Slide 1

PRODUCTION AND OPERATIONS
MANAGEMENT
SHARDA UNIVERSITY
• Program :
MBA
• Term:
II
• Credits:
3

PREM NATH PANDAY
10/31/2015

[email protected]
SHARDA

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Slide 2

Module Title:
PRODUCTION AND
OPERATIONS
MANAGEMENT Program :
Term:
Credits:

10/31/2015

MBA
II
3

SHARDA

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Slide 3

Learning

Hours

Contact

40

Guided Study

25

Assessment

10

Total

75

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Slide 4

OBJECTIVE OF THE PAPER:
The objective of this paper is to help the students to become
effective managers in the competitive global environment. After
studying it the students placed in various organizations whether
manufacturing or service are supposed to take care of the very
basic unit of the work that is process. They need to accept the
challenge of both managing and understanding the
interrelatedness of the enterprise wide activities. Summing up
the aim of this course is to prepare the truly global operation
manager equipped with all type of weapons to take care of the
limited resources of an enterprise and transform them to the
revenue and profit.
PREREQUISITE:

The basic knowledge of elementary math and statistics at least
up to class XII level
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Slide 5

Topics

Cover

UNIT
1

1.Introduction Meaning and function of Production
Management, Production system Production Organization Chart, Decision Making in Production Operation,
Production Departments with various other departments and their importance.
2. Strategies
Responsibility of Production Manger. Interdependencies of Operation strategies and decision making produce to
stock and produce to order strategies, concept of using mixed strategies, advantages of having mixed strategies.

Lec
ture
s
8

8
3. Long term planning/strategy
Facility location and facility layout. Factors affecting the location of facility,
different types of layouts, product focused, process
Focused, cellular and mixed layouts. Introduction to the methods for determining the location and layout of a
facility.
4. Intermediate term planning/ strategy
Capacities Planning, aggregate planning, hire and fire strategy etc.
3. Long term planning/strategy
Facility location and facility layout. Factors affecting the location of facility,
different types of layouts, product focused, process
Focused, cellular and mixed layouts. Introduction to the methods for determining the location and layout of a
facility.
4. Intermediate term planning/ strategy
Capacities Planning, aggregate planning, hire and fire strategy etc.
Identification and segregation of the operations based on the strategy selected
UNIT3 5. Shop floor control Resource planning, sequencing and scheduling, concept of JIT, manufacturing and
8
assembly line balancing, preparation of Gantt Chart.
6. Project Management
CPM, PERT forward pass and backward pass computations, resource leveling, resource allocation, and crashing
of the project.
UNIT4 7. Inventory Management
8
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5
Inventory definition, types and models, managing the inventory, classification of inventories, MPS, MRP, ERP.
8. Work Study & Productivity
UNIT
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Slide 6

PRODUCTION AND OPERATIONS
MANAGEMENT

• 5. Shop floor control: Resource
planning, sequencing and scheduling,
concept of JIT, manufacturing and
assembly line balancing, preparation of
Gantt Chart.
• 6. Project Management
• CPM, PERT forward pass and backward
pass computations, resource leveling,
resource allocation, and crashing of the
project.
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Slide 7

Shop Floor Control
• Operations Management - Shop Floor Control
• The control of work in progress is one of the most
complex day-to-day tasks facing the operations
manager. Planning capacity, ensuring that
bottlenecks are avoided and generating high
levels of shop floor productivity are all part of the
challenge. In today's fast moving environment
knowing the current status of jobs out there on the
factory floor is essential. To achieve excellence in
all these tasks requires very good systems and
their effective operation.
• A system of computers and controllers used to
schedule, dispatch and track the progress of work
orders through manufacturing based on defined
routings.
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Slide 8

Resource Planning
• Unparalleled Visibility into Manufacturing
Operations:
• One can’t improve what one can’t see. If obsolete
inventory blocks a doorway, there’s an obvious
problem. The key is to make waste “visible” long
before that happens. Likewise, if the most up-todate release requirements from the customer are
not easily available, there’s no way to meet
shipping deadlines. An innovative Resource
Planning system provides that crucial real-time
insight, making the outdated, overnight batch
processing once common with legacy Resource
Planning solutions a thing of the past.
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Slide 9

Resource Planning
Full visibility means tracking key events as they
happen and then putting the right information into
the hands of the right people at the right time—
whether it’s the machine operators tracking part
numbers on a touch screen on the shop floor, or
the accounting manager viewing global account
receivables in a custom dashboard. Capturing and
validating data at the point of origination makes for
timely, accurate and, therefore, actionable
information for all other users in the enterprise.
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Slide 10

Reasons for demand forecasting

To maximize gains
from events external
to the organization
(from the external
environment)

To develop policies
that apply to people
who are not part of
the organization

To maximize gains
from events, which
are the results of
actions taken by the
organization

To minimize losses
associated
with
uncontrollable events
external
to
the
organization

To offset the
actions
of
competitor
organizations

Reasons
for Demand
Forecasting

As
an
input
to
Aggregate Production
Planning and / or
Material Requirements
Planning (MRP)

To develop administrative
plans and policy internal
to an organization (e.g.
personnel or budget)
In order to perform
adequate staffing to
support production
requirements

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In decision making
for Facility Capacity
Planning and for
Capital Budgeting

© Oxford UniversitySHARDA
Press 2007. All rights reserved.

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Slide 11

Methods of demand forecasting
Demand Forecasting

Qualitative Analysis

Customer Survey

Quantitative Analysis

Sales Force Composite

Executive
Opinion

Delphi
Method

Past
Analogy

Time Series Analysis

Simple Moving
Average

Holt’s Double
Exponential
Smoothing

Simple
Exponential
Smoothing

Causal Analysis

Trend Analysis

Winters’s Triple
Exponential
Smoothing
Forecast by
Linear
Regression
Analysis

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© Oxford UniversitySHARDA
Press 2007. All rights reserved.

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Slide 12

Actual
Demand

Actual
Demand

Time
No growth or decline trend; no seasonal
variation – simple (or weighted) moving
average; simple exponential smoothing

Actual
Demand

No growth or decline trend; seasonal
variation present – simple moving
average

Time

Actual
Demand

Time
Linear growth (or decline) trend; no
seasonal variation –Holt’s double
exponential smoothing

Time
Linear growth (or decline) trend; seasonal
variation present – Winters’s triple
exponential smoothing; linear regression
analysis

Different Types of Demand Patterns and

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© Oxford
Press
2007. All
rights reserved.
SuitableUniversity
Time Series
Forecasting
Methods
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Slide 13

Forecasting by Linear Regression Analysis

Best fit line is
extrapolated to
find the forecast
for the future
Forecast

Actual
Demand /
Forecast

Best fit line with slope b
y = a + b. x
(Least squares method)
using the past demand
data

y intercept = a
0
Time

Scatter Diagram and Best Fit Line (Forecasting by Linear
Regression Analysis)

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© Oxford UniversitySHARDA
Press 2007. All rights reserved.

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Slide 14

Measurement of Forecasting Errors

•
•
•
•
•
•

Running Sum of Forecast Errors (RSFE)
Mean Forecast Error (MFE)
Mean Absolute Deviation (MAD)
Mean Squared Error (MSE)
Mean Absolute Percentage Error
(MAPE)
Tracking Signal (TS)

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© Oxford UniversitySHARDA
Press 2007. All rights reserved.

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Slide 15

Forecast Control Limits

Forecast
Error
Upper Control Limit (UCL)

0 + 3. s

Targeted or Aimed-at Mean
Forecast Error = 0

Central Line (CL)

Time
Lower Control Limit (LCL)

0 - 3. s

Forecast Control Limits

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© Oxford UniversitySHARDA
Press 2007. All rights reserved.

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Slide 16

PRODUCTION PLANNING AND CONTROL

• Manufacturing planning and control entails the
acquisition and allocation of limited resources to
production activities so as to satisfy customer
demand over a specified time horizon. As such,
planning and control problems are inherently
optimization problems where the objective is to
develop a plan that meets demand at minimum
cost or that fills the demand that maximizes profit.
• Manufacturing planning and control address
decisions on the acquisition, utilization and
allocation of production resources to satisfy
customer requirements in the most efficient and
effective way. Typical decisions include work force
level, production lot sizes, assignment of overtime
and sequencing of production runs.
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Slide 17

Planning Decisions
• Any planning problem starts with a specification of
customer demand that is to be met by the
production plan. In most contexts, future demand is
at best only partially known, and often is not known
at all. Consequently, one relies on a forecast for the
future demand. To the extent that any forecast is
inevitably inaccurate, one must decide how to
account for or react to this demand uncertainty.
• A key choice is what planning decisions to include
in the model. By definition, production-planning
models include decisions on production and
inventory quantities. But in addition, there might be
resource acquisition and allocation decision, such
as adding to the work force and upgrading the
training of the current work
force.
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Slide 18

AGREGATE PLANNING
• Aggregate planning is an operational
activity which does an aggregate plan for
the production process, in advance of 2 to
18 months, to give an idea to management
as to what quantity of materials and other
resources are to be procured and when, so
that the total of the organization is kept to
the minimum over that period.

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Slide 19

AGREGATE PLANNING
• The quantity of outsourcing, subcontracting
of items, overtime of labor, numbers to be
hired and fired in each period and the
amount of inventory to be held in stock and
to be backlogged for each period are
decided. All of these activities are done
within the framework of the company
ethics, policies, and long term commitment
to the society, community and the country
of operation.
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Slide 20

AGREGATE PLANNING
• Aggregate planning has certain pre-required
inputs which are inevitable. They include:
• Information about the resources and the facilities
available.
• Demand forecast for the period for which the
planning has to be done.
• Cost of various alternatives and resources. This
includes cost of holding inventory, ordering cost,
cost of production through various production
alternatives like subcontracting, backordering and
overtime.
• Organizational policies regarding the usage of
above
alternatives.
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Slide 21

AGREGATE PLANNING
• "Aggregate Planning is concerned with
matching supply and demand of output over
the medium time range, up to approximately
12 months into the future. Term aggregate
implies that the planning is done for a single
overall measure of output or, at the most, a
few aggregated product categories. The aim
of aggregate planning is to set overall output
levels in the near to medium future in the
face of fluctuating or uncertain demands.
Aggregate planning might seek to influence
demand
as
well
as
supply."
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Slide 22

Definition

Aggregate Production Planning is
planning about how many units of the
product are to be produced on a weekly or
monthly basis for the coming six to
eighteen months. This plan should be in
line with the overall business plan of the
company.
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Slide 23

Steps in Effective Aggregate Planning Process
Demand Forecasts provided
by the Marketing Department

Business Plan provided
by the Top Management

Strategies for Pure Aggregate Planning
considered by the Production Manager

Level Output Rate Plan

Chase Plan

Varying Utilization Rate Plan

A combination of the pure planning strategies
called the Intermediate Plan is prepared by the
Production Manager

Disaggregating of the Aggregate Production Plan
(Intermediate Plan) is done in order to arrive at a
Master Schedule

Beginning Inventory Status

Projected on-hand Inventory

Master Scheduling Process

Tentative Master Production
Schedule (MPS)

Tentative MPS is run through the Material
Requirements Planning (MRP) Processing
Logic to test for feasibility

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Revised Master Production Schedule is
fixed by using Time Fences

Customer orders committed

Available-to-promise Inventory

Rough-cut capacity planning

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Slide 24

Production Planning Strategies
• Level Output Rate Plan (we vary the inventory
size and keep workforce size and utilization of
workers constant)
• Chase Plan (we vary the workforce size
according to demand and keep the utilization of
workers and inventory size constant)
• Varying Utilization Plan (we vary the utilization of
workers and keep workforce size and inventory
size constant)
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Slide 25

Material Requirements Planning (MRP)
Just-in-Time (JIT)
Supply Chain Management (SCM)

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Slide 26

Material Requirements Planning (MRP)

Material Requirements Planning (MRP)
is a system for planning the future
requirements of dependent
demand items.

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Slide 27

Inputs & Outputs in MRP
INPUTS

Bill of
Materials
(BOM)

Master
Production
Schedule
(MPS)
Inventory
Status
MRP Processing Logic
(Computer-based/
Manual)

Order
Changes
Report

Order Release
Report
Planned
Orders
Report

OUTPUTS

Inputs and Outputs in Material Requirements Planning

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Slide 28

Calculation of Order Size in MRP

There are four methods of calculating the
order size in MRP. These are:
•
•
•
•

Lot-for-lot Method
EOQ Method
Least Total Cost Method
Least Unit Cost Method

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Slide 29

Just-In-Time (JIT)
Schonberger defines the JIT system as to :
”Produce and deliver finished goods just in
time to be sold, sub-assemblies just in
time to be assembled into finished goods,
and purchased materials just in time to be
transformed into fabricated parts”.

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Slide 30

The Concept of JIT Manufacturing

•

Revise factory layouts

•

Reduce set-up times

•

Implement a pull system of production

•

Better coordination with suppliers

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Slide 31

Kanban Visual System

Manufacturing
Cell 1 (MC 1)
Step 4

Manufacturing
Cell 2 (MC 2)
Step 4

Manufacturing
Cell 3 (MC 3)
Step 4

Step 3

Racks containing
bins of components
manufactured at MC
1

Racks containing
bins of components
manufactured at MC
2
Store

Racks containing
bins of components
manufactured at MC
3

Work-In-Process Inventory
Racks containing
bins of components
required at WS 1
Mizosomashi or
supply worker
(Step 2)

Step 1
Workstation 1
(WS 1)

Conveyor

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Car
1

Racks containing
bins of components
required at WS 2

Racks containing
bins of components
required at WS 3

Step 1

Step 1

Workstation 2
(WS 2)

Workstation 3
(WS 3)

Car
2

The Assembly Line
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Car
3

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Slide 32

Use of Kanban across the Supply Chain

Customer’s
Kanban

Delivery
to
Customer
s

Parts
Processing
Kanban

Assembly
Kanban

Warehousin
g Products

Assembly
Processe
s

Set-up
signal
Kanban

Intermediat
e
Processes

Initial
Process

Kanban for
ordering
materials

Warehousin
g Materials

Material
Supplier

Material
forwarding
notice

Material
order sheet

Receptio
n&
Delivery

Subcontractor
Kanban

Delivery
Schedule
Sheet

Definite
warehousin
g schedule
sheet

Suppliers

Order sheet
Order sheet
for subfor in-house
contractor
manufactured
manufactured
parts
parts
Kanban Flow

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Products Flow

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Slide 33

Benefits of JIT
Heightened
awareness of
problems &
causes

Reduced buffer
stocks and/or
operators

Fast feedback
on defects
Ideas for Ideas for improving
Ideas for
cutting lot sizes JIT delivery
controlling defects
performance

Lot size
reductions

JIT
production

Scrap/
quality
control

Smoother
output
rates

Less
material
waste
Less stock in
the system

Less indirect
cost

Fewer rework
hours

Less material, labor, and indirect inputs for the same or higher output = higher productivity
Less inventory in the system = faster market response, better forecasting, less administration

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Slide 34

Demand
Manageme
nt

Inventory
Management

Product
forecasting
and control
P
L
A
N
N
I
N
G

Customer
order entry

Inventory
status (end
items)

Capacity
Manageme
nt
Business
forecasting

Resource
planning

Master
production
schedule

Capacity
planning

Quality
Manageme
nt

Hybrid MRP- JIT
Production
System

Bill of
materials
Component
s
forecasting

Inventory
status
(components)

Materials
requirement
planning

Capacity
requirement
planning

Shop-floor
control
Shop
Capacity
schedulin
control
g
E
X
E
C
U
T
I
O
N

Kanba
n
system

Group
technology
TPM

JIT
distribution

JIT production
TPC
JIT
deliveries
Purchase
order
scheduling

Vendor
capacity
control
Purchasin
g

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Slide 35

Supply Chain Management (SCM)
The U. S. Traditional Supply Network
MS 1

MS 2

General Motors

Ford

B

Chrysler

B
S1

S2

Japanese Supply Chain
Management in
Practice: The Keiretsu

B

Sn

S1

S2

Sn

S1

S2

Sn

The Japanese Keiretsu (Oligopoly Competition)
B

MS 1

MS 2

Toyota

B

MS 1

SC1

MS 2

Nissan

S1

S2

Sn

MS 1

SC1

SCn

S

B

MS 2

Honda

SC1

SCn

S

S1

S2

Sn

SCn

S

S1

S2

Sn

Codes used:-

S

Trading
Firm Shosna

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Sn

Minor
Supplier

Subcontractor
SCn

MS

Major
Supplier

B

SHARDA

Bank

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Slide 36

A comparison of the Japanese JIT Supply Chain
Management and the Traditional US purchasing

• Purchase lot size
• Supplier selection
• Evaluating the
supplier
• Receiving inspection
• Negotiating and
bidding process
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• Mode of
transportation
• Product specifications
• Paperwork
• Packaging

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Slide 37

Purchasing, Procurement, and Supply
Chain Management
• Purchasing refers to the actual buying of materials and those
activities associated with the buying process.
• Procurement, on the other hand, has a broader meaning and
includes purchasing, transportation, warehousing, and inbound
receiving. Procurement is a closed-loop process that begins with the
requisition and ends with payment.
• Supply Chain Management is a transition from purchasing and
procurement towards a more strategic focus, which involves
suppliers as strategic partners in warding off the competition.
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Slide 38

Activities in Supply
Chain Management

Strategic
Focus

1. Use of crossfunctional teams in
supplier qualification
& selection

1. Participation
in generation of
specifications of
required materials

Supply
Management
Activities

6. Strategic acquisition
plans for all important
materials

Procurement
Activities

6. Management of
value analysis

Purchasing
Activities
1. Identification
8. Maintaining
of purchasing
purchase
needs
records

5. Participation in
Corporate
Strategic Planning
and look for
7. Purchase
contract
continuous
administration
improvements in
5.Management
the supply chain
6. Supplier
of investment
selection &
recovery (Salvage
issuance of
purchase tenders P.O.
of surplus and scrap)

2. Early Supplier
Involvement 2.Conducting
(ESI) in
extensive
2. Interaction
product
material
with sales
Tactical
design through market
persons
Focus
concurrent
research
3.
Identification
engineering
of suppliers
approach
4. Analysis of
3.Management of
supplier quality

5. Negotiations
4. Purchase of inbound
transportation

3. Strategic alliances
with suppliers to
control quality & costs

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4. Monitoring of supply
environment for
opportunities & threats

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Slide 39

Tendering & Vendor Rating
Tendering is the process of various suppliers
(vendors) submitting quotations of prices and
other information (called tenders) to a buyer in
response to the invitation of such details from
the buyer in the form of advertising etc.
After receiving all such tenders, the buyer firm has
to perform the rating of various vendors on the
basis of information supplied by them and the
criteria decided upon by the buyers. This
process is called vendor rating.
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Slide 40

Criteria for vendor rating
Price quoted by the
vendor along with any
discounts offered
The reputation of vendor
in terms of quality of
products/ services
supplied by him

After-sales service of the
vendor in terms of repair
of equipment and
replacement of spare
parts (if an equipment
supplier) or replacement
of defective items
supplied

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Criteria for
Vendor
rating

Sole dependence upon the
buyer (vendor supplies to
only one buyer and no one
else) – the buyer has
better control over the
supplier in terms of quality,
pricing, supply schedules,
etc.

SHARDA

Location of the vendor in
close vicinity of the firm
helps in emergencies of
processing rush orders. It
becomes very important in
JIT settings.

Inventory policy of the vendor – in JIT
settings, the buyers prefer that their
vendors should also have JIT
practices with negligible inventory. For
equipment suppliers, the buyers prefer
vendors with sufficient spare parts
inventory (useful in case of equipment
breakdown)

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Slide 41

E-procurement and Operating Resource
Management
10. The employee
receives the
product and the
accounts
department sends
the payment to
suppliers

Employee
4. The employee
checks the
availability status
of the product on
the supplier’s
catalog on MS
Market and fills-in
the order form
5. A dialog box
appears on the
screen asking the
employee to
confirm the order.
The employee
confirms the order
by clicking “Yes”.
6. MS Market
sends email to the
employee’s
manager for
approval of the
order

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2. The employee
browses the
suppliers list on
MS Market (on
intranet) and
chooses a
supplier
3. The employee
finds the desired
product on the
supplier’s catalog
on MS Market

1. The supplier
regularly updates
information in its
catalog on MS
Market (on
company’s
intranet) through
the internet
Internet

Supplier
9. The supplier
ships the product
to the employee

8. The supplier
sends the order
acknowledgement
to the employee

7. On receiving the
approval of the
manager, MS Market
sends the purchase
order email to the
supplier and a copy
to the accounts
department

E-procurement through MS Market

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Slide 42

Just-in-time
• Just-in-time (acronym: JIT) production is a
concept to reduce work in process with respect
to a continuous configuration of product. Just In
Sequence (acronym: JIS) is a similar concept
with respect to a scheduled variety in sequence
of configurations for products.
• Just-in-time (JIT) is an inventory strategy that
strives to improve a business's return on
investment by reducing in-process inventory and
associated carrying costs. To meet JIT
objectives, the process relies on signals
between different points in the process.
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Slide 43

APPLICATION OF JIT
•

•

•

The philosophy of JIT is simple: inventory is waste. JIT inventory systems
expose hidden causes of inventory keeping, and are therefore not a simple
solution for a company to adopt. The company must follow an array of new
methods to manage the consequences of the change. The ideas in this way of
working come from many different disciplines including statistics, industrial
engineering, production management, and behavioral science. The JIT
inventory philosophy defines how inventory is viewed and how it relates to
management.
Inventory is seen as incurring costs, or waste, instead of adding and storing
value, contrary to traditional accounting. This does not mean to say JIT is
implemented without an awareness that removing inventory exposes preexisting manufacturing issues. This way of working encourages businesses to
eliminate inventory that does not compensate for manufacturing process
issues, and to constantly improve those processes to require less inventory.
Secondly, allowing any stock habituates management to stock keeping.
Management may be tempted to keep stock to hide production problems.
These problems include backups at work centers, machine reliability, process
variability, lack of flexibility of employees and equipment, and inadequate
capacity.
In short, the just-in-time inventory system focus is having “the right material, at
the right time, at the right place, and in the exact amount”, without the safety
net of inventory. The JIT system has broad implications for implementers.

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Slide 44

JIT
• Transaction cost approach
• JIT reduces inventory in a firm. However,
a firm may simply be outsourcing their
input inventory to suppliers, if those
suppliers don't use JIT (Naj 1993).
Newman (1993) investigated this effect
and found that suppliers in Japan charged
JIT customers, on average, a 5% price
premium.
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Slide 45

JIT
• Environmental concerns
• During the birth of JIT, multiple daily deliveries
were often made by bicycle. Increased scale has
required a move to vans and lorries (trucks).
Cusumano (1994) highlighted the potential and
actual problems this causes with regard to
gridlock and burning of fossil fuels. This violates
three JIT waste guidelines:
• Time—wasted in traffic jams
• Inventory—specifically pipeline (in transport)
inventory
• Scrap—fuel burned while not physically moving
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Slide 46

JIT
• Price volatility
• JIT implicitly assumes a level of input price
stability that obviates the need to buy parts
in advance of price rises. Where input
prices are expected to rise, storing
inventory may be desirable.

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Slide 47

JIT
• Quality volatility
• JIT implicitly assumes that input parts
quality remains constant over time. If not,
firms may benefit from hoarding high
quality inputs.

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Slide 48

JIT
• Demand stability
• Karmarker (1989) highlights the importance of
relatively stable demand, which helps ensure
efficient capital utilization rates. Karmarker
argues that without significantly stable demand,
JIT becomes untenable in high capital cost
production.
• In the U.S., the 1992 railway strikes caused
General Motors to idle a 75,000-worker plant
because they had no supplies coming in.
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Slide 49

JIT Implementation Design
• Based on a diagram modeled after the one
used by Hewlett-Packard’s Boise plant to
accomplish its JIT program.

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Slide 50

1) F Design Flow Process
•
•
•
•
•
•

- F Redesign / relay out for flow
– L Reduce lot sizes
– O Link operations
– W Balance workstation capacity
– M Preventative maintenance
– S Reduce Setup Times

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Slide 51

2) Q Total quality control
- C worker compliance

•
•
•
•

- I Automatic inspection
- M quality measures
– M fail-safe methods
- W Worker participation

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Slide 52

3) S Stabilize Schedule
• - S Level Schedule
• - W establish freeze windows
• - UC Underutilize Capacity

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Slide 53

4) K Kanban Pull System
• - D Demand pull
• - B Backflush
• - L Reduce lot sizes

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Slide 54

5) V Work with vendors
•
•
•
•

- L Reduce lead time
- D Frequent deliveries
- U Project usage requirements
- Q Quality Expectations

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Slide 55

6) I Further reduce inventory in
other areas
• - S Stores
• - T Transit
• - C Implement Carroussel to reduce
motion waste
• - C Implement Conveyor belts to reduce
motion waste
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Slide 56

7) P Improve Product Design
• - P Standard Production Configuration
• - P Standardize and reduce the number of
parts
• - P Process design with product design
• - Q Quality Expectations

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Slide 57

Benefits
• Set up times are significantly reduced in the
factory. Cutting set up time allows the company to
improve their bottom line, be more efficient, and
focus on other areas that may need improvement.
This allows the company to reduce or eliminate
inventory for "changeover" time.
• Employees who possess multiple skills are used
more efficiently. Having employees trained to work
on different parts of the inventory cycle allows
companies to move workers where they are
needed.
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Slide 58

Benefits
• JIT provides better scheduling and work
hour consistency. If there is no demand for a
product at the time, workers don’t have to
work. This saves the company money, either
by not having to pay workers or by having
them focus on other work.
• There is an increased emphasis on supplier
relationships. A company without inventory
does not want an inventory system brake
that creates a supply shortage. This makes
supplier relationships extremely important.
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Slide 59

Benefits
• Supplies come in around the clock, which
keeps workers productive and businesses
focused on turnover. Focusing management
on deadlines makes employees work hard to
meet company goals, in pursuit of job
satisfaction, promotion, or even higher pay.

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Slide 60

Problems
• just-in-time operation leaves suppliers and
downstream consumers open to supply
shocks and large supply or demand
changes. For internal reasons, Just-in-time
is a means to improving performance of the
system, not an end.

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Slide 61

Kanban
• Kanban (in kanji also in katakana ,
where kan, means "visual," and ban,
means "card" or "board") is a concept
related to lean and just-in-time (JIT)
production. The Japanese word
kanban is a common term meaning
"signboard" or "billboard".
• According to Taiichi Ohno, the man
credited with developing JIT, kanban
is a means through which JIT is
achieved.
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Slide 62

Kanban
• Kanban is a signaling system to trigger
action. As its name suggests, kanban
historically uses cards to signal the
need for an item. However, other
devices such as plastic markers
(kanban squares) or balls (often golf
balls) or an empty part-transport trolley
or floor location can also be used to
trigger the movement, production, or
supply of a unit in a factory.
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Slide 63

Questions?

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Slide 64

Supply of
products &
services

Production,
processing &
assembly

Demand for
products &
services

Customers &
Consumers

Resources &
suppliers

Just-in-time planning and control

JIT Philosophy:
Meet demand instantaneously: products and services
are delivered (both to production & to the customer)
only as and when they are needed...
...With the best appropriate quality, and no waste!
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Slide 65

JIT as a total management commitment: a
philosophy for all operations
Eliminate waste
Involve everyone

A set of techniques...
• Basic transferable standards of
work & quality
• Design for manufacture

Continuous
improvement

A methodology for
planning & control
• “Pull” scheduling

• Supplier inclusion
• Focus on operations & processes

• Small single-stage machines

• Kanban control
• Levelled scheduling: Heijunka
• Mixed production runs

• Attention to layout & flow
• Total preventive maintenance

• Synchronisation across all
production lines

• Set-up time reduction

• Reduction of inventories

• Total people involvement

• Shortening the cash cycle

• Visibility

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Slide 66

JIT implementation benefits
Main benefits:
 Short cycle times
 Work in progress reduced
 Manufacturing facilities
designed to reduced
production set-up times
 Quality problems quickly
made visible
 Short lead-times increase
responsiveness to
customer-demand
 «Pull» systems require
fast and clear lines of
communication

Waste and delay eliminated:
 Focus on simplifying production process
 Total preventive maintenance
 Efficient flow layout
 Reduced set-up times
 Data visibility
 Partnership-based supply relationships
 Inventory control systems - rapid response
 Continuous improvement

TQM - Total Quality Management:
 Senior Management committed
 Focus on defect prevention
 Quality of supplies ensured at the source

People involvement:
 JIT managers empower their staff
 All personnel, particularly operators and clerical staff help to develop
creative solutions
 JIT emphasises team goals and cross-functional working
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 A multi-skilled work force
ITC

M11:U3:3.3-34


Slide 67

The JIT implementation wheel
Adopt JIT
purchasing & SCM

Standardise
manufacturing design

Implementation
starts here

Increase preventive
maintenance
Implement Total
Quality Control

High visibility brings
improvement

JIT

Steadily reduce lot
sizes

Review & change
plant layout

Implement Pull
scheduling
Train workforce to
be more flexible

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Work on reducing
set-up times

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Change to smaller
machines

67


Slide 68

JIT implementation challenges
1. Changing workforce and management attitudes
(e.g., regarding teamwork and empowerment)
2.Responding to their education and training
needs
3.Suppliers or logistics links cannot support JIT
4. Managing & synchronising IT support in the
company, its suppliers and customers
5.Total inventory reduction is often not achieved

6. Catastrophic shutdowns and inability to meet
customer delivery expectations
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Slide 69

The JIT approach to production and control
Management focuses
on producing only
what is needed, when
it is needed
Fewer stoppages,
higher order
fulfilment and less
stress

Lower capacity utilisation
- focus on quality &
involvement

Production rate driven
by demand of next
stage, no build-up of
WIP inventory

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Low inventory, so
problems surface
and are solved focus on delivery
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Slide 70

Best of JIT and MRP systems
Process
design

Product
design for
manufacture

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JIT
Manufacturing
planning &
control
system
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Human &
organisational
elements

70


Slide 71

Combining JIT and MRP systems in practice

Resources & suppliers

Top-level
BOM

Materials
Requirements
Planning

Master
Production
Schedule

Purchasing

Continuous
Process 1

Continuous
& readyuse stock

Goods
inwards
preparation

Production
Cell1

Production
Cell2

Factory
assembly
schedule

Production
Cell3

Orders
management
system

Product
& service
delivery

Final
assembly

MRP is used to provide materials planning and the final assembly
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71
schedule. Kanbans [ ] are used to control internal production flow.

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Slide 72

JIT
• Transaction cost approach
• JIT reduces inventory in a firm. However,
a firm may simply be outsourcing their
input inventory to suppliers, if those
suppliers don't use JIT (Naj 1993).
Newman (1993) investigated this effect
and found that suppliers in Japan charged
JIT customers, on average, a 5% price
premium.
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Slide 73

• Inventory requirements in an organization are closely
related to the production or consumption systems. JIT (Justin-Time) is a production technique which helps in reducing
inventory. The technique developed by Toyota Company in
Japan has now spread all over the world. JIT system is an
integrated manufacturing and supply system aimed at
producing the highest quality and, at the same time, the
lowest cost products through the elimination of waste.
• JIT integrates and controls the entire process. It specifies
what should be stored, moved, operated on or inspected
and precisely when it should be done. Just-in-Time
production continuously strives to improve production
processes and methods. It attempts to reduce, and
ultimately to eliminate inventories because high inventories
tend to cover up production problems. Various components
of a JIT production system are given in figure
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Slide 74

• Components of JIT Production System
• FILL-UP: A PULL Type Ordering System
• Contrary to the conventional system where a central controller co-ordinates
material flow from the first to the last stage of manufacturing, a pull system
triggers action from the market demand. As soon as an order is received
from the market, the dispatch section places an. order on final assembly
section who in turn to sub-assembly section and so on to the stage of
withdrawal of materials from stores for manufacturing. A chain reaction starts
where-in each user is responsible to withdraw materials from the preceding
operation eliminating the need for the central controller. A concept chart
showing the conventional push type ordering system and the new pull type
ordering system is given in Fig. The production stages, storage stages,
information and material flow channels have been shown explain in both the
systems. The system is flexible and is adaptable to quick changes in
demand. Only the required quantity of materials for use during a ~ay or a
part thereof is drawn from the previous operation, thereby leaving almost nil
inventory at work stations at the end of the day. The chances of
accumulation of process inventory in a Push System are more since total
output of a work station is pushed to next work station whether required or
not.
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Slide 75

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Slide 76

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Slide 77

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Slide 78

• Production Smoothing
• A system of forecasting demand for next 3
months, preparation of master production
schedule and monthly production planning with a
provision to adopt monthly demand changes.
Simultaneously, a system of 10 day advance
booking of firm orders from dealers, co-ordinating
with sub-contractors, balancing shop production,
preparation of daily dispatch schedules and
provision to incorporate last minute changes in
daily demand should be well prepared.

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Slide 79

•
•

KANBAN System
A Kanban is a hand sized signboard contained in polypack that is the key control tool for
JIT production. Kanbans are of two types i.e. "Production Instruction Kanban" and "PickUp or Withdrawal Kanban". Production Instruction Kanban indicates how many and what
kind of parts have been passed from one place on the production line to the next place. It
is a green signal to begin processing exactly th same type and number of items that were
passed along. Pick-up Kanban is of two types. One called 'Interprocess Kanban' used
within the plant for picking up needed parts from earlier process jobsite to the next
process jobsite. Other type is 'supplier Kanban' used for picking up needed items from
outsid suppliers and is used the same way as inter-process pick up Kanbans. Steps
involved in using the two Kanbans and their flows as well as the flow of physical units of
product are explained in figure. It may be seen that the number of withdrawal· Kanbans
lying in post at "1" indicate the units consumed in subsequent process assembly line and
therefore creation of the demand for equal number of units to be provided by preceding
process machinery line. These Kanbans authorise picking up units from the machinery
line store and are returned to assembly line along with physical units . Depending upon
the shortfall in the machinery line store, production ordering Kanbans in desired quantity
are placed in the post , carried to production ordering Kanban post. Production ordering
Kanban authorize production in the machinery line and are sent to store again alongwith
machined parts. Kanbans are the pre-printed forms containing product specifications,
quantities and frequency of issue during a day. Kanbans are normally replaced every
month depending upon next month production schedule. There is no need w give written
instructions every time and hence it eliminates lot of paper work. At the same time it
coordinates activities of whole plant as well as with the suppliers and establish a close
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circuit.


Slide 80

•
•

•

Visual Control
This is a method by which managers and supervisors can tell at a glance if
production activities are proceeding normally or not. Light signals (Red & Yellow)
are placed on various machines and storage points. If any problem arises, the
operator switches on light signal. 'Yellow' means there is a problem which
operator himself is trying to solve. 'Red' means he needs help of the supervisor.
Seeing red light, supervisor rush to the workplace. Similarly, a system of
replenishment of stocks is used. A material calling ANDON for the later
replenishment system is illustrated in Figure 3.6. When an empty box is found in
the production shop, the worker pushes a switch thereby putting on main light in
the- central store and a glow lamp in the control pannel indicating the kind of
material required-Seeking the lamps, material carrier transports filled boxes to
the line (see '5') and submits Supplier Kanban (detached from material box) to
the Post Office of material Kanbans (see '6'). During th evening, all supplier
Kanbans are classified supplier wise and handed over to respective truck drivers
along with empty boxes. The drivers draw the materials from supplier as per the
number of Kanbans and deliver to the factory during night .The materials are
therefore replenished to the central stores every day morning before production
starts. From the system it may be observed that inventory is kept only for 1-2
days stocks, with almost no paper work, no noice and chaos and no congestion.
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Slide 81

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Slide 82

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Slide 83

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Slide 84

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Slide 85

Total quality management
• Deep analysis of QA practices and premises
used about them is the most necessary
inspection control of all in cases, where, despite
statistical quality control techniques or quality
improvements implemented, sales decrease.
• The major problem which leads to a decrease in
sales was that the specifications did not include
the most important factor, “What the
specifications have to state in order to satisfy the
customer requirements?”.
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Slide 86

Total quality management
• The major characteristics, ignored during
the search to improve manufacture and
overall business performance were:
• Reliability
• Maintainability
• Safety
• Strength

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Slide 87

sequencing and Operations
Scheduling

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Slide 88

OBJECTIVES
•
•
•
•
•
•
•

Work Center Defined
Typical Scheduling and Control Functions
Job-shop Scheduling
Examples of Scheduling Rules
Shop-floor Control
Principles of Work Center Scheduling
Issues in Scheduling Service Personnel

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Slide 89

Work Center
• A work center is an area in a business
in which productive resources are
organized and work is completed
• Can be a single machine, a group of
machines, or an area where a particular
type of work is done

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Slide 90

Capacity and Scheduling
•
•
•
•

Infinite loading (Example: MRP)
Finite loading
Forward scheduling
Backward scheduling (Example: MRP)

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Slide 91

Types of Manufacturing Scheduling Processes
and Scheduling Approaches
Type of Process

Typical Scheduling Approach

Continuous
process

Finite forward of process, machine
limited

High-volume
manufacturing

Finite forward of line, machined limited

Med-volume
manufacturing

Infinite forward of process, labor and
machined limited

Low-volume
manufacturing

Infinite forward of jobs, labor and some
machine limited

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Slide 92

Typical Scheduling and Control Functions

• Allocating orders, equipment, and
personnel
• Determining the sequence of order
performance
• Initiating performance of the
scheduled work
• Shop-floor control
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Slide 93

Work-Center Scheduling Objectives
• Meet due dates
• Minimize lead time

• Minimize setup time or cost
• Minimize work-in-process inventory
• Maximize machine utilization
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Slide 94

Priority Rules for Job Sequencing
1. First-come, first-served (FCFS)
2. Shortest operating time (SOT)

3. Earliest due date first (D Date)
4. Slack time remaining (STR) first
5. Slack time remaining per operation
(STR/OP)
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Slide 95

Priority Rules for Job Sequencing
(Continued)
6. Critical ratio (CR)
CR 

(Due date - Current
Number

date)

of days remaining

7. Last come, first served (LCFS)
8. Random order or whim

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Slide 96

Example of Job Sequencing: FirstCome First-Served
Suppose you have the four
jobs to the right arrive for
processing on one machine

J ob s (in or d e r
of a r r iva l)

P r oc e ssin g
T im e (d a y s)

D ue D a te
(d a y s h e n c e )

A
B
C
D

4
7
3
1

5
10
6
4

What is the FCFS schedule?

Do all the jobs get done on time?

Answer: FCFS Schedule
J ob s (in or d e r
of a r r iva l)

P r oc e ssin g
T im e (d a y s)

A
B
C
D

4
7
3
1

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D ue D a te
F low T im e
(d a y s h e n c e )
(d a y s)
5
10
6
4
SHARDA

No, Jobs B, C,
and D are
going to be late

4
11
14
15
96


Slide 97

Example of Job Sequencing: Shortest
Operating Time
Suppose you have the four
jobs to the right arrive for
processing on one machine

J ob s (in or d e r
of a r r iva l)

P r oc e ssin g
T im e (d a y s)

D ue D a te
(d a y s h e n c e )

A
B
C
D

4
7
3
1

5
10
6
4

What is the SOT schedule?

Do all the jobs get done on time?

Answer: Shortest Operating Time Schedule
J ob s (in or d e r
of a r r iva l)

P r oc e ssin g
T im e (d a y s)

D
C
A
B

1
3
4
7

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D ue D a te
F low T im e
(d a y s h e n c e )
(d a y s)
4
6
5
10
SHARDA

1
4
8
15

No, Jobs A
and B are
going to be
late
97


Slide 98

Example of Job Sequencing: Earliest
Due Date First
Suppose you have the four
jobs to the right arrive for
processing on one machine

What is the earliest due date
first schedule?

J ob s (in or d e r
of a r r iva l)

P r oc e ssin g
T im e (d a y s)

D ue D a te
(d a y s h e n c e )

A
B
C
D

4
7
3
1

5
10
6
4

Do all the jobs get done on time?

Answer: Earliest Due Date First
J ob s (in or d e r
of a r r iva l)

P r oc e ssin g
T im e (d a y s)

D
A
C
B

1
4
3
7

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D ue D a te
F low T im e
(d a y s h e n c e )
(d a y s)
4
5
6
10
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1
5
8
15

No, Jobs C
and B are
going to be
late
98


Slide 99

Example of Job Sequencing: Critical Ratio
Method
Suppose you have the four
jobs to the right arrive for
processing on one machine

J ob s (in or d e r
of a r r iva l)

P r oc e ssin g
T im e (d a y s)

D ue D a te
(d a y s h e n c e )

A
B
C
D

4
7
3
1

5
10
6
4

What is the CR schedule?

Do all the jobs get done on time?

In order to do this schedule the CR’s have be calculated
for each job. If we let today be Day 1 and allow a total of
15 days to do the work. The resulting CR’s and order
schedule are:
CR(A)=(5-4)/15=0.06 (Do this job last)
CR(B)=(10-7)/15=0.20 (Do this job first, tied with C and D)
CR(C)=(6-3)/15=0.20 (Do this job first, tied with B and D)
CR(D)=(4-1)/15=0.20 (Do this job first, tied with B and C)
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No, but since
there is threeway tie, only
the first job or
two will be on
time

99


Slide 100

Example of Job Sequencing:
Last-Come First-Served
Suppose you have the four
jobs to the right arrive for
processing on one machine

J ob s (in or d e r
of a r r iva l)

P r oc e ssin g
T im e (d a y s)

D ue D a te
(d a y s h e n c e )

A
B
C
D

4
7
3
1

5
10
6
4

What is the LCFS schedule?

Do all the jobs get done on time?

Answer: Last-Come First-Served Schedule
J ob s (in or d e r
of a r r iva l)

P r oc e ssin g
T im e (d a y s)

D
C
B
A

1
3
7
4

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D ue D a te
F low T im e
(d a y s h e n c e )
(d a y s)
4
6
10
5
SHARDA

1
4
11
15

No, Jobs B
and A are
going to be
late
100


Slide 101

Example of Job Sequencing: Johnson’s Rule
(Part 1)
Suppose you have the following five jobs with time
requirements in two stages of production. What is the
job sequence using Johnson’s Rule?

Jobs
A
B
C
D

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Time in Hours
Stage 1
Stage 2
1.50
1.25
2.00
3.00
2.50
2.00
1.00
2.00

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Slide 102

Example of Job Sequencing: Johnson’s Rule
First, select the job with the
smallest time in either stage.

That is Job D with the smallest
time in the first stage. Place that
job as early as possible in the
unfilled job sequence below.

(Part 2)

Time in Hours
Stage 1
Stage 2
1.50
1.25
2.00
3.00
2.50
2.00
1.00
2.00

Jobs
A
B
C
D

Drop D out, select the next smallest time (Job A), and place it 4th in the job
sequence.

Drop A out, select the next smallest time. There is a tie in two stages for
two different jobs. In this case, place the job with the smallest time in the
first stage as early as possible in the unfilled job sequence.
Then place the job with the smallest time in the second stage as late as
possible in the unfilled sequence.

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Job Sequence 1
Job Assigned D

2
B
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3
C

4
A

102


Slide 103

Shop-Floor Control: Major Functions
1. Assigning priority of each shop
order
2. Maintaining work-in-process
quantity information

3. Conveying shop-order status
information to the office
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Slide 104

Shop-Floor Control:
Major Functions (Continued)
4. Providing actual output data for capacity
control purposes
5. Providing quantity by location by shop
order for WIP inventory and accounting
purposes
6. Providing measurement of efficiency,
utilization, and productivity of manpower
and machines
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Slide 105

Input/Output Control
Input

Work
Center

Output

• Planned input should never exceed
planned output

• Focuses attention on bottleneck work
centers
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Slide 106

Principles of Work Center Scheduling
1. There is a direct equivalence between work
flow and cash flow
2. The effectiveness of any job shop should be
measured by speed of flow through the shop

3. Schedule jobs as a string, with process steps
back-to-back
4. A job once started should not be interrupted

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Slide 107

Principles of Job Shop Scheduling
(Continued)
5. Speed of flow is most efficiently achieved
by focusing on bottleneck work centers
and jobs
6. Reschedule every day
7. Obtain feedback each day on jobs that
are not completed at each work center

8. Match work center input information to
what the worker can actually do
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Slide 108

Principles of Job Shop Scheduling
(Continued)

9. When seeking improvement in
output, look for incompatibility
between engineering design and
process execution
10. Certainty of standards, routings,
and so forth is not possible in a job
shop, but always work towards
achieving it
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Slide 109

Personnel Scheduling in Services
• Scheduling consecutive days off
• Scheduling daily work times
• Scheduling hourly work times

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Slide 110

Components of Scheduling
Scheduling in job shops involves:

• Assigning tasks to different machines (or work centers)
• Deciding about the sequence of processing of the job on
different machines on the basis of some priority rule (called
sequencing or prioritization)
• Planning the route of movement of the material from one
department to the other during processing (called routing)
• Issuing dispatch lists to the various work centers (called
dispatching)
• Tracking the progress of various jobs scheduled and in case
of delays in the implementation of schedules, revising the
schedules and expediting the completion of certain jobs
(called expediting)
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Slide 111

Problems in the absence of
proper scheduling
Delays in meeting the
due dates of
customer orders

High average
completion
time of jobs

No accurate
information
available for
the current
status of a
job

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ABSENCE OF
PROPER
SCHEDULING

High work-inprocess
inventory

Low utilization of
workers and
machines (high
idle time)

Higher set-up time
(overall) of
machines
Higher cost of
production/
operations

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Slide 112

Forward & Backward Scheduling
• Forward
scheduling
means
assigning
customer orders or jobs to various work centers
based on the approach “as early as possible”.
• Backward scheduling is a way of scheduling
which is based on the approach “as late as
possible” with the condition that the jobs are
finished by their due dates of delivery to the
customer.
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Slide 113

Loading
• Loading means assigning tasks to work centers
or machines.
• When loading of jobs on machines or work
centers is done keeping in view their maximum
capacity, it is called finite loading.
• Infinite loading means while assigning tasks to
a machine or work center, its maximum capacity
is overlooked.
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Slide 114

Different Methods of Sequencing/
Assignment of Jobs on Machines
Scheduling

Sequencing n jobs

On two
machines

On one
machine

First come, first
served (FCFS)
method

Due date
method

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Last come,
first served
(FCFS)
method

Random
method

Shortest
processing time
(SPT)) method

Sequencing two jobs on n
machines in different machine
sequences (Akers method)

On three
machines

In the same job
sequence

Assigning n jobs
on m machines

On m
machines

Assignment
Model

Johnson’s
method

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Slide 115

Goldratt’s Goal of the Firm

The goal of a firm is to make
money

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115


Slide 116

Concept of JIT, Manufacturing
and Assembly line Balancing

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Slide 117

Assembly Line Balancing
• Cycle time
– The time required to produce one part is
called the cycle time, or the maximum time
allowed at any one work station

• Assembly Line Balancing
– Given a cycle time, find the minimum number
of work stations or minimize the cycle time for
a given number of work stations

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Slide 118

What is Line Balancing?
Line Balancing is the process of assigning
tasks to workstations in such a way that the
workstations have approximately equal time
requirements.
OR
Line Balancing is an analysis process that
tries to equally divide the work to be done
among workstations so that the number of
worker or workstations requires on a
production line is minimized
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Slide 119

Line Balancing Procedure
• 1. Determine the tasks involved in completing
• 2. Determine the order in which tasks must be
done
3. Draw a precedence diagram
4. Estimate task times
5. Calculate the cycle time
6. Calculate the minimum number of
workstations
• 7. Use a heuristic(intuitive) to assign tasks to
workstation
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Slide 120

Scheduling High-Volume-Low-Variety
Operations
•

•
•
•
•
•
•

The mass consumption patterns of modern industrialized nations
depend on assembly line technology.
The classic example is Henry Ford’s auto chassis line.
Before the “moving assembly line” was introduced in
1913, each chassis was assembled by one worker and required 12.5
hours.
Once the new technology was installed, this time was reduced to 93
minutes.
Favorable Conditions
Volume adequate for reasonable equipment utilization.
Reasonably stable product demand.
Product standardization
Part interchange-ability.
Continuous supply of material
Not all of the above must be met in every case.
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Slide 121

Assembly Line Balancing - Example

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Task

Time (min)

Immediate Predecessors

A
B
C
D

0.2
0.3
0.2
0.25

----A
A
A

E
F

0.15
0.3

B,C
D,E

Total

1.4
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Slide 122

Assembly Line Balancing

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Slide 123

Assembly Line Balancing
CYCLE TIME
.30 C  1.40
C = productive time/output rate
C = (8hr x 60min) =.5 min
960
Number of work stations, N = total time/C
N = 140 = 2.8 =3
.5
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Slide 124

Solution to Assembly Line
Balancing Problem
Station
Time
1
2
3

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Tasks Assigned Total Task Time Idle

A, B
C, D
E, F
TOTAL

0.5
0.45
0.45
1.4

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0
0.05
0.05
0.1

124


Slide 125

Line Balancing Rules
Some Heuristic (intuitive) Rules:
• Assign tasks in order of most following
tasks.
– Count the number of tasks that follow

• Assign tasks in order of greatest
positional weight.
–

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Positional weight is the sum of each task’s
time and the times of all following tasks.
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Slide 126

Assembly Line Balancing Solution
• Line Efficiency = Total Work Content
CxN
• Efficiency = 1.40 = .93 or 93%
.5 x 3
• Balance Delay = 1 – efficiency = 1-.93 =
7%

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Slide 127

Example 2

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0.2

0.2

0.3

a

b

e

0.8

0.6

c

d

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f

g

h

1.0

0.4

0.3

127


Slide 128

Solution to Example 2
Station 1

a

b

Station 2

Station 3

e
f

c

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Station 4

g

h

d

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128


Slide 129

Questions?

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Slide 130

Bottleneck Workstation

1 min.

30/hr.

1 min.

30/hr.

2 min.

30/hr.

1 min.

30/hr.

Bottleneck

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Slide 131

Parallel Workstations

30/hr.
1 min.

60/hr.

2 min.

30/hr.

1 min.

1 min.

60/hr.

30/hr.
2 min.

30/hr.

Parallel Workstations

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Slide 132

Designing Process Layouts
Information Requirements:
1. List of departments
2. Projection of work flows
3. Distance between locations
4. Amount of money to be invested
5. List of special considerations
6. Location of key utilities

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Slide 133

Example 3: Interdepartmental Work Flows
for Assigned Departments
30
1

A

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170

3

B

10
0

2

C

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Slide 134

Process Layout
Milling
Assembly
& Test

Grinding

Plating

Drilling

Process Layout - work travels
to dedicated process centers

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Slide 135

Functional Layout
222

Mill

444

111 333
111
333

Lathes

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222
111
444

222

Drill

Grind

3333

1111 2222

Heat
treat

Assembly
111

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Gear
cutting

111
444

135


Slide 136

-1111

Lathe

Mill

Drill

222222222

Mill

3333333333

Lathe Mill

44444444444444

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Heat
treat

Gear
-1111
cut

Heat
treat

Grind - 2222

Heat
treat

Grind - 3333

Drill

Gear - 4444
cut

Drill

Mill

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Assembly

Cellular Manufacturing Layout

136


Slide 137

What is Line Balancing?
• Line Balancing is the process of assigning
tasks to workstations in such a way that the
workstations have approximately equal time
requirements.
OR
• Line Balancing is an analysis process that
tries to equally divide the work to be done
among workstations so that the number of
worker or workstations requires on a
production line is minimized
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137


Slide 138

Line Balancing Procedure
1. Determine the tasks involved in completing 1 unit
2. Determine the order in which tasks must be done

3. Draw a precedence diagram
4. Estimate task times
5. Calculate the cycle time
6. Calculate the minimum number of
workstations
7. Use a heuristic(intuitive) to assign tasks to
workstations
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Slide 139

Scheduling High-Volume- Low-Variety Operations
•
•
•
•
•
•

The mass consumption patterns of modern industrialized
nations depend on assembly line technology.
The classic example is Henry Ford’s auto chassis line.
Before the “moving assembly line” was introduced in 1913,
each chassis was assembled by one worker and required
12.5 hours.
Once the new technology was installed, this time was
reduced to 93 minutes.
Favorable Conditions
Volume adequate for reasonable equipment utilization.
Reasonably stable product demand.
Product standardization
Part interchange-ability.
Continuous supply of material
Not all of the above must be met in every case
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Slide 140

Concepts (1/2)
•
•
•
•
•

Minimum rational work element
Smallest feasible division of work.
Flow time = time to complete all stations
Cycle time
Maximum time spent at any one workstation.
Largest workstation time.
How often a product is completed.
Inverse of the desired hourly output rate = the amount of
time available at each work station to complete all assigned
work.
• 1 / 2 / 3 - 4 min / 5 min / 4 min
• Flow time = 4 + 5 + 4 = 13 • Cycle time = max (4, 5, 4) = 5
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Slide 141

Concepts (2/2)
•
•

•
•
•
•

•
•
•
•

Total work content: Sum of the task times for all the assembly tasks for the product.
Precedence diagram: network showing order of tasks and restrictions on their
performance
Measure of efficiency Line Balancing Rules Line Balancing Heuristics
Heuristic methods, based on simple rules, have been developed to provide good
(not optimal) solutions to line balancing problems
Heuristic methods include:
Incremental utilization (IU) method
Longest-task-time (LTT) method
… and many others
Incremental Utilization Method:Add tasks to a workstation in order of task precedence one at a time until utilization
is 100% or is observed to fall
Then the above procedure is repeated at the next workstation for the remaining
tasks
Pro – Appropriate when one or more task times is equal to or greater than the cycle
time
Con – Might create the need for extra equipment
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Slide 142

Line Balancing Rules
• Line Balancing Heuristics
• Heuristic methods, based on simple rules,
have been developed to provide good (not
optimal) solutions to line balancing problems
• Heuristic methods include:
• Incremental utilization (IU) method
Longest-task-time (LTT) method
… and many others
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Slide 143

Incremental Utilization Method:•

Add tasks to a workstation in order of task
precedence one at a time until utilization is
100% or is observed to fall
• Then the above procedure is repeated at
the next workstation for the remaining tasks
• Pro – Appropriate when one or more task
times is equal to or greater than the cycle
time
• Con – Might create the need for extra
equipment
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Slide 144

Longest-Task-Time Method:•
•

•
•
•

Adds tasks to a workstation one at a time in
the order of task precedence.
If two or more tasks tie for order of
precedence, the one with the longest task time
is added
Conditions for its use:
No task time can be greater than the cycle
time
There can be no duplicate workstations
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Slide 145

The Problem
•

Assign tasks to work stations
observing balancing restrictions so as
to minimize balance delay while
keeping station work content for every
station cycle time.
• Restrictions:
• Technological: precedence
requirement.
• Position restrictions
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Slide 146

Finding a Solution
•
•

•
•

•

Heuristic procedures generally allow for a broader
problem definition, but do not guarantee optimal
solution.
Optimizing procedures generally have used more
narrowly defined problems, but guarantee optimal
solution.
Examples of optimizing procedures
Dynamic programming
0-1 Integer programming
Branch and bound techniques.
Trend in research has been toward optimizing
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146
procedures
due to availability


Slide 147

A Simple Algorithm
•

•

•
•

•
•

Identify tasks whose predecessors have been assigned
to a workstation (available tasks).
Determine from available tasks, those that fit, i.e., those
whose tasks times time remaining to be filled at this work
station.
Choose a task that fits by some decision rule
task with largest time
task with most successors
task with greatest sum of task times of it predecessors.
Continue steps 1 to 3 until no task fits, then go on to next
workstation.
Continue steps 1 to 4 until all tasks are assigned.
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Slide 148

Complications
•

Behavioral options
• Job enlargement and rotation.
Wages related to task.
Distribution of slack time.
Inventory buffers.
Involving work group in decisions.
Arranging stations to facilitate interaction.
Personnel selection.
• Time to move an item between stations
Machine-dominated work stations.
Task times which exceed the cycle time.
Stochastic task times.
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Mixed model assembly lines

148


Slide 149

Cybernetic control
• Cybernetic or steering control is by far the most
common type of control system.
• The key feature of cybernetic control is its
automatic operation. Consider the diagrammatic
model of a cybernetic control system shown in
figure 1. As Figure shows, a system is operating
with inputs being subjected to a process that
transforms them into outputs. It is this system that
we wish to control. In order to do so, we must
monitor the system output.
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Slide 150

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Slide 151

• A cybernetic control system that acts to
reduce deviations from standard is called
a negative feedback loop. If the system
output moves away from the standard in
one direction, the control mechanism acts
to move it in the opposite direction. The
speed or force with which the control
operates is, in general, proportional to the
size of the deviation from the standard.
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Slide 152

Types of cybernetic control systems
• Cybernetic controls come in three varieties, or
orders, differing in the sophistication with which
standards are set. Figure show a simple, first
order control system, a goal seeking device. The
standard is set and there is no provision made for
altering it except by intervention from the outside.
The common thermostat is a time-worn example
of a first order controller. One sets the standard
temperature and the heating and air-conditioning
systems operate to maintain it.
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Slide 153

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Slide 154

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Slide 155

Questions?

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Slide 156

STATISTICAL QUALITY CONTROL, QUALITY
ASSURANCE,

Many organizations use statistical
process control to bring the organization
to Six Sigma levels of quality, in other
words, so that the likelihood of an
unexpected failure is confined to six
standard deviations on the normal
distribution. This probability is less than
four one-millionths. Items controlled
often include clerical tasks such as
order-entry as well as conventional
manufacturing tasks.

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Slide 157

STATISTICAL QUALITY CONTROL, QUALITY
ASSURANCE,

Traditional statistical process controls in
manufacturing operations usually
proceed by randomly sampling and
testing a fraction of the output.
Variances in critical tolerances are
continuously tracked and where
necessary corrected before bad parts
are produced.
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Slide 158

Product Design and its Characteristics;
• The different issues in a phase of a product life
cycle:
•
•
•
•

Development Phase
Production Phase
Utilization Phase
Disposal Phase

• Each phase is explained with two categories of
tangible products in order to show differences in
prioritizing design issues in certain product life
cycle phases:
• Consumer durables
• Capital goods
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Slide 159

Product Design and its Characteristics;
Development phase
• Design rules
– Basic Rules of Embodiment Design: Clarity, Simplicity,
Safety

• Organizational Process
– Design for Short Time to market

• System Design, Testing & Validation
–
–
–
–
–
–

Design for reliability , Synonyms: Reliability Engineering
Design For Test
Design for safety, Synonyms: Safety engineering
Design for quality, Synonyms: Quality engineering
Design Against Corrosion Damage
Design for Minimum Risk

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Slide 160

Product Design and its Characteristics;
Production / operations phase
•
•
•
•
•
•
•

Design Rules: Target costing, Value engineering
Design to standards: Interchangeable parts, , ,
Design Guidelines
Design for assembly
Design for manufacturability
Design for logistics, Design for postponement
Specific situations

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Slide 161

Product Design and its Characteristics;
Design rules
• Design to standards serves in production
operations, or respectively supply chain
operations. Except for "luxury goods" or
"luxury brands", most goods - even upperclass goods - are reliant on, if these are
mass produced (Note: The same is valid for
the functional production strategy "Mass
customization").

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Slide 162

Product Design and its Characteristics;
Design rules
Through Engineering design physical
interfaces between
• a) parts or components or assemblies of the
product and
• b) the manufacturing equipment as well as the
logistical material flow systems can be changed,
and thus cost reducing effects in operating the
latter may be achieved.

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Slide 163

Product Design and its Characteristics;
Design guidelines

• Design for manufacturability ensures the
fabrication of single parts or components
that are based on an in mechanical
engineering terms. It must be noted that
every production technology has its own
specific design guideline that needs to be
consulted depending on the situation.

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Slide 164

Product Design and its Characteristics;
Design guidelines
• Design for assembly addresses the
combination of single parts or components
to subassemblies, assemblies, modules,
systems, etc., that are based on a in
mechanical engineering terms. An
important issue is how the embodied
interfaces within a product are designed
(mechanical engineering, electrical
engineering).
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Slide 165

Product Design and its Characteristics;
Design guidelines
• Design for logistics covers issues along
supply chain partners (i.e. legally
independent firms) but is by its means
closely related to the Design for assembly
guidelines. In academic research, Design for
logistics is tangent to the Strategic alliances,
SCM, and the Engg. part of New product
development.

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Slide 166

Total quality management
• Deep analysis of QA practices and premises
used about them is the most necessary
inspection control of all in cases, where, despite
statistical quality control techniques or quality
improvements implemented, sales decrease.
• The major problem which leads to a decrease in
sales was that the specifications did not include
the most important factor, “What the
specifications have to state in order to satisfy the
customer requirements?”.
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Slide 167

Total quality management
• The major characteristics, ignored during
the search to improve manufacture and
overall business performance were:
• Reliability
• Maintainability
• Safety
• Strength
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Slide 168

Total Quality Management
• As the most important factor had been ignored, a
few refinements had to be introduced:
• Marketing had to carry out their work properly and
define the customer’s specifications.
• Specifications had to be defined to conform to
these requirements.
• Conformance to specifications i.e. drawings,
standards and other relevant documents, were
introduced during manufacturing, planning and
control.
• Management had to confirm all operators are
equal to the work imposed on them and holidays,
celebrations and disputes did not affect any of the
quality levels.
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Slide 169

Total Quality Management
• Inspections and were carried out, and all
components and materials, bought in or otherwise,
conformed to the specifications, and the was
accurate, this is the responsibility of the QA/QC
department.
• Any complaints received from the customers were
satisfactorily dealt with in a timely manner.
• Feedback from the user/customer is used to
review designs.
• Consistent data recording and assessment and
documentation integrity.
• Product and/or process change management and
notification.
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Slide 170

Procurement Quality Management
• Executive authorities are responsible for the
technical integrity of land materiel they
procure, manage or maintain. Effective
procurement quality management assists in
achieving technical integrity by establishing
confidence that procured goods and
services conform to quality requirements.
Quality management is dependent upon an
effective quality management system and
comprises:
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Slide 171

Procurement Quality Management
• Quality planning – the part of quality management
focused on setting quality objectives and specifying
necessary operational processes and related
resources to fulfil the quality objectives.
• Quality assurance – the part of quality
management focused on providing confidence that
quality requirements will be fulfilled.
• Quality control – the part of quality management
focused on fulfilling quality requirements.
• Quality improvement – the part of quality
management focused on increasing the ability to
fulfil quality requirements.
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Slide 172

Measuring Procurement Quality
• Baseline measures
• Timeliness: Percent of Procurement systems
reports received on time (when promised /
scheduled), from total number of reports
produced.
• Accuracy: Percent of procurement system
reports received without any observed errors
(data entry or calculation errors), from total
number of reports produced.
• Flexibility: Ordinal measure ("Low to high") of the
level of effort required to reconfigure information
displayed in procurement system reports.
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Slide 173

Measuring Procurement Quality
• Baseline measures
• Routine-sation: Percent of procurement
systems reports generated to handle
"exceptional conditions" from total number
of reports produced.
• Routine workflows: A map showing the
flow of procurement systems reports under
(a) routine conditions, (b) "low frequency"
exceptional conditions, and (c) during critical
or problematic situations.
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Slide 174

Measuring Procurement Quality
• Baseline measures
• Interactive report generation: Percent of
procurement system reports generated by
procurement system users
• (a) from total number of reports produced,
(b) from each procurement system module,
(c) across which users.
• Recurring cycle times: Ratio of forecast
versus actual time spent performing
recurring procurement processes, such as
"procurement
closings."
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Slide 175

Measuring Procurement Quality
• Baseline measures
• System utilization: Percent of user time
spent
• (a) preparing procurement system inputs,
and
• (b) handling procurement system outputs,
from total hours at work (e.g., per week)

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Slide 176

Measuring procurement quality
• Baseline measures
• Open staff diaries: Each user of the procurement
system or its outputs should be asked to keep a
diary regarding their experiences with and
impressions of the efficiency and effectiveness of
the new financial system. they should be asked to
daily record
• (a) what worked best today, and
• (b) what was biggest problem of the day. Then, on
a weekly basis, record
• (c) what changes should be made to make their
work situation more efficient and more effective,
and
• (d) how has the work situation changed from some
time ago.
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Slide 177

Quality standards
•
•
•
•
•
•
•
•

•
•
•

ISO 10012
AS9003
SAE AS9100
AS / NZS ISO 9001:2000 – Quality Management
Systems - Requirements
Nadcap
– Guidelines for Auditing Quality Systems
AS/NZS 4360:1999 – Risk Management
DI(G) LOG 02-1 – Quality Assurance of Procured Goods
and Services
DI(G)LOG 02-3 – Quality Assurance Arrangements with
Foreign Governments
IPC/EIA J-STD-xxx
IPC-9191

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Slide 178

Questions?

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Slide 179

• 6. Project Management
• CPM, PERT forward pass
and backward pass
computations, resource
leveling, resource allocation,
and crashing of the project.

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Slide 180

OBJECTIVES
• Definition of Project Management
• Work Breakdown Structure
• Project Control Charts
• Structuring Projects
• Critical Path Scheduling

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Slide 181

Project Management

Defined

• Project is a series of related jobs usually
directed toward some major output and
requiring a significant period of time to
perform
• Project Management are the management
activities of planning, directing, and
controlling resources (people, equipment,
material) to meet the technical, cost, and time
constraints of a project
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Slide 182

Preparation of Gantt
Chart.

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182


Slide 183

Questions?

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183


Slide 184

Here is a general approach for developing a
Gantt chart
List the project phases.
• In each project phase, list the tasks in their
chronological order, taking into account which tasks
cannot be started until a preceding task (or tasks) is
completed. In doing this, also take into account the
resources required and how they will be used by
each task. Do not attach start or end dates to the
tasks at this point.
• Along side of each task, identify its product or
deliverable.
• Enter the estimated calendar time required to
complete each task and the resources required to do
the work in that amount of calendar time.
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Slide 185

Here is a general approach for developing a
Gantt chart
List the project phases.
• Now note the date when the project must be
finished and enter it as the end date for the last task
and the phase it is in.
• Work backward from the project end date to
schedule the tasks. Take into account tasks
dependencies. Also, consider whether certain tasks
can be performed in parallel. Adjust calendar
lengths of tasks and resources as needed to fit
within the project time frame. This can require many
tradeoffs to arrive at the best schedule within the
time and resources constraints.
• Identify all of the milestones, such as the end of a
phase or the completion and expected acceptance
of a key deliverable. SHARDA
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185


Slide 186

Here is a general approach for developing a
Gantt chart
List the project phases.
• Now note the date when the project must be
finished and enter it as the end date for the last task
and the phase it is in.
• Work backward from the project end date to
schedule the tasks. Take into account tasks
dependencies. Also, consider whether certain tasks
can be performed in parallel. Adjust calendar
lengths of tasks and resources as needed to fit
within the project time frame. This can require many
tradeoffs to arrive at the best schedule within the
time and resources constraints.
• Identify all of the milestones, such as the end of a
phase or the completion and expected acceptance
of a key deliverable. SHARDA
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186


Slide 187

Here is a general approach for developing a
Gantt chart

Keep in mind that the Gantt chart is
a tool for planning and managing
the project. It focuses on the
phases and tasks of the project and
not on pre-project planning
activities .
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Slide 188

Vertical Axis: Always
Activities or Jobs

Horizontal bars used to denote length of time for
each activity or job.

Activity 1
Activity 2
Activity 3
Activity 4
Activity 5
Activity 6
Time
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Horizontal Axis: Always Time
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Slide 189

Pure Project
A pure project is where a self-contained
team works full-time on the project

• The project manager has full authority
over the project
• Team members report to one boss
• Shortened communication lines
• Team pride, motivation, and commitment
are high
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Slide 190

• Duplication of resources
• Organizational goals and policies are
ignored
• Lack of technology transfer
• Team members have no functional
area "home"
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Slide 191

A functional project is housed within
a functional division
President

Research and
Development

Engineering

Manufacturing

Project Project Project
A
B
C

Project Project Project
D
E
F

Project Project Project
G
H
I

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Example, Project “B” is in the functional
area of Research and Development.
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191


Slide 192

• A team member can work on several
projects
• Technical expertise is maintained
within the functional area
• The functional area is a “home” after
the project is completed
• Critical mass of specialized knowledge
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Slide 193

• Aspects of the project that are not
directly related to the functional area get
short-changed
• Motivation of team members is often
weak
• Needs of the client are secondary and
are responded to slowly
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Slide 194

President

Research and
Development

Engineering Manufacturing

Marketing

Manager
Project A
Manager
Project B
Manager
Project C
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Slide 195

• Enhanced communications between
functional areas
• Pinpointed responsibility
• Duplication of resources is minimized
• Functional “home” for team members
• Policies of the parent organization are
followed
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Slide 196

• Too many bosses
• Depends on project manager’s
negotiating skills
• Potential for sub-optimization

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Slide 197

A work breakdown structure defines the
hierarchy of project tasks, subtasks, and
work packages
Level

1
2

Program
Project 1

Project 2

Task 1.1

Task 1.2

3

Subtask 1.1.1

4

Work Package 1.1.1.1

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Subtask 1.1.2
Work Package 1.1.1.2
197


Slide 198

• A project is made up of a sequence of activities
that form a network representing a project
• The path taking longest time through this
network of activities is called the “critical path”
• The critical path provides a wide range of
scheduling information useful in managing a
project
• Critical Path Method (CPM) helps to identify the
critical path(s) in the project networks

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Slide 199

A project must have:
well-defined jobs or tasks whose completion
marks the end of the project;
independent jobs or tasks;
and tasks that follow a given sequence.
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Slide 200

• CPM with a Single Time Estimate
– Used when activity times are known with certainty
– Used to determine timing estimates for the project,
each activity in the project, and slack time for activities

• CPM with Three Activity Time Estimates
– Used when activity times are uncertain
– Used to obtain the same information as the Single Time
Estimate model and probability information

• Time-Cost Models
– Used when cost trade-off information is a major
consideration in planning
– Used to determine the least cost in reducing total
project time
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Slide 201

• 1. Activity Identification
• 2. Activity Sequencing and Network
Construction
• 3. Determine the critical path
–From the critical path all of the project and
activity timing information can be obtained

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Slide 202

Consider the following consulting project:

Designation Immed. Pred. Time (Weeks)
Activity
Assess customer's needs
A
None
2
Write and submit proposal
B
A
1
Obtain approval
C
B
1
Develop service vision and goals D
C
2
Train employees
E
C
5
Quality improvement pilot groups F
D, E
5
Write assessment report
G
F
1

Develop a critical path diagram and determine
the duration of the critical path and slack times
for
all activities.
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202


Slide 203

Act.
Time
A

Imed.

Pred.

None

2

B

A

1

C

B

1

D

C

2

E

C

5

F

D,E

5

G

F

1

A(2)

B(1)

D(2)

C(1)

F(5)

G(1)

E(5)
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Slide 204

ES=4
EF=6

ES=0
EF=2

ES=2
EF=3

ES=3
EF=4

A(2)

B(1)

C(1)

Hint: Start with ES=0
and go forward in the
network from A to G.
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D(2)

ES=4
EF=9

ES=9
EF=14

ES=14
EF=15

F(5)

G(1)

E(5)

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Slide 205

ES=4
EF=6

ES=0
EF=2

ES=2
EF=3

ES=3
EF=4

A(2)

B(1)

C(1)

LS=0
LF=2

LS=2
LF=3

LS=3
LF=4

D(2)
LS=7
LF=9
ES=4
EF=9

Hint: Start with LF=15 or the
total time of the project and
go backward in the network
from G to A.

ES=9
EF=14

ES=14
EF=15

F(5)

G(1)

LS=9
LF=14

LS=14
LF=15

E(5)
LS=4
LF=9
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Slide 206

ES=4
EF=6

ES=0
EF=2

ES=2
EF=3

ES=3
EF=4

A(2)

B(1)

C(1)

LS=0
LF=2

LS=2
LF=3

LS=3
LF=4

D(2)
LS=7
LF=9

ES=4
EF=9

Slack=(7-4)=(9-6)= 3 Wks

ES=9
EF=14

ES=14
EF=15

F(5)

G(1)

LS=9
LF=14

LS=14
LF=15

E(5)
LS=4
LF=9
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Duration=15 weeks

206


Slide 207

Im m e d ia te
T a sk P re d e c e so rs O p tim istic M o st L ik e ly P e ssim istic
A
N one
3
6
15
B
N one
2
4
14
C
A
6
12
30
D
A
2
5
8
E
C
5
11
17
F
D
3
6
15
G
B
3
9
27
H
E ,F
1
4
7
I
G ,H
4
19
28
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Slide 208

ET(A)= 3+4(6)+15

6
T a sk
A
B
C
D
E
F
G
H
I

Im m e d ia te
P re d e c e so rs
N one
N one
A
A
C
D
B
E ,F
G ,H

E x p e c te d T im e =
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E x p e c te d
T im e
7
5 .3 3 3
14
5
11
7
11
4
18

ET(A)=42/6=7
Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
2
4
14
C
A
6
12
30
D
A
2
5
8
E
C
5
11
17
F
D
3
6
15
G
B
3
9
27
H
E,F
1
4
7
I
G,H
4
19
28

O p t. T im e + 4 (M o s t L i k e ly T im e ) + P e s s . T im e
SHARDA

6

208


Slide 209

ET(B)= 2+4(4)+14
T a sk
A
B
C
D
E
F
G
H
I

Im m e d ia te
P re d e c e so rs
N one
N one
A
A
C
D
B
E ,F
G ,H

E x p e c te d T im e =
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E x p e c te d
T im e
7
5 .3 3 3
14
5
11
7
11
4
18

6
ET(B)=32/6=5.333

Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
2
4
14
C
A
6
12
30
D
A
2
5
8
E
C
5
11
17
F
D
3
6
15
G
B
3
9
27
H
E,F
1
4
7
I
G,H
4
19
28

O p t. T im e + 4 (M o s t L i k e ly T im e ) + P e s s . T im e
SHARDA

6

209


Slide 210

T a sk
A
B
C
D
E
F
G
H
I

Im m e d ia te
P re d e c e so rs
N one
N one
A
A
C
D
B
E ,F
G ,H

E x p e c te d T im e =
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ET(C)= 6+4(12)+30

E x p e c te d
T im e
7
5 .3 3 3
14
5
11
7
11
4
18

6

ET(C)=84/6=14
Immediate
Task Predecesors Optimistic Most Likely Pessimistic
A
None
3
6
15
B
None
2
4
14
C
A
6
12
30
D
A
2
5
8
E
C
5
11
17
F
D
3
6
15
G
B
3
9
27
H
E,F
1
4
7
I
G,H
4
19
28

O p t. T im e + 4 (M o s t L i k e ly T im e ) + P e s s . T im e
SHARDA

6

210


Slide 211

Example 2. Network
Duration = 54 Days
C(14)

E(11)
H(4)

A(7)
D(5)

F(7)
I(18)

B

(5.333)
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G(11)
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Slide 212

Example 2. Probability Exercise
What is the probability of finishing this project in
less than 53 days?

p(t < D)
D=53

t

TE = 54
Z =
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D - TE



 cp

2

212


Slide 213

A c tiv ity v a ria n c e , 

T a sk
A
B
C
D
E
F
G
H
I

2

=

(

P e s s im . - O p tim .

O p tim istic M o st L ik e ly P e ssim istic
3
6
15
2
4
14
6
12
30
2
5
8
5
11
17
3
6
15
3
9
27
1
4
7
4
19
28

(Sum the variance along the critical
path
.)
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6

SHARDA

)

2

V a ria n c e
4



16
4

1
16
2

= 41
213


Slide 214

p(t < D)
TE = 54

D=53
Z =

D - TE



 cp

2

=

53 - 54
41

t

= -.1 5 6

p(Z < -.156) = .438, or 43.8 % (NORMSDIST(-.156)
There is a 43.8% probability that this project will
be
completed in less than
53 weeks.
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214


Slide 215

• What is the probability that the
project duration will exceed 56
weeks?

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215


Slide 216

p(t < D)
TE = 54
D=56
Z =

D - TE



 cp

2

=

56 - 54
41

t

= .3 1 2

p(Z > .312) = .378, or 37.8 % (1-NORMSDIST(.312))
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Slide 217

• Basic Assumption: Relationship
between activity completion time and
project cost
• Time Cost Models: Determine the
optimum point in time-cost tradeoffs
Activity direct costs
– Project indirect costs
– Activity completion times
–

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Slide 218

• Project activities can be identified as entities
(There is a clear beginning and ending point for
each activity.)
• Project activity sequence relationships can be
specified and networked
• Project control should focus on the critical path
• The activity times follow the beta distribution, with
the variance of the project assumed to equal the
sum of the variances along the critical path
• Project control should focus on the critical path
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Slide 219

Questions?

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219


Slide 220

• resource leveling,
resource allocation,
and crashing of the
project

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220


Slide 221

Introduction
• This chapter addresses:
– Trade-offs involved to crash cost
– Relationship between resource loading and
leveling
– Some approaches used to solve allocation
problem

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Slide 222

Critical Path Method – Crashing a Project
• One important difference between CPM & PERT:
– CPM included a way of relating the project
schedule to the level of physical resources
• trade time for cost, or vice versa
• Can specify 2 activity times and 2 costs
• 1st time / cost combination- called normal
• 2nd combination called crash
• Normal – usual ‘average’ time, resources
• Crash – expedite by applying additional
resources
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Slide 223

Critical Path Method – Crashing a Project

• Allocation problem requires more careful
consideration-additional resources?
• Many things make crashing a way of life on
some projects (i.e last minutes changes in
client specification, without permission to
extend the project deadline by an
appropriate increment)
• Careful planning is critical when crashing
project – need to consider feasibility of
expediting work (e.g equipment availability)
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Slide 224

Critical Path Method – Crashing a Project

Slope = crash cost – normal cost
crash time – normal time
Where: slope = cost per day of crashing a project
When slope is negative : indicate the time
required for a project is decreased, the cost is
increased
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Slide 225

Critical Path Method – Crashing a Project

• The Rupees per day slope of activities is
relevant only if the whole crash increment
is useful
• Crashing may involve a relatively simple
decision to increase groups of resources
• If do changes in technology tend to
produce discontinuities in outcomes and
also in cost.
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225


Slide 226

Principles to crash a project

1. Focus on the critical path when
trying to shorten the duration
[resource ready]
1. Select the least expensive way
to do it
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Slide 227

Crashing a Project (E.g Two-Time CPM)
Activity

Precedence

Duration, Days
(normal,crash)

Cost, Rs.
(normal,crash)

Slope (Rs/day)

a

-

3,2

40, 80

40/-1 = -40

b

a

2,1

20, 80

60/-1 = -60

c

a

2,2

20, 20

Cannot be
expedited

d*

a

4,1

30, 120

90/-3 = -30

e**

b

3,1

10, 80

-70 (2 days)

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*Partial crashing allowed **Partial crashing not allowed

227


Slide 228

A CPM Example
e

b
a

c
d

1

2

3

4

5

6

7

8

Normal Schedule, 8 days, Rs120
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Slide 229

A CPM Example

e

b
a

e

b
a

c

c

d

1

2

3

d

4

5

6

7

8

1

7-day schedule, Rs160

2

3

7

8

b
a

c

c
d

d

2

3

4

5

6

7

5-day schedule, Rs260

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6

e

b

1

5

6-day schedule. Rs220

e
a

4

8
SHARDA

1

2

3

4

5

6

7

8

229
4-day schedule, Rs350


Slide 230

• Network critical path is a-b-e, project duration is
8 days, normal total cost is Rs.120
• The decision about which activities to crash
depends on how much to reduce the duration
• On the benefit side, some projects have penalty
clauses that make the parent organization liable
for late delivery- sometimes bonuses for early
delivery

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Slide 231

Cost ($)

• On the cost side, figure below shows the time/cost
relationship of crashing the project

400
350
300
250

All crash
a + b + 2d + 2e
a + d + 2e - b
a+b
a

200
150
100
50
0

All normal
0

1

2

3

4

5

6

7

8

9

Total duration (days)
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Slide 232

Fast Tracking
•
•
•
•

Another way to expedite a project
Term used for construction projects
Refers to overlapping design and build phases
Design completed before construction starts,so
overlapping will result shortening the project
duration
• Build before design completed-more design
changes
• Loss productivity, increased cost, loss time

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Slide 233

Fast Tracking (cont.)
• Studies revealed that:
– more design changes in fast tracking – the number of
project change orders not significantly different than
not fast-tracked project

• Dependent on effective feed-back and feedforward communication

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Slide 234

SOLVED PROBLEM

2

d

a
c

1

4

b

e
3

Activity

Crash
Time,
Cost

Normal Partial
Time,
crashing
Cost

a

3,Rs.6 3,Rs.
0
60

No

b

6,80

7,30

Yes

c

2,90

5,50

No

d

5,50

6,30

No

e

2,100

4,40

Yes

SHARDA the project in 10 days
Find the lowest cost to complete
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234


Slide 235

Answer
Current time and cost: 12 days and Rs.210
Since the critical path is a-c-e, we only
initially need consider these 3 activities:

3
2
0

3

a: cannot be crashed

6
a

d

c

1

5

7
b

8

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4
4

3

12

e

c: can cut 3 days at an extra cost of Rs.40
but only results in project completion by
day 11, due to b. To reach 10 days, cut
b by 1 day, total extra cost Rs.90
e: can cut e by 2 days for an extra cost of
Rs.60 and results in project completion
by
day 10.
SHARDA

Thus, cut e 2 days at a cost of Rs.60.

235


Slide 236

RESOURCE ALLOCATION PROBLEM
• A fundamental measure of the PM’s success in
project mgmt is the skill with which the trade-offs
among performance, time and cost are
managed
• The extreme points of the relationship between
time use and resource are:
– Time limited
– Resource limited

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Slide 237

RESOURCE LOADING
• The amount of individuals resources an existing
schedule requires during specific time periods
• Resource loading can be illustrated by:
– Resource usage calendar
– Modified PERT/CPM AOA diagram (similar with
Gantt Chart)
• PM responsibility:
– Demand for resources does not exceed
resource capacities
– Ensure that the required resources, in the
required amounts
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Slide 238

Resource Usage Calendar

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238


Slide 239

Modified PERT/CPM AOA Diagram
(Refer Ch 08 Slide ? )
a

1

d

2

(4,0)

6

(0,2)
(2,1)
3

1
1

c

3

(2,1)
4

(3,1)
4

0
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dummy

5

10

7

(0,6)

e

3

b

j

g

f

(1,1)
5

(1,0)

i
(6,3)

h

(0,2)

15

20SHARDA25

30

35

40

45
239


Slide 240

RESOURCE LEVELING
• Aims to minimize the period-by-period variations in
resource loading by shifting tasks within their slack
allowances
• Purpose to create a smoother distribution of resource
usage
• Advantages;
– Much less hands on management
– Be able to use ‘just in time’ inventory policy with right
quantity delivered
• If the resource being leveled is people, it improves morale
and results in fewer problems in the personnel and payroll
offices
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240


Slide 241

E.g: Network

2

a, 2
[2]
1
b, 3
[2]

c, 5
[4]

4

3

The activity time is shown above the arc, and resource usage
(one
resource, workers) is in brackets
below the arc.
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241


Slide 242

Before Resource Leveling

a

a

b
c

c

c

b
1

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After Resource Leveling

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• How to Use the Tool:
• As with Gantt Charts, the essential concept behind
Critical Path Analysis is that you cannot start some
activities until others are finished. These activities need
to be completed in a sequence, with each stage being
more-or-less completed before the next stage can
begin. These are 'sequential' activities.
• Other activities are not dependent on completion of any
other tasks. You can do these at any time before or
after a particular stage is reached. These are nondependent or 'parallel' tasks.

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'Crash Action'
You may find that you need to complete a project earlier than your Critical Path
Analysis says is possible. In this case you need to re-plan your project.
You have a number of options and would need to assess the impact of each on the
project’s cost, quality and time required to complete it.
For example, you could increase resource available for each project activity to bring
down time spent on each but the impact of some of this would be insignificant and a
more efficient way of doing this would be to look only at activities on the critical path.
As an example, it may be necessary to complete the computer project in Figure 5 in
8 weeks rather than 10 weeks. In this case you could look at using two analysts in
activities 2 to 3 and 3 to 4. This would shorten the project by two weeks, but may
raise the project cost – doubling resources at any stage may only improve
productivity by, say, 50% as additional time may need to be spent getting the team
members up to speed on what is required, coordinating tasks split between them,
integrating their contributions etc.
In some situations, shortening the original critical path of a project can lead to a
different series of activities becoming the critical path. For example, if activity 4 to 5
were reduced to 1 week, activities 4 to 8 and 8 to 6 would come onto the critical
path.

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•

•

•

•

Critical Path Analysis and PERT are powerful tools that help you to schedule and manage
complex projects. They were developed in the 1950s to control large defense projects, and
have been used routinely since then.
As with Gantt Charts, Critical Path Analysis (CPA) or the Critical Path Method (CPM) helps
you to plan all tasks that must be completed as part of a project. They act as the basis both
for preparation of a schedule, and of resource planning. During management of a project,
they allow you to monitor achievement of project goals. They help you to see where
remedial action needs to be taken to get a project back on course.
Within a project it is likely that you will display your final project plan as a Gantt Chart (using
Microsoft Project or other software for projects of medium complexity or an excel
spreadsheet for projects of low complexity).The benefit of using CPA within the planning
process is to help you develop and test your plan to ensure that it is robust. Critical Path
Analysis formally identifies tasks which must be completed on time for the whole project to
be completed on time. It also identifies which tasks can be delayed if resource needs to be
reallocated to catch up on missed or overrunning tasks. The disadvantage of CPA, if you
use it as the technique by which your project plans are communicated and managed
against, is that the relation of tasks to time is not as immediately obvious as with Gantt
Charts. This can make them more difficult to understand.
A further benefit of Critical Path Analysis is that it helps you to identify the minimum length
of time needed to complete a project. Where you need to run an accelerated project, it
helps you to identify which project steps you should accelerate to complete the project
within the available time.

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PERT (Program Evaluation and Review Technique)
PERT is a variation on Critical Path Analysis that takes a
slightly more skeptical view of time estimates made for each
project stage. To use it, estimate the shortest possible time
each activity will take, the most likely length of time, and the
longest time that might be taken if the activity takes longer
than expected.
Use the formula below to calculate the time to use for each
project stage:
shortest time + 4 x likely time + longest time
----------------------------------------------------------6
This helps to bias time estimates away from the unrealistically short
time-scales normally assumed.
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Key Points:
Critical Path Analysis is an effective and powerful method of
assessing:
•What tasks must be carried out.
•Where parallel activity can be performed.
•The shortest time in which you can complete a project.
•Resources needed to execute a project.
•The sequence of activities, scheduling and timings involved.
•Task priorities.
•The most efficient way of shortening time on urgent projects.
An effective Critical Path Analysis can make the difference
between success and failure on complex projects. It can be
very useful for assessing the importance of problems faced
during the implementation of the plan.
PERT is a variant of Critical Path Analysis that takes a more
skeptical view of the time needed to complete each project
stage.
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RESOURCE LOADING/LEVELING AND
UNCERTAINTY

• If happens excess capacity,the alternative
that we can consider:
– Try to level the demand, moving some of it
forward and some backward
– Try to alter the supply of working hours-trade
off time between periods of over capacity and
periods of under capacity
– Might expend additional resources-contract
worker for overload period, subcontract the
workload
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Assignment -3
• Q1. Attempt any THREE questions out of the following
I. What are the principles of Forecasting?
II. What are the objectives of inventory management?
III. What is meant by materials budget?
IV. What are the various types of stores?
• Q2. Write short notes on any four of the following
I. Economic Order Quantity
II. Material Requirement Planning
III. Safety and security of stores
IV. Explain the various forecasting techniques
V. Explain the P and Q system of inventory replenishment
VI. Explain the steps involved in supplier self certification.

VII.Explain the FIFO and LIFO system of stores valuation.

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Assignment -4
•

PERT / CPM

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