Assignment A Q.1: Discuss the changing philosophy of operations management. What are the new trends in operations management? Answer: Changing philosophy of operations management Operations management has two important components. 1. Operations systems and procedures. 2. Philosophy The performance of the organization is greatly influenced by the philosophy or mental framework of the people involved. Management philosophy influences the decision making and thought process in the organization. It provides a working environment and work culture, which makes all the difference to the organization. Operations management is concerned with all these aspects rather than just producing goods and services. In today’s operations management, the focus has shifted from the earlier concept of large scale production and cost reduction to new methodologies, new approaches, new tools, system’s simplification, continuous improvements, total quality management and just-in-time manufacturing. The operations management are not limiting their options to the new technologies development, automation and computerization, but are looking beyond with new approaches and perspectives. The following are factors affecting Operations Management: • Reality of global competition • Quality, customer service and cost challenges • Rapid expansion of advanced technologies
Transcript
Assignment A
Q.1: Discuss the changing philosophy of operations management. What are the new trends in operations management?Answer:
Changing philosophy of operations management
Operations management has two important components.
1. Operations systems and procedures.
2. Philosophy
The performance of the organization is greatly influenced by the philosophy or mental
framework of the people involved. Management philosophy influences the decision
making and thought process in the organization. It provides a working environment
and work culture, which makes all the difference to the organization. Operations
management is concerned with all these aspects rather than just producing goods and
services.
In today’s operations management, the focus has shifted from the earlier concept of
large scale production and cost reduction to new methodologies, new approaches,
new tools, system’s simplification, continuous improvements, total quality
management and just-in-time manufacturing. The operations management are not
limiting their options to the new technologies development, automation and
computerization, but are looking beyond with new approaches and perspectives.
The following are factors affecting Operations Management:
• Reality of global competition
• Quality, customer service and cost challenges
• Rapid expansion of advanced technologies
• Continued growth of the service sector
• Scarcity of operations resources
• Social responsibility issues
Operations management has undergone lots of changes in its concept, structure and
implementation.
The three terminologies are interrelated.
1. Manufacturing management,
2. Production management and
3. Modern operations management’
The concept of manufacturing management is more than a century old. Subdivision
of work and specialization of workforce was the focus of manufacturing management.
Production management became popular in 1930s. A scientific approach,
techniques of doing work or use of techniques in decision making became the focus of
production management. Industrial engineering applications, work measurement,
method study, incentive schemes were used to improve efficiency in operations.
In modern operations management, the focus is on product quality, customer
satisfaction, technological innovation, collective performance of management and use
of models in better decision making.
New trends in the operations management can be summarized as under:
• Global Market Place: Globalization of business has compelled many
manufacturing firms to have operations in many countries where they have certain
economic advantages. This has resulted in a step increase in the level of
competition among manufacturing firms throughout the world.
• Production/Operations Strategy: More and more firms are recognizing the
importance of production/operations strategy for the overall success of their
business and the necessity for relating it to their overall business strategy.
• Total Quality Management (TQM): TQM approach has been adopted by many
firms to achieve customer satisfaction by a never ending quest for improving the
quality of goods and services.
• Flexibility: the ability to adapt quickly to changes in volume of demand, in the
product mix demanded, and in product design or in delivery schedules, has
become a major competitive strategy and a competitive advantage to the firms.
This is sometimes called as agile manufacturing.
• Cycle time reduction: Reduction of manufacturing cycle time and speed to
market for a new product provides competitive edge to a firm over other firms.
When companies can provide products at the same price and quality, quicker
delivery (short lead times) provide one firm competitive edge over the other.
• Technology: Advances in technology have led to a vast array of new products,
new processes and new materials and components. Automation, computerization,
information and communication technologies have revolutionized the way
companies operate.
• Work involvement (Workers are not costs, they are assets): The recent trend is to
assign responsibility for decision making and problem solving to the lower levels
in the organization. This is known as employees’ involvement and empowerment.
Examples of worker involvement are quality circles and use of work teams or
quality improvement teams.
• Business process Re-engineering: This involves drastic measures or
breakthrough improvements to improve the performance of a firm. It involves the
concept of clean slate approach or starting from scratch in redesigning the
business processes.
• Environmental issues: Today’s production managers are concerned more and
more with pollution control and waste disposal which are key issues in protection
os environment and social responsibility.
• Corporate Downsizing (Or right Sizing) Downsizing or right sizing has been forced
on firms to shed their obesity. This has become necessary due to competition,
lowering productivity, need for improved profit and for higher dividend payments to
shareholders.
• Supply Chain Management: Management of supply chain from suppliers to final
customers reduces the cost of transportation, warehousing and distribution
throughout the supply chain.
• Lean production: Production systems have become lean production systems
which use minimal amounts of resources to produce a high volume of high quality
goods with some variety. These systems use flexible manufacturing systems and
multi skilled workforce to have advantages of both mass production and job
production.
Q.2: What is the difference in strategy in developing an initial layout for a new facility as compared to the strategy in improving the layout of an existing facility?
Answer: A layout is the physical configuration of departments, workstations, and equipments in the conversion process. It is arrangement of physical resources used to create the product.Success of operations depends on the physical layouts of the facilities. Flow of raw material.
Productivity and human relationship are all affected by the arrangements of the conversion facilities. According to Moore “ Plant layout is a plan of an optimum arrangement of facilities including personnel, operating equipment, storage space, material handling equipment and all other supporting services along with the design of best structure to contain all these facilities”.
Plant layout involves: Planning and arranging facilities in new plant Improvements in existing layout to introduce new methods.
Planning and arranging facilities in new plantLayout decisions have long term consequences on cost and companies ability to serve the customers. Its optimal goal is to maximize the profit by arrangement of all the plant facilities to the best advantage of total manufacturing of the product.The following are the major objectives of layout:
Providing enough production capacity Reducing material handling costs Easy supervisions Improvement in productivity Efficient utilization labor Increase in morale of the employees Reducing accidents and hazards to personnel Reducing congestion Utilizing the space efficiently and effectively. Facilitate the organizational structure
Improvements in existing layout to introduce new methodsThe improvements of layout in existing facility has the important role in the sense that A good plant layout involves not only the designing and installing of the layout for the first time but also revision of existing layout, in addition The best layout becomes obsolete over a period of time.The following reasons can push plant managers undertaking new strategies for facility layout revisions:
Expansion Technological advancements Improvement in the layout
ExpansionIt is a natural feature of any industrial establishment. A plant may expand in:
Increase in the output of the existing layout Introduction of a new product
Diversification of the lines of activityTechnological development
Replacement of labour by machines Developments in fuel and energy Developments in process Developments in materials Improvements in product design and Advancements in information technology.
Improvement in the layoutLayout needs to be reviewed and revised to correct any deficiencies.The limitations in a layout go unchecked for two reasons:
The evils of a poor layout are a hidden cost not revealed even by best accounting method
Even if the limitations are revealed the management may be unwilling to initiate remedial steps
The table below summarizes this difference:New facility Revised or existing facility
collect all the data of the external environment to the facility
study the physical flows in and out to the facility
analyze the max capacity of the production process, and avoid bottlenecks
make it simple and efficient, with an appropriate layout between production area, warehouse and "indirect people office" supporting the production : this people needs to be located closed to the production area to support it quickly
simulate and model the possible solutions with a computer based program before implementing
Take into account all the existing constraints in terms of:
physical structure and building health and safety issues to be
respected redesign the material flow
streamlining it with a lean approach test a pilot implement totally
Q.3: Discuss the various factors to be considered to decide the location of a cement plant? How do the factors differ in case of a nuclear plant?Answer:The first step in cement plant location would be to decide whether the facility should
be located domestically or internationally. This is necessary because, countries across
the world are vying with each other to attract foreign investments. The choice of a
particular country depends on such factors as political stability, export & import
quotas, currency & exchange rates, cultural & economic conditions.
The second step would be the selection of a particular region out of the many natural
regions of a country. The following factors would influence such selection:
Availability of raw materials
Nearness to the market
Availability of power
Transport facilities
Suitability of climate
Government Policy
Competition between states
The third step would be selecting a particular locality or community in a region
whereby the selection of a locality in a particular region is influenced by the following
factors:
Availability of labour
Civic amenities for workers
Existence of complementary & competing industries
Finance & research facilities
Availability of water & fire fighting facilities
Local taxes & restriction
Momentum of an early start
Personal factors
Selection of the site will be based on the following elements:
Technical
Economical
Commercial
Social
Political
Government policies
Technical factors
• Technical considerations relating to the location of a cement plant may include
the following:
• Vibrations
• Climate
• Floods
• Soil condition
• Factors that affect the installation cost and operating cost of the plant are to be
examined carefully. Cost of land is normally very high in an industrial area. But
if a plant is located in remote area, distance from the plant from the source of
raw materials or from the market for the finished products becomes very long.
Lot of money has to be spent for movement of raw materials to the plant or for
moving the products to the market. Apart from this, lot of time and effort are
spent in transportation of the materials. Economic factors that need to be
considered are:
• Availability of power and water
• Quick access to raw material source
• Quick access to the market
• Manpower
• Total cost
Commercial Factors
• Location of a plant is generally influenced by many commercial factors such as:
• Location of other industrial units installed in the region
• Availability of services from expert contractors
• Availability of competent repairs facilities in the vicinity of the plant
• It is a great advantage if the main machinery manufacturer has his office
nearby. Banking facilities, airport and seaport should be closer to the plant. Lots
of materials are required at very short notice for urgent repairs and
maintenance of the plant and machinery. Too long a distance between the plant
and the airport/ seaport is not desirable. Iris advantageous to have the location
of the plant in or near a commercially developed area well connected by road,
sea and air.
Social Factors
• Availability of good housing complexes, recreation facilities, school and medical
facilities facilitate the living of the people. It is essential to fulfill the basic
requirements of the people. Good quality of people could be attracted if their
basic needs are fulfilled.
• A plant producing high level of air and noise pollution disturb the nearby
environment and people living in adjoining areas. At the same time, a plant
which does not create such problems to the society, if located nearby creates
more job opportunities to the local population.
Political Factors
• Besides economic, technical and social factors, political factors will be equally
important for deciding the location of a cement plant.
• Various parts of the world are facing militancy in one form or the other,
adversely affecting peace in the region and influencing every walk of life. Even
business is not left untouched by militancy. Political instability or disturbances in
a country can ruin the smooth operation of a plant and hamper its future
growth.
• Political instability or disturbances in a country can ruin the smooth operation of
a cement plant & hamper its future growth.
Government Policies
• For development of a backward area, various governments offer many
attractive concessions and benefits to industrial entrepreneurs to set up their
plants. These benefits or concessions are so attractive that they influence the
decision about the location of a cement plant.
• For example, the government can give land at a very low price, assure an
uninterrupted and adequate power supply and water supply, construct a very
good road network and give tax rebates for a period of five or ten years.
• In view of such benefits, various investors are attracted to invest in the area by
setting up the plants as the returns on the investments are very high.
Apart from the basic amenities the following points should be kept in view while selecting the site for a nuclear power station
(i)Availabilty of WaterAs sufficient of water is required for the cooling purposes, therefore the plant site should be located where ample quantity of water is available.
(ii) Disposal of WasteThe waste produced by fission in nuclear power station is generally radio active which must be disposed off properly to avoid health hazards. The waste should either be buried in a deep trunch or disposed off in a sea quite away from the sea shore. Therefore the site selected for such a plant should have adequate arrangement for the disposal of radio active waste.
(iii)Distance from populated areasThe site selected for a nuclear power station should be quite away from the populated areas as there is a danger of presence of radio activity in the atmosphere near the plant. However, as a precautionary measure, a dome is used in the plant which does not allow the radioactivity to spread by wind or underground waterways.
(iv)Transportation FacilitiesThe site selected for a nuclear power station should have adequate facilities in order to transport the heavy equipments during erection and to facilitate the movement of workers in the plant. From the above mentioned factors it become apparent that ideal choice for a nuclear power station would be near sea or river and away from thickly populated areas.
4. Write short notes on: Answer:
a) Capacity Requirements Planning, also known as CRP, in Manufacturing
Resource Planning (MRP) parlance, is the technique that allows business to
plan ahead to determine how large their future inventory capacity needs to be
in order to meet demand. CRP also helps companies determine how much
space they will need to hold these materials. It verifies that you have the
sufficient capacity available to meet the capacity requirement for the MRP
plans. It thus helps the planners to make the right decisions on scheduling
before the problem develops.
The key elements of the Capacity Requirements Planning process are of
establishing, measuring, and adjusting the limits or levels of the production
capacity based on the process of determining the amount of labor and machine
resources required to accomplish the tasks of production. Inputs of the CRP
process are the Order Entry modules in a MRP system which facilitates
translating the orders into hours of work by the work center by time period via
the use of parts routings and time standards.
According to business definition, capacity requirements planning is a
computerized tracking process that translates production requirements into
practical implications for manufacturing resources. Capacity requirements
planning is part of manufacturing resource planning and is carried out after a
manufacturing resource planning program has been run. This produces an
infinite capacity plan, as it does not take account of the capacity constraints of
each workstation. Where the process is extended to cover capacity
requirements, a finite capacity plan is produced.
This enables loading at each workstation to be smoothed and determines the
need for additional resources.
Forecast for demand of the product is the base for estimating the short term
workload on the facility. Companies make plans for a period of about one year
and workout the expected output of different products or services based on the
forecast. The plans thus generated are compared with the existing capacity. It
is observed that one of the products have high demand in one season and low
demand in another.
For example: Woolen clothes would have high demand in winter season
whereas in summer it could have low or no demand. Another product could
have a uniform demand throughout the year. For example, milk and some of
the food items have uniform demand throughout the year.
Capacity Requirement plans (CRP) looks into the individual operations by using
the routine information. Each operation is valued in standard hours, which
results in total hours required per work center per time period. Final
adjustments are then made to the manufacturing plan at the operation level to
obtain a balanced workload for each work center.
b) Rough cut capacity plans (RCCP) serves the Master Production Schedule
(MPS) for one or two years. RCCP is used to check the balance of scheduled
items, normally finished goods, and time period. RCCP looks at the workload
for each critical area by time period. If this exercise is not carried out, it would
result in an out of balance MPS, which would cause overloads and waiting time
in manufacturing. Rebalancing the workload at the last minute to get the
material supply in line with the MPS would be a very difficult job.
Rough Cut Capacity Planning is a term used in relationship with production
planning and controlling an environment. (RCCP) is also an important part of
the manufacturing process within a company’ s Supply Chain by evaluating
capacity with availability within a companies manufacturing environment.
c) Resource Requirement Planning (RRP) serves the production plan and
covers a number of years. Longer term capacity requirements are difficult to
determine due to the uncertainties in the future market demand and
technologies. RRP is interactive. Capacity requirements are dependant on the
marketing plans and forecasts.
Q.5. Actual demand differs from forecasted demand. How to adjust the aggregate plan to meet this situation? A.5 Actual demand is the demand evidenced by customers ‘orders and/or allocation of inventory. Demand forecasting is the activity of estimating the quantity of a product or service that consumers will purchase. Demand forecasting involves techniques including both informal methods, such as educated guesses, and quantitative methods, such as the use of historical sales data or current data from test markets. Demand forecasting may be used in making pricing decisions, in assessing future capacity requirements, or in making decisions on whether to enter a new market.
Forecasts are essential for the smooth operations of the business organizations. They provide information that can assist managers in guiding future activities toward organizational goal. Forecasts are estimates of the occurrence, timing, or magnitude of uncertain future events. Operations managers are primarily concerned with concerned with forecasts of demand, which are often made by marketing. However, managers also use forecasts to estimate raw material prices, plan for appropriate levels of personnel, help decide how much inventory to carry, and a host of other activities. This results in better use of capacity, more responsive service to customers, and improved profitability. As for the determination of the production requirements the forecasted demand places on the facility, it may happen that there is a difference between forecasted demands and actual. There are three strategies to cope with this situation that are explained in the following lines:
Strategy 1.Vary the number of Productive employees in Response to Varying output
Requirements (also known as Chase 1 plan).
Here, first the average productivity per employee is first calculated which determines
the number of employees needed to meet the monthly required output demand. The
employees are laid off when the output demand falls. As a result there is always Hiring
and laying of employees.
This strategy has the following disadvantages: The hiring and layoff costs are going to
be high, indirect costs of training new employees are going to be there, employee
morale low, required work skills may not be readily available when they are needed,
lead times necessary to hire and train the new employees must be accounted for in
the planning process, society reaction negative. Finally this strategy is not feasible for
the companies constrained by guaranteed wage and also hiring and layoff
agreements.
Strategy 2: Maintain a Constant Work Force Size but Vary the Utilization of the
Work Force (also known as Level # 1) for example, the strategy of employing 70
workers per month throughout the year is chosen. On an average, this work force
would be capable of producing 700 wagons each day. During the lean months
(January, February, March, July, October, November, December), the work force
would be scheduled to produce only the amount forecasted, resulting in some idle
working hours. During high-demand months (April, May, June, August, September),
overtime operations would be needed to meet demand. The work force would
therefore be intensely utilized during some months and underutilized in other months.
A big advantage of this strategy is that it avoids the hiring and layoff costs associated
with strategy 1. But other costs are incurred instead. Overtime, for example, can be
very expensive, commonly at least 50 percent higher than regular-time wages.
Furthermore, there are both legal and behavioral limits on overtime. When employees
work a lot of overtime, they tend to become inefficient, and job-related accidents
happen more often.
Idle time also has some subtle drawbacks. During slack periods, employee morale can
diminish, especially if the idle time is perceived to be a precursor of layoffs.
Opportunity costs also result from idle time. When employees are forced to be idle, the
company foregoes the opportunity of additional output. While wages are still paid,
some potential output has been lost forever.
Strategy 3: Vary the Size of Inventory in Response to Varying Demand (also
known as Chase #2 plan)
Finished goods inventories in make-to-stock companies can be used as a cushion
against fluctuating demand. A fixed number of employees, selected so that little or no
overtime or idle time is incurred, can be maintained throughout the planning horizon.
Producing at a constant rate, output will exceed demand during slack demand periods,
and finished goods inventories will accumulate. During peak periods, when demand is
greater than capacity, the demand can be supplied from inventory. This planning
strategy results in fluctuating inventory levels throughout the planning horizon.
The comparative advantages of this strategy are obvious: stable employment, no
idle time, and no overtime. What about disadvantages? First, inventories of finished
goods (and other supporting inventories) are not cost-free. Inventories tie up working
capital that could otherwise be earning a return on investment. Materials handling
costs, storage space requirements, risk of damage and obsolescence, clerical efforts,
and taxes all increase with larger inventories. Backorders can also be costly.
Customers may not be willing to tolerate backordering, particularly if alternative
sources of supply are available; sales may be lost, and lingering customer will may
decrease future sales as well. In short, there are costs for carrying too much or too
little inventory
Assignment B
Q1.) Why is materials planning needed? Discuss the various aspects of materials planning. Which other departments contribute to materials planning and in what way?
A.1 Material requirements planning (MRP) is a production planning
and inventory control system used to manage manufacturing processes. Most MRP
systems are software-based, while it is possible to conduct MRP by hand as well.
An MRP system is intended to simultaneously meet three objectives:
Ensure materials are available for production and products are available
Plan manufacturing activities, delivery schedules and purchasing activities.
The objective of materials management is to have the right material required for manufacturing, or production, in the right amount, at the right place, and at the right time, and, as we have already noted, this implies that the what, how much, and when of material requirements must be determined first. This is the basic objective of the materials planning and budgeting function. The questions that must be answered are the following:
1) Which material inputs must we get?Note: The inputs required are dependent on the outputs/end products planned to be manufactured.2) How much of each of these inputs do we need, and based on how much is available in stores and/or has already been ordered (inventory on hand and or order), how much of each of these should be ordered? The gross requirements of each of the required material inputs is calculated first and the net requirements are derived by subtracting from it the on hand and on order inventory.3) When should the orders for each of these materials be placed?
This decision is dependent on (i) where in the manufacturing process for the end product is the particular material required, namely, the crankshaft forging for the machining of the crankshaft prior to its assembly with the piston, cylinder etc. for the engine subassembly of the automobile, and (ii) the lead times for procurement and manufacturing, namely procurement lead times for raw materials (including forgings and castings) and purchased, or bought-out, components and subassemblies, and manufacturing lead times for the in-house manufactured components and assembly operations, both subassemblies and final assembly.
Materials requirement planning (MRP) is a computational technique that converts the master schedule for the end products (MPS) into a detailed schedule for the raw materials and components used in the end products. The detailed schedule identifies each raw material and component item required for a particular end product. It also determines when each of these items must be ordered by the factory and delivered by the vendor/supplier to the factory so as to meet the planned completion date for the end product as per the MPS.
Under this, the function of materials management is considered subordinate to the production. The materials manager acts as a subordinate to the works manager. Materials management is considered as a service function to operations and is regulated with the other operations under the control and superintendence of the works manager. The splitting of the materials management department will largely depend on the quantum of the work of each section and the need of the organization. Whether the materials management is treated as a prime function or an operating
function, the nature of splitting of the activities will be more or less the same. The usual splitting of the materials under the prime consideration is given as under:
1. Production department: Regarding the flow of materials, selection of the supplier etc.2. Marketing department: For converting the sales forecast into production schedule and giving delivery dates to customers etc.3. Finance department: For maintaining the level of the stock, locking up of funds into inventory, tapping cash discount and quantity discounting, pledging or hypothecating the materials for working capital needs etc.4. Engineering department: For the specification of materials, quality requirements, product research etc.5. Personnel department: For manning the material[s management department, vendor relationships, advertising, public relations etc.6. Top management: As an important profit center, top management has a great concern for materials management.Production and materials have very close interaction which is treated separately. Just as production depends upon the other departments in the organization, these other departments also derive useful information from the production department. Marketing and sales come to realize the productive capacity of the firm to make their plans. Human Relations need the data about the changes in production capacity to do the manpower planning.
Q2) What do you understand by the term corrective maintenance? In what way is corrective maintenance different from preventive maintenance and predictive maintenance? Support your answer with examples. A,2 Maintenance Management
All of us are very familiar with repair and maintenance works. If water tap leaks in our
house, we replace the washer and repair the tap. In case, heating element of the
cooking range in our kitchen is not heating up, we try to find out, if the heating element
is making proper electrical contact. These small problems in our daily life and the
action taken in repairs, has a direct relation to the maintenance of our facilities.
Maintenance department is one department which is constantly under pressure from
the users as well as from the management. User departments want their machinery to
be in operation all the time. On the other hand, the management stresses on cost
reduction, less usage of manpower, less overtime, control on purchases of inventory
items and reduction in tools and tackles. Under the unfriendly environment,
maintenance department is unable to achieve excellence. Unscheduled breakdown
and long repair times are some of the symptoms of ineffective maintenence.
Corrective Maintenance
During preventive checks, certain problems are noticed about the condition of the
machine. The machine might be operating in a condition that could cause damage to
the machine if continued to operate. Therefore, the machine is to be stopped without
delay to correct the situation. For example, if an abnormal sound is coming from a
water pump, it is necessary to identify the part of the pump from which the abnormal
sound is coming. It is observed on detailed inspection os the pump that its bearing is
damaged or the bearing of the pump is running dry or the shaft of the pump is bent. If
it is established that the bearing is starved of the lubricant or running dry, the problem
of abnormal sound is solved by lubrication of the bearing. The steps for correcting the
situation are termed a corrective maintenance.
Corrective maintenance is a form of system maintenance which is performed after a
fault or problem emerges in a system, with the goal of restoring operability to the
system. In some cases, it can be impossible to predict or prevent a failure, making
corrective maintenance the only option. In other instances, a poorly maintained
system can require repairs as a result of insufficient preventive maintenance, and in
some situations people may opt to focus on corrective, rather than preventive, repairs
as part of a maintenance strategy.
The process of corrective maintenance begins with the failure and a diagnosis of the
failure to determine why the failure appeared. The diagnostic process can include a
physical inspection of a system, the use of a diagnostic computer to evaluate the
system, interviews with system users, and a number of other steps. It is important to
determine what caused the problem in order to take appropriate action, and to be
aware that multiple failures of components or software may have occurred
simultaneously.
The next step is replacement of damaged components. In some cases, the damage
may be repairable, either in situ or by removing the item in question and doing repairs
off site. In other instances, full replacement with a new item may be required to restore
the system's functionality. For example, if an optical drive in a computer fails, a
technician may determine that replacing part of the drive or repairing part of it may be
sufficient, or may find that the entire drive needs to be scrapped so that a new one can
After the corrective maintenance is performed, a technician verifies that the fix has
worked by testing the system. This may be done in several stages to confirm that the
system is operational slowly before overloading it with tasks. Verification is especially
important on systems sent in to a facility for repair, as the technicians want to be sure
that when they are sent back out, the users will be happy with the standard of the work
performed.
For some older systems, it may make more sense to rely on corrective maintenance.
Preventive maintenance can be expensive, and with these systems, it may not make
sense; it may be more cost effective to simply repair system components as they go
wrong. By contrast, with a newer system, preventive maintenance can save money in
the long term and extend the life of the system by preventing system failures as much
as possible before they happen.
Preventative / Corrective Maintenance
Preventative maintenance is maintenance which is carried out to prevent an item
failing or wearing out by providing systematic inspection, detection and prevention of
incipient failure.
For instance Resolve FM’s preventative maintenance program will be used to manage
scheduled maintenance performed at specific intervals. Resolve FM uses preventative
maintenance tasks to sustain the functional and operational capabilities of equipment
or systems. The preventative maintenance efforts are aimed at preserving the useful
life of equipment and avoiding premature equipment failures, minimising any impact
on operational requirements. In addition to the routine aspects of cleaning, adjusting,
lubricating and testing, Resolve FM performs inspections to identify impending
problems and schedule repairs prior to equipment failure and/or further degradation.
Preventative maintenance is carried out only on those items where a failure would
have expensive or unacceptable consequences e.g. lift, fire alarms, electricity supply
and gas supply. Many of these items are also subject to a statutory requirement for
inspection and preventive maintenance.
Periodic preventive maintenance is defined as actions taken on a fixed time interval.
Examples of periodic maintenance include:
daily filter changes,
weekly lubrications, or monthly calibrations.
Predictive maintenance results from trending and monitoring equipment performance
parameters (i.e., vibration, oil, and infrared analysis on operating equipment) and
initiating specific planned maintenance prior to equipment failure.
An example of predictive maintenance would be a pump bearing replacement, after
wear-out was indicated as a result of an oil analysis.
Corrective maintenance can be defined as the maintenance which is required when
an item has failed or worn out, to bring it back to working order. Corrective
maintenance is carried out on all items where the consequences of failure or wearing
out are not significant and the cost of this maintenance is not greater than preventative
maintenance.
Corrective Maintenance activity may consist of repair, restoration or replacement of
equipment. This activity will be the result of a regular inspection, which identifies the
failure in time for corrective maintenance to be planned and scheduled, then
performed during a routine maintenance shutdown.
The repair or restoration of equipment that has a failure or is malfunctioning and not
performing its intended function. Corrective maintenance should normally be
performed only on equipment
previously selected to run until failure. As a result of an effective maintenance
program, only a small fraction of corrective maintenance should be needed on
equipment that is important
to safe and reliable system operations. Some examples of corrective maintenance
include:
replacement of a failed electrical breaker
weld repair of a cracked process line, and
repair of a failed instrument transmitter
Q3) What do you understand by ‘Total quality Management’? Discuss the objectives of total quality management. In what way the approach to Total Quality Management has changed over the last ten years? A.3 The definition of quality depends on the role of the people defining it. Most
consumers have a difficult time defining quality, but they know it when they see it. For
example, although you probably have an opinion as to which manufacturer of athletic
shoes provides the highest quality, it would probably be difficult for you to define your
quality standard in precise terms. Also, your friends may have different opinions
regarding which athletic shoes are of highest quality. The difficulty in defining quality
exists regardless of product, and this is true for both manufacturing and service
organizations. Think about how difficult it may be to define quality for products such as
airline services, child day-care facilities, college classes, or even OM textbooks.
Further complicating the issue is that the meaning of quality has changed over time.
Today, there is no single universal definition of quality. Some people view quality as
performance to standards. Others view it as meeting the customer‘s needs or
satisfying the customer. Let‘s look at some of the more common definitions of quality.
Conformance to specifications measures how well the product or service meets the
targets and tolerances determined by its designers. For example, the dimensions of a
machine part may be specified by its design engineers as 3 _.05 inches. This would
mean that the target dimension is 3 inches but the dimensions can vary between 2.95
and 3.05 inches. Similarly, the wait for hotel room service may be specified as 20
minutes, but there may be an acceptable delay of an additional 10 minutes. Also,
consider the amount of light delivered by a 60 watt light bulb. If the bulb delivers 50
watts it does not conform to specifications. As these examples illustrate, conformance
to specification is directly measurable, though it may not be directly related to the
consumer‘s idea of quality.
Fitness for use focuses on how well the product performs its intended function or
use. For example, a Mercedes Benz and a Jeep Cherokee both meet a fitness for use
definition if one considers transportation as the intended function. However, if the
definition becomes more specific and assumes that the intended use is for
transportation on mountain roads and carrying fishing gear, the Jeep Cherokee has a
greater fitness for use. You can also see that fitness for use is a user-based definition
in that it is intended to meet the needs of a specific user group.
Value for price paid is a definition of quality that consumers often use for product or
service usefulness. This is the only definition that combines economics with consumer
criteria; it assumes that the definition of quality is price sensitive. For example,
suppose that you wish to sign up for a personal finance seminar and discover that the
same class is being taught at two different colleges at significantly different tuition
rates. If you take the less expensive seminar, you will feel that you have received
greater value for the price.
Support services provided are often how the quality of a product or service is judged.
Quality does not apply only to the product or service itself; it also applies to the
people,
processes, and organizational environment associated with it. For example, the quality
of a university is judged not only by the quality of staff and course offerings, but also
by the efficiency and accuracy of processing paperwork.
Psychological criteria is a subjective definition that focuses on the judgmental
evaluation of what constitutes product or service quality. Different factors contribute to
the evaluation, such as the atmosphere of the environment or the perceived prestige
of the product. For example, a hospital patient may receive average health care, but a
very friendly staff may leave the impression of high quality. Similarly, we commonly
associate certain products with excellence because of their reputation; Rolex watches
and Mercedes-Benz automobiles are examples.
Cost of quality
The reason quality has gained such prominence is that organizations have gained an
understanding of the high cost of poor quality. Quality affects all aspects of the
organization and has dramatic cost implications. The most obvious consequence
occurs
when poor quality creates dissatisfied customers and eventually leads to loss of
business.
However, quality has many other costs, which can be divided into two categories. The
first category consists of costs necessary for achieving high quality, which are called
quality control costs. These are of two types: prevention costs and appraisal costs.
The second category consists of the cost consequences of poor quality, which are
called quality failure costs. These include external failure costs and internal failure
costs.
Prevention costs are all costs incurred in the process of preventing poor quality from
occurring. They include quality planning costs, such as the costs of developing and
implementing a quality plan. Also included are the costs of product and process
design, from collecting customer information to designing processes that achieve
conformance to specifications. Employee training in quality measurement is included
as part of this cost, as well as the costs of maintaining records of information and data
related to quality.
Appraisal costs are incurred in the process of uncovering defects. They include the
cost of quality inspections, product testing, and performing audits to make sure that
quality standards are being met. Also included in this category are the costs of worker
time spent measuring quality and the cost of equipment used for quality appraisal.
Internal failure costs are associated with discovering poor product quality before the
product reaches the customer site. One type of internal failure cost is rework, which is
the cost of correcting the defective item. Sometimes the item is so defective that it
cannot be corrected and must be thrown away. This is called scrap, and its costs
include all the material, labor, and machine cost spent in producing the defective
product. Other types of internal failure costs include the cost of machine downtime due
to failures in the process and the costs of discounting defective items for salvage
value.
External failure costs are associated with quality problems that occur at the
customer site. These costs can be particularly damaging because customer faith and
loyalty can be difficult to regain. They include everything from customer complaints,
product returns, and repairs, to warranty claims, recalls, and even litigation costs
resulting from product liability issues. A final component of this cost is lost sales and
lost customers. For example, manufacturers of lunch meats and hot dogs whose
products
have been recalled due to bacterial contamination have had to struggle to regain
consumer confidence. Other examples include auto manufacturers whose products
have been recalled due to major malfunctions such as problematic braking systems
and airlines that have experienced a crash with many fatalities. External failure can
sometimes put a company out of business almost overnight.
Companies that consider quality important invest heavily in prevention and appraisal
costs in order to prevent internal and external failure costs. The earlier defects are
found, the less costly they are to correct. For example, detecting and correcting
defects during product design and product production is considerably less expensive
than when the defects are found at the customer site. External failure costs tend to be
particularly high for service organizations. The reason is that with a service the
customer spends much time in the service delivery system, and there are fewer
opportunities to correct defects than there are in manufacturing. Examples of external
failure in services include an airline that has overbooked flights, long delays in airline
service, and lost luggage.
To summarize all the above costs
Prevention costs are those Costs incurred while preparing and implementing a
quality plan.
Appraisal costs are those incurred Costs for testing, evaluating, and inspecting
quality.
Internal failure costs are Costs of scrap, rework, and material losses.
External failure costs are Costs of failure at customer site, including returns, repairs,
and recalls.
The following are the basic objectives of Total Quality Management:
Customer satisfaction
Performance superiority
Speed Cost Quality Dependability Flexibility
Some other objectives of Total Quality Management include:
Making the organization market and customer focused
Guiding the organization by its values, vision, mission, and goals set through
‘strategic planning processes.
Changing the organization from function focused to customer focused, where
customer priorities come first in all activities.
Making the organization flexible and learning oriented to cope with change
Making the organization believe in and seek continuous improvement as a new
way of life.
Creating an organization where people are at the core of every activity, and are
encouraged and empowered to work in teams.
Promoting a transparent leadership process to lead the organization to
excellence in its chosen field of business
Result achieved by setting appropriate objective should lead to:
Continuous improvement of the organizational processes and outputs, which
must be equal or superior to the competition;
Continual and relentless cost reduction, and value addition to products and
services;
Continual and relentless thrust for improvement of manufacturing processes,
products and services;
Creation of an organizational work culture whereby everyone is involved in the
process of customer satisfaction and value creation for its customers.
The evolution of total quality management (TQM)
The concept of quality has existed for many years, though its meaning has changed
and evolved over time. In the early twentieth century, quality management meant
inspecting products to ensure that they met specifications. Back to 2000, ISO revised
ISO 9001 to focus more on business planning, quality management and continuous
improvement. Other certification standards were created including AS9100 for
aerospace, TS16949 for automotive, ISO 14001 for environmental, TL9000 for
electronics, and ISO 17025 for laboratories. These standards all include the ISO 9001
elements.
Key Concepts of Total Quality Management include
structured system for exceeding customer expectations system that empowers employees drives higher profits drives lower costs continuous improvement. management centered approach on improving quality.
Improves competitive position increase adaptability to global markets elevated productivity superior global image eliminates defects Significantly reduces waste. reduces quality costs Improves management communication raises profits drives customer focus customer loyalty reduces design time.
Case study
Paradise Land Management Company Paradise Land Management owns and operates hotels and apartment complexes near a major metropolitan area. They want to expand operations in the near future, the goal being to increase net earnings before taxes. Two alternative expansion opportunities are under considerations: the Densmore complex and the Highgate project. Both projects involve the purchase of land on which apartment building would be constructed and operated.
The site for the Densmore complex is situated in a respectable, quite, sparsely populated residential neighborhood. Land for the 70-unit complex can be purchased for $60,000. Building costs are estimated at $1,680,000. Anuual maintenance costs would amount to $30,000. Apartment units would rent for $410 per month. Paradise is also conidering constructing a recreation facility nearby. It would cost $100,000 and would service both Densmore residents and the residents of the company owned Paradise west, the only existing apartment complex in the neighborhood. Paradise west, with 120 units renting for $290 per month, has had an average occupancy rate of 84% for the past three years. The addition of Densmore and the recreation facility are expected to increase Paradise West’s occupancy rate to 90% (probability 0.6) or 95% (probability 0.4). Densmore’s occupancy rate is expected to be 90% (probability 0.5), 85% (probability 0.3), or 80% (probability 0.2).
The highgate project calls for 400 units to be constructed on land costing $220,000 in a high density population neighborhood with many competing apartments. Building costs would be $4,200,000. Rental revenue per unit would be $240 per month; anuual operating costs would be $150,000. Highgate’s occupancy rate is expected to be 90% (probability 0.2), 80% (probability 0.5), or 70% (probability 0.3).
Q) What factors should be analyzed in making this capacity decision?
Ans Capacity planning is the process of determining the production capacity needed
by an organization to meet changing demands for its products.[1] In the context of
capacity planning, "capacity" is the maximum amount of work that an organization is
capable of completing in a given period of time. The phrase is also used in business
computing as a synonym for Capacity Management
A discrepancy between the capacity of an organization and the demands of its
customers results in inefficiency, either in under-utilized resources or unfulfilled
customers. The goal of capacity planning is to minimize this discrepancy. Demand for
an organization's capacity varies based on changes in production output, such as
increasing or decreasing the production quantity of an existing product, or producing
new products. Better utilization of existing capacity can be accomplished through
improvements in overall equipment effectiveness (OEE). Capacity can be increased
If production is scheduled to produce 500 pieces of product A on a machine having a
cycle time of 30 seconds and the OEE for the process is 85%, then the time to
produce the parts would be calculated as follows:
(500 Parts X 30 Seconds) / 85% = 17647.1 seconds The OEE index makes it easy to
determine whether we have ample capacity to run the required production. In this
example 4.2 hours at standard versus 4.9 hours based on the OEE index.
Repeating this process for all the parts that run through a given machine, it is possible
to determine the total capacity required to run production.
Capacity Available
If you are considering new work for a piece of equipment or machinery, knowing how
much capacity is available to run the work will eventually become part of the overall
process. Typically, an annual forecast is used to determine how many hours per year
are required. It is also possible that seasonal influences exist within your machine
requirements, so perhaps a quarterly or even monthly capacity report is required.
To calculate the total capacity available, we can use the formula from our earlier
example and simply adjust or change the volume accordingly based on the period
being considered. The available capacity is difference between the required capacity
and planned operating capacity.
Assignment C
1. Which of the following methods best considers intangible costs related to a location decision? a) Weighted method b) Location break-even analysis c) Transportation method d) Assignment method e) None of the above
2. What is the major difference in focus between location decisions in the service sector and in the manufacturing sector? a) There is no difference in focus b) The focus in manufacturing is revenue maximization, while the focus in service is cost minimization c) The focus in service is revenue maximization, while the focus in manufacturing is cost minimization d) The focus in manufacturing is on raw materials, while the focus in service is on labour
3. Service / retail / professional location analysis typically has a: a) Cost focus b) Revenue focus c) Labor focus d) Environmental focus
4. Efficiency is calculated as: a) Efficiency= Standard time * Actual time b) Efficiency= Standard time/ Actual time c) Efficiency= Actual time/ standard time d) None of the above
5. The factors involved in location decisions include a) Foreign exchange b) Attitudes c) Labor productivity d) All of the above e) None of the above
6. Industrial location analysis typically has a a) Cost focus b) Revenue focus c) Labor focus d) Environmental focus
7. Hotel chain find regression analysis useful in site location a)True b)False
8. The telemarketing industry seeks locations that have a) Good electronic movement of data b) Low cost labour c) Adequate availability of labour d) All of the above
9. Factors affecting location decisions include a) Proximity to markets, proximity to suppliers, proximity to athletic facilities b) Site costs, transportation availability, labour availability c) Average age of labour force, labour costs, and number of females in college d) Utility costs, zoning, altitude of city e) All of the above
10. An aggregate plan for a manufacturing firm includes consideration of: a) Production rates b) work-force levels c) Inventory holdings d) All of the above
11. A service firm's aggregate plan links the firm's strategic goals and objectives with detailed operational plans called: a) Production plan b) Staffing plan c) Work-force schedule d) None of the above
12. Utilization is calculated as: a) Utilization = Actual hours*Scheduled available hours b) Utilization = Actual hours/ Scheduled available hours c) Utilization = Actual hours+Scheduled available hours d) None of the above
13. Which of the following statements does NOT apply to a production plan? a) Plans are consistent with company's strategic goals and objectives b) Enables the assessment of financial and physical resource needs without excessive detail c) Serves as a bridge between the strategic and operational plans d) Provides a view of detailed work-force schedules
14. The time horizon for an aggregate plan is typically: a) 0 - 3 months b) 3 - 18 months c) 24 - 60 months d) None of the above
15. A for-profit service may expect to encounter which of the following sequence of plans? a) Business plan; staffing plan; work-force schedule b) Business plan; production plan; work-force schedule c) Financial plan; staffing plan; master production schedule d) Annual plan; production plan; master production schedule
16. The operations area input to the aggregate plan includes: a) Demand forecasts b) Cost data c) work-force capacities d) Product design changes
17. Aggressive alternatives for coping with demand requirements include: a) Anticipation inventory b) Creative pricing c) Employee hiring and layoffs d) Use of subcontractors
18. A reactive strategy that is sometimes called the capacity strategy may be characterized as: a)Chase #1: vary work-force level to match demand b) Chase #2: vary output rate to match demand c) Level #1: constant work-force level d)Level #2: constant output rate
19. Planned capacity is: a) Planned capacity = Demonstrated capacity * Efficiency * Utilization factor b) Planned capacity = Designed capacity * Efficiency / Utilization factor c) Planned capacity = Designed capacity * Efficiency * Utilization factor d) None of the above
20. The aggregate planning strategy that is most likely to impact the productivity of manufacturing workers, adversely, is: a) Hiring of temporary workers b) Use of overtime c) Layoff of workers d) Building anticipation inventory
21. A linear programming model CANNOT be used when which of the following are true? a) An optimal production plan is desired b) The values of decision variables are fractional c) A set of linear constraints may be defined d) Cross product relationships exist between two or more decision variables
22. Basic element of operations Management is: a) Customer demand b) Operating system/Process c) Process capacity d) All of the above
23. The transportation method may be used to determine the costs of alternative strategies for anticipation inventory when which of the following data are available? a) work-force capacity per planning period b) Aggregate demand per planning period c) Beginning inventory d) All of the above
24. Which of the following statements are true about anticipation inventory? a) Inventory increases during periods of light demand b) Use of anticipation inventory is a reactive alternative to arrive at an acceptable aggregate plan c) Increase in anticipation inventory leads to increases in pipeline inventory d) Both a and b
25. When following a utilization strategy, which alternative relies on external sources of production? a) Overtime/under time b) Subcontracting c) Back orders d) Stock outs
26.A major department store initiates a business plan that gets translated into an operational plan called a _______________. a) Production plan b) Staffing plan c) Master production schedule d) Work-force schedule
27.An appliance manufacturer initiates a business plan that gets translated into an operational plan called a _______________. a) Production plan b) Staffing plan c) Master production schedule d) Work-force schedule
28. Which one is not a factor for make or buy decisions: a) Cost b) Quality c) Labor d) Plant location
29. Which one is correct? a) Designed capacity > Planned capacity > Demonstrated capacity b) Designed capacity > Demonstrated capacity > Planned capacity c) Designed capacity = Demonstrated capacity > Planned capacity d) All of the above
30. Plant Productivity is: a) Productivity = Inputs/Outputs b) Productivity = Inputs*Outputs c) Productivity = Outputs//Inputs d) None of the above
31A service encounter includes a) Face-to-face interaction b) Customers and a building c) Customers and advertising d) All of the above
32. Which function typically employs more people than any other functional area? a) Information Systems b) Finance c) Operations d) Marketing
33. The inputs to a transformation process include all of the following except a) Materials b) People c) Assembly d) Information
34. An assembly line is an example of a) A product layout b) A process layout c) A fixed position layout d) An intermittent organization
35. Which of the following characteristics is most typical of a continuous manufacturing organization? a) The firm manufactures customized product. b) The firm has a low volume of production c) The firm has a relatively low unit cost of production d) The firm creates many different products with many different characteristics
36. Which type of processing system tends to produce the most product variety? a) Assembly
b) Job shop c) Batch d) Continuous
37. Buying on the basis of price alone risks problems in each of the following categories except a) Capacity b) Quality c) Quantity d) Supplier
38Which one is not a factor for make or buys decisions: a) Cost b) Quality c) Labor d) Plant location
39 JIT is a a) Push system b) Pull system c) Both d) None of these
40. The word management in quality assurance describes many different functions, encompassing a policy management a) HRM, Safety control b) Component control & management of other resources c) None of the above
