
3. Labor Productivity: Improved methods of work, motivating
environment etc. may enable employees to produce more.
4. Land Productivity: Improved cultivation system, better seeds, good
quality fertilizers etc will obviously increase productivity of land.
159
Accordingly, total productivity is the total output divided by the
total input:
Total Productivity = Total Output
Total Input
Some productivity prototypes contd.
160
Unfortunately this definition has a number of drawbacks.
To start with, the input and output must be in the same units, and
this usually means that they are translated into a common unit.
If monetary unit is used as measure, the amounts depend on the
accounting conventions used, and there is no longer an objective
measure.
Another problem is that, for a reliable measure of total
productivity, all inputs and outputs (tangible and intangible) should be
included .
Meanwhile, finding the actual values of all the inputs and outputs is not
easy.
Some productivity prototypes contd.
161
Factors Affecting Productivity Productivity is affected by many external and internal factors.
Some of the external factors that influence productivity are:
National and international policies
Infrastructural facilities
Cultural practices
Climate
Availability of technology and natural resource
Organizational policies
Information
Motivation, etc.
162
Internal factors identified to have negative impact on productivity included.
Unsuitable personnel Policies leading to low level of satisfaction and involvement
Poor maintenance system and low level of maintenance awareness
Lack of proper and adequate training
Inappropriate choice of Design, Tools, Material, Equipment , System, etc
Undefined Standardization and Quality Policies
Improper Plant Layout and Material Handling System
Poor planning, controlling, and communication systems
Unsafe and unhealthy working environment
Internal Factors Affecting Productivity
163
Types of failures
◦ Design failure
◦ Facility failure
◦ People failure
◦ Supplier failure
◦ Customer failures
Failure detection and analysis
◦ Accident investigation
◦ Product liability
◦ Complaint analysis
◦ Critical incident analysis
◦ Failure mode and effect analysis (FMEA)
163
Failure Prevention
164
Run to breakdown
Preventive maintenance
Condition based maintenance
Total productivity maintenance
Reliability based maintenance
164
165
Chapter 6: Supply Chain
and Logistics
Management
165
166
Forecasting is an objective computation that uses past data to
determine the prospects of future events
There are several approaches to forecasting
◦ Qualitative Panel approach
Delphi method
Scenario planning
166
o Quantitative
• Time series analysis
Simple average
Simple moving average
Weighted moving average
Exponential smoothing
• Causal models
Advanced Concepts of Forecasting
167
Simple average is calculated as follows:
Where Di is demand at ith period
n is the number of periods
ExampleD1 = 22 D2 = 25 D3 = 20 D4 = 24 D5 = ?
What is the demand forecast for the 5th period?
167
n
DDDSA
n
DSA n
n
ii
...211
75.224
24202522
5
SAD
SA
168
Simple moving average is similar to simple average but differs in the fact that the average is only done for selected time period.
Where Di is demand at ith period
n is the number of chosen periods
ExampleD1 = 22 D2 = 25 D3 = 20 D4 = 24 D5 = 22
What is the demand forecast for the 6th period if the chosen period is 3 and 4.
168
i
n
i
Dn
MAperiodschosenofnumber
periodsfordemandofsumMA
1
1;
75.224
22242025:4)
223
222420:3)
6
6
Dnb
Dna
169
Weighted moving average is similar to simple moving average
except in that the WMA discriminates all past data by some
weight. The cumulative sum of all the weights equals 1.
ExampleD1=22:C1=0.2 D2=25:C2=0.40 D3=24:C3=0.4
What is the demand forecast for the 4th period?
169
1;10;1
ii
n
iii CCDCWMA
24
24*4.025*4.022*2.0
4
4
D
D
170
This forecasting technique relies on the very recent forecasted and
actual data of demand. It uses a smoothing coefficient α to filter out the
deviation between forecast and actual demand
ExampleD1=22 F1=24 α =0.4
What is the demand forecast for the next period?
170
10;)1(
)1(*)1()1(*)(
11
ttt FDF
ttimeforforecastttimefordemandactualttimeforforecast
2.23
24*)4.01(22*4.0
2
2
F
F
171
Inventory planning and control compensates for the difference in
timing between the supply of an operation’s products/services and the
demand for them.
171
Inventory planning and controlInventory planning and control
Supply
The operations
Operations resources
Supply
The operations
Operations resources
Demand
The market
Customer requiremen
ts
Demand
The market
Customer requiremen
ts
Delivery of products and services when required
Delivery of products and services when required
Need for products and services at particular time
Need for products and services at particular time
Inventory Planning
172
Merits
Support quality objectives
Support speed objectives
Support dependability
objectives
Support flexibility objectives
Support cost objectives
Demerits
Obsolescence if easily
replaceable
Damage/deterioration
Can be lost/buried in other items
May be hazardous to store
May consume space
Requires high administration
effort
172
173
Type of inventory
Buffer inventory
Cycle inventory
De-coupling inventory
Anticipation inventory
Pipe line inventory
Position of inventory
Single stage inventory
Two stage inventory
Multi stage inventory
Multi echelon
inventory
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174
Order placing costs: this includes clerical works, documentation, arrangement for delivery, and arrangement for delivery payment
Price discount costs: price quotes set on order amount/quantity
Stock-out costs: misjudgment on order quantity that lead to stock-out
Working capital costs: cost of lag between cash payable and cash receivable
Storage costs: cost associated with rental, heating, lighting of warehousing, insurance, etc.
Obsolescence costs: costs associated with out datedness and deterioration
Production inefficiency costs: materials being kept in stores, work-in-process, and finished products
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Deterministic EOQ is a method of inventory management that tries to optimize the acquisition of resources with the best holding costs.
It assumes: Inventory has one stock point, Annual demand is constant, Lead time is zero, Infinite production rate, Shortage is not allowed, and Unit cost is constant
It incorporates the item cost, ordering/procurement cost, carrying/holding cost, i.e
Total cost (TC) = (ordering cost per order * number of orders per year) + (holding cost per unit * average number of units carried per year)
TC = (D/Q)*C1 + (Q/2)*C3; C3 = item price (C) * percentage of unit cost (I)
Where C1 ordering cost per order, C3 is holding cost, D is annual demand, Q is order quantity. Thus,
EOQ (Q*) =
175
3
1**2*;0
C
CDQ
dQ
dTC
176
A purchasing manager has learned the annual demand will be 1000units at unit
price of 25birr. The inventory holding cost is 20% of the unit price and the
ordering cost is 3birr per order.
Find: the EOQ (Q*)
176
Order quantity (Q)
Average inventory (Q/2)
Time (T)Q/D = t
Demand rate = R=D/t
unitsQ 352.0*25
3*1000*2*
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Materials requirements planning (MRP) is a system of planning
and scheduling the time-phased materials requirement for
production operations.
MRP provides information such as due dates for components
that are subsequently used for shop floor control.
The main objectives of MRP are:
Inventory reduction
Reduction in production and delivery lead times
Realistic commitments
Increased efficiency
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Materials Requirement Planning (MRP)
178178
Example of MRP (Assembly operation)
G (1)LT = 2
OP = sub-ass 2
HLT = 1
OP = complete
F (1)LT = 2
OP = sub-ass1
E (4)LT = 1
OP = sub-ass 3
Item (H) Week1 Week2 Week3 Week4
Gross requirement 1
Scheduled receipt 1
Available 0 0 0
Net requirement 1
Planned order receipt
1
Planned order release
1
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Item (F) Week1 Week2 Week3 Week4
Gross requirement 1
Scheduled receipt 1
Available 0 0
Net requirement 1
Planned order receipt
1
Planned order release
1Item (G) Week1 Week2 Week3 Week4
Gross requirement 1
Scheduled receipt 1
Available 0 0
Net requirement 1
Planned order receipt
1
Planned order release
1
Item (E) Week1 Week2 Week3 Week4
Gross requirement 4
Scheduled receipt 4
Available 0 0
Net requirement 4
Planned order receipt
4
Planned order release
4
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Chapter 7: Just-in–Time Systems
180
181
Just-in-Time: definitionJust-in-Time: definition Uses a systems approach to develop and operate a manufacturing systemUses a systems approach to develop and operate a manufacturing system
Organizes the production process so that parts are available when they are Organizes the production process so that parts are available when they are
neededneeded
A method for optimizing processes that involves continual reduction of wasteA method for optimizing processes that involves continual reduction of waste
Only what is needed, nothing more.Only what is needed, nothing more.
To have To have onlyonly the right materials, parts and products in the right place at the the right materials, parts and products in the right place at the
right time.right time.
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Pull schedulingPull scheduling
◦ A system of controlling materials whereby the use signals to the maker or provider that more material is needed.
Push schedulingPush scheduling
◦ A system of controlling materials whereby makers and providers make or send material in response to a pre-set schedule, regardless of whether the next process needs them at the time.
supplier
buyer
Push: traditional way
Pull: Just-in-time
Pull and Push SystemsPull and Push Systems
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Just-in-timeJIT Pyramid of Key FactorsJIT Pyramid of Key Factors
Just-in-time
Minimum delay
Minimum inventory
2
1
Minimum defects
3
Simplicity and visibility
Minimum downtime
5
4
6
Level 1
Level 2
Level 3
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JIT Pyramid of Key Factors Contd.
Factor 1Factor 1 The top of the pyramid is full capability for JIT supply The top of the pyramid is full capability for JIT supply
supported by Level 2 and Level 3 operation.supported by Level 2 and Level 3 operation. Factor 2Factor 2
◦ ‘‘Delay’ and ‘inventory’ interact positively with each Delay’ and ‘inventory’ interact positively with each otherother
◦ The concept of KanbanThe concept of Kanban Factor 3Factor 3
◦ Defect → delay → inventoryDefect → delay → inventory
Bad design
Machine downtime
Unreliable
supplier
Poor quality
Inefficient layout
Inventory Inventory hides hides
problemsproblems
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Factor 4Factor 4◦ Minimum downtime supports inventory controlMinimum downtime supports inventory control
Breakdowns
Planned maintenance
Changeover
Machine downtime
Safety stocks
Preventive maintenance
Flexible production
JIT Pyramid of Key Factors Contd.
Factor 5Factor 5 Simply and visible process help to reduce Simply and visible process help to reduce
inventory and could be better maintained.inventory and could be better maintained. Factor 6Factor 6
◦ It’s more difficult to see the flow of a process with It’s more difficult to see the flow of a process with increased inventory.increased inventory.
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Forecasts Orders
Master schedule
Material plan
Purchase orders Work orders
Source Make Deliver
Bill of materials
Demand management
Logistics planning
Logistics execution
Material Material Requirements Requirements
PlanningPlanning
Independent demand
Dependent demand
The Supply Chain ‘Game Plan’The Supply Chain ‘Game Plan’
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The supply Chain ‘Game Plan’ contd.
Independent demandIndependent demand
◦ Is the demand for a product that is ordered directly by customers.Is the demand for a product that is ordered directly by customers.
◦ The demand items are those items that are sold to customersThe demand items are those items that are sold to customers
Dependent demandDependent demand
◦ Is the demand for parts or subassemblies that make up independent Is the demand for parts or subassemblies that make up independent
demand products.demand products.
◦ Demand items are those items whose demand is determined by Demand items are those items whose demand is determined by
other itemsother items
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The Seven WastesThe Seven Wastes1.1. Waste of motionWaste of motion
2.2. Waste of over productionWaste of over production
3.3. Waste of transportationWaste of transportation
4.4. Waste of waitingWaste of waiting
5.5. Waste of over processingWaste of over processing
6.6. Waste of inventoryWaste of inventory
7.7. Waste of correction for making defective productsWaste of correction for making defective products
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01-189
Correction
Transportation
Over ProducedMotion
Inventory
Over Processed
Waiting
The 7 Waste
The seven wastes contd.
190
Claims for JITClaims for JIT Reduced inventoryReduced inventory
Reduced WIPReduced WIP
shorter lead timesshorter lead times
◦ not too early, not to late...not too early, not to late...
JIT is the result businesses want, JIT is the result businesses want, not a starting pointnot a starting point
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What happens with JIT?What happens with JIT?
Eliminate non-value added activities Eliminate non-value added activities less time spent and less time spent and
less money spent...less money spent...
Involve your suppliers and customersInvolve your suppliers and customers eliminate eliminate
duplications, non value adding activities.duplications, non value adding activities.
Shorter Set-up time and less WIP Shorter Set-up time and less WIP Faster through-put, less Faster through-put, less
time, higher qualitytime, higher quality
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JIT Action Areas Develop people - increase skills,productivity, morale Develop people - increase skills,productivity, morale
Eliminate waste in all areasEliminate waste in all areas
Optimize mOptimize materials handling and production flowaterials handling and production flow
Control Control ToolingTooling
Increase qualityIncrease quality
Improve continuously!Improve continuously!
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Develop the Pipeline Flow... Develop the Pipeline Flow... then work to shorten it!then work to shorten it!
Eliminate multiple locationsEliminate multiple locations
Contract the plant layoutContract the plant layout
Eliminate the "pipeline failures" Eliminate the "pipeline failures"
◦ ReliabilityReliability
◦ QualityQuality
◦ PeoplePeople
Reduce "changeover times” and “lot sizes" significantlyReduce "changeover times” and “lot sizes" significantly
Use "mind technology" before applying high technology!Use "mind technology" before applying high technology!
194
Example: Traditional Production Line(6 people)
195
First pass work cell design (3 people)
196
Second try – work cell design (1 person)
197
Floor SpaceReduction
nearly 50%
198198
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