Notes Pom Module 4

Production and Operations Management Module 4: Capacity Management

Method study

Job design

Job enlargement Job rotation Job enrichment Principles of motion economy

Work design

Work measurement

Stop watch Time study Work Sampling

Work Design is the over all term used for Job design and Work measurement. Job design aims to organize tasks, duties and responsibilities into a unit of work . The objective may be: • to increase Productivity • to reduce costs. • job satisfaction • motivation Poor job design may lead to • Lower productivity • High attrition rate • Absenteeism • Complaints • Sabotage

Objectives of Job design Technical feasibility – Jobs ( set of tasks) should be able to be performed by the person (s) with y the equipments and systems available. Economic feasibility – cost of performing the job should \be as low as possible Behavioral feasibility- motivation and mental simulation are considered. Techniques of Job design Work simplification- Big job is broken down into small parts and assigned to one employee. Less trained or less skilled persons can do the job. This may also result in highly repetitive jobs and less job satisfaction. Job rotation

- Persons are assigned different jobs at different times . reduces boredom , monotony and exposes employees to different aspects of the process.

Job enlargement

-

Job enrichment

Adding similar tasks to a job . to add variety and autonomy . to make work more meaningful. - tasks of planning, organizing and controlling are assigned along with routine tasks. Objective is more involvement , motivation and satisfaction.

Ergonomics Ergonomics is concerned with designing of work situations with human characteristics in mind. 1. Human and machine interfaces- some considerations are : location on tools , switches, parts for assembly , controls, levers, push buttons, Working height, sitting height, left hand and right hand operations, heights at which readings are taken, weights lifted, forces applied , direction of force . 2. Environmental factors – which affect morale , productivity , quality and long term heath problems. Ambient temperature ( 26-38 C) , Noise ( < 90 dB), Lighting( 100 ft-candles Machines), vibrations, air circulation, comfortable furniture.

Work Study Work study is concerned with the analysis of work methods and the equipment used in performing the job, the design of optimum work method and the standardization of proposed work methods. Work study covers: • Method study • Work Measurement

Objective of work study: Analysis of present method and to develop a new and better method • To measure work content by measuring time and to establish standard time. • To increase the productivity by ensuring best possible man- machine interface • To reduce cost of production / increase efficiency Benefits of work study 1. Increased productivity 2. Reduced production costs 3. Better layout 4. Better manpower planning 5. Reduced handling costs 6. Better Morale and satisfaction of employees 7. Standard performance measurement and basis for incentive schemes

Methods study Method is a technique of observing, recording and examining the present method of performing the work with a view to develop a cheaper and productive method. It covers work processes, working conditions, equipments and tools used to carry out the job. When method study is conducted: 1. High operating cost 2. Heavy rejections 3. Excessive movement of materials and men 4. Production bottle necks 5. Quality problems 6. Poor working conditions 7. Excessive overtime 8. Poor delivery performance Objectives of Method study: 1. To study present method and propose new and improved method 2. Improvement in productivity and cost 3. Reduce material handling and operator fatigue 4. Elimination of wasteful motions 5. To standardize work methods Advantages of Method study: 1. Work simplification 2. Improved method( cheaper and productive0 3. Better quality product 4. Improved layout

5. 6. 7. 8. 9.

Better material handling Better work flow Less fatigue to operator Shorter production time Job satisfaction

Method study procedure 1. Selection of work based on present problems and scope for improvement 2. Record relevant facts and information on existing method , use appropriate charts and diagrams 3. Examining recorded facts ( use what, when , how, who, where, why type of questioning on collected facts) 4. Developing improved method by a. Eliminating wasteful tasks b. Simplifying tasks c. Combining tasks d. Evaluating alternatives with respect to cost, savings, feasibility , reaction of employees, short term and long term implications etc. 5. Installing improved method ( plan, schedule, coordinate, involve all concerned) 6. Maintaining the new method ( feed back on performance towards objectives) Symbols used in process charts: Operation ( conversion)

Movement /‘ Transportation

Inspection

Delay / waiting

Storage

Combined activity

Recording Charts and diagrams used in method study: # 1 2

Chart type Outline process chart Operations process chart

3

Flow process charts

4

Two handed process charts

Usage Covers only main operations and Inspections Includes operations, inspections and material inputs Includes sequence of operations, transportation, inspections, delays and storages. • For Material or product • For Man • For Machine Depicts the activities of both hands or limbs

5

Multiple activity chart

For more than one worker/ machine or equipment

6

Man- machine chart

• •

7

Flow diagram

Actual paths followed by materials. Diagram drawn to scale

8

String diagram

9

SIMO chart

Sting used to trace the path of materials or workmen in a scale plan or a Model. To measure distances traveled. Simultaneous motion cycle chart . used for cery small cycle time operations .

Worker and machine on common time scale Worker and two machines on common time scale

Micro motion study is useful for analysis of very small cycle operations, rapid movements and high production rates. Eg. Sewing, assembly of small parts. Video pictures are take and analyzed to understand the minute tasks and to eliminate unnecessary movements. Therbligs which indicate basic body motions of worker is used to analyse the activities. Some therbligs are: Search , Select, Grasp ,Transport empty, Transport loaded, Hold, Release load, Position, Inspect, Assemble, Disassemble Principle of motion economy Aims at minimizing the fatigue of workers due to repetitive motions of various parts of body such as hands, feet, eyes etc. Some principles: • Two hands should begin and complete their motions at the same time • Two hands should not be idle at the same time except during rest • Curved motions are preferred to straight line motions • Fixed place for tools and materials • Materials to be fed to point of use by feeders • Materials and tools to be located for best sequence of motions • Height to be such that alternate suiting and standing is easily possible • Materials to be prepositions • Operations to be combined • Levers, clamps to have greatest mechanical advantage

Work Measurement Work measurement is concerned with techniques to establish work content of specified task by measuring the time required to carry out the job at defined standard of performance by a qualified worker. Qualified worker ( ILO Definition) A qualified worker is one who has the necessary physical attributes, intelligence, education and skills and knowledge to carry out the work to satisfactory standards of safety, quality and quantity Objectives of Work Measurement • Improved planning and control • Basis for sound incentive schemes • Better utilization of manpower • Better labour productivity • Better labour cost control Work measurement procedure: ( arriving at standard time for the job) 1. Divide the job into elements 2. Record observed time for each element by • Time study • Synthesis • Analytical estimation • Predetermined motion time system ( PMTS) ( for basic body movements) 3. Establish elemental value by normalizing observed values 4. Add relaxation allowances ( personal, fatigue) 5. Add contingency allowances ( for non-repetitive elements) 6. Process allowance ( for forced idleness , wating for operation to complete) Time study Determination of amount of time required to perform a unit of work at defined level of performance. Objective of Time study 1. To set standards of performance 2. To determine labour costs 3. To balance the work of operators 4. To establish a incentive scheme Conducting time study 1. Select job 2. Select worker to be studied 3. Plan and stopwatch study

a. divide into elements. Elements may be repetitive, occasional, manual , machine foreign etc b. Measure time with stop watch c. Note rating factor ( normal pace of work is equivalent of walking 4 kmph ) 4. Determine normal time for each element by: Normal time = observed time x rating factor Synthesis method Synthesis method takes values of normal time foe reach element from the data base developed and available . data base has elemental times for all similar job elements eg.` loading, unloading, clamping, checking etc. Advantages: less time to establish, reliable , good for estimation for new jobs Analytical estimation Takes data from elemental time data base as far as possible. Estimation of time is made for remaining elements based on experience Advantages : good for non-repetitive jobs and for estimation for new jobs Predetermined motion time systems Times for basic motions ( Therbligs ) are established in TMUs ( time measurement units) . 1 TMU =0.036 sec. Times for reach, move , grasp etc are available in TMUs.

Problem1: Calculate standard production per shift of 8 hours with following data. Observed time per unit= 5 mins Rating factor =120% Total allowance =33 1/3 % of Normal time Ans: observed time X observed rating = Normal time x normal rating 5 x 120 =Normal time X 100 : normal tine = 5 x 120 / 100 = 6 min. allowance = 33 1/3 percent = 1/3 of normal time = 6/3 =2 min. Standard time =normal time + allowance = 6 +2 =8 min Standard production / shift = time available / standard time per piece = (8 x 60)/ 8 =60 pcs. Problem 2; Time for making 4 pieces of an item with elements a, b, c, d is as follows .. Fatigue allowance is 25% of normal time. find the standard time per piece Element a b c

Cycle 1 ( min) 1.2 0.7 1.4

Cycle 2 ( min) 1.3 0.6 1.3

Cycle 3 ( min) 1.3 0.65 1.3

Cycle 4 ( min) 1.4 0.75 1.2

Rating 85 120 90

d

0.5

0.5

Ans # a b c d

0.6

average observed 1.3 0.675 1.3 0.5

0.4

time

70

Normal time 1.105

0.81 1.17 0.35

Total Normal time = 3.435 Allowance = 25/100 X 3.435 = 0.858 : Standard time = 3.435 + 0.858 =4.29 min. Standard time per pc = 4.29 / 4 =1.073 min per pc

Work sampling Work sampling is based statistical theory of random sampling and probability of Normal distribution. Normally used for determining fraction of time the machines are idle or the operators are idle. More the number of samples taken , less is the error. No. of observations n= pqz2 / a2

p= percentage of observations where machine was idle q= 100 -p ( percentage machine not idle) z= desired confidence level ( z=1 for 68.3%, 2 for 95.4%, 3 for 99%) a= desired accuracy or error ( in percentage) Advantages • Economical • Not necessary to use trained work study experts • No stop watch measurements Limitations • Little value to improve the operations • If random sampling is not done results will be erroneous Problem Nine observations were made for machine busy or idle. If an accuracy of +- 15% is required at a confidence level of 95.4%, determine the sample size necessary. No.

working

1

yes

2 3 4 5 6 7 8 9

yes yes no yes no no yes yes

Ans p= 3/9 X 100 = 33.33% n= pqz2 / a2 :

;

q =66.67% ;

z=2

;

n= 33.33 x 66.67 x (2 x 2) / 15 x 15

a= 15%: = 39.50 = 40 observations

Productivity Production – refers to total out put : 1000 pcs per month ; 100 tons of castings per month Productivity = Out put / input = Quantity of goods and services / Amount of resources used Productivity can be improved by: • Increase production with same amount of resources • Decrease resources while keeping the production same • Add few resources and get higher production • Allow slight production decrease while utilizing significantly less resources Productivity can be applied to labour, space, money, materials energy used . Ways of measuring labour productivity; • Output per man –hour = Output / man hours used ( 50 pcs per man-hr) • Labour hour per unit of out put = man-hours/ output ( 100man-hrs per part) • Added value per unit of labour cost = added value for the product/ total wages ( eg. 8, 10 ) Some ways to increase productivity: 1. Reducing rejections and rework 2. Reducing cycle time 3. Reducing setup time 4. Reducing wasted time by method study 5. Good training 6. Automation

Learning curve Workers take more time in the beginning when the task or product is new. As they gain experience the performance improves. The reduction in time taken is drastic in the beginning , tapers off and finally the time taken is constant . There are mathematical models to estimate the time taken such as : • Arithmetic analysis • Logarithmic analysis Typical learning curve is as below

Time taken

No. of components

Aggregate planning Aggregate planning involves best quantities to be produced during the time period ( normally 6months to 18 months) at the lowest cost. It involves: • Planning work force size • Production rate • Inventory levels Aggregate production planning involves determining the output levels of product groups for the planning period.

Aggregate planning or aggregate capacity planning consists of devising a plan to support the production required. Why aggregate planning is required? 1. It facilitates loading of facilities fully. Minimizes over loading and under loading 2. Provision of production capacity to meet aggregate demand 3. Helps in Systematic production in spite of peaks and valleys in customer demand. 4. Utilization of resources is enhanced Steps in Aggregate capacity planning 1. Prepare sales forecast for each product over the planning period (normally 6-18 months) 2. Indicating quantities for weeks/ months . 3. Sum up individual product requirements into one arrogate demand for the factory. 4. Convert aggregate demand into labour, materials, machines and other elements of production capacity 5. Identify alternate resources for supplying necessary production capacity , if required. 6. Develop alternatives and select one which meets the objectives of the organization. Production capacity may have to be computed with respect to: 1. Size of work force 2. Use of over time or idle time 3. Inventories or back orders 4. Use of subcontractors Costs associated with aggregate planning are: Pay roll costs Cost of overtime Second shift/ third shift operation Cost of hiring or laying off workers Cost of inventories Cost of backlogs ( liquidity damages – reduced price in case of delays as a part of contract) Approaches to Aggregate planning Topdown approach – consideration is given to product families , products and quantities. Does not consider small capacity differences that may exist among specific products Bottomup approach- each product with details at lower level ( say parts) are taken into consideration while developing the plan. This the most popular method of arriving at aggregate plan.

Capacity planning Capacity indicates the ability of the firm to meet the market demand Types of capacity planning

• Long range capacity planning • Medium range capacity planning • Short range capacity planning Long range capacity planning • Meets corporate / business objectives • Normally for 3 or more years ahead • Planning of land • Planning of facilities • Planning of technology and equipments • Planning of human resources Medium range capacity planning • Making of aggregate plans • Normally for 6 to 18 months or more years ahead • Work force reallocation • Inventory management • Work force recruitment • Second shift and third shift operation • Subcontracting ( development and permanent loading) • Make –buy decisions Short tem capacity planning • Normally for 3-6months • Overtime management • Control of inventories ( raw material, WIP and finished goods) • Work force reallocation • Subcontracting • Alternate tooling

Capacity requirement planning (CRP) Capacity requirement planning is concerned with determining the following requirement for a Master production schedule.( MPS) • What and when materials are required ( MRP – Material requirement planning) • Machine hours required • Labour hours and categories required Major CRP inputs are: • Planned orders and released orders • Loading information from work centre file ( standard hours for jobs and hours available)

•

Routing information and alternate routing , if any

Major CRP outputs are • Load reports • Revisions to MPS for rescheduling if any • Verfication of materials planned as per MRP system If the load reports indicate inadequacy of capacity, overtime or subcontracting to be resorted to or changes to be made to MPS. Strategies to meet non –uniform demand Strategy 1: Absorbing demand fluctuations by varying inventory levels or allowing backlogs Method1- Produce in earlier period and hold in inventory until the product is demanded Cost- Inventory carrying cost Method 2- deliver product when capacity is available Result- lost revenue, lost customers, unhappy customers Stategy2 : Change production according to demand Method 1- Work additional hours with out changing work force size Cost- overtime pay ( normally double) Method 2- Add work force for higher production Cost- excessive labour charges during period of slack demand Method 3- Sub -contract Cost- company overhead and sub-contact cost Quality and production schedules may be affected Strategy 3 : vary work force according to demand Method1- Hire additional personnel when demand increases Cost- cost of advertisement, interview, training Skilled labour may not be available when needed Method 2- lay-off when demand reduces Cost- cost of lay off ( half pay during lay off) Capital investments are idle Problems; Order position for a certain product is as below Month Units 1 13, 000

Month 7

Units 11,000

2 12, 000 8 3 10, 000 9 4 9, 000 10 5 11, 000 11 6 13, 000 12 Given: Capacity of shop is10,000 per month on regular basis Overtime capacity is 3000 per month Sub-contract capacity is3000 per month with 3 months lead time Initial inventory is 1000 units

7, 000 15, 000 13, 000 12,000 10,000

Production cost is Rs 5 / unit on regular basis Production cost is Rs 9 / unit on Overtime basis Subcontract cost is Rs 7 / unit Cost of carrying inventory is 1.00 per month per unit No back log of orders is allowed. Work out the total production cost on: • leveled production basis • No inventory basis and suggest which to be adopted Ans : Plan A : Level production basis Month Units

Regular production

Overtime production

1 13, 000 2 12, 000 3 10, 000 4 9, 000 5 11, 000 6 13, 000 7 11,000 8 7, 000 9 15, 000 10 13, 000 11 12,000 12 10,000 Total 1, 36, 000 * from initial inventory

10,000 10, 000 10, 000 10, 000 10, 000 10, 000 10, 000 10, 000 10, 000 10, 000 10, 000 10, 000 1, 20, 000

2000 2000

Subcontract From production Inventory ( stock) nil 1000 nil

Inventory carried ( stock)

1000 1000 3000 1000 3000

4000

2000 3000 2000

3000

11,000

1000*

Cost of production; 1. Regular basis :1,20, 000 X Rs .5 = Rs. 6, 00, 000 2. Overtime basis: 4000 x Rs 9 = Rs 36, 000

3. Subcontract basis 11, 000 X Rs 7 = Rs 77, 000 4. Inventory carrying cost : 1000 X 1 (month) X Rs 1 + 3000 x 1 x Rs 1 5. Total cost = Rs 7, 17, 000

Plan B : No Inventory basis Month Units Regular production 1 2 3 4 5 6 7 8 9 10 11 12 Total

13, 000 12, 000 10, 000 9, 000 11, 000 13, 000 11,000 7, 000 15, 000 13, 000 12,000 10,000 1, 36, 000

10,000 10, 000 10, 000 9, 000 10, 000 10, 000 10, 000 7, 000 10, 000 10, 000 10, 000 10, 000 1, 16, 000

Overtime production 2000 2000

= Rs 4000

Subcontract From production Inventory ( stock) nil 1000 nil

1000 3000 1000 2000

3000 3000 2000

6000

13000

Cost of production; 1. Regular basis :1,16, 000 X Rs .5 = Rs. 5, 80, 000 2. Overtime basis: 6000 x Rs 9 = Rs 54, 000 3. Subcontract basis 13, 000 X Rs 7 = Rs 91, 000 4. Inventory carrying cost : nil 5. Total cost = Rs 7, 25, 000 Plan A is to be adopted because of lower total production cost.

1000