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PRODUCTION AND OPERATIONS MANAGEMENT SHARDA UNIVERSITY Program :MBA Term: II Credits: 3 PREM NATH 4/18/20151SHARDA.

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Presentation on theme: "PRODUCTION AND OPERATIONS MANAGEMENT SHARDA UNIVERSITY Program :MBA Term: II Credits: 3 PREM NATH 4/18/20151SHARDA."— Presentation transcript:

1 PRODUCTION AND OPERATIONS MANAGEMENT SHARDA UNIVERSITY Program :MBA Term: II Credits: 3 PREM NATH PANDAYpremnathpa@gmail.com 4/18/20151SHARDA

2 Module Title: PRODUCTION AND OPERATIONS MANAGEMENT - Program :MBA Term: II Credits: 3 4/18/20152SHARDA

3 LearningHours Contact 40 Guided Study 25 Assessment 10 Total 75 4/18/20153SHARDA

4 OBJECTIVE OF THE PAPER: The objective of this paper is to help the students to become effective managers in the competitive global environment. After studying it the students placed in various organizations whether manufacturing or service are supposed to take care of the very basic unit of the work that is process. They need to accept the challenge of both managing and understanding the interrelatedness of the enterprise wide activities. Summing up the aim of this course is to prepare the truly global operation manager equipped with all type of weapons to take care of the limited resources of an enterprise and transform them to the revenue and profit. PREREQUISITE: The basic knowledge of elementary math and statistics at least up to class XII level 4/18/20154SHARDA

5 Topics Cover Lec ture s UNIT 1 1.Introduction Meaning and function of Production Management, Production system Production Organization Chart, Decision Making in Production Operation, Production Departments with various other departments and their importance. 2. Strategies Responsibility of Production Manger. Interdependencies of Operation strategies and decision making produce to stock and produce to order strategies, concept of using mixed strategies, advantages of having mixed strategies. 8 UNIT 2 3. Long term planning/strategy Facility location and facility layout. Factors affecting the location of facility, different types of layouts, product focused, process Focused, cellular and mixed layouts. Introduction to the methods for determining the location and layout of a facility. 4. Intermediate term planning/ strategy Capacities Planning, aggregate planning, hire and fire strategy etc. 3. Long term planning/strategy Facility location and facility layout. Factors affecting the location of facility, different types of layouts, product focused, process Focused, cellular and mixed layouts. Introduction to the methods for determining the location and layout of a facility. 4. Intermediate term planning/ strategy Capacities Planning, aggregate planning, hire and fire strategy etc. Identification and segregation of the operations based on the strategy selected 8 UNIT3 5. Shop floor control Resource planning, sequencing and scheduling, concept of JIT, manufacturing and assembly line balancing, preparation of Gantt Chart. 6. Project Management CPM, PERT forward pass and backward pass computations, resource leveling, resource allocation, and crashing of the project. 8 UNIT4 7. Inventory Management Inventory definition, types and models, managing the inventory, classification of inventories, MPS, MRP, ERP. 8. Work Study & Productivity Productivity improving techniques, Cost reduction approach, Work and Method study, Work Order, Production Control and its importance 8 UNIT 5 9. Quality Concepts Production Quality Concepts and Internal Customer Approach, Introduction to the tools of quality management. 10. Safety Management Evolution of safety concepts, Electrical & Chemical hazards, ionizing and non ionizing Radiation, Personal protection, Material handling and shop floor design concepts, Environmental safety, fire prevention, introduction to OHSAS standards. 8 4/18/20155SHARDA

6 PRODUCTION AND OPERATIONS MANAGEMENT 5. Shop floor control: Resource planning, sequencing and scheduling, concept of JIT, manufacturing and assembly line balancing, preparation of Gantt Chart. 6. Project Management CPM, PERT forward pass and backward pass computations, resource leveling, resource allocation, and crashing of the project. 4/18/20156SHARDA

7 Shop Floor Control Operations Management - Shop Floor Control The control of work in progress is one of the most complex day-to-day tasks facing the operations manager. Planning capacity, ensuring that bottlenecks are avoided and generating high levels of shop floor productivity are all part of the challenge. In today's fast moving environment knowing the current status of jobs out there on the factory floor is essential. To achieve excellence in all these tasks requires very good systems and their effective operation. A system of computers and controllers used to schedule, dispatch and track the progress of work orders through manufacturing based on defined routings. 4/18/20157SHARDA

8 Resource Planning Unparalleled Visibility into Manufacturing Operations: One can’t improve what one can’t see. If obsolete inventory blocks a doorway, there’s an obvious problem. The key is to make waste “visible” long before that happens. Likewise, if the most up-to- date release requirements from the customer are not easily available, there’s no way to meet shipping deadlines. An innovative Resource Planning system provides that crucial real-time insight, making the outdated, overnight batch processing once common with legacy Resource Planning solutions a thing of the past. 4/18/20158SHARDA

9 Resource Planning Full visibility means tracking key events as they happen and then putting the right information into the hands of the right people at the right time— whether it’s the machine operators tracking part numbers on a touch screen on the shop floor, or the accounting manager viewing global account receivables in a custom dashboard. Capturing and validating data at the point of origination makes for timely, accurate and, therefore, actionable information for all other users in the enterprise. 4/18/20159SHARDA

10 © Oxford University Press 2007. All rights reserved. 10 Reasons for demand forecasting Reasons for Demand Forecasting To maximize gains from events external to the organization (from the external environment) To minimize losses associated with uncontrollable events external to the organization To develop policies that apply to people who are not part of the organization To offset the actions of competitor organizations To develop administrative plans and policy internal to an organization (e.g. personnel or budget) In decision making for Facility Capacity Planning and for Capital Budgeting As an input to Aggregate Production Planning and / or Material Requirements Planning (MRP) To maximize gains from events, which are the results of actions taken by the organization In order to perform adequate staffing to support production requirements 4/18/2015SHARDA

11 © Oxford University Press 2007. All rights reserved. 11 Methods of demand forecasting Demand Forecasting Qualitative Analysis Quantitative Analysis Time Series Analysis Causal Analysis Customer Survey Sales Force Composite Executive Opinion Delphi Method Past Analogy Simple Moving Average Trend AnalysisSimple Exponential Smoothing Holt’s Double Exponential Smoothing Winters’s Triple Exponential Smoothing Forecast by Linear Regression Analysis 4/18/2015SHARDA

12 © Oxford University Press 2007. All rights reserved. 12 No growth or decline trend; no seasonal variation – simple (or weighted) moving average; simple exponential smoothing Time Actual Demand No growth or decline trend; seasonal variation present – simple moving average Linear growth (or decline) trend; no seasonal variation –Holt’s double exponential smoothing Linear growth (or decline) trend; seasonal variation present – Winters’s triple exponential smoothing; linear regression analysis Different Types of Demand Patterns and Suitable Time Series Forecasting Methods 4/18/2015SHARDA

13 © Oxford University Press 2007. All rights reserved. 13 Forecasting by Linear Regression Analysis Time Actual Demand / Forecast 0 Best fit line with slope b y = a + b. x (Least squares method) using the past demand data Scatter Diagram and Best Fit Line (Forecasting by Linear Regression Analysis) Best fit line is extrapolated to find the forecast for the future Forecast y intercept = a 4/18/2015SHARDA

14 © Oxford University Press 2007. All rights reserved. 14 Measurement of Forecasting Errors Running Sum of Forecast Errors (RSFE) Mean Forecast Error (MFE) Mean Absolute Deviation (MAD) Mean Squared Error (MSE) Mean Absolute Percentage Error (MAPE) Tracking Signal (TS) 4/18/2015SHARDA

15 © Oxford University Press 2007. All rights reserved. 15 Forecast Control Limits Central Line (CL) Upper Control Limit (UCL) Lower Control Limit (LCL) Forecast Control Limits 0 - 3. s 0 + 3. s Targeted or Aimed-at Mean Forecast Error = 0 Time Forecast Error 4/18/2015SHARDA

16 PRODUCTION PLANNING AND CONTROL Manufacturing planning and control entails the acquisition and allocation of limited resources to production activities so as to satisfy customer demand over a specified time horizon. As such, planning and control problems are inherently optimization problems where the objective is to develop a plan that meets demand at minimum cost or that fills the demand that maximizes profit. Manufacturing planning and control address decisions on the acquisition, utilization and allocation of production resources to satisfy customer requirements in the most efficient and effective way. Typical decisions include work force level, production lot sizes, assignment of overtime and sequencing of production runs. 4/18/201516SHARDA

17 Planning Decisions Any planning problem starts with a specification of customer demand that is to be met by the production plan. In most contexts, future demand is at best only partially known, and often is not known at all. Consequently, one relies on a forecast for the future demand. To the extent that any forecast is inevitably inaccurate, one must decide how to account for or react to this demand uncertainty. A key choice is what planning decisions to include in the model. By definition, production-planning models include decisions on production and inventory quantities. But in addition, there might be resource acquisition and allocation decision, such as adding to the work force and upgrading the training of the current work force. 4/18/201517SHARDA

18 AGREGATE PLANNING Aggregate planning is an operational activity which does an aggregate plan for the production process, in advance of 2 to 18 months, to give an idea to management as to what quantity of materials and other resources are to be procured and when, so that the total of the organization is kept to the minimum over that period.operationalproductionmanagement resources 4/18/201518SHARDA

19 AGREGATE PLANNING The quantity of outsourcing, subcontracting of items, overtime of labor, numbers to be hired and fired in each period and the amount of inventory to be held in stock and to be backlogged for each period are decided. All of these activities are done within the framework of the company ethics, policies, and long term commitment to the society, community and the country of operation.outsourcingsubcontractingovertimeinventory ethics 4/18/201519SHARDA

20 AGREGATE PLANNING Aggregate planning has certain pre-required inputs which are inevitable. They include: Information about the resources and the facilities available. Demand forecast for the period for which the planning has to be done.Demand Cost of various alternatives and resources. This includes cost of holding inventory, ordering cost, cost of production through various production alternatives like subcontracting, backordering and overtime.backordering Organizational policies regarding the usage of above alternatives. 4/18/201520SHARDA

21 AGREGATE PLANNING "Aggregate Planning is concerned with matching supply and demand of output over the medium time range, up to approximately 12 months into the future. Term aggregate implies that the planning is done for a single overall measure of output or, at the most, a few aggregated product categories. The aim of aggregate planning is to set overall output levels in the near to medium future in the face of fluctuating or uncertain demands. Aggregate planning might seek to influence demand as well as supply." 4/18/201521SHARDA

22 22 Definition Aggregate Production Planning is planning about how many units of the product are to be produced on a weekly or monthly basis for the coming six to eighteen months. This plan should be in line with the overall business plan of the company. 4/18/2015SHARDA

23 23 Demand Forecasts provided by the Marketing Department Business Plan provided by the Top Management Strategies for Pure Aggregate Planning considered by the Production Manager Level Output Rate PlanChase PlanVarying Utilization Rate Plan A combination of the pure planning strategies called the Intermediate Plan is prepared by the Production Manager Disaggregating of the Aggregate Production Plan (Intermediate Plan) is done in order to arrive at a Master Schedule Master Scheduling ProcessBeginning Inventory Status Customer orders committed Tentative Master Production Schedule (MPS) Available-to-promise InventoryProjected on-hand Inventory Tentative MPS is run through the Material Requirements Planning (MRP) Processing Logic to test for feasibility Rough-cut capacity planning Revised Master Production Schedule is fixed by using Time Fences Steps in Effective Aggregate Planning Process 4/18/2015SHARDA

24 24 Production Planning Strategies Level Output Rate Plan (we vary the inventory size and keep workforce size and utilization of workers constant) Chase Plan (we vary the workforce size according to demand and keep the utilization of workers and inventory size constant) Varying Utilization Plan (we vary the utilization of workers and keep workforce size and inventory size constant) 4/18/2015SHARDA

25 25 Material Requirements Planning (MRP) Just-in-Time (JIT) Supply Chain Management (SCM) 4/18/2015

26 SHARDA 26 Material Requirements Planning (MRP) Material Requirements Planning (MRP) is a system for planning the future requirements of dependent demand items. 4/18/2015

27 SHARDA 27 Inputs & Outputs in MRP Bill of Materials (BOM) Master Production Schedule (MPS) Inventory Status MRP Processing Logic (Computer-based/ Manual) Order Changes Report Planned Orders Report Order Release Report INPUTS OUTPUTS Inputs and Outputs in Material Requirements Planning 4/18/2015

28 SHARDA 28 Calculation of Order Size in MRP There are four methods of calculating the order size in MRP. These are: Lot-for-lot Method EOQ Method Least Total Cost Method Least Unit Cost Method 4/18/2015

29 SHARDA 29 Just-In-Time (JIT) Schonberger defines the JIT system as to : ”Produce and deliver finished goods just in time to be sold, sub-assemblies just in time to be assembled into finished goods, and purchased materials just in time to be transformed into fabricated parts”. 4/18/2015

30 SHARDA 30 The Concept of JIT Manufacturing Revise factory layouts Reduce set-up times Implement a pull system of production Better coordination with suppliers 4/18/2015

31 SHARDA 31 Kanban Visual System Workstation 1 (WS 1) Workstation 3 (WS 3) Workstation 2 (WS 2) Car 1 Car 3 Car 2 Racks containing bins of components required at WS 1 Conveyor The Assembly Line Manufacturing Cell 1 (MC 1) Manufacturing Cell 2 (MC 2) Manufacturing Cell 3 (MC 3) Racks containing bins of components manufactured at MC 1 Racks containing bins of components manufactured at MC 2 Racks containing bins of components manufactured at MC 3 Racks containing bins of components required at WS 2 Racks containing bins of components required at WS 3 Store Work-In-Process Inventory Step 1 Mizosomashi or supply worker (Step 2) Step 3 Step 4 4/18/2015

32 SHARDA 32 Delivery to Customer s Warehousin g Products Assembly Processe s Intermediat e Processes Initial Process Warehousin g Materials Material Supplier Customer’s Kanban Assembly Kanban Parts Processing Kanban Set-up signal Kanban Kanban for ordering materials Sub- contractor Kanban Delivery Schedule Sheet Definite warehousin g schedule sheet Order sheet for sub- contractor manufactured parts Order sheet for in-house manufactured parts Material forwarding notice Material order sheet Receptio n & Delivery Suppliers Kanban FlowProducts Flow Use of Kanban across the Supply Chain 4/18/2015

33 SHARDA 33 Benefits of JIT Heightened awareness of problems & causes Reduced buffer stocks and/or operators Fast feedback on defects Ideas for cutting lot sizes Ideas for improving JIT delivery performance Ideas for controlling defects Lot size reductions JIT production Scrap/ quality control Smoother output rates Less material waste Less stock in the system Less indirect cost Fewer rework hours Less material, labor, and indirect inputs for the same or higher output = higher productivity Less inventory in the system = faster market response, better forecasting, less administration 4/18/2015

34 SHARDA 34 Product forecasting and control Business forecasting Resource planning Customer order entry Inventory status (end items) Master production schedule Capacity planning Materials requirement planning Capacity requirement planning Component s forecasting Inventory status (components) Bill of materials Shop schedulin g Capacity control Kanba n system Group technology Shop-floor control JIT productionJIT distribution Vendor capacity control Purchase order scheduling Purchasin g JIT deliveries Hybrid MRP- JIT Production System Demand Manageme nt Inventory Management Capacity Manageme nt Quality Manageme nt PLANNINGPLANNING EXECUTIONEXECUTION TPM TPC 4/18/2015

35 SHARDA 35 Japanese Supply Chain Management in Practice: The Keiretsu General Motors HondaNissan FordChrysler B BBB BB MS 1MS 2 MS 1 MS 2 S1S1 S2S2 S1S1 S1S1 S1S1 S1S1 S1S1 S2S2 S2S2 S2S2 S2S2 S2S2 SnSn SC n SnSn SnSn SnSn SnSn SnSn SC 1 SSS The Japanese Keiretsu (Oligopoly Competition) The U. S. Traditional Supply Network S SnSn SC n MSB Trading Firm - Shosna Minor Supplier SubcontractorMajor Supplier Bank Codes used:- Toyota Supply Chain Management (SCM) 4/18/2015

36 SHARDA 36 A comparison of the Japanese JIT Supply Chain Management and the Traditional US purchasing Purchase lot size Supplier selection Evaluating the supplier Receiving inspection Negotiating and bidding process Mode of transportation Product specifications Paperwork Packaging 4/18/2015

37 SHARDA 37 Purchasing, Procurement, and Supply Chain Management Purchasing refers to the actual buying of materials and those activities associated with the buying process. Procurement, on the other hand, has a broader meaning and includes purchasing, transportation, warehousing, and inbound receiving. Procurement is a closed-loop process that begins with the requisition and ends with payment. Supply Chain Management is a transition from purchasing and procurement towards a more strategic focus, which involves suppliers as strategic partners in warding off the competition. 4/18/2015

38 SHARDA 38 Tactical Focus Purchasing Activities Procurement Activities Supply Management Activities Strategic Focus 1. Identification of purchasing needs 2. Interaction with sales persons 3. Identification of suppliers 4. Analysis of purchase tenders 5. Negotiations 6. Supplier selection & issuance of P.O. 7. Purchase contract administration 8. Maintaining purchase records 1. Participation in generation of specifications of required materials 2.Conducting extensive material market research 3.Management of supplier quality 4. Purchase of inbound transportation 5.Management of investment recovery (Salvage of surplus and scrap) 6. Management of value analysis 2. Early Supplier Involvement (ESI) in product design through concurrent engineering approach 1. Use of cross- functional teams in supplier qualification & selection 3. Strategic alliances with suppliers to control quality & costs 4. Monitoring of supply environment for opportunities & threats 6. Strategic acquisition plans for all important materials 5. Participation in Corporate Strategic Planning and look for continuous improvements in the supply chain Activities in Supply Chain Management 4/18/2015

39 SHARDA 39 Tendering & Vendor Rating Tendering is the process of various suppliers (vendors) submitting quotations of prices and other information (called tenders) to a buyer in response to the invitation of such details from the buyer in the form of advertising etc. After receiving all such tenders, the buyer firm has to perform the rating of various vendors on the basis of information supplied by them and the criteria decided upon by the buyers. This process is called vendor rating. 4/18/2015

40 SHARDA 40 Criteria for vendor rating Criteria for Vendor rating The reputation of vendor in terms of quality of products/ services supplied by him After-sales service of the vendor in terms of repair of equipment and replacement of spare parts (if an equipment supplier) or replacement of defective items supplied Price quoted by the vendor along with any discounts offered Location of the vendor in close vicinity of the firm helps in emergencies of processing rush orders. It becomes very important in JIT settings. Inventory policy of the vendor – in JIT settings, the buyers prefer that their vendors should also have JIT practices with negligible inventory. For equipment suppliers, the buyers prefer vendors with sufficient spare parts inventory (useful in case of equipment breakdown) Sole dependence upon the buyer (vendor supplies to only one buyer and no one else) – the buyer has better control over the supplier in terms of quality, pricing, supply schedules, etc. 4/18/2015

41 SHARDA 41 E-procurement and Operating Resource Management Employee InternetSupplier 2. The employee browses the suppliers list on MS Market (on intranet) and chooses a supplier 3. The employee finds the desired product on the supplier’s catalog on MS Market 1. The supplier regularly updates information in its catalog on MS Market (on company’s intranet) through the internet 4. The employee checks the availability status of the product on the supplier’s catalog on MS Market and fills-in the order form 5. A dialog box appears on the screen asking the employee to confirm the order. The employee confirms the order by clicking “Yes”. 6. MS Market sends email to the employee’s manager for approval of the order 7. On receiving the approval of the manager, MS Market sends the purchase order email to the supplier and a copy to the accounts department 8. The supplier sends the order acknowledgement to the employee 9. The supplier ships the product to the employee 10. The employee receives the product and the accounts department sends the payment to suppliers E-procurement through MS Market 4/18/2015

42 Just-in-time Just-in-time (acronym: JIT) production is a concept to reduce work in process with respect to a continuous configuration of product. Just In Sequence (acronym: JIS) is a similar concept with respect to a scheduled variety in sequence of configurations for products.Just-in-time (acronym: JIT) production is a concept to reduce work in process with respect to a continuous configuration of product. Just In Sequence (acronym: JIS) is a similar concept with respect to a scheduled variety in sequence of configurations for products.Just-in-timeJust In SequenceJust-in-timeJust In Sequence Just-in-time (JIT) is an inventory strategy that strives to improve a business's return on investment by reducing in-process inventory and associated carrying costs. To meet JIT objectives, the process relies on signals between different points in the process.Just-in-time (JIT) is an inventory strategy that strives to improve a business's return on investment by reducing in-process inventory and associated carrying costs. To meet JIT objectives, the process relies on signals between different points in the process.businessreturn on investmentinventorycarrying costsbusinessreturn on investmentinventorycarrying costs 4/18/201542SHARDA

43 APPLICATION OF JIT The philosophy of JIT is simple: inventory is waste. JIT inventory systems expose hidden causes of inventory keeping, and are therefore not a simple solution for a company to adopt. The company must follow an array of new methods to manage the consequences of the change. The ideas in this way of working come from many different disciplines including statistics, industrial engineering, production management, and behavioral science. The JIT inventory philosophy defines how inventory is viewed and how it relates to management. Inventory is seen as incurring costs, or waste, instead of adding and storing value, contrary to traditional accounting. This does not mean to say JIT is implemented without an awareness that removing inventory exposes pre- existing manufacturing issues. This way of working encourages businesses to eliminate inventory that does not compensate for manufacturing process issues, and to constantly improve those processes to require less inventory. Secondly, allowing any stock habituates management to stock keeping. Management may be tempted to keep stock to hide production problems. These problems include backups at work centers, machine reliability, process variability, lack of flexibility of employees and equipment, and inadequate capacity. In short, the just-in-time inventory system focus is having “the right material, at the right time, at the right place, and in the exact amount”, without the safety net of inventory. The JIT system has broad implications for implementers. 4/18/201543SHARDA

44 J I T Transaction cost approach JIT reduces inventory in a firm. However, a firm may simply be outsourcing their input inventory to suppliers, if those suppliers don't use JIT (Naj 1993). Newman (1993) investigated this effect and found that suppliers in Japan charged JIT customers, on average, a 5% price premium. 4/18/201544SHARDA

45 J I T Environmental concerns During the birth of JIT, multiple daily deliveries were often made by bicycle. Increased scale has required a move to vans and lorries (trucks). Cusumano (1994) highlighted the potential and actual problems this causes with regard to gridlock and burning of fossil fuels. This violates three JIT waste guidelines: gridlockfossil fuels Time—wasted in traffic jams Inventory—specifically pipeline (in transport) inventory Scrap—fuel burned while not physically moving 4/18/201545SHARDA

46 J I T Price volatility JIT implicitly assumes a level of input price stability that obviates the need to buy parts in advance of price rises. Where input prices are expected to rise, storing inventory may be desirable. 4/18/201546SHARDA

47 J I T Quality volatility JIT implicitly assumes that input parts quality remains constant over time. If not, firms may benefit from hoarding high quality inputs. 4/18/201547SHARDA

48 J I T Demand stability Karmarker (1989) highlights the importance of relatively stable demand, which helps ensure efficient capital utilization rates. Karmarker argues that without significantly stable demand, JIT becomes untenable in high capital cost production. In the U.S., the 1992 railway strikes caused General Motors to idle a 75,000-worker plant because they had no supplies coming in. 4/18/201548SHARDA

49 JIT Implementation Design Based on a diagram modeled after the one used by Hewlett-Packard’s Boise plant to accomplish its JIT program. 4/18/201549SHARDA

50 1) F Design Flow Process - F Redesign / relay out for flow – L Reduce lot sizes – O Link operations – W Balance workstation capacity – M Preventative maintenance – S Reduce Setup Times 4/18/201550SHARDA

51 2) Q Total quality control - C worker compliance - I Automatic inspection - M quality measures – M fail-safe methods - W Worker participation 4/18/201551SHARDA

52 3) S Stabilize Schedule - S Level Schedule - W establish freeze windows - UC Underutilize Capacity 4/18/201552SHARDA

53 4) K Kanban Pull System - D Demand pull - B Backflush - L Reduce lot sizes 4/18/201553SHARDA

54 5) V Work with vendors - L Reduce lead time - D Frequent deliveries - U Project usage requirements - Q Quality Expectations 4/18/201554SHARDA

55 6) I Further reduce inventory in other areas - S Stores - T Transit - C Implement Carroussel to reduce motion waste - C Implement Conveyor belts to reduce motion waste 4/18/201555SHARDA

56 7) P Improve Product Design - P Standard Production Configuration - P Standardize and reduce the number of parts - P Process design with product design - Q Quality Expectations 4/18/201556SHARDA

57 Benefits Set up times are significantly reduced in the factory. Cutting set up time allows the company to improve their bottom line, be more efficient, and focus on other areas that may need improvement. This allows the company to reduce or eliminate inventory for "changeover" time. Employees who possess multiple skills are used more efficiently. Having employees trained to work on different parts of the inventory cycle allows companies to move workers where they are needed. 4/18/201557SHARDA

58 Benefits JIT provides better scheduling and work hour consistency. If there is no demand for a product at the time, workers don’t have to work. This saves the company money, either by not having to pay workers or by having them focus on other work. There is an increased emphasis on supplier relationships. A company without inventory does not want an inventory system brake that creates a supply shortage. This makes supplier relationships extremely important. 4/18/201558SHARDA

59 Benefits Supplies come in around the clock, which keeps workers productive and businesses focused on turnover. Focusing management on deadlines makes employees work hard to meet company goals, in pursuit of job satisfaction, promotion, or even higher pay. 4/18/201559SHARDA

60 Problems just-in-time operation leaves suppliers and downstream consumers open to supply shocks and large supply or demand changes. For internal reasons, Just-in-time is a means to improving performance of the system, not an end.supply shocks 4/18/201560SHARDA

61 Kanban Kanban (in kanji also in katakana, where kan, means "visual," and ban, means "card" or "board") is a concept related to lean and just-in-time (JIT) production. The Japanese word kanban is a common term meaning "signboard" or "billboard".kanjikatakanaleanjust-in-timesignboardbillboard According to Taiichi Ohno, the man credited with developing JIT, kanban is a means through which JIT is achieved.Taiichi OhnoJIT 4/18/201561SHARDA

62 Kanban Kanban is a signaling system to trigger action. As its name suggests, kanban historically uses cards to signal the need for an item. However, other devices such as plastic markers (kanban squares) or balls (often golf balls) or an empty part-transport trolley or floor location can also be used to trigger the movement, production, or supply of a unit in a factory. 4/18/201562SHARDA

63 Questions? 4/18/201563SHARDA

64 Demand for products & services Customers & Consumers Supply of products & services Resources & suppliers Meet demand instantaneously: products and services are delivered (both to production & to the customer) only as and when they are needed......With the best appropriate quality, and no waste! Production, processing & assembly Just-in-time planning and control JIT Philosophy: 4/18/201564SHARDA

65 JIT as a total management commitment: a philosophy for all operations A methodology for planning & control “Pull” scheduling Kanban control Levelled scheduling: Heijunka Mixed production runs Synchronisation across all production lines Reduction of inventories Shortening the cash cycle Eliminate waste A set of techniques... Basic transferable standards of work & quality Design for manufacture Supplier inclusion Focus on operations & processes Small single-stage machines Attention to layout & flow Total preventive maintenance Set-up time reduction Total people involvement Visibility Involve everyone Continuous improvement 4/18/201565SHARDA

66 JIT implementation benefits Main benefits:  Short cycle times  Work in progress reduced  Manufacturing facilities designed to reduced production set-up times  Quality problems quickly made visible  Short lead-times increase responsiveness to customer-demand  «Pull» systems require fast and clear lines of communication Waste and delay eliminated:  Focus on simplifying production process  Total preventive maintenance  Efficient flow layout  Reduced set-up times  Data visibility  Partnership-based supply relationships  Inventory control systems - rapid response  Continuous improvement TQM - Total Quality Management:  Senior Management committed  Focus on defect prevention  Quality of supplies ensured at the source People involvement:  JIT managers empower their staff  All personnel, particularly operators and clerical staff help to develop creative solutions  JIT emphasises team goals and cross-functional working  A multi-skilled work force M11:U3:3.3-34 4/18/201566SHARDA

67 The JIT implementation wheel JIT Standardise manufacturing design Increase preventive maintenance Implement Total Quality Control Work on reducing set-up times Review & change plant layout Change to smaller machines Train workforce to be more flexible Implement Pull scheduling Steadily reduce lot sizes High visibility brings improvement Adopt JIT purchasing & SCM Implementation starts here 4/18/201567SHARDA

68 JIT implementation challenges 1. Changing workforce and management attitudes (e.g., regarding teamwork and empowerment) 2.Responding to their education and training needs 3.Suppliers or logistics links cannot support JIT 4. Managing & synchronising IT support in the company, its suppliers and customers 5.Total inventory reduction is often not achieved 6. Catastrophic shutdowns and inability to meet customer delivery expectations 4/18/201568SHARDA

69 Management focuses on producing only what is needed, when it is needed Lower capacity utilisation - focus on quality & involvement Production rate driven by demand of next stage, no build-up of WIP inventory Low inventory, so problems surface and are solved - focus on delivery Fewer stoppages, higher order fulfilment and less stress The JIT approach to production and control 4/18/201569SHARDA

70 Best of JIT and MRP systems Human & organisational elements Product design for manufacture Process design Manufacturing planning & control system JIT 4/18/201570SHARDA

71 Combining JIT and MRP systems in practice Product & service delivery Final assembly Production Cell3 Production Cell2 Production Cell1 Continuous Process 1 Goods inwards preparation Purchasing Orders management system Master Production Schedule Factory assembly schedule Materials Requirements Planning Top-level BOM Continuous & ready- use stock Resources & suppliers MRP is used to provide materials planning and the final assembly schedule. Kanbans [ ] are used to control internal production flow. 4/18/201571SHARDA

72 J I T Transaction cost approach JIT reduces inventory in a firm. However, a firm may simply be outsourcing their input inventory to suppliers, if those suppliers don't use JIT (Naj 1993). Newman (1993) investigated this effect and found that suppliers in Japan charged JIT customers, on average, a 5% price premium. 4/18/2015SHARDA72

73 4/18/2015SHARDA73 Inventory requirements in an organization are closely related to the production or consumption systems. JIT (Just- in-Time) is a production technique which helps in reducing inventory. The technique developed by Toyota Company in Japan has now spread all over the world. JIT system is an integrated manufacturing and supply system aimed at producing the highest quality and, at the same time, the lowest cost products through the elimination of waste. JIT integrates and controls the entire process. It specifies what should be stored, moved, operated on or inspected and precisely when it should be done. Just-in-Time production continuously strives to improve production processes and methods. It attempts to reduce, and ultimately to eliminate inventories because high inventories tend to cover up production problems. Various components of a JIT production system are given in figure

74 4/18/2015SHARDA74 Components of JIT Production System FILL-UP: A PULL Type Ordering System Contrary to the conventional system where a central controller co-ordinates material flow from the first to the last stage of manufacturing, a pull system triggers action from the market demand. As soon as an order is received from the market, the dispatch section places an. order on final assembly section who in turn to sub-assembly section and so on to the stage of withdrawal of materials from stores for manufacturing. A chain reaction starts where-in each user is responsible to withdraw materials from the preceding operation eliminating the need for the central controller. A concept chart showing the conventional push type ordering system and the new pull type ordering system is given in Fig. The production stages, storage stages, information and material flow channels have been shown explain in both the systems. The system is flexible and is adaptable to quick changes in demand. Only the required quantity of materials for use during a ~ay or a part thereof is drawn from the previous operation, thereby leaving almost nil inventory at work stations at the end of the day. The chances of accumulation of process inventory in a Push System are more since total output of a work station is pushed to next work station whether required or not.

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78 4/18/2015SHARDA78 Production Smoothing A system of forecasting demand for next 3 months, preparation of master production schedule and monthly production planning with a provision to adopt monthly demand changes. Simultaneously, a system of 10 day advance booking of firm orders from dealers, co-ordinating with sub-contractors, balancing shop production, preparation of daily dispatch schedules and provision to incorporate last minute changes in daily demand should be well prepared.

79 4/18/2015SHARDA79 KANBAN System A Kanban is a hand sized signboard contained in polypack that is the key control tool for JIT production. Kanbans are of two types i.e. "Production Instruction Kanban" and "Pick- Up or Withdrawal Kanban". Production Instruction Kanban indicates how many and what kind of parts have been passed from one place on the production line to the next place. It is a green signal to begin processing exactly th same type and number of items that were passed along. Pick-up Kanban is of two types. One called 'Interprocess Kanban' used within the plant for picking up needed parts from earlier process jobsite to the next process jobsite. Other type is 'supplier Kanban' used for picking up needed items from outsid suppliers and is used the same way as inter-process pick up Kanbans. Steps involved in using the two Kanbans and their flows as well as the flow of physical units of product are explained in figure. It may be seen that the number of withdrawal· Kanbans lying in post at "1" indicate the units consumed in subsequent process assembly line and therefore creation of the demand for equal number of units to be provided by preceding process machinery line. These Kanbans authorise picking up units from the machinery line store and are returned to assembly line along with physical units. Depending upon the shortfall in the machinery line store, production ordering Kanbans in desired quantity are placed in the post, carried to production ordering Kanban post. Production ordering Kanban authorize production in the machinery line and are sent to store again alongwith machined parts. Kanbans are the pre-printed forms containing product specifications, quantities and frequency of issue during a day. Kanbans are normally replaced every month depending upon next month production schedule. There is no need w give written instructions every time and hence it eliminates lot of paper work. At the same time it coordinates activities of whole plant as well as with the suppliers and establish a close circuit.

80 4/18/2015SHARDA80 Visual Control This is a method by which managers and supervisors can tell at a glance if production activities are proceeding normally or not. Light signals (Red & Yellow) are placed on various machines and storage points. If any problem arises, the operator switches on light signal. 'Yellow' means there is a problem which operator himself is trying to solve. 'Red' means he needs help of the supervisor. Seeing red light, supervisor rush to the workplace. Similarly, a system of replenishment of stocks is used. A material calling ANDON for the later replenishment system is illustrated in Figure 3.6. When an empty box is found in the production shop, the worker pushes a switch thereby putting on main light in the- central store and a glow lamp in the control pannel indicating the kind of material required-Seeking the lamps, material carrier transports filled boxes to the line (see '5') and submits Supplier Kanban (detached from material box) to the Post Office of material Kanbans (see '6'). During th evening, all supplier Kanbans are classified supplier wise and handed over to respective truck drivers along with empty boxes. The drivers draw the materials from supplier as per the number of Kanbans and deliver to the factory during night.The materials are therefore replenished to the central stores every day morning before production starts. From the system it may be observed that inventory is kept only for 1-2 days stocks, with almost no paper work, no noice and chaos and no congestion.

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85 Total quality management Deep analysis of QA practices and premises used about them is the most necessary inspection control of all in cases, where, despite statistical quality control techniques or quality improvements implemented, sales decrease. The major problem which leads to a decrease in sales was that the specifications did not include the most important factor, “What the specifications have to state in order to satisfy the customer requirements?”. salesspecifications 4/18/2015SHARDA85

86 Total quality management The major characteristics, ignored during the search to improve manufacture and overall business performance were: Reliability Maintainability Safety Strength 4/18/2015SHARDA86

87 sequencing and Operations Scheduling 4/18/201587SHARDA

88 Work Center Defined Typical Scheduling and Control Functions Job-shop Scheduling Examples of Scheduling Rules Shop-floor Control Principles of Work Center Scheduling Issues in Scheduling Service Personnel OBJECTIVES 4/18/201588SHARDA

89 Work Center A work center is an area in a business in which productive resources are organized and work is completed Can be a single machine, a group of machines, or an area where a particular type of work is done 4/18/201589SHARDA

90 Capacity and Scheduling Infinite loading (Example: MRP) Finite loading Forward scheduling Backward scheduling (Example: MRP) 4/18/201590SHARDA

91 Types of Manufacturing Scheduling Processes and Scheduling Approaches Continuous process Type of ProcessTypical Scheduling Approach High-volume manufacturing Med-volume manufacturing Low-volume manufacturing Finite forward of process, machine limited Finite forward of line, machined limited Infinite forward of process, labor and machined limited Infinite forward of jobs, labor and some machine limited 4/18/201591SHARDA

92 Typical Scheduling and Control Functions Allocating orders, equipment, and personnel Determining the sequence of order performance Initiating performance of the scheduled work Shop-floor control 4/18/201592SHARDA

93 Work-Center Scheduling Objectives Meet due dates Minimize lead time Minimize setup time or cost Minimize work-in-process inventory Maximize machine utilization 4/18/201593SHARDA

94 Priority Rules for Job Sequencing 1. First-come, first-served (FCFS) 2. Shortest operating time (SOT) 3. Earliest due date first (D Date) 4. Slack time remaining (STR) first 5. Slack time remaining per operation (STR/OP) 4/18/201594SHARDA

95 Priority Rules for Job Sequencing (Continued) 6. Critical ratio (CR) 7. Last come, first served (LCFS) 8. Random order or whim 4/18/201595SHARDA

96 Example of Job Sequencing: First- Come First-Served Answer: FCFS Schedule Suppose you have the four jobs to the right arrive for processing on one machine What is the FCFS schedule? No, Jobs B, C, and D are going to be late Do all the jobs get done on time? 4/18/201596SHARDA

97 Example of Job Sequencing: Shortest Operating Time Answer: Shortest Operating Time Schedule Suppose you have the four jobs to the right arrive for processing on one machine What is the SOT schedule? No, Jobs A and B are going to be late Do all the jobs get done on time? 4/18/201597SHARDA

98 Example of Job Sequencing: Earliest Due Date First Answer: Earliest Due Date First Suppose you have the four jobs to the right arrive for processing on one machine What is the earliest due date first schedule? No, Jobs C and B are going to be late Do all the jobs get done on time? 4/18/201598SHARDA

99 Example of Job Sequencing: Critical Ratio Method Suppose you have the four jobs to the right arrive for processing on one machine What is the CR schedule? No, but since there is three- way tie, only the first job or two will be on time In order to do this schedule the CR’s have be calculated for each job. If we let today be Day 1 and allow a total of 15 days to do the work. The resulting CR’s and order schedule are: CR(A)=(5-4)/15=0.06 (Do this job last) CR(B)=(10-7)/15=0.20 (Do this job first, tied with C and D) CR(C)=(6-3)/15=0.20 (Do this job first, tied with B and D) CR(D)=(4-1)/15=0.20 (Do this job first, tied with B and C) Do all the jobs get done on time? 4/18/201599SHARDA

100 Example of Job Sequencing: Last-Come First-Served Answer: Last-Come First-Served Schedule No, Jobs B and A are going to be late Suppose you have the four jobs to the right arrive for processing on one machine What is the LCFS schedule? Do all the jobs get done on time? 4/18/2015100SHARDA

101 Example of Job Sequencing: Johnson’s Rule (Part 1) Suppose you have the following five jobs with time requirements in two stages of production. What is the job sequence using Johnson’s Rule? Time in Hours Jobs Stage 1Stage 2 A 1.50 1.25 B 2.00 3.00 C 2.50 2.00 D 1.00 2.00 4/18/2015101SHARDA

102 Example of Job Sequencing: Johnson’s Rule (Part 2) First, select the job with the smallest time in either stage. That is Job D with the smallest time in the first stage. Place that job as early as possible in the unfilled job sequence below. Drop D out, select the next smallest time (Job A), and place it 4th in the job sequence. Drop A out, select the next smallest time. There is a tie in two stages for two different jobs. In this case, place the job with the smallest time in the first stage as early as possible in the unfilled job sequence. Then place the job with the smallest time in the second stage as late as possible in the unfilled sequence. Job Sequence1 2 3 4 Job AssignedD A B C Time in Hours Jobs Stage 1Stage 2 A 1.50 1.25 B 2.00 3.00 C 2.50 2.00 D 1.00 2.00 4/18/2015102SHARDA

103 Shop-Floor Control: Major Functions 1. Assigning priority of each shop order 2. Maintaining work-in-process quantity information 3. Conveying shop-order status information to the office 4/18/2015103SHARDA

104 Shop-Floor Control: Major Functions (Continued) 4. Providing actual output data for capacity control purposes 5. Providing quantity by location by shop order for WIP inventory and accounting purposes 6. Providing measurement of efficiency, utilization, and productivity of manpower and machines 4/18/2015104SHARDA

105 Input/Output Control InputOutput Planned input should never exceed planned output Focuses attention on bottleneck work centers Work Center 4/18/2015105SHARDA

106 Principles of Work Center Scheduling 1. There is a direct equivalence between work flow and cash flow 2. The effectiveness of any job shop should be measured by speed of flow through the shop 3. Schedule jobs as a string, with process steps back-to-back 4. A job once started should not be interrupted 4/18/2015106SHARDA

107 Principles of Job Shop Scheduling (Continued) 5. Speed of flow is most efficiently achieved by focusing on bottleneck work centers and jobs 6. Reschedule every day 7. Obtain feedback each day on jobs that are not completed at each work center 8. Match work center input information to what the worker can actually do 4/18/2015107SHARDA

108 Principles of Job Shop Scheduling (Continued) 9. When seeking improvement in output, look for incompatibility between engineering design and process execution 10. Certainty of standards, routings, and so forth is not possible in a job shop, but always work towards achieving it 4/18/2015108SHARDA

109 Personnel Scheduling in Services Scheduling consecutive days off Scheduling daily work times Scheduling hourly work times 4/18/2015109SHARDA

110 110 Components of Scheduling Scheduling in job shops involves: Assigning tasks to different machines (or work centers) Deciding about the sequence of processing of the job on different machines on the basis of some priority rule (called sequencing or prioritization) Planning the route of movement of the material from one department to the other during processing (called routing) Issuing dispatch lists to the various work centers (called dispatching) Tracking the progress of various jobs scheduled and in case of delays in the implementation of schedules, revising the schedules and expediting the completion of certain jobs (called expediting) 4/18/2015SHARDA

111 111 Problems in the absence of proper scheduling Delays in meeting the due dates of customer orders High work-in- process inventory High average completion time of jobs Low utilization of workers and machines (high idle time) No accurate information available for the current status of a job Higher cost of production/ operations Higher set-up time (overall) of machines ABSENCE OF PROPER SCHEDULING 4/18/2015SHARDA

112 112 Forward & Backward Scheduling Forward scheduling means assigning customer orders or jobs to various work centers based on the approach “as early as possible”. Backward scheduling is a way of scheduling which is based on the approach “as late as possible” with the condition that the jobs are finished by their due dates of delivery to the customer. 4/18/2015SHARDA

113 113 Loading Loading means assigning tasks to work centers or machines. When loading of jobs on machines or work centers is done keeping in view their maximum capacity, it is called finite loading. Infinite loading means while assigning tasks to a machine or work center, its maximum capacity is overlooked. 4/18/2015SHARDA

114 114 Different Methods of Sequencing/ Assignment of Jobs on Machines Scheduling Sequencing n jobsSequencing two jobs on n machines in different machine sequences (Akers method) Assigning n jobs on m machines First come, first served (FCFS) method Last come, first served (FCFS) method Due date method Random method Shortest processing time (SPT)) method Assignment Model On one machine On two machines On three machines On m machines Johnson’s method In the same job sequence 4/18/2015SHARDA

115 Goldratt’s Goal of the Firm The goal of a firm is to make money 4/18/2015115SHARDA

116 Concept of JIT, Manufacturing and Assembly line Balancing 4/18/2015116SHARDA

117 Assembly Line Balancing Cycle time –The time required to produce one part is called the cycle time, or the maximum time allowed at any one work station Assembly Line Balancing –Given a cycle time, find the minimum number of work stations or minimize the cycle time for a given number of work stations 4/18/2015117SHARDA

118 What is Line Balancing? Line Balancing is the process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements. OR Line Balancing is an analysis process that tries to equally divide the work to be done among workstations so that the number of worker or workstations requires on a production line is minimized 4/18/2015118SHARDA

119 Line Balancing Procedure 1. Determine the tasks involved in completing 2. Determine the order in which tasks must be done 3. Draw a precedence diagram 4. Estimate task times 5. Calculate the cycle time 6. Calculate the minimum number of workstations 7. Use a heuristic(intuitive) to assign tasks to workstation 4/18/2015119SHARDA

120 Scheduling High-Volume-Low-Variety Operations The mass consumption patterns of modern industrialized nations depend on assembly line technology. The classic example is Henry Ford’s auto chassis line. Before the “moving assembly line” was introduced in 1913, each chassis was assembled by one worker and required 12.5 hours. Once the new technology was installed, this time was reduced to 93 minutes. Favorable Conditions Volume adequate for reasonable equipment utilization. Reasonably stable product demand. Product standardization Part interchange-ability. Continuous supply of material Not all of the above must be met in every case. 4/18/2015120SHARDA

121 Assembly Line Balancing - Example TaskTime (min)Immediate Predecessors A0.2----- B0.3A C0.2A D0.25A E0.15B,C F0.3D,E Total1.4 4/18/2015121SHARDA

122 Assembly Line Balancing 4/18/2015122SHARDA

123 Assembly Line Balancing CYCLE TIME.30  C  1.40 C = productive time/output rate C = (8hr x 60min) =.5 min 960 Number of work stations, N = total time/C N = 140 = 2.8 =3.5 4/18/2015123SHARDA

124 Solution to Assembly Line Balancing Problem StationTasks AssignedTotal Task TimeIdle Time 1A, B0.50 2C, D0.450.05 3E, F0.450.05 TOTAL1.40.1 4/18/2015124SHARDA

125 Assign tasks in order of most following tasks. –Count the number of tasks that follow Assign tasks in order of greatest positional weight. – Positional weight is the sum of each task’s time and the times of all following tasks. Some Heuristic (intuitive) Rules: Line Balancing Rules 4/18/2015125SHARDA

126 Assembly Line Balancing Solution Line Efficiency = Total Work Content C x N Efficiency = 1.40 =.93 or 93%.5 x 3 Balance Delay = 1 – efficiency = 1-.93 = 7% 4/18/2015126SHARDA

127 cd abe fgh 0.2 0.3 0.80.6 1.00.40.3 Example 2 4/18/2015127SHARDA

128 Station 1Station 2Station 3Station 4 ab e f d g h c Solution to Example 2 4/18/2015128SHARDA

129 Questions? 4/18/2015129SHARDA

130 1 min.2 min.1 min. 30/hr. Bottleneck Bottleneck Workstation 4/18/2015130SHARDA

131 Parallel Workstations 1 min. 2 min. 1 min. 60/hr. 30/hr. 60/hr. 2 min. 30/hr. Parallel Workstations 4/18/2015131SHARDA

132 Information Requirements: 1.List of departments 2.Projection of work flows 3.Distance between locations 4.Amount of money to be invested 5.List of special considerations 6.Location of key utilities Designing Process Layouts 4/18/2015132SHARDA

133 1 3 2 30 17010 0 ABC Example 3: Interdepartmental Work Flows for Assigned Departments 4/18/2015133SHARDA

134 Process Layout - work travels to dedicated process centers Milling Assembly & Test Grinding Drilling Plating Process Layout 4/18/2015134SHARDA

135 Gear cutting Mill Drill Lathes Grind Heat treat Assembly 111 333 222 444 222 111 444 111333 11112222 222 3333 111 444 111 333333333 44444 333333 22222 Functional Layout 4/18/2015135SHARDA

136 -1111 222222222 - 2222 Assembly 3333333333 - 3333 44444444444444 - 4444 Lathe Mill Drill Heat treat Heat treat Heat treat Gear cut Gear cut Grind Cellular Manufacturing Layout 4/18/2015136SHARDA

137 What is Line Balancing? Line Balancing is the process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements. OR Line Balancing is an analysis process that tries to equally divide the work to be done among workstations so that the number of worker or workstations requires on a production line is minimized 4/18/2015137SHARDA

138 Line Balancing Procedure 1. Determine the tasks involved in completing 1 unit 2. Determine the order in which tasks must be done 3. Draw a precedence diagram 4. Estimate task times 5. Calculate the cycle time 6. Calculate the minimum number of workstations 7. Use a heuristic(intuitive) to assign tasks to workstations 4/18/2015138SHARDA

139 Scheduling High-Volume- Low-Variety Operations The mass consumption patterns of modern industrialized nations depend on assembly line technology. The classic example is Henry Ford’s auto chassis line. Before the “moving assembly line” was introduced in 1913, each chassis was assembled by one worker and required 12.5 hours. Once the new technology was installed, this time was reduced to 93 minutes. Favorable Conditions Volume adequate for reasonable equipment utilization. Reasonably stable product demand. Product standardization Part interchange-ability. Continuous supply of material Not all of the above must be met in every case 4/18/2015139SHARDA

140 Concepts (1/2) Minimum rational work element Smallest feasible division of work. Flow time = time to complete all stations Cycle time Maximum time spent at any one workstation. Largest workstation time. How often a product is completed. Inverse of the desired hourly output rate = the amount of time available at each work station to complete all assigned work. 1 / 2 / 3 - 4 min / 5 min / 4 min Flow time = 4 + 5 + 4 = 13 - Cycle time = max (4, 5, 4) = 5 4/18/2015140SHARDA

141 Concepts (2/2) Total work content: Sum of the task times for all the assembly tasks for the product. Precedence diagram: network showing order of tasks and restrictions on their performance Measure of efficiency Line Balancing Rules Line Balancing Heuristics Heuristic methods, based on simple rules, have been developed to provide good (not optimal) solutions to line balancing problems Heuristic methods include: Incremental utilization (IU) method Longest-task-time (LTT) method … and many others Incremental Utilization Method:- Add tasks to a workstation in order of task precedence one at a time until utilization is 100% or is observed to fall Then the above procedure is repeated at the next workstation for the remaining tasks Pro – Appropriate when one or more task times is equal to or greater than the cycle time Con – Might create the need for extra equipment 4/18/2015141SHARDA

142 Line Balancing Rules Line Balancing Heuristics Heuristic methods, based on simple rules, have been developed to provide good (not optimal) solutions to line balancing problems Heuristic methods include: Incremental utilization (IU) method Longest-task-time (LTT) method … and many others 4/18/2015142SHARDA

143 Incremental Utilization Method:- Add tasks to a workstation in order of task precedence one at a time until utilization is 100% or is observed to fall Then the above procedure is repeated at the next workstation for the remaining tasks Pro – Appropriate when one or more task times is equal to or greater than the cycle time Con – Might create the need for extra equipment 4/18/2015143SHARDA

144 Longest-Task-Time Method:- Adds tasks to a workstation one at a time in the order of task precedence. If two or more tasks tie for order of precedence, the one with the longest task time is added Conditions for its use: No task time can be greater than the cycle time There can be no duplicate workstations 4/18/2015144SHARDA

145 The Problem Assign tasks to work stations observing balancing restrictions so as to minimize balance delay while keeping station work content for every station cycle time. Restrictions: Technological: precedence requirement. Position restrictions 4/18/2015145SHARDA

146 Finding a Solution Heuristic procedures generally allow for a broader problem definition, but do not guarantee optimal solution. Optimizing procedures generally have used more narrowly defined problems, but guarantee optimal solution. Examples of optimizing procedures Dynamic programming 0-1 Integer programming Branch and bound techniques. Trend in research has been toward optimizing procedures due to availability of large-scale computers. 4/18/2015146SHARDA

147 A Simple Algorithm Identify tasks whose predecessors have been assigned to a workstation (available tasks). Determine from available tasks, those that fit, i.e., those whose tasks times time remaining to be filled at this work station. Choose a task that fits by some decision rule task with largest time task with most successors task with greatest sum of task times of it predecessors. Continue steps 1 to 3 until no task fits, then go on to next workstation. Continue steps 1 to 4 until all tasks are assigned. 4/18/2015147SHARDA

148 Complications Behavioral options Job enlargement and rotation. Wages related to task. Distribution of slack time. Inventory buffers. Involving work group in decisions. Arranging stations to facilitate interaction. Personnel selection. Time to move an item between stations Machine-dominated work stations. Task times which exceed the cycle time. Stochastic task times. Mixed model assembly lines 4/18/2015148SHARDA

149 Cybernetic control Cybernetic or steering control is by far the most common type of control system. The key feature of cybernetic control is its automatic operation. Consider the diagrammatic model of a cybernetic control system shown in figure 1. As Figure shows, a system is operating with inputs being subjected to a process that transforms them into outputs. It is this system that we wish to control. In order to do so, we must monitor the system output. 4/18/2015149SHARDA

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151 A cybernetic control system that acts to reduce deviations from standard is called a negative feedback loop. If the system output moves away from the standard in one direction, the control mechanism acts to move it in the opposite direction. The speed or force with which the control operates is, in general, proportional to the size of the deviation from the standard. 4/18/2015151SHARDA

152 Types of cybernetic control systems Cybernetic controls come in three varieties, or orders, differing in the sophistication with which standards are set. Figure show a simple, first order control system, a goal seeking device. The standard is set and there is no provision made for altering it except by intervention from the outside. The common thermostat is a time-worn example of a first order controller. One sets the standard temperature and the heating and air-conditioning systems operate to maintain it. 4/18/2015152SHARDA

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155 Questions? 4/18/2015155SHARDA

156 STATISTICAL QUALITY CONTROL, QUALITY ASSURANCE, Many organizations use statistical process control to bring the organization to Six Sigma levels of quality, in other words, so that the likelihood of an unexpected failure is confined to six standard deviations on the normal distribution. This probability is less than four one-millionths. Items controlled often include clerical tasks such as order-entry as well as conventional manufacturing tasks.statistical process controlorganizationSix Sigma standard deviationsnormal distributionone-millionthsclerical tasks 4/18/2015156SHARDA

157 STATISTICAL QUALITY CONTROL, QUALITY ASSURANCE, Traditional statistical process controls in manufacturing operations usually proceed by randomly sampling and testing a fraction of the output. Variances in critical tolerances are continuously tracked and where necessary corrected before bad parts are produced. 4/18/2015157SHARDA

158 Product Design and its Characteristics; The different issues in a phase of a product life cycle:product life cycle Development Phase Production Phase Utilization Phase Disposal Phase Each phase is explained with two categories of tangible products in order to show differences in prioritizing design issues in certain product life cycle phases:product life cycle Consumer durables Capital goods 4/18/2015158SHARDA

159 Product Design and its Characteristics; Development phase Design rules –Basic Rules of Embodiment Design: Clarity, Simplicity, SafetyClaritySimplicity Safety Organizational Process –Design for Short Time to marketTime to market System Design, Testing & Validation –Design for reliability, Synonyms: Reliability EngineeringReliability Engineering –Design For TestDesign For Test –Design for safety, Synonyms: Safety engineeringSafety engineering –Design for quality, Synonyms: Quality engineeringQuality engineering –Design Against Corrosion DamageCorrosion –Design for Minimum RiskRisk 4/18/2015159SHARDA

160 Product Design and its Characteristics; Production / operations phase Design Rules: Target costing, Value engineeringTarget costingValue engineering Design to standards: Interchangeable parts,,,Design to standardsInterchangeable parts Design Guidelines Design for assembly Design for manufacturability Design for logistics, Design for postponementDesign for logistics Specific situations 4/18/2015160SHARDA

161 Product Design and its Characteristics; Design rules Design to standards serves in production operations, or respectively supply chain operations. Except for "luxury goods" or "luxury brands", most goods - even upper- class goods - are reliant on, if these are mass produced (Note: The same is valid for the functional production strategy "Mass customization").Design to standards mass producedMass customization 4/18/2015161SHARDA

162 Product Design and its Characteristics; Design rules Through Engineering design physical interfaces betweenEngineering design a) parts or components or assemblies of the product and b) the manufacturing equipment as well as the logistical material flow systems can be changed, and thus cost reducing effects in operating the latter may be achieved. 4/18/2015162SHARDA

163 Product Design and its Characteristics; Design guidelines Design for manufacturability ensures the fabrication of single parts or components that are based on an in mechanical engineering terms. It must be noted that every production technology has its own specific design guideline that needs to be consulted depending on the situation.Design for manufacturability 4/18/2015163SHARDA

164 Product Design and its Characteristics; Design guidelines Design for assembly addresses the combination of single parts or components to subassemblies, assemblies, modules, systems, etc., that are based on a in mechanical engineering terms. An important issue is how the embodied interfaces within a product are designed (mechanical engineering, electrical engineering).Design for assembly 4/18/2015164SHARDA

165 Product Design and its Characteristics; Design guidelines Design for logistics covers issues along supply chain partners (i.e. legally independent firms) but is by its means closely related to the Design for assembly guidelines. In academic research, Design for logistics is tangent to the Strategic alliances, SCM, and the Engg. part of New product development.Design for logisticsDesign for assemblyDesign for logisticsStrategic alliances 4/18/2015165SHARDA

166 Total quality management Deep analysis of QA practices and premises used about them is the most necessary inspection control of all in cases, where, despite statistical quality control techniques or quality improvements implemented, sales decrease. The major problem which leads to a decrease in sales was that the specifications did not include the most important factor, “What the specifications have to state in order to satisfy the customer requirements?”. salesspecifications 4/18/2015166SHARDA

167 Total quality management The major characteristics, ignored during the search to improve manufacture and overall business performance were: Reliability Maintainability Safety Strength 4/18/2015167SHARDA

168 Total Quality Management As the most important factor had been ignored, a few refinements had to be introduced: Marketing had to carry out their work properly and define the customer’s specifications. Specifications had to be defined to conform to these requirements.requirements Conformance to specifications i.e. drawings, standards and other relevant documents, were introduced during manufacturing, planning and control.drawingsplanning Management had to confirm all operators are equal to the work imposed on them and holidays, celebrations and disputes did not affect any of the quality levels.operators 4/18/2015168SHARDA

169 Total Quality Management Inspections and were carried out, and all components and materials, bought in or otherwise, conformed to the specifications, and the was accurate, this is the responsibility of the QA/QC department. componentsmaterials accurate Any complaints received from the customers were satisfactorily dealt with in a timely manner.complaints Feedback from the user/customer is used to review designs. Consistent data recording and assessment and documentation integrity. Product and/or process change management and notification. 4/18/2015169SHARDA

170 Procurement Quality Management Executive authorities are responsible for the technical integrity of land materiel they procure, manage or maintain. Effective procurement quality management assists in achieving technical integrity by establishing confidence that procured goods and services conform to quality requirements. Quality management is dependent upon an effective quality management system and comprises: 4/18/2015170SHARDA

171 Procurement Quality Management Quality planning – the part of quality management focused on setting quality objectives and specifying necessary operational processes and related resources to fulfil the quality objectives. Quality assurance – the part of quality management focused on providing confidence that quality requirements will be fulfilled. Quality control – the part of quality management focused on fulfilling quality requirements. Quality improvement – the part of quality management focused on increasing the ability to fulfil quality requirements. 4/18/2015171SHARDA

172 Measuring Procurement Quality Baseline measures Timeliness: Percent of Procurement systems reports received on time (when promised / scheduled), from total number of reports produced. Accuracy: Percent of procurement system reports received without any observed errors (data entry or calculation errors), from total number of reports produced. Flexibility: Ordinal measure ("Low to high") of the level of effort required to reconfigure information displayed in procurement system reports. 4/18/2015172SHARDA

173 Measuring Procurement Quality Baseline measures Routine-sation: Percent of procurement systems reports generated to handle "exceptional conditions" from total number of reports produced. Routine workflows: A map showing the flow of procurement systems reports under (a) routine conditions, (b) "low frequency" exceptional conditions, and (c) during critical or problematic situations. 4/18/2015173SHARDA

174 Measuring Procurement Quality Baseline measures Interactive report generation: Percent of procurement system reports generated by procurement system users (a) from total number of reports produced, (b) from each procurement system module, (c) across which users. Recurring cycle times: Ratio of forecast versus actual time spent performing recurring procurement processes, such as "procurement closings." 4/18/2015174SHARDA

175 Measuring Procurement Quality Baseline measures System utilization: Percent of user time spent (a) preparing procurement system inputs, and (b) handling procurement system outputs, from total hours at work (e.g., per week) 4/18/2015175SHARDA

176 Measuring procurement quality Baseline measures Open staff diaries: Each user of the procurement system or its outputs should be asked to keep a diary regarding their experiences with and impressions of the efficiency and effectiveness of the new financial system. they should be asked to daily record (a) what worked best today, and (b) what was biggest problem of the day. Then, on a weekly basis, record (c) what changes should be made to make their work situation more efficient and more effective, and (d) how has the work situation changed from some time ago. 4/18/2015176SHARDA

177 Quality standards ISO 10012 AS9003 SAE AS9100 AS / NZS ISO 9001:2000 – Quality Management Systems - Requirements Nadcap – Guidelines for Auditing Quality Systems AS/NZS 4360:1999 – Risk Management DI(G) LOG 02-1 – Quality Assurance of Procured Goods and Services DI(G)LOG 02-3 – Quality Assurance Arrangements with Foreign Governments IPC/EIA J-STD-xxx IPC-9191 4/18/2015177SHARDA

178 Questions? 4/18/2015178SHARDA

179 6. Project Management CPM, PERT forward pass and backward pass computations, resource leveling, resource allocation, and crashing of the project. 4/18/2015179SHARDA

180 Definition of Project Management Work Breakdown Structure Project Control Charts Structuring Projects Critical Path Scheduling OBJECTIVES 4/18/2015180SHARDA

181 Project is a series of related jobs usually directed toward some major output and requiring a significant period of time to perform Project Management are the management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project Project Management Defined 4/18/2015181SHARDA

182 Preparation of Gantt Chart. 4/18/2015182SHARDA

183 Questions? 4/18/2015183SHARDA

184 Here is a general approach for developing a Gantt chart List the project phases. In each project phase, list the tasks in their chronological order, taking into account which tasks cannot be started until a preceding task (or tasks) is completed. In doing this, also take into account the resources required and how they will be used by each task. Do not attach start or end dates to the tasks at this point. Along side of each task, identify its product or deliverable. Enter the estimated calendar time required to complete each task and the resources required to do the work in that amount of calendar time. 4/18/2015184SHARDA

185 Here is a general approach for developing a Gantt chart List the project phases. Now note the date when the project must be finished and enter it as the end date for the last task and the phase it is in. Work backward from the project end date to schedule the tasks. Take into account tasks dependencies. Also, consider whether certain tasks can be performed in parallel. Adjust calendar lengths of tasks and resources as needed to fit within the project time frame. This can require many tradeoffs to arrive at the best schedule within the time and resources constraints. Identify all of the milestones, such as the end of a phase or the completion and expected acceptance of a key deliverable. 4/18/2015185SHARDA

186 Here is a general approach for developing a Gantt chart List the project phases. Now note the date when the project must be finished and enter it as the end date for the last task and the phase it is in. Work backward from the project end date to schedule the tasks. Take into account tasks dependencies. Also, consider whether certain tasks can be performed in parallel. Adjust calendar lengths of tasks and resources as needed to fit within the project time frame. This can require many tradeoffs to arrive at the best schedule within the time and resources constraints. Identify all of the milestones, such as the end of a phase or the completion and expected acceptance of a key deliverable. 4/18/2015186SHARDA

187 Here is a general approach for developing a Gantt chart Keep in mind that the Gantt chart is a tool for planning and managing the project. It focuses on the phases and tasks of the project and not on pre-project planning activities. 4/18/2015187SHARDA

188 Activity 1 Activity 2 Activity 3 Activity 4 Activity 5 Activity 6 Time Vertical Axis: Always Activities or Jobs Horizontal Axis: Always Time Horizontal bars used to denote length of time for each activity or job. 4/18/2015188SHARDA

189 The project manager has full authority over the project Team members report to one boss Shortened communication lines Team pride, motivation, and commitment are high Pure Project A pure project is where a self-contained team works full-time on the project 4/18/2015189SHARDA

190 Duplication of resources Organizational goals and policies are ignored Lack of technology transfer Team members have no functional area "home" 4/18/2015190SHARDA

191 President Research and Development EngineeringManufacturing Project A Project B Project C Project D Project E Project F Project G Project H Project I A functional project is housed within a functional division Example, Project “B” is in the functional area of Research and Development. 4/18/2015191SHARDA

192 A team member can work on several projects Technical expertise is maintained within the functional area The functional area is a “home” after the project is completed Critical mass of specialized knowledge 4/18/2015192SHARDA

193 Aspects of the project that are not directly related to the functional area get short-changed Motivation of team members is often weak Needs of the client are secondary and are responded to slowly 4/18/2015193SHARDA

194 President Research and Development EngineeringManufacturing Marketing Manager Project A Manager Project B Manager Project C 4/18/2015194SHARDA

195 Enhanced communications between functional areas Pinpointed responsibility Duplication of resources is minimized Functional “home” for team members Policies of the parent organization are followed 4/18/2015195SHARDA

196 Too many bosses Depends on project manager’s negotiating skills Potential for sub-optimization 4/18/2015196SHARDA

197 Program Project 1Project 2 Task 1.1 Subtask 1.1.1 Work Package 1.1.1.1 Level 1 2 3 4 Task 1.2 Subtask 1.1.2 Work Package 1.1.1.2 A work breakdown structure defines the hierarchy of project tasks, subtasks, and work packages 4/18/2015197SHARDA

198 A project is made up of a sequence of activities that form a network representing a project The path taking longest time through this network of activities is called the “critical path” The critical path provides a wide range of scheduling information useful in managing a project Critical Path Method (CPM) helps to identify the critical path(s) in the project networks 4/18/2015198SHARDA

199 A project must have: well-defined jobs or tasks whose completion marks the end of the project; independent jobs or tasks; and tasks that follow a given sequence. 4/18/2015199SHARDA

200 CPM with a Single Time Estimate –Used when activity times are known with certainty –Used to determine timing estimates for the project, each activity in the project, and slack time for activities CPM with Three Activity Time Estimates –Used when activity times are uncertain –Used to obtain the same information as the Single Time Estimate model and probability information Time-Cost Models –Used when cost trade-off information is a major consideration in planning –Used to determine the least cost in reducing total project time 4/18/2015200SHARDA

201 1. Activity Identification 2. Activity Sequencing and Network Construction 3. Determine the critical path –From the critical path all of the project and activity timing information can be obtained 4/18/2015201SHARDA

202 Consider the following consulting project : Activity Designation Immed. Pred. Time (Weeks ) Assess customer's needsANone2 Write and submit proposalBA1 Obtain approvalCB1 Develop service vision and goalsDC2 Train employeesEC5 Quality improvement pilot groupsFD, E 5 Write assessment reportGF1 Develop a critical path diagram and determine the duration of the critical path and slack times for all activities. 4/18/2015202SHARDA

203 A(2)B(1) C(1) D(2) E(5) F(5) G(1) ANone2 BA1BA1 CB1CB1 DC2DC2 EC5EC5 FD,E5 GF1GF1 Act.Imed. Pred. Time 4/18/2015203SHARDA

204 ES=9 EF=14 ES=14 EF=15 ES=0 EF=2 ES=2 EF=3 ES=3 EF=4 ES=4 EF=9 ES=4 EF=6 A(2)B(1)C(1) D(2) E(5) F(5) G(1) Hint: Start with ES=0 and go forward in the network from A to G. 4/18/2015204SHARDA

205 ES=9 EF=14 ES=14 EF=15 ES=0 EF=2 ES=2 EF=3 ES=3 EF=4 ES=4 EF=9 ES=4 EF=6 A(2)B(1) C(1) D(2) E(5) F(5) G(1) LS=14 LF=15 LS=9 LF=14 LS=4 LF=9 LS=7 LF=9 LS=3 LF=4 LS=2 LF=3 LS=0 LF=2 Hint: Start with LF=15 or the total time of the project and go backward in the network from G to A. 4/18/2015205SHARDA

206 ES=9 EF=14 ES=14 EF=15 ES=0 EF=2 ES=2 EF=3 ES=3 EF=4 ES=4 EF=9 ES=4 EF=6 A(2)B(1) C(1) D(2) E(5) F(5) G(1) LS=14 LF=15 LS=9 LF=14 LS=4 LF=9 LS=7 LF=9 LS=3 LF=4 LS=2 LF=3 LS=0 LF=2 Duration=15 weeks Slack=(7-4)=(9-6)= 3 Wks 4/18/2015206SHARDA

207 4/18/2015207SHARDA

208 ET(A)= 3+4(6)+15 6 ET(A)= 3+4(6)+15 6 ET(A)=42/6=7 4/18/2015208SHARDA

209 ET(B)=32/6=5.333 ET(B)= 2+4(4)+14 6 ET(B)= 2+4(4)+14 6 4/18/2015209SHARDA

210 ET(C)= 6+4(12)+30 6 ET(C)= 6+4(12)+30 6 ET(C)=84/6=14 4/18/2015210SHARDA

211 Example 2. Network A(7) B (5.333) C(14) D(5) E(11) F(7) H(4) G(11) I(18) Duration = 54 Days 4/18/2015211SHARDA

212 Example 2. Probability Exercise What is the probability of finishing this project in less than 53 days? What is the probability of finishing this project in less than 53 days? p(t < D) T E = 54 t D=53 4/18/2015212SHARDA

213 ( Sum the variance along the critical path.) 4/18/2015213SHARDA

214 There is a 43.8% probability that this project will be completed in less than 53 weeks. p(Z < -.156) =.438, or 43.8 % (NORMSDIST(-.156) T E = 54 p(t < D) t D=53 4/18/2015214SHARDA

215 What is the probability that the project duration will exceed 56 weeks? 4/18/2015215SHARDA

216 t T E = 54 p(t < D) D=56 p(Z >.312) =.378, or 37.8 % (1-NORMSDIST(.312)) 4/18/2015216SHARDA

217 Basic Assumption: Relationship between activity completion time and project cost Time Cost Models: Determine the optimum point in time-cost tradeoffs – Activity direct costs – Project indirect costs – Activity completion times 4/18/2015217SHARDA

218 Project activities can be identified as entities (There is a clear beginning and ending point for each activity.) Project activity sequence relationships can be specified and networked Project control should focus on the critical path The activity times follow the beta distribution, with the variance of the project assumed to equal the sum of the variances along the critical path Project control should focus on the critical path 4/18/2015218SHARDA

219 Questions? 4/18/2015219SHARDA

220 resource leveling, resource allocation, and crashing of the project 4/18/2015220SHARDA

221 Introduction This chapter addresses: –Trade-offs involved to crash cost –Relationship between resource loading and leveling –Some approaches used to solve allocation problem 4/18/2015221SHARDA

222 Critical Path Method – Crashing a Project One important difference between CPM & PERT: –CPM included a way of relating the project schedule to the level of physical resources trade time for cost, or vice versa Can specify 2 activity times and 2 costs 1 st time / cost combination- called normal 2 nd combination called crash Normal – usual ‘average’ time, resources Crash – expedite by applying additional resources 4/18/2015222SHARDA

223 Allocation problem requires more careful consideration-additional resources? Many things make crashing a way of life on some projects (i.e last minutes changes in client specification, without permission to extend the project deadline by an appropriate increment) Careful planning is critical when crashing project – need to consider feasibility of expediting work (e.g equipment availability) Critical Path Method – Crashing a Project 4/18/2015223SHARDA

224 Slope = crash cost – normal cost crash time – normal time Critical Path Method – Crashing a Project Where: slope = cost per day of crashing a project When slope is negative : indicate the time required for a project is decreased, the cost is increased 4/18/2015224SHARDA

225 Critical Path Method – Crashing a Project The Rupees per day slope of activities is relevant only if the whole crash increment is useful Crashing may involve a relatively simple decision to increase groups of resources If do changes in technology tend to produce discontinuities in outcomes and also in cost. 4/18/2015225SHARDA

226 Principles to crash a project 1.Focus on the critical path when trying to shorten the duration [resource ready] 1.Select the least expensive way to do it 4/18/2015226SHARDA

227 Crashing a Project (E.g Two-Time CPM) ActivityPrecedenceDuration, Days (normal,crash) Cost, Rs. (normal,crash) Slope (Rs/day) a-3,240, 8040/-1 = -40 ba2,120, 8060/-1 = -60 ca2,220, 20Cannot be expedited d*a4,130, 12090/-3 = -30 e**b3,110, 80-70 (2 days) *Partial crashing allowed **Partial crashing not allowed 4/18/2015227SHARDA

228 A CPM Example 1 2345678 a c b d e Normal Schedule, 8 days, Rs120 4/18/2015228SHARDA

229 A CPM Example 1 2345678 a c b d e 1 2345678 a c b d e 1 2345678 ac b d e 7-day schedule, Rs1606-day schedule. Rs220 5-day schedule, Rs260 1 2345678 a c b d e 4-day schedule, Rs350 4/18/2015229SHARDA

230 Network critical path is a-b-e, project duration is 8 days, normal total cost is Rs.120 The decision about which activities to crash depends on how much to reduce the duration On the benefit side, some projects have penalty clauses that make the parent organization liable for late delivery- sometimes bonuses for early delivery 4/18/2015230SHARDA

231 On the cost side, figure below shows the time/cost relationship of crashing the project All crash a + b + 2d + 2e a + d + 2e - b a + b a All normal 4/18/2015231SHARDA

232 Fast Tracking Another way to expedite a project Term used for construction projects Refers to overlapping design and build phases Design completed before construction starts,so overlapping will result shortening the project duration Build before design completed-more design changes Loss productivity, increased cost, loss time 4/18/2015232SHARDA

233 Studies revealed that: – more design changes in fast tracking – the number of project change orders not significantly different than not fast-tracked project Dependent on effective feed-back and feed- forward communication Fast Tracking (cont.) 4/18/2015233SHARDA

234 SOLVED PROBLEM ActivityCrash Time, Cost Normal Time, Cost Partial crashing a3,Rs.6 0 No b6,807,30Yes c2,905,50No d5,506,30No e2,1004,40Yes 1 2 3 4 a b e c d Find the lowest cost to complete the project in 10 days 4/18/2015234SHARDA

235 Answer Current time and cost: 12 days and Rs.210 3 1 2 3 4 a b e c d 0 3 7 4 5 6 8 12 Since the critical path is a-c-e, we only initially need consider these 3 activities: a: cannot be crashed c: can cut 3 days at an extra cost of Rs.40 but only results in project completion by day 11, due to b. To reach 10 days, cut b by 1 day, total extra cost Rs. 90 e: can cut e by 2 days for an extra cost of Rs. 60 and results in project completion by day 10. Thus, cut e 2 days at a cost of Rs.60. 4/18/2015235SHARDA

236 RESOURCE ALLOCATION PROBLEM A fundamental measure of the PM’s success in project mgmt is the skill with which the trade-offs among performance, time and cost are managed The extreme points of the relationship between time use and resource are: –Time limited –Resource limited 4/18/2015236SHARDA

237 RESOURCE LOADING The amount of individuals resources an existing schedule requires during specific time periods Resource loading can be illustrated by: –Resource usage calendar –Modified PERT/CPM AOA diagram (similar with Gantt Chart) PM responsibility: –Demand for resources does not exceed resource capacities –Ensure that the required resources, in the required amounts 4/18/2015237SHARDA

238 Resource Usage Calendar 4/18/2015238SHARDA

239 Modified PERT/CPM AOA Diagram (Refer Ch 08 Slide ? ) 051015202530354045 4 1 12 3 3 3 5 67 1 4 a (4,0) b (2,1) c (3,1) dummy h (0,2) d j (0,6) e (2,1) f (1,1) i (6,3) g (1,0) 4/18/2015239SHARDA

240 RESOURCE LEVELING Aims to minimize the period-by-period variations in resource loading by shifting tasks within their slack allowances Purpose to create a smoother distribution of resource usage Advantages; –Much less hands on management –Be able to use ‘just in time’ inventory policy with right quantity delivered If the resource being leveled is people, it improves morale and results in fewer problems in the personnel and payroll offices 4/18/2015240SHARDA

241 E.g: Network 1 2 3 4 a, 2 [2] c, 5 [4] b, 3 [2] The activity time is shown above the arc, and resource usage (one resource, workers) is in brackets below the arc. 4/18/2015241SHARDA

242 Before Resource Leveling 12345 10 8 6 4 2 bb cc a c Days 12345 c b a WorkersActivity 4/18/2015242SHARDA

243 After Resource Leveling 12345 10 8 6 4 2 a c b Days 12345 c b a Activity Workers 4/18/2015243SHARDA

244 4/18/2015SHARDA244 How to Use the Tool: As with Gantt Charts, the essential concept behind Critical Path Analysis is that you cannot start some activities until others are finished. These activities need to be completed in a sequence, with each stage being more-or-less completed before the next stage can begin. These are 'sequential' activities. Other activities are not dependent on completion of any other tasks. You can do these at any time before or after a particular stage is reached. These are non- dependent or 'parallel' tasks.

245 4/18/2015SHARDA245 'Crash Action' You may find that you need to complete a project earlier than your Critical Path Analysis says is possible. In this case you need to re-plan your project. You have a number of options and would need to assess the impact of each on the project’s cost, quality and time required to complete it. For example, you could increase resource available for each project activity to bring down time spent on each but the impact of some of this would be insignificant and a more efficient way of doing this would be to look only at activities on the critical path. As an example, it may be necessary to complete the computer project in Figure 5 in 8 weeks rather than 10 weeks. In this case you could look at using two analysts in activities 2 to 3 and 3 to 4. This would shorten the project by two weeks, but may raise the project cost – doubling resources at any stage may only improve productivity by, say, 50% as additional time may need to be spent getting the team members up to speed on what is required, coordinating tasks split between them, integrating their contributions etc. In some situations, shortening the original critical path of a project can lead to a different series of activities becoming the critical path. For example, if activity 4 to 5 were reduced to 1 week, activities 4 to 8 and 8 to 6 would come onto the critical path.

246 4/18/2015SHARDA246 Critical Path Analysis and PERT are powerful tools that help you to schedule and manage complex projects. They were developed in the 1950s to control large defense projects, and have been used routinely since then. As with Gantt Charts, Critical Path Analysis (CPA) or the Critical Path Method (CPM) helps you to plan all tasks that must be completed as part of a project. They act as the basis both for preparation of a schedule, and of resource planning. During management of a project, they allow you to monitor achievement of project goals. They help you to see where remedial action needs to be taken to get a project back on course.Gantt Charts Within a project it is likely that you will display your final project plan as a Gantt Chart (using Microsoft Project or other software for projects of medium complexity or an excel spreadsheet for projects of low complexity).The benefit of using CPA within the planning process is to help you develop and test your plan to ensure that it is robust. Critical Path Analysis formally identifies tasks which must be completed on time for the whole project to be completed on time. It also identifies which tasks can be delayed if resource needs to be reallocated to catch up on missed or overrunning tasks. The disadvantage of CPA, if you use it as the technique by which your project plans are communicated and managed against, is that the relation of tasks to time is not as immediately obvious as with Gantt Charts. This can make them more difficult to understand. A further benefit of Critical Path Analysis is that it helps you to identify the minimum length of time needed to complete a project. Where you need to run an accelerated project, it helps you to identify which project steps you should accelerate to complete the project within the available time.

247 4/18/2015SHARDA247 PERT (Program Evaluation and Review Technique) PERT is a variation on Critical Path Analysis that takes a slightly more skeptical view of time estimates made for each project stage. To use it, estimate the shortest possible time each activity will take, the most likely length of time, and the longest time that might be taken if the activity takes longer than expected. Use the formula below to calculate the time to use for each project stage: shortest time + 4 x likely time + longest time ----------------------------------------------------------- 6 This helps to bias time estimates away from the unrealistically short time-scales normally assumed.

248 4/18/2015SHARDA248 Key Points: Critical Path Analysis is an effective and powerful method of assessing: What tasks must be carried out. Where parallel activity can be performed. The shortest time in which you can complete a project. Resources needed to execute a project. The sequence of activities, scheduling and timings involved. Task priorities. The most efficient way of shortening time on urgent projects. An effective Critical Path Analysis can make the difference between success and failure on complex projects. It can be very useful for assessing the importance of problems faced during the implementation of the plan. PERT is a variant of Critical Path Analysis that takes a more skeptical view of the time needed to complete each project stage.

249 RESOURCE LOADING/LEVELING AND UNCERTAINTY If happens excess capacity,the alternative that we can consider: –Try to level the demand, moving some of it forward and some backward –Try to alter the supply of working hours-trade off time between periods of over capacity and periods of under capacity –Might expend additional resources-contract worker for overload period, subcontract the workload 4/18/2015249SHARDA

250 Assignment -3 Q1. Attempt any THREE questions out of the following I.What are the principles of Forecasting? II.What are the objectives of inventory management? III.What is meant by materials budget? IV.What are the various types of stores? Q2.Write short notes on any four of the following I.Economic Order Quantity II.Material Requirement Planning III.Safety and security of stores IV.Explain the various forecasting techniques V.Explain the P and Q system of inventory replenishment VI.Explain the steps involved in supplier self certification. VII.Explain the FIFO and LIFO system of stores valuation. 4/18/2015250SHARDA

251 Assignment -4 PERT / CPM 4/18/2015251SHARDA

252 4/18/2015252SHARDA

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