Industrial Engineering and Production Management [3 ed.] 9789352533794

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industrial Engineering And Production Management

About the Author Dr. Telsang Martand Tamanacharya Professor Mechanical Engineering & Dean Academics of Sanjay Ghodawat University, Dr. Telsang is B.E. (Mech.) First Class with Distinction from Karnataka University Dharwad (1982), M.Tech (Industrial Engineering) from National Institute for Industrial Engineering (NITIE), Mumbai (1992) and Ph.D. in Mechanical Engineering from Dr. Babasaheb Ambedkar Technological University, Lonere Maharashtra. He is also D.B.M (Post Graduate Diploma in Business Mgt.), First Class, IMDR Poona (1985). With five years of Industrial experience and thirty years of teaching experience at UG and PG programs in engineering and--management, Dr. Telsang is Fellow of Institution of Engineers (FIE) India and Fellow of Indian Institution of Production Engineers (FIIPE), Bangalore as well as Senior Member, IIIE Mumbai, Member of ISTE New Delhi and Life member and National Council Member of ISTD New Delhi. He is Advisory Board member BIOINFO Mechanical Engineering. He has contributed research papers at various National and International seminars and conferences and Journals. And is the author of 3 Books and 2 Monograms. Dr. Telsang has organized workshops for ·faculty and students in areas like educational Technology, TQM, Business Process Reengineering, Industrial engineering and is a recognized trainer of ISTD in the areas of Industrial Engineering and quality management. Awarded with Outstanding Academic award '98, Instituted by RIT, Rajaramnagar and Best Teacher Award 2004 by K.E. Society's Kasegaon, he has also received ISTE Best Engineering College Teacher Maharashtra 2011, Outstanding Engineering Educator Award 2016 by lndo-US collaboration for Engineering Education (IUCEE) and the Shivaji University Gunawant Shikshak Award 2015. His long association with Professional Bodies like ISTE, ISTD, Institutions of Engineers (IE) and,IUCEE coupled with international exposure through visits of US top-ranking universities as a member of Indian delegation through lndo-Universal Collaboration for Engineering Education (IUCEE) adds to his already varied portfolio. Dr. Telsang has worked as Member of Board of Governance of RIT for 10 years, is member Finance and Planning committee and Member Secretar_y of Academic Council of RIT apart from being a reviewer for many national and international jo_urnals and Member of Editorial Board of Journal of Engineering Education Transformation. His areas of interests include Total Quality Management, Industrial Engineering and Operation Research. Production Management and Educational Technology.

Industrial Engineering • And Production Management [Recommended text for Diploma, Undergraduate and Post Graduate Programs in Mechanical, Production and Industrial Engineering. A useful reference for BBA, MBA and Professional Engineers. A useful guide for GATE and UPSC and other Competitive Examinations.]

Dr. MARTAND T TELSANG M.Tech (Ind. Engg). PhD Mechanical Engineering Fellow (IEI) India, Fellow (FIIPE) Bangalore, IUCEE Fellow (2017) Dean Academics, Sanjay Ghodawat University Kolhapur

S.

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© 1998, Dr. Martand T Telsang All rights reserved. No part of this publication may be reproduced or copied in any material form (including photocopying or storing it in any medium in form of graphics, electronic or mechanical means and whether or not transient or incidental to some other use of this publication) without written permission of the publisher. Any breach of this will entail legal action and prosecution without further notice. Jurisdiction: All disputes with respect to this publication shall be subject to the jurisdiction of the Courts, Tribunals and Forums of New Delhi, India only. First Edition 1998 Subsequent Edition and Reprints 2002, 2004 (Twice), 2005, 2006 (Twice), 2007, 2008 (Twice), 2009, 2010, 2011, 2012, 2013 (Twice), 2014 (Twice), 2015 Third Revised Edition 2018

ISBN: 978-93-525-3379-4 PRINTED IN INDIA By Nirja Publishers & Printers Pvt. Ltd., 54/3/2, Jindal Paddy Compound, Kashipur Road, Rudrapur-263153, Uttarakhand and published by S. Chand & Company Ltd., 7361, Ram Nagar, New Delhi -110 055.

This Book is dedicated to the loving memory of my beloved brother Late Krishna Telsang and Revered father Late Tamanacharya Telsang

(v)

Preface to the Third Revised Edition Rapid changes in technologies are the driving forces for both the industry and business at global as well as national levels. Customer still remains in focus and is king in the competitive manufacturing environment. The increase in capabilities of manufacturing accompanied by expectations of customer is building pressure on both speed and variety. Customers are becoming more demanding and expect the product to be designed and manufactured in a tailor - made fashion to meet individual-requirements (mass customization). The ever increasing demand and expectations have shortened product life cycle and also customer wanting more personalized treatment. One more noticeable change is the shift in strategy of companies to focus on their core competencies and outsourcing has become more prominent demanding interconnectivity or networking of manufacturing substantially. The implication of this is that companies are now integrated as the customer of their suppliers and integrated with customers whom they supply. This has created need to design and manage same vejy complex supply chains networks. Information technology has helped to solve many of the enterprise issue and helps to integrate all functions of the organization. The response to changing manufacturing environment is two-fold. The organization of the book has been changed and the contents have been adjusted to more closely to reflect the current needs.

Organization of the book (Third Edition) The book is reorganized into six sections: Section 1: Work System Design Section 2: Production System Design Section 3: Manufacturing Planning and Control Section 4: Quantitative Techniques for Operations Decisions Section 5: Supply Chain Management Section 6: Advances and Trends in Operations Management. Special feature of the third edition This edition of the book retains all the good features of the sewnd edition with respect to presentation, simplicity of the language and format. With due response to feedbacks both from my fellow faculty, students and industry persons, the focus of the book is reorganized to include the perspective and approach right'from how the product idea is translated into a physidl product. All the aspects have been covered comprehensively and lucidly so that it serves both students and practioners. The salient features are: 1. Entire book is re-organized into six sections with 29 brand new chapters (with 5 free chapters on the website). 2. Each chapter starts with chapter learning outcomes (it is mandatory for NBA accreditation to write course outcome chapter outcomes to practice OBE). 3. More solved and illustrative examples to make concepts clear and case studies to include practicing aspects. 4. Conceptual clarity helps students to prepare for competitive examinations like GATE, UPSC. 5. New and evolving concepts like Reconfigurable manufacturing, Green manufacturing and Remanufacturing are added to acquaint readers with new and advanced trends in manufacturing. 6. A special note on manufacturing cost concepts is added to give a focus on costing. Dr. Martand T Telsang (vii)

Acknowledgement

'

Constructive criticism and feedback from students and faculty has worked as a great motivation for revising the book and coming up with chapters that address the latest operation management technologies around the globe. Special thanks to entire academic fraternity of industrial Engineering and Production/ operations Management for recommending the book for the courses in Engineering and Management. I am very much thankful to President Mr. Sanjay Ghodawat, Trustee Mr. Vinayak. Bhosale and Hon. Vice Chancellor Dr. Venkatesh. A Raikar, Er. Shripad S Adhyapak and Registrar Dr. B.M. Hirdekar of Sanjay Ghodawat University Kolpapur for their support and encouagement. I acknowledge with thanks to management and the contribution of my fellow teachers at Rajarambapu Institute of Technology, all my M. Tech Students and special thanks to Dr. S.K Patil Dean Academics of RIT and Dr. Anand Mishrikoti, Professor Dean VDRIT Haliyal. My special thanks to my mother Padmavati, My Better half Mrs. Kshama, My Father in law Er. Sripad Adhyak and Mrs. Sarala Adhyapak and My Beloved Trupti, Manoj and Madhurya for their uncondional support and motivation.

Dr. Marland T Telsang

Kolhapur

Disclaimer : While the authors of this book have made every effort to avoid any mistakes or omission and have used their skill, expertise and knowledge to the best of their capacity to provide accurate and updated information. the author and S. Chand does not give any representation or warranty with respect to the accuracy or completeness of the contents of this publication and are selling this publication on the conditlon and understanding that they shall not be made liable in any manner whatsoever. S. Chand and the author expressly disclaim all and any liability/responsibility to any person, whether a purchaser or reader of this publication or not, in respect of anything and everything forming part of the contents of this publication. S. 9hand shall not be responsible for any errors, omissions or damages arising out of the use of the information contained in this publication. Further, the appearance of the personal name, location, place and incidence, if any; in the illustrations used herein is purely coincidental and work of imagination. Thus the same should in no manner be termed as defamatory to any individual.

(viii)

Contents SECTION I: WORK SYSTEM DESIGN 1.

Introduction to Industrial Engineering 1.1 Definition 1.2 History and Development of Industrial Engineering 1.3 Contributions to Industrial Engineering 1.4 Activities of Industrial Engineering l.5 Industrial Engineering Approach 1.6 Objectives oflndusfrial Engineering 1. 7 Functions of an Industrial Engineer 1.8 Techniques of Industrial Engineering 1.9 Place of Industrial Engineering in an Organisation 1.10 Industrial Engineering in Service Sector 1.11 Systems Approach Summary References for Further Redding Review Questions

2.

Productivity and Production Performance 2.1 Introduction 2.2 Concept 2.3 Definitions of Productivity 2.4 Production and Productivity . 2.5 Expectations from Productivity 2.6 Benefits from Productivity 2.7 Dynamics of Productivity Change 2.8 Productivity Measures 2.9 Advantages and Limitations of Productivity Measures 2.10 Productivity Measurement Models 2.11 Factors Influencing Productivity 2.11.1 Controllable Factors (Internal Factors) 2.11.2 External Factors 2.12 Productivity Improvement Techniques 2.13 Levels ofProductivity Measurements 2.14 Measuring Manufacturing Performance 2.14.1 Capacity Utilization 2.14.2 Labour Productivity 2.14.3 Re-Visit of Capacity Utilization 2.14.4 Yield 2.14.5 What is Visual Management? 2.15 Common Production KPIS (ix)

9-21 9 10 11 12 13 14 14 14 15 16 17 19 20 20

22-48 22 23 23 24 25 25 25 26 27 31 32 33 33 34 35 36 36 36 37 37 38 38

2.16 Quality, Cost and Delivery (QCD): Measuring Manufacturing Performance Summaty References for Further Reading Review Questions

40 46 47 47

3.

Work-Study

49-58

4.

Method Study

59-95

3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15

Introduction Importance of Work-Study Advantages of Work-Study Work-Study Procedure Work Simplification and Work-Study Human Considerations in Work-Study Work-Study and the Management Work-Study and Supervisor Work-Study and the Workers Work-Study Man Influence of Method and Time Study on Production Activities Concept of Work Content Reasons for Excess Work Content Techniques to Reduce Work Content Work-Study as a Tool to Improve Productivity Summmy References for Further Reading Review Questions

4.1 4.2 4.3 4.4 4.5 4.6 4.7

Introduction Objectives of Method Study Scope of Method Study Steps Involved in Method Study Selection of the Job for Method Study Recording Techniques Recording Techniques 4.7.l Charts 4.7.2 Diagrams 4.8 Micro-Motion Study 4.9 Memo Motion Study 4.10 Cycle Graph and Chronocycle Graph 4.11 Critical Examination 4.12 Operation Analysis 4.13 Development and Selection of New Method 4.14 Principles of Motion Economy 4.15 Installation of the Proposed Method 4.16 Maintain the Proposed Method Summary References for Further Reading Review Questions (x)

49 50 50 51 52 52 52 53 53 53 54 54 55 56 57 57 58 58 59 60 60 61 62 63 64 65 73 75 77 78 78 80 82 82 92 92 92 93 93

5.

Time Study (Work Measurement) 5.1 Definition 5.2 Objectives of Work Measurement 5.3 Preparing to Measure Process Work with a Time Study 5.4 Techniques ofWork Measurement 5.5 Types of Elements 5.6 Time Study Equipments 5.7 Performance Rating 5.8 Allowances 5.9 Computation of Standard Time 5.10 Comparison of Various Techniques 5.11 Work Sampling 5.12 Synthetic Data 5.13 Predetermined Motion Time Analysis (PMTS) 5.14 Most Work Measurement Technique Summary References for Further Reading Review Q�estions Problems·

6.

Job Design 6.1 Introduction 6.2 Definition 6.3 Steps in Job Design 6.4 Job Characteristics 6.5 Benefits ofJob Design 6.6 Aspects ofJob Design 6.7 Multidisciplinary Approach to Job Design 6.8 The Mechanistic Job-Design Approach 6.9 The Motivational Job-Design Approach 6.10 The Biological Job-Design Approach 6.11 The Perceptual/ Motor Job-Design Approach 6.12 Application ofJob Design in the Wmkplace 6.13 Herzberg's Two-Factor Theory 6.14 Job Rotation 6.15 Job Simplification 6.16 Job Enlargement 6.17 Job Enrichment 6.18 Job Characteristics Theory 6.19 Strengths and Weaknesses of the Job Design Theory 6.20 Job Characteristics Theory 6.21 Various Approaches ofJob Design 6.22 The Job Characteristics Approach Summary References for Further Reading Review Questions (xi)

96-147 96 97 97 101 104 107 109 114 116 122 122 128 129 132 143 144 144 145

148-165 148 149 149 150 151 151 152 153 153 155 155 156 157 158 158 158 158 159 159 160 161 162 164 165 165

7 . Value Engineering

Origin ofValue Engineering Meaning ofValue Definition ofV.E. Value Analysis and Value Engineering Uses ofValue Engineering When to Apply Value Analysis Reasons for Unnecessary Costs Difference between V.E. and Other Cost Reduction Techniques Steps in Value Analysis 7.9.1 Selection ofProduct 7.9.2 Information Gathering· 7.9.3 Definition and Analysis ofFunctions 7.10 Function Analysis Systems Technique (FAST) 7.10.1 Speculation ofAlternatives 7.10.2 Evaluation ofAlternatives 7.10.3 Presentation ofAlternatives 7.10.4 Phases and Constituent Elements ofEach Phase 7.11 Ten Commandments (Principles) ofValue Analysis 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9

Summary References for Further Reading Review Questions

8.

Job Evaluation and Merit Rating 8.1 Introduction 8.2 Concept and Related Terminologies ofJob Evaluation 8.3 Definition 8.4 Obj�ctives ofJob Evaluation 8.5 Procedure for Job Evaluation 8.6 Job Analysis 8.6. l Stages in Job Analysis 8.7 Job Description 8.8 Job Specification 8.9 Job Evaluation Systems 8.10 Merit Rating 8.11 Difference between Merit Rating and Job Evaluation! Summary References for Further Reading Review Questions

9.

166-181 166 167 168 168 168 169 169 169 170 171 171 172172 174 175 175 176 180 180 181 181

182-195 182 183 183 184 184 185 185 187 187 188 192 192 193 195 195

196-209

Wages and Incentives 9.1 Introduction 9.2 Definitions 9.3 Minimum Wage 9.4 Need for a Rational Wage Policy 9.5 Factors Influencing Wage System

196 197 197 197 198

(xii)

9.6 9.7 9.8 9.9 9.10 9.11 9.12

Characteristics ofa Good Wage System Types ofWage Payments . Incentive Schemes Individual and Group Incentive Schemes Characteristics ofa Good Incentive System Incentive Plans Incentive Schemes in India Summary. References for Fi1rther Reading Review Questions

10. Ergonomics 10.1 Introduction and Definition 10.2 Objectives ofHuman Engineering 10.3 Ergonomics is Multidisciplinary 10.4 Ergonomics, Productivity and Working Environment 10.5 Study ofHuman .Engineering Areas 10.6 Man-Machine System 10.7 Three Aspects ofa Man-Machine System 10.8 Display Design 10.9 Design ofControls 10.10 Environmental Factors 10.11 · Anthropometry 10.12 Manual Material Handling (MMH) 10.13 Physiological Aspects ofMuscular Work 10.14 Workplace Design 10.15 Workstation Ergonomics Summary References for Further Reading Review Questions

198 198 199 200 200 200 206 207 208 209

210-242 210 211 2'11 211 211 212 213 214 217 218 220 222 223 223 227 240 242 242

SECTION II: PRODUCTION AND OPERATIONS SYSTEM DESIGN 11. Production· and Operations Management: Introduction 11.1 Introduction 11.2 Production System 11.3 Production and Production Management 11.4 Defining Operations Management 11.5 Transformation Role ofOperations -Management 11.6 Role ofManufacturing and Service Operations 11.7 Services as Part ofOperations Management 11.8 Organizational Decision Levels 11.9 Objectives ofProduction/Operation Management 11.10 Functions and Scope and Activities 11.11 Scope ofProduction Management 11.12 Production Management Framework (xiii)

253-276 253 254 255 255 256 257 258 259 259 261 261 262

11.13 11.14 11.15 11.16 11.17 11.18 11.19

History and Development of Operations Management Challenges Faced by Production /Operations Management Challenges Facing the Modern Operations Manager Priorities of OM Relationship of Production with other Functional Areas Organization Shucture for Production Function Ethics and Social Responsibility Summa,y References for Further Reading Review Questions

264 267 268 271 271 274 275 275 276 276

12. Types of Production System

277-294

13. Operations Strategy

295-327

12.1 12.2 · 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 12.11 12.12 12.13 12.14

13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 13.9 13.10 13.11 13.12 13.13 13.14

Types of Production Make to Stock Production Make to Order Production Assemble-to-Order Production System Types of Production System Classification of Production System Job Shop Production Project Indush"ies Intermittent (Batch) Production Process Industries (Flow Production or Continuous Process Production) Mass Production Mass Production with Process Layout Mass Production with Product Layout Cellular Production Summa,y References for Further Reading Review Questions Introduction The Nature of Strategy Key Strategy Level Issues in Strategy Operations Strategy· Need for an Operations Strategy What Constitutes an Operations Strategy? Operations Decisions Types of Operations Strategy Operations Priorities Components of Production Strategy Framework for Manufacturing/Operations Strategy Developing and Implementing Production Strategy Steps in Developing a Strategic Plan for SBU Focused Operations (xiv)

277 277 278 279 280 283 284 285 286 287 289 290 291 291 293 294 294

295 296 297 298 299 300 302 306 307 308 · 310 311 312 313

Interface between Operations and Marketing Function Porter's Five Forces Model Core Operational Strategies Operations Strategy Examples Competitive Priorities and Competitive Advantage Order Winners/Qualifiers Interfaces between Operations �nd Marketing Function Sumina,y References for Further Reading Review Questions

314 314 317 318 318 324 324 325 326 327

14. Product Design 14.1 Introduction 14.2 What Does Product and Service Design Do? 14.3 Product Life-Cycle 14.4 Product Policy of an Organisation 14.5 Selection of a Profitable Product 14.6 Product Design (Development) Process 14.7 Product Analysis 14.7.1 Marketing Aspects 14.7.2 Functional Aspects 14.7.3 Operational Aspects 14.7.4 Durability and Dependability 14.7.5 Aesthetic Aspect 14.7.6 Economic Analysis 14.8 Standardisation 14.9 Production Aspects of Product Design 14.10 Designing for Mass Customization 14.11 Techniques for Improving the Design Process 14.12' Tools and Techniques of Product Design 14.13 Failure Mode Effect and Critically Analysis (FMECA) 14.14 Design for Manufacturing and Assembly 14.15 Robust Design 14.16 Concurrent Engineering Summa,y References for Further Reading Review Questions

328-363

15. Process Planning 15. I Introduction 15.2 Framework for Process Engineering 15.3 Process Design and Job Design. 15.4 Process Planning 15.5 Application of BEA in the Choice of Machines or Process 15.6 Machine Requirements

364-395

13.15 13.16 13.17 13.18 13.19 13.20 13.21

(xv)

328 329 330 331 332 333 334 334 335 336 336 336 337 338 339 340 341 343 348 353 357 361 362 362 363 364 365 366 370 372 374

15.7 Machine Output 15.8 Manpower Planning 15.9 Make or Buy Decision When? 15.10 Factors Influencing Make or Buy Decision 15.11 Functional Aspects of Make or Buy Decision 15.12 Economic and Non-Economic Factors Influencing Make or Buy Decisions

Summa,y References for Further Reading Review Questions

16. Capacity Planning 16.1 16.2 16.3 16.4 16.S 16.6 16.7

396-403

Introduction Measurement of Capacity Measures of Capacity Capacity Planning Estimating Future Capacity Needs Factors Influencing Effective Capacity Factors Favouring Over Capacity and Under Capacity

Summa,y References for Further Reading Review Questions Problems

396 397 397 398 398 399 400 401 402 402 402

404-423

,17. Plant Location 17 .1 17.2 17.3 17.4 17.S 17.6 17.7 17.8 17 .9 17.10 17.11 17.12 17.13 17.14

382 384 388 388 389 390 393 394 394 ·

Introduction Need for Selecting a. Suitable Location Plant Location Problem Advantages of Urban, Suburban, Rural Locations Importance of Location Systems View of Location Location Factors Comparison between Urban and Rural Locations Multjple Plant Manufacturing Strategies Factors that Influence the Selection of Plant Location Location Planning Factors for-International Location Decisions Evaluating Location Alternatives Quantitative Method for Evaluation of Plant Location

Summary References for Further Reading Review Questions

404 405 406 407 409 409. 410 410 411 412 416 416 417 418 420 423 423

424-464

18. Plant Layout

424 426 426

18.1 Introduction 18.2 Definition 18.3 Plant Layout Problem

(xvi)

18.4 18.5 18.6 18.7 18.8 18.9 18.10 18.11 �8.12 18.13 18.14 18.15

Objectives of Plant Layout Principles of Plant Layout Advantages of Plant Layout Types of Layout Line Balancing Material Flow Patterns Symptoms ·of Bad Layout Plant Layout Procedure When to Use Process, Product and Fixed Position Layout Tools and Techniques of Plant Layout Computer Packages for Layout Analysis Factory Building 18.15.1 Factors to be Considered for Designing Factory Building 18.15.2 Types of Factory Buildings Summary References for Further Reading Review_ Questions

19. Material Handling 19.1 19.2 19.3 19.4 19-5 19.6 19.7 19.8 19.9 19.10 19.11 19.12 19.13 19.14 19.15 19.16 19.17 19.18 19.19 19.20 19.21

Introduction Objectives of Material Handling Elements of Material Handling Material Handling Activities and Functions Principles of Material Handling Symptoms of Bad Material Handling -.Selection of Material Handling Equipment Types of Material Handling Equipment Unit Load Concept Systematic Handling Analysis (SHA) Economics of Material Handling Criteria for the Selection of Material Handling Equipment Selection of Material Handling Equipments Types oflviaterial Handling Systems Automated Material Handling Syste�s Guidelines for Choosing a Conveyor System Selecting the Right Material Handling Conveyor Conveyor Systems Automated Guided Vehicle (AGV ) Systems Automated Storage and Retrieval Systems (AS/RS) Carousel Storage Systems S11mmary References for Further Reading Review Questions

(xvii)

427 427 427 428 434 446 447 448 448 44_8 453 454 455 455 462 463 464

465-493 -465 466 466 466 467" 468 469 469 472 473 474 475 476 477 477 478 479 484 485 487 490 492 493 493

SECTION Ill: PRODUCTION PLANNING AND CONTROL 20. Production Planning and Control 20.1 20.2 20.3 20.4 20.5 20.6 20.7 20.8 20.9 20.10 20.11 20.12 20.13 20.14

Introduction Need for PPC Production Planning and Production Control Objectives of PPC Principles of Production Planning Functions of PPC Factors Determining Production Planning Elements of PPC Comparison between Production Planning and Production Control Information Requirement of PPC Production Procedure Organisation for PPC Manufacturing Methods and PPC Problems of Production Planning and Control Summmy References for Further Reading Review Questions

497 498 501 501 501 502 504 505 510 510 511 512 514 515 515 515 516

21. Demand Forecasting

517-547

22. Aggregate Planning

548-573

21.1 21.2 21.3 21.4 21.5 21.6 21.7 21.8 21.9 21.10 21.11 21.12 21.13

22.1 22.2 22.3 22.4 22.5

Introduction Forecasting and Prediction Need for Demand Forecasting Long-Term and Short-Term Forecasts Classification of Forecasting Methods Judgemental Techniques Time Series Analysis Least Square Methog of Forecasting (Regression Analysis) Moving Average (MA) Forecasting Exponential Smoothing Method Causal Forecasting Method Forecast Error Costs and Accuracy of Forecasts Summary References for Further Reading Review Questions Problems Introduction Factors Affecting Aggregate Planning Aggregate Planning as an Operational Tool Importance of Aggregate Planning Objectives of Aggregate Planning (xviii)

517 518 518 518 519 519 520 521 525 528 533 535 536 543 544 544 545

548 549 550 550 550

22.6 22.7 22.8 22.9

Aggregate Planning Strategies Aggregate Planning Aggregate Planning Guidelines Linear Programming Approach to Aggregate Planning Summary Reference for Further Reading Review Questions

550 554 556 559 570 571 571

23. Inventory Control

574-624

24. Material Requirement Planning (MRP)

625-654

23.1 · 23.2 23.3 23.4 23.5 23.6 23.7 23.8 23.9 23.10 23.11 23.12 23.13 23.14 23.15

24.1 24.2 24.3 24.4 24.5 24.6 24.7 24.8 24.9 24.10 24.11 24.12 24.13 24.14 24.15 24.16

Introduction Meaning ofInventory Types oflnvent0ries Reasons for Keeping Inventories Inventory Control Objectives oflnventmy Control Benefits of Inventory Control Costs Associated with Inventory Inventory Control-Terminology Inventory Cost Relationships Inventory Models An Inventory Model with Planned Shortages Safety Stock Inventory Control System ,selective Conh·ol ofInventory Summary References for Further Reading Review Questions Problems Introduction MRP Objectives Functions Served By MRP MRP Terminology Benefits and Drawbacks ofMRP An Example ofMRP MRP System MRPOutputs MRPLogic Management Information from MRP Lot Sizing Considerations Manufacturing Resource Planning (MRP-Il) Master Production Schedule (MPS) Aggregate Planning Methods, Advantages and Limitations Capacity Requirements Planning (CRP) Enterprise Resource Planning (ERP) (xix)

574 575 575 575 575 576 576 576 577 578 578 585 592 594 596 619 620 620 620

625 626 627 628 628 629 634 636 637 637 638 641 642 643 644 645

652 653 653

Summary, References for Further Reading Review Questions Problems

654

25. Production Scheduling and Control 25.1 25.?. 25.3 25.4

25.5 25.6 25.7 25.8

25.9

25.10 25.11 25.12 25.13 25.14 2�.15

Introduction Outline of Production Control Loading, Sequencing and Scheduling Loading 25.4.1 Gantt Chart 25.4.2 Visual Load Profiles Priority Sequencing Sequencing Problems Assignment Model Scheduling 25.8.1 Principles of Scheduling 25.8.2 Inputs to Scheduling 25.8.3 Scheduling Strategies Objectives of Scheduling 25.9.1 Forward Scheduling and Backward Scheduling 25.9.2 Finite Loading 25.9.3 Critical Ratio Scheduling 25.9.4 Index Method 25.9.5 Critical Path Method 25.9.6 Simplifying Scheduling Problem 25.9.7 Scheduling and Loading Guidelines Single Machine Scheduling Dispatching Progressing Production Control Hierarchy of Production /Operation Decisions Important Terminologies in Scheduling Summmy References for Further Reading Review Questions Problems

26. Maintenance Management 26.1 26.2 26.3 26.4 26.5 26.6

Introduction Necessity of Maintenance Management Importance of Maintenance Management Objectives of Maintenance Management Functions of Maintenance Management Maintenance Costs (xx).

655-695 655 656 656 656 657 658 658 659 667 672 672 672 673

673 674 675 676 676 676 676 676 677 680 681 689 689 691 692 693 693 694

696-732 696 696 697 698 698 699

26.7 26.8 26.9. 26.10 26.11 26.12 26.13 26.14 26.15 26.16 26.17 26.18

700 701 702 703 704. 704 706 709 710 713 716 723 729 730 730 731

·Failure Analysis Benefits and Limitations of Failure Statistics Types of Maintenance Maintenance Policies Preventive Versus Breakdown Maintenance Maintenance Strategies Common Maintenance Problems Predictive Maintenance Reliability Centered Maintenance Predictive Maintenance Total Productive Maintenance (TPM) Maintenance Performance

Summary References for Further Reading Review Questions Problems

27. Project Scheduling with CPM and PERT 27.1 27.2 27.3 27.4 27.5 27.6

Introduction Objectives ofNetworkAnalysis Applications ofNetworkAnalysis (PERT and CPM) Basic Concepts in Network Numbering of Events (Fulkerson's Rule) Critical Path Method 27.6.1 Forward Pass Comp1,1tations (Earliest Event Time) 27.6.2 Backward Pass Computations (LatestAllowable Time) 27.7 Programme Evaluation and Review Techniques (PERT) 27.8 Time-Cost Trade Off (Crashing) 27.9 Comparison between CPM and PERT

733-753 733 734 734 734 735 736 T?,6 737 740 744 747 ,751 752 752 752

Summary References for Further Reading Review Questions Problems

SECTION IV: QUANTITATIVE TECHNIQUES FOR OPERATIONS DECISIONS

28. Decision Theory 28.1 28.2 28.3 28.4 28.5 28.6 28.7 28.8 28.9

Introduction Decision Environment Steps in Dedsion Making Process Pay-off Matrix Opportunity Loss or Regret Table Expected·pay-off Decision Making Under Uncertainty Decision Making Under Risk Expected Monetary Value (EMV) (xxi)

757-774 757 757 758 760 761 '762 763 763 764

28.10 28.11 28.12 28.13

Expected Opportunity Loss (EOL) Criteria Expected Value of Perfect Information (EV PI) Decision Trees Steps in Decision Tree Analysis Summary References for Further Reading Review Questions Problems

29. Replacement Models

29.1 Introduction 29.2 Replacement Problem 29.3 Factors that Necessitate Replacement 29.4 MAPI Method ·. Summary References for Further Reading Review Questions Problems

30. Queuing Models 30.1 30.2 30.3 30.4 30.5

Introduction Behefits of Queueing Theory Characteristics ofa Queueing System Kendall's - Lee Notation for Queueing System Queueing Models Summary References for Further Reading Review Questions Problems

31. Linear Programming Problems (LPP)

764 764 766 766 768 769 769 769

775-793 775 776 776 784 791 792 792 79J

794-806 794 795 795 797 797 804 804 805 805

807-835

31.1 31.2 31.3 31.4 · 31.5 31.6 31.7

Introduction Product Mix Decisions Standard Form ofLinear Programming Problem Formulation ofL.P. Problem Graphical Method for Solving L.P. Problems Simplex Procedure Duality in Linear Programming 31.7.1 Characteristics of Duality 31.7.2 Advantages of Duality 31.8 Sensitivity Analysis Summary References for Further Reading Review Questions Problems (xxii)

807 808 808 808 811. 813 820 820 821 823 833 834 834 834

32. Simulation Technique 32.1 32.2 32.3 32.4 32.5 32.6 32.7 32.8

Introduction Applications ofSimulation Advantages ofSimulation Limitations ofSimulation Monte-carlo Simulation Process ofSimulation Simulation ofan Inventory System Simulation ofQueuing Model (Waiting Line Problem) Summary Referencesfor Further Reading Review Questions Problems

33. Production Cost Concepts and Break-even Analysis 33.1 33.2 33.3 33:4 33.5 33.6 33.7 33.8

Introduction Costs of Production Concept ofCost Cost Centre Cost Unit Classification ofCosts Analysis ofProduction Costs Break-Even Analysis 33.8.1 Assumptions in Break-Even Analysis 33.8.2 Break-Even Point 33.8.3 Methods of Lowering BEP 33.8.4 Applications ofBEP 33.8.5 Cost-Volume-Profit (CV P) Analysis Summary References for Further-Reading Review Questions Problems

836-850 836 837 837 837 838 838 838 840 849 849 849 849

851-867 851 851 852 852 852 852 855 857 857 857 859 859 859 865 866 866 866

SECTION V: SUPPLY CHAiN MANAGEMENT

34. Understanding Supply Chain 34.1 34.2 34.3 34.4 34.5 34.6 34.7 34.8 34.9

Introduction Objectives of Supply Chain Management Supply Chain Management and its B_asic Layout Supply Chain Management: Advantages Supply Chain Management - Goals Decision Phases ofSupply Chain Supply Chain Management Strategy Logistics and Supply Chain Management Supply Chain Management Process (xxiii)

871-901 871 873 873 878 878 879 885 887 889

34.10 34.11 34.12 34.13 34.14

Stages of Development of Buyer-Supplier Relationship Process Views of a Supply Chain • Supply Chain Components Key Issues in Supply Chain Management Supply Chain Challenges in India Summary References for Further Reading Review Questions

890 891 895 895 898 899 900 901

35. Supply Chain Performance Drivers and Metrics 35.1 Introduction 35.2 Competitive and Supply Chain Strategies 35.3 The Concept of Value Chain 35.4 Obstacles to Achieving Strategic Fit 35.5 Key Metrics for Measuring Supply Chain Performance· 35.6 Considerations in Measuring Supply Chain Performance 35.7 Five Supply Chain Drivers 35.8 Framework for Structuring Drivers Summary References for Further Reading Review Questions

902-919 902 903 903 904 905 906 907 910 918 919 919

36. Supply Chain Network Design 36. l 11).troduction 36.2 Network Design Role in Supply Design 36.3 Reasons for Network Planning 36.4 Hierarchical Steps in Network Planning 36.5 Relevant Costs Data for Network Decision 36.6 Designing Supply Chain Network 36.7 Strategic Network Design 36.8 Factors of Supply Chain Network Design 36.9 Network Design Considerations 36.10 The Framework in Network Design Decisions Summmy References for Further Reading Review Questions

920-933 920 921 921 921 922 922 924 928 929 931 931 932 932

37. Supply Chain Coordination and Bullwhip Effect 37.1 Introduction 37.2 Obstacles to Lack of Supply Chain Coordination 37.3 Managerial Levers to Achieve Coordination 37.4 Designing Effective Conflict Resolution Mechanism 37.5 Bull Whip Effect and the Origin of the Concept 37.6 The Minor Causes ofBull whip Effec,t in SCM and their Remedies 37.7 · Major Causes ofBullwhip Effect in SCM 37.8 Impact of the Bullwhip Effect on Performance Measure

934-951 934 934 936 940 940 942 942 943

(xxiv)

37.9 Reduction ofBullwhip Effect 37.10 Collaborative Planning, Forecasting and Replenislµnent (CPFR) Summary References for Further Reading . · Review Questions

944 949 950 951 951

38. Strategic Alliances in Supply Chain

952-969

39. Supply Chain Integration

970-990

38.1 38.2 38.3 38.4 38.5 38.6 38.7 38.8 38.9 38.10 38.11 38.12

39.1 39.2 39.3 39.4 39.5 39.6 39.7 39.8 39.9 39.10 39.11 39.12 39.13 39.14 39.15 39.16

Introduction Need for Strategic Alliance Ways of Entering in to Strategic Alliance Horizontal_ Strategic Alliance Vertical Strategic Alliance Means of Entering into a Strategic Alliance Reasons for-Strategic Alliance Purpose ofSA Success Factors Framework for Strategic Alliances Three Types ofStrategic Alliances Strategic Alliances: Long-Term Partnership Summary References for Further Reading Review Questions Introduction Vertical Integration Concept ofIntegration Integrated Supply Chain Horizontal Integration V s. Vertical Integration Benefits ofSupply Chain Integration Internal and External Integration Supply Chain Integration Model Different Supply Chain Members Four Levels oflntegration According to Muckstadt Et Al (2001) Types oflntegration Forces Driving Increased Integration Benefits of Integration The Biggest Challenges in Supply Chains How to Create a Supply Chain Strategy Push, Pull and Push Pull Systems Summary References for Further Reading Review Questions

(xxv)

952 953 953 954 954 955 955 956 956 957 958 965 968 969 969

970 971 971 972 973 975 976 977 979 980 981 982 984 985 985 986 990 990 990

SECTION VI: ADVANCES AND TRENDS .IN OPERATIONS MANAGEMENT 40. Lean Manufacturing 40.1 Introduction 40.2 Objective of Lean 40.3 Lean Philosophy 40.4 Evolution and History of Lean 40.5 Lean Today 40.6' Principles of Lean Manufacturing 40.7 Tools and Techniques of Lean Manufacturing 40.8 Special Features of Lean Manufacturing 40.9 Advantages and Limitations 40.10 Lean Manufacturing Approach 40.11 Steps in Implementation of Lean Culture 40.12 The 5S System 40.13 The House of Lean 40.14 Difficulties in Adopting Lean• Technique 40.15 Labour and Equipment Effectiveness 40.16 Difference between Traditional and Lean Manufacturing Summary References for Further Reading Review Questions 41. Just in Time Manufacturing 41.1 Introduction 41.2 JIT as Competitive Weapon 41.3 Objectives of JIT 41.4 Basic Elements of JIT 41.5 Elimination of Waste 41.6 JIT Philosophy 41.7 Core Logic of JIT 41.8 Key Principles of JIT 41.9 Pre-Requisites for JIT Implementation 41.10 Kanban System 41.11 Comparison between JIT and MRP 41.12 Implementation of JIT 41.13 Requirements for Successful Implementation of JIT 41.14 Barriers to JIT Implementation 41.15 Difference between JIT and Lean 41.16 Model for JIT Implementation and Perform�nce Measurement 41.17 JIT Implementation Phase · Summary References for Further Reading Review Questions (xxvi)

993-1007 993 993 994 994 995 996 997 998 999 999 1001 1001 1004 1004 1005 1006 1006 1006 1007 1008-1031 1008 1009 1010 1010 1011 1013 1015 1017 1019 1021 1022 1023 1023 1023 1024 1025 1027 1030 1031 1031

42. Agile Manufacturing

1032-1044

43. Digital Manufacturing

1045-1070

44. Sustainable Manufacturing

1071-1081

42.1 42.2 42.3 42.4 42.5 42.6 42.7 42.8 42.9 42.10 42.11 42.12

43.1 43.2 43.3 43.4

44.1 44.2 44.3 44.4 44.5 44.6 44.7 44.8

1045 1045 1046 1047 1069 1070

Introduction Digital Manufacturing Concept Digital Manufacturing in Computer-Aided Technologies Digital Manufacturing Overview Summary References for Further Re-ading Introduction Value Creation in Sustainable Manufacturing Value Creation Framework 6R Approach Value Retention in Material Cycle Manufacturing Architecture for Sustainable Solutions Principles for Sustainable Value Creation in Manufacturing Key Strategies to Enable Value Creation Through Sustainable Manufacturing Summary References for Further Reading

45. Reconfigurable Manufacturing Systems 45.1 45.2 45.3 45.4 45.5 45.6 45.7

1032 1033 1034 1035 1036 1037 1037 1037 1037 1038 1039 1040 1044 1044

Introduction Agility and its Origin Approach and Pillars of Agile Manufacturing Agile Manufacturing Framework Effectiveness of Agile Manufacturing Key Elements Relationship with Lean Characteristics.of Agile Manufacturing System How to Become Agile Difference between Agility and Flexibility Difference between Lean and Agile Manufacturing System Manufacturing Excellence Summa1y References for Further Reading

Introduction RMS- a New Class of System Design Principles of RMS Modularity of RMS RMT Examples Product Families Formation in RMS RMS Implementation Summa,y References for Further Reading

(xxvii)

1071 1073 1073 1074 1074 1075 1076 1077 1080 1081

1082-1100 1082 1084 1085 1086 1088 1090 1097 1099 1100

46. Remanufacturing

1101-1113 1101_ l l02 l l03 1104 1104 l l05 l l05 · 1106 1107 1108 lll0 1111 1111 1111 1112 1112 1113

47. Materials Management 47. l Introduction 47.2 Objectives of Materials Management 47.3 Scope of Materials Man_agement 47.4 Integrated Materials Management 47.5 Flow of Materials in Manufacturing 47.6 Purchasing 47.7 Methods of Buying 47.8 Source Selection (Vendor Selection) 47.9 Vendor Relations 47.10 Vendor Rating (Evaluation of Suppliers) 47. l l Just In Time {JIT) Purchasing �ummary. References for Further Reading

1114-1122 1114 1115 ll15 1115 l l l6 1117 1118 l l l9 1119 l l20 ll20 1121 1122

46. l Introduction to Remanufacturing 46.2 Need ofRemanufacturing 46.3 History 46.4 Requirements for RM 46.5 Choice between Remanufactured V s. Refurbished 46.6 Remanufacturing Towards more Sustainable Future 46.7 Societal Impact ofRemanufacturing 46.8 Challenges for Remanufacturing 46.9 Remanufacturing in Action 46.10 Personal Computers end of Life Scenario 46. l l Remanufacturing and Refurbishment Processes 46.12 Circular Economy 46.13 Benefits ofRemanufactured Products 46.14 Challenges in Process ofRemanufacturing 46.15 · Overview ofRemanufacturing Summary References for Further Reading

Index 48. 49. 50. 51. 52.

1123-1132

Competitive Strateg_ies (Games Theory)* Lean and Agile Supply Chain* Information Technology and Supply Chain Management* Cellular Manufacturing* Product and System Reliability*

_____________

*Available on Our Website www.schandpublishing.com

(xxv1ii)

SECTION I: WORK SYSTEM DESIGN

Work system is a natural unit of analysis for thinking about systems in organisations.

In organisational settings, work is the application of human, informational, physical and other resources to produce products/services. A work system is a system in which human participants and/or machines perform work (processes and activities) using information, technology and other resources to produce specific products/services for specific internal and/or external customers. In work system, the components and interactions should be in alignment, which implies that all components and interactions should be aligned with the work system's goals. Misalignments and performance gaps for components, interactions of components and a work system as a whole are important reasons for modifying a work system. The major components of work system design are job design, process (methods) analysis and work measurement. Job design determines the specific work activities of each . employee or type of employee. Process analysis focuses on the detailed steps of doing a particular job. Work measurement determines how long it should take to do a job. Based on the definition of work system, work systems exist to produce products/ services for their customers. Accordingly, a work system's performance should be evaluated based partly on the efficiency and other aspects of internal processes and activities and partially on customer evaluations of the products/services that are produced to provide value for internal and/or external customers. As per the definition of work system, work systems may be socio-technical systems in which people perform processes and activities. In addition to socio-technical work systems, the definition of w·ork system also covers totally automated systems,_ including those revealed through decomposition of socio­ technical work systems during analysis and design processes. Applying work system theory as symmetrically as possible to both socio-technical work systems and totally automated work systems may serve as a bridge between social scientists who tend to focus on socio-technical systems and technical specialists who tend to focus on internal operation and user interfaces of totally automated systems. 1

Work System Design is an umbrella term used to collectively address the issues of job design and work measurement. Components of work system design are represented in the following figure: Work Design

Job Design

Methods Analysis

Flow Process Chart

Job enlargement, rotation & enrichment

Work Measurement

Principles of Motion Economy Stop-watch Time Study

Work Sampling

T Employee Machine Activity Chart

1. Job Design Means assigning various components i.e. tasks to a job to be performed by a worker in daily routine. Job design involves specifying the content and methods of job that what, who, how, where the job will be done. (a) Method Analysis: Methods analysis is a technique in job design in which the job is usually broken down into various steps or procedures. The workplace arrangement, tools and equipment used, materials used and the worker's skill set required for the performance of the job are all studied in detail in order to devise better methods of performing a job. (i) Flow Process: Flow process chart shows the flow of materials, labour and products (semi-finished and finished) from one place to the other in the facility. It helps in identifying the various sources of delay in the process, which may be eliminated in order to achieve better efficiency. (ii) Employee-machine activity: Employee-machine activity charts help in methods analysis of jobs for improving the efficiency of the employees and the machines. In employee-machine activity chart, we show the various time instants and the activities of the employee and the machine simultaneously. (b) Behavioural Aspect of Job Design (i) Job enlargement: Job enlargement is the horizontal loading of the job of a worker. This means certain tasks of the same skill and mental level as being handled by the worker earlier are added to the job. (ii) Job rotation: Job rotation, highly repetitive tasks like in assembly lines is swapped (interchanged) amongst workers after a suitable duration of time. (iii) Job enrichment: Job enrichment means giving some additional responsibilities to the worker, which are slightly more dignified than the routine tasks being handled by him. This is also called vertical loading of the job. (c) Principles of Motion Economy: Principles of motion economy aim at minimizing the human fatigue of workers due to repetitive motion of the different parts of the body like hands, feet, eyes, etc. and thus, maximizing the efficiency of the worker during the performance of a job. 2

2. Work Measurement: Work measurement is the application of techniques designed to establish the time for qualified worker to carry out a specified job at a defined level of performance. · (a) Stopwatch Time: Stopwatch time study is a method of work measurement used for measuring the standard time duration of repetitive tasks. (i) Standard time: Standard time duration means .the time taken by an average worker to perform a task at a sustainable rate under the given facility arrangements. (b) Work Sampling: Work sampling is a method used to determine the fraction of idle time of machines or workers during the day or to determine the time spent by workers on different types of tasks. This method is suitable for jobs which are non-. repetitive in nature. This section aims at giving sufficient details to the above aspects of work system design and organized in to ten chapters: 1. Introduction to Industrial Engineering 2. Productivity and Production Performance 3. Work Study 4. Method Study 5. Time Study (Work Measurement) 6. Job Design 7. Value Engineering 8. Job Evaluation and Merit Rating 9. Wages and Incentives 10. Ergonomics

3

PREAMBLE: INDUSTRIAL ENGINEERING - TODAY Ever since the beginning of the civilisation, man has attempted to improve productivity of limited resources in order to maximize creation of wealth, which is essential for survival and enjoyment of life. First resources were manpower and animal power and then hand · tools were created and later machines and machine tools to improve the productivity of manpower. The continued pursuit of higher productivity since then led to the dawn of industrial age and gave birth to the two disciplines viz. "Industrial Management" and "Industrial Engineering" during the mid-twentieth century. Industrial Engineering seeks to maximize the performance in interactive man-machine-material systems. Systems • integration that cuts across boundaries of fuhctions within organisations and across boundaries of organisations that together makes a whole enterprise. It is seen that industrial engineering has evolved over the last century as a broad profession concerned with designing effective systems and developing the best processes with the purpose of integrating people, machine and material resources for improved overall effectiveness of organisations and delivering the products and services. to the consumer. The focus is on manufacturing systems but still the other systems in the areas such as transportation, communication, finance etc. are given due importance. Industrial engineering discipline enables interface engineering facilities and their operations for converting resources into products and services, which are in turn delivered to the consumer. Thus, industrial engineering is_ referred appropriately as "Interface Engineering". Due to increasing complexity of operations and need of customer responsiveness, there is a great need for teamwork between different functions such as marketing, product design, procurement, process design, manufacturing, logistics and distribution. Increasing competition is demanding a greater need to ensure the optimal utilisation of all assets such as people, material, equipment and time in business systems. Thus, there is an established need to design and implement variety of planning and control systems in the various · technology management interfaces such as: • • Facilities Planning and Control • Operations Planning and Management • Plant Engineering and Management • Quality Engineering and Management • Manpower (HR) Management • Logistics and Supply Chain Management • Project Engineering and Management • Environmental Engineering and Management Thus, the scope of industrial engineering - Design, improve and install work systems (integrated systems of men, material and machines) have broadened and deepened to encompass all the activities in factories, fields homes and offices irrespective of purpose or size of the organisations. Today's organisation work in constantly changing environment has to accommodate new products, volume changes new technologies and management philosophies and there is a constant pressure to improve all work processes to meet the demands of changing environment. Industrial engineers play a pioneering role as change agents in the organisation as system integrators with strong mathematical, statistical, technical and management background.

4

INDUSTRIAL ENGINEERING AND INFORMATION TECHNOLOGY Information is the important element or key to achieve system integration. Industrial engineering as a discipline is now poised to break new frontiers in terms of enabling the new information technologies to serve mankind by guiding in the design, development and management of growing complex, interactive man-machine-material systems. All the capability of Information Technology (IT) helps in improving the co-ordination and information access across organisational units enabling effective management of task interdependency. Industrial engineers should understand the capabilities of IT and exploit the opportunities in design of integrated systems to achieve system optimisation. If we trace back the evolution of industrial engineering - 1950's to 1970's marked the quantitative management and this period expanded the knowledge base providing industrial engineering firm base in mathematics, which allowed for improved and better understanding of mathematical modelling.

80's IT as a New Business Tool 1980's saw the availability of high-speed, stored program digital computer and upward performance brought IT as a handy tool for industrial engineers. The benefits include a high speed calculating device computer and the capability to simulate. With more sophisticated tools including IT, industrial er:i.gineers of 80's had to specialize to a greater degree than even before. During this period, Industrial Engineering saw many specialty areas like • Reliability Engineering • · Value Engineering • Inventory Control and Production Control • Human Engineering 1990's IT as a Business Enabler The alignment of IE with IT gave new dimensions to the way the business was conducted: The business process re-engineering philosophy of radically overhauling and improving business processes (Michael Hammer) changed the way the business is done. IE have several assets that make them good candidate for BPR team membership. With new role of BPR team leaders, it was the tirst time that industrial engineering started getting more strategic and authoritative position in the organisations ranging from operations to banking, manufacturing to services, automotive to health care. ERP implementation and supply chain management and management consulting has made the industrial engineers suitable for posts in the areas of strategic management and supply chain managers. Beyond 2000 - IT as a Business Driver IT is all set to take a driving seat in business for the days to come. Though IT played a supporting role in the business so far, now the business would need to be designed as per the progress in information technology. IT and IE together can make a world of difference combining the efficiency of IE and accuracy we can meet the demands of the future. Thus, combined IE + IT can work wonders for the business and industry in the areas of risk management, industrial automation, web-enabled ERP and E-Engineering. Thus, Industrial Engineering discipline can make a unique contribution to society by improving the productivity of the economy and health, Quality of Work Life (QWL) and human happiness by giving proper emphasis on abilities and limitations of human being in economic work situations and the technology. 5

TRENDS IN INDUSTRIAL ENGINEERING Three current trends in industrial engineering specialty include lowering energy consumption, minimizing environmental impact and a greater focus on automation. 1. Lowering Energy Consumption: Energy consumption is important to every type of business and almost every individual as the costs of energy continue to rise. Industrial engineers look for ways to allow systems to reduce the energy wasted by operating at certain times of the day and smarter building design. 2. Minimizing Environmental Impact: While reducing energy can also be considered a way of reducing environmental impact, this is such an important trend that it deserves attention in its own right. Facilities that incorporate natural ventilation and are designed_ to be more inviting 't o those who walk or bike and keep the energy use as low as possible. 3. Focus on Automation: Finally, improved technology is bringing automation into almost every industrial engineering project in some way, as it helps to lower costs without affecting quality. These trends toward "greener" living and reducing our environmental footprint can be seen in many areas of our lives today, and industrial engineering is no different. However, the thing we know for sure is that the future will continue to usher in changes and engineers will seek better ways to adapt.

CHANGING ROLE OF INDUSTRIAL ENGINEERING IN GLOBAL ECONOMY The traditional definition of Industrial Engineering says "Industrial engineers design and improve work systems. These systems include people, equipment, materials, information, energy and money." Industrial engineers traditionally focus on process improvement, production planning and control, operations research and simulation, statistics and quality control, facility layout and project management and systems engineering Mass customisation, individualisation, global competition, fast overcoming of traditional rules and standards cause that many change processes are running in companies worldwide under the slogan "give your customer what he wants - but f�ster than your competitors". The essential question is - what does the customer really want? What is customer value? There are three fundamental concepts in indush'ial engineering focused on customer value: 1. Lean Management 2. Theory of Constraints 3. Six Sigma

Ii

Customer Value Specification

\

Lean

G;J-. a

TdC

Waste Reduction

Process Variability Reduction Throughput Increase

6

� -+

Efficient Processes Stable Processes Productive Processes

Satisfied Customers, Stockholders and Employees

The Main Business Concepts: Lean, Six Sigma and TOC ·.

Over the last decade, many companies have tried t(! copy Toyota's principles. They are applying methods for waste elimination from production and business processes, they compare benchmark indicators like value added index or working hours per product. But' the essence of Toyota's excellence is not captured in the "common sense" methods like 5S, Kanban, Value Stream Management or manufacturing cells. Toyota has been developing this system consistently for over 50 years. Toyota has developed a system of knowledge which creates reusable knowledge, maintains it and leverages its use in the future. Nobody _from Toyota employees wrote a handbook of Toyota Production System; this is a business of other management gurus. The values and. principles of the Toyota Production System are developed in the minds and daily jobs of all the employees. All the knowledge gained througnout the design or production process, what works and what doesn't work, could 'be captured and consistently applied for all future projects. Toyota doesn't call its system "lean", but it is lean, Toyota doesn't speak about knowledge management, but does it! The lean concept originated in Toyota is oriented on waste identification and elimination from the whole process chain (Value Stream Management). In other words lean focus is maximisation of added value in all the production, logistical, administrative and development processes. Theory of Constraints (TOC) is based on the identification and elimination of the system's constraints with the goal of ongoing throughput improvement. The throughput is defined as the rate at which .the organisation generates money through sales. In other words throughput is the added value in the process chain per time unit. Six Sigma philosophy specifies the value in the eyes of the customer (voice of the customer) and identifies and eliminates variation from the value stream. Six Sigma, Lean and TOC continuously improve knowledge in pursuit of perfection and involve and empower the employees. The main problem of these most important business concepts is that they have tools to give to the customer exactly what he wants (without waste and quickly), but they don't have the systematic approach how to create a new value for him. Many companies are oriented on low cost strategies. However some cost attack programmes or transferring production facilities to the low cost countries showed that it is not the right and strategic solution. In recent years many West European and US manufacturing firms have moved their production plants to low cost countries. Over time, they recognised that they had lost some competitive advantages because some departments were physically separated (e.g. product design and development, production engineering, prnduction, logistics) and the communication and co-operation between them was limited. Also many cultural differences reduced the effects of the low cost location. Not even massive implementation of Lean Manasement, Six Sigma or other world class concepts brings any radical improvement. Company success is not only in the optimisation of current processes (doing right things right) but first of all in innovation (looking for new but as fast as possible). The productivity world will be replaced by the world of creativity; the world of perfect planning will be replaced by the world of experiments and generating new ideas and opportunities. Not perfect planning of the change but fast realisation of the .• change is the way towards success. In conclusion, Industrial Engineering is an approach to enl1ance both the efficiency and effectiveness of products, processes and systems resulting in improvement in productivity and quality of life.

7

Introduction to ·1·ndustrial Engineering

Chapter Outcomes After completing the chapter, you will be able to:

1.1

•

Trace the evolution and development of industrial engineering.

•

Appreciate the role of contributors to industrial engineering.

•

Understand the scope and objectives of industrial engineering.

•

List the various-functions and activities of industrial Engineering.

•

Describe the tools and techniques of industrial engineering.

•

Visualise the trends in industrial engineering.

•

Understand the systems view of industrial engineering.

•

Select the industrial engineering tools for manufacturing/service situations.

DEFINITION

Present techno-economic scenario is marke_d by increasing competition in almost every sector of economy. The expectations of the customers are'on the rise and manufacturers have to design, and produce goods in as many variety· as possible (concept of economics of scale is no more talked off) to cater to the demands of the customers. Thus, there is a challenge before the indw:,tries to manufacture goods of right quality and quantity and at right time and at miDiroum cost for their survival and growth. This demands an increase in productive efficiency of the organisations. Industrial Engineering is going to play a pivotal role in increasing the prod!,.lctivity. Various industrial engineering techniques are used to analyse and improve the work methods, to eliminate waste and proper allocation and utilisation of resources. Industrial engineering is a profession in which a knowledge of mathematical and natural sciences gained by study, experience and practice is applied with judgement to 9

10

Industrial Engineering and Production. Management

develop the ways to utilise economically the materials and other natural resources and forces of nature for the benefit of mankind. American Institute of Industrial Engineers (AIIE) defines Industrial Engineering as follows: . Industrial Engineering is concerned with the design, improvement and installation of integrated system of men, materials and equipment. It draws upon specialised knowledge and skills in the mathematical, physical sciences together with the principles and methods of engineering analysis and design to specifi;, predict and evaluate the results to be obtained from such systems. The prime objective of industrial engineering is to inGrease· the· productivity by eliminating waste and non-value adding (unproductive) operations and improving the effective utilisation of resources.

1.2

HISTORY AND DEVELOPMENT OF INDUSTRIAL ENGINEERING

History of industrial engineering dates back to industrial revolution and it has passed through various phases to reach the present advanced and developed stage. Though Frederick Taylor is named as father of scientific management and Industrial Engineering, there are many others who contributed to the industrial engineering field before Taylor and then they got associated with industrial engineering. Adam Smith's concept of division of labour through his book "The Wealth of Nations1 " in _1776 is important as it influenced the factory system. James Watt, Arkwright, Boultin Mathew and Robinson obtained a place in the history of industrial engineering because of their progressive and scientific attitude towards the improvements in the performance of machines and industries. Period between 1882-1912 was the critical in the history of industrial engineering. The important works during this period are: 1. Factory system and owner - engineer and manager concept. 2. Equal work, equal pay and incentive schemes. 3. Scheduling and Gantt charts. 4. Engineers started taking interest in cost control and accounting. The most often quoted and acknowledged investigator that have lead to be discipline of industrial engineering in present form was F.W. Taylor, who took interest in human aspects of production and productivity. The modern· industrial engineering techniques had their origin during the period between 1940 to 1946. Predetermined time standards (PMTS), value analysis and system analysis are few prominent one·s. They were expanded, refined and applied in subsequent years. Operation Research technique has brought a revolution and changed and expanded the scope of industrial engineering activities. The computers have added a new dimension to the industrial engineering activities.

Present State of Industrial Engineering Industrial engineering has not remained restricted _to manufacturing activities but has extended its services to service industries also. The development of techniques such as: 1. Value Engineering · 1

An lnqufry into the Naturn and Causes of the Wealth ofNations is generally referred to by its shortened title The Wealth of Nations

Introduction to Industrial Engineering

11

2. Operation Research 3. Critical Path Method (CPM) & PERT 4. Human Engineering (Ergonomics) 5. Systems Analysis 6. Advances in Information Te!=hnology and Computer Packages 7. Mathematical and Statistical Tools These techniques have expanded the scope of activities of industrial engineering. Thus industrial engineering has taken a firm position in the organisation and it is contributing maximum towards increasing productivity and efficiency in ,particular and Quality of W ork Life (QWL) in general.

1.3

CONTRIBUTIONS TO INDUSTRIAL ENGINEERING

1. Adam Smith (1776) - Adam Smith through his book titled Wealth of Nations laid foundation to scientific manufacturing. He introduced the concept of "division of labour." Through his concept of division of labour which included the skill development, time savings and the use of specialised machine was able to influence the factory system. 2. James Watt (1864) - Steam engine advanced the use of mechanical power to increase productivity. 3. Charles Babbage was an English mathematician who worked .on the same line as Adam Smith's division of labour and advocated specialisation as one more advantage of division of labour. 4. Frederick Taylor (1859-1915) - Frederick Taylor is generally credited with being the father of industrial management and industrial engineering. Taylor was a mechanical engineer who initiated investigations of better work methods and went ·on to.become the first individual to develop an integrated theory of management principles and methodologies., Taylor believed that a scientific approach to management could improve labour efficiency. He proposed the following actions: (i) Collect data on each element of work and develop standardised procedures for workers. (ii) Scientifically select, train and develop workers instead of letting them train themselves. (iii) Strive for a spirit of cooperation between management and workers so that high production at good pay is fostered. (iv) Divide the work between management and labour so that each group does the work for which it is best suited. The above principles over the periods, developed into method study and work measurement, training, selection, placement and Industrial relations. So, Taylor's contribution are: (i) Constitution of day's work (ii) Wage payment system (iii) Elimination of waste (iv) Training of workers (v) Understanding between managers and workers

12

Industrial Engineering and Production Management

5. Henry L. Gantt (1913) - Gantt an engineering contemporary of Taylor, had a profound impact on the development of management thinking. His contributions were: (i) Work in the area of motivation field and development of task and bonus plan, a highly successful incentive plan. (ii) Measurement of management results by Gantt charts. (iii) Recognition of social responsibility of business and industry. (iv) Advocated training of workers by management. 6. Frank and Lillian Gilbreth (1917) - The advancement of motion studies is a contribution by ,Gilbreth. Assisted by his wife, he developed method study as a tool for work analysis. Gilbreth emphasised the relationship between output and the effort of the worker. He developed micro motion study, a breakdown of work into fundamental elements called Therbligs2• 7. Harrington Emerson (1913)- He developedhis managerialconcepts simultaneously with Taylor, Gantt and Gilbreth. Amongst his contributions is the Emerson's . Efficiency Bonus Plan, an incentive plan which guarantees the base day rate and pays a graduated bonus.

Emerson's Twelve Principles of Efficiency (i) Clearly defined ideas (ii) Common sense (iii) Competent counsel (iv) Discipline (v) Fi}ir deal (vi) Reliable, immediate and adequate records (vii) Dispatching (viii) Standards and schedules (ix) Standardised conditions (x) Standard operations (xi) Written sta.ndard practice instructions (xii) Efficiency reward 8. L:H.C. Tippet (1937) - He developed the concept of work sampling to determine the equipment. and manpower utilisation and for setting performance standards for Ion$ cycle, heterogeneous jobs involving teamwork.

1.4

ACTIVITIES OF INDUSTRIAL ENGINEERING

The primary activities as spelled out by AIIE are: 1. Selection of processes and assembling methods. 2. Selection and design of tools and e9uipment. 3. Design of facilities including plant location, layout of buildings, machines and equipment, material handling system, raw materials and finished goods storage facilities. 2

Therbligs is "Gilbreth" spelled backwards with letters th transposed co their original order.

Introduction tq Industrial Engineering

13

4. Design and improvement of planning and control systems for production, inventory, quality and plant maintenance and distribution systems. 5. Developing a cost control system such as budgetary �ontrol, cost analysis and . standard costing. 6. Development of time standards, costing and performance standards. 7. Development and installation of job evaluation systems. 8. Installation of wage incentive schemes. 9. Design and installatio� of value engineering and analysis system. 10. Operation research including mathematical and statistical analysis.. 11. Performance evaluation. 12. Organisation_and Methods (0 & M). 13. Project feasibility studies. 14. Supplier selection and evaluation.

1.5

INDUSTRIAL ENGINEERING APPROACH

In carrying out the various activities (functions), the industrial engineering department uses the scientific approach, i.e. the industrial engineer gathers and analyses facts, prepares the alternative solutions taking into consideration all the constraints both internal and external, and seiects the best solution for implementation. E.g. an industrial engineering department selects the operation or job for improvement This stage is referred to as problem identification or definition of the problem. 1. All the details or facts about the job/ operation are collected and recorded using various recording techniques like charts, diagrams or models and templates. 2. All the recorded facts are subjected to critical _examination by asking series of questions. 3. Alternative ways of doing the operation and/ or jobs is found out by using various techniques like brain storming etc. 4. Based upon the criteria fixed for evaluation, the best alternative is selected. Only selection of best solution is not the end but industrial engineering department has the responsibility of preparing recommendation for implementation so that the organisation will get benefit out of this improved method. To ensure that the actions it recommends are beneficial to the company, the industrial engineering department must operate with objectivity: 1. In approaching the problem it has to listen to and evaluate objectively the view points of the concerned departments affected. 2. In making recommendations, its selected course of action should be supported by sound reasoning to prove that it offers the best solution. 3. The industrial engineering department must be prepared to meet the prejudiced point of view and to treat them understandably but firmly. 4. It should seek opinion of line management and it should not loose the sight of the fact that its first concern is to strengthen the overall operations of the company.

14

1.6

Industrial Engineering and Production Management

OBJECTIVES OF INDUSTRIAL ENGINEERING

The basic objectives of industrial engineering departments are: 1. To establish methods for improving the operations and controlling the production costs. 2. To develop programmes for reducing those costs. Industrial engineering department exists primarily to provide specialised services to production departments. The services offered depend on the type of organisation. Normally the services include such functions as method study, establishing time standards, development of wage - incentive schemes, job evaluation and merit rating. In some cases, industrial engineering department is assigned to head projects.

1.7

FUNCTIONS OF AN INDUSTRIAL ENGINEER 1. Developing the simplest work methods and establishing one best way of doing the work. (Standard Method) 2. Establishing the performance standards as per the standard methods. (Standard Time) 3. To develop a sound wage and incentive schemes. 4. To aid in the development and designing of a sound inventory control, determination of economic lot size and reducing work-in-process for each stage of production. 5. To assist and aid in preparing a detailed job description, and job specification for each job and to evaluate them. 6. Development of cost reduction and cost control programmes, and to establish standard costing system. 7. Sound selection of site and developing a systematic layout for the smoothflow of work without any interruptions. 8. Development of standard training programmes for various levels of organisation for effective implementation of various improvement programmes.

1.8

TECHNIQUES OF INDUSTRIAL ENGINEERING

The tools and techniques of industrial engineering aim at improving the productivity of the organisation by optimum utilisation of organisation's resources, i.e. men, materials and machines. The various tools and techniques of industrial engineering are: · 1. Method Study- To establish a standard method of performing a job or an operation after thorough analysis of the jobs and to establish the layout of production facilities to have an uniform flow of material without back tracking. 2. Time Study (Work Measurement) - This is a technique used to establish a standard time for a job or for an operation. 3. Motion Economy - This is used to analyse the motions employed by the operators . to do the work. The principles of motion economy and.motion analysis.are very useful in mass production or for short cycle repetitive jobs. 4. Financial and Non-financial Incentives - These helps to evolve at a rational compensation for the efforts of the workers. 5. Value Analysis - It ensures that no unnecessary costs are built into the product and it tries to provide the required functions at the minimum cost. Hence, helps to enhance the worth of the product.

Introduction to Industrial Engineering

15

6. Production, Planning and Control - lbis includes the planning for the resources (like men, materials and machines), proper scheduling and controlling production activities to ensure the right quantity, quality of product at predetermined time and pre-established cost. 7. Inventory Control - To find the economic lot size and the reorder levels for the items so that the item should be made available to the production at the right time and quantity to avoid stock out situation and with minimum capital lockup. 8. Job Evaluation - This is a technique which is used to determine the relative worth of jobs of the organisation to aid in matching jobs and personnel and to arrive at sound wage policy. 9. Material Handling Analysis - To scientifically analyse the movement of materials through various departments to eliminate unnecessary movement to enhance the. efficiency of material handling. 10. Ergonomics. (Human Engineering) - It is concerned with study of relationship between man and his working conditions to minimise mental and physical stress. It is concerned with man-machine system. 11. System Analysis - is the study of various sub-systems and elements that make a system, their interdependencies in order to design modify and improve them to achieve greater efficiency and effectiveness. 12. Operation Research Techniques - These techniques aid to arrive at the optimal solutions to the problems based on the set objective and constraints imposed on the problems. The techniques that are more often used are: (i) Linear programming problems (ii) Simulation Models (iii) Queuing models (iv) Network analysis (CPM and PERT) (v) Assignment sequencing and transportation models (vi) Dynamic and integer programming (vii) Games theory 13. The· Other Techniques Include - Statistic.al process· control. techniques, Group technology Organisation and Methods (0 & M).

1.9

PLACE OF INDUSTRIAL ENGINEERING IN AI\I ORGANISATION

With due consideration to nature of its activities, responsibilities and its working relationship within the company, industrial engineering department should report to the executive who has got the overall responsibility of planning, quality and sales, etc. A typical organisation structure is shown in Fig. 1.1. There is no hard and fast rule governing the place of industrial engineering in an organisation. The factors that influence its position in the organisation are: 1. The number of direct employees. 2. Scope of industrial engineering activities. 3. .Complexity of manufacturing organisation.

16

Industrial Engineering and Production Management Managing Director

General Manager Marketing

General Manager Finance

Operating Manager

Material Manager

General Manager (Manufacturing)

General Manager Quality

General Manager Personnel

Ind. Engg. Manager

Maintenance Manager

Manager P.P.C.

I Supt. I Supt. II

Supt. III

Supervisor Plant I

Supervisor Plant II

Supervisor Plant III

Fig. 1.1: Centralised industrial engineering organisation

Forms of Internal Organisation 1. Small company (100 to 300 direct workers): In a small company 2 to 3 industrial engineers may undertake all the responsibilities. The senior industrial engineer should be the man with a variety of capabilities as he is expected to handle large variety of assignments. Typically the emphasis will be on work methods, fixation of time and performance standards, plant layout, estimating, cost reduction, etc. 2. Medium company (300 to 600 direct workers): The organisation generally takes the form of individual sections for various activities of industrial engineering. Functions are well defined and titles like. Time study engineer, Method study engineer, Process engineer, etc., are used to denote the activities performed by each specialist and there is a division of responsibility for industrial engineering service. 3. Laige company: In a large company increased emphasis is placed on such functions as value engineering, operation research, training, wage programmes which is done in greater depth apart from regular specialised functions. 1.10 INDUSTRIAL ENGINEERING IN SERVICE SECTOR

Modern •industrial engineering is a broad discipline encompassing the analysis, design and improvement of any and all productive elements of any enterprise. As a part of the general improvement trend in the service industries, large number of industrial engineers are in demand and attracted to careers in exciting, challenging and rewarding new fields. Fields such as health care, education, etc., invite a creative talents, high degree of professional and technical competence, offer challenging opportunities. The various service industries are: 1. Industrial Engineering in Health Services: A number of developments in health industry have resulted in a much wider acceptance and use of industrial engineers in hospitals, with a trend towards cooperative programmes in which group of hospitals share industrial engineering services. The advances in information

Introduction to Industrial Engineering

17

technology and use of optimisation techniques are helpful to achieve the expected service levels in health care industries by optimum utilisation of resources. 2. Industrial Engineering in Government Organisations: The range of activities encompassed by government is as extensive as the industrial engineering techniques themselves. Personnel activities, plant or office location problems, organisation and methods are so complex because of the integrated nature of government and their solution requires not only the application of normal industrial engineering techniques but an extremely broad-based new techniques. 3. Industrial Engineering in Banking: Banking is a large-scale business, dealing the economy. The with the production and delivery of vital services throughout . . computer, as a tool of industrial engineering is making a major impact on banking. The �ole of industrial engineering is: (i) Training- Training to make the employees technically competent to carry out the ·increasingly specialised tend in bank operations. (ii) Use of Operation Research - One of the primary reasons for the slow growth of operations research in banking is that banks have rarely emp,loyed engineers . in a technical capacity on their staff. Now with a changing trend, technically competent engineers are making a head way in applying OR techniques in banking. (iii) Cost System - There is a need for engineers withwconceptual awareness of interfacing amongst the various bank management functions. Engineers with ability to bring together the related functions of the bank in actual or simulated mode to present the management an objective appraisal of individual contribution of each unit. A well designed cost system provides the basis for such an evaluation. (iv) Information Systems - Reports generated by information system require skilled and thoughtful design. The format and presentation of the data should be simple and should motivate the reader to action. Thus a competent industrial engineer is able to design the information system to integrate various .banking activities. 4. The Other Areas of Application of Industrial Engineering- Public utilities such as the companies which supply essential commodities such as water, gas, electricity, telephone ser�ices. \

1.11 SYSTEMS APPROACH A system is defined as a collection of elements which are interdependent and independent to achieve objective for example a production system. The systems consists of many subsystem for example in a production system we have many subsystems like planning system, inventory system, quali� system, etc. The Characteristics of the System are: 1. Every system has a specified objective to achieve. 2. Every system has got a boundary within which it operates. 3. System has got inputs which are processed into outputs. 4. There are restrictions or constraints imposed on the system by the factors which are internal or external to the system.

18

Industrial Engineering and Production Management

The systems thinking or methodology is a wholistic approach which integrates the activities of subsystems and elements and optimises the system effectiveness. A simple system is shown in the Fig. 1.2. Input

Processing

Output

Feedback Surroundings (External to the system)

Fig. 1.2: Representation of simple system

The systems approach consists of systems analysis, systems engineering and systems management. It is a powerful tool for solving large, complex problems involving men and machines. A key feature of the systems approach is its emphasis on analysing the interrelationships among various elements of the system. The systems approach takes the wholistic and integrated view of the problem and suggests solutions taking into consideration the influence of elements on the performance of the system. Systems approach consists of: • Systems analysis: Systems analysis includes investigation of system objectives, selection of criteria for evaluating alternative solutions, examination of the feasibility of proposed solutions, evaluation of feasible solution and selection of the optimal solution. • Systems engineering: It is a top level engineering process associated with the development or modification of the complex system. Systems engineering identifies: and specifies the subsystem elements that will be assembled engineered, procured, developed, tested and evaluated in accordance with a development plan. • Systems management: Systems management includes the development of the procedures and the organisational structure for planning, directing and controlling systems engineering activities and operations throughout the life of the system. Systems analysis consists of the following: 1. Problem definition 2. System objectives 3. System boundaries 4. User requirements analysis 5. System effectiveness measures 6. Functional analysis 7. Constraint evaluation 8. Selection of feasible alternative 9. Evaluation of the feasible solution against prefixed criteria 10. Selection of the best alternative System Design

System design is divided into two phases preliminary and detailed design. Methodology for preliminary design consists of (As per Asimow): • Screening of design alternatives • Development of mathematical model

Introduction to Industrial Engineering

• • • • • • •

19

Sensitivity analysis Compatibility analysis Stability analysis Optimisation Projection into future Testing the design concept Simplification of design

Methodology for detailed design: • Preparation for design • Establishing performance requirements for hardware and software • Design specifications preparation • Design of elements and subsystems • Design of parts • Preparation of assembly drawings • Experimental construction • System integration · • Testing • Redesign For managing the systems effectively, the identification of checkpoints (milestones) is necessary which can be used to monitor schedule, budget, and technical performance. These milestones in addition to representing convenient points for monitoring project status, should be chosen to provide decision points for future course of action without affecting schedule .and budget. The major strength of the systems approach is that all the factors that influence the system throughout its life from the conception stage is considered.

Systems Approach in Industrial Engineering Industrial engineering, relies heavily on · systems approach in solving the problems. Instead of analysing the problem in isolation, at the elemental or subsystem level, an integrated view of the problem is considered for suggesting the solution keeping in mind the const,raints imposed on the system from both inside and outside the system and the factors which influence the system. Thus, this wholistic approach helps to achieve the system optimisation instead of analysing part by part which leads to sub-optimisation.

SUMMARY It is seen ·that industrial engineering has evolved over the last century as a broad profession concerned with designing effective systems and developing the best processes with the purpose of integrating people, machine and material resources for improved overall effectiveness of organisations and delivering the products and services to the consumer. The focus is on manufacturing systems but still the other systems in the areas such as transportation, communication, finance etc. are given due importance. Industrial engineering discipline enables interface engineering facilities and their operations for converting resources into products and services, which are in turn delivered to the consumer. Thus, industrial engineering is referred appropriately as "Interface Engineering".

20

Industrial Engineering and Production Management

Design, improve and install work systems (integrated systems of men, material and machines) have broadened and deepened to encompass all the activities in factories, fields, homes and offices irrespective of purpose or size of the organisations. Today's organisation work in constantly changing environment and have to accommodate new products, volume changes, new technologies and management philosophies and there is a constant pressur� to improve all work processes to meet the demands of changing environment as well. Industrial engineers play a pioneering role as change .agents in the organisation as system integrators with strong mathematical, statistical, technical and management background. History of industrial engineering dates back to industrial revolution and it has passed through various phases to reach the present advanced and developed stage. Though Fredrick Taylor is named as father of scientific management and industrial engineering there are many others who contributed to the industrial engineering field before Taylor and then they got associat�d with industrial engineering. In carrying out the various activities (functions), the industrial engineering department uses the scientific approach i.e. the industrial engineer gathers and analyses facts, prepares the alternative solutions taking in to consideration all the constraints both internal and external and selection of the best solution for implementation. Modern industrial engineering is a broad discipline encompassing analysis, design and improvement of any and all productive elements of any enterprise. As a part of the general improvement trend in the service industries, large number of industrial engineers is in demand and attracted to careers in exciting, challenging and rewarding new fields. Fields Sl:lch as health care, education etc. invite creative talents, high degree of professional and technical competence, offer challenging opportunities.

EFERENCES FOR FURTHER READING 1. 2.

Maynard, H.B. Industrial Engineering Handbook. Education: McGraw-Hill, (1971) Vaughn, Richard C. Introduction to Industrial Engineering. Ames, IA, U.S.A.: Iowa State University Press, (1985)

3.

Optner, Stanford L. System Analysis for Business Management. Englewood Cliffs, N.J.: Prentice Hall, (1968)

4.

Asimov, Morri!i. Introduction to Design. Photoduplication Service, Library of Congress, Washington, D.C., (1976)

5.

Chestnut, Harold. Systems Engineering Methods. New York: John Wiley and Sons, (1967)

EVIEW EVIEWQUESTIONS QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. ·

Define industrial engineering. What is its importance? Discuss the scope and objectives of industrial engineering. Discuss the history and development of industrial engineering. What are the functions of industrial engineering? Describe the tools and techniques of industrial engineering. Comment on the place of industrial engineering in an organisation. How does industrial engineering help to increase the productivity of an organisation? Write short notes on: (a)

Industrial engineering approach

(b)'

Organisation structure for industrial engineering

(c)

Qualities of an industrial engineer

Introduction to Industrial Engineering

21

(d). Productivity and I.E. techniques (e)

Industrial engineering in service sector

(�

Systems approach

9. What are the phases involved in system methodology? 10. Ho� is systems approach useful to problem solving? 11. Industrial Engineering is concerned with resource use in manufacturing as well as ·service • systems. Support the statement using the definition of IIE.

12.

How do you distinguish IE from management?

13. What are effectiveness and efficiency? 14. Efficiency is an important performance dimension of management. Industrial engineering 15.

focuses on this dimension. Explain how IE definitions emphasize of efficiency of systems. . What are the ideas and thoughts of F.W. Taylor? How did he lay the foundation for industrial engineering?

16.

What are tbe additional contributions of Frank Gilbreth to the development of industrial engineering?

17.

What are the 12 principles of efficiency in organisations as advocated by Emerson and how does IE use those principles in !mproving efficiency of systems and organisations?

18.

How do motion study and time study complement each other in systems and methods improvement?

Productivity and Production Performance

Chapter Outcomes After completing the chapter, you will be able to: • . Differentiate between producdon and productivity. • Understand the dynamics of productivity change.

2.1

e

Describe the models of productivity.

•

Learn to use tools and techniques to improve productivity.-

•

Compute the factor and labour productivity.

•

Measure manufacturing performance.

INTRODUCTION

Productivity has now become an everyday watchword. It is crucial to the welfar_e of the industrial firm as well as for the economic progress of the country. High productivity refers to doing the work in a shortest possible time with least expenµiture on inputs without sacrificing quality and with minimum wastage of resources. Today the term productivity has acquired a wider meaning. Originally, it was used only to rate the workers according to their skills. The person who produced more either faster or harder were said to have higher productivity. Subsequently emphasis was laid to improve the hourly output by analysing and improving upon the techniques applied by different workers. A system of measurement was then evolved to compare the improvement made · in relation to the rate of_ output and in order to improve productivity further, machines were introduced. Manufacturers of machines started incorporating new features with the 22

Productivity and Production Performance

23

help of latest technological developments. Today we have machines that are completely controlled by computers. Computers have now become powerful tools towards improving productivity.

2.2 CONCEPT Productivity is the quantitative relation between what we produce and what we use as a resource to produce them, i.e. arithmetic ratio of amount produced (output) to the amount of resources (input). Productivity can be expressed as: Output Productivity — Input Productivity refers to the efficiency of the production system. It is the concept that guides the management of production system. It is an indicator of how well the factors of production (Land, capital, labour and energy) are utilised. European Productivity Agency (EPA) has defined productivity as, "Productivity is an attitude of mind. It is the mentality of progress, of the constant improvements of that which exists. It is the certainity of being able to do better today than yesterday and continuously. It is the constant adaptation of economic and social life to changing conditions. It is the continual effort to apply new techniques and methods. It is the faith in human progress." A major problem with productivity is that it means many things to many people. Economists determine it from Gross National Product (GNP), Managers view it as cost cutting and speed up, engineers think of it in terms of more output per hour. But generally accepted meaning is that it is the relationship between goods and services produced and the resources employed in their production.

Table 2.1: Productivity as Viewed by Different People

2.3

Economists

Ratio of output to input (partial productivity Measure and Total Productivity Measure)

Accountants

Financial Ratios, Budgetary Variances

Behavioural Scientists

Labour Utilisation (Man days)

Engineers

Capacity Utilisation, Production per Man hour, Manpower efficiency

DEFINITIONS OF PRODUCTIVITY 1. Productivity is a function of providing more and more of everything to more and more people with less and less consumption of resources. 2. The volume of output attained in a given period of time in relation to the sum of the direct and indirect efforts expended in its production. 3. Productivity is the measure of how well the resources are brought together in an organisation and utilised for accomplishing a set of objectives. 4. Productivity is concerned with establishing congruency between organisational goals with societal aspirations through input-output relationship. 5. Productivity is the multiplier effect of efficiency and effectiveness.

24 2.4

Industrial Engineering and Production Management PRODUCTION AND PRODUCTIVITY

Production is defined as a process or procedure to transform a set of input into output having the desired utility and quality. Production is a value addition process. Production system is an organised process of conversion of raw materials into useful finished products represented as in Fig. 2.1. INPUT

TRANSFORMATION

OUTPUT

PROCESS MEN

GOODS & SERVICES

MACHINES MATERIALS MONEY MANAGEMENT INFORMATION ENERGY

Fig. 2.1: Production system

The concept of production and productivity are totally different production refers to absolute output whereas productivity is a relative term where in the output is always expressed in terms of inputs. Increase in production may or may not be an indicator of increase in productivity. If the production is increased for the same output, then there is an increase in productivity. Productivity can be Increased

1. When production is increased without increase in inputs. 2. The same production with decrease in inputs. 3. The rate of increase in output is more compared to rate of increase in input. Illustration 1: A company produces 160 kg of plastic moulded parts of acceptable quality by consuming 200 kg of raw materials for a particular period. For the next period, the output is doubled (320 kg) by consuming 420 kg of raw material and for the third period, the output is increased to 400 kg by consuming 400 kg of raw material. During the first year, production is 160 kg Output=160 Productivity = 0.8 or 80% Intput 200 For the second year, production is increased by 100% Output = 320 Productivity = 0.76 or 76% 4, Input 420 For third period, production is increased by 150% Output _ 400 1.0 i.e. 100% Productivity = Input 400

Comments: From the above illustration, it is clear that, for second period, though production has doubled, productivity has decreased from 80% to 76%, for third, period production is increased by 150% and correspondingly productivity increased from 80% to 100%. Thus, Increase in production may or may not increase Productivity.

Productivity and Production Performance

2.5

25

EXPECTATIONS FROM PRODUCTIVITY

Expectations differ amongst the various stakeholders, some of the expectations are quite contrast, i.e. the workers expect more leisure time in contrast to managers expectation of hard work. Table 2.2 shows the expectations of various groups interested in productivity.

Table 2.2: Expectations from Productivity MANAGEMENT AND ENTREPRENEURS

High Return on Investment (ROI), Higher market share and corporate image.

Managers

Maximum utilisation of resources, lower unit cost, higher quality.

Workers

Higher wages, safer work environment, increased quality of work life (QWL).

Suppliers

Prompt payment, continuous order.

Customers

Lower cost, quality, reliability, safety and timeliness of delivery.

Government

Economic development, employment generation, more exports.

Share Holders

Higher dividends.

2.6

BENEFITS FROM PRODUCTIVITY

Always there is a misunderstanding about productivity in the minds of the workforce. To the workers, higher productivity means higher work load, higher efforts, more profits to owners and unemployment and threat to job security. These are not the correct observations. Productivity integrates the objectives of owners and workers. Productivity contributes towards increase in production through efficient utilisation of resources and inputs rather than making workers to work hard. Productivity strives to minimise human hazards and human efforts with a view to utilise them to those areas where they can contribute maximum to the output.

2.7

DYNAMICS OF PRODUCTIVITY CHANGE

Productivity improvement results in lower cost per unit by effective utilisation of all the resources and reducing wastage. Lower cost per unit contributes in increased profit levels so that company can reinvest the surplus in new technology, equipment's and machines. This will result in further productivity increase and also there is a greater employment generation due to new investments. The productivity increase results in higher wages to employees as profit potential of the company increases thereby increasing purchasing power of workers. Thus productivity increase sets in a chain reaction as shown in Fig. 2.2.

26

Industrial Engineering and Production Management Improvement 1 in Productivity 4_

• Increase in Wages More Ouput Increase in Demand For Goods and Services

V Reduction in Production Cost

Better Machines

A

A

Lowering of Prices

Greater Employment A

More Savings

More Profits

Higher Investments

Fig. 2.2: Dynamics of productivity change 2.8

PRODUCTIVITY MEASURES

Partial Productivity Measures (PPM)

Depending upon the individual input partial productivity measures are expressed as: Total Output Individual Input Total Output 2. Labour Productivity — Labour Input Labour input is measured in terms of man-hours Total Output 3. Capital Productivity — Capital Input Total Output 4. Material Productivity — Material Input Total Output 5. Energy Productivity — Energy Input

1. Partial Productivity —

One of the major disadvantage of partial productivity measures is that there is an over emphasis on one input factor to the extent that other inputs are underestimated or even ignored. This cannot represent the overall productivity of the firm. Total Productivity. Measure (TPM)

It is based on all the inputs. This model can be applied to any manufacturing organisation or service company. Total Tangible Output Total Productivity Total Tangible Input

Productivity and Production Performance

27

Total tangible output = Value of finished goods produced + value of partial units produced + dividends from securities + interest + other income Total tangible output = Value of (human + material + capital + energy + other inputs) used. The word tangible here refers to measurable. The output of the firm as well as the inputs must be expressed in a common measurement unit. The best way is to express them in rupee value. To compare productivity, indices are be adjusted to the base year, and must be stated in terms of base year rupee value. This is referred to as deflating the input and output factors. Deflators are used to nullify the effect of changing price from one year to another. Current Year Price Deflator — Base Year Price Features of Total Productivity Measures 1. 2. 3. 4.

Gives both firm level and detailed unit level index. Helps to find out the performance and productivity of the operational unit. Helps to plan, evaluate and control. An important information to strategic planners regarding expansion or phasing out decisions.

Total Factor Productivity Measure (TFP) It is the ratio of net output to the labour and capital (factor) input. Net Output Total Factor Productivity — Labour + Capital Inputs 2.9

ADVANTAGES AND LIMITATIONS OF PRODUCTIVITY MEASURES Advantages

A.

Partial Productivity Measure 1. Easy to understand and calculate. 2. A tool to pinpoint improvement.

B.

Total Productivity Measure 1. Easy and more accurate representation of the total picture of the company. 2. Easily related to total costs.

Limitations • 1. Misleading if used alone. 2. No consideration of overall impact. 1.

Difficulty in obtaining the data.

2. Requirement of special data collection system. 3. Considers all quantifiable outputs 3. Gives an overall view. and inputs. C. Total Factor Productivity Measure 1. Data from company records is 1. No consideration for material and relatively easy to obtain energy input. 2. Value added approach. 2. Difficult to relate value added approach to production efficiency.

28

Industrial Engineering and Production Management

Illustration 2: The following information regarding the output produced and inputs consumed for a particular time period for a particular company given below: Z 10,000. Output = Z 3,000. Human input Z 200. Material input = Z 300. Capital input = Z 100. Energy input = Z 50. Other misc. input The values are in terms of base year rupee value. Compute various productivity indices Solution: Partial Productivity

1. Labour Productivity

Output = 10,000 . 3.33 Human Input 3000

2. Capital Productivity

Output 10,000 = 3.33 Capital Input 3000

3. Material Productivity =

Output . 10,000 = 5.00 Material Input 2000

4. Energy Productivity =

Output 10,000 — 10.00 Energy Input 1000

5. Other Misc. Expenses =

Output = 10,000 Other Misc. Exp. 500

6. Total Productivity

Total Output Total Input

20.00

Total Output (Human + Material + Capital + Energy + Other Misc. Expenses) —

10,000 1.053 10,000 3000 + 2000 + 3000 +1000 + 500 9,500

7. Total Factor Productivity (TFP) —

Net Output (Labour + Capital) Input

Total Output — Material and Services Purchased (Labour + Capital) Input Assume that the company purchases all its material and services including energy, m/c and equipment (leasing). Then 10,000 — (2000 + 3000 +1000+ 500) 3500 — 0.583 Total Factor Productivity = 6000 3000 + 3000

Productivity and Production Performance

29

Illustration 3: Following information is given pertaining to a firm's performance for the last four periods. Compute the partial productivity and total productivity indexes for the company for each of the four periods. Present the results in a tabular form. Assume period -1 as a base year. A. 1. 2.

3. B. 1. 2. 3.

4. 5.

6.

Particulars OUTPUT Finished goods produced Work in process To of completion Price per unit (Z.) Dividend from securities Deflator for item (3) INPUT Skilled labour (hrs) Average Wage Rate Unskilled labour (hrs) Wage Rate (Z) Materials . Raw materials (tonnes) Price per tonne Total plant hrs worked Plant hour rate Energy (i) Oil used (Its) Price/litre (ii) Coal (tonnes) Price/tonne (iii) Electricity (kWH) Rate/kWH Other expenses (i) Consulting fees (ii) Information expenses Deflator for item

Period-1

Period-2

Period-3

Period-4

2500 1200 60 1000 12000 1

2200 1600 50 1200 15000 1.11

2800 1000 30 1500 28000 1.12

3200 4000 15 1700 29000 1.5

10,000 60 5000 30

12,000 70 8000 40

12,000 75 5000 40

10,000 75 3000 50

20 1200 1800 650

18 1600 2400 650

23 2000 2500 1500

25 2000 2500 2400

5000 4 200 1200 15000 2.5

3000 6 150 1800 18000 3.2

2000 8 50 2800 22000 4.2

1500 12 — — 30000 6.7

15000 1.2

40000 28000 1.3

200000 50000 1.3

20000 10000 1

Solution: Sample calculations for period-2. Assume period-1 as base period. Current Year Price Deflator for period — 2 = Base Year Price Total output for period 2 =

2200 x1200 1600 x 0.5 x 1200 15000 1.11 — 3013513.50 1.2 1.2

30

Industrial Engineering and Production Management

Inputs for period - 2 12000 x 70 8000 x 40 + - 964739.43 1. Labour input = 1.33 1.16 18 x1600 -21654.13 2. Material input = 1.33 1 650 - 156000 3. Capital input (Plant hr cost) = 2400x 3000x 6 150x1800 18000x3.2 237000 1.5 + 1.5 + 1.28 1500 5. Other expenses = 1.2 - 12500 4. Energy input -

Total Input for period-2 (1 + 2 + 3 + 4 + 5) = 2870893.6 Calculation of productivity measures for period-2 Total Output - 3013513.5 1.04 Total Input 964739.43 Output _ 3013513.5 3.12 2. Labour Productivity = Labour Input 964739.43 Output = 3013513.5 -1.93 3. Capital Productivity = Capital Input 156000 Output _ 3013513.53 139.64 4. Material Productivity = Material Input 21654.13 Output 3013513.5 - 12.71 5. Energy Productivity = Energy Input 2370000 Output 3013513.5 - 241.08 6. Other misc. expenses = Other Misc. exp 2500

1. Total Productivity Measure

Productivity measures and productivity indexes are represented in the Tables 2.3 and 2.4. Table 2.3: Productivity Ratios

Particulars T.P.R. L.P.R. M.P.R. C.P.R. E.P.R. OTHER EXP. PROD. RATIO

Period-1 1.36 4.3 134.6 2.76 10.86 107.73

Period-2 1.04 3.12 139.2 1.93 12.71 241.8

Period-3 1.10 3.59 112.8 1.91 25.22 59.74

Period-4 1.37 5.53 126.8 2.34 47.15 19.86

Productivity and Production Performance T.P.R. = Total productivity ratio M.P.R. = Material productivity ratio E.P.R. = Energy productivity ratio

31

L.P.R. = Labour productivity ratio C.P.R. = Capital productivity ratio

Table 2.4: Productivity Index Particulars T.P.I. L.P.I. M.P.I. C.P.I. E.P.I. OTHER EXP. PROD. INDEX

Period-1 1 1 1 1 1 1

Period-2 0.76 0.73 1.04 0.70 1.17 2.23

T.P.I. = Total productivity index L.P.I. = Labour productivity index M.P.I. = Material productivity index

Period-3 0.81 0.83 0.84 0.69 2.32 0.56

Period-4 1.01 1.02 0.94 0.85 4.34 0.19

C.P.I. = Capital productivity index E.P.I. = Energy productivity index

2.10 PRODUCTIVITY MEASUREMENT MODELS 1. Craig and Harris Model: This model points out the inadequacy of partial productivity measure. It is also called "Service flow model" because physical inputs are converted into rupees that are payments for services provided by inputs. Productivity is viewed as efficiency of conversion process. 0 Total productivity is expressed as, P — L+C+R+Q where P = Total productivity L = Labour input factor C = Capital input factor R = Raw materials and purchased parts Q = Other mise, goods and services. 0 = is output. 2. Taylor-Davis Model: Contrary to Craig and Hariss total productivity model, they defined a Total Factor Productivity (TFP) Model. Total Factor Productivity (TFP), S+C+MP—E (W + B)+ [KW + KF)Fb x df] where

S = Net sales adjusted (i.e. deflated to base year) C = Inventory change (Raw materials, finished goods and WIP) MP = Manufacturing plant (Unsaleable products like jigs and fixture, SPM) E = Exclusions (Materials and services purchased from outside + depreciation of buildings + plant + equipment + rentals) W = Wages and salary B = Benefits

32

Industrial Engineering and Production Management

KW = Working capital KF = Fixed capital Fb = investors contribution (expressed as %) df = price deflator. In this model, raw material was not considered as input on the basis that raw material is the result of some other labour and effort. 3. APC Model: American Productivity Centre (APC) has developed a comprehensive measure which distinguishes among profitability, price recovery and productivity. It can be utilised to measure productivity changes in labour, materials, energy and capital. It also measures the corresponding effect each one has on profitability. APC model is based on the premise that profitability is a function of productivity and price recovery. Productivity relates to quantities of output and quantities of inputs, while price recovery relates to price of output and costs of inputs. Price recovery can be thought of as the degree to which input cost increases are passed on to the customers in the form of higher output price. Relationship between productivity, profitability and price recovery are represented as, Revenue Profitability — Cost Output Quantities x Sales Price - Input Quantities x Unit Cost Output Quantities Sales Price x - Input Quantities Unit Cost Profitability = Productivity x Price recovery The model compares data from one period (base period) with the data from the current period.

2.11 FACTORS INFLUENCING PRODUCTIVITY Factors influencing productivity can be classified broadly into two categories: (a) Controllable or internal factors (b) Uncontrollable or external factors S.No. 1. 2. 3. 4. 5. 6. 7. 8. 9.

Controllable (Internal Factors) Product Plant and Equipment Technology Materials Human Factors Work Methods Management Style Financial Factors Sociological Factors

Uncontrollable (External Factors) Structural Adjustments (economic and social) Natural Resources Government Policy Infrastructure

Productivity and Production Performance

33

2.11.1 Controllable Factors (Internal Factors) 1. Product factor: In terms of productivity means product factor the extent to which the product meets. output requirements. Product is judged by. its usefulness. The cost benefit factor of a product can.be enhanced by increasing the benefit at the same cost or by ·reducing cost for the same benefit. 2. Plant and equipment: These play a prominent role in enhancing the productivity. The increased availability of the plant through proper maintenance and reduction of idle time increases the productivity. Productivity can be increased by paying proper attention to utilisation, age, modernisation, cost, investments, etc. 3. Technology: Innovative and late�t technology improves productivity to a greater extent. Automation and information technology helps to achieve improvements in material handling, storage, communication system and quality control. The various aspects of technological factors to be considered are: (i) Size and capacity of the plant (ii) Timely supply and quality of inputs (iii) Production planning and control (iv) Repairs and maintenance (v) Waste reduction (vi) Efficient material handling systems 4. Material and energy: Efforts to reduce materials and energy consumption brings about considerable improvement in productivity. The factors that are to be considered are: (i) Selection of quality material and right material (ii) Control of wastage and scrap (Hi) Effective stock control (iv) Development of sources of supply (v) Optimum energy utilisation and energy savings 5. Human factors: Productivity is basically dependent upon human competence and skill. Ability to work effectively is governed by various factors such as education, training, experience, aptitude etc., of .the employees. Motivation of employees will influence producti,vity. 6. Work methods: Improving the ways in which the work is done (methods) improves productivity. Work study and industrial engineering techniques and training are the areas which improve the work methods which in term enhances the productivity. 7. Management style: This influences the organisational design, communication in organisation, policy and procedures. A flexible and dynamic management.style is a better approach to achieve higher productivity. 2.11.2 External Factors Structural adjustment includes both economic and social changes. Economic changes that have influence significant are: 1. Shift in employment from agriculture to manufacturing industry 2. Import of technology 3. Industrial competitiveness

34

Industrial Engineering and Production Management

Social changes such as women's participation in the labour force, education, cultural values, attitudes are some of the factors that play a significant role in the improvement of productivity. 1. Natural Resources: Manpower, land and raw materials are vital to the productivity improvement. 2. Government and Infrastructure: Government policies and programmes are significant to productivity practices of government agencies, transport and communication power, fiscal policies (interest rates, taxes) influence productivity to the greater extent. 2.12 PRODUCTIVITY IMPROVEMENT TECHNIQUES

The basic productivity improvement techniques are represented in the Fig. 2.3. TECHNOLOGY BASED

PRODUCT BASED

PRODUCTIVITY IMPROVEMENT -4 TECHNIQUES

MATERIAL BASED

EMPLOYEE BASED

TASK BASED

Fig. 2.3: Productivity improvement techniques Technology Based

1. Computer Aided Design (CAD), Computer Aided Manufacturing (CAM), and Computer Integrated Manufacturing System (CIMS): CAD refers to design of products, processes or systems with the help of computers. The impact of CAD on human productivity is significant for the advantages of CAD are: • Speed of evaluation of alternative designs • Minimisation of risk of functioning • Error reduction CAM is very much useful to design and control the manufacturing system. It helps to achieve the effectiveness in production system by Line Balancing. • Production planning and control • Capacity Requirements Planning (CRP) Manufacturing Resource Planning (MRP II) and Materials Requirement Planning (MRP) • Automated inspection. Computer Integrated Manufacturing (CIM) is characterised by automatic line balancing, machine loading/scheduling and sequencing, automatic inventory control and inspection. 2. Robotics 3. Laser technology 4. Modern maintenance techniques 5. Energy technology 6. Flexible manufacturing system (FMS)

Productivity and Production Performan,ce

35

Employee Based 1. Financial and non-financial incentives at individual and group level · 2. Employee promotion. 3. Job design, job enlargement, job enrichment and job rotation 4. Worker participation in decision-making 5. Quality circles (QC), Small Group Activities (SGA) 6. Personal Development Material Based 1. Material planning and control 2. Purchasing logistics 3. Material storage and retrieval 4. Source selection and procurement of quality material 5. Waste elimination 6. Material recycling and reuse Process Based 1. Methods engineering and work simplification 2. Job design, job evaluation, job safety 3. Human factors engineering Product Based 1. Value analysis and value engineering 2. Product diversification 3. Standardisation and simplification 4. Reliability engineering 5. Product mix and promotion Management Based 1. Management style 2. Communication in the organisation 3. Work culture 4. Motivation 5. Promoting group activity 2.13 LEVELS OF PRODUCTIVITY MEASUREMENTS 1.

International Level

2.

National Level

3.

Industry (Sector) Level

Development of indexes to compare the growth and competitive position of competing countries. Developing economic indicators to enable the country to plan its resources on a rational basis. Developing measures to compare each others performance to plan its manpower requirements, to compare performance of companies which comprise the inc;iustry in a sector.

36

Industrial Engineering and Production Managem'ent . ·

4.

Company Level

5.

Individual Resource Level

Measures tq enable them compare themselves in terms of performance experience. To measure trends of productivity improvements to plan . effectively company resources. To develop measures to compare performance of each resource amongst one another. To plan the future requirement of these resources.

2.14 . MEASURING MANUFACTURING PERFORMANCE Setting production standards is critical in today's manufacturing environment because it has a significant impact on company profitability. Competitive environment, with shrinking margins and overseas competition, has forced domestic manufacturers of all types to strive for as high a degree of productivity as possible, but measuring that productivity maybe difficult without some specific measures that can be applied across a wide variety of manufacturing environments.

2.14.1 Capacity Utilization Capacity Utilization indicates how much of the total manufacturing capacity is being utilized at a given point in time. The formula for Capacity Utilization is: CapacihJ utilization = CapacihJ utilized or gross production I Optimum capacity or production level It represents the amount of available capacity that is being used to supply current demand at the time of the measurement. It is a good indicator of business and market conditions because most manufacturing facilities are able to run at 70-80% of capacity when times are good, and in some instances may approach 100%. Capacity Utilization is a widely held and respected key performance indicator (KPI) in many industries because it helps 'to determine optimum capacity in looking at market" potential, new and emerging markets, and the effects of market demand. A business either has sufficient cushion in their 'capacity' to permit them to deal with major advances in: market demands, or they simply will not be able to keep up with increasing market pressures if running at too great a capacity during normal or lean times. When Capacity Utilization is at a high level it is important that the manufacturers' gross production is actually saleable production, not simply stock production. It is extremely important to project Capacity Utilization. at various market loads by measuring and adjusting factors such as production costs including fixed and variable costs, inventory levels, staffing capacity, overtime functionality, and facilities demand, including maintainability. 2.14.2 Labour Productivity Labour Productivity measures the relationship between units of labour and units of production (output). The formula is: Labour ProductivihJ = units of ProductivihJ (Output) I units of Labour In this formula the Units of Productivity are some measurable quantity of production, and the Units of Labour are measures used during the creation of the productive output. For example, if we were a concrete plant we might measure cubkyards of concrete against work (man) hours to produce those cubic yards. Let's look at a 'real world' type example: If our plant produces 120 cubic yards of concrete in an 8-hour day, and it requires the

Productivity and Production Performance

37

efforts of 3 workers working the entire 8 hours to produce that number of cubic yards, we can calculate the labour productivity as:

120 cubic yards produced I 24 man (3

x

8) hours= 5 cubic yards per man hour

Of course it rarely is this simple, there are a lot of different factors that go into play, even when making concrete. Things like supply availability may impact Labour Productivity, for example if you start the day with a shortage of 'Portland cement' with which to make the-concrete, and have to wait for an hour to get an additional delivery, before resuming production, you still have paid your people for that hour (3 man hours total), but have produced nothing. Imagine who high your Productivity (output) would have been if all the supplies had been in place to run the plant for the entire 8 hour period?

2.14.3 Re-visit of Capacity Utilization Let's take ·a minute to re-visit Capac'ity Utilization now that we have our real world example, of the concrete plant, because it is easy to perform the measure. We had 5 yards of concrete per man hour in our Labour Productivity example, despite the fact that the plant was down for 1 hour (3 man hours) dtJe to insufficient inventory of Portland Cement; if we take that 3 man hours and multiply them by 5 yards, then we can easily see that if the plant had run for the entire 8 hour shift (for which the men were paid), our total yards of concrete produced would have been 135 yards (120 produced+ 15 potential yards). That would have been maximum productivity. So if we -look at the day on a capacity Utilization basis then our formula is: 120 yards / 135 yards = 88.88%. It always helps to have 'real world' examples when we look at the principles of Key Performance Indicators. Now another example of KPI, Yield.

2.14.4 Yield The percentage of products that are manufactured correctly and to specifications the first time through the process without scrap or rework. Sometimes this KPI is referred to as First-time-through Yield, the formula to compute Yield is: Yield = Units Produced - Defective Units I Units Produced F0r purposes of the formula, defective units includes all units of production which are scrapped, re-worked, do not meet standards, require repair or are not saleable. This is a measure of production efficiency in terms of how well all the various aspects of the production or manufacturing process work together. If workers are failing to follow proper production steps, flaws may exist in the final product; but if super:visors are failing to catch potential defects early due to inadequate quality control, the result maybe a product that ends up 'defective' (using the definitio� above). Yield is an important Key Performance Indicator because it helps identify efficiency and inefficiencies that will allow to target necessary changes in performance of the manufacturing process and/ or workers. In the concrete mix example, if the mix is not right, the cubic yards of concrete are defective. Wet or dry, there is a formula for the production of concrete- it requires Portland Cement, rock and sand (plus water if you are making 'wet mix'), but if you are producing bags of dry concrete (for self-mixing) the formula still has to be right or it simply will not set-up right when mixed, it could be too stiff, or too loose. So when the Portland Cement in earlier example started running low, perhaps there was a tendency to make it go as far as it could, so just add a little extra sand to make the bags 'weigh out'. But now the formula isn't right. Those bags with excess sand really are 'defective' because they lack sufficient Portland Cement. And it gets worse when the Portland Cement came in and the plant started producing bags of concrete mix again, the

38

Industrial Engineering and Production Management

extra sand used in those earlier bags means that there is really insufficient sand to mix with those last remaining bags of the day and so there is more Portland Cement in relationship fo sand in those bags. In effect the plant:has produced just as many defective bags due to insufficient Portland Cement as it has excessive Portland Cement. Can we guess as to how many 'defective bags' that is? Strategic philosophies or practices such as Kaizen, Lean Manufacturing, Six Sigma, Total Quality Management and Continuous Improvement are used by many organisations to help improve processes, drive productivity and maintain a competitive edge in today's ever-increasing global economy. Despite varying concepts, each practice uses Key Performance Indicators (KPls) to assess, analyze and track manufacturing processes. Even if an organisation does not employ formal continuous improvement initiatives, efficiency gains can still be realized by borrowing lessons learned through the visual management techniques of those processes. This white paper discusses how visual management can drive productivity by leveraging seven common Key Performance Indicators (KPis) for production line monitoring.

What are Key Performance Indicators (KPls)? KPis are assorted variables that organisations use to access, analyze and track manufacturing processes. These performance measurements are commonly used to evaluate success in relation to goals and objectives. 2.14.5 What is Visual Management? Visual management is the process of displaying critical information such as KPis that relate specifically to production output, efficiency and quality. By displaying this data on the factory floor, employees have a better sense of production levels and tend to strive for higher performance. Visual management also provides actionable information that allows supervisors to better monitor performance and determine, in real-time, areas that may need improvement. The overall result helps to drive productivity throughout the organisation by increasing efficiency, quality and uptime. More information on this topic is outlined in Red Lion's "Three Visual Management Solutions" white paper.

2.15 COMMON PRODUCTION KPls Though KPis tend to vary by organisation a list of seven common production KPis used on automated plant floors follow:

1. Count (Good or Bad) An essential factory floor metric relates to the amount of product produced. The count (good .or bad) typically refers to either the amount of product produced since the last machine changeover or the.production sum for the entire shift or week. Many companies will compare individual worker and shift output to invoke a competitive spirit among employees. 2. Reject Ratio Production processes occasionally produce scrap, which is measured in terms of reject ratio. Minimizing scrap helps organisations meet profitability goals so it is important to track whether or not the amount. being pr A transport indicates the movement of workers, materials or equipment from one place to another. Ex.— • Movement of materials from one work station to another. • Workers travelling to bring tools.

D

4. Delay Delay (Temporary Storage) A delay occurs when the immediate performance of the next planned thing does not take place. Ex.— • Work waiting between consecutive operations. • Workers waiting at tool cribs. • Operators waiting for instructions from supervisor. 5. Storage V A storage occurs when the object is kept in an authorised custody and is protected against unauthorised removal. For example, materials kept in stores to be distributed to various work centres. 4.7

RECORDING TECHNIQUES

According to the nature of the job being studied and the purpose for which the record is required the techniques fall into following categories: 1. Charts. 2. Diagrams. 3. Templates and models. CHART: 1. OPERATION PROCESS CHART (outline process chart) 2. FLOW PROCESS CHART • Man type • Material type • Equipment type 3. MULTIPLE ACTIVITY CHART 4. TWO HANDED PROCESS CHART 5. TRAVEL CHART 6. SIMO CHART

Gives bird's-eye view of process and records principal operations and inspecting. Sequence of activities performed by worker. Sequence of activities performed on materials. Sequence of activities performed by equipment. Charts activities of men and/or machines on a common time scale. Activities performed by worker's two hands. Movement of materials and/or men between departments. Activities of worker's hands, legs and other body movements on common time scale.

Method Study

65

DIAGRAM:

7. FLOW AND STRING DIAGRAMS Path of movement of men and materials. 8. MODELS AND TEMPLATES Work place layout. 9. CYCLE GRAPH AND CHRONOCYCLE High speed, short cycle operation recording. 4.7.1 Charts

This is the most popular method of recording the facts. The activities comprising the jobs are recorded using method study symbols. A great care is to be taken in preparing the charts so that the information it shows is easily understood and recognised. The following information should be given in the chart: 1. Adequate description of the activities. 2. Whether the charting is for present or proposed method. 3. Specific reference to when the activities will begin and end. 4. Time and distance scales used wherever necessary. 5. The date of charting and the name of the person who does charting. 1. Operation Process Chart

It is also called outline process chart. An operation process chart gives the bird's-eye view of the whole process by recording only the major activities and inspections involved in the process. Operation process chart uses only two symbols, i.e., operation and inspection. Operation, process chart is helpful to: (i) Visualise the complete sequence of operations and inspections in the process. (ii) Know where the operation selected for detailed study fits into the entire process. (iii) In operation process chart, the graphic representation of the points at which materials are introduced into the process and what operations and inspections are carried on them are shown. Construction of the Chart

A start is made by drawing an arrow to show the entry of the main materials, writing above the descriptions of the components, and below the line the description of the condition. As each operation, inspection takes place, the symbol is entered and numbered in sequence, with a brief description on the right hand side and the time required for the operation on the left side. During assembly process, the major process is charted towards the right hand side of the chart and the subsidiary process on its left hand side. These are joined to each other and to the main trunk at the place of entry of the material or subassembly. The chart does not show where the work takes place, or who performs it. An illustration of operation process chart is shown in Fig. 4.2. 2. Flow Process Chart

Flow process chart gives the sequence of flow of work of a product, or any part of it through the work centre or the department recording the events using appropriate symbols. It is

Industrial Engineering and Production Management

66

OPERATION PROCESS CHART (PRESENT METHOD)

Task : Manufacture of pipe clip assembly Chart begins : Raw materials lying in the stores Chart ends : Finished assembly of pipe clip on the rack Charted by • Date of charting :

20 mm A/F Hex.

g

10 mm M.S. Bright bar

G.I. Casting

Cut to length

0.3

Turn

0.1 13 I Inspect

0.7

Drill

0.55

0.25

Tap

0.1 14 I Inspect seat

Cut thread

0.05

Part off

0.1 15 I Inspect holes

Bend

0 Drill holes face sheet

Cut thread

co a)

A

0.2

0.6

Nut

0.1

Centre distance and inspect thread

M/c radius

6 I Radius seat

Inspect and centre distance

0.1

0.05

O

0.3

0 Assemble

Assemble

0.45

Paint

0.15 0

Hang

SUMMARY Symbol

Frequency

Time

0

18

5.5

❑

08

0.65

Fig. 4.2: Operation Process Chart

Method Study FLOW PROCESS CHART (Material type) (PRESENT METHOD) Task : Manufacture of the component Chart begins Component lying in the stores Chart ends : The machined component lying in the stores Charted by Date of charting : Lying in store

To machine

Loaded on machine

Machining of component

To inspection bench

Waited till inspector is free

Inspect component

To stores

Placed in the rack

Stored in the rack SUMMARY

Cu EI o

Symbol

Frequency

Time

Distance

4

9.2 min

—

3

—

34 m

2 min

—

1

15 min

—

2

—

—

1

.

Fig. 4.3: Flow Process Chart (material type)

67

68

Industrial Engineering and ProduCtion Management FLOW PROCESS CHART (Man type) (PRESENT METHOD)

: Writing a letter Task : Typist in his chair at his office Chart begins Chart ends : Typist puts letter in "out tray" Charted by Date of charting :

To officers cabin Take dictation To his own seat Prepare for typing

Types letter

Checks for mistakes

Place in file for signature

To officer's cabin

Places file for signature

During checking and signature

Back to own seat

Type envelope

Put letter in envelope

Keep letter in "out" tray

SUMMARY Symbol

Frequency

❑

0 08

04

V D

01

Fig. 4.4: Flow Process Chart (Man Type)

01

69

Method Study FLOW PROCESS CHART (Man and Material type) (PRESENT METHOD) Task

: Inspection of component, MATERIAL TYPE

MAN TYPE Chart begins : Man in inspection Deptt. Chart ends : Man in inspection Deptt.

Chart begins : Material in goods receiving Chart ends : Material in stores

To goods receiving

Await arrival of man

Locate component

To inspection deptt.

Pickout component

Set on the bench

To inspection deptt. Inspection Set the component to bench Measure dimensions Visual inspection Stamped Measure and record length To Stores Put inspection seal Stored To stores Enter in stock

Return to inspection deptt.

SUMMARY Symbol Frequency

Symbol

0 6

4

I

Frequency

0 ' 3

D v

> 2

1

1

1

Fig. 4.5: Flow Process Chart (Man and Material Type)

the amplification of the operation process chart in which operations, inspection, storage, delay and transportation are represented. Flow process charts are of three types: (i) Material type—Which shows the events that occur to the materials. (ii) Man type—Activities performed by the man. (iii) Equipment type—How equipment is used.

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Industrial Engineering and Production Management

The flow process chart is useful • To reduce the distance travelled by men (or materials). • To avoid waitmg time and unnecessary delays. • To reduce the cycle time by combining or eliminating operations. • To fix up the ·sequence of operations. • To relocate the inspection stages. Like operation process chart, flow process chart is constructed by placing symbols one below another as per the occurrence of the .activities and are joined by a vertical line. A brief description of the activity is written on the right hand side of the activity symbol and time or distance is given on the left hand side. Illustration: One of the component involves the following activities: 1. Component was brought from stores 10 m away. 2. The component was loaded on the machine (2 min). 3. It was machined (5 min). 4. It was then moved to inspection bench �2 m away. 5. It has to wait for 15 min for the inspector to be free from previous job. 6. The component was checked for accuracy (2 min). 7. It was then moved back to store 12 m away from inspection bench and stored in rack. The chart is represented as shown in Fig. 4.3.

3. Two Handed Process Chart A two handed (operator process chart) is the most detailed type of flow chart in which the activities of the workers hands are recorded in relation to one another. The two handed process chart is normally confined to work carried out at a single workplace. This also gives synchronised and graphical representation of the sequence of manual activities of the worker. The application of this charts are: (i) To visualise the complete sequence of activities in a repetitive task. (ii) To study the work station layout. Construction of the Chart The two handed process chart consists of two charts, one for the left hand and other for the right hand. The simultaneous activities are recorded opposite to each other on the chart. This helps to analyse what left hand will be doing when right hand is working or vice versa at any point of time. All the five symbols are used and inspection and storage are not used in the conventional sense. Inspection symbol is used when touch or feel by hand is to be recorded. Storage symbol is used when the hand is used as a grip or vice to hold the object. Example of Two Handed Process Chart:

�-------� LAYOUT BOLTS

NUTS

®

OPERATOR

@

®

®

ASSEMBLY

Fig. 4.6: Work bench layout

Method Study

71

TWO HANDED PROCESS CHART (PRESENT METHOD) Task : Assembly of nut and bolt Chart begins : Both hands free before assembly Chart ends : Both hands free after assembly Charted by • Date of charting : LEFT HAND Description Reach for bolt

RIGHT HAND Symbol

Symbol

Description

1

Reach for bolt

Grasp bolt head

Grasp nut

Carry to central position

Carry to central position

Carry to central position Hold bolt Place nut on bolt

Hold bolt

Screw nut

Transfer assembly to right hand

Grasp assembly Release assembly Return hand to central position

SUMMARY Symbol

0 '

> V

D

Frequency (R.N.)

5

4

—

—

Frequency (L.H.)

2

2

2

2

Fig. 4.7: Two Handed Process Chart

72

Industrial Engineering and Production Management

4. Multiple. Activity Chart

It is a chart where activities of more than subject (worker or equipment) are each recorded on a common time scale to show their inter-relationship. Multiple activity chart is made to (i) Study idle time of the man and machines (ii) Determine number of machines handled by one operator (iii) Determine number of operators required in teamwork to perform the given job. Construction of the Chart

A multiple activity chart consists of a series of bars (columns) placed against a common time scale. Each subject is allocated one bar and the activities related to the subjects are represented in this bar. The columns are placed against a common time scale which starts at zero and ends at cycle time of the job. The task to be recorded is broken into smaller elements and time for each element is measured with the help of a stop watch. The activities are then recorded in the chart in their respective columns. Two symbols are used in the chart—One representing working and other idle. Working is represented by hatched column and Idle is represented by blank as shown in Fig. 4.8. The multiple activity chart is extremely useful in organising teams of operatives on mass production work. This is also used in maintenance. It is used to determine the number of machines which an operator can handle. It is useful in: • Reducing idle time of machines and operators. • Combine or eliminate some of the operations. • It helps to explore ways to increase utilisation of men and machines.

Fig. 4.8: Symbols Used in Multiple Activity Chart

An Illustration of Multiple Activity Chart

The operator engaged on the machine performs the following operations: 1. Pick up the job, place it between the jaws of a hydraulic vice (0.2 min). 2. Make the switch 'ON' to tightly hold the part (0.08 min). 3. Make the switch 'ON' start automatic cycle of the operation (0.08 min). 4. Machining of the part on auto cycle (1.5 min). 5. Wait till the vice opens automatically (0.08). 6. Pick up the machined job from the vice (0.05). 7. Keep it in the tray (0.05). Construct the multiple activity chart for the machining operation.

73

Method Study

Task Chart begins Chart ends Charted by Charting date

: : : . :

MULTIPLE ACTIVITY CHART (Present Method) Machining of a component The part to be machined lying near machine Machined part lying in the container

Operator

Machine T

0

Description

T

0.20

LOAD JOB

0.2

S IDLE

0.28

SWITCH 'ON'

0.08

IDLE

0.36

SWITCH 'ON'

0.08

IDLE

1.86

IDLE

1.91

PICKUP PART

0.05

IDLE

1.96

KEEP IN TRAY

0.05

IDLE

MACHINING OF PART "Autocycle"

Subject

Cycle time (min)

Time worked per cycle

OPERATOR

1.96

0.46

MACHINE

1.96

1.5

S

1.5

Percentage utilisation 23.4 ,

76.6

Fig. 4.9: Multiple Activity Chart 4.7.2 Diagrams

The flow process chart shows the sequence and nature of movement but it does not clearly show the path of movements. In the paths of movements, there are often undesirable features such as congestion, back tracking and unnecessary long movements. To record these unnecessary features, representation of the working area in the form of flow diagrams, string diagrams can be made: (i) To study the different layout plans and thereby select the most optimal layout. (ii) To study traffic and frequency over different routes of the plant. (iii) Identification of back tracking and obstacles during movements. Diagrams are of two types: 1. Flow Diagram and 2. String Diagram. 1. Flow Diagram

Flow diagram is a drawing, substantially to scale, of the working area, showing the location of the various activities identified by their numbered symbols and are associated with particular flow process chart either man type or material type. The routes followed in transport are shown by joining the symbols in sequence by a line which represents as nearly as possible the paths or movement of the subject concerned. The procedure to make the flow diagram: (i) The Layout of the workplace is drown to scale. (ii) Relative positions of the machine tools, work benches, storage and inspection benches are marked on the scale. (iii) Path followed by the subject under study is traced by drawing lines. (iv) Each movement is serially numbered and indicated by arrow for direction.

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Industrial Engineering and Production Management

(v) Different colours are used to denote different types of movements. A simple flow diagram is shown in Fig. 4.10. C

B

E

I

H

Fig. 4.10: A Simple Flow Diagram 2. String Diagram

The string diagram is a scale layout drawing on which length of a string is used to record the extent as well as the pattern of movement of a worker working within a limited area during a certain period of time. It is especially valuable where the journeys are so irregular in distance and frequency to see exactly what is happening. The primary function of a string diagram is to produce a record of an existing set of conditions so that the job of seeing what is actually taking place is made as simple as possible. One of the most valuable features of the string diagram is the way it enables the actual distance travelled during the period of study to be calculated by relating the length of the thread used to the scale of the drawing. Thus it helps to make a very effective comparison between different layouts or methods of doing job in terms of the travelling involved. The main advantage of string diagram compared to flow diagram is that repetitive movements between work stations which are difficult to be traced on the flow diagram can be conveniently shown on string diagram. Procedure to draw string diagram: (i) A layout of the workplace or factory is drawn to scale on a soft board. (ii) Pins are fixed into boards to mark the locations of work stations, pins are also driven at the turning points of routes. (iii) A measured length of thread is taken to trace the movement (path). (iv) The distance covered by the object is obtained by measuring the remaining part of the thread and subtracting it from the original length.

Method Study

75

Figure 4.11. shows a string diagram. H

E

C

D

Fig. 4.11: String Diagram

4.8

MICRO-MOTION STUDY

Micro-motion study provides a technique for recording and timing an activity. Micromotion study is a set of techniques intended to divide the human activities in a groups of movements or Micro-motions (called as Therbligs) and the study of such movements helps to find for an operator one best pattern of movement that consumes less time and requires less effort to accomplish the task. Therbligs were suggested by Frank B. Gilbreth, the founder of motion study. Micro-motions study was originally employed for job analysis but new uses have been found for this tool. The applications of micro-motion study include the following: (i) Is an aid in studying the activities of two or more persons on a group work? (ii) As an aid in studying the relationship of the activities of the operator and the machine as a means of timing operations. (iii) As an aid in obtaining motion time data for time standards. (iv) Acts as a permanent record of the method and time of activities of the operator and the machine. The micro-motion group of techniques is based on the Idea of dividing human activity into divisions of movements or groups of movements (Therbligs) according to purpose for which they are made. Gilbreth differentiated 17 fundamental Hand or hand and eye motions to which an eighteenth has subsequently been added. Each Therblig has a specific colour, symbol and letter for recording purposes. The Therbligs are shown in Table 4.1.

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76

Therbligs refer primarily to motions of human body at the workplace and to the mental activities associated with it. They permit a much more precise and detailed description of the work than any other recording techniques. Micro-motion study involves the following steps: 1. Filming the operation to be studied. 2. Analysis of the data from the films. 3. Making recording of the data. 1. Filming the Operation: Micro-motion study consists of taking motion pictures of the activity while being performed by an operator. The equipment required to make a film or video tape of the operation consists of 16 mm movie camera, 16 mm film, wink counter (micro-chronometer) and other usual photographic aids. Micro-chronometer (or wink counter) is a timing device placed in the field of view while filming. Time is recorded in winks. (1 wink =1/2000 of a minute) 2. Analysis of Data from Films: Once the operation has been filmed and film is processed, then the film is viewed with help of projector for analysis of micro-motions. The film is analysed in the following way: Film is run at normal speed so as to get familiar with the pattern of movement involved. (i) A typical work cycle is selected from amongst the filmed cycles. (ii) Film is run at a very low speed and is usually stopped or reversed frequently to identify the motions (therbligs). Therbligs after identification are entered in analysis sheet. 3. Recording of Data is Done USing SIMO Chart. Table 4.1: Therbligs

SYMBOL

CODE

KID>

SH

NAME

DESCRIPTION

COLOUR

SEARCH

Locate an article

F

FIND

Mental reaction at GRAY end of search

,

ST

SELECT

LIGHT GRAY

(--

G

GRASP

Selection from a number Taking hold

H

HOLD

Prolonged grasp

GOLD OCHRE

TL

TRANSPORT LOADED Moving an article

P

POSITION

A

ASSEMBLE

U.

USE

i(Thi

__90 I

BLACK.

RED

GREEN

Placing in a definite BLUE location Putting parts VIOLET together Causing a device to PURPLE perform its function

Method Study d—I-

DA

0 8

I

,______). .._)

'

77

DISASSEMBLE

Separating parts

LIGHT VIOLET

INSPECT

Examine or test

BURNT OCHRE

PP

PREPOSITION

Placing an article ready foruse

PALE BLUE

RL

RELEASE LOAD

Release an article

CARMINE RED

TE

TRANSPORT EMPTY Movement of body member

R

REST

Pause to overcome fatigue

ORANGE

UNVOIDABLE DELAY

Idle - outside person's control

YELLOW

-•,..__, UD

a OLIVE GREEN

SIMO Chart Simultaneous Motion'Cycle Chart (SIMO chart) is a recording technique for micro-motion' study. A SIMO chart is a chart based on the film analysis, used to record simultaneously on a common time scale the therbligs or a group of therbligs performed by different parts of the body of one or more operators. It is the micro-motion form of the man type flow process chart. To prepare a SIMO chart, an elaborate procedure and use of expensive equipment are required and this study is justified when the saving resulting from study will be very high. The format for SIMO chart is shown in Fig. 4.12. SIMO CHART Operation Part drawing No. Method Operation No. Wink counter Reading

• : Present/Proposed •

Left hand description

Therbligs

Tithe

Film No. Chart No. Date Charted by Time in 200/m

•

.

•

Time

Therbligs

Right hand description

Fig. 4.12: Format for Simo Chart 4.9

MEMO MOTION STUDY

Memo motion photography is a form of time-lapse photography which records activity by the use of cine camera adapted to take picture at longer intervals than normal (time interval normally lies between 1/2 sec to 4 sec).

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Industrial Engineering and Production Management

There are many jobs that have activities which does not need to be examined in fine detail, and are still too fast or intricate to be recorded accurately without the help of a film. There are cases where Micro-motion study is not justified like smaller production quantities, job cycle n;tay exceed 4 minute duration. The filming of these various classes of works can be . performed efficiently and economically by a method of time lapse cine photography known as memo motion. This is carried out by attaching an electric time lapse unit to the cine camera so that a picture is taken at an interval of time set at any convenient unit between 1/2 sec to 4 sec in frequency. A camera is placed with a view over the whole working area to take pictures at the rate of one or two per second instead of 24 frames a second. The result is that the activities of 10 or 20 minutes may be compressed into one minute and a very rapid survey of the large movements·giving rise to wasted efforts can be detected and steps are taken to eliminate them. It is economical compared to Micro-motion study.

4.10 CYCLE GRAPH AND CHRONOCVCLE GRAPH These are the photographic techniques for the study of path of movements of an operators hands, fingers, etc. These are used especially for those movements which are too fast to be traced by human eye. A cycle graph is a record of path of movement usually traced by a continuous source . of light on a photograph. A small electric bulb is attached to hand, finger or other part of the body of the operator performing the operation. A photograph is taken by still camera and the light source shows the path of the 'motion and the path of the photograph is called "cycle graph."· 0 � � Continuous path

C

{J

{J

{J

{J

Fig. 4.13: Cycle graph an 1, select site N Merit of N Otherwise, i.e., < 1, select M The advantages of this method are—it compares both subjective and objective (tangible and intangible) factors and gives a quantitative figure to the decision maker. 2. Method Based on the Economics of Various Sites: The ideal location for the plant should be such that the cost of procuring the materials and processing them into products and the cost of distribution of finished goods to the customer should be minimum. This method is illustrated through an example. An ABC company intends to select one of the three locations. Both tangible and intangible factors collected by the expert is given in table 17.3: If the value of

Table 17.3:

PARTICULARS

(a) (b) (c) (d) (e) (f) (g) (h)

Total investments in land, building, plant and ink (Z '000) Revenues ('0000) Expenses on raw materials ('0000) Distribution cost ('0000) Expenses on utilities ('0000) Wages and salaries ('0000) Community facilities Community attitude

SITE A

B

C

250

325

270

410 89 40 50 25 Indifferent Indifferent

515 100 60 40 30 Good Good

360 98 30 25 28 Bad Indifferent

Here the criteria used to evaluate the suitability of the sites is rate of return on investment. Rate of return is computed as Total Revenues - Total Expenses R.O.I. Total Investment The table 17.4 shows the calculation of R.O.I. for the three alternatives. Table 17.4:

PARTICULARS

SITE A

1. 2. 3. 4. 5.

Total investments Total sales Cost of raw material Cost of distribution Expenses on utilises

250 410 89 40 50

B 325 515 100 60 40

C

270 360 98 30 25

420 6. 7. 8.

Industrial Engineering and Production Management Salaries and wages Total expenses Rate of return (%)

25 204 82.4%

30 230 87.6%

28 181 66.29%

As the R.O.I. for site 'B' is higher compared to others, it is the best choice. SUMMARY Facility location is categorized as a strategic decision, because it is concerned with the whole environment in which the firm operates and it involves the entire resources and the people who form the company and the interface between the two. Like any other strategic decision, facility location has long term effects on company's operation; therefore, a lot of research needs to be carried out in order to collect enough information to make an informed decision. The selection of location is a key-decision as large investment is made in building plant and machinery. It is not advisable or not possible to change the location very often. So an improper location of plant may lead to waste of all the investments made in building and machinery equipment When deciding on a location, mangers must take into account the culture shock employees might face after a location move. Culture shock can have a big impact on employees which might affect workers productivity, so it is important that mangers look at this. There are three specific analytical techniques available to aid in evaluating location alternatives: Location Cost-Volume-Profit Analysis,factor rating method and centre og gravity method. Problem 1: An automobile air conditioner manufacturer currently manufactures its RB-300 line at three different 400 n Plant C places (locations), Plant A, Plant B and Plant C respectively. (275,380) Recently, management has decided to build all compressors, a 300 - n Plant B (100,300) major component in a separate dedicated facility Plant D. Using center of gravity method and the information given determine 200 n Plant A (150,75) the best location for plant D. Assume linear relationship between volumes shipped and 100 shipping costs. Quantity of compressors required by each plant. 100 200 300 400 Compressors required/year Plant Plant location matrix A 6,000 B 8,200 C 7,000 Solution: The center of gravity method is a technique for locating facilities that considers the existing facilities, the distances between them and the volumes of goods to be shipped. This method assumes the inbound and outbound transportation. This method begins by placing the existing locations on a co-ordinate grid system. The choice of coordinate systems in entirely arbitrary. The purpose is to establish relative distances between locations, using longitude and latitude of a grid layout. The center of gravity is found by calculating the x and y co-ordinates that result in the minimal transportation cost. The formula to calculate x and y co-ordinate.

Plant Location Cx =

Ed;Y V EV

CY -

Ed;y V; Evi

421

where C, = x co-ordinate of the center of gravity Cy = y co-ordinate of the center of gravity d1 = x co-ordinate of the ith location = y co-ordinate of the ith location = Volume of goods moved to or from the ith location. d1Y= 150, da = 100, da = 275,

vi X

/V,

Ed,yV, CY — EV,

dly = 75, d2y = 300, day = 380,

V1 = 6,000 V2 = 8,200 V3 = 7,000

(150 x 6000) + (100 x 8200) + (275 x 7000) = 172 6000 + 8200 +7000 (75x6000) + (300x8200) + (380x7000) =262.7 6000 + 8200 + 7000

The location for plant D is D (Cx, Cy) = D [172, 263]. Problem 2: A company is planning to undertake the production of medical testing equipments has to decide on the location of the plant. Three locations are being considered, namely, Pune, Ahmednagar and Miraj. The fixed costs of three locations are estimated to be 300 Lakhs, 500 Lakhs and 250 Lakhs respectively. The variable costs are 3000,Z 2000 and 3500 per unit respectively. The average sales price of the equipment is 7000 per unit. Find (i) The range of annual production/sales volume for which each location is most suitable. (ii) Select the best location, if the sales volume is of 18,000 units. Solution: (i) Determination of total costs of three locations. Total cost = Fixed cost + [volume or quantity produced] x [variable cost] = F + x.v where 'x' is the quantity to be produced. a. Total cost at Pune ... (1) = 300,00,000 + 3000 x b. Total cost at Ahmednagar = 500,00,000 + 2000 x ... (2) c. Total cost at Miraj = 200,00,000 + 3500 x (3) For the various volumes of production, i.e., 5,000, 10,000, 15,000, 20,000 and 25,000 units, the total costs are computed at the three locations and they are plotted as shown in Fig. 17.3.

Industrial Engineering and Production Management

422

Table. 17.5: Total

costs at different volumes for three locations (Z in Lakhs) 5,000

10,000

15,000

20,000

25,000

Pune

450

600

750

900

1,050

Ahmednagar '

600

700

800

900

1,000

Miraj

425

600

775

950

1,125

Volume (Nos)

Quantity Fig. 17.3

Decision Rules For quantities upto 20,000 units, Miraj is the most economical location. For quantities above 22,000, Pune is, the preferred location. Problem 3: A new plant is to be located which will supply raw materials to a set of existing plants in a group of companies. There are five existing plants which require material movement with new plant. The locations of the existing plants are (400,200), (800,500), (1100,800), (200,900) and (1300,300). The material transported (in tons) per year from the new plant to various existing plants are 450, 1200, 300, 800 and 1500 respectively. Determine the optimum location for the new plant such that the distance moved is minimum. Solution: Let (x, y) be the co-ordinates of the new plant. (i) Determination of optional x co-ordinate for the new plant. The data of existing plants arranged in the increasing order of their x co-ordinates and their weights are represented in the table 17.6. Table 17.6 (i)

Existing plant 4 1 2 3 5 Total

x co-ordinate 200 400 . 800 1100 1300

weight 800 450 1200 300 1500

cumulative weight 800 1250 2450 2750 4250 4250 tones

Thus, the median location corresponds to a cumulative weight of 4250/2 = 2125. From

Plant Location

423

. the table, the corresponding x co-ordinate value of 800. Since the cumulative weight first ·exceeds 2125 at x = 800. (ii) Determination of y co-ordinate Table 17 .6 (ii)

Existing plant 1 5 2 3 4 Total

x co-ordinate 200 300 500 800 900 '

weight 450 1500 1200 300 800

cumulative weight 450 1950 3150 2450 4250 4250 tones

The median location of y axis corresponding, to the cumulative weight of 4250/2 = 2125 is 500. Hence optimal y co-ordinate for new facility is 500. The optimal values of (x, y) are (800, 500).

-------

REFERENCES FOR FURTHER READING 1. 2. 3.

4. 5.

Mayer, Raymond R. Production and Operations Management. New York: McGraw-Hill Education, (1982) Wild, Ray. Production and Operations Management: Principles and Techniques. London: Holt, Rinehart and Winston, (1980) Magee, John F. Industrial Logistics.' Analysis and Management of Physical Supply and Distribution Systems. New York: McGraw-Hill Education, (1968) Love, Robert F., J. G. Morris, and George 0. Wesolowsky. Facilities Location: Models & Methods. New York: Elsevier, (1988) Riggs, James L. Pr�duction Systems; Planning, Analysis, and Control. 4th. ed. New York: Wiley, (1987)

REVIEW QUESTIONS 1. 2. 3. 4. 5.

Explain why plant location decisions are important to the organisation? What are the factors that influence the selection of location for a plant? Explain the advantages and disadvantages of urban, semi-urban and rural locations. Explain the quantitative' methods available for plant location. Explain the modern trend in plant location. 6. Define plant location problem. 7. How the Government policy affects the selection of location? 8. Explain the factors that influence the location for the following products. Justify your answer: (a) Textile (cotton) industries, (b) Steel, (cf) Aluminium, (c) Cement, (e) Food processing Industries, (� Sugar Industries, (g) Paint Industries. 9. What are the major impacts of Globalization on location planning? Determine the dominant location factors with proper justification for the following Passenger car manufacturing Cement manufacturing unit A software companY. A technical institute

r

Plant Layout

Chapter Outcomes After completing the chapter, you will be able to: •

Define the plant layout aQd factors that influence plant layout

•

Describe the types of layout and their significance

•

Understand the flow patterns in layouts

•

Design the process layout

•

Design the product layout and balance the production line

•

Describe systematic layout planning and apply it for layout planning

•

Understand the computer"packages for layout design

18.1 INTRODUCTION A facility layout is an arrangement of everything needed for production of goods or delivery of services. A facility is an entity that facilitates the performance of any job. It may be a machine tool, a work centre, a manufacturing cell, a machine shop, a department, a warehouse, etc.). It means planning for the locations of all machines, utilities, employee workstations, customer service areas, material storage area, aisles, rest rooms, lunchrooms, internal walls, offices and computer rooms. This is for the flow patterns of materials and people around� into and within buildings. The layout design generally depends on the products variety and the production volumes. Four types of organization are referred to, namely fixed product layout, process layout, product layout and cellular layout (Dilworth, 1996).

Factor Affecting Facilities Layout Planning The final solution for a Plant Layout has to take into account a balance among the characteristics and considerations of all factors affecting plant layout, in order to get the maximum advantages. 424

Plant Layout

425

The factors affecting plant layout are given below:

Material The layout of the productive equipment will depend on the characteristics of the product to be managed at the facility, as well as the different parts and materials to work on. Main factors to be considered: size, shape, volume, weight, and the physical-chemical characteristics, since they influence the manufacturing methods and storage and material handling processes. The sequence and o'rder of the operations will affect plant layout as well, taking into account the variety and Quantity to produce.

Labour Labour has to be organized in the production process (direct labour, supervision and auxiliary services). Environment considerations: employees safety, light conditions, ventilation, temperature, noise, etc. Process considerations: personnel qualifications, flexibility, number of workers required at a given time as well as the type of work to be performed by them.

Material Handling Material handling does not add value to the product; its just waste. Objective: Minimize material handling as well as combining with other operations when possible, eliminating, unnecessary and costly mov�ments.

Waiting Time

Continuous Material Flow ·through the facility, avoiding the cost of waiting time and demurrages that happen when the flow stops. On the other hand, the material waiting to flow through the facility not always represents a cost to avoid. As stock sometimes provides safety to protect production, improving customer service, allowing more economic batches, etc. It is necessary then to consider space for the required stock at the facility when designing the layout. Resting time to cool down or heating up.

1. Nature of the Product: The nature of the product to be manufactured has a significant influence on plant layout. Small and light products can be moved from one machine to another with minimum effort and time and therefore line layout would be more suitable. Stationary layout would be suitable for heavy and bulky products. In case of production of large.variety of non-standardized products, process layout is ideal. 2. Production Volume: Line layout should be preferred if standardized commodities are manufactured on a large scale. Functional layout is suitable if production is based on customers' orders. It is better suited for low volume job production. 3. Location of the Site: The topology and size of the site influences the choice of a particular layout. The idea is to maximize the utilization of space. Layout should also suit the facton; building. The positioning of elevators, stairways, parking lots and storage points also influence the layout.

Type of Machines: Stationary layout is preferable if machines are heavy and emit more noise. Such heavy machinery can be fittE;!d on the floor. Adequate space should be provided for the location of machines and also there should be sufficient space between theni. to avoid accidents. Having information about the processes, machinery, tools and necessary equipment, as well as their use and requirements is essential to design a correct layout. The methods and time studies to imp:r:ove the processes are closely linked to the plant layout. Regarding machinery, the type, total available for each type, as well as type and quantity of tools and equipment has to be considered. It is essential as well to know about space required, shape, height, weight, quantity and type of workers required, risks for the personnel, requirements of auxiliary services, etc..

426

Industrial Engineering and Production Management

1. Climate: Temperature, illumination, ventilation should be considered while deciding on the type of layout. The above factors should be considered in order to improve the health and welfare of employe _es. 2. Service facilities: The layout should provide for the comforts and welfare of the employees. It should have adequate provision for rest rooms, drinking water, and lavatory. There should be sufficient space for free moveme.nt of workers. 3. Safety of employees: While deciding on a particular type of layout, the safety of employees should be given importance. The layout should provide for obstruction free floors, non-slippery floors, protection against dangerous fumes, excess heat, strong odours etc. 4. Type of production: Layout plans differ ,according to the type of production. In case of job orders, pro1uction of non-standardized products are undertaken and therefore functional or process outlet is suitable. Line layout would be suitable when there is mass production of standardized goods. 5. Type of process: In the case of intermittent type of production (bi-cycle manufacturing, electronics), functional layout is suitable. For synthetic type of Production (cement and automobile industries), line layout is preferable. 6. Management policies: Policies of the management relating to type of product, quality, scale of production, level of plant integration, type of production, possibility ·of future expansion etc., influence the type of layout to be adopted.

18.2 DEFINITION Plant layout refers to the physical arrangement of production facilities. It is the configuration of departments, work centres_ and equipment in the conversion process. According to Moore "Plant layout is a plan of an optimum arrangement of facilities including personnel, operating equipment, storage space, material handling equipment and all other supporting services along with the design of best structure to contain all these facilities." The overall objective of plant layout is to design a physical arrangement that meets the required output quality and quantity most economically.

18.3 PLANT LAYOUT PROBLEM Each one in the organisation is connected with the plant layout some way or the other. So the need for the plant layout change arise becaus� of the following reasons: 1. Changes in the product design or introduction of the new product 2. Changes in the volume of demand for the company's product 3. Increasing frequency of accidents because of existing -layout 4. Plant and machinery becomes outdated and is to be replaced by new one 5. Poor working environment affecting worker efficiency and productivity 6. Change in the location or markets 7. Minimising the cost through effective facilities location

Plant Layout

427

18.4 OBJECTIVES OF PLANT LAYOUT The primary goal of the plant layout is to maximise the profit by arrangement of all the · plant facilities to the best advantage of total manufacturing of the product. Thus the objective of plant planning is the best relationship between output, space and . manufacturing cost. The objectives of plant layoutare: 1. Streamline the flow of materials through the plant 2. Facilitate the manµfacturing process 3. Maintain high turnover of in process inventory 4. Minimise materials handling 5. Effective utilisation of men; Equipment and space 6. Make effective utilisation of cubic space . 7. Flexibility of manufacturing operations and arrangements 8. Provide for employee convenience, safety and comfort

18.5 PRINCIPLES OF PLANT LAYOUT 1. Principle of Integration: A good layout is on� that integrates men, materials, machines and supporting services and others in order to get the optimum utilisation of resources and maximum effectiveness. 2. Principle of Minimum Distance: This principle is concerned with the minimum travel (or movement) of man and materials. The facilities should be arranged such that, the total distance travelled by the men and materials should be minimum and as far as possible straight line movement should be preferred. 3. Principle of Cubic Space Utilisation: The good layout is one that utilise both h�rizontal and vertical space. It is not only en.ough if only the floor space is utilised · optimally but the third dimension, i.e., the height is also to be utilised effectively. 4. Principle of Flow: A good layout is one that makes the materials to move in forward direction towards the completion stage, i.e., there should not be any backtracking. 5. Principle of Maximum Flexibility: The good layout is one that can be altered . without much cost and time, i.e., future requirements should be taken into account while designing the present layout. 6. Principle of Sa{ety and Security and Satisfaction: A good layout is one that gives due consideration to workers safety and satisfaction and safeguards the plant and machinery against fire, theft, etc. 7. Principle of Minimum Handling: A good layout is one that reduces the material handling to the minimum.

18.6 ADVANTAGES OF PLANT LAYOUT 1. Advantages to the Worker: A good layout will reduce the effort of the workers and minimises the manua} material handling. It reduces the number of accidE;nts and provide better working conditions.

·'

428

Industrial Engineering and Production Management

2. Advantages to the Management: Effective.plant layout reduce the labour costs and enhances the productivity thus ultimately reducing the cost per unit. This helps the management to gain competitiveness in manufacturing. 3. Advantages to Manufacturing: Minimises the movement between work centres and also results in reduced manufacturing cycle. 4. Advantages to Production Control: A good layout facilitates production through uniform and uninterrupted flow of materials and helps to carry out production activities within the predetermined time period and with effectiveness.

18.7 TYPES OF LAYOUT Although there are hundreds of hybrid design layouts, they are all based on three basic layout concepts intended to meet the needs of specific types of manufacturing. These layout designs consist of: Process Layout Design, Fixed-Position Layout Design, and Product Layout Design. Each type of layout has its own unique set of advantages and disadvantages, and each tends to utilize its own type of material handling set-up. In fact, material handling is an important part of all three layouts, but for the Product Layout Design approach, it is virtually imperative,

Process (Functional) Layout In the job shop layout, machines are grouped according to function to machine centers. Orders for individual products are routed through the various machine centers to obtain the required processing. Designed to facilitate processing items or providing services that present a variety of processing requirements. The layout includes departments or other functional groupings in which similar kinds of activities are performed. This type of plant layout is useful when the production process is organized in batches. Personnel and equipment to perform the same function are allocated in the same area. The different items have to move from one area to another one, according to the sequence of operations previously established. The variety of products will lead to diversity of flows through the facility. Variations in the production volumes from one period to the next one (short period of time) may lead to modifications in the manufactured quantities as well as the types of products to be produced. Diagram of process layout is shown in Figure 18.1 and 18.2. Lathe

Lathe

Drill

Weld

Weld

Lathe

Lathe

Drill

► Paint

Paint

a 0 a g

h

'V Mill

Mill

Assembly

Mill

Mill

Assembly

4 Fig. 18.1: Process Layout

e 4

Plant Layout

429

LAB 1=

0 BOILER HOUSE

J

NEW ACID =' ETCH

OIL STORE

BOND STORE

OLD ACID ETCH

MAINTENANCE

FORGE

PIPE SHOP

—STORES

AREA ■ WELD

HEAT MACHINE SHOP

SHOP

TREATMENT

MELT SHOP

CONDO

pd

OFFICE

METRES

Fig. 18.2: Example of process layout METALICS

CORE GAS AND ARTICULATE EMISSIONS

GAS AND PARTICULATE EMISSIONS

to% ) l' 16114 'w Bp iEt‘

METAL MELTING

FLUXES

ECTR ARC

CUPOLA

GAS AND PARTICULATE EMISSIONS

SHIPPING DUCTILE IRON INNOCULATION

\

AVoii ( fiLL

GASES

•

4,,, tt, ,,

DUST

SAND

• II

RETURN.. AND Av..14,1; ASAND 'GASES ...,c,,1 METAL -lt., GAS CASTING SHAKEOUT .40.....,-- COOLING AND POURING CLEANING

o

FINISHING Att.-DUST ,

ly

-

BINDER 471

pusr

RETURN SAND SPILL

1. SAND GASES SAND PREPARATION

CORES

4*

1

ja

DUST

CORE SAND AND BINDER

tt t)

MOLDING CORE MAKING

1:2

Fig. 18.3: Layout of a Foundry Advantages

1. Flexibility of equipment and personnel. 2. Lower investment on account of comparatively less number of machines and lower cost of general purpose machines. 3. Higher utilisation of production facilities. 4. Greater flexibility with regards to work distribution to machineries and workers.

430

Industrial Engineering and Production Management

5. Variety of job makes the job challenging and interesting. 6. Supervisors will become highly knowledgeable about the functions under their department.

Disadvantages 1. Backtracking and long movements may occur in the handling of materials thus reducing material handling efficiency. 2. Material handli.Jilg cannot•be mechanised which adds to cost. 3. Process time is prolonged which reduce the inventory turnover and increases the investment in inventories. 4. Production planning and control is difficult. 5. More space is required. 6. Lowered productivity due to number of set-ups.

Product (Line) Layout Here the product (or products) follows a fixed path through th(! production resources. The resources are arranged to minimize the material movement. This type of plant layout is useful when the production process is organized in a continuous or repetitive way. Product Layout Design is one of the most popular facility layouts in the world of manufacturing. Product Layouts (also known as assembly lines) arrange activities in a production line according to a sequence of operations _that need to be performed to assemble a particular product. Product Layouts are suitable for mass production or repetitive operations in which demand is steady and volume is high. Because of this, Product Layouts are more autonomous than the other designs mentioned above. A Product Layout Design requires that materials be moved in one direction along the assembly line and always in the same pattern. The major concern for the Product Layout Design is balancing the · assembly line so that no one workstation becomes a bottleneck and holds up the flow of work through the line. The advantage of the Product Layout Design is in its efficiency and n ease of use. The disadvantage is i its inflexibility. For manufacturing facilities utilizing a Product Layout Operation Design, there are ways to improve layout functionality and flexibility. A flexible manufacturing system can produce a large volume and variety of products. The emphasis is often on automation, · and computers run all the machines that complete the process. Since it's so expensive to use automated' processes in a Product_ Layout Design, most industries can't afford to incorporate Flexible Manufacturing Systems in the- traditional sense of the word. But, there are more. economic solutions for companies looking to streamline their operation and develop a flexible manufacturing facility, particularly for those follot\ring the Product Layout Design. Continuous flow: The corred operations flow is reached through the layout design and equipment and machinery specifications. Repetitive flow (assembly line): The correct operations flow will be based in a line balancing exercise, in order to avoid problems generated by bottle necks. The plant layout will be based in allocating a machine as close as possible to the next one in line, in the correct sequence to manufacture the product. A job is divided into a series of standardized tasks, permitting specialization of both labour · and equipment. Because of the high volume of production, the machines on the line can be designed with a high level of fixed automation, with very little manual labour. Operations are arranged in the sequence required to make the product.

Plant Layout

431

Diagram of Product Layout is shown in Fig. 18.3 Lathe

Drill

Drill

O• Grand

A Press

► Bend

Drill

0

e m

r a g

Mill

0.

Drill

0

u y

► Lathe

W a r e h

► Lathe

e

Drill

Fig. 18.4: Product Layout • Product layout Machines are organized to conform to the sequence of operations High volume, standardized/mass production

/ Paper Raw Materials 1---> Machines Pulp, Kraft, etc. (Run Formation and Sequencing)

/

Reels

Winders (Trimming)

z

Oa

0 , =EP

Sheeters (Finishing) Pallets

Barn boo

• •L • Trucks and Trains (Loading)

Processing

Fig. 18.5: Product layout (line Layout): Eg: Paper mill

Warehouses E> Ports

432

Industrial Engineering and Production Management

Advantages

1. Reduced material handling cost due to mechanized handling systems and straight

2. 3. 4. 5. 6.

flow. Perfect line balancing which eliminates bottlenecks and idle capacity. Manufacturing cycle is short due to uninterrupted flow of materials. Simplified production, planning and control. Small amount of work in process inventory. Unskilled workers can_ learn and manage the production.

Disadvantages

1. 2. 3. 4.

Lack of flexibility - A change in product may require the facility modification. Large capital investment. Dedicated or special purpose machines. Dependence of the whole activity on each part. Breakdown of any one machine in the sequence may result in stoppage.of production.

Fixed Position Layout For tasks ori. large objects such as the manufacture of an electrical generator, the construction of a building, or the repair of a large air plane, the machines implementing the operation must come to the product, rather than the product moving to the ma 3 occurs for products is P and V. Product P is produced in the volume of 140 + 90 = 230 units per month. The load summary matrix is computed as follows. From the figure it is noticed that there is only one flow between the non-adjacent department (3 and 6) and it is of significant magnitude of 175 units. Now, the layout is to be improved by reducing this flow. (i) Exchange the place of the departments 2 and 6 in a grid. The resultant layout is shown below in Fig. 18.22. 1 350

495

Fig. 18.22: Improved Layout.

This layout is an improvement over the earlier layout because of the non-adjacent flows have been reduced from 175 to 75. No further improvement is possible. The layout

459

Plant Layout

on the grid is transformed into actual areas by putting department squares on the grid and are arranged in the available space of 100 x 100 m2. 37.5 37.5 25

60

3 25

53.33

5

4

1

40

6

46.67

2 53.58

21.42 Final Layout

Load Summary Dept. 1

1 -

2 3 4

2 (75) -

3 140 + 90 (230) (0)

4 175 + 75 + 100 (350) 50 + 115 (165) 140 + 90 (230) -

6 (0)

5 (0) (75) (0) 140 + 50 + 115 + 100 + 90 (495)

(115) (175) (175) 140 + 100 + 90 (330) -

5 6

Ranking the closeness requirements of pair of departments as per the load summary. Pairs of Department

Load Summary

Rank

4 and 5 4 and 1 5 and 6 4 and 3 1 and 3 3 and 6 4 and 6 2 and 4 2 and 1 2 and 5

495 350 330 230 230 175 175 165 75 75

I II III IV IV VI VI VIII IX IX

The rank I indicates that it is highly preferable to keep departments (D and E) close together. The increasing rank indicates the less and less preference. Based on the closeness rankings the departments are arranged on a grid along with their flows.

Industrial Engineering and Production Management

460

Problem 3: The present layout is shown in the figure. The manager of the department is intending to interchange the departments C and F in the present layout. The handling frequencies between the departments is given. All the departments are of the, same size and configuration. The material handling cost per unit length travel between departments is same. What will be the effect of interchange of departments C and F in the layout?

E B D F

A C

From/To

A

B

C

D

E

F

A

-

0

90

160

50

0

B

-

-

70

0

100

130

C

-

-.

-

20

0

0

D

-

-

-

-

180

10

E

-

-

-

-

-

40

-

-

-

F-

-

-

Solution: (i) The distance matrix for the existing layout considering only the departments that share boundaries with adjacent department. Distance matrix for the existing layout.

From/To A B C D E F

A -

B 1

C 1 2

D 2 1 1

E 2 3 1 2

F 3 2 2 1 1 -

(ii) Computation of total cost matrix (combining the inter departmental material handling frequencies and distance matrix. Total cost matrix for initial layout.

461

Plant Layout

From/To A B C D E F Total

A

B 0

C 90 140

D 320 0 20

E 100 300 0 360

F 0 260 0 10 40

Total 510 700 20 370 40 1640

If the departments are interchanged the layout will be represented as shown below. A F E B D C The distance matrix and the cost matrix is represented as shown. From/To A B C D E F

A -

B 1

C 3 2

D 2 1 1

E 2 3 1 2

F 1 2 2 1 1 -

F 0 260 0 10 40

Total 690 700 20 370 40 1840

Total cost matrix for the modified layout. From/To A B C D E F Total

A

B 0

C 270 140

D 320 0 20

E 100 300 0 360

The interchange of departments C and F increases the total material handling cost Thus, it is not a desirable modification. Problem 4: A defence contractor is evaluating 'ts machine shops current process layout. The figure below shows the current layout and the table shows the trip matrix for the facility. Health and safety regulations require departments E and F to remain at their current positions. E B F A

C

D

Current Layout

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Industrial Engineering and Production Management

Dept.

A

B

C

A B C D E F

-

8 -

3

D

E

F

9

5

8

9 3 3 -

3 -

Trips between departments Improve the layout based on trial and error method and also evaluate using load distance (Id) score? E C F A B D Proposed Layout Proposed plan

Dept. Pair

No. of Trips (1)

Existing plan Distance (2)

Load x Distance (1 x 2)

Distance (3)

Load x Distance (1 x 3)

A-B A-C A-E A-F B-D C-E C-F D-F E-F Total

8 3 9 5 3 8 9 3 3

2 1 1 3 2 2 2 1 2

16 3 9 15 6 16 18 3 6 92

1 2 1 3 1 1 1 1 2

8 6 9 15 3 8 9 3 6 67

SUMMARY Plant layout refers to the physical arrangement of production facilities. It is the configuration of departments, work centers and equipment in the conversion process. According to Moore "Plant layout is a plan of an optimum arrangements of facilities including personnel, operating equipment, storage space, material handling equipment and all other supporting services along with the design of best structure to contain all these facilities." The overall objective of plant layout is to design a physical arrangement that meets the required output quality and quantity most economically. The primary goal of the plant layout is to maximize the profit by arrangement of all the plant facilities to the best advantage of total manufacturing of the product. Thus the objective of plant planning is the best relationship between output, space and manufacturing cost.

Plant Layout

463

A good layout will reduce the effort of the workers and minimizes the manual material handling. It reduces the number of accidents and provide better working conditions. A good layout is one that makes the materials to move in forward direction wards to the · completion stage i.e. there should not be any backtracking. Functional Layout (Process layout) is recommended for batch production. All machines performing similar type of operations are grouped at one location in the process layout e.g. all lathes, milling machines etc. Are grouped in the shop will be clustered in like groups..Thus in process layout the arrangement of facilities are grouped together according to their functions. Product Layout (Line Layout): In this type of layout, the machines are arranged in the sequence as required by the product. If the volume of production of one or more products is large, the facilities can be arranged to achieve efficient flow of materials and lower cost per unit. Special purpose machines are used which perform the required function quickly and reliably. The equipment is closely placed along the sequence in which the item is processed. ·

Combination Layout: Thi� is also called the hybrid or mixed type of layout usually a process layout is combined with the product layout. For example, refrigerator manu­ facturing uses a comb�ation layout. The process or functional layout is used to produce various operations like stamping, welding, heat treatment are carried out in different work centers as per the requirement. The final assembly of the product is done in a product type layout. Thus for manufacturing various component parts process layout is used and for assembly product layout is used. Fixed Position Layout: This is also called the project type of layout. In this type of layout, the material, or major components remain in a fixed location and tools, machinery, men and other materials are brought to this location. This type of layout is suitable when one or few pieces of identical heavy products are to be manufactured and when the assembly consists of large number of heavy parts, the cost of transportation of these parts is very high. Group Layout: There is a trend r{ow to bring an. element of flexibility in to manufacturing system as regards to variation in batch sizes and sequence of operations. A grouping of equipment for performing a sequence of operations on family of similar components ·o r products has become all the important. Line balancing is major issue in product layout and movement is the major consideration in design of process layout. Systematic Layout Planning (SLP) is an organized approach developed by Richard Muther (1973) which has got maximum practical applications in determining the best layout plan. SLP Consists of the following four phases.

REFERENCES FOR FURTHER READING 1.

Apple, James M. Plant Layout and Materials Handling. 3rd ed. New York: John Wiley & Sons, (1977)

2.

Moore, James M. Plant Layout and Design. Englewood Cliffs, N.J.: Prentice Hall, (1962)

3.

Muther, Richard. Practical Plant Layout. New YOrk: McGraw-Hill Education, (1955)

4.

Chary, S. N. Production and Operations Management: New Delhi: McGraw-Hill Equcation; (1996)

464 5.

Industrial Engineering and Production Management Maynard, H. B. Industrial Engineering Handbook. 3rd ed.: New York: McGraw-Hill Education,

. (1971)

REVIEW QUESTIONS 1. Define plant layout. What are the objectives of good plant layout? 2. What are the various types of layout? Explain the application of each. 3. Compare product layout and process layout. 4. What is the significance of group layout? 5. What are the various flow patterns? Explain with a diagram for each. 6. What are the principles of plant layout? 7. What are the factors that influence the plant layout? 8. How the plant layouts are related to type of production? 9. Explain the various tools and .techniques of plant layout. 10. Explain the procedure for plant layout. 11. What are the advantages of computer packages in plant layout? 12.

Explain the steps involved in systematic layout planning (SLP) with the help of a block diagram.

13.

Write short note on: (,)

Type of production systems

(iQ

Process and product type layout

(ii O

Travel chart

(iv)

Relationship chart

(v)

Dimensional Analysis

(vO

Single storey vs. multi-storey buildings

(vi,) ·Symptoms of bad layout (viiO Flow pattern.

Mater·ial Handl"ing

Chapter Outcomes After completing the chapter, you will be able to: •

Describe the objectives of m;;tterial handling system.

•

Understand the relationship between plant layout and material handling.

•

State the principles of MH and use them in practice.

•

Select the material handling systems and equipments.

•

Use the concept of unit load in MH and understand its practical significance.

•

De�cribe the automatic MH handling systems like AGV,AS/RS and coriveyer systems with their applications and selection.

19.1 INTRODUCTION Material handling (MH) is an activity that uses the right method to provide the right amount of the right material at the right place, at the right time, in the right sequence, in the right position, and at the right cost a MH system is responsible for transporting materials between workstations with minimum obstruction and joins all the workstations and workshops in a manufachuing system by acting as a basic integrator. The MH task accounts for 30-75% of the total cost of a product, and efficient MH can be responsible for reducing the manufacturing system operations cost by 15-30%. These figures justify the importance of MH cost as an element in improving the cost structure of a manufacturing organization. An efficient MH system greatly improves the competitiveness of a product through the reduction of handling cost, enhances the production process, increases production and system flexibility, increases efficiency of material flow, improves facility u�ilization, provides effective utilization of manpower, and decreases lead time]. 465

466

Industrial Engineering and Production Management

The functions performed by MH equipment can be classified into four broad categories, that is, (a) transport, (b) positioning, (c) unit formation, and (d) storage. Usually, all the MH functions are composed of one or more combin_ations of these four primary functions. Equipment in transport category simply moves materials from one point to another, which includes conveyors, industrial trucks, cranes, and so forth. Unlike transport equipment, positioning equipment is usually employed at workstations to aid machining operations. Robots, index tables, rotary tables, and so forth are the examples of this type of equipment. Unit formation equipment is used for holding or carrying materials in standardized unit load forms for transport and storage and generally includes bins, pallets, skids, and containers. Storage equipment is used for holding or buffering materials over a period of time. Typical examples that perform this function are AS/RS, pallet racks, and shelves. The MH equipment selection is an important function in the design of an MH system and, thus, a crucial step for facility planning. The determination of an MH system involves both the seleetion of suitable MH equipment and the assignment of MH operations to each individual piece of equipment. As a wide variety of equipment is available today, each having distinct characteristics and cost that distinguish from others, selection of the proper equipment for a designed manufacturing system is a very complicated task and is often influenced by the ongoing development of new technology, practices, and equipment. While choosing the best MH equipment, the successful solution would likely involve matching the best solution with the existing or contemplated physical facilities and environment. The major factors contributing to the complexity of MH selection process are constraints imposed by the facility and materials, multiple conflicting design criteria, uncertainty in the operational environment, and the wide variety of equipment types and models available.

19.2 OBJECTIVES OF MATERIAL HANDLING l. Minimise cost of material handling. 2. Minimise delays and interruptions by making available the materials at the point of use at right quantity and at right time. 3. Increase the productive capacity of the production facilities by effective utilisation of capacity and enhancing productivity. 4. Safety in material handling through improvement in working condition. 5. Maximum utilisation of material handling equipment. 6. Prevention of damages to materials. 7. Lower investment in in process inventory.

19.3 ELEMENTS OF MATERIAL HANDLING l. Motion: Move in most economic, safe and efficient manner. 2. Time: Provide materials on time. 3. Quantity: Ensure supply of correct quantity continuously at each manufacturing organisation. 4. Space: Ensure optimum use of_ cubic space.

19.4 MATERIAL HANDLING ACTIVITIES AND FUNCTIONS In manufacturing organisation, the handling activity encompass1. Transportation and handling at suppliers end. 2. Material handling at manufacturing plant.

Material Handling

467

3. Transportation and handling from warehouse to customer (physical distribution). But we are more concerned here with handling within the plant. The material handling activity in the plant starts with the unloading of the material after receipt from suppliers, and extends throughout the processing from raw material stage till it is manufactured and stored in the warehouse to be dispatched to the customer. The various activities and functions are shown in Fig. 19.1. Relationship between Plant Layout and Material Handling

There is a close relationship between plant layout and material handling. A good layout ensures minimum material handling and eliminate re-handling. 1. Material movement does not add any value to the product so, the material handling should be kept at minimum though not avoid it. This is possible only through the systematic plant layout. Thus a good layout minimises handling. 2. The productive time of workers will go without production if they are required to travel long distance to get the material tools, etc. Thus a good layout ensures minimum travel for workman thus enhancing the production time and eliminating the hunting time and travelling time. 3. Space is an important criteria. Plant layout integrates ali the movements of men, material through a well-designed layout with material handling system. 4. Good plant layout helps in building efficient material handling system. It helps to keep material handling shorter, faster and economical. A good layout reduces the material backtracking, unnecessary workmen movement ensuring an effectiveness in manufacturing. Thus a good layout always ensure minimum material handling. (In Manufacturing Organisation) • Unloading • Receiving and temporary storage location • Packaging at customers end • Storing • Transportation, to • Loading and transportation • Issuing consumers at suppliers end • Inter-plant • Workplace handling • External plant handling handling • In process handling and storage • Inter-department • Intra plant • Packaging • Warehousing of finished goods • Loading and shipping Fig. 19.1: Material handling activities and functions

19.5 PRINCIPLES OF MATERIAL HANDLING 1. Planning Principle: All handling activities should be planned. 2. Systems Principle: Plan a system integrating as many handling activities as possible

468

Industrial Engineering and Production Management

and coordinating the full scope of operations (receiving, storage, production, inspection, packing, warehousing, supply and transportation). 3. Space Utilisation Principle: Make optimum use of cubic space. 4. Unit Load Principle: Increase quantity, size, weight of load handled. 5. Gravity Principle: Utilise gravity to move a material wherever practicable. 6. Material Flow Principle: Plan an operation sequence and equipment arrangement · to optimise material flow. 7. Simplification Principle: Reduce combine or eliminate unnecessary movement and/or equipment. 8. Safety Principle: Provide for safe handling methods and equipment. 9. Mechanisation Principle: Use mechanical or automated material handling equipment. 10. Standardisation Principle: Standardise method, types, size of material handling equipment. 11. Flexibility Principle: Use methods and equipment that can perform a variety of task and applications. 12. Equipment Selec�ion Principle: Consider all aspect of material, move and method to be utilised. 13. Dead Weight Principle: Reduce the ratio of dead weight to pay load in mobile equipment. 14. Motion Principle: Equipment designed to transport material should be kept in motion. 15. Idle Time Principle: Reduce idle time/unproductive time of both MH equipment and manpower. 16. Maintenance Principle: Plan for preventive maintenance or scheduled repair of all handling equipment 17. Obsolescence Principle: Replace obsolete handling methods/equipment when more efficient method/equipment will improve operation. 18. Capacity Principle: Use handling equipment to help achieve its full capacity. 19. Control Principle: · Use materi,:il handling equipment to improve production control, inventory control and other handling. 20. Performance Principle: Determine efficiency of handling performance in terms of · cost per unit handled which is the primary criteria.

19.6 . SYMPTOMS OF BAD MATERIAL HANDLING 1. Frequent interruption in production due to delay in handling and supplying materials to the point of use. 2. Skilled labour performing duties like storing, movement and handling of materials. 3. Damages to materials in handling. 4. Accumulation of work-in-process and materials in different locations. 5. Reworking and rejections due to handling defects. 6. Crowded floor space with scrap and materials. 7. Congestion at receipt, producti.on and inspection areas. 8. Long waiting for material handling equipment to pick up and deliver materials.

Material Handling

469

19. 7 SELECTION OF MATERIAL HANDLING EQUIPMENT Selection of MH equipment is an important decision as it affects both cost and efficiency of handling system. The following factors are to be taken into account while selecting material handling equipment: 1. Nature of Operations (i) Whether handling is temporary or permanent. (ii) Whether the flow is continuous or intermittent. (iii) Material flow pattern-vertical or horizontal. (iv) Type of layout-process layout, product layout or combination layout. 2. Material to be Handled (i) Size and shape of the material. (ii) Quantity and weight of the material. (iii) Material characteristics. (iv) Susceptibility to damage during handling. 3. Distance over which the material is to be moved (i) Fixed distance. (ii) Long distance. (iii) Work station. 4. Installation and operating costs (i) Initial investment. (ii) Operating and maintenance costs. 5. Plant facilities (i) Types of buildings. (ii) Floor load capacity. 6. Safety considerations 7. Engi_neering factors (i) Door and ceiling dimensions. (ii) Floor conditions and structural strength. (iii) Traffic safety. 8. Equipment reliability (i) Use of standard components. (ii) Service facilities. (iii) Supplier reputation.

19.8 TYPES OF MATERIAL HANDLING EQUIPMENT The material handling equipment are classified based on: 1. Types of services required: (1) Lifting, (2) Moving, (3) Stacking, and (4) Positioning 2. Types of equipment 3. Relative mobility of equipment: (a) Travel between fixed points, and (b) Travel over wide areas 4. Movement of equipment. (i) On the floor. (ii) Above the floor.

470

Industrial Engineering and Production Management

(iii) Overhead. (iv) Underground. 5. Categories of equipment

(i) Conveyers: (ii) Cranes and hoists.

(iii) Industrial trucks. (i) Conveyers

Conveyers primarily perform the movement of uniform loads between fixed points. They occupy space continuously except when they are of portable type. They reduce handling. Types of conveyers are: l. Belt conveyers. 2. Roller conveyers. 3. Screw conveyers. 4. Pipeline conveyers. 5. Monorail. 6. Trolley conveyers. Conveyers are useful when (a) Loads are uniform. (b) Materials move continuously. (c) Routes do not vary. (d) Movement rate is relatively fixed. (e) Movement is from one point to another point. (ii) Cranes and Hoists

Cranes are overhead devices capable of moving materials vertically and laterally in area of limited length and width and height. Cranes are employed for lifting and lowering heavy objects and moving them from one point to another. Cranes find their application in heavy engineering industries and in intermittent type of production. Types of cranes are: (a) Overhead travelling cranes. (b) Jib crane. (c) Gantry crane. Hoists are used for loading and unloading of heavy objects and they are also used for raising and lowering heavy and long objects. Type of hoists are: (a) Chain hoists. (b) Pneumatic hoists. (c) Electric hoists. The hoists and cranes are most commonly used when • Movement is within fixed area. • Moves are intermittent.

Material Handling

471

• Loads varY, in size and weight. • Loads handled are not uniform..

(iii) Industrial Trucks Hand or powered vehicles are used for movement of mixed or uniform loads intermittently over varying paths which have suitable running surfaces and clearances and where the primary function is transporting. These are various types of material handling trucks. Types of industrial trucks are: (c) Tractor trailer. (a) Forklift truck. (b) Platform truck. Industrial trucks are generally used when: • Materials are moved intermittently. • Movement is through changing routes and distances.

'·. e Overhead Travelling Crane

The Stationary Powered Conveyor

The Powered Hand Truck

The Fork Truck

Portable Conveyer

Fig. 19.2:

The Hoist

Material handling equipments

472

Industrial Engineering and Production Management

• Loads are uniform mixed is size and weight. • Materials can be put into unit loads. Material handling.equipment are shown in Figs. 19.2 and 19.3.

19.9 UNIT LOAD CONCEPT Material handling efficiency is proportional to the size of the load handled, i.e., numper of units handled per unit time. It is economical and faster to handle small parts by grouping them into one unit (called unit load) than moving them individually. James R. Bright defines unit load as-" A number of items or bulk material, so arranged or restrained that the mass can be picked up and moved as a single object too large for manual handling and which upon being released will return its initial arrangement for subsequent movement."

The Industrial Tractor

The Overhead Conveyor

The Mobile Crane

The Low-Lift Platform Truck

The High-Lift Platform Truck

Fig. 19.3: Material handling equipments

Material Handling

473

Unit load should1. Perform a minimum number of handling and eliminate manual handling. 2. Assemble materials into unit load for economy of handling and storage. 3. Make the unit load as large as possible considering the limitations of building, handling equipment. Production areas, volume of material required and common carrier dimensions and capacity. Common types of unit load are: 1. Part bins 2. Pallet box 3. Bulk container 4. Cargo container. Advantages 1. Permits handling of larger loads. 2. Reduces handling cost. 3. Faster movement of goods. 4. Reduced time for loading and unloading. 5. Maximise use of cubic space. 6. Reduce pilferage in transit and storage. Disadvantages • Cost of unitising. • Problem of returning empty containers. • Lack of flexibility. 19.10 SYSTEMATIC HANDLING ANALYSIS (SHA) 1. Classification of Materials - Basic classification (Solid, Liquid, Gases) - Classification based on transportability. Quantity — Payload, Fast/Slow movers, batch. - Special control and timings. Govt. regulation, urgent/regular intermittent, seasonal. 2. Layout - Layout establishes 'Distance' between origin and destination. - Layout types. - Flow patterns.

1 3. Analysis of Moves - Flow analysis — Intensity and Condition of Flow. - Process charting — Route chart.

474

Industrial Engineering and Production Management 1

4. Visualisation of Move - Flow diagram, Distance intensity. chart — Distance for each move. 5. Understanding MH Method - Movement system - MH equipment - Unit load, palletisation. - Packaging method, Calculation of requirements. 1

6. Preliminary handling plan - Systematic engineering. - Determination of method. - Conventions. - Visualisation. - Development of more than one plan. 7. Modifications and limitations - Procedural problem. - People problems. - Other modifications. 8. Evaluation of alternatives - Investment, operating costs. - Intangible factors. SELECTED M.H. SYSTEM.

19.11 ECONOMICS OF MATERIAL HANDLING The American Society for Mechanical Engineers (ASME) has developed the formulae for estimating the economies with the application of certain equipment to a material handling problem. Let A = Percentage allowance on investment B = Percentage allowance for insurance and taxes C = Percentage allowance for maintenance D = Percentage allowance for depreciation E = Annual cost of power, supplies and others S = Yearly saving in direct labour cost in

Material Handling

475

U = Yearly savings or earnings through increased production (Z) T = Yearly Savings in fixed charges and operating charges (Z) I= Initial cost of equipment X = Percentage of year during which the equipment is used 1. Maximum justifiable investment — (S+T+U—E)X Z— A+B+C+D 2. Yearly cost of maintaining the equipment Y=I(A+B+C+D) 3. Yearly profit from the operation of the equipment above the sample intent V= + T + U— EPC] — Y 4. Estimated rate of Profit

p V- + A 5. No. of year required for amortisation of investments out of earning H—

100 P+D

19.12 CRITERIA FOR THE SELECTION OF MATERIAL HANDLING EQUIPMENT Equipment factors to be taken into consideration may well include the following: Adaptability: The load carrying and movement characteristics of the equipment should fit the materials handling problem. Flexibility: Where possible the equipment should have flexibility to handle more. than one material, referring either to class or size. Load capacity: Equipment selected should have great enough load-carrying characteristics to do the job effectively, yet should not be too large and result in excessive operating costs. Power: Enough power should be available to do the job. Speed: Rapidity of movement of material, within the limits of the production process or plant safety, should be considered Space requirements: The space required to install or operate materials handling equipment is an important factor in its selection. Supervision required: As applied to equipment selection, this refers to the degree of automaticity designed into the equipment. Ease of maintenance: Equipment selected should be easily maintained at reasonable cost. Environment: Equipment selected must conform to any environment regulations. Financial Feasibility: Material handling is only a part of the entire project. Hence the most important fact is the chosen solution should add value to the entire project. The criteria for MH equipment selection are represented in Fig. 19.4.

476

Industrial Engineering and Production Management

Flexibility

Adaplabll!ty

t

Load capacity

G Ease of Maintaince

Space requirerr:ients

Supervision required

Environment

Fig. 1·9.4:· Criteria for MH equipment selection

19.13 SELECTION OF MATERIAL HANDLING EQUIPMENTS Selection of MH equipment is an important decision as it affects both cost and efficiency of handling system. The following factors are to be taken in to account while selecting material handling equipment. 1. Nature of operations (i) Whether handling is temporary or permanent. (ii) Whether the flow is continuous or intermittent. (iii) Material flow pattern - vertical or horizontal (iv) Type of layout - process layout, product layout or combination layout. 2. Material to be handled (i) Size and shape of the material (ii) quantity and weight of the material (iii) Material characteristics (iv) Susceptibility to damage during handling. 3. Distance over which the material is to be moved (i) Fixed distance (ii) Long distance (iii) work station. 4. Installation and operating costs (i) Initial investment (ii) Operating and maintenance costs. 5. Plant facilities (i) Types of buildings (ii) Floor load capacity

Material Handling

477

6. Safety considerations 7. Engineering factors

(i) Door and ceiling dimensions . (ii) Floor conditions and structural strength (iii) Traffic safety. 8. Equipment reliability

(i) Use of standard components (ii) Service facilities (iii) Supplier reputation..

19.14

TYPES OF MATERIAL HANDLING SYSTEMS

1. Equipments oriented systems

(i) (ii) (iii) (iv) (v)

Convey or Systems Tractor transfer system Fork lift.truck Industrial truck system Underground system

2. Material Oriented Systems

(i) Unit handling system (ii) Bulk handling system (iii) Liquid handling system 3. Methods oriented system

(i) (ii) (iii) (iv)

Manual systems Automated systems Job shop handling system Mass production system

4. Function oriented system

(i) (ii) (iii) (iv)

Transportation systems Conveying systems Transferring systems Elevating systems

Types of Materials Handling Equipment 1. 2. 3. 4.

Conveyers Cranes, Elevators and Hoists Industrial Trucks Auxiliary Equipments

19.15 AUTOMATED MATERIAL HANDLING SYSTEMS Automated Materials Handling (AMH) Systems improve efficiency of transportation, storage and retrieval of materials. The examples include computerized conveyors, automated storage and retrieval systems (AS/RS) in which computers direct automatic loaders to pick and place items. Automated guided vehicle (AGV) systems use embedded

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Industrial Engineering and Production Management

floor wires to direct driverless vehicles to various locations in the plant. Benefits of automated material handling systems include quicker material movement. Lower invento.ries and storage space, reduced product damage and higher labour productivity.

19.16 GUIDELINES FOR CHOOSl�G A CONVEYOR SYSTEM Choosing the right conveyor system can be an overwhelming task for the warehouse or distribution center professional. Managers and planners often face a series of dilemmas when attempting to identify, develop and purchase the "ideal" material handling systems design. Depending on the operation, the product to be handled and the application requirements, systems can vary from the very simplistic to the extremely complex. While various types of equipment are available to satisfy an application's needs, the best mind­ set when considering a conveyor system is to be sure the system is designed with specific characterist1cs in mind: 1) ease of adaptability to changing needs. 2) Operationally safe; 3) reliable and requiring minimal maintenance; 4) energy efficient and designed around "green" principles; 5) most important of all, cost effective to operate. Both conventional wisdom and the traditional mind-set have erroneously devalued conveyors over time, regarding them as little more than non-value added equipment that does no more than move product through a warehouse or distribution center. This is why conveyors (and the material handling systems of which they are components) are typically the last elements considered in the process planning cycle. The common requirements for conveyors systems in all warehouse and distribution environments are to transport product between successive steps in the order fulfillment process, and to provide accumulation buffers throughout the process to allow for workflow balahcing when considering the different processing rates associated with each step in . the process. Accumulation buffers can also enable ongoin·g production during localized backups or downtime elsewhere downstream in the process. There are a number of specific features or characteristics to look for when designing, evaluating, selecting and choosing conveyors for your system: Modularity. Regardless of the type of conveyor required, look for modularity. Select conveyors that feature pre-engineered sections, modules and components that can be freely combined to provide an initial customized layout, but can also be easily re-configured if necessary. Flexibility. Look for conveyors that can easily accommodate· various product sizes, specifically greater widths. Also look for conveyors that can satisfy today's demands, but can also accommodate future throughput growth requirements. Scalability. Whether your planning horizon is short.or long, select conveyors that will facilitate growth and adaptability to change over time. The "ideal" system will incorporate both modularity and flexibility to account for an extensive range of product types and sizes and also allow for increased throughput over time. The system should be capable of being "extended" and/ or re-configured as needed to adapt to future needs and requirements. Safety. Certain types of conveyors include built-in safety features, while others may require additional guarding to protect employees who directly interface with the equipment. Ergonomics. A conveyor system designed with proper ergonomics creates a better work environment, increases productivity and reduces operator injuries. Don't necessarily make a decision based on "typical guidelines." Rather, look closely at your workforce and determine what makes the most sense for your unique operation.

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Reliability. Select conveyors that have withstood the test of time. Focus on "leading edge," rather than "bleeding edge," technology. Look for conveyors that have been in operation for some time. Contact current users and references to discuss performance and reliability over time. Managers generally develop a greater appreciation for the value of their conveyors when they are down. · Maintainability. While you shouldn't limit conveyor selection to the level of maintenance expertise that supports your· operation, you certainly want to select conveyors · that are easy to maintain. Clearly, most people take their conveyor system's benefits for .granted until the system is down. So, the easier it is to maintain and repair the system, the less impact there will be on operations when it goes down.· Energy efficiency. While certain conveyors use less energy than others, energy efficient principles can be applied to all types of conveyors. Something as simple as programming individual conveyors or parts of the system to shut down or enter "sleep" mode during periods of inactivity can result in significant cost savings. Sequential or staggered start-up of motors in a large system can also help limit the peak power draw. Conveyor systems are not only mechanically necessary to automated warehouse and distribution solutions, but they are a critical element in the facility's operational efficiency and ultimately, the company's profitability. Properly selected and designed, these systems can support today's process and operational needs, as well as expand, grow and adapt to meet future expectations. For a company to realize the maximum benefits and return on investment from such a purchase, conveyor systems should be planned for and considered early in the process planning cycle, evaluated as an investment in productivity and operating efficiency, and selected on the basis of real, strategic value. 19.17

SELECTING THE RIGHT MATE.RIAL HANDLING CONVEYOR.

Material handling conveyors are often a key element of automated manufacturing systems. They safely and efficiently transfer parts across the warehouse floor from station to station or even through other automated systems. Automated conveyors are ideal for whenever a business wants to eliminate the human element from transporting parts. Determining what kind of material handling conveyor is best suited for your operations requires a detailed look at the part, the needs of the manufacturing process and the layout of the process. Types of conveyors

There are many types of conveyors an automation equipment manufacturer will recommend depending on the aforementioned criteria. Some of the more common conveyor systems include: 1. Belt conveyors - Ideal for simple transportation of parts or materials without the need for part orientation, belt conveyors consist of two or more pulleys and an endless loop of the conveyor belt rotated around them. 2. Overhead conveyors - This conveyor system utilizes a .chain that runs through a track mounted overhead. Parts are hooked to the chain and hang down below. It is ideal for automated paint systems since the part has the most exposed surface area when being transported with an overhead conveyor. 3. Pallet conveyors - With a pallet conveyor, a pallet rides on top of a chain set with rollers. The pallet is in a fixed position during transportation, enabling automated unloading during the process.

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Industrial Engineering and Production Management 4. Precision index conveyors - Fixtures maintain part orientation during

transportation on a precision index conveyor. This system enables high speed movement of the part throughout the manufacturing process while ensuring part orientation for other automated systems.

The part's impact The part plays a k�y factor in what type of conveyor is needed. A simple belt conveyor is sufficient if there is no need for part orientation. Should the part merely need to be transferred from point A to point B, belt conveyors are a quick and easy way to accomplish this task. The make-up of the part can determine what materials are needed for the belt or other conveyor systems. If the part's surface is a critical component, a change in the hardness of the belt material may·be needed to keep the integrity of the part intact. For example, windshields are transported on strand conveyors. Each strand is a 1-inch wide linked rubber belt that allows a piece of glass to sit flat between two strands. The material, along with the way it holds the windshield, saves the glass from getting marred. The food industry requires conveyors'to be made from materials that pass health code in addition to specifications on how it gets cleaned. Food grade materials that maintain the structural and hygienic integrity of the products are a necessity for this industry. Automated paint systems use overhead conveyors to transport parts through the sprayers and drying ovens. By utilizing an overhead conveyor, the maximum amount of surface area of the part can be exposed to the sprayers since it's not laying down on a surface. The process' impact The most prominent factor in determining the type of conveyor needed to handle materials is the manufacturing process. Within the processes, a key consideration is part orientation. If the part has a process done'in two different machines but can't change orientation, the automated system need a conveyor with the capabilities to match. If a change- part orientation is critical to the process, the material handling conveyor needs additional equipment to track and locate the part. Often, a precision index conveyor is an ideal option. The precision index conveyor manages part orientation during transportation so other equipment can easily find and manipulate the part per the process parameters. Another material handling option is a pallet conveyor. Similar to precision index conveyors, pallet conveyors have fixtures for the part to maintain orientation through transportation. The pallet rides on top of a chain set with rollers. When the pallet reaches the portion in which the next event in the manufacturing process happens, another element comes into contact and locates the part. . Additionally, automated or human part loading determines a need for location equipment or robots. If the process requires parts to be loaded on to or unloaded from a conveyor with automated systems, the conveyor will need a vision system to find and identify the part on the conveyor and transmit data to a robot to physically manipulate the part. The layout's impact The layout of the conveyor can determine which style of conveyor is needed and the materials used. Conveyors may need to travel on an incline, a decline or around corners

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as part of the process. If using a belt conveyor and the layout requires an incline or decline during the transportation, the belt material will have to be abrasive enough to keep the part in place. Conveyors that turn corners need a corner section utilizing a different material to ensure the part follows the intended path. The layout can affect more than the conveyor materials such as the speed at which the conveyor operates and the location of ancillary equipment used to locate and manipulate the part during transport. Estimating and Cost reduction

Find the best-value solutions for your manufacturing operations by downloading this guide. You will learn feature-based cost estimation and parametric cost estimation in addition to the elements of Design for Manufacturing (DFM). Through these cost-estimation tools and DFM practices, manufacturers can find cost savings throughout their operations. Materials handling systems are expensive to purchase and operate. The expenses are those of initial costs, labour cost for operating the material handling equipments and maintenance and repair costs. The indirect expenses are those resulting from damaged or lost materials, delays in material deliveries and accidents. Since these expenses are quite substantial, greater attention of management is needed to the design and selection of materials handling systems. Since the pattern of flow of material in a plant definitely affects the materials handling costs, it is vital that the design and layout of buildings must be integrated with the design of the materials-handling system. Hence, the selection and design of the materials handling system should be done along with the development of the layout as each one affects the other. For example, if overhead cranes are to be used, the structure of the building must be strong enough to support the operation of· these services. If heavy loads are to be transported on trucks, floors must have adequate support to withstand these loads. Aisles or gangways must be wide enough to accommodate fork lift trucks that will travel through the areas carrying the loads. Adequate floor space has to be provided in the layout for fixed position handling devices such as conveyors. Conveyors

1. Gravity or powered devices 2. Used for moving loads from one point to point over fixed paths. Belt Conveyor

Motor driven belt usually made of metal fabric

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Industrial Engineering and Production Management

Chain Conveyor- Motor driven chain that drags material along a metal side base

Roller Conveyor- Boxes, large parts or units loads roll on top of a series of rollers mounted on a rigid frame.

Cranes, Elevators and Hoists These are overhead devices used for moving varying loads intermittently between points within an area. Cranes - Devices mounted on overheard rail or ground wheels or rails. They lift, swing and transport large and heavy materials.

Material Handling

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Elevators -Types of cranes that lift materials -usually between floors or buildings

Hoists - J\1ove vertically or horizontally. May be air hoist , electric hoist, chain hoist

Forklift Truck

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Industrial Engineering and Production Management

Pallet Truck

19.18 CONVEYOR SYSTEMS Conveyor system is used when materials must be moved in relatively large quantities between specific locations over a fixed path. Usually they are powerep to move the loads along the pathways and also sometim�s gravity may cause the load to travel from one elevation to another. The characteristics of conveyors are • Generally they are mechanized and al.ltomated. • They are fixed in position to establish paths. • May be mounted on the floor or overhead. • Limited to unidirectional flow of materials. • Generally use discret� loads but certain types can be used to move bulk loads only. Types of Conveyors · The major types of conveyors are 1. Roller Conveyors This conveyor system consists of a series of rollers that are fixed perpendicular to the direction of travel. The rollers are contained in a fixed frame, which elevates the pathway above the floor level. The loads are moved forward as the roller rotate. The roller conveyors may be powered. or may use gravity. The powered conveyors are driven by the different mechanisms like belt and chains, gears etc. They are used for delivering loads between manufacturing operations, delivery to and from storage and distribution applications. 2. Skate Wheel Conveyors These are similar in operation to roller conveyors. However, instead of rollers, skate wheels rotating on shafts connected to the frame are used to move the pallet or containers along the pathway. The loads that can be transported are usually be lighter compared to roller conveyors. 3. Belt Conveyors The materials are placed on the belt surface and travel along the moving oath. The belt is supported by a frame that has rollers spaced every few distances (feet). At each end of the conveyor there are driver rolls that power the belt.

Material Handling

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4. Chain Conveyors These are made of loops of endless chain in an over and under configuration around powered sprockets at the end,s of the pathway. There may be one or more chains operating in parallel to from the conveyor.

5. Slat Conveyors It uses an individual platform called slats, that are connected to a continuously moving

chain. Although its drive mechanism is the powered chain, it operates much like a belt conveyor. Loads are placed on the flat surface of the slates and are transported along with' them.

6. Overhead Trolley Conveyors A trolley is a wheeled carriage running on an overhead rail from which loads can be suspended. A trolley conveyor consists of multiple trolleys, usually equally spaced along the rail system by means of an endless chain or cable. The chain or cable is attached to a drive wheel that supplies power to the system. The path is determined by the configuration of the rail system. It has turns and changes in elevation to form an endless loop. Usually the hooks or baskets are suspended from the trolley to carry loads.

19.19 AUTOMATED GUIDED VEHICLE (AGV) SYSTEMS An automated guided vehicle is a robot type vehicle that is used to carry objects from one place to another and can be programmed to travel in predetermined path. Automated guided vehicle systems (AGVs) are a material handling system that uses independently operated, self-propelle·d vehicles that are guided along defined pathways in the floor. They are usually powered by a battery and the wires embedded in the floor or reflective paint on the floor surface normally define the pathways. ·

Components of AGV The essential components of AGV's are 1. Mechanical structure 2. Actuators for driving and steering mechanism 3. Servo controllers 4. Servo amplifiers 5: The computing facility and power system (on board) 6. Feedback components

Functions of AGV 1. Guidance Allows the vehicle to follow a predetermined route, which is optimized for the material flow pattern of a given application.

2. Routing.

Ability to make decisions along the guidante path in order to select optimum routes to specific applications.

3. Traffic Handling It is the ability of the vehicle to avoid collisions with other vehicles at the same

time maximizing vehicle flow and therefore the load management throughout the system.

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Industrial Engineering and Production Management

4. Load Handling and Transfer Pickup and delivery method for AGVs, which may be simple and integrated with other subsystems. 5. System Management Should be able to control the system for efficient system operation.

Types of AGV

Various types of Automated Guided Vehicles are 1. Wire Guided Vehicles These types use a network of buried cables, which are arranged, in the form of complex closed loops. These are widely used for industrial applications. 2. Painted Line Guided Vehicles These AGV's follow line on the floors, which have been painted using a fluorescent dye. Used widely in light engineering industries and office automation. 3: Free Ranging AGV's The path of these vehicles is software programmable and can be altered easily. They provide more flexibility than guided vehicles and task of rescheduling is easy. The AGV's can be categorized as 1. Driverless Trains This system consists of the towering vehicle that pulls one or more trailers to from a train. This is most popular type of AGV and is used where heavy payloads must be moved over large distances in factory or warehouses with intermediate pick up and drop off points along the route. 2. AGV Pallet Trucks AGV's are used to move palletized loads along predetermined paths. 3. AGV Unit Load Carriers These are used to move unit loads from one station to another station. They are often equipped for automatic loading and unloading by means of powered rollers, moving belts, mechanized left plat forms etc.

Material Handling

487

Given the AGV layout in the figure and the info listed, determine the number of vehicles required for a delivery (flow) rate of 40 del/hr. Data Given Loading time = 0.75 min

Unloading time = 0.5 min Unload Man

AGV

AGV guide path

20 1 40

55 4

20 Direction of vehicle movement

Load Man

Vehicle speed = 50 m/min Traffic factor = 0.9 E=1 Solution: Ideal cycle time/ del/veh Compute workload Available time Num of vehicles

Availability = 0.95 (from fig) =>Ld = 110 m ; Le = 80 m

= = = =

T, = 0.75 + 0.5 + 110/50 + 80/50 = 5.05 min WL = (40) (5.05) = 202 min/hr AT = (60) (0.95) (0.90) (1.0) = 51.3 min/hr/veh ne = 202/51.3 = 3.94 veh => 4 vehicles!

Application of AGV

1. Driverless Train Operation Movement of large quantities of materials over relatively large distances. 2. Distribution Systems Unit load carriers and unit trucks are used for storage and distribution systems. Here the working of AGV's interface with other systems like automated storage and retrieval systems. 3. Assembly Line Operations 4. Application in flexible manufacturing systems. 5. Other general application in office, hospitals etc. 19.20 AUTOMATED STORAGE AND RETRIEVAL SYSTEMS (AS/RS)

Automated Storage/Retrieval Systems (AS/RD) is defined by materials handling institute as "A combination of equipments and controls, which handles, stores and retrieves materials with precision, accuracy and speed under a defined degree of automation." The AS/R systems can be customized to meet specific applications and the AS/R systems will range from simple mechanized systems that are manually controlled to very large computerized systems, which are totally integrated with factory and warehouse applications.

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Industrial Engineering and Production Management

Difference Between conventional storage and AS/RS storage system Basic Components of an AS/RS. The components of AS/RS are 1. Storage structure. 2. Storage/Retrieval (S/R) machine. 3. Storage modules. 4. Pick up and deposit stations. The storage structure supports the loads in the AS/RS and it is a strong and rigid fabricated structure where industrial compartments must be designed to contain the stored materials. The storage structure may also be used to support the roof and siding of the building in which AS/RS is installed. It also a supports the aisle hardware required to align the S/R machines with respect to individual storage compartments of ASS/RS. This hardware includes the guide rails at the top and bottom of the structure as well as the end stops and also helps for safe operation of the S/R machines.

Storage structure (rack framework)

Storage module (pallet loads)

S/R machine

Pick-and deposit station Basic Components of AS/RS

Material Handling

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Table 19.1: Basic Components and their description

Component Description Storage structure Consists of the rack framework used to support loads contained in the AS/RS; made from fabricated steel of sufficient strength and toughness to support typical AS/RS loads. May have individual storage compartments to hold storage modules, which hold the stored material. May be built into the plant building itself, as a building support structure. It also supports aisle hardware required to align the S/R machines with the storage compartments of the AS/RS. S/R machine

Used to accomplish storage transactions, both delivering loads to storage, and retrieving loads as required. To do this, the S/R machine must be able to move horizontally and vertically with the load along the front of the rack structure. Components consist of a rigid mast on which is mounted an elevator system for vertical motion; all of which is attached to a base with wheels for horizontal motion along a rail system that traverses the storage aisle. A parallel rail at the top of the storage structure ensures alignment of mast and carriage with the rack structure.

Storage modules The unit load containers of the stored materials, including pallets, steel wire baskets and containers, plastic tote pans, and special drawers. The storage modules are standardised in size so that can be handled. The S/R machine is used to carry out storage function, delivering loads from the input station in to storage or retrieving loads from storage and delivering them to output station. T2 perform these functions, the S/R machine should be capable of traveling in vertical and horizontal directions to align the carriage with the storage compartment in the storage structure. The carriage consists of shuttle mechanism to place and pickup loads from storage compartments. To get the desired motions of the S/R machine, the horizontal, vertical and shuttle drive systems are required. The storage modules are the containers of the stored material. The storage modules may be pallets, steel wire baskets and container storage bins and special drawers. The sizes are standardized so that it permits,the storage compartments of AS/RS. The pickup and deposit stations are used to transfer loads to and from the AS/RS. They are located at the end of aisles for access by the S/R machines and the external handling system that brings loads to AS/RS and takes loads away. Pickup stations and deposit stations may be located at opposite ends of the storage aisle. TYPES OF AS/RS

The important types of AS/RS are 1.Unit Load AS/RS

These are designed to handle large unit loads stored on pallets or other standard containers. 2. Mini Load AS/RS

This is used to handle small loads that are contained on bins or drawers within the systems.

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Industrial Engineering and Production Management

3.Man-on Board AS/RS

This system permits individual items to be picked directly at their storage locations. 4. Automated Item Retrieval System These are designed for retrieval of individual items or small unit loads in a distribution warehouse. The items are stored in single file lanes rather than in bins or drawers.

5.Deep Lane AS/RS It is a high-density unit load storage system suitable when large quantities are to be stored.

It stores number of loads in a single rack, one load behind the next. Each rack is designed for "Flow through" with input on one side and output on the other side.

AS/RS System

Applications of AS/RS

Most applications of AS/RS systems are used in ware housing and distribution operations. The application areas include• Unit load storage and handling • Work in process storage system • Order picking 19.21 CAROUSEL STORAGE SYSTEMS

Carousel storage is a mechanized system where the load/unload station is manned by a human worker who activates the powered carousel to deliver a desired bin to the station. The carousel storage system consists of series of bins or baskets fixed to carries that are connected together and revolve around a long, oval track system. The track system is similar to a trolley conveyor system.

Material Handling

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Carousel structure Drive motor system Carousel track

Conveyor Bins for inventory

Load/unload station Major Components of Carousel

The controls used for modern carousel systems range from manual controls to the computer control. The manual controls include 1. Foot pedal control 2. Hand control 3. Key board control Computer controls are implemented using various computer configurations from microprocessor based controllers for individual's carousels to centralized dedicated computers that control multiple carousels.

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Industrial Engineering and Production Management

Carousel storage system The carousel storage applications include - storage and retrieval operations, transport and accumulated and some special applications such as storing of items during electrical testing of comp µ. Use both analysis and intuition. 11. Discuss the likely outcome of a waiting line system where µ > 'A,, but only by a tiny amol}nt. (For example, µ = 4.1, 'A, = 4). 12. Provide examples of four situations in which there is a limited, or finite, waiting line. 13. What are· the components of the following queuing systems? Draw and explain the configuration of each. (a) Barbershop. (b) Car wash. (c) Laundromat. (d) Small grocery store. 14. Whether doctors' offices generally have random arrival rates for patients? Are service times random? Under what circumstances might service times be constant? 15. What happens if two single-channel systems have the same mean arrival and service rates , but the service time is constant in one and exponential in the other? 16. What Rupee value do you place on yourself per hour that you spend waiting in lines? What value do your classmates place on them.selves? Why do the values differ?.

1. 2. 3. 4. 5.

PROBLEMS 1.

Customers arrive at Shop at a rate of 3 per hour, distributed in a Poisson fashion. Shop can serve at a rate of 5 per hour, distributed exponentially. (a) Find the average number of customers waiting for haircuts. (b) Find the average number of customers in the shop. (c) Find the average time a customer waits until it is his or her turn. (d) Find the average time a customer spends in the shop. (e) Find the percentage of time that Paul is busy.

2.

There is only one copying machine in the student shopping complex of the business school. Students arrive at the rate of 'A, = 40 per hour (according to a Poisson distribution). Copying takes an average of 40 seconds , orµ = 90 per hour (according to an exponential distribution). Compute the following: (a) The percentage of time that the machine is used. (b) The average length of the queue. (c) The average number of students in the system.

(d) The average time spent waiting in the queue. e) The average time in the system. 3.

Calls arrive at hotel switchboard at a rate of 2 per minute. The average time to handle each is 20 seconds. There is c;:mly one switchboard operator at the current time. The Poisson and exponential distributions appear to be relevant in this situation. (a) What is the probability that the operator 1s busy? (b) What is the average time that a caller must wait before reaching the operator? (c) What is the average number of calls waiting to be answered?

806 4.

Industrial Engineering and Production Management Automobiles arrive at the drive-through window at the downtown Urbana, Illinois, post office at the rate of 4 every 10 minutes. The avetage service time is 2 minutes. The Poisson distribution is appropriate for the arrival rate and service times are exponentially distributed. (a) What is the average time a car is in the system? · (b) What is the average number of cars in the system? · (c) What is the average number of cars waiting to receive ·service?

5.

6.

(d) What is the average time a car is in the queue? (e) What is probability that there are no cars at the window? (n What percentage of the time is the postal clerk busy? (g) What is the probability that there are exactly 2 cars in the system? Electronics Corporation retains a service crew to repair machine breakdowns that occur on an average of 11, = 3 per 8-hour workday (approximately Poisson in nature). The crew can service an average ofµ � 8 machines per workday, with a repair time distribution that resembles the exponential distribution. (a) What is the utilization rate of this service system? (b) What is the average downtime for a broken machine? (c) How many ma chines are waiting to be serviced at any given time? _ (d) What is the probability that more than one machine is in the system? The probability that more than two are broken and waiting to be repaired or being serviced? More than three? More than four? A student as a part of survey has been collecting data at the student canteen. He has found that, between 5:00 P.M. and 7:00 P.M., students arrive at the grill at a rate of 25 per hour (Poisson distributed) and service time takes an average of 2 minutes (exponential_ distribution). There is only 1 server, who can work on only 1 order at a time. (a) What is the �verage number' of students in line? (b) What is the average time a student is in the grill area? (c) Suppose that a second server can be added to team up with the first (and, in effect, act as one faster server). This would reduce the average service time to 90 seconds. How would this affect the average time a student is in the grill area?

(d) Suppose a second server is added and the 2 servers act independently, with each taking an average of 2 minutes. What would be the ave.rage time a student is in the system? 7. · Cabinet-making shop has five tools that automate the drilling of holes for the installation of hinges. These machines need setting up for each order of cabinets. The orders appear to follow the Poisson distribution, averaging 3 per 8-hour day. There is a single technician for setting these machines. His service times are exponential, averaging 2 hours each. , (a) What is the service factor for this system? (b) What is the average number of these machines in service? (c) What impact on machines in service would there be if a second technician were available? 8. The administrator at a large hospital emergency room ,faces the problem of providing treatment for patients who arrive at different rates during the day. There are 4 doctors available to treat patients when needed. If not needed, they can be assigned other responsibilities (such as doing lab tests, reports, X-ray diagnoses) or else rescheduled to work at other hours. It is important to provide quick and responsive treatment, and the administrator feels that, on the average, patients should not have to sit in the waiting area for more than 5 minutes before being seen by a doctor. Patients are treated on a first-come, first-served basis and see the first available doctor after waiting in the queue. The arrival pattern for a typical day is as follows: TIME ARRIVAL RATE 9 A.M.-3 P.M. 6 patients/hour 3 P.M.-8 P.M. 4 patients/hour 8 P.M.-midnight 12 patients/hour Arrivals follow a Poisson distribution, and treatment times, 12 minutes on the average, follow the exponential pattern. How many doctors should be on duty during each period to maintain the level of patient care expected?

Linear Programming Problems (LPP)

Nter completing the c�apter, you will be able to: •

Formulate the given problem as Linear Programming Problem.

•

Express the problem in a standard form.

•

Solve the two variable problem using graphical method.

•

Determine the optimum solution to the problem using simplex procedure.

•

Apply duality concept to convert primal problem in to its dual.

•

Carry out sensitivity analysis on optimum solution.

31. 1 INTRODUCTION Linear programming is a mathematical technique for determining the optimal allqcation of the resources and obtaining a particular objective when there are alternative uses of resources. The objective may be cost minimisation or profit maximisc).tion. In practice, linear programming is one of the · powerful technique for managerial decision making. The application of this technique has helped to solve many complex problems which otherwise are more difficult to solve. The specific problems where this technique can be successfully applied are: • Production scheduling • . Product mix decisions • Capital budgeting • Plant location • Resource allocation and optimal utilisation of resources

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Industrial Engineering and Pro"duction Management

31.2 PRODUCT MIX DECISIONS Product mix decision is an important planning activity. The optimal product mix selection has far reaching implications and it contributes to the survival and growth of an industry. There are many constraints under which the product mix decision is to be made e.g. cost, capacity and other constraints. Linear programming problem (LPP) is a technique useful to select the optimum product mix. Linear programming is a quantitative technique and the relationships between variables in the problem is linear, hence the name linear programming.

31.3 STANDARD .FORM OF LINEAR PROGRAMMING PROBLEM Let x 1 x2 x3 ..... x11 are the decision variables Optimise (maximise or minimise) (objective function) Z = c1x 1 + c2x2 + ....... + c11x 11

Subject to the constraints; a11X1 a1;x2 + ..... + a1nX11 � b1 a21X1 a22X2 +· ...... + az,,x,, � bz am1x1 am 2x2 + ..... + am 11x 11 � b 11 x1x2 ....... x 11 > 0 (non negative restriction) c1c2 ...... c11 are cost or profit coefficients a;/i = 1, 2 ...... n, j = 1, 2 ...... n) are structural coefficients b1, b2 . . . . . b11 are called requirements or availability.

The LPP can be Solved by Two Method (i) Graphical method: It is used only when two decision variables are involved. This is more simple. (ii) Simplex method: This is useful for any number of decision variables in the problem and there are number of constraints on the problem.

31.4 FORMULATION OF LP PROBLEM Steps involved'in formulation. 1. From the given problem, identify the key decision to be made. 2. Identify the decision variable� ...... whose values give the solution to the problem. 3. Write the objective in the quantitative terms and express it as a function of linear variables. 4. Study the constraints and express them as a linear equations.

Problem 1: A form can produce three ti;pes of cloth say A, B & C, three kinds of wool are required for it say red wool, green wool and blue wool. One unit length of tt;pe A cloth needs 2 yards of red wool and 3 yards of red wool. One unit length of type B cloth needs 3 yards of red wool, 2 yards of green wool and 2 yards of blue wool and one unit length of type C cloth needs 5 yards of green and 4 yards of blue wool. The form has a stock of only 8 yards of red, 10 yards green and 15 yards of blue wool. The profit from sale of one unit length of tt;pe A is � 10, type B is � 8 and type C is� 5. Determine how the firm should use the available material so as to. maximise the profit. · Forinulate this as a LP problem.

Linear Programming Problems (LPP)

809

Solution:

(i) They key decision here to find the units of three type of cloths A, B and C type to be produced by the company. Let x1, x2 and x3 be the number of cloth of type A, type B and type C to be produced respectively. (ii) The objective is to maximise the profit by selling three types of cloths. The profit equation is written as z =10x1 + 8x2 + 5x3 Here the coefficient represent the contributions towards the profit equations. (iii) Requirements and availability of wool. Requirement of wool

Cloths

Availability of wool

A (a) Red wool (b) Green wool (c) Blue wool

2

3 2 3 2 These can be expressed as a linear equations 2x1 + 3x2 < 8 2x2 +5x3 < 10 3x1 + 2x2 + 4x3 < 15 These are represented in standard from as: Maximise Z = 10x1 + 8x2 + 5x3 Subjected to 2x1 + 3x2 S 8 2x2 + 5x3 10 3x1 + 2x2 + 4x3 15 x1, x2,x3 >— 0

8 10 15

5 4

(availability of Red wool) (availability of Green wool) (availability of Blue wool)

Problem 2: A paper company produces rolls of papers used in cash registers each roll of paper is 200 meters in length and can be produced in the width of 2.5, 5, 7.5 and 12.5 cms. the company's production process results in 200 meters rolls that are 30 cms in width. The company must cut its 30 cm roll to the desired width. it has six basic cutting alternatives. Cutting Alternative Number of Rolls 2.5 5 7.5 12.5 6 3 0 0 2 0 3 2 0 3 1 1 1 1 4 0 0 2 1 5 0 4 1 0 6 4 2 1 0 The maximum demand requirements for the 4 rolls are as follows: Roll width (cms) Demand (Rolls) 2.5 3000 5 2000 7.5 1500 12.5 1000

Waste (cms) 0

1 1 1

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Industrial Engineering and Production Management

The company wishes to minimise the waste created by its production process, while meeting its requirements. Formulate the problem as a LP model. Solution: Let xi be the number of cutting alternatives

where j = 1, 2, 3, 4, 5 and 6 Let x3, x4, x5 and x6 are the waste produced in alternatives 3, 4, 5 and 6 respectively. Minimise Z = x3 + x4 + x5 + x6 Subjected to 6x1 + x3 + 4x6 3000 ....(1) (width of roll 2.5 cm.) ...(2) (width of roll 5 cm.) 3x1 + 3x2 + x3 + 4x5 + 2x6 .5_ 2000 ...(3) (width of roll 7.5 cm.) 2x2 + x3 + 2x4 + x5 + x 6 1500 x3 + x4 1000 ...(4) (width of roll 12.5) xi, x2 ... x6 0 Problem 3: A Manager of an oil refinery has to decide upon the optimal mix of two blending processes of which inputs and outputs are given per production run. Process

Output

Input Crude

Crude

Gasoline

Gasoline

A

B

X

Y

1

5

3

5

8

2

4

5

4

4

The maximum amount of crude A and B are 200 units and 150 units respectively. Market and other requirements show that at least 100 units of Gasoline X and 80 units of Gasoline Y must be produced. The profit per production run for process 1 and 2 are Z 3 and Z 4 per unit respectively. Formulate the problem as LPP.

Solution: Let x1 and x2 be the number of units produced per production run by process (1) and process (2) respectively. Then objective function Maximise Z = 3x1 + 4x2 Subjected to (Maximum availability of crude A) 5x1 + 4x2 200 (Maximum availability of Crude B) 3x1 + 5x2 5_ 150 5x1 + 4x2 100 (Market requirement of Gasoline x) 8x1 + 4x2 80 (Market requirement of Gasoline y) xi, x2 0 Problem 4: An advertisement planning is to be carried out for a company which uses three media TV, radio and print to get maximum exposure of its products to large number of customers. The following information is obtained from the market survey report. T.V.

Cost of Advt/unit No of customers reached No of targeted customer (female) reached

30,000 2,00,000 1,50,000

Radio

Print Media

20,000 6,00,000 4,00,000

18,000 1,50,000 70,000

Linear Programming Problems (LPP)

811

The company intends to spend maximum Z 5,00,000 on advertisement. The requirements of the company are:(i) At least 1 million exposures take place among female customers. (ii) The maximum unit on advertising in print media is Z 1,50,000 (iii) At least 3 advertisements must be brought in print media. (iv) Number of advertisement units on TV and radio should each be minimum 7 respectively. Formulate as LPP. Solution: The key decision to be made here is to determine the number of advertisement units to be brought on TV, radio and print media. Let x1, x2 and x3 be the number of advertisement to be brought on TV, Radio and print media respectively. Objective is to maximise the number of customers. Objective function is Z = 105 [2x1 + 6x2 + 1.5x3] Subjected to constraints 30,000.x1 + 20,000.x2 + 18,000.x3 5,00,000 (Advt budget) 1,50,00.x1 + 4,00,000.x2 + 70,000.x3 10,00,000 (Female exposure) x3 1,50,000 (expenses on print media) x3 3 (at least 3 advt in print media) 7 (at least 7 advt on T.V.) x2 12 (at least 12 advt on radio) xi x2 x3 0 31.5 GRAPHICAL METHOD FOR SOLVING L.P. PROBLEMS Step I: State the problem in a mathematical form. Step II: Plot on a graph the problem constraints by temporarily ignoring the inequality sign and decide upon the area of feasibility solution as per the inequality sign of the constraints. Indicate the area of the feasible solution by the shaded area which forms a convex polyhedron. Step III: Determine the co-ordinates of all points at the corner of the feasible solution. Step IV: Find out the value of the objective function corresponding to all the solution points determined in step (II). Step V: Determine the feasible solution which optimises the value of the objective function. Problem 5: A company produces two types of dolls A and B. Dolls a is of superior quality and B is of lower quality. Profit on doll A and doll B is Z 5 and 3 respectively. Raw material required for each doll A is twice that is required for doll B. The supply of raw material is only 1000 per day of doll B. Doll A requires a special crown and only 400 such clips are available per day. For doll B, only 700 crowns are available per day. find graphically the product so that the company makes maximum profit. Solution: The formulation of the LPP. is Maximise Z = 5x1 + 3x2 Subjected to constraints 2x1 + x2 5 1000

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Industrial Engineering and Production Management

x 400 x20

Linear Programming Problems (LPP)

813

Solution: This is a minimisation problem. The constraint equation are (making them equalities). Equation (1) 3x1 + x2 > 24 xi = 0, gives x2 24 and x2 = 0 x1 = 8 co-ordinates are (0, 24), (8, 0) Equation (2) x 1 + x 2 = 16 co-ordinates are (0, 16) (16, 0) Equation (3) 2x1 + 6x2 = 48 Then xi = 0 gives x2 = 8, x2 = 0 gives x1 = 24 co-ordinates are (0, 8), (24, 0) These are plotted on the graph as shown in Fig. 31.2.

Fig. 31.2. Graphical Solution of LPP

The Values of Objective Function

Point

Co-ordinate

A B

(0, 24) (4, 12) (12, 4) (24, 0)

C D

Objective function Value (z = 600x1 + 400x2) 9600 7200 Minimum 8800 14600

The optimal value of objective function 14,600 The optimal solution is xi = 4, x2 = 12 31.6 SIMPLEX PROCEDURE

1. Formulate the problem as the LPP problem in standard form. 2. Convert the inequalities into equalities by introducing slack or surplus and/or artificial variables as required by the problem. 3. Initial solution—obtain the initial or starting by setting n-in variables in the problem and m represents the number of constraint equations. The variables set equal to

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Industrial Engineering and Production Management

zero are called non-basic variables are called basic solutions. Those (n-m) variables should be set equal to zero, which give unique solution to the problem. 4. The initial solution is represented in the tabular form and it is called initial simplex Table. 5. The next step is to improve the solution by the number of iterations till optimal solution is obtained. This step is explained as follows: (i) Determine the entering variable: The variable with the most negative value in the z equation of the initial Table corresponds to the entering variable. This is called entering variable as it enters the basis. (ii) Leaving variable: This is the variable which leaves the basis to give place for new entering variable. To identify the leaving variable—the ratio of entering column co-efficient is calculated for the rows except z (objective) row only +ve values are considered. The variable associated with smallest ratio is called the leaving variable. (iii) The column corresponding to the entering variable: It is called entering column or pivot column. The row corresponding;to the leaving variable is called pivot row. The element at intersection of pivot row and pivot column is called the pivot eiement or key element. (iv) For computing the improvement, the pivot element should be 1 and there should be zeros in the pivot column in all other places. This is done using the Gauss-Jordan elimination method. The new values are calculated using the following equations. Old pivot equation • New pivot equation pivot element • New Z equation = (Old Z equation) - (its entering column coefficient) x New pivot equation. • For all other equations, (old equation) - its entering column co-eff x New Pivot equation. The values obtained as represented in the Table. 6. Test for optimality: If the values of the non basic variable in Z row are all +ve, then optimal solution is reached. Get the value of Z and decision variables from the Table otherwise Repeat step 5 to get the improved solution till optimal solution is obtained. Simplex procedure for maximisation problem is shown in Fig. 31.3. Problem 7: A firm engaged in a manufacture of two products A and B performs only three operations—painting, assembly and testing. The relevant data regarding the products is given below. Product

sales price (? per unit)

Hours required per unit Assembly Painting Testing A 50 0.2 1.0 B 80 1.5 0.2 0.1 Total number of hours available each week are:

Linear Programming Problems (LPP)

815

Assembly — 600 Hrs., Painting — 100 Hrs., Testing — 30 Hours. The firm wishes to determine its weekly production so as to maximize its revenue. Formulate the model and solve by simplex method. FLOW CHART OF SIMPLEX METHOD Convert all the inequalities to equalities (Add slack or surplus and artificial variables as required.

Find the starting (initial) solution by setting (n # m) variables equate to zero.

1 Present the values of initial solution the tabular form.

Examine the z-row in the Table

If there are any negative values in the z-row. Optimal solution reached

Find the new basic solution Yes Select the largest -ve element as the entering variable.

‘1, Select the leaving variable. (Leaving variable is one associated with smallest +ve ratio of RHS/Ent. Column coeff.

Bring 1 in place of pivot element and zeros in the columns of pivot column

Fig. 31.3. Flow chart for simplex procedure (Maximisation problem) Solution: Let x1 and x2 be the number of units of product A and B respectively to be produced in order to maximise revenue. The problem can be represented as a LPP, model as shown below: Maximise Z = 50x1 + 80x2 (objective function) Subjected to x1 + 1.5x2 5. 600 ...(1) — assembly hours constraint. 0.2x1 + 0.2x2 100 ...(2) — painting hours constraints 0.1x2 0 Number of variables (n) = 5 Number of equations (m) = 3 To get the starting solution, (n-m) variables should be set equal to zero. The variables set equal to zero should be such that they should give an unique solution. (n-m) = 5 — 3 = 2 variables Two variables x1, x2 should be set equal to zero. Substituting which gives: X3 = 600 ...(1) x4 = 100 .(2) —(3) X5 = 30 Z=0 The starting solution is represented in the form of an initial Table (table 31.1). The variables which are set equal to zero (i.e. x1 and x2) are called non basic variables and variables which are not set equal to zero are called basic variables. i.e. (x3, x4, x5) Basic variables are represented in the basic column of the initial table. Table 31.1: Initial table.

Pivot row

Pivot Column x2 x3

Basic

z

x1

Z

1

x3 x4

0 0

—50 1 0.2

—80 1.5 0.2

x5

0

0

0.1

x4

x5

Solution

Ratio

0 1 0

0 0 1

0 0 0

0 600 100

— 400 500

0

0

1

30

300

Iteration No. 1.

The highest negative value in the z - row is associated with the variable x2. So x2 is the entering variable. RHS To find out the leaving variable, the ratio of Entering column coefficient Only for +ve coefficients of the entering column the ratio is to be calculated. The ratio is to be calculated only for constraint equation. The minimum positive ratio is 300 associated with variable x5 so x5 is the leaving variable. The pivot element should be 1 and the other coefficient in pivot column should be zero. The get this, Gauss-Jordan elimination method is used or the following equations are used to calculated new equation.

Linear Programming Problems (LPP)

817

old pivot equation pivot element New z-equation = old z equation - (its entering column coefficient) x NPE Other equations can be calculated as, New equation = old equation - (its entering column coefficient) x NPE The values are calculated and represented as shown in Table 31.2.

New pivot equation (NPE) -

Table 31.2:

Iteration No. 1

Basic

Z

xi

x2

X3

x4

x5

RHS

Ratio

Z x3

1

0 0 0 1

0 1 0 0

0 0 1 0

800 -15 -2 10

2400 150 40 300

150 200 -

X4

0

-50 1 2.0

X2

0

0

0

Iteration no.2.

The Variable x1 (which has the coefficient of -50 in z-row) is the entering element. To determine the leaving variable, the ratio of RHS Coefficient of Entering column is taken The ration corresponding to the variable x3 is minimum (150) x3 is the leaving variable. Now, if there is already 1 in the position of pivot element there is no need to compute the new pivot equation. The z-equation and x4 and x2 equations are calculated and the value are tabulated as shown in table 31.3. Table 31.3:

Iteration No: 2

Basic

Z

xi

x2

X3

x4

x5

Solution

Z x1 x4 x2

1 0 0 0

0 1 0 0

0 0 0 1

50 1 -0.2 0

0 0 1 0

50 -15 1 10

31,500 150 10 300

Since all the non basic variables in the z-equation (row) are non-negative, optimality has reached. The solution is

x i = 150 x2 = 300

x3, x4 and x5 = 0. Substituting these values in objective function. Z = 50x1 + 80x2 = 50 x 50 + 60 x 300 = 31,500

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Industrial Engineering and Production Management

Big M. Method (illustration)

Z = 3x1 — x2 Maximise Subjected to

2x1 + x2 > 2 x1 + 3x2 < 3 x2 < 4 x

X2 > 0

Solve the problem using simplex method.

Step 1: Convert the inequalities into equalities by introducing the slack, surplus and artificial variables as required. ...(1) 2x1 + x2 — x3 + A = 2 ...(2) xi + 3x2 + x4 = 3 X2 + X5 = 4

x

—(3)

x2, X3, X5, A > 0

x3 is a surplus variable. A is an artificial variable. x1, x 2, x 4, x 5 are slack variables. Step 2: Initial Solution Set the (n-m) variable equal to zero to get the starting. Solution: No of variables = 6

No of constraint equations = 3 (n-m) = 6-3 = 3 variables should be set equal to zero i.e. x1, x2 and x3 should be equal to zero to give in the unique solutions. Substituting these values in constraint equations we get the initial solution. A=2 x4 = 3 X5 = 5 and Z = 0

This is represented in the table (1)

The objective function is written as Z — 3xi + x2 + x3 + X4 + X5 + OA Table 31.4: Initial table

Basic Z

x1

x2

x3

x4

x5

A

RHS

Ratio RHS Ent column coefficient

Pivot row -->

Z Al

1 0

—3 2

1 1

0 —1

0 0

0 0

M 1

0 2

1

Pivot element

x4

0

0

3

0

1

0

0

3

3

x5

0

0

1

0

0

1

0

4

—

Pivot column

819

Linear Programming Problems (LPP) For the next iteration, x1 is the entering variable (as it has max -ve value in z-equation) To find the leaving variable, RHS The Ratio of are taken Entering column coeffs. Entering column coeffs. The minimum positive ratio (1) corresponding to Al is the leaving variable. The pivot element is 2 (Element at Intersection of pivot row and pivot column) Table 31.5: Iteration No. 1

Basic

Z

x1

x2

x3

x4

x5

A

RHS

Z

1 0

0 1

5/2 1/2

-3/2 -1/2

0 0

0 0

2m + 3/2 1/2

3 1

x4

0

0

5/2

1

0

-1/2

2

x5

0

0

0

1

0

4

x1

Pivot row ->

V 0

Pivot element 1' Pivot column For the next step, x3 is selected as a entering variable (most -ve value in z-equation). and x4 is the leaving variable as it is the only variable associated with minimum positive ratio (2/y2) = 4 The point element is to be made 1 and all other elements in the column are to be made as zero using the Gauss Jordan elimination method or by using the equations. The results of the iteration (2) are represented in table 3. To improve the solution, there should be 1 in the place of pivot element and zeros in the other places in the column. This is obtained by Gauss-Jordan elimination method or by calculating the equations using formulas. Old pivot equation 1. New pivot equation Pivot element NPE = [0 1 1/2 -1/2 0 0 1/2 1] 2. New z-equation = Old z equation - its entering coeff.. x NPE = [1 -3 1 0 0 0 M 0] +3 x NPE = [0 3 3/2 -3/2 0 0 3/2 3] [1 0 5/2 -3/2 0 0 2m + 3/2 3] 3. Other equations are calculated as New equation = old equation - (its entering column coeff. x NPE) New x4 equation = [0 1 3 0 1 0 0 3] -1 x NPE = [0 -1 -1/2 1/2 0 0 -1/2 -1] = [0 0 5/2 1/2 1 0 -1/2 2] x5 equation has already zero in the pivot column So, it remains unchanged. These values of new equations are represented in the table (2).

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Industrial Engineering and Production Management

Table 31.6: Itneration No. 2 xl

X2

X3

X

1

0

10

x1

0

1

3

0 0

3 1

x5 x3

0

0

5

1

2

0

0

1

0

0

Basic

Z

Z

4

X

5

0 0 0 1

A

RHS,

M

9/2 3/2 1 4

-1/2

-2 0

Since the value of coefficient of non basic variables are +ve the optimality has reached The optimal solution is, x = 3/2 Values of decision variables. x2 = 0 Substituting these values in objective function, Z = 3x1 - 2x2 = 3 x 3/2 - 0 = 9/2 Maximum value of objective function = 9/2 31.7 DUALITY IN LINEAR PROGRAMMING

Every linear programming problem whether of maximisation or minimisation has associated with it another mirror image problem based on the same data. The original problem is called the primal problem while the other is called the dual problem. Formulation of dual from the primal problem. 1. If the primal problem is a maximisation problem, the dual will be a minimisation problem and vice-versa. 2. The number of primal decision variables equals the number of dual constraints and the number of primal constraints equal the number of dual variables. 3. The profit constraints Cj in the primal problem replace the capacity constraints bi and vice-versa i.e. the coefficients in the primals objective function are put as dual constraints and vice-versa. 4. If the inequalities in the primal problem are of type, then in the dual problem, they are of the type and vice-versa. 5. Ignoring the non-negativity restrictions, if there are 'n' variables and m inequalities in the primal problem, then in the dual problem, there will be m variables and n constraint equations (inequalities). 6. The signs in the non-negativity constraints are both in primal and dual problems. 7. The coefficients column wise [from top to bottom] are positioned in the duals constraint inequalities row wise (from left to right) and vice-versa. The coefficient matrix of constraints of the dual becomes the transpose of a primal. • 8. The dual of the dual problem is the original LPP itself. 31.7.1 Characteristics of Duality

The characteristics of the dual simplex problems are: 1. Dual of the dual is a primal problem.

Linear Programming Problems (LPP)

821

2. If either primal or dual problem has a solution, then the other also has a solution and their optimal values are equal. 3. The value of the objective function for any feasible of the primal is less than the value of the objective function for any feasible solution of the dual. 4. If either primal or dual problem has an unbounded solution, then solution to the problem is infeasible. 31.7.2 Advantages of Duality

1. Solution of the dual checks the accuracy of the primal solution for computational errors. 2. Problems involving more constraints than variables require more computational effort than, when the number of variables is more than number of constraints. This is because the number of iterations in the simplex procedure depends upon the number of rows. Hence, it would be advantageous to solve the dual of the problem where it involves more constraints than variables. 3. Gives the information as to how the optimal solution changes as a result of the changes in the coefficients and the formulation of the problem (sensitivity analysis). 4. Economic interpretation of the dual helps the management in making future decisions. Illustration: Dual • Primal Minimise

Maximise Z =12y1 + 20y2 + 18y3 + 40y4

Subjected to

Subjected to

v Z= 6000x1 + 4000x2

4x1 9xi 7x1 10xi

12 20 18 40

x2 x2 3x2 40x2

4y1 9y2 + 7y3 + 10y4

6,000

yi -E. y2 + 3y3 + 40y4

40,000

Y1 Y2 Y3

x1 , x2

>

Problem 8: Obtain the dual of the following primal problem: Z = 5x1 + 3x2 Maximise Subjected to 2 X 1+ X 2 5x1 + 2x2 5 10 3x1 + 8x2 5. 12 x X2 0 Solution: The dual to the above primal problem is Minimise Z* = 2y1 + 10y2 + 12y3

"?'

822

Industrial Engineering and Production Management

Subjected to .1/1 5Y2 3Y3 >5 Yi 2Y2 8Y3 3 , Y2 1./3 Problem 9: Construct the dual of the problem. Z = 3x1 + 17x2 + 9x3 Maximise Subjected to — x2 + x3 3 —3x1 + 2x3 1 x1, x2'3 > 0 Solution: First, the constraint is converted into < constraint by multiplying both sides of the equation by —1 i.e. —x1 + x2 — x3 —3 Now, the dual of the given problem is Minimise Z = 3y1 + y2 Subjected to —.111

3Y3 3 y1 >_17 2Y2

9

.1/1, Y2 Problem 10: Construct the dual of the following primal problem. Maximise Z = 3x1 + 10x2 + 2x3 Subjected to 2x1 + 3x2 + 2x3 5 7 3x1 — 2x2 + 4x3 = 3 x1/ x2, X3 0 Solution: As the given problem is of maximisation type, all the constraints should be of type. The equation 3x1 — 2x2 + 4x3 = 3 can be expressed as a pair of two inequalities 3x1 — 3x2 + 4x3 3 and 3x1 — 2x2 + 4x3 3 or 3x1 — 2x2 + 4x3 3 and —3x1 + 2x2 — 4x3 —3 Let y1, y2' and y2" be the associated dual variables Then, the dual problem is Minimise Z = 7y1 + 3 (y2' — y2") Subjected to 2y1 + 3 0/2' - y2") 3 3y1— 2 (y2i - y2") 10 2y1 + 4 (y2' — y2") ?_ 2

and y1, y21, y21' Substituting y2' — y2" = y2 where y2 is unrestricted, the dual problem becomes

Linear Programming•Problems (LPP)

Minimise Subjected to

823

Z = 7y1 + 3y.2

2y1 + .3y2 > 3 3y1 — 2y2 10 2y1 + 4y2 2 where y1 > 0, y2 is unrestricted in sign. 31.8 SENSITIVITY ANALYSIS

. A linear programming problem can be solved under certain constraints and cost coefficients may not remain the same or stable for long time. The markets fluctuate, material costs, labour costs vary from time to time and rarely the optimal solution obtained on the baSis of a single estimate represent reality. This type of uncertainties are common in business and it is required. to know the impact of such changes on the input parameters of the model. It is essential to check the range of validity of the solution. The investigation related to this is known as "post-optimality analysis or sensitivity analysis. It is not necessary the one should look for the result after they have occurred in reality. If the decision maker knows that a Z 1 increase in selling price of one product brings a higher profit than the other product for a similar rise'of price, he can make a better decision when he has to change the prices of the products. To get a good insight into the problem, the analysis is not stopped by obtaining merely the optimal solution of the LP problem, by extending it to sensitivity analysis or post-optimal analysis. Basic Principles of Sensitivity

1. Introduce the changes due to the new problem in the final tableau of the original problem. 2. See whether the identity matrix exists in the tableau after the changes. If it does not, carry out row operations to get the identity matrix. 3. Check whether the solution is feasible or not. This is checked by observing whether the variable values are +ve or not. If theyare not, bring the solution into feasibility. 4. If the solution is feasible, see whether it is optimal. The approach to sensitivity analysis in terms of the effect on the optimal solution with the following changes. (a) Change in the coefficient of the objective function: Consider that the objective function has changed from Maximise Z = 3x1 + 5x2 to maximise Z = 4x1 + 5x2 Subjected to same constraints 2x1 + 3x2 Lc. 24 xi 9 x2 5 6 Now, the coefficient of x1 has changed from 3 to 4. The incremental change in the co-efficient in the objective function is (4 — 3) =1 while doing iterations in simplex method, we bring the variables from RHS to LHS in the Z-equation. So the incremental change in the coefficient of x1 in LHS is —1. This change i.e. introduction of coeff. of x1 = —1 in 1-eqn, will not give the identity matrix. To get the identity matrix row operation is carried out and the optimal solution is worked out.

824

Industrial Engineering and Production Management

. (b) Changes in the RHS of the constraint: This helps to indicate the extent of increase of RHS quantities without altering the existing basic variables. e.g. consider the constraint in (a) x2 :S: 6 has changed to p2 :S: 4. Now changes will take place only at RHS. (c) Changes in the coefficient of the constraints: e.g. the problem in (a), if the coefficient of x1 has changed due to new labour force added i.e. 2x1 - 3x2 :S: 24 has changed to 4x1 + 3x2 :S: 24. (d) To determine the sequence of basic situations that become optimal as the changes in the LP parameters are extended further and further. In this analysis, the objective is to determine -how sensitive is the optimal solution' to the changes in the parameters. The process of investigating of this kind is called sensitivity analysis.

Linear programming formulation examples Problem 11: A cargo plane has three compartments for storing cargo: front, centre and rear. These compartments have the following limits on both weight and space: Compartment Weight capacity (tonnes) Space capacity (cubicmetres) Front 10 6800 Centre 16 8700 Rear 8 ,5300 Furthermore, the weight of the cargo in the respective compartments must be the same proportion of that compartment's weight capacity to maintain the balance of the plane. The following four cargoes are available for shipment on the next flight: Cargo Weight (tonnes) Volume. (cubic metres/tonne) Profit (£/tonne) Cl 18 480 310 C2 15 650 380 C3 23 580 350 C4 12 285 390 Any proportion of these cargoes can be accepted. The objective is to determine how much (if any) of each cargo Cl, C2, C3 and C4 should be accepted and how to distribute each among the compartments so that the total profit for the flight is maximised. • Formulate the above problem as a linear program • What assumptions are made in formulating this problem as.a linear program? • to solve the above linear program, over a judgmental approach to this problem. Solution: Variables: We need to decide how much of each of the four cargoes to put in each of the three compartments. Hence let: xij be the number of tonnes of cargo i (i = l, 2, 3, 4 for Cl, C2, C3 and C4 respectively) that is put into compartment j (j = l for Front, j = 2 for Centre and j = 3 for Rear) where xii >= 0 i = l, 2, 3, 4; j = l, 2, 3 Note here that we are explicitly told we can split the cargoes into any· proportions (fractions) that we like. Constraints • cannot pack more of each of the four cargoes than we have available

Linear Programming Problems (LPP)

825

18

Fig. 34.8: Supply chain Management Process

890

Industrial Engineering and Production Management

•

Develop (Source) After planning, the next step involves developing or sourcing. In this stage, we mainly concentrate on building a strong relationship with suppliers of the raw materials required for production. This involves not only identifying dependable suppliers but also deterrniniI1g different planning methods for shipping, delivery, and payment of the product. Companies need to select suppliers to deliver the items and services they require to develop their product. So in this stage, the supply chain managers need to construct a set of pricing, delivery and payment processes with suppliers and also create the metrics for controlling and improving the relationships. · Finally, the supply chain managers can combine all these processes for handling their goods and services inventory. This handling comprises receiving and examining shipments, transferring them to the manufacturing facilities and authorizing supplier payments. • Make The third step in the supply chain management process is the manufacturing or making of products that were demanded by the customer. In this stage, the products are designed, produced, tested, packaged, and synchronized for delivery. Here, the task of the supply chain manager is to schedule all the activities required for manufacturing; testing, packaging and preparation for delivery. This stage is considered as the most metric-intensive unit of the supply chain, where firms can gauge the quality levels, production output and worker productivity. • Deliver The fourth stage is the delivery stage. Here the products are delivered to the customer at the destined location by the supplier. This stage is basically the logistics phase, where customer orders are accepted and delivery of the goods is planned. The delivery stage is often referred as logistics, where firms collaborate for the receipt of orders from·customers, establish a network of warehouses, pick carriers to deliver products to customers and set up an invoicing system to receive payments. · • Return The la'st and final stage of supply chain management is referred as the return. In the stage, defective or damaged goods are returned to the supplier by the customer. Here, the companies need to deal with customer queries and respond to their complaints etc. This stage often tends to be a problematic section of the supply chain for many companies. The planners of supply chain need to discover a responsive and flexible network for accepting damaged, defective and extra products back from their customers and facilitating the return process for customers who have issues with delivered products.

34.10 STAGES OF DEVELOPMENT OF BUYER-SUPPLIER RELATIONSHIP Once the organization makes the decision to buy, and then the next logical step is identification of sources of supply. The basic stages of development of Buyer-Supplier relationship 1. Specification of basic contract between the two parties. Suppliers are provided with drawings and basis specifications [Quantities to be supplied, rates and period of contract]. 2. Specifications of critical parameters for incoming parts. Aggregate production plans known to suppliers..

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3. Standardization of quantity procedure at suppliers dispatch. Buyer is informed about upstream development and testing procedures of suppliers, die-design, patterns and tooling, supplier• product constraints are taken into account. 4. Initiation of improvements by buyer after, supplier audit of supplier operations. 5. Initiation of improvement by supplier with sharing of gains. This could conclude value engineering and design improvements. 6. Common strategy planning of long-term relationship spanning many contracts. 34.11 PROCESS VIEWS OF A SUPPLY CHAIN

A supply chain is a sequence of processes and flows that happen within and between different stages and combine to meet a customer need for a product. There are two different ways to view the processes performed in a supply chain. 1. Cycle View: The processes in a supply chain are divided into a series of cycles, each performed at the interface between two consecutive stages of a supply chain. 2. Push/Pull View: The processes in a supply chain are divided into two groups depending on whether they are executed in response to a customer order or in anticipation of customer orders. Pull processes are initiated by a customer order, whereas push processes are initiated and performed in anticipation of customer orders. Cycle View of Supply Chain Processes

Given the five stages of a supply chain shown in Fig. 34.9, all supply chain processes can be fragmented into the following four process cycles, as shown in Fig. 34.9: • • Customer order cycle • Replenishment cycle • Manufacturing cycle • Procurement cycle Each cycle happens at the interface between two successive stages of the supply chain. Thus, the five stages result in four supply chain process cycles. Not every supply chain will have all four cycles clearly distinct. E.g. A grocery supply chain in which a retailer stocks finished-goods inventories and places replenishment orders with a distributor is likely to have all four cycles separated. Dell, in contrast, sells straight to customers, thus bypassing the retailer and distributor. Each cycle contains of six sub processes as shown in Fig. 34.9. Each cycle begins Customer with the supplier marketing the product Customer Order Cycle to customers. A buyer then places an order Retailer which is received by the supplier. The supplier then provides the order, which is Replenishment Cycle Distributor received byte buyer. The buyer may return some of the product (in case faulty product Manufacturing Cycle received) or other recycled material to Manufacturer the supplier or a third party. The cycle of activities then continues all over again. Procurement Cycle

Supplier

Fig. 34.9: Supply Chain Process Cycles

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Depending on the h·ansaction in question, the sub processes in Fig. 34.9 can be applied to the appropriate cycle. E.g. when customers shop online at Amazon, they are part of the customer order cycle­ with the customer as the buyer and Amazon as the supplier. In contrast, when Amazon orders books from a distributor to refill its inventory, it is part of the replenishment cycle­ with Amazon as the buyer and the distributor as the supplier. Within each cycle, the aim of the buyer is to confirm product availability and to get economies of scale in ordering. The supplier tries to forecast customer orders and lower the cost of receiving the order. The supplier then works to fuifil the order on time and improve efficiency and accuracy of the order fulfilment process. The buyer then works to. reduce the cost of the receiving process. Reverse flows are managed to decrease cost and meet environmental objectives. Even though each cycle has the same basic sub processes, there are a few important differences between cycles. In the customer order cycle, demand is -external to the supply chain and thus uncertain. In all other· cycles, order placement is uncertain but can be estimated based on policies followed by the particular supply chain stage. E.g. in the procurement cycle, a tire supplier to an automotive manufacturer can predict tire demand precisely once the production schedule at the manufacturer is known. The second difference across cycles relates to the scale of an order. E.g., A customer buys a single car, whereas the dealer places order of multiple cars at a time from the manufacturer, and the manufachrrer, in turn, places an even larger quantity order of tires from the supplier. As we move from the customer to the supplier, the number of individual orders drops and the size of each order surge. Thus, sharing of information and operating policies across supply chain stages is more important as we move farther from the end customer. A cycle view of the supply chain is very suitable when considering operational decisions because it clearly specifies the roles of each member of the supply chain. The detailed process description of a supply chain in the cycle view forces a supply chain designer to consider the infrastruchrre required to support these processes. The cycle view of supply chain processes is useful when setting up information systems to support supply chain operations.

Push/Pull View of Supply Chain Processes Processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push). Push and pull botmdary separates both the processes. The diagram depicts the push and pull boundary.

Push view of supply chain As push view depends on the speculation of customer demand it tries to push as many products into the market. In this they take lot of time to react to the changes in the market. Forecast plays vital role in push view. Long term forecasting helps the-company to manufacture optimum l�vel-of products. The speculative nahrre of the push process results in high production cost, high inventory cost and high transportation cost because firm would like to have buffer at every stage.

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Supply chain integration in push view: Manager of firm based on push view sometime unable to meet changing demand pattern. For example a textile company manufacturer's huge apparel thinking that style will stay longer and try to push that style into the market. Suddenly the style become obsolete and people prefer new style. The information reaches to the company little later. Result in longer lead time. When the firms try to push the product in downstream order required at each level varies. This information distortion in supply chain is known as bullwhip effect... Push process result in high inventory and high size of batches. Here company tries to emphasize on reducing the cost of supply chain and forget the responsiveness. The push view also poses challenges to demand management and transportation management. Pull view of supply chain

In pull process of supply chain demand is real and firms react to the demand. It helps company to produce required number of products. Pull system has drawback if there is excess demand from the customer and company do not have capacity result in loss of opportunity cost. The lead time in the pull view of supply chain is less. Supply Chain Integration in pull view. Production and distribution in the firm are depending on the demand. Firm is having reactive supply chain in this view. Thus it is having fewer inventories and less variability. It reduces the lead time in the entire process. The biggest drawback of this view is it can't reduce the cost by scaling up the production and operations. All processes in a supply chain fall into one of two types depending on the timing of their execution relative to end customer demand. Pull process is initiated in response to a customer order. Push process is initiated in anticipation of customer orders. Therefore, at the time of execution of a pull process, customer demand is known with certainty, whereas at the time of execution of a push process, demand is unknown and must be forecast. Pull processes may also be termed as reactive processes because they react to customer demand. Push processes may also be termed as speculative processes because they respond to forecasted rather than actual deinand. The push/pull boundary in supply chain separates push processes from pull processes as shown in Fig. 34.10. Push processes operate in an uncertain situation because customer demand is not yet known. Pull processes operate in situation in which customer demand is known. They are, however, often constrained by inventory and capacity decisions that were made in the push phase. Customer Order Cycle

Procurement, Manufacturing and Replenishment cycles

PUSH PROCESSES

PULL PROCESSES

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Cus omer Order Arrives

Fig. 34.10: Push/Pull boundary

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Push/Pull View of Supply Chain Processes

Execution is initiated in response to customer orders (reactive)

PULL PROCESSES Adilk

Customer order arrives

Execution is initiated in anticipation of customer orders (speculative)

PUSH PROCESSES

Processes are divided based on the timing of their execution relative to a customer order. Processes are divided based on their timing relative to the timing of a customer order They key difference is the uncertainty during the two phases At the time of execution of a pull process customer demand is known At the time of execution of a push process customer demand is not known (and must be forecasted)

Fig. 34.11: Push/Pull processes

A push/pull view of the supply chain is very beneficial when considering strategic decisions relating to supply chain design. The aim is to recognize an appropriate push/ pull boundary such' that the supply chain can match supply and demand effectively. Another excellent example of gaining from suitably adjusting the push/pull boundary is the paint industry. The manufacture of paint requires production of the base, mixing of suitable colors, and packing. Until the 1980s, all these processes were carried out in large factories and paint cans were transported to stores. These qualified as push processes, as they were performed to a forecast in expectation of customer demand. Given the uncertainty of demand, the paint supply chain had great difficulty matching supply and demand. In the 1990s, paint supply chains were restructured such that mixing of colors was done at retail stores after customers placed their o1ders. In other words, color mixing was shifted from the push to the pull phase of the supply chain even though base preparation and packing of cans was still performed in the push phase. The result is that customers are always able to get the color of their choice, while total paint inventories across the supply chain have declined. Comparison between push and pull SI. No

Push View

Pull view

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Execution initiated in anticipation of

2: 3. 4. 5. 6. 7. 8

customer order Demand is uncertain Speculative process High complexity Focus on resource allocation Long lead time Helps in supply chain planning Objective is to minimize the cost

Execution initiated in response to customer order Demand is certain Reactive process Low complexity Focus on responsiveness Short lead time Helps in order fulfilment Objective is to maximize the service

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34.12 SUPPLY CHAIN COMPONENTS The supply chain primarily made of three important entities. Inbound logistics and supply chain, in-house supply chain (within factory) and outbound logistics and Supply chain. Inbound supply cnain aims at providing raw materials and components to the organization for manufacturing and assembly. A typical manufacturing firm requires variety of materials like rolled steel, steel bars, angles and channels. It requires many semi finished components and parts like forged components, castings and moulded parts and also requires many subassemblies like motors, gear boxes, pneumatics and hydraulic components, control system components etc. so also some service facilities from outside vendors and service providers. • To manage the inbound suppliers tiers of suppliers are created. Tier 1 consists of OEM (Original Equipment manufacturers) suppliers who provide key sub-components. For tier 2 there will be a set of components suppliers related to their production system. Tier 2 suppliers coordinate with tier 1 supplier and respond to their production plans. Tier two suppliers source their requirements from metal manufacturing and other firms. An effective coordination is required between the manufacturing, planning and procurement functions in an organization to manage effectively an inbound sully chain. This inbound supply chain deals with sourcing, logistics, strategic relationship with suppliers, managing information flows.

In-house Supply Chain The in-house supply chain relates to the physical arrangement of production processes. The flow of materials sourced from suppliers are converted in to value added products/ services through series of processes. Managing this aspect of supply chain calls for designing the manufactur,ing system, facilities layout and management, process design and material handling system design. Since the conversion of material inputs in to useful and value added products is a critical link in the entire supply chain. To control effectively the inhouse supply chain the collaboration both within and outside the organization is important. A good collaboration between all the functional areas of business i.e. marketing, operation, human reso.urce management and finance is critical to the success of this supply chain.

Outbound Logistics Outbound logistics is concerned with the physical distribution of goods and services that are produced to the customers through middlemen. This includes the distribution Network design, warehousing, logistics planning, channel management, channel coordination and managing customer interfaces.

34.13 KEY ISSUES IN SUPPLY CHAIN MANAGEMENT Supply chain management provides enterprises, especially manufacturers, with tremendous competitive and business advantages. However, supply chain management is fraught with challenges especially in today's business landscape.

1. Globalization Globalization presents several critical supply chain management challenges to enterprises and organizations. First, to reduce costs across the supply chain, enterprises are moving manufacturing operations to countries which offer lower labor costs, lower taxes, and/ or lower costs of transport for raw materials. For some companies, outsourcing production

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involves not only a single country, but several countries for different parts of their products. However, outsourcing not only extends the production process globally, but also the company's procurement network. Having suppliers in different geographic locations complicates the supply chain. Companies will have to deal with, coordinate, and collaborate with parties across borders regarding manufacturing, storage, and logistics. Furthermore, they have to extend or maintain fast delivery lead times to customers who want to receive their products on schedule despite the increased complexity in the manufacturer's supply chains. Finally, they also have to maintain real-time visibility into their production cycle - From raw materials to finished goods - To'ensure the efficiency of their manufachuing processes. Second, as companies expand sales into global markets, localization of existing products requires a significant change in the supply chain as companies adapt their products to different culhues and preferences. There is an in11erent risl of losing control, visibility, and proper management over inventory, especially if enterprise applications are not integrated. This requires managing diverse structures of data across geographies effectively.

2. Fast-changing Markets Consumer behaviour is affected by cultural, social, personal, and psychological factors that are quickly being changed by technology and globalization. Social media is creating new pressures for consumers to conform while putting pressure on enterprises to utilize these sources of information to respond to changing preferences in order to stay interesting and relevant. Like globalization, the fast-changing consumer market also brings with it supply chain management challenges: First, products have shorter life cycles due to rapidly changing market. demands. Enterprises are under pressure to keep up with the latest trends and innovate by introducing new products, while keeping their total manufachuing costs low because they understand that trends will not last for a long time. This also demands a flexible supply chain that can be utilized for manufacturing other products and for fuhtre projects. Second, aside from new products, companies also need to constantly update product features. Enhancing product features requires enterprises to redesign their supply chain to accommodate product changes. Finally, innovation presents a challenge in forecasting demand for new products. The constant innovation necessitated by fast-changing markets also means enterprises will constantly have to anticipate demand for new products. Enterprises need to create and maintain an agile supply chain that can respond well to spikes and dips in demand and production needs. Companies should be asking if they have all the data needed to make planning decisions to address challenges created by fast-changing markets. For example, if stated lead times from suppliers are longer than actual times, this will lead to higher inventory levels than are actually required and affect costly decisions around network planning and optimization. Omni channel retail has related silos of sales data that have to be blended and harmonized to detect demand signals earlier in the planning process as well.

3. Quality and Compliance Apart from influencing consumer behaviour, social media highlights the importance of having high-quality products. According research, reading reviews, comments, and

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feedback is the top social media activity that influences online shopping behaviour. Furthermore, social media has not only raised consumers' expectations of product quality Thus; enterprises are tinder increasing pressure to create high-quality products and to create them consistently. They can do so by addressing quality at every level of the supply chain, such as raw materials procurement, manufacturing, packaging, logistics, and product handling. Product quality often goes hand-in-hand with compliance. Enterprises need to ensure that they meet local and international regulatory standards in manufacturing, p�ckaging, handling, and shipping of their products. Aside from passing quality control and safety tests, enterprises are also required to prepare compliance documents such as permits, licenses, and certification which can overwhelm them and their supply chain management systems. Emerging capabilities like IoT, Smart Packaging, and Block chain are changing how compliance is enforced and measured.

Overcoming supply chain challenges with data management and integration At 'the core of all these supply chain challenges, from globalization to compliance, is the need for better data management and integration. Faced by global operations, market expansions, and stricter quality and regulatory standards, enterprises are getting overwhelmed by massive amounts of information coming from different suppliers and customers in varying geographic locations that they need to properly manage. This includes data from every stage of the supply chain such as pricing of direct and indirect materials, labour agreements, rental contracts, tax documents, freight bills, Md compliance certificates, among many others. Data management and integration is key to solving these challenges by connecting the manufacturer's supply chain management systems with those of their suppliers and partners. Data management and integration give manufacturers much-needed visibility and control over all of their supply chain processes such as· procurement, manufacturing� storage, and logistics. Raw information coming from suppliers, partners, and even customers are also often composed of both structured and unstructured data which makes it even more difficult for enterprises to consume, analyze, and generate insights from these disjointed pieces of informa�ion. Proper data management and integration transform these raw information into compatible formats required by different supply chain management systems to ensure their seamless flow. In the U.S., supply chain costs are around 8.5 percent of the GDP. But in India, Supply chain costs are as high as 13 percent of the GDP. India received ranked 119 out of 130 countries on an index that measures business ease of nations based on supply chain and other significant factors while the list is topped by countries like Norway which tend to avoid disruptions in their global supply chain operations. It has been estimated that the losses occurring due to inefficient supply chain are approximately 65 billion dollars per year. Clearly the supply chain in India suffers from a lot of challenges. The supply chain in India suffers from both demand side challenges and supply side challenges. Demand side supply chain challenges in India are basically related to price and variety. India is a country full of diversity. One can encounter a new lifestyle, language and tradition after crossing 30-40 kms. So, it is not possible for a single manufacturer or a group of manufacturers to cater to the varied needs and wants of the consumers. It requires collaboration of manufacturers with local agents, distributors and retailers who are in contact with local consumers.

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34.14 SUPPLY CHAIN CHALLENGES IN INDIA Supply side supply chain challenges in India are mainly related to poor distribution system, lack of mature third party logistics, tax complexities, dispersed markets, outdated technology and lack of proper infrastructure. For successful implementation of supply chain, great focus should be put on the infrastructure in the country. Undoubtedly, In India, the infrastructural impediments are hampering the indushial performance. India is proud to have world's second largest road network totaling around 4.2 million kilometers but most of it is of poor quality. National highways in India comprise around 2 percent of the road network, but carry around 40 percent of the load. Shipments by the roads that generally take three days in the U.S can take as much as nine days in India. In India, ships can stay up to five days to dock at the ports which are not available in Europe. Also, there are very less logistic firms in India which have a fleet size of more than 100 trucks and very few trucks are provided with a CPS facility. Thus the real-time tracking of shipments is not possible. It is not only the inadequate means of transport that hold Indian supply chains back but there are certain other factors also. Higher fuel cost in India increases the transportation costs. A lot of delays happen due to load restrictions, numerous permits, · excessive documentation work, public holidays ·etc. All of these result in high lead times, poor long term relationships and more transportation costs also. Due to presence of a large number of intermediaries, the product costs get artificially boosted up which decreases margins at the retail point of sales. Supply chains are becoming complicated and dynamic due t? frequent changes in sourcing locations and smaller and frequent purchase orders. The distribution centers are set up taking into consideration the tax laws. However, the operations inside these centers are not up to the mark leading to more expenses. The historical data is not maintained properly and is not available at the times when needed. Even if the proper data is available, due to poor IT, infrastructure, it is not utilized properly. As a result, the retail industry is not able to forecast the inventory requirements. Ultimately the inventory carrying cost would increase if more inventories are accumulated or the business would lose its customers if there are fewer inventories.

1. E-commerce Over the last 12-18 months, e-commerce is di:iving _the increasing popularity of third-party logistics (3PL) and last-mile delivery vendors. Such vendors provide heavily capital- and labour-intensive services _such as transportation, warehousing, inventory management, freight forwarding, cross-docking and packaging. Within the e-commerce space especially, it becomes increasingly cost-efficient for online players to use a 3PL vendor to provide end-to-end delivery solutions for everything from food, electronics, beauty products, branded apparel and footwear - at cheaper and cheaper rates. India's online and mobile shopping boom shows no signs of slowing down with a recent study estimating B2C transaction value topping US$100 billion by 2020, while B2B · value is expected to hit US$700 billion. With an increase in the number of 0nline transactions, the online logistics space will continue to flourish, with consolidation around four to five prominent players (for example Delivery, Vulcan, E-Kart). 2. Operational Efficiency Companies are constantly facing pressure to manage their bottom lines across the business.

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Sourcing and procurement activities can be streamlined across different regions with better integration. This, in htrn, gives companies increased negotiating power and better economies of scale to drive operational efficiency. , Many companies are also looking at developing strategic relationships with key vendors to drive through the concept of supplier driven innovation. Apart from the services industry, where the concept of procurement/sourcing Centers of Excellence (COEs) has been fairly popular, traditional product-based companies also setting up similar COEs to leverage global relationships, driving operational efficiency. Developing strategic relationships is also key as vendors are increasingly an extension of the company's logistics arm, and they contribute directly to the brand's image. Any service delivery issue or error could harm the company's reputation. 3. Emergence of 'Lean Supply Chain' Concept

The concept of a "Lean Supply Chain" has gained popularity in recent years. It's no longer about just customer management or economies of scale but also how agile a company's supply chain is and its ability to adapt to internal and external factors. To develop a lean supply chain, companies are looking at adapting technological improvements across the entire organization. But the success of a lean supply chain is heavily dependent on the ability of its hmnan capital to make qui.ck decisions. Primitive reporting struchtres might no longer work, and this has led to an emergence of matrix structures within supply chain set-ups. Candi.dates with experience of working in such an environment, especially with exposure to global stakeholders, are heavily in demand. Talented strategists rather than pure play execution-oriented staff are being courted for their ability to lead key initiatives and projects leading to operational efficiency. Logistics and distribution professionals with experience in handling imports, customs clearance and 3PL vendors are also prized.

SUMMARY The term Supply Chain Management is used to describe the management of material, suppliers, production facilities, distribution services and customers linked together through the forward flow of information and the backward flow of materials. The management process which integrates the movement of goods, services, information, and capital, right from the sourcing of raw material, till it reaches its end consumer is known as Logistics Management: Supply Chain Management (SCM) is a series ° of interconnected activities related to the transformation and movement of raw material to the finished goods till it reaches to the end user. It is the outcome of the efforts of multiple organizations that helped in making this chain of activities successful. Supply chains are now common not only within the country where the business is operating, but they are extended as international supply chain in both low and high technology products ranging from textiles to sophlsticated electronics and automobiles where raw materials are processed in one country, intermediate processing or assembly in another country and final processing in the third country. If distribution is included in the supply chain, there could be many stages in that like warehousing third party freight forwarders, wholesalers, retailers.and service providers. The term supply chain forms the pichrre of how organizations are linked together.

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The primary objective of supply chain management is to reduce risks and uncertainties in to supply chain, thereby positively affecting inventory levels, operation and product cycle time, processes and ultimately end users service levels. The focus is on system optimization and enhancement of performance effectiveness. Each stage in a supply chain is linked through the flow of products, information, and funds. These flows often take place in both directions and may be managed by one of the stages or an intermediary. Supply chain management is a collaborative approach to getting goods from manufacturer to consumer. The_priinary goals center on shared efficiency, optimized transportation and utilization, quality improvement and long-term stability. Decision phases can be defined as· the different stages involved in supply chain management for taking an action or decision related to some product or services the strategic goals of supply chains have to match those of the constih1ent firms. These goals have to set a scene for medium and long term and operational management for those firms. The interface between the buyer and suppliers, buyers and other buyers of suppliers, suppliers and final customer is equally important. There are two different ways to view the processes performed in a supply chain. 1. Cycle View: The processes in a supply chain are divided into a series of cycles, each perf