T.Y.B.B.

A
(SEM-6)
PRODUCTION AND OPERATION MANAGEMENT-CC-311
UNIT-1
 Meaning of production management and operation
management
 Objectives of production management
 Scope of production management
Types of production
1. Continuous
2. Intermittent
3. Project
4. Job shops
 Concept of production planning and control
 Function of production planning and control:
Estimating, routing, scheduling, loading, dispatching,
expediting, follow up, inspection and corrective action
 Concept of work study and motion study, work
measurement, basic work study procedure.
UNIT – 2
 Concept of purchasing
 Principles of purchasing
 Process of purchasing
 Types of purchasing
1. Blanket orders
2. Stockless purchasing
3. System contracting
4. Small order purchases
 Concept of material handling and principles of material
handling.
 Concept of MRP-1 and MRP-2
 Objectives, advantages, and disadvantages of MRP-1
 Concept of ERP and features of ERP.

UNIT-3
1. Concept of layout, factors affecting layout and features
of a good layout.
Types of layouts
1 product
2 process
3 project
2. Concept of quality management
Cost of quality Deming’s 14 principles of quality
Concept of six sigma and its process
Deming’s concept of PDCA cycle
Concept of ISO-9000, 14000, 22000

UNIT- 4
 Contemporary issues
 JIT: concept and characteristics ( including the concept
of KANBAN)
 Kaizen: concept, 3 guiding principles, activities falling
under the kaizen umbrella.
 Japanese 5: “S” approach ( 5 s kaizen movement)
 Business process reengineering- characteristics, steps
 Lean production and basic elements.

 Books
1. Production and operation management by k.
Shridhara Bhatt, Himalya publication house.
2. Operation management by Roberta S. Russell and
Bernard S. Taylor, Pearson higher education.
3. Production and operation management by Kanishka
Bedi, Oxford higher education.
4. Operation management by Heizer render, Pearson
publication.
 Unit-1
UNIT-1
 Meaning of production management and operation
management
 Objectives of production management
 Scope of production management
 Types of production
5. Continuous
 6. Intermittent
7. Project
8. Job shops
 Concept of production planning and control
 Function of production planning and control:
Estimating, routing, scheduling, loading, dispatching,
expediting, follow up, inspection and corrective action
 Concept of work study and motion study, work
measurement, basic work study procedure.

1. MEANING OF PRODUCTION MANAGEMENT AND

OPERATION MANAGEMENT-
 Prime activities of modern business world-
Production of tangible products or intangible services
And their marketing to the consumers for whom it
made.
 The production management clear around series of
functions like procurement of inputs,
Testing them before they are sent for processing,
Sequential processing in series of stages before they
are ready for the dispatch to the market.
 The production management is also identified or
clubbed with operations management because it is
primarily involves in step by step operations of
converting the raw materials into finished goods with
the help of machines , men and other production
facilities.
 Production is the basic activity of all industrial unit.
 The end activity of the production activity is the
creation of goods and services for the satisfaction of
the human wants.
 The operation management is nothing but the step -by-
step conversion of one form of materials.
 The products of the mine, farm, sea and forest are used
as raw material on which processing is done with a
view to create or enhance the form utility.
 In a chain of manufacturing activities the finished
products of the preceding firms become the raw-
material for the other manufacturing firms falling next
in the sequence.

2. DEFINITION AND CHARACTERISTICS OF PRODUCTION

MANAGEMENT-
DEFINITION OF PRODUCTION-
 1. “Production is the process of transforming raw
materials into finished goods using resources such as
man , machine and technology” .
 2. According to economist, “Production is an activity
through which the form utility is either created or
enhanced. Example- a piece of wood has some utility
but when it is converted into a chair with some
mechanical processing, the utility of a piece of wood
would enhance substantially”.
 3. According to Edwood Buffa, “ Production is a process
by which goods and services are created”.

DEFINITION OF PRODUCTION MANAGEMENT-

 1. “Production management is the management of
those resources and activities of the business that are
required to produce goods or services for sale to
customers at a profit”.
 2. “Production management is an administrative
activity for the efficient and effective use of resources
for step-by-step conversion of material into finished
good and it strives meet the costs, performance,
quality and waste requirements”.
 3. According to H.A.Harding “Production management
is concerned with those processes which convert the
inputs into outputs. The inputs are various resources
like raw- materials, men, machines, methos etc. and
outputs are goods and services”.
 4. According to Edwood Buffa, “ Production
management deals with decision-making related to
production processes so that the resulting goods or
services is produced according to specifications, in the
amounts and by the schedule demanded and at
minimum cost”.
CHARACTERISTICS OF PRODUCTION MANAGEMENT-
1. Production management is a prime activity of the
business performed by the operating manager
( production manager).
2. Production management involves the series of
processing activities for converting the low value
raw materials into the high value finished goods
and adds profitability to the business.
 3. Production management involves huge initial
investments in fixed assets and equipment for
creation of production facilities.
4. Production management is closely linked with
other areas of management like marketing,
finance, human resources, computer, and
information technology etc.
5. Production management is a localized activity
carried out at one or limited locations.
6. Production management strives to control costs
through adoption of latest technology and
efficient use of available resources keeping the
cost of production as low as possible.
7. Production management is monitored at the head
office and at different centres of production.
8. The efficiency of production management can be
attained through the fast turnover of the installed
production capacity.
3. OBJECTIVES OF PRODUCTION MANAGEMENT

1.ULTIMATE OBJECTIVE 2. INTERMEDIAT-OBJECTIV

1.Preestablished cost 1.MACHINERY AND EQUPMENT
OPERATING COST
2.According to specific quality. 2.MATERIALS
PRODUCT QUALITY
3.Within the stipulated time schedule. 3.MANPOWER
OPERATING SCHEDULE 4. MANUFACTURING

1. ULTIMQTE OBJECTIVE
1. Operative costs-
The unit cost of products should be estimated
carefully and every effort should be made to stick to
the cost standard.
Efforts should be made for the following
a. Reduction in the variable cost.
b. Reduction in fixed cost.
c. Increase in volume of production so fixed cost
spread in more unit and reduction in average fixed
cost.
d. The allocation of the fixed overheads should be
made on scientific basis.
2. Product quality-
The product quality standards are often established
by the product specifications specified by the
consumers.
The maintenance of the quality should not result
into increase in manufacturing costs or delay in the
production.
 A proper balance should be maintained between
quality and cost as well as quality and time.
3. Operating schedule-
Proper time objectives must be set for
manufacturing activities.
The time schedule should be set for all the
subsystems like operating cycle time, inventory
turnover rate, machine utilization, machine and
labour idle time, set-up, repair, and maintenance
time etc.
Time schedule objective directly affects the cost,
quality, and the goodwill of the business in terms of
regularity of shipment to consumers.

2. INTERMEDIATE -OBJECTIVES
The intermediate objective are to procure various
inputs and to use them efficiently and effectively.
1. Machinery and equipment-
a. Acquisition of machinery and equipment and
b. Utilization of machinery and equipment.
The adequacy of the existing machinery should be
considered and proper additions and
replacements should be made according to the
requirements.
Efforts should also be made to increase the
utilization rate of machinery through repair,
maintenance, and maximum occupancy of the
machines.
2. Materials-
 The materials objectives must be prescribed in terms
of units, rupee value and space requirements.
The per unit materials costs should be specified and
efforts should be made to increase the inventory
turnover of all types of inventories – raw materials,
work-in-progress and finished goods.

3. Manpower –
Manpower is an important as well as typical input in
the manufacturing activities.
Manpower must be closely allied with the objectives
of selection, placement, training, rewarding, and
utilisation of manpower.
Usually, these objectives are considered in terms of
employee turnover rates, safety measurements,
industrial relations, absenteeism etc.
4. Manufacturing services-
The provision of proper and adequate services
directly affects the utilization of other inputs such as
men, machines, and materials.
Proper objectives should be set for the installation of
important facilities such as power, water supply,
material handling etc.
Objective of manufacturing activities are to
manufacture a quality product, on schedule, at the
 lowest possible costs, with maximum asset turnover
to achieve consumer satisfaction.

4.SCOPE OF PRODUCTION MANAGEMENT-

> Production management is a prime area of
business activities.
> production management involves the step-by-step
conversion of raw materials into the finished goods
deliverable to the consumer.

>Production management includes the following

activities in its scope.
1. Product selection and design-
> A product can be a single product pr a group or
products of product mix.
> choosing the right products, keeping the mission
and overall objectives in mind is the key to success.
> the design of the product which makes the firm
competitive or non-competitive.
2. Process selection and planning-
> Selection of process involves taking decisions about
adoption of particular technology, type of machines and
equipment.
> The company strives to optimise the output from a
given process.
 > Process planning, detailing the stages of the process,
give an idea of optimum automation and mechanisation.
3. Location facilities-
> The location of production operations directly affects
the logistics.
> It is a long term decision which can not be changed so,
a wrong decision may prove disastrous.
> Location should as far as possible be such that it
should cut down the production and distribution cost.
> Therefore, from the various alternative open to the
company, each should be evaluated and a suitable location
be selected.
4. Plant layout and material handling facilities-
> Plant layout deals with the arrangements of machines
and plant facilities.
> The machines should be so arranged in such a manner
that the flow of production remain smooth.
> There is product layout, where machines are arranged in
sequence required for the processing of a particular
product.
> The departments are laid out in such a way that the cost
of material handling is reduced.
> These days, computer software is available for planning
the process layout e.g., CRAFT , CORELAP etc.
5. Capacity Planning-
 > The capacity planning deles with the procurement of
productive resources.
> full capacity indicates maximum level of output. Within
that limit, a capacity is planned for short-term as well as for
long-term.
> capacity planning, requiring the long-term
considerations like expansion and contraction.
6. Planning of plant and personnel services-
>The plant services like power, repair and maintenance
etc. are to be considered in terms of type of machines and
selection of plant layout suitable to the respective
production systems.
> The provision of personnel services like parking,
canteen, toilets etc are included in the broader scope of
production management.
7. Quality control activities-
> The production management involves pre-production
testing of raw- materials, in-process inspection for quality
control and post-production quality control of finished
goods before they are dispatched to the market.
> The location of testing laboratories, lab-equipment and
lab-personnel become an important activity falling under
the production management.
8. Purchase, storing, and waste-scrap management-
> These are the allied functions to the production
activities.
 > sometimes they are linked to the production function or
can have an independent status wherein they are
coordinated with the production function.
5. TYPES OF PRODUCTION-
 In modern business world four types of production
systems are practiced
1. Continuous Production system
2. Intermittent Production system
3. Project Production system
4. Job-shop production system
1. Continuous Production –
 Under the continuous production system, the
production of standard products is carried on a mass
scale.
 Due to the production of standardized products, the
product design tends to be constant.
 The number of operations and the sequence of
operations remains same.
 The machines are arranged in the sequence according
to the operation sequence of the product.
 The machines set-up remains unchanged for the longer
time.
 The entire production line is characterised by fixed
rated capacity. Like intermittent production, the
possibilities of waiting or rushing do not exist in
continuous production.
 Time required to convert the raw-materials into
finished product is relatively short
 Continuous manufacturing is most suitable to process
industries such as chemical industry, refineries, food
processing etc.
 It is also applied to assembling industries such as
automobiles, radios, refrigerators, typewriters etc.
 As compared to job-shop production, the investment in
the inventories is relatively less.
 The production system requires the standard materials
and their requirements can be estimated reliably based
on the production schedule.
 In the continuous production, usually the production of
the few standardized products are made on a large
scale for the stock. However, sometimes the
continuous production is also made according the
customer’s order, provided it is fairly large size.
Like production of monopoly design of some customer
in textile industry. Some engineering parts on large
scale say 1,00,000 pieces etc.
 The production schedule is based on the adjusted
demand forecasting. The entire production activity is
geared to the production schedule.
 The routing is simple due to the standard linear
operation, preset sequence of operations and
automatized material handling.
 The scheduling function is also simple due to
synchronization of the operations. The periodic
production is made according to master schedule.
 Some adjustments in the production schedule would
be necessitated based on the fluctuations in demand
and the stock pilling of the finished products.
Dispatching function stands to be easy due to standard
machine set-up, standing instructions to the operators
and use of standard materials and tools.
 Sufficient attention is given to the quality of
production, rate of rejections, oiling, cleaning, repairing
and maintenance of machines and equipment’s.
 Continuous production does not mean 3 shift
production round the clock. It simply means that it
does not need change in machine set up and
production instructions. They are generally of
permanent nature.
 Examples – pasta production, tomato sauce, juice, ice-
cream production.

2. Intermittent production-
 Intermittent production system is a compromise
between the continuous and job shop production.
 Under this type of production system, the production is
processed in lots rather than on a continuous flow
basis or a single order basis.
 It is also known as batch production.
 The product designing and the machines set- up
changes as per the specialisation of each size of limited
quantity batch production.
 The works manager or plant engineer to determine the
economic manufacturing lot size.
 Unlike the continuous flow production, the product
design and the machine set-up are changed as per the
specific lot.
 The problem of production planning and control are
relatively more complex as compared to continuous
manufacturing.
 The routing function changes along with the change in
the lot be manufactured.
 The scheduling function is performed in the light of the
jobs on hand, their stage of completion, commitment
for completion etc.
 The changes of waiting, rushing, and bottlenecks are
more resulting into either idle capacity or pressure on
existing production capacity.
 The dispatching also becomes a complex function. The
job assignments to man and machines necessitates the
up-to-date information about their existing and
probable workloads.
 The investment in the inventories tend to be high due
to the maintenance of reservoirs of materials in the
sub-stores and the prolong operating cycle.
 This type of production system is more suited to
pharmaceutical companies, casting, forging, ready-
made garments, foot-wear industry etc.
3. Project production system-
 The project production system is a specialized
production system which has typical features other
than the continuous, job-shop or intermittent system
 Every project is unique in its job performance
 It is performed outside the shop floor. The construction
assignment or infrastructure projects like highways,
dams, ports or air-ports, metro rail are the examples.
 As every project is unique in its job performance, the
production planning and control functions are
organized independently.
 A fresh thinking and planning is done for each project
assignment. The machine set-up and job instructions
are unique.
 The project production system is a static system
wherein the resources like man, machines and
materials must move to the job sites.
 High skilled engineers are employed for planning and
control purposes.
 Generally, the project companies undertake such
project assignment and a special project team is
created for each project.
 The project production system is suitable for more
complex, costly, and project of non-repetitive nature.
 Examples- abuilding, a ship, an airplane or a large
computer.

4. Job-shop production system-

 When the manufacturing is carried on exclusively
according to the specification of the customer’s order.
 It is popularly known as ‘’Job shop” manufacturing.
 The job-shop manufacturing signifies that the sales
orders from the customers are obtained in advance and
then they are translated into manufacturing
operations,
 The job-shop production is undertaken by engineering
firms which manufacture machines and equipment’s
according to specification of customers.
 The cost of each job is find out on the basis of job
costing.
 The order may be of repetitive or non-repetitive
nature.
In case of repetitive orders, the tools, patterns, dies etc.
are stored and the product design is preserved for
reproduction in future.
 As repetitive orders ensure certain cost advantages to
the manufacturing firm, a part of them are usually
passed over to the customers in the form of reduced
price.
 Generally, process layout is preferred wherein similar
machines are grouped at one location. The production
planning and control’s function is relatively complex
due to variations in the individual job specification.
 The machine set up and production instructions change
for each job. Generally high skilled workers are
employed as they must understand the diverse needs
of the customers.
 Such production system is more suitable to engineering
fabrication jobs, housing projects, printing and
 publication etc. making railings for a specific house,
making flower arrangement for a specific wedding.

6.CONCEPT OF PRODUCTION PLANNING AND

CONTROL(PPC)-
> The PPC relates to the production of goods or
services which is the prime objective of any business units.
> through production they achieve their ultimate goal, that
is earning profits which is not possible without the control
on production and operations planning.
> Through planning, goals, objectives, and targets of
production are decided.
> The production activities are initiated to achieve what has
been planned. Control is the post-production activity which
keeps production on right track.
> Control provides useful feedback to planning and thereby
helping the planning to be more effective.
Planning and control are very closely interrelated with each
other.
Planning--------------------Production------------------control
(Action plan) (Real Action) (Watch on
Action)
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| -------------------(Feedback for improvements) -------------
MEANING OF PPC-
1. Production planning and control can be defined as
achievement of production goals in most efficient and
economical manner through co-ordinating resources.

CHARACTERISTICS OF PPC-
1.PPC is a complete and co-ordinated plan of the entire
manufacturing process.
2. It provides for a follow up system for the plan so that the
production flow can move smoothly.
3. It is also a controlling system to see that plans are being
actually carried out.
4. The continuous feedback mechanism tries to modify and
improve plans as per the dynamic requirements.
5. It involves series of steps undertaken in a sequential basis
like planning, routing, scheduling, dispatching, etc.
OBJECTIVES OF PPC-
1. To estimate and plan production activities depending
upon delivery schedules committed to the customers.
2. To ensure effective utilization of scarce economic
resources.
3. To coordinate production related activities of different
departments.
4. To allocate and to assign the work to different sections
of the production department.
5. To make available adequate raw materials and other
resources necessary for production.
6. To eliminate any bottlenecks in the system and ensure
smooth flow of material on ship floor.
7. To schedule production activities in a systematic and
co-ordinated manner.
8. To arrange machine loading for the purpose of
balanced use of machines.
9. To have a check on the production activities, that is,
whether everything is moving as per plan or not.
10. To get feedback on the effectiveness of plans and
do necessary modifications in the same.
11. To follow up the planned activities to ensure
timely completion of the same through continuous
feedback.

6. FUNCTION OF PRODUCTION PLANNING AND

CONTROL-
PPC
PHASES--- planning Action control
FUNCTIONS- Estimating dispatching Expediting
Routing Follow-up
Loading Inspection
scheduling Corrective
action
 1. Estimating –
 The time estimation prior to the start of the job is a
planning function of PPC.
 It relates to the processing time required for each
operation.
 It also includes the set-up time required to be provided
for each operation carried out in the company on in-
house basis.
 The standard time estimations are made both for the
machine as well as for the labour in terms of machine
hours and labour hours.
2. Routing-
 It is the process of deciding sequence ( route) of any
process/operation to be performed during the
production of any product or services.
 The main objective of this phase of PPC is to select the
best and the most economical way to produce a job.
 Routing depends upon following factors-
a. Activities performed prior to, parallel and after the
process under planning.
b. Machines available for productions. Their type and
capacity.
c. Manpower availability.
d. Name of jobs to be performed.
e. Quantity of jobs to be performed.
 Generally, in industries, “Route sheets” are prepared
for each component to be manufactured.
 3. Scheduling-
 It is the process of allocating jobs to different machines
and setting time table of completion of different jobs as
per the priority.
 It is also related to machine loading. Machine loading
charts are used to indicate availability of machine for
preparing time- table per week or month.
 Based on machine loading, scheduling is done
indicating the time for each job and overall rate of
production.
 For scheduling, generally Master production schedule
(MPS) is prepared first.
4. Loading-
 Each work centre machine capacity is generally
presented on machine-hour basis.
 In the loading function, the machine load charts are
used which specifies the planned occupancy of
different jobs on a particular machine.
 The machine loading is carried out in connection with
the routing function to ensure the smooth work flow.
Such co-ordination avoids the chances of rush-orders
and facilitates the optimum use of production capacity
in terms of the priority set as per the urgency of job
performance.
5. Dispatching-
Following activities performed in this phase-
a. Issue of relevant drawings, job cards, material
slip etc. required for production.
 b. Arrangement for required jigs, fixtures, and
tooling.
c. Issue of authorization to start work.
d. Issue of inspection cards to inspection
department.
e. Make note on production rate and deviation if
any.
6. Expediting-
 The expediting function is related to the controlling
function of PPC.
 There are many probable interruptions during the
processing time like machine break down, non-
availability of materials, absence of a worker, lack of
timely supply of plant services like maintenance, power
supply etc.
 The expediting function keeps a track on the progress
of work on regular basis through comparing the current
state of performance with the planned targeted time.
 The expediting work takes care of the actual work
done, compares with the planned target and keep the
PPC managers informed about progress of the work or
any problem that may crop-up based on regular
periodic reporting.
7. Follow up
 Follow-up is performed to ensure that work should
progress as planned.
 There are many factors affecting flow of production
such as lack of raw material, machine breakdown,
 strike, accidents etc. these factors cause delay in
production.
 During follow up, production monitored to ensure that
it gets completed as planned. In case of any deviations,
corrective actions are taken.
 This phase also provides necessary feedback to
improve future plans.
 This is done by systematically investigating causes of
delay and their probable remedies.

8. Inspection-
 Inspection operations are broadly divided into three
categories.
a. Pre-production inspection at the time of receipt of
the inventories.
b. In-process inspection which is carried out several
times during the processing of the job as per the job
requirements
c. Post – production inspection before the dispatch of
the finished goods.
 The inspection work is carried out either in a separate
laboratory or at the various inspection points
determined as per routing scheduling function.
 The inspection function evaluates the efficiency of the
materials, processes and the workers and allows the
job for further processing only after the fulfilment of
the set standard quality.
 Statistical quality control technique of sampling is used
in the inspection function.
 9. Corrective action-
 Corrective action function helps in reducing the
wastages and defective products.
 The inspection function is proactive in nature because,
it prevents the additional processing costs on faulty
products.
 despite of efficient PPC, there are chances of defective
production due to several reasons like, over use of
machine, material becoming stale, tired workers etc.
 under such situation, post-production corrective action
is initiated and immediate feedback is provided for
correcting the situation resulting into the defective or
faulty production.
 The corrective action taken are of both the aspects-
a. Quality of the defects
b. Number of defects in a product.
 The corrective action contributes in the cost savings by
reducing the cost of wastages, scrap and after sale
warranty expenses.
 It also helps in maintaining the satisfaction level of the
consumers.
IMPORTANCE OF PPC-
1. It enables effective utilization of resources (man,
machine, and materials etc.)
2. In fulfils delivery schedules of customers by
providing them goods as per the dates specified by
them. Thus, improving reputation of the firm.
3. It minimizes the impact of controllable emergencies
through careful planning.
 4. It helps in meeting production priorities as per the
contractual obligations.
5. It controls ineffective time of man and machines
through proper co-ordination.
6. Machine loads can be uniformly distributed on
different machines.
7. The investment in work in process (WIP) inventories
can be minimized.
8. It ensures uniform production to be managed in an
uninterrupted manner.
9. It ensures effective estimation of manpower and
machine capacity.
10. The over all production function is managed in an
integrated and holistic manner.

7. CONCEPT OF WORK STUDY-

MEANING-
 It is the study of human work in deepest sense and
dignity of the word.
 The aim of work study is to determine the best method
of performing each operation and to eliminate wastage
so that production increases with less fatigue.
 Work study is not limited to the shop-floor, nor even to
manufacturing industry, it can be used in any situation
where human work is performed.
 “ A management service based on those techniques,
particularly method study and a work measurement,
which are used in the examination of human work in all
its contexts and which lead to the systematic
 investigation of all the resources and factors which
affects the efficiently and economy of the situation
being reviewed in order to effect improvement”.

WORK STUDY
______________________________________________
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METHOD STUDY WORK
MANAGEMENT
(to improve methods of production) (to assess
human
Effectiveness)
Result in more effective use of Making
possible
materials, plant, equipment, planning and control,
manpower managing and as a
basis
for sound incentive
scheme
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|_______________Higher Productivity_________________|

 Method study as defined by British standard-

“ The systematic recording and critical examination of
the factors and resources involved in existing and
proposed way of doing work, as a means of developing
and applying easier and more effective methods and
reducing costs”.

8. WORK MEASUREMENTS-
 “ work measurement is the application of techniques
design to establish the time for a qualified worker to
carry out a specified job at a defined level of
performance”.
 The work measurement is closely related to method
study. The method study intends to reduce the work-
content, and the work measurement establishes time
 standards based on work-content as determine the
former.
 BASIC WORK STUDY PROCEDURE-
It consists of eight basic steps some of which are
common to both method study MS and work
measurement WM.
Sr. no. Basic step MS WM
1 Select * *
2 Record * *
3 Examine * *
4 Develop *
5 Measure *
6 Define *
7 Install *
8 Maintain *

The Method study (MS) has six steps-

1. Select the job to be studied.
2. Record how it is performed right now.
3. Examine the existing method critically.
4. Develop an improved method.
5. Install the improved method.
6. Maintain it in practice.
The acronym SREDIM will help you to remember the
steps.
 To conduct Methos study (MS), we should have
conducive human relations climate, top-management
support, supervisory co-operation.
 Work study ((WS), if properly applied, tends to improve
industrial relations. Skilled seniors may resist changes.
 Work study (WS) results may render some workers
redundant (not needed for job), leading to
retrenchment/ redevelopment/transfer. In developing
countries, this causes the greatest anxiety. In the long
run, however, the technique benefits all.
 Work study (WS) is to be conducted by a properly
qualified person, who can win confidence of both the
supervisors and the workers. He should be able to deal
with people. Work study (WS) results are to be applied
with tact.

9. MOTION STUDY-
 Motion study refers to the study of movements loke
lifting, putting objects, sitting, and changing positions,
etc., which are undertaken while doing a typical job.
Unnecessary movements are sought to be eliminated
so that it takes less time to complete the job efficiently.

 The main aim of this study is to eliminate unproductive

and unnecessary movements to ensure timely
completion of work.

 Motion study is a science of elimination of wasteful

body movement of a worker which is unnecessary and
ill- directed. As some of the moments are non-value
 adding, they are considered as inefficient motion and
needs to be corrected.

 The motion study become more important when the

job is of repetitive nature. Example – brick laying in the
construction industry.

 The motion study of the human body at production

operations of a repetitive nature can be better studied
only by taking the motion pictures of the operations in
the camera and then to play at the slow speed and
analysing it.

 In the motion study, the contribution made by

following Authorities are
1. Franklin B. Gilbreth and his wife Lillian M. Gilbreth
2. Marvin E. Mundel
3. Barnes

1. Franklin and Lillian Gilbreth who developed the

THERBLIGS. Concept of the motion study. The term
THERBLIGS was coined by reversing the term
Gilbreth.
 Mrs. Gilbreth possessed the psychology background
and Mr. Gilbreth was having engineering background.
Such unique combination facilitated the study of
mental perception and the body movements and their
relationship.
 When the workers were working on the jobs, the
movements were snapped in the camera and
subsequently were used in slow motion and the use of
micro- chronometer.
 In 1985 , he entered as a building contractor at the age
of 17. He closely studied the brick- layer’s job. He
observed that the workers do not do the same set of
operations in the repetitive work. Moreover, no two
man did the job exactly in the same way.
 Based on such studies, he tried to find ‘one best way ‘of
performing the given repetitive task. He invented the
“scaffold” that is wooden frames on which bricks were
staked a convenient distance eliminating unnecessary
bending by workers to lift the brick every time.
2. Marvin E. Mundel devised a special form of
micromotion study. It is popularly known as “Memo
motion study”.
 In this study motion pictures are taken at slow speed
with the use of motion picture cameras.
 Generally, 60 frames per minute and 100 frames per
minute are used. It is used to study the flow and
handling of materials, new activities and multi man and
machine relationships.
 Micromotion analysis as expensive to conduct, and
should be undertaken if it is appearing economically
justifiable, only after large scale improvement has been
fully investigated as a result of using the other
recording techniques.
  In certain types of operations, particularly those with
very short cycle which are repeated thousands of times
(packing of sweets in boxes or food cans into cartoons)
 It is worthwhile to go in much greater detailed studies
to determine where the movements and efforts can be
saved and to develop the best possible pattern of
movement thus enabling the operator to perform the
operation repeatedly with a minimum of effort and
fatigue.
 The micromotion group of techniques are based on the
idea of dividing human activities into divisions of
movements or group of movements according to the
purpose for which they are made, and to align the
human efforts with the machines.

3.BARNES 22 RULE –
> It explains the scientific way of motions to be used in the
production operations. It aligns the movement of human
body with the suitable work place and the design of tools
and equipment’s.
> The break-up of these these 22 principles in the three
categories.
1. Rules concerning use of human body -9 rules
2. Rules concerning arrangement of work place-8 rules
3. Rules concerning the design of tools and equipments-5
rules.
a. Rules concerning use of human body-
1. the two hands should be as well as complete their
motions at the same time.
2. The two hands should not be idle at the same time except
during rest periods.
3. Motion of the arms should be made in opposite and
symmetrical directions, and should be made simultaneously.
4. Hand and body motion should be confined to the lowest
classification with which it is possible to perform the work
satisfactory.
The ascending order of motion classification is a. fingers
only b. fingers and wrists, c. fingers, wrist and lower arms,
d. fingers, wrists, lower and upper arms, e. hands, arms, and
body.
5.Momentum should be employed to assist the worker
wherever possible and it should be reduced to a minimum if
it must be overcome by muscular efforts.
6. smooth, continuous curved motions of the hands are
preferable to straight line motions involving sudden and
sharp changes direction.
7. Ballistic movements are faster, easier, and more accurate
than restricted or controlled, movements.
8. work should be arranged to permit easy and natural
rhythm.
9. Eye fixation should be as free and as close together as
possible.
b. Rules concerning arrangement of the work place-
10. There should be a definite and fixed place for all tools
and materials.
11. Tools, materials and controls should be located close to
the point of use.
12. Gravity feed bins and containers should be used to
deliver materials close to the point of use.
13. Drop deliveries should be used wherever possible.
14. Materials and tools should be located to permit the best
sequence.
15.Provisions should be made for adequate conditions for
seeing good illumination is the first requirement for
satisfactory visual perception.
16. The hight of the work place and the chair should
preferably arranged so that alternate shifting and standing
at work are easily possible.
17. A chair of the type and hight to permit good posture
should provide for every worker.
C. Rules concerning the design of tool and equipment-
18. The hand should be relived of all work that can be done
more advantageously by a jig, a fixture, or a foot operated
device.
19. Two or more tools should be combined wherever
possible.
20. Tool and materials should be pre-positioned whenever
possible.
21. where each finger performs some specific movement
such type writing, the load should be distributed in
accordance with the inherent capacities of the fingers.
22.Levers, cross bars, and hand wheels which should be
located in such positions that the operator can manipulate
them with the least change in body position and with the
mechanical advantage.
> FOLLOWING MOTION STUDY METHODS IS ALSO
IMPORTANT AND RELAVANT-
1.Simultaneous Motion Chart (SIMO chart)
> In India SIMO chart are not very popular, since they are
expensive.
> A SIMO is a chart, often based on film analysis used to
record simultaneously on a common time scale the therbligs
or groups of therbligs performed by different parts of the
body of one or more workers.
2.Memo motion –
> There are many jobs that have activities, or an inter-
relationship of activities which, although they do not need
to examined in fine detail, are still to fast or intricate to be
measured and recorded accurately without the help of a
film.
>The production quantities of some jobs may not justify the
detail of micromotion analysis, the job cycle may exceed the
4 -minute duration, or the efficiency of a cycle may depend
on integrating the work of a team of people.
> The filming of these various classes of work can be
performed economically and efficiently.
> Marvin E. Mundel’s method of time lapse cine
photography known as to the cine camera so that a picture
is taken at an interval of time set at any convenient until
between ½ seconds up to 4 seconds in frequency.
> usually, the time interval chosen is one from a second,
which means that a 100-ft reel of film can record an hour’s
work. For a very large range and variety of jobs, one frame a
second misses very little detail of the information that is
vital to a study, so that this technique is an extremely
valuable tool possessing all the advantages of a film record
and the additional advantages of economic use of film and
the ability to record longer periods of work.
3. Line of Balance (LoB)-
> Line of balance is a planning technique which is of much
use when we have to manufacture similar products over a
period of time.
Week 1 2 3 4 5 6 7 8 9 10
Quantity 2 4 4 10 10 20 20 10 10 10
Cumulative
total 2 6 10 20 30 50 70 80 90 100

 Over a period ten weeks, we have to deliver 100 units.

The production has the following three stages.
 Machine parts- 3 weeks.
Assembling the product- 2 weeks.
 Testing the product – 1 week.
 The planned position at a given point of time of the
various stages of production is called the line of
balance.

UNIT – 2
 Concept of purchasing
 Principles of purchasing
 Process of purchasing
 Types of purchasing
1Blanket orders
 2Stockless purchasing
3System contracting
4Small order purchases
 Concept of material handling and principles of material
handling.
 Concept of MRP-1 and MRP-2
 Objectives, advantages, and disadvantages of MRP-1
 Concept of ERP and features of ERP.

1. CONCEPT OF PURCHASING-
 The purchase function is confined to the purchase of
inventories either raw material and components and
other material items like stores and spares.
 Materials represent a large part of the cost of
production and the frequency of purchases amount a
huge absolute during a particular year.
 Purchases involve specific considerations and a skilful
purchases manager is appointed with a fat salary

 The purchase function involves the following

consideration-

1. Precise materials specification.

2. Total quantity and periodic spread of the need in a
scheduled manner.
 3. Price variations and the price related terms like the
transportation, loading -unloading cost etc.
4. Quality of materials which should in consonance
with the offer price as determined by the
management.
5. Service offered by supplier like exchange of
breakages, price adjustments continuous
information about price trends etc.
 The honesty and integrity of the purchase people is
very important. They are expected to give due
consideration to company goals rather than the
personal benefits.
MEANING OF PURCHASE-
 “Purchasing is a function of getting required materials
in right quantity of right quality, at right price, at right
time, and from the right source.”
CHARACTERISTICS OF PURCHASING-
1. Purchasing is managerial function. It should be
assigned to a competent purchase manager.
2. Purchase function involves prior considerations
before a purchase decision. Proper planning
determined by the higher management and giving
reasonable freedom to the purchase manager.
3. Purchase is an integrated function. Proper linkage
and co-ordination should be made internally with
the production, storing, accounts and quality control
department. External linkage should be developed
with the supplier and customers as regards pricing,
delivery, and other related terms.
 4. It involves the negotiations with the suppliers and
customers.
5. As purchasing involves conversion of cash into non-
cash materials items, due honesty should be
observed in this function.
6. As it is continuously on-going function, it
presupposes development of the management
information system (MIS) and use ready-made
software’s. The MRP (materials requirement
planning) is important software of the ERP
(enterprise resource planning).
2.PRINCIPLES OF PURCHASING-
> Purchasing being a recurring function must follow certain
principes.
> Principles of purchasing as five “R”
1. Right Quantity
2.Right Quality
3. Right Price
4. Right Time
5. Right Source

1. Right Quantity-
 Purchase department should procure required
materials in right quantity every time. Over- stocking as
well as short purchasing have their own harmful effect.
 The benefit of quantity discount should be properly
evaluated.
 For each material “ordering level” and “economic order
quantity” should be worked out.
2. Right Quality-
 The quality of finish goods largely depends on the
quality of raw materials and other components
purchased.
 It becomes one of the prime duties of purchasing
department to get right quality of materials.
Right price-
 It is believed that the lowest price is the right price. But
this is not true.
 Whether the price offered by the supplier is right or
wrong can be judged with the combined effect of the
following factors.
a. Quality of the material.
b. Effective landed price (price of material+
transportation and insurance cost+ packing and
forwarding charges+ taxes and duties)
c. Reputation of supplier and services offered by him.
d. Delivery schedules committed by supplier.
3. Right time-
 Right time of delivery of materials is very important.
Delay in getting materials at required time can hamper
 entire production schedule and which may lead to loss
of sales and customer good will.
 Lead time (the time between placing the order and
getting the materials) calculation should be properly
done while planning purchasing.
4. Right source-
 Selecting the right vendor is also one of the most
critical jobs of purchase department. Vendors can be
selected based following factors.
1. Reputation and financial condition.
2. Prices offered for the different quantities of
materials.
3. Delivery schedule commitments.
4. After sales services.
5. Scope of long-term relations
6. Quality of materials.
 In case of more than one vendor exist for same
materials, they need to be rated on above factors and
are given priority accordingly while planning
purchasing.

3.PROCESS OF PURCHASING-
> The process of purchasing is generally consisting of
following stages.
1. Recognition of the need-
> Need for different items are originated in different
departments.
> When stock of particular material reaches to “reorder
level” , the concerned clerk forwards the purchase
requisition to the purchase department with relevant
details.
> Based on detail purchase department start purchasing
actions.
2. Information regarding vendors-
> Same materials can be supplied different suppliers.
> Purchase department has to keep updated list of supplier
of materials being supplied by them.
> based on this information vendor contact for materials is
decided.
3. Vendor contact and selection-
> Based on material to be procured, relevant vendors are
contacted to get their latest details, such as capacity,
infrastructure facilities etc. this will help to select few
suppliers to whom purchase inquiries can be sent.
4. Inviting quotations-
> Purchase inquiries are sent to selected suppliers asking
them to submit their quotations.
5. Analysis of offers (Quotations)-
> Quotations received from different suppliers are then
compared with respect to prices and other terms and
conditions.
> in case of critical items or where huge fund is involved ,
number of other department are also invited to analyse and
discuss regarding which vendor should be given purchase
order.
6. Placing order-
Based on above analysis, appropriate vendor is selected and
purchase order is prepared on his name and forwarded to
him.
 Purchase order is available in printed format where
name and address of the suppliers, items, quantity and
prices are to be printed or typed.
7.Order follow up-
> To ensure timely delivery of the materials ordered, it is
necessary that purchase executives should follow up
regularly with the respective vendors, after placing order on
them.
8. Receipt and inspection-
> Receiving section takes receipt of the materials supplied
by vendors. Generally, “Delivery chalan” is accompanied
with the materials.
> Receiving section first verifies the type and quantity of the
materials supplied with the help of copy of purchase order
and delivery challan.
> The materials thus received are kept aside for detailed
technical inspection by concerned department.
9. Making payments-
> Account departments once again verifies the details sent
by purchase department with respect to purchase order and
bill copies. They verify the details such as prices, taxes,
duties, discounts applicable and other commercial terms
and conditions.
> If everything found ok, then payment is made to vendor as
per the mode specified in purchase order. That is by cheque,
demand draft or through bank.
10. Maintaining records-
> once the purchase order gets totally completed, all the
documents are properly kept in a file as a record.
> This can be helpful in future purchases as well as at the
time of any legal disputes with vendors.
11. Vendor evaluation-
> This is a supporting and one of the most important
activities of the purchase procedure. All the vendors are
rated with respect to certain criteria, such as, timely
delivery, quantity discounts provided, rejection, disputes
etc.
> Such vendor rating is much helpful in selecting appropriate
vendor.
12. Maintaining vendor-relations-
> Purchase department tries to maintain healthy relations
with their vendors for overall effectiveness of the
purchasing function.
4.TYPE OF PURCHASING-
> The procurement of raw materials varies from industry to
industry, from company to company and in the same
company, from period to period depending upon the
demand and supply conditions and the expected price
fluctuations.
> they are also affected by seasonality of the availability of
materials like seasonal agriculture-based materials or
government regulations like import licence.
> Four types of purchasing
1. Blanket orders
2. Stock less purchasing
3. System contracting
4. Small order Purchase
1. BLANKET ORDERS-
> A blanket order is a standing order placed with the
selected supplier in a bulk requirement generally for a year.
> The blanket order is to be placed for the materials which
are low in value but are consumed in large quantity.
> Some important terms and conditions for blanket order.
a. Material specification.
b. precise name and categories to be purchased. ( more
than 1 material from the same supplier).
c. To clarify that the supplier can supply the specified
materials as required by the purchasing company. Regarding
the price, the agreement should be sought on any of the
following line.
1. fixed price during the contractual period.
2. market price at the time of delivery.
3. The specification of celling price which cannot be crossed
without fresh negotiations.
d. The timings of delivery can be agreed upon as under
1. Delivery of standard quality at regular time intervals. Like
500 units of 1st day of every month.
2. Delivery as per the specified schedule.
3. Delivery as per the demand from the byers.
2. STOCK LESS PURCHASING-
> The buyer is not required to maintain the stock of these
items.
> The financial incidence of the storing and inventory
carrying is borne by the supplier. The supplier locates the
materials at his own plant or at byer’s plant. If the
inventories are maintained at suppliers’ plant, the physical
distance of supplier’s plant should be considered while
deciding about the supplier.
> where the material is located at buyers’ plant, it is known
as “consignment buying.”
> Generally, the price of the materials is a bit higher than
the usual prices because the storing and carrying costs are
borne by the supplier.
> The supplier is expert in handling such type of sock and
the maintenance of safety stock.
3.SYSTEM CONTRACTING-
> The system contracting incorporates the characteristics of
blanket order and stockless buying, still it is different from
them.
> Like blanket contract, the periodic contract is made with
the vendor, and like stockless buying, the buyer is not
required to maintain the safety stock.
> The system contract is unique in the sense that it is a long-
term contract as compared to blanket order.
> The system contractor is a large supplier at the
competitive price. He assists the buyer to spell out his needs
more scientifically, the delivery schedules and standard
sized shipments are developed.
> The companies which have adopted this system of
purchasing have reduced their costs substantially because
this arrangement eliminates the need for stocking the non-
essential items while inventory carrying of the key items is
reduced to the minimum.
4. SMALL ORDER PURCHASE-
> It is a common experience of all companies that they need
certain items of non-recurring nature which involve very
insignificant cost.
> The cost of the materials to be purchased does not justify
the paper cost of purchasing. So such items are purchased
without undergoing the formal purchase procedure. Such
purchases are also known as “paperless purchases”.
> The popular methods of such purchases are
1. Purchases under the petty-cash system where indirect
cash purchases are for small items.
2. purchasing through telephone orders wherein no formal
purchase orders are sent to the supplier.
3. Purchasing under the cash on delivery system.

5. CONCEPT OF MATERIAL HANDLING-

 The material handling refers to the internal movement
of inventories within the plant area.
 A manufacturing firm, the raw materials are obtained
from the suppliers and are store in the store room.
They are issued to production department as per
material requisition note.
 Material continuously moves from one process to
another for the purpose of processing till they are
converted into finished products.
 Thus material handling involves the movement of
materials from one place to another for the purpose of
processing. They are moved either manually or
 mechanically with the help of different type of material
handling equipment’s.
 Generally, out of men, machine and materials, the
machines have fixed installations, men have specific
working place on a shop floor area and their
movements are mostly confined to the limited working
space. While in case of materials, they travel
extensively inside the plant area.
 Material handling is defined as “materials handling is
the art and science involving the movements, packing,
and storing of substances in any form”.
 The material handling function is considered as one of
the most important activities of the production
function, as out of the total time spent by the materials
inside the plant area, about 20% of the time is utilized
for the purpose of actual processing on them while the
remaining 80% of the time is spent in moving from one
place to another, waiting for the processing or finding
places in the sub stores.
 Material handling is closely related to the plant layout
i.e. the arrangement of the machine and plant services
inside the plant area.

6. PRINCIPLES OF MATERIALS HANDLING-

1. The first principle of material handling is not to
handle the material as all. The material should be
moved as little as possible. The selection of
production machinery and the type of plant layout
 should be such that the material handling may be
eliminated as far as possible.
2. The time of each move should be minimized. This
can be attained through shortest routes and use of
mechanical material handling equipment in place of
manual labour.
3. The distance of each move should be minimized. This
can be attained through use of shortest routes and
elimination of back tracking.
4. The principle of “unit load” should be applied.
According to this principle, the material should be
moved in lots rather than on individual basis. The
optimum number of units should be moved in one
unit.
5. The gravity should be used wherever possible, as it is
the cheapest form of motive power.
6. Re-handling and back-handling of the material
should be avoided, this can be attained through
proper layout and efficient routing and scheduling.
7. The appropriate material handling equipment should
be selected so that the safety efficiency and
flexibility can be maintained.
8. The design of the container, palate, drums etc.
should be such that they may entail economy in
handling, at the same time the material damages
during the transit may be reduced.
9. The material handling service should not interfere
with the production flow.
10. The safety of the people must be taken care off.
 11. The provision of stand-by facilities should be made
so that the sudden breakdown may not paralyse the
operations.
12. The check up, repairing and maintenance of the
existing material handling equipment’s should be
made periodically.
13. The material handling services should be
evaluated periodically and necessary changes should
be incorporated wherever it is possible.

7. ADVANTAGES OF GOOD MATERIAL HANDLING SYSTEM-

1. Good material handling system minimizes the
movement of materials, moves them continuously
and at maximum rate which is advantageous as
under a. shorter operating cycle
b. Reduction in handling cost
2. It eliminates unproductive handling of materials like
back-tracking, rehandling etc.
3. It reduces idle machine capacity thus ensuring better
turnover of investment.
4. It reduces the idle time of labour, workers and
required to keep pace with the production processes
supported by good handling system. Moreover, they
are freed from physical work of moving and
positioning the materials.
5. It eliminates the factory hazards and thus increases
the safety of the operators.
 The quality of the materials is maintained through
minimum human touches, elimination of breakages
etc.
6. The factory area is used most effectively.
Unproductive overhead and floor areas are used
more productively.
7. It avails greater economy in store-room and
facilitates material issues.
8. It helps in maintaining effective production control.
9. It helps in providing better customer services due to.
a. Reduced operating cost.
b. Better quality of products.
c. Timely production.

8. CONCEPT OF MRP-1 AND MRP-2-

 MRP-1 (Material Requirement planning)
 MRP-2 (Manufacturing Resource Planning)
 ERP (Enterprise Resource planning)
 Both concepts are applicable to the tangible goods and
intangible services.
 The concepts of MRP-1 and MRP-2 are the outcome of
the application of Information and communication
technology (ITC).
 The liberalization approach of many countries adopted
after 1970s, encouraged global economic co-operation
in the form of multinational companies with local
companies and subsidiary and joint venture
necessitated the need for the world wide web (WWW)
system for low cost or costless transformation of
 information along with the server connectivity in the
form of LAN (local Area Network)

9. DEFINITION AND CHARACTERISTICS OF MRP-

 MRP initially developed as an independent software
package was revised to MRP-2
 At large, stage, MRP became a sub system of the
comprehensive ERP (Enterprise Resource Planning)
software package which includes several sub-systems
like SCM (supply chain management) etc.
 DEFINITION OF MRP-1
“MRP-1 is a computerized system highlighting the
procedure for planning and controlling of raw-
materials, components and in-house work in progress
required for ensuring the smoothness in the production
process”
 DEFINITION OF MRP-2
“MRP-2 is a computerised system for the effective
planning of the resources required by the
manufacturing company though developing the
linkages with the suppliers and with various
departments like purchasing, finance, marketing and
distribution and human resource.

10.OBJECTIVES OF MRP-1
1. To estimate the availability of materials,
components, and products for planned processing and
for timely delivery of products to customers.
2. To maintain the lowest possible level of inventory
reducing the financial investment in idle inventories
and also the reduce the storing costs of unwanted
inventories.
3. To plan the timely procurement of repetitive items as
per requirements.
4.To maintain the smooth production flow avoiding the
interruptions coined by non-availability of materials
and components.
5. To maintain the promised delivery schedules to the
customers.

11. ADVANTAGES OF MRP-1-

1. It reduces the unnecessary investments in the

inventories. Thus, it reduces the material investments
costs and the storing costs.
2. It reduces the production time due to smooth
production flow.
3. It ensures timely delivery to customers providing
them customer satisfaction.
4. It enhances the productivity of all the resources like
machines and men thus arresting the down time of
machines and idle time of employees.
5.Due to quick and real-time on-line information, it
enables the company to respond to the dynamic
market changes.
6. It ensures better inventory planning thus helping the
routing and scheduling functions of production and
operations management.
7.It helps in building good relations with suppliers of
raw materials and ultimate consumers to whom
products are sold.
8. The improves the profitability and competitive
strengths and creates a good image in the business
world.
12. LIMITATIONS OF MRP-1-
1. Each part of the inventory is managed separately and
independently. It creates a problem of co-ordinated
when materials usages are interdependent.
2.It assumes lead time of materials procurement to be
constant regardless of production variations. Thus, it
implicitly assumes infinite capacity which is an unreal
assumption.
3. MRP 1 is a computer package which is a means for
effective inventory management. If it is not used
effectively by the people, then it fails to attain its ends,
i.e. benefits.

13.CONCEPT OF ENTERPRISE RESOURCE AND

PLANNING (ERP)
> An enterprise is an economic entity which creates
or enhances the value of a product or a service with
the use of varied economic resources like machines,
materials, men etc. such economic resources are
 scare (supply is less than the demand) and they have
alternative uses.
Thus, resource planning is necessary for the efficient
and effective use of such resourced.
 The Enterprise Resource Planning (ERP) is incidental to
the successful existence, survival, and growth of a
business enterprise.
 ERP has been inevitable in the modern cut-throt
competition where all the firms strive to get the
reasonable market share consisting of limited customer
population, some of whom are price conscious and
some are quality conscious.
 The manufacturing enterprises are located at one of
few centres while the users of the products or services
are scattered all over the nations have adopted the
liberalized approach and substantially reduced the
regulations after 1970.
 ERP is basically an extensive use of computers
technology for resolving, the business problems with
the cheap and quick processing of business data as an
aid to refined business judgments.
DEFINITION OF ERP-
 Enterprise Resource Planning (ERP) is basically an
integrated information system to feed the need of the
business enterprise at varies stages, timings, and
locations.
 ERP is a specific project work to meet the solutions of
the complex business problems through developing
 various business module integrated into one holistic
system.
 The online availability of the information to the
operating managers improves the quality of the
decision- making.
 ERP enables the use of scare business resources which
have alternative uses improving the efficiency and
effectiveness of the business enterprise.
14. FEATURES OF ERP (ENTERPRISE RESOURCR
PLANNING)
1. ERP is an integrated business model which integrates
various business system and processes.
2. ERP can be generalized or it can be customized.
Some common business problem can be resolved
through development of common ERP modules like
Microsoft excel, Microsoft projects, or telly
accounting. It can also be developed on customized
basis considering specific needs of the client, e.g.
specific packages to be developed for government,
railways, banks, insurance companies, stock broking
firms and even multinational companies.
3. ERP development is a costly exercise, ERP being an
integrated system, needs to develop sub-modules
and then into a unified business module. However,
the use of ready made generalized is relatively
cheaper as compared to the tailor- made customized
module developed as per the specific needs of the
client.
4. The development of ERP module is time- consuming,
the software engineers who develops the business
module consisting of sub modules relating to various
business processes have first to digest the business
system. Then only they can develop an appropriate
business module.
5. ERP is a supportive function and not an exclusive
decision-making function. Every business decision is
a combination of objective, information, and the
subjective judgement of decision maker. ERP simply
provides the information needs of the decision-
maker.
6. ERP stores the data in the form of data mine and
data warehouse. The access to such data base is
managed in the form of programmes systems and
formats.
7. ERP presupposes the online connectivity.
8. ERP evolved in the evolutionary stages and still it has
evolutionary phase.
 UNIT -3

1.Concept of layout, factors affecting layout and features

of a good layout.
Types of layouts
1 product
2 process
3 project
2.Concept of quality management
Cost of quality Deming’s 14 principles of quality
Concept of six sigma and its process
Deming’s concept of PDCA cycle
Concept of ISO-9000, 14000, 22000

1. CONCEPT OF LAYOUT-
 A layout is a chart which indicates the locations of
various department and sections with the available
area with reference to the production and operations
management, a layout is referred as a plant layout
where in various machines processes and plant and
personnel services are located.
 A plant is a place where all the production activities are
housed. After the selection of the factory site, the
building is constructed at the selected site. The
problem of arrangement of various departments inside
 the factory building arises only after the availability of
the floor area covered by the walls and roofs forming
the factory building.
 It should be noted that, though the problem of plant
layout arises only after the building facilities have been
made available, they are considered along with the
construction of the factory building.
 Thus, both factory building and plant layout are
considered simultaneously.
 Plant layout is the overall arrangement of the
production processes, store room, stock-room, material
handling equipment, racks and sub stores, employee
services and all other accessories required for
facilitating the production in the factory.
 “ A plant layout refers to the arrangement of machines,
equipment’s and other plant service for purpose to
smoothest production flow at least time”
“ A good layout is one which allows materials to move
rapidly and directly for processing. This reduces transport,
handling, clerical and other cost down per unit, space
requirements are minimized and reduces idle machine
and idle labour time.

2. FEATURES OF A GOOD PLANT LAYOUT-

1. Minimization of material handling.
2. Elimination of bottle-necks through balancing of
plant capacities.
 3. High material turnover through shorter operating
cycle.
4. Effective utilisation of installed capacity so that
the returns on the investments may be maximized.
5. Effective utilisation of cubic space of the factory
area.
6. Effective utilisation of manpower resources
through elimination of idle time.
7. Elimination, improvement of objectionable
operations.
8. Elimination of physical efforts required of
operative workers.
9. Avoidance of industrial accidents.
10. Better working conditions for the employees
like lighting, ventilation, control of noise and plant
area.
11. Decency and orderliness inside the plant
area.
12. Better customer services through cheaper
and better Product supplies according to the
delivery promises.

3. FACTORS AFFECTING THE PLANT LAYOUT-

1. Types of production-
The layout of a weighty engineering unit will be
quite different than from that of a light flour
factory.
2. Production system-
 The plant layout for continuous production system
will be totally different from that under the
intermittent production system.
3. Scale of production-
The plant layout and material handling equipment
in the large scale organisation will be different
from that in the small scale manufacturing activity.
4. Type of machines-
The use of single-purpose and multipurpose
machines substantially affect the plant layout,
similarly noisy and vibrating machines require
special attention in the plant layout decision.
5. Type of building facilities-
The plant layout in a single storey building will be
different from that in a multistorey building.
6. Availability of total floor area-
The allocation of space for machines, work-
benches, sub-stores is made on the basis of the
available of floor area.
7. Possibility of future expansion-
Plant layout is made in the light of future
requirement and installation of additional
facilities.
8. Arrangement of material handling equipment-
The plant layout and the material handling
services are closely related and the latter has a
decisive effect on the arrangement of production
process and plant services.
4. TYPES OF PLANT LAYOUT-
 1. Process layout
2. Product layout
3. Project layout

1. Process layout-
 All machine performing similar type of operations are
grouped at one location in the process layout.
 It is also known as “functional layout”. Example all
milling machine, cutting machines etc in the
engineering shop will be clustered in their like groups.
 In this type of layout, the process rather than the
product has a dominating role.
 This type of process is more suitable to job order type
of production. In such production the operations differ
from product to product. So, it is desirable to arrange
the machines on the basis of process rather than on the
product basis.
 It is more suitable for job order industry like steel
fabrication, hosiery, printing etc.
ADVANTAGES-
1. Like product layout, it eliminates the duplications of
machines and enables the optimum use of installed
capacity.
2. It facilitates the flexibility in production. The
production capacity is not arranged in rigid
sequence.
3. Like production layout, break-down of one machine
does not interrupt the entire production flow.
4. Specialization is supervision becomes possible.
5. Individual incentive schemes can be developed.
DISADVANTAGES-
1. Due to lack of straight-line sequence of
production, it is impossible to maintain the line
balancing in production.
2. The cost of material handling increases due to
long-routing and back-tracking between the
processes.
3. The processing time is prolonged which reduces
the inventory turnover and increase the
investment in inventories.
4. The inspection cost increase. Due to frequent
changes in the machine setup, inspection is
required in each stage of process.
5. The cost of supervision increases due to specialist
supervisors and more number of supervisors are
required at each process unit.
6. The production planning and control becomes
difficult due to complexities arising in routing,
scheduling, dispatching and follow-up.
7. It is not implementing the group incentive
schemes based on quantity of the products
manufacturing.
8. More space is required for internal storing,
reservoir of materials and provision for the
expansion of the particular process section.

2. PRODUCT LAYOUT-
 In this type of layout, the machines are arranged in the
sequence as required by the particular product. All
machines are required to balance the particular
product line are arranged in a sequential line but not
necessarily in the strait line. It is also known as “ the
line layout”.
 In this type of layout, the product is dominating over
the process, in the sense that the product is given the
primary importance and the process machine must
remain present at a point where the products needs its
services.
 Product layout is more suitable for process industries
like refineries, textiles, cement, sugar etc.
 They are also suitable for assembling industries like
scooters, washing machine etc. it does not require
frequent changes in machine set-up.
 ADVANTAGES-
1. Reduced material handling cost due to straight line
production flow.
2. Mechanisation of material handling is possible due
to material handling between fixed points.
3. Line balancing may eliminate bottleneck and ideal
capacity.
4. Shorter operating cycle due to shorter and speedier
movements of materials.
5. Maximum utilization of machine and labour capacity
through developing proper balance between them.
6. Effective control over production with reduced
supervision by generalise supervision.
 7. Effective quality control with reduced inspection
points. It does not require frequent changes in
machine set-up.
8. Effective production planning and control. Unlike
process layout, the routing, scheduling, despatching,
and follow-up are relatively easier.
9. Maximum use of space due to straight production
flow and reduced need of interim storing.
10. It facilitates the implementation of the group
incentive schemes for the workers.
DISADVANTAGES-
1. The duplication of machines and equipment
necessitates the increased investments.
Sometimes the indivisibility of machines results
into idle capacity.
2. The production flow is regulated through the
straight-line sequence and fixed rated capacity and
thus makes it highly inflexible.
3. The break-down of any machine in the line,
interrupts the entire production flow.
4. Unlike process layout the benefits of specialized
supervision are not possible.
5. As the entire production is the result of the joint
efforts of all operations in the line, it is difficult to
implement individual investment schemes.

3. PROJECT LAYOUT-
 The manufacturing operations require the movements
of men, machines, and materials. Generally, the
 machine has fixed installations and materials which
moves from operation to operation for purpose of
processing.
 But where the product is large in size and heavy in
weight, it tend to be static e.g. ship building . in such a
production system, the product remain the static and
the men and machines move performing the
operations on the product.
ADVANTAGES OF PROJECT LAYOUT-
1. Unlike product and process layout , in the project
layout the machine and men move around the job,
and thus this layout increases the mobility of
machine and men.
2. As the installation of machine not required the cost
of layout tends to be very low.
3. The transportation of bulky products like huge
vessels in chemical factory, construction blocks in
infrastructure projects are avoided as they are
constructed at project site.
4. It gives identity to the workers who have worked on
the sight of a project.
 DISADVANTAGES OF THE PROJECT LAYOUT-
1. At the distantly located project, sight, the use of
machines gets confined to the specific project and
cannot be used elsewhere. Thus, it results into idle
capacity.
2. Similarly, the operators have to attend their duties at
distantly located site.
 3. The use of surplus materials at other plant site does
not become possible.
4. It involves substantial operating costs, inflexibility of
operations and great inconvenience to human
resources.

UNIT-3
2.QUALITY MANAGEMENT

 Concept of quality management

 Cost of quality Deming’s 14 principles of quality
 Concept of six sigma and its process
 Deming’s concept of PDCA cycle
 Concept of ISO-9000, 14000, 22000

1. DEFINITION OF QUALITY MANAGEMENT-

DEFINITION OF QUALITY-
 Philips Crosby defined quality as “zero defect
performance standard”
 International standardization organization (ISO) defines
quality “Quality is a totality of features and
characteristics of a product or service that bear on its
ability to satisfy a given need”.
DEFINITION OF QUALITY MANAGEMENT-
 “Quality management means ensuring degree of
perfection with regard to specification, colour, shape,
 finishing-considering the relevant cost of
manufacturing”.
 Joseph M. Juran defined quality management as a path
of perfection from consumers’ perception.
 “ Quality management is a managerial process of
setting the quality standards, appraising the
conformance to these standards and action taken when
standards are not set, and planning changes in these
standards if required.
2. COST OF QUALITY(COQ)-
1. The cost and quality have a direct relationship i.e.
high-quality products or services can be provided
only at high cost because of their direct relationship.
2. The consumer expects an acceptable ( or a
tolerable ) quality at an affordable price. So the
competing firms, strive to offer, ‘better quality at
affordable price’. This philosophy of quality level
presupposes a cut-off point of quality maintenance
beyond which the costly quality improvements will
not be acceptable to them.
3. The manufacturing firms shall have to manipulate
the following ratio R towards the higher side.
Quality
R= ---------
Cost
Following 3 types of operating tactics can be
followed to improve the value of “R”.
 1.same quality at lower price.
2. same cost with high quality offer.
3. higher quality at lower cost.
The third strategy proves powerful in the
competitive market environment. But it is proves
very challenging to follow.
 The two opposite considerations are involving in the
cost and quality relationship. The production cost to
the supplier increases along with the improvement of
quality as shown by P curve in the following graph.
 On the other hand the value of the increased quality in
terms of his disposable income decreases along with
any additional chunk of quality improvement
programme. The behaviour pattern of consumer is
denoted by C curve in the following figure.
 The inter section at point M describes an affordable
price for an acceptable level of quality.
 DIAGRAM-
Page 82.

3.DEMINGS 14 PRICIPLES OF QUALITY-

> W. Edward Deming was an U.S.A consultant who
substantially contributed in the quality improvement
programmes initiated by Japanese firm during 1950s.
> other two quality gurus are Joseph Juran and Philip Crosby
who provided 10 and 14 stages of quality improvement.
> Primary work done by E. Edward Deming by giving 14
points of quality management.
1. create constancy of purpose- which should be directed
towards improvements in product or service.
2. Adapt a new philosophy- do not accept poor
workmanship and Sallen service.
3. Cease dependence on mass inspection- quality does not
come from inspection but from the improvement of the
process.
4. End the practice of awarding business on price tag alone-
purchases from low bedear venders may lead to low quality
purchase.
5. Improve constantly and forever the system of production
and service – everything at every time leaves an area of
improvement.
6. Industrial training- doing is better than listening and
seeing.
7. Institutional leadership- Good leaders are capable of
changing the mindsets of traditional thinkers.
8. Drive out fear- any initiation is always risky. One should
be prepared to assume it.
9. Break down barriers between staff areas- the synergy
always pays rather than formal position ties.
10. Eliminates slogans, exhortations, and targets for the
work force for the creative minds. Sky is the limit because
craving desire for excellence is a journey rather than the
destination.
11. Eliminate numerical quotas- figures are the best means
to be fool people. Also consider the qualitative parts of the
quality.
12. Remove barriers to pride to workmanship- the kaizen
concept emphasizes the continuous Improvements. Today’s
standard or records can be broken tomorrow.
13. Institute various programmes of education and retaining
– in the knowledge management world, today’s technology
will become obsolete after some time keep people abreast
of latest developments and addition in the existing
knowledge. Use it in a cumulative manner.
14. Take action to accomplish the transformation – action
quotient (AQ) is more important than the intelligent
quotient (IQ). Treat ‘better’ as an enemy of ‘good’. Act
promptly on today’s knowledge without waiting it for
further refinement.
> The above mentioned philosophy focused on quality
improvements will definitely result into strong moves by the
organizational members initiated spontaneously with high
degree of individual as well as team commitments.
 4. THE CONCEPT OF SIX SIGMA-
 The six sigma concept was first adopted by the
Motorola company in 1986.
 By the end of 20th century, 75% of the fortune 500
companies adopted the concept of six sigma.
 The six sigma technique identifies and removes the
causes of defects or errors occurring in the production
process outputs. Thus it is closely related to the quality
improvement programmes.
 The six sigma rating indicates the percentage of the
defect free products in which 99.99966% of the
products are statistically expected to be free of defects.
DEFINITION OF SIX SIGMA-
 “ Six sigma is a technique related to product quality
improvements through eliminating waste and
inefficiency resulting into customer satisfaction through
delivering a product as per his expectation”.
CHARECTERISTICS OF SIX SIGMA-
1. It is related to only production and operating
activities.
2. Its basic focus is on reduction of defects in the
products or services which pass through various
production process.
3. It is a quantified statistical measure presenting
defects in percentiles.
4. It involves co-operation and contribution of all
organizational members from top management to
bottom level supervisors and workers.
 5. Cost control and quality improvements are the
natural culmination of the six sigma technique.
SIX SIGMA ALSO INCLUDES THE FOLLOWING-
 Continues efforts to achieve stable and predictable
process result.
 The production and business processes should be
amenable to be measured, analysed, controlled, and
improved.
 Sustained quality improvements with the efforts and
co-operation of top-management down to bottom
management.
 A clear focus on achieving measurable and qualifiable
financial results.
 An increased and passionate support of the corporate
management leadership.
 The decision making should be based on the verifiable
data, statistical quantitative methods rather than
perceptual decision based on assumptions and
intelligent guess work.
PROCESS OF SIX SIGMA-
 The six sigma process follows Edward Demings PDCA
(plan, do , check and act) cycle. Based on similar lines,
six sigma has developed two process using
1. DMAIC with stands for define, measure, analyse,
improve, and control.
2. DMADV which stands for Define, Measure, Analyse,
Design and verify.
BENEFITS OF SIX SIGMA-
1. It executes a strategic change in the existing
production process resulting into cost control
quality improvements.
2. It enhances the values to the customers and help
in creating brand-loyal customers.
3. It prompts learning and cross pollination.
4. It spells out achievable performance goals for the
employees and provides job satisfaction of
producing defect free products and services.
5. Once adopted, it sustains for several years with
subsequent changes if required.
LIMITATIONS OF SIX SIGMA-
1. IT is applied to only production system and non-
production activities are out of its preview.
2. A part of production data like behaviour of
people cannot be casted in straight jacket of
numerical and thus, certain subjective
considerations are not amenable for
quantitative statistical analysis.
5.DEMING’S PDCA CYCLE-
> The PDCA cycle denoting plan, do, check and
Act- four stages was popularized by w. Edward
Deming, the U.S.A. consultant in Japan who is
considered as a quality crusader.
> It is scientific problem solving method based on
critical thinking by all the participants in the
production processes.
> It was first tried at Toyota, Japan which gave
more emphasis to innovative thinking rather than
routine job performance. This technique is based
on the Toyota philosophy of “Building people
before building cars”
> The four stages of PDCA cycle-
1. Plan (P)-
> It emphasizes on the objectives and processes
which are necessary to deliver the results in
accordance with the expected output.
> This stage envisaged the accuracy and
completeness of the product with the targeted
improvements. This stage initially focused on
small things to be considered and to test their
effects.
2. Do (D)-
> This stage focuses on doing after thinking
process of plan. It involves following consideration
> Implement the plan
> Execute the process
> Make the product
>Collect the data for analysing for the following c
and D steps.
3. Check-
 > This stage involves the study of actual results
obtain by above stage. Do than compare the result
with the targeted results outlined in above first
stage plan, and ascertain difference between
them. Evaluate the differences in terms of
attaining the targeted plans from its correctness
and appropriateness angle, so that it becomes
executable.

4.Act (A)-
> this stage focuses on the significant
differences between the targeted plan and the
actuals and highlighted by the above check
stage – such significant differences – positive or
negative, are analysed to determine root causes
for them. Such analysis will provide the
guidelines for the required changes in the
process or product through the innovative
considerations.
> PDCA is a cyclical process of continuous
improvements in the qualities of a product or a
process.

6. CONCEPT OF ISO 9,000; 14,000; AND 22,000-

 In the production and management, quality plays a
crucial role along with the cost and time. As consumers
have become quality conscious, the business firms
throughout the global economy with the intense
 competitive environment have become conscious not
only about the quality but also about the
standardization of quality with a documentation and
authorization by the accredited quality standard
institutes.
 ISO 9000 is an effort toward standardization of the
process by the internationally accredited institute.
 The International Organization for Standardization
(IOS) was founded in 1946. With a Head Quarter at
Geneva, Switzerland. It was represented by 91
countries.
 In 1987 it adopted the series of written quality
standards popularized as ISO 9000.
 The name IOS replaced by ISO in 1994.
ISO 9000
 ISO 9000 certification expects a company of the
member country to have a quality assurance system
along with the procedures, policies, and training. As a
part of the certification , the company is required to
prepare a documentation in the form of manual. The
manual is audited by an independent audit team of the
recognized accredited institute. After proper
verification, the certification is issued. The audit
aspects covered are: drawings, specifications,
blueprints, work instructions, test procedures,
inspection reports, calibration data and quality cost
reports.
 It should be noted that ISO 9000 does not assure the
quality of a product or a service. It simply ensure the
 conformance to the specified standards of the
production process.
 The role of the ISO 9,000has remained crucial in the
growth of the international business.
ISO 14,000
 It is a series of standard on environment management.
It is a series of standards adopted by the Bureau of
Indian standards (BIS).
 The companies which get ISO 14,000 certification are
benefited as under-
1. It helps in minimising the adverse impact of
production processes having negative impact on
environment, like adverse impact on air, water and
land.
2. It guides in complying with the laws, regulations and
other environmental oriented requirements. Thus, it
helps in reducing the risk of penalty under regulatory
provisions and environmental liabilities.
3. The adoption ISO 14,000 standardization helps in
reduction of wastes, consumption of resources and
thus saves the operating costs.
4. ISO 14,000 being an internationally recognized
standard, the business firms operating at multi-
locations across the globe can leverage on it without
needing the multiple registration.
5. It provides a global competitive advantage over the
companies which have not adopted this standard.
 Not only that, it creates positive image in the mind
of all those parties which are dealing with it.
6. It facilitates the access to new customers and new
business partners being a company following
innovativeness and forward-thinking approach to
business plans.
LIST OF ISO 14,000 SERIES-
ISO 14001: environment management systems –
general guidelines
ISO 14004: environmental management system-
guidelines on principles, systems, and support
techniques.
ISO 14006: environmental management system –
guidelines for supporting Eco designs.
ISO 14015: environmental assessment of sites and
organizations.
ISO 14020: it is 14020 – 14025 series which deals
with environmental labels and declarations.
ISO 14030: it deals with post – production
environmental assessment.
ISO 14031: guidelines for equip mental performance
evaluation.
ISO 14040: it is 14040 to 14049 series. It discusses
pre-production planning and environmental goal
setting.
HOW TO ADOPT ISO 14000?
1. Make a self- determination or self-declaration.
 2. Seek confirmation of its confirmation by the
parties having an interest in the organization such
as customers.
3. Seek confirmation by its self-declaration by a party
external to the organization.
4. Seek certification / registration of its
EMS(environmental management system) by an
external organization i.e. consultants dealing with
such registration.

ISO 22,000:
 ISO 22,000 certification for food safety management
system is a process control system. It is design to
improve quality of the food organization in the form of
identification, evaluation and control of the food safety
hazards like physical, chemical, microbiological and
other hazards which are present in food production as
well as food chain.
 ISO 22,000 defines and follows HACCP (Hazard Analysis
and critical control points) guidelines.
 These guidelines include steps designed to prevent
problems before they occur and corrects the deviations
in the systematic way the moment they are detected by
the system. Such preventive control systems with
documentation and verification are widely recognized
by the international standardization authorities.
ISO 22,000 CERTIFICATION IN INDIA-
 ISO 22,000 certification can be issued in India by any
approved certifying body which is accredited to provide
 certificate is issued for 3 years, which can be reissued
after the completed duration.
 The certifying body conducts the surveillance audits
during the three years any time after 3,6,9 or 12
months depending upon the nature and size of the
organization .
 In India the Punyam Management Service is a leading
certification consultancy company in Ahmedabad,
Gujarat . such certification received by the Indian
companies help them in getting certification from the
certification bodies from U.S.A. , U.K., Europe, Australia
etc. very easily and quikly.

____________________________________________