Bhel inventory management singh begun yeh

Shri

1. Operations Management
MBA II Sem
UNIT: III
GITAM School of Business
GITAM Deemed to be University

2. Topics
•Layout Planning -Types of Layout, Implications for Layout
Planning, Layout Design. Dependent and Independent
Demand, Strategies to Meet Demand, Loading –Finite and
Infinite, Sequencing, Capacity Planning.
Reference Books:
•Nigel Slack et al., Operations Management, 6
th
Edition
•B.Mahadevan, Operations Management Theory and Practice, 3
rd
Edition

3. Layout Planning
•The process of preparing a layout is an art as well as
science
•The final layout will be a consummation of many trails,
errors, and compromises, may not be the best.
•To make the final layout as perfect as possible, the layout
personnel would do well to proceed step by step in the
process of layout planning.

4. Steps in Layout Planning and Design

5. Principles of Layout
•The Principle of Minimum Travel
•The Principle of Sequence
•The Principle of Usage
•The Principle of Compactness
•The Principle of safety and satisfaction
•The Principle of Flexibility
•The Principle of Minimum Investment

6. •Plant layout is the arrangement of the work space within
a facility.
•Itconsiderswhichdepartmentsorworkareasshouldbe
adjacenttooneanothersothattheflowofproduct,
information,andpeoplecanmovequicklyandefficiently
throughtheproductionsystem.
•It is defined as “a technique of locating machines, processes
and plant services within the factory so as to achieve the right
quantity and qualityof output at the lowestpossible cost of
manufacturing”.
•It involves a judicious arrangementof production facilities so
that workflow is direct.
Plant Layout

7. Objectives of Plant layout
•Minimize investmentin equipment
•Minimize overall production time
•Utilize existing spacemost effectively
•Provide for employee convenience, safety and comfort
•Maintain flexibilityof arrangement and operation
•Minimize materials-handlingcost
•Facilitate the manufacturing process
•Facilitate the organizational structure
7

8. •Material
•Product
•Worker
•Machinery
•Type of Industry
•Method of manufacturing Process
•Location
•Managerial Policies
Factors Influencing Plant layout

9. Layout Types
•Most practical layouts are derived from only
four basic layout types. These are:
•Fixed-position layout
•Functional layout
•Cell layout
•Product layout
•Combined layout

10. Fixed-Position layout
•Fixed-position layout is in some ways a contradiction in terms, since the
transformed resources (customers, material and information) do not
move between the transforming (facilities and staff) resources.
•In this type of layout, the major product being produced is fixed at one
location.
•Equipment labor and components are moved to that location.
•All facilities are brought and arranged around one work center.
•Instead of materials, information or customers flowing through an
operation, the recipient of the processing is stationary and the equipment,
machinery, plant and people who do the processing move as necessary.
•This could be because the product or the recipient of the service is
•too large to be moved conveniently, or
•it might be too delicate to move, or
•perhaps it could object to being moved;

11. •Examples:
•Shipbuilding–the product is too large to move.
•Open-heart surgery –patients are too delicate to move.
•High-class service restaurant –customers would object to
being moved to where food is prepared.
•Mainframe computer maintenance –the product is too big
and probably also too delicate to move, and the customer
might object to bringing it in for repair.
Fixed-Position layout Cont..
Ship Building yard
Finished Products
(ship)
Material
Equipment
Labor

12. Advantages
•Materialmovementisreduced
•Capitalinvestmentisminimized.
•Productioncentersareindependent
ofeachother.Hence,effective
planningandloadingcanbemade.
Thustotalproductioncostwillbe
reduced.
•Itoffersgreaterflexibilityandallows
changeinproductdesign,product
mixandproductionvolume.
Fixed-Position layout Cont..
Limitations
•Highlyskilledmanpoweris
required.
•Movement of machines
equipment’stoproductioncenter
maybetimeconsuming.
•Complicatedfixturesmaybe
requiredforpositioningofjobsand
tools.Thismayincreasethecostof
production.

13. Functional (Process) layout
•Functional layout is so called because it conforms to the needs and
convenience of the functions performed by the transforming
resources within the processes.
•In functional layout, similar resources or processes are located
together.
•This may be because it is convenient to group them together, or
that the utilization of transforming resources is improved.
•It means that when materials, information or customers flow
through the operation, their route is determined according to their
needs.
•Different products or customers will have different needs and
therefore take different routes.
•Usually this makes the flow pattern in the operation very complex.

14. Examples:
•Hospital –some processes (e.g. X-ray machines and laboratories) are
required by several types of patient; some processes (e.g. general wards)
can achieve high staff-and bed-utilization.
•Manufacturing the parts which go into aircraft engines –some processes
(e.g. heat treatment) need specialist support (heat and fume extraction);
some processes (e.g. machining centres) require the same technical
support from specialist setter–operators; some processes (e.g. grinding
machines) get high machine utilization as all parts which need grinding
pass through a single grinding section.
•Supermarket –some products, such as tinned goods, are convenient to
restock if grouped together.
Functional (Process) layoutCont..

15. Example:
Drilling Planning Grinding
(1) (2) (5) (5)
(2) (3)
Milling Welding Assembly
(1)
(3) (4) (4) (6) (6)
Product A:
Product B:
Process layout showing movement of two products
15
Functional (Process) layoutCont..

16. An example of a functional layout in a library showing the path
of just one customer
Functional (Process) layoutCont..

17. Advantages
•Therewillbelessduplicationofmachines.
Thus,totalinvestmentinequipment
purchasewillbereduced.
•Itoffersbetterandmoreefficient
supervisionthroughspecializationat
variouslevels.
•Thereisagreaterflexibilityinequipment
andmanpowerthusloaddistributionis
easilycontrolled.
•Betterutilizationofequipmentavailableis
possible.
•Breakdownofequipmentcanbeeasily
handledbytransferringworktoanother
machine/workstation.
•Therewillbebettercontrolofcomplicated
orprecisionprocesses,especiallywhere
muchinspectionisrequired.
Functional (Process) layoutCont..
Limitations
•Therearelongmaterialflowlinesand
hencetheexpensivehandlingis
required.
•Totalproductioncycletimeismore
owingtolongdistancesandwaitingat
variouspoints.
•Sincemoreworkisinqueueandwaiting
forfurtheroperationhencebottlenecks
occur.
•Generally,morefloorareaisrequired.
•Sinceworkdoesnotflowthrough
definitelines,countingandschedulingis
moretedious.
•Specializationcreatesmonotonyand
therewillbedifficultforthelaidworkers
tofindjobinotherindustries.

18. Product layout
•Product layout involves locating the transforming resources entirely
for the convenience of the transformed resources.
•Each product, piece of information or customer follows a
prearranged route in which the sequence of activities that are
required matches the sequence in which the processes have been
located. The transformed resources ‘flow’ as in a ‘line’ through the
process.
•Under this, machines and equipments are arranged in one line
depending upon the sequence of operations required for the
product.
•The materials move from one workstation to another sequentially
without any backtracking or deviation.
•This is why this type of layout is sometimes called flow or line
layout.
•Flow is predictable and therefore relatively easy to control.

19. Examples of product layout include:
•Automobile assembly –almost all variants of the same model
require the same sequence of processes.
•Loan application processing –all applications require the
same sequence of clerical and decision-making activities.
•Self-service cafeteria –generally the sequence of customer
requirements (starter, main course, dessert, drink) is common
to all customers, but layout also helps control customer flow.
Product layout Cont..
Lathe DrillGrinder AssemblyPaint shop
Product A: (1) (2) (3) (4) (5)
Planner Grinder Miler Lathe Welding
Product B: (1) (2) (3) (4) (5)

20. The sequence of processes in paper-making; each process will
be laid out in the same sequence
Product layout Cont..

21. Advantages
•Lowerstotalmaterialhandlingcost.
•Thereislessworkinprocesses.
•Betterutilizationofmenandmachines,
•Lessfloorareaisoccupiedbymaterial
intransitandfortemporarystorages.
•Greatersimplicityofproduction
control.
•Totalproductiontimeisalsominimized.
Product layout Cont..
Limitations
•Noflexibilitywhichisgenerally
requiredisobtainedinthislayout.
•Themanufacturingcostincreases
withafallinvolumeofproduction.
•Ifoneortwolinesarerunninglight,
thereisaconsiderablemachine
idleness.
•Asinglemachinebreakdownmay
shutdownthewholeproduction
line.
•Specializedandstrictsupervisionis
essential.

22. Product vs. Process Layouts
PRODUCT LAYOUT PROCESS LAYOUT
1. Description Sequential arrangement of
machines
Functional grouping of machines
2. Type of ProcessContinuous, mass
production, assembly
Intermittent, job shop
batch production, fabrication
3. Product Standardized, make-to-stockVaried, make-to-order
4. Demand Stable Fluctuating
5. Volume High Low
6. Equipment Special purpose General purpose
7. Workers Limited skills Varied skills
8. Inventory Low in-process, High in-process,
9. Storage Small Large
10.MaterialhandlingFixed path (conveyor) Variable path (forklift)
11.Advantage Efficiency Flexibility

23. Cell layout
•A cell layout is one where the transformed resources entering the
operation are pre-selected (or pre-select themselves) to move to
one part of the operation (or cell) in which all the transforming
resources, to meet their immediate processing needs, are located.
•Identify families of parts with similar flow paths
•Group machines into cells that resemble small assembly lines based
on part families
•Arrange cells so parts movement is minimized
•Locate large shared machines at point of use
•After being processed in the cell, the transformed resources may go
on to another cell.
•In effect, cell layout is an attempt to bring some order to the
complexity of flow which characterizes functional layout.

24. Cellular Layout Solution
Cell layout
Example:12
12 3
4
5
6
7
8 910
11
A BCRaw materials
Cell1
Cell 2
Cell 3
Assembly
Original Process Layout
Cellular Layout Solution

25. Examples of cell layouts include:
•Some laptop assembly –within a contract manufacturer’s factory, the
assembly of different laptop brands may be done in a special area
dedicated to that one brand that has special requirements such as
particularly high quality levels.
•‘Lunch’ products area in a supermarket –some customers use the
supermarket just to purchase sandwiches, savoury snacks, etc. for their
lunch. These products may be located together so that these
customers do not have to search around the store.
•Maternity unit in a hospital –customers needing maternity attention
are a well-defined group who can be treated together and who are
unlikely to need the other facilities of the hospital at the same time
that they need the maternity unit.
Cell layout Cont..

26. The ground floor plan of a department store showing the sport goods
shop-within-a-shop retail ‘cell
Cell layout Cont..

27. Mixed (combined) layouts
•Many operations either design themselves hybrid layouts which combine
elements of some or all of the basic layout types, or use the ‘pure’ basic
layout types in different parts of the operation.
•Generally, a combinationof the product and process layout or other
combination are found in practice
•Ex. for industries involving the fabrication of parts and assembly,
fabrication tends to employ the process layout, while the assembly areas
often employ the product layout.
•For example, a hospital would normally be arranged on functional-layout
principles, each department representing a particular type of process (the
X-ray department, the surgical theatres, the blood-processing laboratory,
and so on).
•Yet within each department, quite different layouts are used.
•The X-ray department is probably arranged in a functional layout,
•the surgical theatres in a fixed-position layout, and
•the blood-processing laboratory in a product layout.
(Mixed Model Assembly Lines)

28. A restaurant complex with all four basic layout types
Mixed layouts Cont...

29. The relationship between process types and
basic layout types

30. Layout Design
•Layoutdesignconcernsthephysicalplacementofresources
suchasequipmentandstoragefacilities.
•Thelayoutisdesignedtofacilitatetheefficientflowof
customersormaterialsthroughthemanufacturingorservice
system.
FactorsinDeterminingLayoutAndDesign
•Ease of future expansion or change
•Flow of movement
•Materials handling
•Output needs

31. Fixed-position layout Design
•In fixed-position arrangements the location of resources will
be determined, not on the basis of the flow of transformed
resources, but on the convenience of transforming resources
themselves.
•The objective of the detailed design of fixed-position layouts
is to achieve a layout for the operation which allows all the
transforming resources to maximize their contribution to the
transformation process by allowing them to provide an
effective ‘service’ to the transformed resources.

32. Functional layout Design
•The detailed design of functional layouts is complex, as is flow
in this type of layout.
•very large number of different options.
•Most functional layouts are designed by a combination of
intuition, common sense and systematic trial and error.

33. Functional layout DesignCont..
The information for functional layouts
•Before starting the process of detailed design in functional layouts
there are some essential pieces of information which the designer
needs:
•The arearequired by each work centre;
•The constraintson the shape of the area allocated to each work
centre;
•The degree and direction of flowbetween each work centre (for
example, number of journeys, number of loadsor costof flow per
distance travelled);
•The desirability of work centres being close together or close to
some fixed point in the layout.

34. Flow record chart:
a)the number of loads transported between departments.
•If the directionof the flow between work centres makes little difference to
the layout, the information can be collapsed
•There may be significant differences in the costs of moving materials or
customers between different work centres.
•For example (d) the unit cost of transporting a load between the five work
centres is shown.
•Combining the unit cost and flow data gives the cost-per-distance travelled
data shown in Figure (e).
•If the directionof the flow , this has been collapsed into Figure (f).
Functional layout DesignCont..
(Example)

35. Functional layout Design Cont..
(Example)

36. Minimizing distance travelled
•The prime objective is to minimize the costs to the operation which are
associated with flow through the operation.
•This usually means minimizing the total distance travelled in the
operation.
•Below Figure shows a simple six-centre functional layout with the total
number of journeysbetween centres each day and distance
Functional layout Design Cont..
The effectiveness of the layout, at this simple level, can be calculated from:
Effectiveness of layout = ΣFijDijfor all i≠ j
Where,
Fij= the flow in loads or journeysper period of time from work centre ito work centre j
Dij= the distancebetween work centre iand work centre j
The lower the effectiveness score, the better the layout.

37. Minimizing distance travelled
•The above example presents only journeys and distance assuming that all
journeys are the same in that their cost.
•In some operations this is not so,
•For example, in the hospital some journeys involving healthy staff and
relatively fit patients would have little importance compared with other
journeys where very sick patients need to be moved from the operating
theatres to intensive-care wards.
•In these cases a cost (or difficulty) element is included in the measure of
layout effectiveness:
•Effectiveness of layout = ΣFijDijCijfor all i≠ j
•Where: Cijis the cost per distance travelled of making a journey between
departments iand j.
Functional layout DesignCont..

38. The general functional layout design method
The general approach to determining the location of work centres in a
functional layout is as follows:
•Step 1 Collect information relating to the work centres and the flow
between them.
•Step 2 Draw up a schematic layout showing the work centres and the flow
between them, putting the work centres with the greatest flow closest to
each other.
•Step 3 Adjust the schematic layout to take into account the constraints of
the areainto which the layout must fit.
•Step 4 Draw the layout showing the actual work centre areas and
distances which materials or customers must travel. Calculate the
effectivenessmeasure of the layout either as total distance travelled or as
the cost of movement.
•Step 5 Checkto see if exchanging any two work centres will reduce the
total distance travelled or the cost of movement. If so, make the exchange
and return to step 4. If not, make this the final layout.

39. Cell layout design
•In doing this the operations management has implicitly taken
two interrelated decisions regarding:
The extent and nature of the cells it has chosen to adopt
Which resources to allocate to which cells.
•Below Figure Shows how a functional layout has been divided
into four cells, each of which has the resources to process a
‘family’ of parts.

40. Cell layout design Cont..

41. •Production flow analysis
•The detailed design of cellular layouts is difficult, partly because the idea
of a cell is itself a compromise between process and product layout.
•To simplify the task, it is useful to concentrate on either the process or the
product aspects of cell layout.
•If cell designers choose to concentrate on processes, they could use
cluster analysis to find which processes group naturally together.
•This involves examining each type of process and asking which other types
of processes a product or part using that process is also likely to need.
•One approach to allocating tasks and machines to cells is production flow
analysis (PFA), which examines both product requirements and process
grouping simultaneously.
Cell layout design Cont..

42. Product layout Design
•Several Mass Production Systems are in operation today
–Various sub-assemblies in a mass producer need to be configured to
match the production rate
–Similarly, the final assembly stations also need to have the required
number of resources at each station to meet the targeted demand.
•A product layout design
–seeks to identify the minimum number of resources required to meet
a targeted production rate and the order in which these resources are
to be arranged
–Technique employed for designing of product layout is known as line
balancing

43. Product layout Design
•Decisions & Trade-offs
•Line balancing
–A method by which the tasks are optimally combined without
violating precedence constraints and a certain number of
workstations designed to complete the tasks
–Key decision variables are production rate, cycle time and the
number of workstations, which are inter-related
–Solving the “line balancing” problem calls for striking the right
trade-off between increased production and better utilisationof
resources

44. Product layout Design
•The nature of the product layout design decision is a little
different from the other layout types.
•Rather than ‘where to place what’, product layout is
concerned more with ‘what to place where’.
•The main product layout decisions are as follows:
What cycle time is needed?
How many stages are needed?
How should the task-time variation be dealt with?
How should the layout be balanced?

45. 1.The cycle time of product layouts
•The time between completed products, pieces of information or customers
emerging from the process.
•Cycle timeis the ratio of the available time to the actual (desired) production rate
•It is calculated by considering the likely demand for the products or services over a
period and the amount of production time available in that period.
•Example:
Product layout Design Cont... oductionDesiredActual
TimeAvailable
TimeCycleDesiredActual
Pr)(
)( 

46. 2. The number of stages
•the number of stages in the layout and depends on the cycle time required
•the total quantity of work involved (total work content) in producing the
product or service.
•The larger the total work content and the smaller the required cycle time,
the more stages will be necessary.
•Example:
Product layout Design Cont... TimeCycle
timestaskallofSum
requiredstationsworkofNoMinimum .

47. 3. Task-time variation
•In practice, of course, the flow would not be so regular.
•This is a general characteristic of all repetitive processing (and
indeed of all work performed by humans) and
•can be caused by such factors as differences between each
product or service
•Slight variations in coordination and effort on the part of staff
performing the task.
Product layout Design Cont...

48. 4. Balancing work-time allocation
•Line balancing is one of the most important design decisions in product
layout.
•In the mortgage-processing example we have assumed that the 15
minutes of work content are allocated equally to the four stations.
•This is nearly always impossible to achieve in practice and some imbalance
in the work allocation results.
•Inevitably this will increase the effective cycle time of the line.
•If it becomes greater than the required cycle time, it may be necessary to
devote extra resources, in the shape of a further stage, to compensate for
the imbalance.
•The effectiveness of the line-balancing activity is measured by balancing
loss.
•This is the time wasted through the unequal allocation of work as a
percentage of the total time invested in processing the product or service.
Product layout Design Cont...

49. 4. Balancing work-time allocation Cont..
Balancing technique:
•Precedence diagram: This is a representation of the ordering of the
elements which compose the total work content of the product or service.
•Each element is represented by a circle.
•The circles are connected by arrows which signify the ordering of the
elements.
•This general approach is to allocate elements from the precedence
diagram to the first stage, starting from the left, in order of the columns
until the work allocated to the stage is as close to, but less than, the cycle
time.
•When that stage is as full of work as is possible without exceeding the
cycle time, move on to the next stage, and so on, until all the work
elements are allocated.
Product layout Design Cont...

50. Working Example
Product layout Design Cont...

51. Working Example Cont..
Figure: Element listing and precedence diagram for Karlstad Kakes
Product layout Design Cont...

52. •Working from the left on the precedence diagram, elements a and b can be
allocated to stage 1. Allocating element c to stage 1 would exceed the cycle time.
•In fact, only element c can be allocated to stage 2 because including element d
would again exceed the cycle time.
•Element d can be allocated to stage 3. Either element e or element f can also be
allocated to stage 3, but not both, or the cycle time would be exceeded.
•Following the ‘largest element’ heuristic rule, element e is chosen. The remaining
elements then are allocated to stage 4.
•Figure shows the final allocation and the balancing loss of the line.
Working Example Cont..
Product layout Design Cont...

53. Arranging the stages
•Should the layout be arranged as a single long thin line, as several short
fat parallel lines, or somewhere in between?
•Notethat ‘long’ refers to the number of stages and ‘fat’ to the amount of
work allocated to each stage
•In any particular situation there are usually technical constraints which
limit either how ‘long and thin’ or how ‘short and fat’ the layout can be,
•but there is usually a range of possible options within which a choice
needs to be made.
•The advantages of each extreme of the long thin to short fat spectrum are
very different and help to explain why different arrangements are
adopted.
Product layout Design Cont...

54. •Arranging the stages
The arrangement of stages in product layout can be described on a spectrum from
‘long thin’ to ‘short fat’
Product layout Design Cont...

55. Product layout Design Cont...

56. Product layout Design Cont...

57. Example
•A factory working in 2 shifts each of 8 hours produces 24,000 electric bulbs
using a set of workstations. Using this information compute the actual
cycle time of the plant operation. There are 8 tasks required to
manufacture the bulb. The sum of all task times is equal to 12 seconds.
How many workstations are required to maintain this level of production if
combining of tasks into that many workstations is a feasible alternative?
Product layout Design Cont...
Solution
Available time = 2*8*60*60 = 57,600 seconds
Actual production = 24,000 electric bulbs
Therefore, the Cycle time for each bulb is = seconds
This means that the factory is producing a bulb every 2.4 seconds.
No. of work stations required =
Therefore the tasks are to be split among the five stations such that each
workstation will have sum of the task times to be 2.4 seconds. 4.2
000,24
600,57
 5
4.2
12


58. •Planning and control is concerned with the reconciliation
between what the market requires and what the operation’s
resources can deliver.
•Planning and control activities provide the systems, procedures and
decisions which bring different aspects of supply and demand together.
•The difference between planning and control
•Planning is a formalization of what is intended to happen at some time in
the future.
•Control makes the adjustments which allow the operation to achieve the objectives
that the plan has set, even when the assumptions on which the plan was based do
not hold true.
Planning and control

59. The balance between planning and control activities

60. •Uncertainty in supply and demand
•Dependent and independent demand
•Responding to demand
Resource-to-order
create-to-order or make-to-order
make-to-stock
•P:D ratios
Supply and demand affect planning and control

61. •Planning and control requires the reconciliation of supply and demand in
terms of volumes, timing and quality.
•There are four overlapping activities:
Planning and control Activities

62. 1. Loading
•Loading is the amount of work that is allocated to a work centre.
Planning and control Activities
1.Finite loading
2.Infinite loading

63. 1. Loading Cont..
Finite loading
•Finite loading is an approach which only allocates work to a work centre (a
person, a machine, or perhaps a group of people or machines) up to a set
limit.
•This limit is the estimate of capacity for the work centre (based on the
times available for loading).
•Work over and above this capacity is not accepted.
Finite loading is particularly relevant for operations where:
it is possible to limit the load
it is necessary to limit the load
the cost of limiting the load is not prohibitive
Planning and control Activities

64. 1. Loading Cont..
Infinite loading
•Infinite loading is an approach to loading work which does not limit
accepting work, but instead tries to cope with it.
•capacity constraints have not been used to limit loading so the work is
completed earlier.
Infinite loading is relevant for operations where:
it is not possible to limit the load
it is not necessary to limit the load
the cost of limiting the load is prohibitive
Planning and control Activities

65. 2. Sequencing
•Whether the approach to loading is finite or infinite, when work arrives,
decisions must be taken on the order in which the work will be tackled.
•The priorities given to work in an operation are often determined by some
predefined set of rules, some of which are relatively complex.
Some of these are summarized below:
•Physical constraints
•Customer priority
•Due date (DD)
•Last-in first-out (LIFO)
•First-in first-out (FIFO)
•Longest operation time (LOT)
•Shortest operation time first (SOT)
Planning and control Activities

66. Planning and control Activities
2. Sequencing
Example
SteveSmithisawebsitedesignerina
businessschool.Returningfromhis
annualvacation(hefinishedall
outstandingjobsbeforeheleft),five
designjobsaregiventohimupon
arrivalatwork.Hegivesthemthe
codesAtoE.
Stevehastodecideinwhichsequence
toundertakethejobs.Hewantsbothto
minimizetheaveragetimethejobsare
tiedupinhisofficeand,ifpossible,to
meetthedeadlines(deliverytimes)
allocatedtoeachjob.

67. Planning and control Activities
Comparison of five sequencing decision rules
2. Sequencing Cont..

68. 2. Sequencing Cont..
Johnson’s rule
Example: (refer bpook: pp.554, B.Mahadevan, Operations Management)
Five jobs are to be scheduled in two machines in a manufacturing shop. All the five
jobs undergo processing in both the machines (flow shop). Table provides information
on the processing time in both the machines.
Planning and control Activities
ProcessingTime
Job No. Machine 1 Machine 2
1 4 7
2 6 3
3 2 3
4 7 7
5 8 6
a) Identify the best sequence using Johnson’s rule.
b) Develop a Gantt chart for the schedule and compute the flow times and make span
for the jobs for this sequence.

69. 3. Scheduling
operations require a detailed timetable showing at what time or date jobs
should start and when they should end.
•The complexity of scheduling
Machines will have different capabilities and capacities; staff will have
different skills.
Number of possible schedules increases rapidly as the number of
activities and processes increases.
This is why scheduling rarely attempts to provide an ‘optimal’ solution
but rather satisfies itself with an ‘acceptable’ feasible one.
Planning and control Activities

70. 3. Scheduling Cont..
•Forward and backward scheduling
•assume that it takes six hours for a contract laundry to wash, dry and press
a batch of overalls. If the work is collected at 8.00 am and is due to be
picked up at 4.00 pm, there are more than six hours available to do it.
Planning and control Activities
forward scheduling backward scheduling
High labour utilization –workers always
start work to keep busy
Lower material costs –materials are not
used until they have to be, therefore
delaying added value until
the last moment
Flexible –the time slack in the system
allows unexpected work to be loaded
Less exposed to risk in case of schedule
change by the customer Tends to focus
the operation on customer due dates
Advantages

71. 3. Scheduling Cont..
Gantt charts
Planning and control Activities
Gantt chart showing the schedule for jobs at each process stage
See: Short case The life and times of a chicken salad sandwich –part
one(pp. 286, Slack, Operations Management)

72. 3. Scheduling Cont..
•Scheduling work patterns
•the schedule of work times effectively determines the capacity of the
operation itself.
Staff Rostering:
•The main task of scheduling is to make sure that sufficient numbers of
people are working at any point in time to provide a capacity appropriate
for the level of demand at that point in time.
Planning and control Activities

73. 4. Monitoring and controlling the operation
•Having created a plan for the operation through loading, sequencing and
scheduling, each part of the operation has to be monitored to ensure that
planned activities are indeed happening.
Planning and control Activities

74. 4. Monitoring and controlling the operation Cont..
Push and pull control
Push versus pull: the gravity analogy
Planning and control Activities

75. 4. Monitoring and controlling the operation Cont..
Drum, buffer, rope Concept
Planning and control Activities

76. 4. Monitoring and controlling the operation Cont..
The degree of difficulty in controlling operations
Planning and control Activities

77. What is capacity management?
•Capacity : the maximum level of value-added activity
over a period of time that the process can achieve
under normal operating conditions.
•capacity constraint: operating at their capacity
‘ceiling’ for the whole operation.
Capacity Planning

78. Planning and controlling capacity:
•Capacity planning and control is the task of setting
the effective capacity of the operation so that it can
respond to the demands placed upon it.
•Long-term capacity Strategy:
•Medium-and short-term capacity:
•Aggregate demand and capacity
Capacity Planning

79. Capacity Planning
Time Horizon
Criterion
Time Horizon for planning
Long term Medium term Short-term
Time frame 2 -5 years Typically 1 year 1 week to 3 months
Planning premise
Augmenting capacity for
projected growth
Balancing demand -
supply
Maximising availability;
Efficent use of resources
Key decisions
made
Capacity Augmentation;
Capital Budgeting
Exercises
Adjusting demand and
supply attributes to
balance available
capacity to
requirement
Resource deployment
strategies, Maintenance
routines, Improvement
projects to be undertaken
Tools &
Techniques used
Investment planning;
Break-even analysis,
Discounted cash flow
techniques; Decision Trees
Aggregate Production
Planning; Make or Buy
Planning & Scheduling, Total
Productive Maintenance,
Waste elimination by
continuous improvement;
Simulation
Capacity
strategies
•Develop new product
lines
•Expand existing facilities
•Construct or phase out
production plants
•Fluctuations in
demand seasonal &
economical factors
•Overtime,
subcontracting, hiring,
firing, etc.,
•Resource deployment
strategies
•Maintenance routines,

80. Examples of Short-and Long-Term Capacity Decisions

81. Capacity Planning Framework
Step 1
•Estimating the capacity requirements for the
planning Horizon
Step 2
•Computing the available capacity
•Estimating the quantum of capacity to be
augmented
Step 3
•Identifying the available alternatives
•Selecting the best one for capacity augmentation

82. Measuring demand and capacity
Forecasting demand fluctuations
•Forecasting is a key input to capacity planning and control
a)It is expressed in terms which are useful for capacity planning and control
(Eg.machine hours per year, operatives required, space, etc.)
b)It is as accurate as possible
c)It gives an indication of relative uncertainty
Seasonality of demand
Capacity Planning

83. Aggregate demand fluctuations for four organizations
Capacity Planning

84. Measuring capacity
Capacity depends on activity mix
Input and output capacity measures for different operations
Capacity Planning

85. Measuring capacity
Example
•Suppose an air-conditioner factory produces three different models of air-
conditioner unit: the de luxe, the standard and the economy. The de luxe model
can be assembled in 1.5 hours, the standard in 1 hour and the economy in 0.75
hour. The assembly area in the factory has 800 staff hours of assembly time
available each week.
•If demand for de luxe, standard and economy units is in the ratio 2:3:2, the time
needed to assemble 2 + 3 + 2 = 7 units is:
(2 ×1.5) + (3 ×1) + (2 ×0.75) = 7.5 hours
The number of units produced per week is:
•If demand changes to a ratio of de luxe, economy, standard units of 1:2:4, the time
needed to assemble 1 + 2 + 4 = 7 units is: (1 ×1.5) + (2 ×1) + (4 ×0.75) = 6.5 hours
Now the number of units produced per week is:
Capacity Planning800
7746.7
7.5
Units 800
7861.5
6.5
Units

86. Measuring capacity
Design capacity and effective capacity
•The ratio of the output actually achieved by an operation to its
design capacity, and the ratio of output to effective capacity
are called, respectively, the utilization and the efficiency of
the plant:
Capacity Planning

87. Measuring capacity
Overall equipment effectiveness(OEE)
•The overall equipment effectiveness (OEE) measure is an increasingly
popular method of judging the effectiveness of operations equipment. It is
based on three aspects of performance:
the time that equipment is available to operate;
the speed, or throughput rate, of the equipment.
the quality of the product or service it produces;
Capacity Planning

88. The alternative capacity plans
There are three ‘pure’ options available for coping with such variation:
Level capacity plan: Ignore the fluctuations and keep activity levels
constant
Chase demand plan: Adjust capacity to reflect the fluctuations in
demand
Demand management: Attempt to change demand to fit capacity
availability
(Read: Short case: Seasonal salads, pp.310, Slack, Operations Management)
Capacity Planning

89. The alternative capacity plans
Level capacity plan:
Capacity Planning
Level capacity plans which
use anticipation inventory
to supply future demand
Level capacity plans with
under-utilization of capacity

90. The alternative capacity plans
Chase demand plan:
Capacity Planning
Chase demand capacity
plans with changes in
capacity which reflect
changes in demand
Chase demand capacity
plans with changes in
capacity which reflect
changes in demand

91. The alternative capacity plans
Manage demand plan:
The most obvious mechanism of demand management is to
change demand through price.
Alternative products and services
Mixed plans
Capacity Planning

92. The alternative capacity plans
Yield management:
•Inoperationswhichhaverelativelyfixedcapacities,suchasairlines
andhotels,itisimportanttousethecapacityoftheoperationfor
generatingrevenuetoitsfullpotential.
•Yield management is especially useful where:
capacity is relatively fixed;
the market can be fairly clearly segmented;
the service cannot be stored in any way;
the services are sold in advance;
the marginal cost of making a sale is relatively low.
Example: Airlines : Overbooking, Price discounting and Varying service
types
Capacity Planning