Industrial Engineering Part 1 Lecture 1 Work Measurement Work measurement refer to the estimation of standard time, that is the time allowed for completing one piece of job using the given method. This is the time taken by an average experienced worker for the job with provisions for delays beyond the workers control. There are several techniques used for estimation of standard time in industry. These include time study, work sampling, standard data, and predetermined time systems. Application: Standard times for different operations in industry are useful for several applications like •
stimating material machinery and equipment requirements.
•
stimating the production cost per unit as an input to !reparation of budgets o "etermination of selling price o #ake or buy decision o
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stimating manpower requirements.
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stimating delivery schedules and planning the work
•
$alancing the work of operators working in a group.
•
stimating performance of workers and use as basis for incentive payment to those direct and in director labor who show greater productivity.
Time Study is the most versatile and the most widely used. Definition: Time study is a technique to estimate the time to be allowed to a qualified and well%trained worker working at a normal pace to complete a specified task. This technique is based on measuring the work content of the task when performed by the prescribed method, with the allowance for fatigue and for personal and unavoidable delays. Time Study Procedure: The procedure for time study can best be described step%wise, which are self explanatory. Step 1: Define objective Define objective of the study. This involves statement of the use of the result, the preci&sion desired, and the required level of confidence in the estimated time standards. Step 2: Analyse the Analyse the operation to determine whether standard method and conditions exist and whether the operator is properly trained. 'f need is felt for method study or further training of operator, the same may be
completed before starting the time study. Step 3: Select (perator Select (perator to be studied if there is more than one operator doing the same task. Step 4: Record information Record information about the s tandard method, operation, operator, product, equipment, quality and conditions. Step : Di!ide the Di!ide the operation into reasonably small elements. Step ": Time the Time the operator for each of the elements. )ecord the data for a few number of cycles. *se the data to estimate the total numbers of observations to be taken. Step #: +ollect #: +ollect and record the data of required number of cycles by timing and rating the operator. Step $: or $: or each element calculate the calculate the representative watch time. #ultiply it by the rating factory to get normal time. -ormal time (bserved time / )ating factor 0dd the normal time time of various elements to to obtain the normal time time for the whole whole operation. Step %: "etermine %: "etermine allowances for various delays from the company1s policy book or by conducting an independent study. Step 1&: "etermine 1&: "etermine standard time by adding allowances to the normal time of operation. Standard time -ormal time 2 allowances Time Study '(uipment The following equipment is needed for time study work. •
Timing device
•
Time study observation sheet
•
Time study observation board
•
(ther equipment
Timin) De!ice The stop watch 3igure4 3igure455 and the electronic timer are the most widely used timing devices used for time study. The two perform the same function with the difference that electronics timer can measure time to the second or third decimal of a second and can keep a large volume of time data in memory. Time Study *+ser!ation S,eet 't is a printed form with space provided for nothing down the necessary information about the operation being studied like name of operation, drawing number, name of the operator, name of time study person, and the date and place of study. Space are provided in the form for writing detailed description of the process 3element%wise5, recording stop%watch readings for each element of the process, performance rating3s5 of the operator, and computation igure 6 Shows 6 Shows a typical time study observation sheet. Time Study -oard
completed before starting the time study. Step 3: Select (perator Select (perator to be studied if there is more than one operator doing the same task. Step 4: Record information Record information about the s tandard method, operation, operator, product, equipment, quality and conditions. Step : Di!ide the Di!ide the operation into reasonably small elements. Step ": Time the Time the operator for each of the elements. )ecord the data for a few number of cycles. *se the data to estimate the total numbers of observations to be taken. Step #: +ollect #: +ollect and record the data of required number of cycles by timing and rating the operator. Step $: or $: or each element calculate the calculate the representative watch time. #ultiply it by the rating factory to get normal time. -ormal time (bserved time / )ating factor 0dd the normal time time of various elements to to obtain the normal time time for the whole whole operation. Step %: "etermine %: "etermine allowances for various delays from the company1s policy book or by conducting an independent study. Step 1&: "etermine 1&: "etermine standard time by adding allowances to the normal time of operation. Standard time -ormal time 2 allowances Time Study '(uipment The following equipment is needed for time study work. •
Timing device
•
Time study observation sheet
•
Time study observation board
•
(ther equipment
Timin) De!ice The stop watch 3igure4 3igure455 and the electronic timer are the most widely used timing devices used for time study. The two perform the same function with the difference that electronics timer can measure time to the second or third decimal of a second and can keep a large volume of time data in memory. Time Study *+ser!ation S,eet 't is a printed form with space provided for nothing down the necessary information about the operation being studied like name of operation, drawing number, name of the operator, name of time study person, and the date and place of study. Space are provided in the form for writing detailed description of the process 3element%wise5, recording stop%watch readings for each element of the process, performance rating3s5 of the operator, and computation igure 6 Shows 6 Shows a typical time study observation sheet. Time Study -oard
't is a light %weight board used for holding the observation sheet and stopwatch in position. 't is of si7e slightly larger than that of observation sheet used. 8enerally, the watch is mounted at the center of the top edge or as shown in igure 9 near 9 near the upper right%hand corner of the board. The board has a clamp to hold the observation sheet. "uring the time study, the board is held against the body and the upper left arm by the time study person in such a way that the watch could be operated by the thumb:index finger of the left hand. Watch readings are recorded on the observation sheet b y the right hand. *t,er '(uipment This includes pencil, eraser and device like tachometer for checking the speed, etc. .ormal Performance There is no universal concept of -ormal !erformance. ;owever, it is generally defined as the working rate of an average qualified worker working under capable supervision but not under any incentive wage payment scheme. This rate of working is characteri7ed by the fairly steady exertion of reasonable effort, and can be maintained day after day without undue physical or mental fatigue. The level of normal performance differs considerably from one company to another. What company 0 calls 4<< percent performance, company $ may call =< percent, company + may call 46> percent and so on. 't is important to understand that the level that a company selects for normal performance is not critical but maintaining that level uniform among time study person and constant with the passage of time within the company is extremely important. There are, of course, some universally accepted benchmark examples of normal performance, like dealing >6 cards in four piles in <.> minute, and walking at 9 miles per hour 3?.=9 km:hr5. 'n order to make use of these benchmarks, it is important that a complete description about these be fully understood, like in the case of card dealing, what is the distance of each pile with respect to the dealer, technique of grasping, moving and disposal of the cards. Some companies make use of video films or motion pictures for establishing what they consider as normal speed or normal rate of movement of body members. Such films are made of typical factory jobs with the operator working at the desired normal pace. These films are reported to be useful in demonstrating the level of performance expected from the operators and also for training of time study staff. Performance Ratin) "uring the time study, time study engineer c arefully observes the performance of the operator. This performance seldom conforms to the exact definition of normal or standard. Therefore, it becomes necessary to apply some 1adjustment1 to the mean observed time to arrive at the time that the normal operator would have needed to do that job when working at an average pace. This 1adjustment1 is called !erformance )ating.. )ating "etermination of performance rating is an important step in the work measurement procedures. 't is based entirely on the experience, training, and judgment of the work%study engineer. 't is the step most subjective and therefore is subject to criticism. 't is the procedure in which the time study engineer compares the performance of operator3s5 under observation to the -ormal !erformance and !erformance and determines a factor called )ating actor.
System of Ratin)
There are several systems of rating, the performance of operator on the job. These are 4. 6. 9. ?.
!ace )ating Westinghouse System of )ating (bjective )ating Synthetic )ating
0 brief description of each rating method follows Pace Ratin) *nder this system, performance is evaluated by considering the rate of accomplishment of the work per unit time. The study person measures the effectiveness of the operator against the concept of normal performance and then assigns a percentage to indicate the ratio of the observed performance to normal or standard performance. 'n this method, which is also called the speed rating method, the time study person judges the operators speed of movements, i.e. the rate at which he is applying himself, or in other words @how fast@ the operator the motions involved. Westin),ouse System of Ratin) This method considers four factors in evaluating the performance of the operator A Skill, effort, conditions and +onsistency. Skill may be defined as proficiency at following a given method. 't is demonstrated by co ordination of mind and hands. 0 person1s skill in given operation increases with his experience on the job, because increased familiarity with work bring speed, smoothness of motions and freedom from hesitations. The Westinghouse system lists six classes of skill as poor fair, average, good, excellent in a Table4. The time study person evaluates the skill displayed by the operator and puts it in one of the six classes. 0s equipment B value of each class of skill is provided in the table, the rating is translated into its equivalent percentage value, which ranges from 24> B 3for super skill5 to %66 B 3for poor skill5. 'n a similar fashion, the ratings for effort, conditions, and consistency are given using Table6 for each of the factors. $y algebraically combining the ratings with respect to each of the four factors, the final performance% rating factor is estimated. *+/ecti!e Ratin) 'n this system, speed of movements and job difficulty are rated separately and the two estimates are combined into a single value. )ating of speed or pace is done as described earlier, and the rating of job difficulty is done by selecting adjustment factors corresponding to characteristics of operation with respect to 3i5 amount of body used, 3ii5 foot pedals, 3iii5 bimanual ness, 3iv5 eye%hand co ordination, 3v5 handling requirements and 3vi5 weight handled or resistance encountered #undel and "anner have given Table9 of B values 3adjustment factor5 for the effects of various difficulties in the operation performed. or an operation under study, the numerical value for each of the six factors is assigned, and the algebraic sum of the numerical values called job difficulty adjustment factor is estimated. The rating factor R can be expressed as R0PD Where A P !ace rating factor
D Cob difficulty adjustment factor. Synt,etic Ratin) This method of rating has two main advantages over other methods that 3i5 it does not rely on the judgment of the time study person and 3ii5 it give consistent results. The time study is made as usual. Some manually controlled elements of the work cycle are selected. *sing a !#T system 3!re%determined motion time system5, the times for these elements are determined. The times of these elements are the performance factor is determined for each of the selected elements. !erformance or )ating actor, R 0 P A Where P !redetermined motion time of the element ,
A 0verage actual (bserved time of the element.
The overall rating factor is the mean of rating factors determined for the selected elements, which is applied uniformly to all the manually controlled elements of the work cycle. 'ample 0 work cycle has been divided into = elements and time study has been conducted. The average observed times for the elements are as A 'lement .o
4
6
9
?
>
D
E
=
'lement Type
#
#
!
#
#
#
#
#
<.4D
<.9<
<.>6
<.6D
<.?>
<.9?
<.4>
A!era)e actual <.4? time minutes5
# #anually +ontrolled , ! !ower +ontrolled Total observed time of work cycle 232 min. Suppose we select elements number 6,> and = 3These must be manually controlled elements5. $y using some !#T system, suppose we determine the times of these elements as 'lements .o
6
>
=
PMT System timesmins5
<.4?>
<.6>>
<.4?<
)ating factor for element 6 <.4?> : <.4D %&&" 6 )ating factor for element 6 <.6>> : <.6D %$&$ 6 )ating factor for element 6 <.4?< : <.4> %""" 6 The mean of the rating factors of selected elements %4%3 6 or say % 6 is the rating factor that will be
used for all the manual elements of the work cycle. The normal time of the cycle is calculated as given in the following table. 'lement .o
4
6
9
?
>
D
E
=
'lement Type
#
#
!
#
#
#
#
#
A!era)e actual timemin5
<.4?
<.4D
<.9<
<.>6
<.6D
<.?>
<.9?
<.4>
PMT system timemin5 Performance Ratin) 7actor
<.4?> &>
&>
<.6>> 4<<
&>
&>
<.4? &>
&>
&>
-ormal +ycle Time <.&>3<.4?2<.4D2<.>62<.6D2<.?>2<.9?2<.4>524.<<3<.9<5 4.&62<.9< 222 minutes Allo8ances The readings of any time study are taken over a relatively short period of time. The normal time arrived at, therefore does not include unavoidable delay and other legitimate lost time, for example, in waiting for materials, tools or equipmentF periodic inspection of partsF interruptions due to legitimate personal need, etc. 't is necessary and important that the time study person applies some adjustment, or allowances to compensate for such losses, so that fair time standard is established for the given job. 0llowances are generally applied to total cycle time as some percentage of it, but sometimes these are given separately as some B for machine time and some other B for manual effort time. ;owever no allowance are given for interruptions which maybe due to factor which are within the operator1s control or which are avoidable.
#ost companies allow the following allowances to their employees. •
"elay 0llowance
•
atigue 0llowance
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!ersonal 0llowance
•
Special 0llowance
Delay Allo8ance This time allowance is given to an operator for the numerous interruptions that he experiences every day during the course of his work. These interruptions include interruptions from the supervisor, inspector, planners, expediters, fellow workers, production personnel and others. This allowance also covers interruptions due to material irregularities, difficulty in maintaining specifications and tolerances, and interference delays where the operator has to attend to more than one machine. 7ati)ue Allo8ance This allowance can be divided into two partsA 3i5 basic fatigue allowance and 3ii5 variable fatigue allowance. The basic fatigue allowance is given to the operator to compensate for the energy expended for carrying out the work and to alleviate monotony. or an operator who is doing light work while seated, under good working conditions and under normal demands on the sensory or motor system, a ?B of normal time is considered adequate. This can be treated as a constant allowance. The magnitude of variable fatigue allowance given to the operator depends upon the severity of the factor or conditions, which cause extra 3more than normal5 fatigue to him. 0s we know, fatigue is not homogeneous, it range from strictly physical to purely psychological and includes combinations of the two. on some people it has a marked effect while on others, it has apparently little or no effect. Whatever may be the kind of fatigue% physical or mental, the result is same%it reduces the work output of operator. The major factors that cause more than just the basic fatigue includes sever working conditions, especially with respect to noise, illumination, heat and humidityF the nature of work, especially with respect to posture, muscular exertion and tediousness and like that. 't is true that in modern industry, heavy manual work, and thus muscular fatigue is reducing day by day but
mechani7ation is promoting other fatigue components like monotony and mental stress. $ecause fatigue in totality cannot be eliminated, proper allowance has to be given for adverse working conditions and repetitiveness of the work. Personal Allo8ance This is allowed to compensate for the time spent b y worker in meeting the physical needs. 0 normal person requires a periodic break in the production routine. The amount of personal time required by operator varies with the individual more than with the kind of work, though it is seen that workers need more personal time when the work is heavy and done under unfavorable conditions. The amount of this allowance can be determined by making all%day time study or work sampling. #ostly, a > B allowance for personal time 3nearly 6? minutes in = hours5 is considered appropriate. Special Allo8ance These allowances are given under certain special circumstances. Some of allowances and the conditions under which they are given areA Small 9ot Allo8ance: This allowance is given when the actual production period is too short to allow the worker to come out of the initial learning period. W hen an operator completes several small%lot jobs on different setups during the day, an allowance as high as 4> percent may be given to allow the operator to make normal earnings. Trainin) Allo8ance: This allowance is provided when work is done by trainee to allow him to maker reasonable earnings. 't may be a sliding allowance, which progressively decreases to 7ero over certain length of time. 'f the effect of learning on the job is known, the rate of decrease of the training allowance can be set accordingly. Re8ork Allo8ance: This allowance is provided on c ertain operation when it is known that some present of parts made are spoiled due to factors beyond the operator1s control. The time in which these spoiled parts may be reworked is converted into allowance. "ifferent organi7ations have decided upon the amount of allowances to be given to different operators by taking help from the specialists : consultants in the field and through negotiations between the management and the trade unions. 'G( has given its recommendations about the magnitude of various allowances, Table ?. 'ample: 'n making a time study of a laboratory technician performing an analysis of processed food in a canning factory, the following times were noted for a particular operation. Run
1 2 3 4 " # $ % 1& 11 12
Operation time(sec.)
64644D4&6<4D 6<4&4&6
Run
13 14 1 1" 1# 1$ 1% 2& 21 22 23 24
(peration time3sec.5
644=694&4>4= 4=4&646<6< 4&
'f the technician1s performance has been rated at 46< percent, and the company policy for allowance
3personal, fatigue, etc.5 stipulates 49 percent, 3i5 "etermine the normal time. 3ii5"etermine the standard time. Watch readings falling >< B above and 6> B below the average may be considered as abnormal. Ans :
Work Samplin) Work Sampling 3also sometimes called ratio delay study5 is a technique of getting facts about utili7ation of machines or human beings through a large number of instantaneous observations taken at random time intervals. The ratio of observations of a given activity to the total observations approximates the percentage of time that the process is in that state of activity. or example, if ><< instantaneous observations taken at random intervals over a few weeks show that a lathe operator was doing productive work in 9D> observations and in the remaining 49> observations he was found 1idle1 for miscellaneous reasons, then it can be taken that the operator remains idle 349>:><<5 x 4<< 6E B
in @-ot Working@ state. Step 2. "esign the Sampling plan. 3i5 stimate satisfactory number of observations to be made. 3ii5 "ecide on the period of study, e.g. two days, one week, etc. 3iii5 !repare detailed plan for taking the observations. This will include observation schedule, exact method of observing, design of observation sheet route to be followed, the particular person to be observed at the observation time, etc. Step 3. +ontact the person concerned and take them in confidence regarding conduct of the study. Step 4. +ollect the data at the pre%decided random times. We will now briefly discuss some important issues involved in the procedure. .um+er of *+ser!ations 0s we know, result of study based on larger number of observations are more accurate, but taking more and more observation consume time and thus is costly. 0 cost%benefit trade%off has thus to be struck. 'n practice, the following methods are used for estimation of the number of observation to be made. 3i5 -ased on /ud)ment. The study person can decide the necessar y number of observations based on his judgment. The correctness of the number may be in doubt but estimate is often quick and adequate in many cases. 3ii5 sin) cumulati!e plot of results. 0s the study progresses the results 3of the proportion of time devoted to the given activity, i.e. !i from the cumulative number of observations are plotted at the end of each shift or day. 0 typical plot is shown in igure?. Since the accuracy of the result improves with increasing number of observation, the study can be continued until the cumulative !i appears to stabili7e and collection of further data seems to have negligible effect on the value of !i. 3iii5 se of statistics. 'n this method, by considering the important of the decision to be based on the results of study, a maximum tolerable sampling error in terms of confidence level and desired accuracy in the results is specified. 0 pilot study is then made in which a few observations are taken to obtain a preliminary estimate of !i. The number of observations - necessary are then calculated using the following expression
Where S desired relative accuracy
!i estimate of proportion of time devoted to activity expressed as a decimal, e.g. > B <.<> a factor depending on the confidence level.
4, 6, 9 for confidence levels of D= B, &> B and && B respectively. . total number of observations needed. The number of observations estimated from the above relation using a value of !i obtained from a preliminary study would be only a first estimate. 'n actual practice, as the work sampling study proceeds, say at the end of each day, a new calculation should be made by using increasingly reliable value of !i obtained
from the cumulative number of observations made. Determination of *+ser!ation Sc,edule The number of instantaneous observations to be made each day mainly depends upon nature of operation. or example, for non%repetitive operations or for operations in which some elements occur in frequently, it is advisable to take observations more frequently so that the chance of obtaining all the facts improves. 't also depends on the availability of time with the person making the study. 'n general, about >< observations per day is a good figure. The exact 3random5 schedule of the observations is prepared by using random number table or any other technique. Desi)n of *+ser!ation S,eet 0 sample observation sheet for recording the data with respect to whether at the pre%decided time, the worker on job is in 1working1 state or 1non%working1 state is shown in figure>. 't contains the relevant information about the job, the operators on job, etc. 0t the end of each day, calculation can be done on the percent of time workers on the job 3on an average5 spend on activities, which are considered as part of the work method. Standard Time Determination 'n this method of work measurement, the observed time for a given job is estimated as the working time divided by the number of units produced during that time.
Where T Total study period . -umber of units produced in study period = Total number of observations made in study period
i =Number of observations in which worker(s) was found in 'working' state The normal time 3-T5 is found by multiplying the observed time by the average performing index 3rating factor5.
Where
0verage rating factor
inally, the standard time is found by adding allowances to the normal time. 'ample
0 work sampling study was made of a cargo loading operation for the purpose of developing its standard time. The study was conducted for duration of minutes during which 9<<<, 4><< instantaneous observations were made at random intervals. The results of study indicated that the worker on the job was working =< percent of the time and loaded 9D< pieces of cargo during the study period. The work analyst rated the performance at &< B. 'f the management wishes to permit a 49 B allowance for fatigue, delays and personal time, what is the standard time of this operationH Ans: ;ere, Total period Working fraction 0verage rating
4><< minutes =< percent &< percent
-umber of units loaded 9D< 0llowances
49 B
Ad!anta)es and Disad!anta)es of Work Samplin) in ;omparison 8it, Time Study Ad!anta)e Economical
4. 6.
#any operators or activities are difficult or uneconomical to measure by time study can readily be measured by work sampling. Two or more studies can be simultaneously made of several operators or machines by a single observer. (rdinarily a work study engineer can study only one operator at a time when continuous time study is made.
9.
't usually requires fewer man%hours to make a work sampling study than to make a continuous time study. The cost may also be about a third of the cost of a continuous time study.
?.
-o stopwatch or other time measuring device is needed for work sampling studies.
>.
't usually requires less time to calculate the results of work sampling study. #ark sensing cards may be used which can be fed directly to the computing machines to obtain the results just instantaneously.
Flexible
D. 0 work sampling study may be interrupted at any time without affecting the results. E. (perators are not closely watched for long period of time. This decreases the chance of getting erroneous results for when a worker is observed continuously for a long period, it is probable that he will not follow his usual routine exactly during that period. Less Erroneous
=. (bservations may be taken over a period of days or weeks. This decreases the chance of day%to% day or week%to%week variations that may affect the results. Operators Like It
&. Work sampling studies are preferred to continuous time study by the operators being studied. Some people do not like to be observed continuously for long periods of time. Observers Like It
4<. Work sampling studies are less fatiguing and less tedious to make on the part of time study engineer. Applications
44. Work sampling is applicable to a wide variety of situations in manufacturing, distribution, or service industries. 46. Work sampling is useful when determine the nature of the distribution of work activities within a gang operation. Disad!anta)e 4.
6.
Work sampling is not economical for the study of a single operator or operation or machine. 0lso, work%sampling study may be uneconomical for studying operators or machines located over wide areas. Work sampling study does not provide elemental time data.
9.
The operator may change his work pattern when he sees the observer. or instance, he may try to look productive and make the results of s tudy erroneous.
?.
-o record is usually made of the method being used by the operator Therefore a new study has to be made when a method change occurs in any element of operation.
>.
+ompared to stop watch time study, the statistical approach of work sampling study is difficult to understand by workers.
;omputeri
Predetermined Motion Time System 0 predetermined motion time system 3!#TS5 may be defined as a procedure that analy7es any manual activity in terms of basic or fundamental motions required to performing it. ach of these motions is assigned a previously established standard time value in s uch a way that the timings for the individual motions can be synthesi7ed to obtain the total time for the performance of the activity. The main use of !#TS lies in the estimation of time for the performance of a task before it is performed. The procedure is particularly useful to some organi7ations because it does not require troublesome rating with each study. 0pplications of !#TS are for 3i5 "etermination of job time standards. 3ii5 +omparing the times for alternative proposed methods so as to find the economics of the proposals prior to production run. 3iii5 stimation of manpower, equipment and space requirements prior to setting up the facilities and start of production. 3iv5 "eveloping tentative work layouts for assembly line prior to their working. 3v5 +hecking direct time study results. 0 number of !#TS are in use, some of which have been developed by individual organi7ations for their own use, while other organi7ations have publici7ed for universal applications. The following are commonly used !#T systems •
Work factor 34&9=5
•
#ethod Time #easurement 34&?=5
•
$asic #otion Time 34&>45
•
"imension #otion Time 34&>?5
Some important factors which be considered while selecting a !#T system for application to particular industry are
.
;ost of =nstallation. This consists mainly of the cost of getting expert for applying the system under consideration.
!. Application Cost . This is determined by the length of time needed to s et a time standard by the system under consideration.
". Performance Level of the System . The level of performance embodied in the system under consideration may be different from the normal performance established in the industry where the system is to be used. ;owever, this problem can be overcome by 1calibration1 which is nothing but multiplying the times given in the Tables by some constant or by the application of an adjustment allowance.
#. Consistency of Standards . +onsistency of standards set by a system on various jobs is a vital factor to consider. or this, the system can be applied on a trial basis on a set of operations in the plant and examined for consistency among them.
$. Nature of Operation . $est results are likely to be achieved if the type and nature of operations in the plant are similar to the nature and type of operations studied during the development of the system under consideration. Ad!anta)es and limitations of usin) PMT systems Ad!anta)e +ompared to other work measurement techniques, all !#T system claim the following advantagesA
.
There is no need to actually observe the operation running. This means the estimation of time to perform a job can be made from the drawings even before the job is actually done. This feature is very useful in production planning, forecasting, equipment selection etc.
!.
The use of !#T eliminates the need of troublesome and controversial performance rating. or the sole reason of avoiding performance rating, some companies have been using this technique.
".
The use of !# times forces the analyst to study the method in detail. This sometimes helps to further improve the method.
#.
0 bye%product of the use of !# time is a detailed record of the method of operation. This is advantageous for installation of method, for instructional purposes, and for detection and verification of any change that might occur in the method in future.
$.
The !# times can be usefully employed to establish elemental standard data for setting time standards on jobs done on various types of machines and equipment.
%.
The basic times determined with the use of !#T system are relatively more consistent.
9imitations There are two main limitations to the use of !#T system for establishing time standards. These are A 3i5 its application to only manual contents of job and 3ii5 the need of trained personnel. 0lthough !#T system eliminates the use of rating, quite a bit of judgment is still necessarily exercised at different stages. Motion Study #otion study is a technique of analy7ing the body motions employed in doing a task in order to eliminate or reduce ineffective movements and facilitates effective movements. $y using motion study and the principles of motion economy the task is redesigned to be more effective and less time consuming. The 8ilbreths pioneered the study of manual motions and developed basic laws of motion economy that are still relevant today. They were also responsible for the development of detailed motion picture studies, termed as #icro #otion Studies, which are extremely useful for analy7ing highly repetitive manual operations. With the improvement in technology, of course, video camera has replaced the traditional motion picture film camera. 'n a broad sense, motion study encompasses micro motion study and both have the same objectiveA job simplification so that it is less fatiguing and less time consuming while motion study involves a simple visual analysis, micro motion study uses more expensive equipment. The two types of studies may be compared to viewing a task under a magnifying glass versus viewing the same under a microscope. The added detail revealed by the microscope may be needed in exceptional cases when even a minute improvement in motions matters, i.e. on extremely short repetitive tasks. Taking the cine films I 4D to 6< frames per second with motion picture camera, developing the film and analy7ing the film for micro motion study had always been considered a costly affair. To save on the cost of developing the film and the cost of film itself, a technique was used in which camera took only > to 4< frames per minute. This saved on the time of film analysis too. 'n applications where infrequent shots of camera could provide almost same information, the technique proved fruitful and acquired the name #emo #otion
Study. Traditionally, the data from micro motion studies are recorded on a Simultaneous #otion 3simo5 +hart while that from motion studies are recorded on a )ight ;and % Geft ;and !rocess +hart. T,er+li)s 0s result of several motion studies conducted 8ilbreths concluded that any work can be done by using a combination of 4E basic motions, called Therbligs 38ilbreth spelled backward5. These can be classified as effective therbligs and ineffective therbligs. ffective therbligs take the work progress towards completion. 0ttempts can be made to shorten them but they cannot be eliminated. 'neffective therbligs do not advance the progress of work and therefore attempts should be made to eliminate them by applying the !rinciples of #otion conomy. Table> gives the therbligs along with their s ymbols and descriptions. S=M* ;,art 't is a graphic representation of the sequence of the therbligs or group of therbligs performed by body members of operator. 't is drawn on a common time scale. 'n other words, it is a two%hand process chart drawn in terms of therbligs and with a time scale, see igureD making the Simo +hart. 0 video film or a motion picture film is shot of the operation. The film is analy7ed frame by f rame. or the left hand, the sequence of therbligs 3or group of therbligs5 with their time values are recorded on the column corresponding to the left hand. The symbols are added against the length of column representing the duration of the group of therbligs. The procedure is repeated for the right and other body members 3if any5 involved in carrying out the operation. 't is generally not possible to time individual therbligs. 0 certain number of therbligs may be grouped into an element large enough to be measured as can be seen in igureE. ses of Simo ;,art rom the motion analysis shown about the motions of the two hands 3or other body members5 involved in doing an operation, inefficient motion pattern can be identified and any violation of the principle of motion economy can be easily noticed. The chart, therefore, helps in improving the method of doing the operation so that balanced two%handed actions with coordinated foot and eye motions can be achieved and ineffective motion can be either reduced or eliminated. The result is a smoother, more rhythmic work cycle that keeps both delays and operator fatigue to the minimum extent. ;ycle )rap, and ;,rono cycle )rap, These techniques of analy7ing the paths of motion made by an operator were developed by the 8ilbreths. To make a cycle graph, a small electric bulb is attached to the finger, hand, or any other part of the body whose motion is to be recorded. $y using still !hotography, the path of light of bulb 3in other words, that of the body member5 as it moves through space for one complete cycle is photographed by k eeping the working area relatively less illuminated. #ore than one camera may be used in different planes to get more details. The resulting picture 3cycle graph5 shows a permanent record of the motion pattern employed in the form of a closed loop of white continuous line with the working area in the background. 0 cycle graph does not indicate the direction or speed of motion. 't can be used for •
'mproving the motion pattern and
•
Training purposes in that two cycle graphs may be s hown with one indicating a better motion pattern than the other.
The +hrono cycle graph is similar to the cycle graph, but the power supply to the bulb is interrupted regularly by using an electric circuit. The bulb is thus made to flash. The procedure for taking photograph remains the
same. The resulting picture 3+hrono cycle graph5, instead of showing continuous line of motion pattern, shows short dashes of line s paced in proportion to the speed of the body member photographed. Wide spacing would represent fast moves while close spacing would represent slow moves.The jumbling of dots at one point would indicate fumbling or hesitation of the body member. 0 chrono cycle graph can thus be used to study the motion pattern as well as to compute velocity, acceleration and retardation experienced by the body member at different locations. The world of sports has used this analysis tool, updated to video, for extensively the purpose of training in the development of from and skill. Desi)n of Workplace 9ayout •
The design of workplace layout involves the following
•
"etemination of work surface height
•
"esign of operator chair 3if work is to be done in sitting posture5, or allowing the use of antifatigue mats for standing operator "etermination of location of tools, materials, controls, displays and other devices.
•
We shall consider these briefly. Work Place >ei),t This should be decided from the standpoint of comfortable working posture for the operator. 8enerally, it is equal to the elbow height of operator whether work is done in standing or sitting posture. ;owever, for work involving lifting of heavy parts, it is useful to lower the work surface height by as much as 6< cm. This would reduce the fatigue to the trunk of operator. Similarly, it may be useful to lower the work surface height when work involves usual examination of minute details of fine parts. This would reduce the eye fatigue to the operator. 0lternatively, the work surface may be inclined by 4> degrees or so. Work surface height may also be made adjustable in situations where operator is permitted to do work in alternatively sitting and standing postures. Desi)n of *perator ;,air 0 seated posture is better than standing posture from the standpoint of stress reduction on the feet and the overall energy expenditure. 0 well%designed seat should •
!rovide trunk stabili7ation so that a good posture is maintained,
•
!ermit change of posture and
•
-ot unduly press the thigh tissues.
This requires the use of ergonomic considerations and anthropometrics dimensions of operator so that appropriate dimensions are chosen for the following features 4. 6. 9. ?. >. D. E.
Seat ;eight Seat "epth Seat W idth Seat 'nclination 0rm )ests $ack )est oot )est
'n order that the same seat 3or chair5 is useable by many operators doing that job, it is necessary to provide adjustability, particularly with respect to seat height.
Standing for long periods of time on a cemented floor is fatiguing. 'f operator has to work only in standing posture, it is essential to provide resilient anti fatigue floor mats. Such mats allow small muscle contractions in the legs and force the blood to keep circulating. Determination of location of tools? materials? controls? displays and ot,er de!ices We all know that greater the distance operator moves his body member while doing work, larger is the muscular effort, control and time. This means that all tools, materials, controls, etc need to be located within close reach of the operator. 'n this context, two areas can be identified normal working area and maximum working area. igure= identifies these areas in hori7ontal and vertical planes. Within these areas, all tools, materials, controls, displays and other devices must be located on the basis of following principles. 3i5 =mportance Principle. 0ccording to this principle, the most important item or group of items are first located within the normal area in the best position. The next important component item or group of item is then selected and located in the best location within the remaining area. 'n this way, all the items are located. 3ii5 7re(uency of se Principle. 0ccording to this principle, the item with the greatest frequency of use has the highest priority for location at the optimum position. rom within the remaining items to be located in the remaining area, the same principle can then be applied repetitively. 3iii5 7unctional Principle. The functional principle of location provides for grouping of items according to their function. or instance, all controls that are functionally related may be grouped together and located at another place. 3iv5 Se(uence of se Principle. 0ccording to this principle, items are located according to sequence of their use. or illustration, let us consider the case of assembly. 0s we know, an assembly is made by assembling the sub%assemblies in a certain order. rom motion economy or production efficiency point of view, it would be better if sub%assemblies and other items were located in the sequence in which they are to be used in assembly. urther, for better productivity, it is important that of all tools materials and controls be fixed so that their @search@ and @ select@ is minimi7ed. Work Study Definition: Work study may be defined as the analysis of a job for the purpose of finding the preferred method of doing it and also determining the standard time to perform it by two areas of study%method study 3motion study5 and time study 3work measurement5. Role of Work Study in =mpro!in) Producti!ity 'n order to understand the role of work study, we need to understand the role of method study and that of time study. #ethod study 3also sometimes called Work #ethod "esign5 is mostly used to improve ex isting method of doing work although it is equally well applicable to new jobs. When applied to existing jobs, method study aims to find better methods of doing the jobs that are economical and safe, require less human effort, and need shorter make%ready : put%away time. The better method involves the optimum use of best materials and appropriate manpower so that work is performed in well, organi7ed manner leading to utili7ation, better quality and lower costs. We can therefore say that through method study we have a systematic way of developing human resource
effectiveness, providing high machine and equipment utili7ation, and making economical use of materials. Time study, on the other hand, provides the standard time, that is the time needed by worker to complete a job by the specified method. Therefore for any job, the method of doing it is first improved by method study, the new method is implemented as a standard practice and for that job to be done by the new method, and standard time is established by the use of time study. Standard times are essential for any organisation, as they are needed for proper estimation of •
manpower, machinery and equipment requirements
•
daily, weekly or monthly requirement of materials
•
production cost per unit as an input to selling price determination
•
labor budgets
•
worker1s efficiency and make incentive wage payments.
$y the application of method study and time study in an y organi7ation, we can thus achieve greater output at less cost and of better quality, and hence achieve higher productivity. Work Study and 'r)onomics The work study and the ergonomics are the two areas of study having the same objectiveA design the work system so that for the operator it is safe, less fatiguing and less time taking. Goto Home
@ 9ecture 2 @ 9ecture 3 'i duto copy ,oi ni karon 8e+site te nei
Part 2 uality and Related ;oncepts
Lecture 1 =ntroduction The rapidly increasing global competition over the past decade has led to the emergence of new scenarios for most of the
industrial sectors. The industries are now associated with rapid technological changes and product variety proliferation in order to remain competitive. The competitiveness of a company is mostly dependent on its ability to perform well in dimensions such as cost, quality, delivery, dependability and speed, innovation and flexibility to adapt itself to variations in demand. 0iming at improving organi7ational performance through the effective use of production capability and technology, operations strategy such as total quality management 3TJ#5, quality function deployment 3J"5, six sigma, business process re%engineering 3$!)5, just in time 3C'T5, benchmarking, performance measurement and many others are commonly used. The concept of quality has evolved from mere specifications, controls, inspections, systems, and methods for regulatory compliance to a harmoni7ed relationship with business strategies aimed at satisfying both the internal and external customer. Today, quality and value are, first and above all, givens, and the customer expects them. Juality in the successful organi7ation is fully integrated into all of the business processes and is an extension of everything else that has to happen along the path to success , both for the company and for the people involved. uality Definitions5 0s Specified by Coseph Curan, Juality is the fitness of use i.e. it is the value of the goods and services as perceived by the supplier, producer and customer. The measure also pertains to the degree to which products and services c onform to specifications, requirements and standards at an acceptable price. Some of the definitions of the term KJuality1, provided by quality gurus are as followsA •
Juality is fitness for use 3C*)0-5
•
Juality is conformance to requirements 3+)(S$L5
•
the efficient production of the quality that the market expects 3"#'-85
•
Juality is what the customer says, it is 3'8-$0*#5
•
Juality is the loss that a product costs to the society after being shipped to the customer 3T08*+;'5
•
The totality of features and characteristics of a product or services that bear on its ability to satisfy stated or implied needs of the customers 30SJ+5
•
0 quality system is the agreed on company wide and plant wide operating work structure, documented in effective, integrated, technical and managerial procedures for guiding the co%coordinated actions of people, the machines, or the information of company in the best and most practical ways to assume customer quality satisfaction and economical costs of quality. 3'8-$0*#5
Dimensions of Product uality 0s prescribed by 8arvin, the eight dimensions of quality areA •
!erformance
3will the product do the intended jobH5
•
)eliability
3how often the product failsH5
•
"urability
3how long the product lastsH5
•
Serviceability
3how easy is to repair the productH5
•
0esthetics
3what does the product look likeH5
•
eatures
3what does the product doH5
•
!erceived quality 3what is the reputation of a company or its productsH5
Dimensions of Ser!ice uality •
)eliability
•
)esponsiveness
•
+ompetence
•
+ourtesy
•
+ommunication
•
+redibility
•
Security
T,ree Aspects of uality 7i)ure5 The three aspects of quality and their linkages with each other have been depicted in the figure belowA
uality of Desi)n: ;onsumerBs Perspecti!e
The product must be designed to meet the requirement of the customer. The product must be designed right first time and every time and while designing all aspects of customer expectations must be incorporated into the product. The factors need to consider while designing the product areA
Type of product •
•
!rofit policy of the company "emand
•
•
+ost
0vailability of the parts
uality of ;onformance: ManufacturerBs Perspecti!e The product must be manufactured exactly as designed. The activities involved at this stage includeA defect finding, defect prevention, defect analysis, and rectification. The difficulties encountered at the manufacturing stage must be conveyed to the designers for modification in design, if any. The two%way communication between designer and manufacturing may help to improve the quality of the product. uality of Performance The product must function as per the expectations of the customer. The two way communication between designers and customer is the key to have a quality product. Goto Home
Lecture 2 '!olution of uality 3igure5 "uring the early days of manufacturing, an operative1s work was inspected and a decision made whether to accept or reject it. The f was just to accept or reject the products based on the specification. -o effort was made on defect prevention. 'n the 4&6<1s statistical theory began to be applied effectively to quality control, and in 4&6? Shewhart made the first attempt of a mo control chart. ;is work was later developed by "eming and the early work of Shewhart, "eming, "odge and )omig constitutes muc what today comprises the theory of statistical process control 3S!+5. ;owever, there was little use of these techniques in manufactu companies until the late 4&?<1s. 'n the early 4&><1s, quality management practices developed rapidly in Capanese plants, and become a major theme in Capanese management philosophy, such that, by 4&D<, quality control and management had become a national preoccupation. 'n 4&D&, eigenbaum presented a paper in a conference and the term Mtotal qualityN was used for the first time, and referred to issues such as planning, organi7ation and management responsibility. 'shikawa presented a paper explaining how Mtotal quality co in Capan was different, it meaning Mcompany wide quality controlN, and describing how all employees, from top management t workers, must study and participate in quality control. +ompany wide quality management was common in Capanese companies b late 4&E<1s.
Total quality management 3TJ#5 came into existence in 4&=< by the western world. TJ# is now part of a much wider concep addresses overall organi7ational performance and recogni7es the importance of processes. 0s we move into the 64st century, TJ# has developed in many countries into holistic frameworks, aimed at helping organi7 achieve excellent performance, particularly in customer and business results.
>istorical Aspects of uality •
•
•
dward "eming O
!ostulated Statistical J*0G'TL +ontrol !rinciples
O
4? !oints of J*0G'TL #anagement
O
these !rinciples successfully adapted by Capanese #anufactures
William +rosby O
mphasi7ed ;umanistic $ehavioral 0spects of J*0G'TL 'mprovement
O
$ecoming #ore 'mportant -ow
Coseph Curan1s J*0G'TL Trilogy 0. J*0G'TL !lanning O
Set of J*0G'TL 8oals
O
Set !lans for (perations $ased on these 8oals
$. J*0G'TL +ontrol O
)esponsible for #eeting J*0G'TL 8oals
O
!revent 0dverse +hanges
O
Set and (bserve
!erformance #easures +ompare with 'ndustry Standards $enchmarking
+. J*0G'TL 'mprovement O
#oving from +urrent Gevel to the -ext ;igher Gevel
O
(rgani7e Teams, Train (perators to identify and +orrect J*0G'TL !roblems
uality ;ontrol 'nspection, analysis and action applied to a portion of the product in a manufacturing operation to estimate overall quality of the pro and determine what, if any, changes must be made to achieve or maintain the required level of quality. Juality control of a product can be viewed as a system which ensures •
!roper !lanning
•
)ight "esign
•
!roper equipment
•
!roper 'nspection
•
+orrective action
Traditional ;oncept: Juality +ontrol has been concerned with detecting poor quality in manufacturing products and taking correcti action to eliminate it. Modern ;oncept: Juality +ontrol encompasses a broader scope of activities includingA •
)obust design
•
Statistical !roecess +ontrol
T8o aspects of (uality control •
(ff%line quality control
•
(n%line quality control
(ff%line quality control encompasses all those activities that are performed before the actual manufacturing of the product or service rendered (n%line quality control activities start from the manufacturing of a product till it goes in the field and also after sale service. The qualit tools used in the phase are Statistical !rocess control and 0cceptance Sampling =mportance of uality ;ontrol •
Juality is vital in all areas of business, including the product development and production functions
•
+ost of quality is ultimately reduced by investing money up front in quality design and development
•
Typical costs of poor quality include downtime, repair costs, rework, and employee turnover
-enefits of uality ;ontrol 0 well%established, committed quality system in an organi7ation will render the following benefits •
'mprovement in the quality of product
•
;igher productivity
•
+ost reduction
•
+ontinuous improvement in quality of product Goto H
Lecture 3 uality ;osts Juality costs components are •
&revention costs
•
0ppraisal costs
•
'nternal ailure +osts
•
xternal ailure +osts
Pre!ention costs These costs are incurred in the process of trying to prevent defects and errors from occurring. The costs involved are for •
planning the quality control process
•
training and educating
•
designing the product for quality
•
designing the production system for quality
•
preventive maintenance
Appraisal costs detection costs5 These are the costs of determining the current quality of the production system or inspection and testing through sampling. The costs involved are for •
measuring and testing parts and materials
•
conducting statistical process control
•
receiving inspection
•
reporting on quality
=nternal 7ailure ;osts These costs are incurred when defects and errors are found before s hipment or delivery to the customer. The costs involved are for •
labor and materials that are scrapped
•
reworking and retesting to correct defects
•
lost profits
'ternal 7ailure ;osts
Lecture 4 Seven Basic Quality Control Tools •
;istograms
•
)un +harts
•
!areto +harts
•
low +harts
•
Scatter "iagrams
•
+ause and ffect "iagrams
•
+ontrol +harts
>isto)rams 0 ;istogram is a bar graph used to present frequency data. ;istograms provide an easy way to evaluate the distribution of data over different categories Steps in makin) >isto)ram
• •
•
•
•
efine ategories for ata ollect ata sort them into the categories ount the ata for each category raw the iagram. *ach category finds its place on the +, -+is. The bars will be as high as the value for the category
The histogram reveals the following about the process •
•
•
;enterin) of t,e process data: The
centering of the data provides information on the
process about some mean. Spread of t,e data: istogram width defines the variability of the process about the mean S,ape of t,e ,isto)ram: /ell or normal shaped histogram is e+pected. Other than normal or bell shape means something wrong with the process responsible for poor 0uality.
9imitations oft,e >isto)rams
• •
The randomness in the data in developing histogram losses the vital information -s data are not represented in order the time,dependent or time,related trends in the process may not be revealed Run;,art
)un +harts arebetter option over histograms as they overcome the limitations of thehistograms. 0 run chart represents change in measurement over a sequence ortime. )un charts are used to determine cyclic events and their average values. Steps in makin) Run ;,arts
P +ollect "ata P 0rrange data with time sequence P !lot the data in order P 'nterpreting "ata
The run chart reveals the following about the process •
)un charts display process performance over time
•
Trends, cycles, and large variations are clearly visible
•
0n average line may be added to a run chart to clarify movement of the data away from the process average
Two types of mistake normally people commit while interpreting the run chart 4. 6.
cycle or trend exist but actually it is not cycle or trend does not exist but actually they exist
To overcome this problem a thumb rule is to look at the data for a long period of time Pareto ;,art Q'G)"( !0)T( an 'talian economist provided a golden rule which fits into many managerial situations. The golden rule he noticed is MW0GT; 'S +(-+-T)0T" '- 0 W !(!GN. !areto principle A MThe majority of wealth is held by a disproportionately small segment of the populationN. This principle is also known as =< : 6< principle. =
C*)0- has noticed that this principle applies to quality improvement as well. 0ccording to Curan the problems that occur a few are very frequent while other important problems occur seldom. ;e given the phrase as MQital few and the trivial manyN !areto +harts are used to apply the =<:6< rule of Coseph Curan which states that =
• •
•
•
1irst define categories 2ort the data into the ategories and find out the fre0uency of occurrence of each category -rrange the categories in descending order
The !areto +hart of the following problem is given belowA
Pro+lem Type 7re(uency Annual ;ost on Rs1&&& ;umulati!e6 0
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7lo8 ;,art 0 flow chart is way of representing a procedure using simple symbols and arrows. 0 low chart shows the activities in a process and the relationships between them. 0 low chart lets a process be understood easily. 't also demonstrate the relationships between the elements of the process. Steps in makin) 7lo8 ;,arts
•
•
•
•
•
etermine the &rocess need to be represented by flow chart 3ist down the se0uence of operation and other details 2tart at a certain point and go then step by step using flow chart symbols 4rite the titles to each element
Scatter Dia)ram
Scatter diagram is a statistical chart which shows a trend in a series of data. 't demonstrates correlations between values. Steps in makin) Scatter Dia)ram
• •
•
&lot the data points raw trend line by fitting a straight line 5pward line shows the positive trend 3R increases
and L increases5 •
ownward line shows the negative trend 3R increases
and L decreases5
;ause and 'ffect Dia)rams Steps5 0 +ause and ffect "iagram shows the relationship between effect and the categories of their causes. The diagram look like a fishbone it is therefore also called fish%bone diagram. +ause and effect diagram enables a team to focus on the content of a problem. 't helps to provide a comprehensive picture of the problem and the root causes of the same. Steps in making +ause and ffect "iagram "etermine the ffect or !roblem +ategori7e the possible causes "escribe the possible causes 4.
"raw an arrow hori7ontally pointing to an effect
6.
"raw four or more branches off the large arrow to represent main categories of potential causes.
Typical categories are man, machinery, methods, and materials.
9.
Secondary causes can be listed on branches off the category branches.
?.
0dditional causes can be branched off the Secondary causes.
>.
0dditional +auses, if any, may further be branched off the tertiary causes. The process goes on till all the possible causes have been explored.
;ontrol ;,art +ontrol charts are statistical tool, showing whether a process is in control or not. 't is a graphical tool for
monitoring the activities of an ongoing process also referred as Shewhart control charts. Steps in makin) control c,art
• • • •
efine 5pper limit lower limit and enter line raw hart &lot the data points into chart 6nterpret the control chart
"etails regarding control chart is given in the next lectures Goto Home
Lecture 5 ;ontrol ;,arts igure5 +ontrol charts are statistical tool, showing whether a process is in control or not. 't is a graphical tool for monitoring the activities of an ongoing process also referred as Shewhart control charts. +ontrol charts are used for process monitoring and variability reduction. $efore discussing and calculating the limits etc. of control charts, it is necessary to understand causes of variations present in the system. Qariability is an inherent feature of every process. !roduction data always have some variability. ;auses of Cariations Two types of causes are present in the production system •
•
Special causes: Qariation due to identifiable factors in the production process. xamples of special causes includeA wrong tool, wrong production method, improper raw material, operator1s skill, wrong die etc. +ontrol of process is achieved through the elimination of special causes. 0ccording to "eming, only 4>B of the problems are due to the special causes. Special causes or also sometimes referred as Assi)na+le causes ;ommon causes: Qariation inherent in the process. 'mprovement of process is accomplished through the reduction of common causes and improving the system. 0ccording to "eming, =>B of the problems are due to the common causes.
-ssignable causes are controlled by the use of statistical process charts. Steps in constructin) a control c,art •
"ecide what to measure or count
•
+ollect the sample data
•
!lot the samples on a control chart
•
+alculate and plot the control limits on the control chart
•
"etermine if the data is in control
•
•
'f non%random variation is present, discard the data 3fix the problem5 and recalculate the control limits When data are with in the control limits we leave the process assuming there are only chance causes present
0 process is in control ' •
-o sample points outside control limits
•
#ost points near process average or center line
•
0bout equal number of points above and below the center line
•
Sample point are distributed randomly
7i)ure: ;ontrol ;,art Representin) 9imits? Special ;auses? ;ommon ;auses Goto Home
Lecture 6
Types of Process Data Two types of process dataA 4. QariableA continuous data. Things we can measure. xample includes length, weight, time, temperature, diameter, etc. 6. 0ttributeA discrete data. Things we count. xamples include number or percent defective items in a lot, number of defects per item etc. Types of ;ontrol ;,artsA the classification of control charts depend upon the type of data. 4. Qariable chartsA are meant for variable type of data. R bar and ) +hart, R bar and sigma chart, chart for the individual units 6.
0ttribute chats A are meant for attribute type of data. p chart, np chart, c chart, u chart, * chart
;ontrol c,arts for t,e !aria+le type of data +ar and R c,arts5 'n the x bar chart the sample means are plotted in order to control the mean value of a variable. 'n ) chart, the sample ranges are plotted in order to control the variability of a variable +entre line, upper control limit, lower control limit for x bar and ) charts are calculated. The formulae used are as followingA
mean of the i th sample n
sample si7e,
Ri
ith data
)i Rmax3i5 Rmin 3i5
range of ith sample maximum value of the data in ith sample minimum value of the data in ith sample
mean of g samples
;entre 9ine for +ar c,art5 mean of mean of g samples g
number of samples
standard deviation of samples
d6
estimate of standard deviation of population parameter depends on sample si7e n
pper control limit for +ar c,art5
06
parameter depends on sample si7e
value of 06 can be directly obtained from the standard tables
9o8er control limit for +ar c,art5
where
pper control limit for R c,art5
where
9o8er control limit for R c,art5
'ample: Mean !alues and ran)es of data from 2& samples sample si
S.
Mean of Mean of Mean of Mean of Mean of Ran)e S. Ran)e S. Ran)e S. Ran)e S. Ran)e Sample Sample Sample Sample Sample
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Sum of mean of 6< samples
696
0verage of mean values of 6< samples
0verage of )anges of 6< samples *pper +ontrol Gimit of R bar chart
44.D 3+enter Gine of R bar +hart5
?.4> 3+enter Gine of ) +hart5
44.D 2 06 ?.4> 306 <.E6& for sample si7e ?5 4?.D9
Gower +ontrol Gimit of R bar chart
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*pper +ontrol Gimit of ) chart
"9 ?.4> 3"9 6.6=6 for sample si7e ?5 &.?E
Gower +ontrol Gimit of ) chart
&.>
"? ?.4> 3"? < for sample si7e ?5
E-ar ;,art Sample data at S.- 6, 4D, and 4= are slightly above the *+G. fforts must be made to find the special causes and revised limits are advised to calculate after deleting these data.
R ;,art 0ll the data are within the G+G and *+G in ) +hart. ;ence variability of the process data is not an issue to worry. ;ontrol c,arts for Attri+ute type data p? c? u c,arts5 p%charts calculates the percent defective in sample. p%charts are used when observations can be placed in two categories such as yes or no, good or bad, pass or fail etc.
c%charts counts the number of defects in an item. c%charts are used only when the number of occurrence per unit of measure can be counted such as number of scratches, cracks etc. u%chart counts the number of defect per sample. The u chart is used when it is not possible to have a sample si7e of a fixed si7e. or attribute control charts, the estimate of the variability of the process is a function of the process average. +entre line, upper control limit, lower control limit for c, p, and u charts are calculated. The formulae used are as followingA pEc,art formulae
centre line of p chart
Where n is the sample si7e. Sample si7e in p chart must be Sometimes G+G in p chart becomes negative, in such cases G+G should be taken as < cEc,art formulae
centre line of c chart
uEc,art formulae
ci number of defects in i th sample k number of samples ni si7e of ith samples
'ample: pEc,art Data for defecti!e ;Ds from 2& samples sample si
Sample .o
.o of Defecti!e ;Ds 0
Proportion Defecti!e 0 sample si
Sample .o
.o of Defecti!e ;Ds 0
Proportion Defecti!e 0 sample si
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pE;,art Sample data at S.- 4D , 4=, and 6< are above the *+G. fforts must be made to find the special causes and revised limits are advised to calculate after deleting these data. There is important observation that is clearly visible from the data points that there is an increasing trend in the average proportion defectives beyond sample number4> also, data show cyclic pattern. !rocess appears to be out of control and also there is a strong evidence that data are not from independent source. 'ample: cEc,art Data for defects on TC set from 2& samples sample si
Sample .o
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cE;,art -one of the sample is out of the G+G and *+G. $ut the chart shows cyclic trend. Goto Home
Lecture 7 Process ;apa+ility Process Sta+ility 0 process output is considered stable when it consists of only common%cause variation and has the reproducibility over a long period of time. +ommon%cause variation originates from the basic elements of a manufacturing process. Which are > #sA •
#an 3operator5,
• •
#achine,
#aterial,
•
#ethod of work, and
•
#easurement system
.STA-9' PR*;'SS 30s mean value and Qariance of the process is continuously varying5
STA-9' PR*;'SS 30s mean value and Qariance of the process is constant5 The process parameters can not be correctly estimated for an unstable process because of the following reasons. •
-o well defined output distribution
•
#isleading decisions
•
-o useful estimation of process capability
•
-o useful purpose for process improvement
Process ;apa+ility !rerequisites for process capability is to estimation of process av erage and process standard deviation. Process ;apa+ility for -ilateral Specification
0 process producing a characteristic with a bilateral specification meets the minimum requirement of capability when it is stable, and has no more than <.49> percent of its output for this characteristic outside either specification limit. Process ;apa+ility for nilateral Specification 0 process producing a characteristic with a unilateral specification meets the minimum requirement of capability when it is stable, and has no more than <.49> percent of its output for this characteristic outside the single specification limit.
Why Processes Fail
•
!rocess variation 3spread5 is too large
•
!rocess average is not properly centered
•
!rocess average is not properly centered and !rocess Qariation is too large
Measurin) Process ;apa+ility 4. +apability 'ndex, +p or bilateral specification When !rocess average is equal to nominal valueA +p 3*SG O GSG5 : Ds When process average is not equal to nominal valueA +p #inimum 3m % GSG: 9s , *SG% m : 9s 5 6. +apability 'ndex, +p or unilateral specification 'n case of *SG A +p #aximum 3*SG% m : 9s , *SG%R : 9s 5
'n case of GSG A +p #aximum 3m%GSG : 9s , R % *SG : 9s 5
;p !alues
;apa+ility Ratin)s
+p 6.<<
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7lo8 ;,art for ;onductin) a Process ;apa+ility
Goto Home
Part 3 CPM/PE RT Lecture ! Pro/ect Mana)ement 0 project is a well defined task task which has a definable beginning beginning and a definable end and requires requires one or more resources for the completion of its constituent activities, which are interrelated and which must be accomplished to achieve the objectives of the project. !roject management is evolved to coordinate and control all project activities in an efficient and cost effective manner. The salient features of a project areA • •
•
0 project has identifiable beginning and end points. ach project can be broken down into a number of identifiable activities which will consume time and other resources during their completion. 0 project is scheduled to be completed by a target date.
•
0 project is usually large and complex and has many interrelated activities.
•
The execution of the project activities is always subjected to some uncertainties and risks.
.et8ork Tec,ni(ues The network techniques of project management have developed in an evolutionary way in many years. *p to the end of 4=th century, the decision making in general and project management in particular was intuitive and depended primarily on managerial capabilities, experience, judgment and academic background of the managers. 't was only in the early of 4&<<1s that the pioneers of scientific management, started developing the scientific management techniques. The forerunner to network techniques, the 8antt chart was developed, during world war ', by ;enry G 8antt, for the purpose of production scheduling. The 8antt chart 3 igure 4 5 was later modified to bar chart 3 igure 6 5, which was used as an important tool in both the project and production scheduling. The bar charts, then developed into milestone charts 3 igure 9 5, and next into network techniques 3such as +!# and !)T5. .et8ork ;onstruction 0 network network is the graphical representation of the project activities activities arranged in a logical sequence and depicting all the interrelationships among them. 0 network network consists of activities and events. Acti!ity 0n activity is a physically physically identifiable part of a project, which consumes both time and resources. 0ctivity is represented by an arrow in a network diagram 3 igure ? 5. The head of an arrow represents the start of activity and the tail of arrow represents its end. 0ctivity 0ctivity description and its estimated completion time are written along the arrow. 0n 0n activity in the network can be represented by a number of waysA 3i5 by numbers of its head and tail events 3i.e. 4<%6< etc.5, and 3ii5 by a letter code 3 i.e. 0, 0, $ etc.5. 0ll those activities, which must be completed before the start of activity under consideration, are called its predecessor activities. 0ll those activities, which have to follow the activity under consideration, are c alled its successor activities 3 igure > 5. 0n activity, activity, which is used to to maintain the pre%defined pre%defined precedence relationship only during the the construction of
the project network, is called a dummy activity. "ummy activity is represented by a dotted arrow and does not consume any time and resource 3 igure D 5. 0n unbroken chain of activities between any two events is called a path. '!ent 0n event represents the accomplishment accomplishment of some task. 'n a network diagram, beginning and ending of an activity are represented as events. ach event is represented as a node in a network diagram. 0n event does not consume any time or resource. ach network diagram starts with an initial event and ends at a terminal event. ach node is represented by a circle 3 igure E5 E5 and numbered by using the ulkerson1s )ule. ollowing steps are involved in the numbering of the nodesA • •
•
The initial initial event, event, which which has all outgoing outgoing arrows arrows and no incoming arrow, is numbered numbered as 4. "elete all the arrows arrows coming out from node just numbered node 3i.e. 45. This step will create some more nodes 3at least one5 into initial events. -umber these events in ascending order 3i.e. 6, 9 etc.5. +ontinue the the process until the final or terminal node which which has all arrows arrows coming in, with no arrow going out, is numbered.
0n illustration of ulkerson1s ulkerson1s )ule of numbering the the events is shown in igure = . 0s a recommendation it must be noted that most of the projects are liable for modifications, and hence there should be a scope of adding more events and numbering them without causing any inconsistency in the network. This is achieved by skipping the numbers 3i.e. 4<, 6<, 9
A Gooping among the activities must be avoided3 igure44 5. ;PM and P'RT The +!# 3critical path method5 system of networking is used, when the activity time estimates are deterministic in nature. or each activity, a single value of time, required for its execution, is estimated. Time estimates can easily be converted into cost data in this technique. +!# is an activity oriented technique. The !)T 3!roject valuation and )eview Technique5 technique is used, when activity time estimates are stochastic in nature. or each activity, three values of time 3optimistic, most likely, pessimistic5 are estimated. (ptimistic time 3to5 estimate is the shortest possible time required for the completion of activity. #ost likely time 3tm5 estimate is the time required for the completion of activity under normal circumstances. !essimistic time 3tp5 estimate is the longest possible time required for the completion of activity. 'n !)T %distribution is used to represent these three time estimates. 0s !)T activities are full of uncertainties, times estimates can not easily be converted in to cost data. !)T is an event oriented technique.
Goto Home
Lecture " ;alculation of 'pected Time and Cariance of a Pat, in P'RT The xpected Time of a chain of activities in series, is the S*# of their expected times, similarly the variance of the path, is the S* Qariances of activities on the path in ig below, three activities 0,$ and + are connected in series, 3i.e. from a path5. Their time esti
t pare given along the activity arrow. The expected time of the path 4%6%9%? is
0s the length of the path ,that is the number of activies connected in series increases,the variance of the path and hence the uncert meeting the expected time increases. 'ample:
'n the -etwork of fig below, the !)T time estimates of the activities are written along the activity arrow in the order t o-t m-t p. +omp expected time and variance for each activity. 0lso compute the expected duration and standard deviation for the following path of th 3a5 4<%6<%><%=<%&< 3b5 4<%9<%><%E<%&< 3c5 4<%?<%D<%=<%&<
Solution : The +omputation of expected times and variance for different activities are carried in a table given below
-ctivity i 7
Time *stimates tm t p to
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.et8ork Analysis;PM5 : 'n the project network given in figure below , activation and their directions are specified at the activities. ind the critical path and th
duration.
a5 7or8ard Pass ;omputations :
'T/5 is the earliest expected time of event /,
#T&i' is the earliest e+pected time of predecessor activity i
is the e+pected time of activity i().
+5 -ack8ard Pass ;omputations :
9T/5 is the latest expected time of event i,
LT&i' is the latest e+pected time of sucessor event )
is the e+pected time of activity i().
&redecessor *vent i
2uccessor *vent 7
*T(i) *arliest e+pected *+pected Time of the time of &redecessor activity i,7 activity i
*T(7) *arliest e+pected Time of event 7
3T(i) LT&)' 3atest 3atest e+pected e+pected time time of of event i sucessor event 7
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Forcasting Lecture ! *ntroduction
The growing competition fre0uent changes in customer's demand and the trend towards automation demand that decisions in business should not be based purely on guesses rather on a careful analysis of data concerning the future course of events. 8ore time and attention should be given to the future than to the past and the 0uestion 'what is likely
to happen9' should take precedence over 'what has happened9' though no attempt to answer the first can be made without the facts and figures being available to answer the second. 4hen estimates of future conditions are made on a systematic basis the process is called forecasting and the figure or statement thus obtained is defined as forecast. 6n a world where future is not known with certainty virtually every business and economic decision rests upon a forecast of future conditions. 1orecasting aims at reducing the area of uncertainty that surrounds management decision, making with respect to costs profit sales production pricing capital investment and so forth. 6f the future were known with certainty forecasting would be unnecessary. /ut uncertainty does e+ist future outcomes are rarely assured and therefore organi:ed system of forecasting is necessary. The following are the main functions of forecasting; The creation of plans of action.
• •
•
The general use of forecasting is to be found in monitoring the continuing progress of plans based on forecasts. The forecast provides a warning system of the critical factors to be monitored regularly because they might drastically affect the performance of the plan.
6t is important to note that the ob7ective of business forecasting is not to determine a curve or series of figures that will tell e+actly what will happen say a year in advance but it is to make analysis based on definite statistical data which will enable an e+ecutive to take advantage of future conditions to a greater e+tent than he could do without them. 6n forecasting one should note that it is impossible to forecast the future precisely and there always must be some range o f error allowed for in the forecast. +ependent versus *ndependent +emand
emand of an item is termed as independent when it remains unaffected by the demand for any other item. On the other hand when the demand of o ne item is linked to the demand for another item demand is termed as dependent. 6t is important to mention that only independent demand needs forecasting. ependent demand can be derived from the demand of independent item to which it is linked. Business Time Series
The first step in making a forecast consists of gathering information from the past. One should collect statistical data recorded at successive intervals of time. 2uch a data is usually referred to as time series. -nalysts plot demand data on a time scale study the plot and look for consistent shapes and patterns. - time series of demand may have constant trend or seasonal pattern ( 1igure ) or some combination of these patterns. The forecaster tries to understand the reasons for such changes such as •
hanges that have occurred as a result of general tendency of the data to increase or decrease known as secular movements.
•
hanges that have taken place during a period of ! months as a result in changes in climate weather conditions festivals etc. are called as seasonal changes.
•
hanges that have taken place as a booms and depressions are called as cyclical variations.
•
hanges that have taken place as a result of such forces that could not be predicted (like flood earth0uake etc.) are called as irregular or erratic variations.
Lecture ! *ntroduction
The growing competition fre0uent changes in customer's demand and the trend towards automation demand that decisions in business should not be based purely on guesses rather on a careful analysis of data concerning the future course of events. 8ore time and attention should be given to the future than to the past and the 0uestion 'what is likely
to happen9' should take precedence over 'what has happened9' though no attempt to answer the first can be made without the facts and figures being available to answer the second. 4hen estimates of future conditions are made on a systematic basis the process is called forecasting and the figure or statement thus obtained is defined as forecast. 6n a world where future is not known with certainty virtually every business and economic decision rests upon a forecast of future conditions. 1orecasting aims at reducing the area of uncertainty that surrounds management decision, making with respect to costs profit sales production pricing capital investment and so forth. 6f the future were known with certainty forecasting would be unnecessary. /ut uncertainty does e+ist future outcomes are rarely assured and therefore organi:ed system of forecasting is necessary. The following are the main functions of forecasting; The creation of plans of action.
• •
•
The general use of forecasting is to be found in monitoring the continuing progress of plans based on forecasts. The forecast provides a warning system of the critical factors to be monitored regularly because they might drastically affect the performance of the plan.
6t is important to note that the ob7ective of business forecasting is not to determine a curve or series of figures that will tell e+actly what will happen say a year in advance but it is to make analysis based on definite statistical data which will enable an e+ecutive to take advantage of future conditions to a greater e+tent than he could do without them. 6n forecasting one should note that it is impossible to forecast the future precisely and there always must be some range o f error allowed for in the forecast. +ependent versus *ndependent +emand
emand of an item is termed as independent when it remains unaffected by the demand for any other item. On the other hand when the demand of o ne item is linked to the demand for another item demand is termed as dependent. 6t is important to mention that only independent demand needs forecasting. ependent demand can be derived from the demand of independent item to which it is linked. Business Time Series
The first step in making a forecast consists of gathering information from the past. One should collect statistical data recorded at successive intervals of time. 2uch a data is usually referred to as time series. -nalysts plot demand data on a time scale study the plot and look for consistent shapes and patterns. - time series of demand may have constant trend or seasonal pattern ( 1igure ) or some combination of these patterns. The forecaster tries to understand the reasons for such changes such as •
hanges that have occurred as a result of general tendency of the data to increase or decrease known as secular movements.
•
hanges that have taken place during a period of ! months as a result in changes in climate weather conditions festivals etc. are called as seasonal changes.
•
hanges that have taken place as a booms and depressions are called as cyclical variations.
•
hanges that have taken place as a result of such forces that could not be predicted (like flood earth0uake etc.) are called as irregular or erratic variations.
PPC 3ecture *ntroduction
&roduction &lanning is a managerial function which is mainly concerned with the following important issues; •
4hat production facilities are re0uired9
•
ow these production facilities should be laid out in the space available for production9 and
•
ow they should be used to produce the desired products at the desired rate of production9
/roadly speaking production planning is concerned with two main aspects; (i) routing or planning work tasks (ii) layout or spatial relationship between the resources. &roduction planning is dynamic in nature and always remains in fluid state as plans may have to be changed according to the changes in circumstances. &roduction control is a mechanism to monitor the e+ecution of the plans. 6t has several important functions; •
8aking sure that production operations are started at planned places and planned times.
•
Observing progress of the operations and recording it p roperly.
•
-naly:ing the recorded data with the plans and measuring the deviations.
•
Taking immediate corrective actions to minimi:e the negative impact of deviations from the plans.
•
1eeding back the recorded information to the planning section in order to improve future plans.
- block diagram depicting the architecture of a control system is shown in 1igure. 6mportant functions covered by production planning and control (&&) function in any manufacturing system are shown in Tablealong with the issues to be covered. Types of Production Systems
- production system can be defined as a transformation system in which a saleable product or service is created by working upon a set of inputs. 6nputs are usually in the form of men machine money materials etc. &roduction systems are usually classified on the basis of the following; •
Type of product
•
Type of production line
•
•
*0uipments used etc.
They are broadly classified into three categories; •
ob shop production
•
/atch production
•
8ass production
,o- Production
6n this system products are made to satisfy a specific order. owever that order may be produced, ,only once ,at irregular time intervals as and when new order arrives ,at regular time intervals to satisfy a continuous demand The following are the important characteristics of 7ob shop type production system; •
8achines and methods employed should be general purpose as product changes are 0uite fre0uent.
•
&lanning and control system should be fle+ible enough to deal with the fre0uent changes in product re0uirements. 8an power should be skilled enough to deal with changing work conditions.
•
2chedules are actually non e+istent in this system as no d efinite data is available on the product.
•
6n process inventory will usually be high as accurate plans and schedules do n ot e+ist.
•
&roduct cost is normally high because of high material and labor costs.
•
>rouping of machines is done on functional basis (i.e. as lathe section milling section etc.)
•
This system is very fle+ible as management has to manufacture varying product types.
•
8aterial handling systems are also fle+ible to meet changing product re0uirements.
•
Batch Production
/atch production is the manufacture of a number of identical articles either to meet a specific order or to meet a continuous demand. /atch can be manufactured either, ,only once ,or repeatedly at irregular time intervals as and when demand arise ,or repeatedly at regular time intervals to satisfy a continuous demand The following are the important characteristics of batch type production system; •
•
-s final product is somewhat standard and manufactured in batches economy of scale can be availed to some e+tent. 8achines are grouped on functional basis similar to the 7ob shop manufacturing.
•
2emi automatic special purpose automatic machines are generally used to take advantage of the similarity among the products. 3abor should be skilled enough to work upon different product batches.
•
6n process inventory is usually high owing to the type of layout and material handling policies adopted.
•
•
•
2emi automatic material handling systems are most appropriate in con7unction with the semi automatic machines. Normally production planning and control is difficult due to the odd si:e and non repetitive nature of order.
.ass Production
6n mass production same type of pro duct is manufactured to meet the continuous demand of the product. 5sually demand of the product is very high and market is going to sustain same demand for sufficiently long time. The following are the important characteristics of mass production system;
•
-s same product is manufactured for sufficiently long time machines can be laid down in order of processing se0uence. &roduct type layout is most appropriate for mass production system. 2tandard methods and machines are used during part manufacture.
•
8ost of the e0uipments are semi automatic or automatic in nature.
•
8aterial handling is also automatic (such as conveyors).
•
2emi skilled workers are normally employed as most of the facilities are automatic.
•
-s product flows along a pre defined line planning and control of the system is much easier.
•
ost of production is low owing to the high rate of production.
•
6n process inventories are low as production scheduling is simple and can be implemented with ease.
•
MRP 3ecture =ntroduction 't was discussed in demand forecasting that in the dependent demand situation, if the demand for an item is known, the demand for other related items can be deduced. or example, if the demand of an automobile is known, the demand of its sub assemblies and sub components can easily be deduced. or dependent demand situations, normal reactive inventory control systems 3i.e. (J etc.5 are not suitable because they result in high inventory costs and unreliable delivery schedules. #ore recently, managers have reali7ed that inventory planning systems 3such as materials requirements planning5 are better suited for dependent demand items. #)! is a simple system of calculating arithmetically the requirements of the input materials at different points of time based on actual production plan. #)! can also be defined as a planning and scheduling system to meet time%phased materials requirements for production operations. #)! always tries to meet the delivery schedule of end products as specified in the master production schedule. MRP *+/ecti!es #)! has several objectives, such asA •
•
•
Reduction in =n!entory ;ostA $y providing the right quantity of material at right time to meet master production schedule, #)! tries to avoid the cost of excessive inventory. Meetin) Deli!ery Sc,eduleA $y minimi7ing the delays in materials procurement, production decision making, #)! helps avoid delays in production thereby meeting delivery schedules more consistently. =mpro!ed PerformanceA $y stream lining the production operations and minimi7ing the unplanned interruptions, #)! focuses on having all components available at right place in right quantity at right time.
MRP System 0 simple sketch of an #)! system is shown in figure. 't can be seen from the figure that an #)! system has three major input componentsA •
•
•
Master Production Sc,edule MPS5A #!S is designed to meet the market demand 3both the firm orders and forecasted demand5 in future in the taken planning hori7on. #!S mainly depicts the detailed delivery schedule of the end products. ;owever, orders for replacement components can also be included in it to make it more comprehensive. -ill of Materials -*M5A $(# represents the product structure. 't encompasses information about all sub components needed, their quantity, and their sequence of buildup in the end product. 'nformation about the work centers performing buildup operations is also included in it. =n!entory Status 7ileA 'nventory status file keeps an up%to%date record of each item in the inventory. 'nformation such as, item identification number, quantity on hand, safety stock level, quantity already allocated and the procurement lead time of each item is recorded in this file.
0fter getting input from these sources, #)! logic processes the available information and gives information about the followingA •
•
Planned *rders ReceiptsA This is the order quantity of an item that is planned to be ordered so that it is received at the beginning of the period under consideration to meet the net requirements of that period. This order has not yet been placed and will be placed in future. Planned *rder ReleaseA This is the order quantity of an item that is planned to be ordered and the planned time period for this order that will ensure that the item is received when needed. !lanned
•
order release is determined by offsetting the planned order receipt by procurement lead time of that item. *rder Resc,edulin)A This highlight the need of any expediting, de%expediting, and cancellation of open orders etc. in case of unexpected situations.
Inventry 3ecture =ntroduction The amount of material, a company has in stock at a specific time is known as inventory or in terms of money it can be defined as the total capital investment over all the materials stocked in the company at any specific time. 'nventory may be in the form of, •
raw material inventory
•
in process inventory
•
finished goods inventory
•
spare parts inventory
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office stationary etc.
0s a lot of money is engaged in the inventories along with their high carrying costs, companies cannot afford to have any money tied in excess inventories. 0ny excessive investment in inventories may prove to be a serious drag on the success ful working of an organi7ation. Thus there is a need to manage our inventories more effectively to free the excessive amount of capital engaged in the materials. W,y =n!entories 'nventories are needed because demand and supply can not be matched for physical and economical reasons. There are several other reasons for carrying inventories in any organi7ation.
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To safe guard against the uncertainties in prices fluctuations, supply conditions, demand conditions, lead times, transport contingencies etc. To reduce machine idle times by providing enough inprocess inventories at appropriate locations.
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To take advantages of quantity discounts, economy of scale in transportation etc.
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To decouple operations i.e. to make one operation1s supply independent of another1s supply. This helps in minimi7ing the impact of break downs, shortages etc. on the performance of the down stream operations. #oreover operations can be scheduled independent of each other if operations are decoupled.
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To reduce the material handling cost of semi%finished products by moving them in large quantities between operations.
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To reduce clerical cost associated with order preparation, order procurement etc.
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=n!entory ;osts
'n order to control inventories appropriately, one has to consider all cost elements that are associated with the inventories. There are four such cost elements, which do affect cost of inventory. •
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*nit costA it is usually the purchase price of the item under consideration. 'f unit cost is related with the purchase quantity, it is called as discount price. !rocurement costsA This includes the cost of order preparation, tender placement, cost of postages, telephone costs, receiving costs, set up cost etc.
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+arrying costsA This represents the cost of maintaining inventories in the plant. 't includes the cost of insurance, security, warehouse rent, taxes, interest on capital engaged, spoilage, breakage etc.
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Stockout costsA This represents the cost of loss of demand due to shortage in supplies. This includes cost of loss of profit, loss of cus tomer, loss of goodwill, penalty etc.
'f one year planning hori7on is used, the total annual cost of inventory can be expressed asA Total annual inventory cost +ost of items 2 0nnual procurement cost 2 0nnual carrying cost 2 Stockout cost The objective of inventory management team is to minimi7e the total annual inventory cost. 0 simplified graphical presentation in which cost of items, procurement cost and carrying cost are depicted is shown in igure 4 . 't can be seen that large values of order quantity J result in large carrying cost. Similarly, when order quantity J is large, fewer orders will be placed and procurement cost will decrease accordingly. The total cost curve indicates that the minimum cost point lies at the intersection of carrying cost and procurement curves. =n!entory *peratin) Doctrine When managing inventories, operations manager has to make two important decisionsA •
When to reorder the stock 3i.e. time to reorder or reorder point5
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;ow much to stock to reorder 3i.e. order quantity5
)eorder point is usually a predetermined inventory level, which signals the operations manager to start the procurement process for the next order. (rder quantity is the order quantity. =n!entory Modellin) This is a quantitative technique for deriving the minimum cost model for the inventory problem in hand. 'conomic *rder uantity '*5 Model This model is applied when objective is to minimi7e the total annual cost of inventory in the organi7ation. conomic order quantity is that si7e of the order which helps in attaining the above set objective. (J model is applicable under the following conditions. •
"emand per year is deterministic in nature
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!lanning period is one year
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Gead time is 7ero or constant and deterministic in nature
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)eplenishment of items is instantaneous
