Production Management

Same same but different, Different

different but same..
 Definition :- Production
• The process of converting raw material into
finished goods for the purpose of sale is called
production

RAW FINISHED
MATERIAL PROCESS GOODS
 Production management
• Production management means the
application of management principles to the
production function in a factory.
• It involves the following
• Planning
• Staffing
• Directing and controlling
Production management involves the
following functions

Production
Management

Controlling
Planning

organising
 Other definitions
• Production management deals with decision making
related to production process so that the resulting
goods or services are produced according to the
specifications in amount and by the schedules
demanded and at the minimum cost.—E.S Bulla
• Production management is concerned with those
processes which convert the inputs into outputs.
• Inputs:- raw material, men, methods etc
• Output :- goods and services
 Objective of production management
• To convert raw material into finished goods with
ensuring quantity, quality, cost and delivery
• Right quantity, right quality, right time and right price
• Effectiveness objective
• Efficiency objective
• Quality objective
• Lead time objective
• Capacity utilisation objective
• Cost objective
Objective of production mangement

Quality
objective

Efficiency Effectiveness
Objective of objective
objective
production
management

Cost Capacity
objective utilisation
Lead time objective
objective
Component of production function
• Production management is essentially planning,
organising and controlling of production function.
• Planning :- product selection and design
• Process selection and planning
• Facility location
• Facility layout and materials
• Capacity planning
• Forecasting
• Production planning
 Organising
• Work study and job design
• Controlling
• Production control
• Inventory control
• Quality control
• Maintenance and replacement
• Cost reduction and cost control
Qualities of Production
manager
o Imagination
o Intelligence
o Sympathy
o Self control
o Communication skills
o Enthusiasm and
perseverance
o Resourcefulness
o Flexibility
 Manufacturing Systems

Manufacturing Systems

Continuous or flow
Intermittent Production
Production
 Intermittent Production
Job Production Batch Production
 Manufacturing systems
• Intermittent production
• Continuous or flow production

• Intermittent production:- job production and

batch production
• Continuous production:- Mass Production,
process production and assembly production
• Process production:- analytical and synthetic
 Product development
Introduction of new product Improvement in existing product
Methods of product development
• Imitation
• Improvement or adaptation
• Innovation or invention
Stages of product development
 product
• Product is the startling point of all marketing
activities. It can be tangible/intangible
• It can be divided into two categories
• Consumer products and industrial products

• Consumers are further divided into

• Convenience goods, shopping goods,
 Convenience goods
• Staple products
• Impulse products
• Emergency products
 Shopping goods
• Speciality goods
• Insistence goods
• Unsought goods
 Industrial products
• Raw materials
• Semi-furnished goods
• Fabricated goods
• Equipment
• Operating supplies
• services
Objective of product development
• It’s a continuous and dynamic process
• 2 main objective:- immediate objective and ultimate
objective
• Immediate objective is to work for the immediate
satisfaction of consumers wants, utilisation resources,
explore further development in the design and function
• Ultimate objective is of long term or permanent in
nature
• Trust and loyalty of consumer which will lead economy
of large scale production
 Elements of product development
• To discover the feasibility of the production of product
• To develop qualities and charateristics of products
• To develop different models and design of products
• To select the best model or design
• To decide the packing, colour, size, form etc of the
product
• Expansion and contraction of product mix
• Discontinuation of unprofitable products
• Improvement in products
 Advantages of product development
• Helps in producing product and services of high quality
• Maximum possible satisfaction to the consumers
• Expanding the market for the product
• Helps in achieving stability in the demand of the
products
• Helps in facing competition
• Increases goodwill of the organisation
• Increases profit earning possibilities of the organisation
 Scope of product planning and product
development
• Product decision
• Size and design of product
• Name of product
• Prize of product
• Brand, packing and label of product
• New uses of product
• Guarantee and after sale service
 Product design and its characteristics
• Function
• Reliability
• Maintainability
• Producibility
• Simplication
• Product standarisation and variety reduction
• Quality
• Minimum cost
• Warranties
• Modular design
 Types of product design
• Functional design
• Aesthetic design
• Production design
• Packing design
 Factors affecting design of the product
• Customers requirements and psychological effects
• Facility to operator
• Functionality
• Materials
• Work method and equipment
• Cost/price ratio
• Quality policy
• Process capability
• Effect on other products
• Packaging
 Stages of product design
• Conception
• Acceptance
• Execution
• Evaluation
• Translation
• Pre-production
 Aspects of new product design

• Idea generation
• Screening idea
• Feasibility study
• Preliminary design
• Pilot runs and testing
• New product launch
 Plant location
• Steps in plant location
Selection of region or general area
Selection of the particular community
Selection of the exact plant site
 Selection of region
• Availability of raw materials
• Fuel and power
• Transport
• Market
• Meteorological condition and topography
 Selection of community
• Labour
• Supplementary complementary industries
• Banking and credit institutions
• Local taxes and insurance
• Water
• Momentum of early start
• Personal factors
• Historical factors
• Political stability
• State assistance
 Selection of exact plant site
• Price of land
• Type of soil
• Waste disposal
• Expansion potential
• Commercial services
• Communications
• Availability of amenities
• Health of the locality
• Statutory consideration
• Flood and drought conditions
• Right and title of land
• Good scenery
• Attitude of local people
• Technological know how
• Religious and social institution
 Plant layout
• Planning of space available for all the
functions and activities associated with
manufacturing
• Plant layout involves the allocation of space
and arrangement of equipment that overall
operating costs are minimised
Characteristics of an efficient plant layout
• Smooth flow of production
• Maximum utilisation of space
• Facilities the movement of men, materials,machines etc
• Minimum handling
• Better working condition
• Flexibility
• Location of stores
• Facilities supervision and control
• Provision of safety
• Co-ordination and integration
 Objectives of plant layout
• Economy in materials handling, work in progress and finished goods
• Ensuring optimum use of men, materials, equipment and space
available
• Better inventory control
• Good work flow
• Efficient control
• Avoidance of frequent changes
• Safety
• Better services
• Higher morale
• Flexibility
Principles of a good product layout
• Overall integration of factors
• Minimum movement
• Unidirectional flow
• Effective use of available space
• Maximum visibility
• Maximum accessibility
• Minimum handling
• Inherent safety
• Safe and improved environment
• Maximum flexibility
• Maximum security
 Types of plant layout
• Product or line layout
• Process or functional layout
• Static or stationary or fixed layout
• Combined or hybrid layout
• Cellular or group technology layout
 Purchase Management
• Purchasing is a business activity directed to
securing the materials, supplies, equipment
required in the operation of an organisation
• Purchasing is the acquisition by a
manufacturer of necessary primary materials,
supplies, equipment, and so forth by any
method whatsoever
 Importance of Purchasing
• It affects a substantial portion of the finance of the
company, which affects its working capital and cash
flow position.
• It plays an important role in the continuity of supply of
raw materials, sub-contracted items and spare parts
• Purchasing is a fundamental function in an industrial
establishment
• The wheels of industry will not move unless materials
of the right type are bought in right quantities and
made available at the right time.
 Conti…
• More than 50% of the total cost is contributed by
materials. Right purchase can lead to saving in material
cost
• Huge employment of capital in purchase
• Purchasing can help in finding substitute for imports and
thus leading to various benefits to the entity
• Right purchasing can reduce in delays
• Improvement in the quality of finished goods
• Eoq
• Governed by various acts and guidelines
 Objective of
purchasing

Maximum
integration with
Uninterrup
other departments ted supply

Develop good and Competitiv

sustainable
vendor relatioship e pricing

Low inventory
carrying cost
 Six R’s of purchasing
Right
Right quality
source
Right
quantity

Right place

Right price
Right time
 Other principles of purchasing
• Right buyer- Seller relations
• Right mode of transport
 Purchasing systems
• Hand to mouth purchasing
• Forward buying/ Purchasing
• Speculative purchasing
• Hedging
• Tender buying
• Blanket orders
• Zero stock
• Rate contract
• Reciprocity
• Systems contracts
 Other concepts
• Economies of scale
• Payoff matrix
• China “ a world’s factory”
 Productivity
• Productivity refers to the output relative to
the inputs.

• Productivity =Quantity of goods and services

produced
------------------------------------------
Amount of resources used
4 ways of increasing productivity
Increase
Increase the
the amount
amount Reduce
Reduce the
the production
production
of resources
of resources used
used till
till till
till the
the amount
amount of
of
production
production increases
increases resources
resources used
used
more
more than
than decreases
decreases more
more than
than
proportionately
proportionately proportionately
proportionately

Reduce the amount

of resources used, Increasing
keeping the
production same
productivity

Increase
production using
the same amount
of resources
• Productivity is the ratio between output of
work and input of resources used in the
process of creating wealth.

input Process output

w
a
s
t
e
• Productivity is simply the ratio between the
amount produced and amount of resources
used in the course of production.
• It applied to an enterprise, an industry or an
economy as whole
 resources

Capital
( rupees)

People Land(hect
(man hour) ares(

Plant and
machinery
Material( m
(machine hours) etric tonne)
Total factor productivity
 Individual factor productivity
• Capital productivity= output
-----------------
capital employed

Labour productivity = output

--------------------
man-hours employed
• Material productivity = output
------------------------
raw material consumed

Machine Productivity= output

------------------------------
machine hours worked
• Land productivity = output
---------------------------
area of land used
 Concept of quality management
• Quality management is a system of initiating
and co-ordinating quality development,
quality maintenance and quality
improvement.
Importance of quality control
Early detection
Study of of quality
deviation
variations Minimises
delays and
stoppages

Minimises
legal action

Reduces cost
of
productions

Builds
competitive
strength
Improves
overall
Improves efficiency
customers
goodwill
 Factors affecting market/9 M’s
• Market
• Money
• Management
• Men
• Motivation
• Materials
• Machine and mechanisation
• Modem information methods
• Mounting product requirement
 Total quality management/TQM
• The concept of TQM was developed by Dr. W. E.
Deming in 1960s in Japan.
• Basic philosophy is to improve the quality of
output and customer satisfaction
• TQM is a customer-oriented philosophy
• TQM is an integrated system of tools, techniques
and training to improve quality
• It emphasis on prevention of errors rather than
on rectification
 Features of TQM
• Customer oriented philosophy
• Continuous process
• Defect free approach
• Commitment from Top Management
• Employee involvement
• Synergy in teamwork
• Training at all levels
• TQM Techniques
• Recognition and reward
• Technology oriented
 Importance of TQM
• Helps to face competition
• Contributes to higher customer satisfaction
• Generates Goodwill and Reputation
• Less rejection
• Reduced customer complaints
• Lead to Expansion and Diversification
• Contributes to employees welfare
• Highly motivated Personnel
 Eight building Blocks of TQM

Devel
v
op an
t
intern
Focus al
on custo
i
preve mer
ntion suppli
e
er
i
relatio
n
nship
 Cost of qualtiy
• The cost of quality is not the price of creating
a quality product or service. It is the cost of
not creating a quality product or service
• Every time work is redone, the cost of quality
increases
Eg :- reworking of a manufactured item
retesting of an assembly
rebuilding of tool or reworking of a service
 Cost of quality

Cost of poor quality Cost of good quality

Internal failure cost External failure cost Appraisal cost Prevention cost
 W.E. Deming’s 14 points of TQM
• Constancy of purpose
• The new philosophy
• Cease dependence on mass inspection
• End lowest tender contracts
• Improve every process
• Institute training on the job
• Institute leadership
• Drive out fear
• Break down barriers
• Eliminate exhortations
• Eliminate arbitrary numerical targets
• Permit pride of workmanship
• Encourage education
• Top management commitment and action
Juran’s 10 steps to quality improvement
• Build awareness of opportunity to improve
• Set goals for improvement
• Organize to reach goals
• Provide training
• Carryout projects to solve problems
• Report progress
• Give recognition
• Communicate results
• Keep score
Juran’s trilogy

Quality
Quality
planning
control

Quality
improvement
 Philip crosby’s philosophy
• Management commitment
• Quality improvement team
• Quality measurment
• Cost of quality evaluation
• Quality awareness
• Corrective action
• Establishment an ad-hoc commitment for the zero defects programe
• Supervisor training
• Zero defect day
• Goal setting
• Error cause removal
• Recognition
• Quality councils
• Do it over again
The Japan Story
Toyota Rav4
 BAPE
• A Bathing Ape ( ア・ベ
イジング・エイプ A
Beijingu Eipu) (or
BAPE) is a Japanese
clothing brand
founded by Nigo
(Tomoaki Nagao) in
Ura-Harajuku in 1993.[1][2]
The brand specializes i
n men's, women's and c
hildren's lifestyle and str
eet wear, running 19 sto
res in
Japan
 SUSHI JIRO
• Sukiyabashi Jiro ( す
きやばし次郎
Sukiyabashi Jirō) is a
sushi restaurant in
Ginza, Chūō, Tokyo
, Japan. It is owned an
d operated by
sushi master Jiro Ono.[1]
It was the first sushi re
staurant in the world
[2]

to receive three stars f

rom the
Michelin Guide
Features/benefits of kaizan
Gradual
Quality control
techinqus
process
Wide
applicability

Far reaching
implications

Less
resistance

A learning
experience
Team
Less capital building
investment
 Lean thinking
• Was coined by James P Womack and Daniel T
jones
• The core idea is to eliminate waste
• It will lead to maximum customer value with
minimum waste
 7 types of waste
Over
production
defects
waiting

motion

Transport
Over
processing
Inventory
 Features of lean thinking
• Lean thinking principles
• Universal process
• Tools and techniques
• Mass production and lean enterprise
• Emphasis on waste reduction
• Benefits of lean thinking
Mass production mindset Lean enterprise mindset
Producers push Consumers pull
Movement of material Flow of value
High voulme Flexible response
inspection prevention
Expert driven Knowledge driven
decomposition integration
Periodic adjustment Continuous improvement
Six sigma
 Problem on productivity
Output= 5,00,000 Raw material= 190,000

Labour= 75,000 Electricity = 25,000

capital= 1,00,000 Other misc exp = 10,000

• Calculate partial/factor
based and total
productivity
 SERVQUAL
• Servqual is the most popular method of service
quality measurement in almost all the service
industries.
• It is based on assessment of need GAPS in the
service quality
• Model essentially points out the mismatch
between the way customer perceive service
and the way the service provider interprets
customers expectation of service quality
Servqual model
 Criteria important in moulding customers
expectation
• Tangibles i.e physical evidence
• Reliability
• Responsiveness
• Communication
• Credibility
• Security ( physical, financial and confidentiality )
• Competence
• Courtesy
• Understanding
• Access
 Definition of quality
• Quality can have two meaning:-
The characteristics or ability of a product or
service to satisfy stated and implied need
A product or service free of defect or
deficiencies.
 Other definitions
• Quality should be aimed at the needs of the
customer, present and future- Dr E. Deming
• Fitness for use or purpose is a definition of
quality that evaluates how well the product
performs for its intented use- Joseph Juran
• Quality is the conformance to requirement-
Philip Crosby
 Features and concepts of quality
• Fitness for use
• Fitness for purpose
• Totality of feature and characteristics
• Conformance to requirement
• Stated and implied needs
 Characteristics of quality
• Structural characteristics
• Sensory characteristics
• Time oriented characteristics
• Ethical characteristics
• Variables
• Nonconformity
• Nonconformity unit
• Attribute
• Defect
• Specifications
• Standard
• Quality of design
• Quality of conformance
• Quality of performance
 QMS
• Quality is a dynamic concept which is
ultimately defined by customer expectation
and satisfaction
• QMS is achieved through alignment of people,
process and technology
• 9 core elements are involved in QMS
 Elements of QMS
• Quality objective
• Quality manual :- describe the scope of QMS,
Detail the requirement of QMS framework, List
any element of the QMS which are excluded
from the implementation, Reference specific
quality procedures used within the
organisation, provide visual documentation of
the critical procedure via flowchart, explain the
organisation quality policies and objectives
• Organization structure and responsibility
• Data management
• Processes
• Customer satisfaction with product quality
• Continuous improvement
• Quality instruments
• Documental control
 Quality circle
• First experimented in the Nippon wireless and
telegraph company in Japan in 1962
• Concepts by Dr. Ishikawa
• 3 attributes of quality control
Form of participation management
Human resource development technique
Problem solving technique
 Objectives of quality circles
• To aid self and mutual development
• To increase quality and cost awareness
• To utilise creativity of the workforce
• To develop managerial ability and leadership
• To built team spirit through participative decision
making
• To implement and manage accepted ideas
• To improve productivity
• Better product and process at work
 Characteristics of quality circle
• Goals
• Membership
• Organisation
• Scope of problem
• Frequency of meeting
• Training and development
• Emphasis of group effort
• Rewards
 Process of quality circles
• Finding the problems
• Selecting the problem
• Analysing the problem:- Brainstorming and Pareto analysis
• Locating the causes
• Collecting and analysing the data
• Generating alternative solutions
• Presentation to management
• Management scrutiny and approval
• Execution and follow up
 NUMERIC PROBLEMS
IN THE FOLLOWING EXAMPLE, WHICH ACTION
INDICATES HIGHER PRODUCTIVITY
IN RS 10, A PERSON MAKES
10PIECES
IN RS 20, A PERSON MAKES 25
PIECES
IN RS 40, A PERSON MAKES 30
PIECES
• WHAT IS THE PRODUCTIVITY OF AN AUTHOR,
IF HE WRITES 224 PAGES IN 96 HOURS?
• IF A FACTORY PRODUCES RS. 1 LAC WORTH OF
PRODUCT BY UTILISING A CAPITAL
INVESTMENT OF RS. 20 THOUSAND AND A
LABOUR OF RS. 30 THOUSAND, THEN WHAT
WILL BE THE TOTAL FACTOR PRODUCTIVITY.
• ANALYSE THE FOLLOWING DATA
TOTAL OUTPUT= 8000
CAPITAL= 4000
RAW MATERIAL= 3000
SALARY/LABOUR= 750
ELECTRICITY= 250
FIND OUT PARTIAL AND TOTAL PRODUCTIVITY
 Kepner and Tregoe Methodology
• A problem is an unwanted effect due to a
deviation from the plan. It is something which
is to be corrected or eliminated.
• Every problem has only one real cause which
may be a single event or a combination of
event.
 Seven basic concepts of problem analysis

• Standard of performance
• Problem identification
• Problem definition
• Impact of problem
• Cause of problem
• Root cause of problem
• Problem description
 Problem solving methodology
• Specify a problem
• Draw a problem analysis work sheet
• Search for the cause
• Differentiation of IS and IS NOT
• Analysis for distinction and changes
• Find the cause
• Test the cause determined
 IS IS NOT DISTINCTIVE ANY CHANGE
OF THE IS
WHAT:
DEVIATION
OBJECT
WHERE: ON
OBJECT
OBSERVED
WHEN: ON
OBJECT
OBSERVED
EXTEND : HOW
MUCH, HOW
MANY
 Decision analysis
• Interim action
• Adaptive action
• Corrective action
• Preventive action
• Contingency action
Seven concepts of decision making
• Setting objectives against which to choose
• Classify objectives according to importance
• Develop alternatives from which to choose
• Evaluate alternatives against the objectives to make a
choice
• Choose the best alternative
• Assess the adverse consequence of the tentative
decision
• Control effect of final decision by preventing adverse
consequences and by follow up
 Steps in six sigma processes
• DMAIC ( Define, Measure, Analysis, Improve,
Control)
• DMADV (Define, Measure, Analysis, Design,
Verify)
 Six sigma enablers
• Leadership commitment
• Change in culture
• Change in mindset
• Challenging standards
• Customer focus
• Continual improvement
 Other important models
• Analysis of variance
• Business process mapping
• Correlation
• Histograms
• Pareto analysis
• Scatter diagram
• Quality function deployment
 ISO 9000
• ISO stands for international organisation for
standardization
• ISO 9000 standards expect firms to have a
quality manual that meets ISO guidelines,
documents quality procedures and job
instructions, and verification of compliance by
third party auditors
• ISO 9000 series comprises of ISO 9000, ISO
9001, ISO 9002, ISO 9003 and ISO 9004
 Steps in ISO 9000 registration
• Top management commitment
• Assigning responsibilities and training personnel
• Prepare quality policy manual
• Educating the staff
• Preparing operating procedures
• Documentation ( tier 1 to tier 4)
• Hold internal audit
• Appointment of the registrar
• Final audit( information meeting, documentation review,
certification audit)
• Closing meeting and issue of the certificate
 ISO 14000
• ISO 14000 addresses six distinct but related
subjects
• Environment management system(EMS)
• Environment Auditing (EA)
• Environmental performance evaluation(EPE)
• Environment labelling (EL)
• Life cycle Assessment( LGA)
• Environment aspects in product standards(EAPS)
 ISO 14000

Process oriented standards Product oriented standards

LCA EMS
EL EPE
EAPS EA
 MANAGEME
NT REVIEW
CHECKING AND
CORRECTIVE
ACTION

ENVIRONME
NTAL POLICY

IMPLEMENTATI
ON AND
OPERATION

PLANNING
 QS 9000
• QS 9000 is a quality system developed in september
1994 by the three big automobile manufacturers
• Addition requirement:- additional automotive/heavy
trucking requirement
• Covering production part approval process,
continual improvement and manufacturing
capabilities
• Customer specific requirements that are unique to
ford, chrysler and General motors
 Malcolm Baldrige national quality award

• Awarded in six categories manufacturing,

service, small business, education, health care
and non profit.
• Based on 7 parameters: Leadership( 120),
strategic planning( 85), customer and market
focus (85), measurement analysis and
knowledge management(90), workforce
focus( 85), Process management (85) and
results (450)
 Material management
• Material management is concerned with the
management of material resources.
• It considers the cost we incur on material and
seeks to reduce this cost.
• Material management, as a distinctive process
of management covers the whole range of
function involved in planning, sourcing,
procuring, moving, storing and controlling
material in the most effective manner
 Definition
• Materials management is used for the group of
activities concerned with getting purchased
material and services to the point where they
are economically useful
• Materials management refers to an integrated
management approach to planning,
acquisition, conversion, flow and distribution
of production materials from the raw material
state to the finished product state
 Objectives of material management

• Low prices
• High inventory turnover
• Low cost of acquisition and possession
• Continuity of supply
• Consistency of quality
• Maintenance of good buyer-seller relations
• Development of new materials and vendors
 conti
• Good record keeping and quick reporting
• Development of personnel
• Standardization
• Procedures
• Operational expenditure
• Future forecast
• Make or buy decision
 Importance of material management

• Material form the largest single item of

expenditure
• Fixed assets is a capital already sunk and the
only scope for improving the return on
investment lies in the efficient management of
materials.
• Material cost is about 60 to 70% of the total
production cost
 conti
• Indirect cost and the cost of materials
movement are well within control
• Inventory losses are minimised due to
efficiency and loss from theft
• Effective utilisation of materials is possible
only when the equipments are effectively
used
• Loss of time of direct labour is minimized
 conti
• Length of manufacturing cycle is reduced due
to effective utilisation of men, material and
machine
• Congestion of material is store and/ at
different points of manufacturing is avoided
 Integrated material management
• Imvolves various functions like material
planning, purchasing, receiving, stores,
inventory control, scrap and surplus disposal.
• Advantages of integrated material
management
• Better accountability
• Better coordination
• Better performance
 conti
• Adaptability to EDP
• Procurement at the right time
• Improved inventory control
• Increased productivity
• Control of price
• Dead stock
• Effective classification and coordination
 conti
• Heavy packages
• Assurance of verified right materials
• Better focus on urgent material
• Quick return of defective
• Better utilisation of space
• Reduced paper work
• Reduced correspondence
• Ease for accounting department
 Material handling
• Material handling is the art and science involving
movement, packaging and storing of materials in
any form by means of gravity, manual effort or
power actuated machinery
• It is concerned with the following
• Movement
• Time
• Quantity
• space
 Objective of material handling
• Reduction of cost ( which can be achieved by
either reducing material handling or by improving
handling procedure or both)
• Increase in capacity by better use of space, by
reducing travel space or excessive wastage of
space, by improving equipment utilisation, faster
loading and unloading
• Improvement in working condition through safety
aspect, easy working and foolproof operations
 conti
• Improved distribution
• Reduced waste
• Improved customer service
 Principles of material handling
• Planning principle
• Systems principles
• Material flow principles
• Simplification principle
• Gravity principle
• Space utilisation principle
• Unit size principle
• Safety principle
• Mechanization/ automation principle
 conti
• Equipment selection principle
• Standarisation principle
• Flexibility principle
• Dead weight principle
• Motion principle
• Idle time principle
• Maintenance principle
• Obsolescence principle
 conti
• Control principle
• Capacity principle
• Performance principle
 Inventory and inventory management
• Inventory means all the material in process or
finished goods, castings and consumables tools,
electrodes etc
• Characteristics of inventory
• Inventory serves as a cushion
• Inventory , a necessary evil for any enterprise
• Inventory provides production economies
• Maintenance of smooth and efficient production flow
• Creation of motivational effect in decision making
 Inventory control techiques
• ABC classification
• FSN classification
• GOLF classification
• VED classification
• S-O-S classification
• HML classification
• SDE classification
• XYZ classification
Lifting and Lowering equipments
Block and tackle
winches
Hoists
Elevators
Pillar crane
Overhead crane
Transporting Equipment
Box truck
Narrow gauge rail road
Combination equipment
Crane truck
Forklift
Belt conveyor
Roller conveyor
Elevating conveyor
Cable conveyor
EOQ formula
 Problem on eoq
• If an enterprise consumes 4000 units of a
particular item every year and the cost per
order is Rs 240/- and the price of that unit is
Rs. 10 per unit, the inventory carrying cost is
30%. What is it eoq ?
 Problems on EOQ
• Find out EOQ if a fruit dealer sells 16000 boxes
of dry fruits during the year. The demand for
dryfruits is steady throughout the year. The
cost of placing an order is Rs.500 and each box
of dry fruits cost Rs.2000.The cost of carrying
inventory is 20%.
• The annual demand for an item is 3200 units.
The unit per cost is Rs. 6 and inventory
carrying charges are 25% per annum. If the
cost of one procurement is Rs. 150, determine
1. Economic order quantity
2. No. of orders per year
3. Time between two consecutive orders
• Following information have been furnished by prakash ltd
• Requirement for the year are 3,00,000
• The purchase price per unit is Rs 3.
• Carrying cost is 25%
• Cost per order is Rs. 20
• Desired safety is 10,000 units
• Three days are required for delivery
• Calculate EOQ, Orders to be placed each year and at what
inventory level should an order be placed.
 Genichi Taguchi Quality Engineering
• To improve quality means to look upstream at
the design stage because that’s where quality
begins
• Taguchi’s seven points
1. Product quality is measured by the total loss to
society created by the product
2. Continuous quality improvement and cost
reduction are necessary to survive in world
competition
3. Quality improvement requires continual and
repeated reduction of variation in the production
process performance around the standard
nominal values.
4. Quality loss is frequently proportional to the
square of the deviation of the performance in the
nominal value
5.Product and process design can have an
important impact on a product’s quality and cost.
6.Peformance variation can be reduced by
suitable adjustment of the product’s parameters
and/or the process parameters
7. The appropriate parameter settings that
reduce variation can be identified with the
appropriate statistically designed experiments.
Quality Assurance