HISTORICAL DEVELOPMENT OF OPERATIONS MANAGEMENT

At the onset of the 1970s, while Japan's productivity continued its healthy
surge the leaders of business and government worldwide were Alarmed that
productivity is stagnating in the United States

THE FOLLOWING QUESTIONS ARISED,

Q1.What had happened to the gait (step) of commerce and industry?
Q2.What lead to its lethargy?
Q3.What have we learned in the ensuing years?
Q4.What can be done to restore its majestic posture?
Answers to these questions reside in the way we manage our
organizations and their operations.
 HISTORICAL DEVELOPMENT OF OPERATIONS MANAGEMENT

While U.S. productivity decline, Americans grew increasingly concerned

about other related issues:
1. Maintaining adequate energy sources,
2. Protecting the environment and meeting the demand for goods and
services at home and abroad.

These facts continue to impose complex demands on our organizations.

Today management faces unparalleled challenges from a society more
educated, affluent demanding, and concerned than ever before, and from
international competition keener than ever before.
 HISTORICAL DEVELOPMENT OF OPERATIONS MANAGEMENT

 Operation management came into existence in 1970`s.

 The service sector became more prominent as the change from

“production” to “operations” emphasized the broadening of service
organization.

 More emphasis was laid on synthesis rather than analysis.

 Previously preoccupied with an intensive analytical orientation and an

emphasis on marketing and finance, managers had failed to integrate
operation activities coherently into the highest levels of strategy and policy.

 Today the operations function is experiencing a renewed role as a vital

strategic element . Hence, organizational goals are better focused to meet
consumer`s needs throughout the world.
 Operations as a System

Production System

Conversion
Inputs Outputs
Process

Control
Management variables and operations conversion system

Random fluctuations

PLANNING ORGANISING
Adjustment
needed

Input Monitor

Conversion Process Output

Models
Behavior

CONTROLING

Feedback
 Introduction to operations Management

• Operations: All activities that involved in the Conversion

Process of Input to Output (Goods/service)

• Management: The Process of Planning, Organizing and

Controlling in achieving the desired objectives.
 University as an Example:

Input Planning & Supportive Output

controlling Subsystems

Students Class Times Bookstore Educated

Students
Professor Course Library Research
Development Outcomes
School
Buildings Regulations Computer Service to
Lab Public
Operations Management as
a Function
Operations System : of an organization is the part that produces the organization's physical
products or services.

Basic operations system (function) of an organization

Random fluctuations

INPUT Monitor
Adjustment
• Land output
needed
• Labour Output
• Material CONVERSION •Goods
• Machine PROCESS •Services
• Capital
• Management

Comparison
actual vs. desired
feedback
Basic operations system for a Department store

Random fluctuations
• Late deliveries
• Recession
• Labour turnover
INPUT Adjustment Monitor
needed output
• Land Output
• Labour CONVERSION • Service customer
• Building ,equipments PROCESS
With desired
merchandise
merchandise
• Management

(+ or -)

Feedback
• Inventory levels
• Labour efficiency
• Sales Volume
Basic operations system for a Farm

Random fluctuations
• Weather
• Inflation
• Govt. Control
• Equipment breakdown
INPUT
• Land Adjustment Monitor
needed output
• Animals
Output
• Farmer labour CONVERSION • Grain
• Tractors, combines etc. PROCESS •Milk
• Building
• Management skills of
farmer

(+ or -)

Feedback
• Observation of crop and soil conditions
• Prices received
 Manufacturing operations versus Service operations
Manufacturing operations : A conversion process that includes manufacturing (or
production ) yields a tangible output: a product.

Service operations :In contrast, a conversion process that includes service yields an intangible
output: a deed, a performance, an effort .

For example
McDonnell Douglas Corporation (MDC), an aerospace firm and the United States‘ largest
defense contractor. Subsidiary Douglas Aircraft Company produces airplanes, clearly a
product.
Yet,other MDC components, such as the Information Systems Group (ISG),provide
services. for example, ISG delivers computer services to hospitals, architects, and other
businesses-services such as programming, data analysis, and data storage using ISG's computers.
Distinction between Manufacturing operations and
service operations

• Nature of output (Tangible/Intangible?)

• Consumption of output

• Nature of work/jobs

• Degree of consumer contact

• Customer participation in conversion

• Measurement of performance
Manufacturing Vs Service

Manufacturing Service

Measure of Productivity Easy Difficult

Measure of Quality Easy Difficult

Customer Involvement Low High

Ability to Inventory Yes No

 WHY STUDY OPERATIONS MANAGEMENT

STSTEMATIC APPROACH
TO ORGANIZATIONAL PROCESSES

CAREER
BUSINESS OPERATIONS
OPPORTUNITIES
EDUCATION MANAGEMENT

CROSS FUNCTIONAL
APPLICATIONS
Systems view of operations : Defining the subsystem
In a very general sense, a system is a collection of objects related by regular
interaction and interdependence.

Finance
Personnel
Accounting

Production/ operation

Distribution
Engineering
Purchasing

Marketing
 IMPORTANCE OF OPERATION MANAGEMENT

• Maintain high quality of life: better quality products and services ensure
secured and comfortable future

• Transition from industrial era to intelligence era: combining of human

activity and artificial intelligence expands business horizons

• Controls and checks the declining rate of increase in productivity

• Acknowledges the shift in economic structure from goods manufacturing to

service generation sector

• Helps in maintaining balance between manufacturing and service activities

to maintain economic leadership
 PRODUCTION MANAGEMENT

 Production is the fabrication of a physical object through the use of men, material and

machinery.

 In the words of R.Mayer, “ in a manufacturing organization production is the fabrication of a

physical object through the use of men, material and machinery whereas in a service

organization production is the discharge of a function which has some utility”.

 As defined by Mr.E.L.Brech, “ production management is the process of effective planning and

regulating the operations of that section of an enterprise which is responsible for the actual

transformation of materials into finished products”.

 Production management deals with decision making related to production process. It is a set of

general principles for production economies, facility design, job design, schedule design, quality

control, inventory control, work study, cost control and budgetary control.
 BASIC ACTIVITIES OF PRODUCTION MANAGEMENT
 Specification and procurement of input resources like;
management, material, land, equipment and capital.

 Product design and development to determine the production

process for transforming the input into output of goods and
services.

 Supervision and control of transformation process for

efficient production of goods and services.
 FUNCTIONS OF PRODUCTION
MANAGEMENT
• Design and development of production process.

• Production planning and control.

• Implementation of the plan and related activities to produce the

desired output.

• Administration and co-ordination of the activities of various

components and departments responsible for producing the
necessary goods and services.

• Control of labour costs (direct cost), and indirect costs (designing

and packaging of products, production and inventory control, plant
location and layout, transportation of raw material and finished
products).
 PROBLEMS IN PRODUCTION SYSTEM

Problems associated with production system can be

divided into two types i.e.

1. Long Term (selection of production process,

product design, plant location and layout ) and

2. Short Term (inventory and production control,

quality control, cost control, labour administration )

problems related to decision making.

 PRODUCTION CYCLE

INPUT CONVERSION OUTPUT

PROCESS

INFORMATION
MANAGEMENT ORGANIZATION
MATERIAL TRANSFORMATION GOODS
LAND
LABOUR SERVICES
CAPITAL
TECHNOLOGY

FEEDBACK
 Objectives of Operation/Production
Management
• Right Quality
• Right Quantity
• Right Time
• Right Manufacturing Cost
• Customer Service
• Resourse Utilization
• Overall management of all different functions
/operations of production
Scope of Operation/Production Management

• Location of Facilities
• Plant Layout
• Material Handling
• Product design
• Process Design
• Production and planning control
• Quality Control
• Materials Management
• Maintenance management
 TYPES OF MANUFACTURING SYSTEMS

MANUFACTURING/ PRODUCTION
SYSTEMS

Intermittent system Continuous system

Job Mass
Batch Process
production production production
production
1.Intermittent system : is one where goods are
manufactured specially to fulfill the orders made by
customers rather than for stock. This system is used
to manufacture those products where the basic nature
of inputs change with the changes in the design or
production process when adjusted to continuous.
Example- hospitals, offices, aerospace
manufacturing, etc..
Features:
1. Production takes place in small quantities
2. Production facilities are flexible enough to handle wide
variety of products & huge investments required
3. Machines and equipments are laid out by process
4. Work loads are generally unbalanced
5. Highly skilled operators are required
6. In- process inventory is large
7. Essentially requires needs estimation of job, routing,
scheduling, dispatching as the orders are to be completed
as per customers specification.
8. Demand can be discontinuous
 Intermittent system can again be divided into two categories

(i) Job production : also known as ‘make complete’ production is one where
single complete is produced by one operator or a group of operators ex.
Bridge building, ship building, dam construction etc..
 Entire project is considered as single operation
 Versatile and highly skilled labour is required
 Huge capital investment is required
 Control of operations is relatively simple
 High unit cost of production

(ii) Batch production : production schedule in accordance to specific orders or on

the demand forecast. New batch is produced during each production run ex.
Chemical industry, medicine, electronic equipments, printing press.
 Product is divided into parts or operations
 Specialized labour required
 Low capital
2. Continuous system : under this system items are produced for
the stock. Sales forecast is made to estimate demand of the
product and thus master schedule is prepared to adjust
production according to past orders and inventory level.
Features:
1. Continuity of demand must exist
2. Product must be standardized
3. Material should be per specification and delivered on time
4. Balanced operational stages
5. Quality standards must be maintained
6. Provision of appropriate plant and machinery provided
7. Inspection must be in line with production
8. Basic manufacturing information and bills of materials be
maintained
9. Production takes place in large lot sizes
10. In process storage not necessary
 Continuous system can again be divided into two categories

(i) Mass production : items are produced in large quantities and

importance not given to customer orders.
 Standardization exist w.r.t. materials and machines
 One type of product is produced at a time
 Different combinations of sub-assemblies or parts can be used to
manufacture different kinds of products

ii) Process production: volume of production is very high

ex. Petroleum products, heavy chemical industry, etc..
 Demand of products is high and continuous
 Single raw material is transformed into different kinds of product at
different levels
 DIFFERENCES BETWEEN INTERMITTENT AND CONTINUOUS
MANUFACTURING SYSTEM

Basis INTERMITTENT CONTINUOUS

Product Same product is not produced Same product produced continuously
continuously
Purpose Item produce for order Item produce for stock

Flexibility Flexible Not flexible

Range of Wide range of product can produce Some particular types of product can
product produce
Planning & Planning & Controlling of operations Planning & Controlling of operations are
control are complicated simple and easy.

Scale of Smaller scale of production Large scale of production

production

Capital Low capital investment High capital investment

investment

Use of Used for limited time Regularly used

equipments
 DIFFERENCES B/W INTERMITTENT AND CONTINUOUS
MANUFACTURING SYSTEM Conti…..

Basis INTERMITTENT CONTINUOUS

Per unit High per unit cost Low per unit cost.
cost
Job Low job security High level of job security
security
Change in Change in location is easy Change in location is very typical
location
Level of Low high
accuracy
 Operations as a strategic element in accomplishing organizational goals

Industry
Market and competition

Organizational strategy
Profit or return
Source of funds
Product or service quality

Operations policy
Conversion characteristics
Operations Product design flexibility
Delivery capability
Strategy Location of facilities
Processing technology
Control system

Managing conversion operations

Quality
Efficiency
Schedule

Result
Information Feedback
 THE STRATEGIC ROLE OF OPERATIONS
• Primary role is related to market opportunities
• Secondary role is related to economy and efficiency of conversion

STRATEGIC PERSPECTIVE –

 Quality (product performance)

 Cost efficiency (low product price)

 Dependability (reliable, timely delivery of orders)

 Flexibility (responding rapidly with new products or changes in

output volume)
OPERATIONS OBJECTIVES :

 Product characteristics
 Process characteristics
 Product quality
 Efficiency (effective employee relation, cost control of
material, cost control in facility utilization, cost control of
labour)
 Customer service (producing quantities to meet expected
demand, meeting the required delivery date for goods and
services)
 Adaptability for future survival
Systems Perspectives of Operations Management : Defining
the subsystem : In a very general sense, a system is a collection of objects
related by regular interaction and interdependence.

Personnel
Finance
Accounting

Engineering
Distribution
Purchasing
 Operations Management Interfaces with
Every Other Functional Area
Industrial
Engineering
Maintenance
Distribution

Purchasing Public
Operations Relations

Legal
Personnel

Accounting MIS
Key Decisions of Operations Managers
• What
– What resources/what amounts
• When
– Needed/scheduled/ordered
• Where
– Work to be done
• How
– Designed
• Who
– To do the work
RESPONSIBILITY OF PRODUCTION MANAGER :
1. Production manager should concern himself with production
planning.

2. Production control.

3. Production manager should concern himself with quality

control.

4. Methods of analysis of operations.

5. Plant layout and material handling.

6. Proper inventory control

7. Work study.

8. Wage and other incentives.

 Productivity
In general sense , productivity is some relationship between input and output of
an enterprise. It is the quantitative relationship between what we produce and the
resources used. the only way of incising living standards of society to increase
productivity.
Definitions of productivity:
1. Productivity is measure of how much input is required to produce a
given output i.e. it’s the ratio of output to input.
2. Productivity is the ratio between the amount produced and the amount
of resource used in the course of production .The resource may be
any combination of materials , machines , men and space.
3. According to Peter Drucker , Productivity means balance between all
factors of production that will give the maximum output with the smallest
efforts.
4. Organisation of European economic Community (OEEC) defines
productivity as the ratio between the production of given commodity
measured by volume and one or more of the corresponding input
factors also measures by volume. Thus there can be a number of
measures indicating the level of performance corresponding to each
input. In general sense , productivity is measure how much input is
required to produce a given output. i.e.
 PRODUCTIVITY = MEASURE OF OUTPUT / MEASURE OF INPUT
Input in a business organisation can be labour capital etc. the measure can
be expressed in terms of money value or in terms of quantity.
in most cases output will be goods and services produced ,for which input will
be men , money ,equipment ,power ,plant facilities and other items used in the
process of production. So…
Total productivity of the firm can be defined as:

Pt = Qt / L+C+R+M
Where Pt : Total Productivity
L : Labour Input
C : Capital input
R : Raw material and purchased parts input.
M : other miscellaneous goods and services input factors
Qt: Total Output
Importance of productivity:
1. Optimum use of resources .
2. Maximum satisfaction
3. Minimum efforts and expenditure.
4. Helps in indicating the stages where improvement requires
5. Helps to increase output.
6. Comparison of performances
7. Help in solving HR Issues of different labour unions

.
 Factors Influencing Productivity
(A) CONTROLLABLE (OR INTERNAL) FACTORS

1. Product factor: In terms of productivity means the extent to which the

product meets output requirements product is judged by its usefulness. The cost
benefit factor of a product can be enhanced by increasing the benefit at the
same cost or by reducing cost for the same benefit.

2. Plant and equipment: These play a prominent role in enhancing the

productivity. The increased availability of the plant through proper maintenance
and reduction of idle time increases the productivity. Productivity can be
increased by paying proper attention to utilisation, age, modernisation, cost,
investments etc.
3. Technology: Innovative and latest technology improves
productivity to a greater extent.
Automation and information technology helps to achieve improvements in material
handling, storage, communication system and quality control. The various aspects of
technology factors to be considered are:
(i) Size and capacity of the plant,
(ii) Timely supply and quality of inputs,
(iii) Production planning and control,
(iv) Repairs and maintenance,
(v) Waste reduction, and
(vi) Efficient material handling system.

4. Material and energy: Efforts to reduce materials and energy

consumption brings about
considerable improvement in productivity.
1. Selection of quality material and right material.
2. Control of wastage and scrap.
3. Effective stock control.
4. Development of sources of supply.
5. Optimum energy utilisation and energy savings.
5. Human factors: Productivity is basically dependent upon human competence
and skill.Ability to work effectively is governed by various factors such as education,
training, experience aptitude etc., of the employees. Motivation of employees will
influence productivity.

6. Work methods: Improving the ways in which the work is done (methods)
improves productivity, work study and industrial engineering techniques and training
are the areas which improve the work methods, which in term enhances the
productivity.

7. Management style: This influence the organizational design, communication

in organization, policy and procedures. A flexible and dynamic management style is a
better approach to achieve higher productivity
(B) UN-CONTROLLABLE (OR EXTERNAL) FACTORS
1. Structural adjustments: Structural adjustments include both economic and social
changes. Economic changes that influence significantly are:
(a) Shift in employment from agriculture to manufacturing industry,
(b) Import of technology, and
(c) Industrial competitiveness.
Social changes such as women’s participation in the labour force, education, cultural values,
attitudes are some of the factors that play a significant role in the improvement of
productivity.

2. Natural resources: Manpower, land and raw materials are vital to the productivity
improvement.

3. Government and infrastructure: Government policies and programmes are

significant to productivity practices of government agencies, transport and communication
power, fiscal policies (interest rates, taxes) influence productivity to the greater extent.
Techniques to improve productivity:
1. Better planning and training of employees, improved jobs and
communication.
2. Use of time and motion study.
3. Better transportation and material handling system.
4. By providing work incentives and other benefits to workers.
5. Workers involvement in decision making.
6. Improvement in technology of production process.
7. Simplification , standardization and specialization technique.
8. Better and efficient utilization of resource.
9. Different Inventory Control Techniques (e.g. ABC analysis) to
identify more important items and then apply inventory control to
reduce capital investment.
 Productivity Improvement Techniques
(A) TECHNOLOGY BASED

1. Computer Aided Design (CAD), Computer Aided Manufacturing (CAM), and

Computer Integrated Manufacturing Systems (CIMS):
2. Computer integrated manufacturing; Computer integrated manufacturing is
characterised by automatic line balancing, machine loading (scheduling and sequencing),
automatic inventory control and inspection.

(B) EMPLOYEE BASED

1. Financial and non-financial incentives at individual and group level.
2. Employee promotion.
3. Job design, job enlargement, job enrichment and job rotation.
4. Worker participation in decision-making
5. Quality Circles (QC), Small Group Activities (SGA)
6. Personal development.
(C) MATERAL BASED
1. Material planning and control
2. Purchasing, logistics
3. Material storage and retrieval
4. Source selection and procurement of quality material
5. Waste elimination.
(D) PROCESS BASED
1. Methods engineering and work simplification
2. Job design evaluation, job safety
3. Human factors engineering.
(E) PRODUCT BASED
1. Value analysis and value enginering
2. Product diversification
3. Standardisation and simplification
4. Reliability engineering
5. Product mix and promotion.
(F) TASK BASED
1. Management style
2. Communication in the organisation
3. Work culture
4. Motivation
5. Promotion group activity.
From the above illustration it is clear that, for second period, though production
has doubled, productivity has decreased from 80% to 76% for period third,
production is increased by 150% and correspondingly productivity increased from
80% to 100%.
WORK STUDY
 Advantages of Work Study
Following are the advantages of work study:
1. It helps to achieve the smooth production flow with minimum interruptions.
2. It helps to reduce the cost of the product by eliminating waste and
unnecessary operations.
3. Better worker-management relations.
4. Meets the delivery commitment.
5. Reduction in rejections and scrap and higher utilisation of resources of the
organization.
6. Helps to achieve better working conditions.
7. Better workplace layout.
8. Improves upon the existing process or methods and helps in standardisation
and
simplification.
9. Helps to establish the standard time for an operation or job which has got
application in manpower planning, production planning.
 METHOD STUDY
Method study enables the industrial engineer to subject each operation to
systematic analysis.

The main purpose of method study is to eliminate the unnecessary operations

and to achieve the best method of performing the operation.
Method study is also called methods engineering or work design. Method
engineering is used to describe collection of analysis techniques which focus on
improving the effectiveness of men and machines.

According to British Standards Institution (BS 3138): “Method study is the

systematic recording and critical examination or existing and proposed ways or
doing work as a means or developing and applying easier and more effective
methods and reducing cost.”
Fundamentally method study involves the breakdown of an operation or
procedure into its component elements and their systematic analysis. In
carrying out the method study, the right attitude of mind is important.
The method study man should have:
1. The desire and determination to produce results.
2. Ability to achieve results.
3. An understanding of the human factors involved.
 Objectives of Method Study
Method study is essentially concerned with finding better ways of doing things. It
adds value and increases the efficiency by eliminating unnecessary operations,
avoidable delays and other forms of waste.
The improvement in efficiency is achieved through:
1. Improved layout and design of workplace.
2. Improved and efficient work procedures.
3. Effective utilisation of men, machines and materials.
4. Improved design or specification of the final product.
The objectives of method study techniques are:
1. Present and analyse true facts concerning the situation.
2. To examine those facts critically.
3. To develop the best answer
 Scope of Method study
The areas to which method study can be applied successfully in manufacturing
are:
1. To improve work methods and procedures.
2. To determine the best sequence of doing work.
3. To smoothen material flow with minimum of back tracking and to improve
layout.
4. To improve the working conditions and hence to improve labour efficiency.
5. To reduce monotony in the work.
6. To improve plant utilization and material utilization.
7. Elimination of waste and unproductive operations.
8. To reduce the manufacturing costs through reducing cycle time of operations.
Steps or Procedure Involved in Methods Study
Steps or Procedure Involved in Methods Study
Selection of the Job for Method Study
The job should be selected for the method study based upon the following considerations:
 MOTION STUDY
Motion study is part of method study where analysis of the
motion of an operator or work will be studied by following the
prescribed methods.
Principles of Motion study
There are a number of principles concerning the economy of movements which have
been developed as a result of experience and which forms the basis for the development
of improved methods at the workplace. These are first used by Frank Gilbreth, the
founder of motion study and further rearranged and amplified by Barnes, Maynard and
others.
The principles are grouped into three headings:
(a) Use of the human body.
(b) Arrangement of workplace.
(c) Design of tools and equipment.
 WORK MEASUREMENT
Work measurement is also called by the name ‘Time
study’.
Work measurement is absolutely essential for both the
planning and control of operations. Without measurement
data, we cannot determine the capacity of facilities or it is not
possible to quote delivery dates or costs. We are not in a
position to determine the rate of production and also labour
utilization and efficiency. It may not be possible to introduce
incentive schemes and standard costs for budget control.
Definition of Work Measurement
 What is Work Measurement?
• Determining the amount of worker time required to
generate one unit of output

labor standards

– Target amount of time required to perform a job

under normal working conditions

Why use Work Measurement?

Schedule work and allocate capacity
Motivate and measure work performance
 Evaluate performance
 Provide benchmarks
 Objectives of work measurement
1. Manpower planning.
2. Production planning and scheduling.
3. Estimating productions costs.
4. Cost reduction and control.
5. Rational basis for incentives.
6. Performance appraisal.
7. Training of employees.
8. Comparing alternative methods.
9. Accepting new orders.
10. Fixing the selling cost.
Eight Steps to Conducting a Time Study
1. Define the task to be studied (after a methods analysis)

2. Break down the task into precise elements

3. Decide how many times each element of the task must be

measured

4. Record the times and ratings of performance for the task

elements

5. Compute the average observed cycle time

Eight Steps to Conducting a Time Study
6 .Compute the NORMAL TIME for each task element:

Normal time = (Average actual cycle time)x (Rating factor)

7. Sum the normal times for each element to develop a total normal time for
the task
8. Compute the STANDARD TIME:

Standard time = Total normal time

1- Allowance factor
 Allowances
• Personal time allowance - 4% - 7% of total
time - use of restroom, water fountain, etc.
• Delay allowance - based upon actual delays
that occur
• Fatigue allowance - to compensate for
physical or mental strain, noise level,
tediousness, heat and humidity,
assumption of an abnormal position, etc.
 6A-33

Time Study Normal Time Formulas

• Normal time(NT)=Observed performance time per unit
x (Performance rating)*

*The Performance Rating is usually expressed in

decimal form in these formulas. So a person working
10% faster than normal would have a Performance
Rating of 1.10 or 110% of normal time. Working 10%
slower, 0.90 or 90% of normal.

Normal time = Time worked x (Performance Rating )

Number of units produced
 6A-34

Time Study Standard Time Formulas

• Standard time = Normal time
+ (Allowances x Normal times)

• Standard time = NT(1 + Allowances)

• Standard time = NT .
1 - Allowances
 Time Study Example Problem

• You want to determine the standard time for a job.

The employee selected for the time study has
produced 20 units of product in an 480 minutes(8 hrs)
day. Your observations made the employee nervous
and you estimate that the employee worked about 10
percent faster than what is a normal pace for the job.
Allowances for the job represent 25 percent of the
normal time.

• Question: What are the normal and standard times

for this job?
 6A-36

Time Study Example Solution

Normal time = Time worked x (Perf. rating)

Number of units produced

= (480 minutes/20) x (1.10)

= 26.4 minutes

Standard time = NT .
1 – Allowances

= (26.4)/(1-0.25)

= 35.2 minutes
Techniques/Methods/Types of WM
 METHODS OF WORK MEASUREMENT
1. Historical data method
Historical data method uses the past-performance data. Here, past performance is used as a guideline
for setting work performance standards. The main advantage of this technique is that it is simple to
understand, quicker to estimate and easier to implement. However, past performance is not the best
basis for fixing performance standards. This is because there may be many changes in technology,
employees’ behavior, abilities, etc.

2. Time study
Time study with the help of a stop watch is the most commonly used work measurement method. This
technique was developed by Frederick Winslow Taylor (1856-1915).
Time study is best suited for short-cycle repetitive jobs. Most of the production jobs can be easily
timed by a time-study.
Time study procedure consists of the following steps:
1. Select the job to be timed.
2. Standardize the method of doing the job.
3. Select the worker to be studied.
4. Record the necessary details of the job and conditions of work.
5. Divide the job into elements. Here, ’element’ is a part of the job.
6. Find out the time taken to do every single element.
7. Keep provisions for relaxation, etc.
8. Fix the standard time for doing the job.
 METHODS OF WORK MEASUREMENT
3. Work sampling
Work sampling method was original developed by Leonard Henry Caleb
Tippett (1902-1985) in Britain in 1934. In this technique, the workers are
observed many times at random. It is done to find out for how much time
the worker is actually on the job. It checks how long he is working and how
much time he is not working (idle time).
Work sampling method does not involve stop watch measurement. The
purpose of work sampling technique is to estimate what proportion of a
worker’s time is devoted to work-related activities.
Work sampling method involves following three main steps:
Deciding what activities are defined as ’working’. Non-working are those
activities which are not defined as working.
Observe the worker at selected intervals and record (write down) whether
he is working or not.
Calculate the portion of time (P), a worker is working.
A portion of time (P) a worker is working equals to ’Number of observations
during which working occurred’ divided by ’Total Number of observations.’
The above calculation is used as a performance standard.
 METHODS OF WORK MEASUREMENT
4. Synthesis method
In synthesis method, the full job is first divided into elements (parts). Then the
time taken to do each element of the job is found out and synthesized .
This gives the total time taken for doing the full job. In this technique, the time
taken to do each element of the job is found out from previous time studies. So,
this technique gives importance to past-time studies of similar jobs. It also uses
standard data.
Standard-data is the normal time taken for doing routine jobs. Standard data is
easily available for routine-jobs like fitting screws, drilling holes, etc. So there is no
need of calculating these times repeatedly. Most companies use Standard-data.
They do not waste time doing studies for all elements of the job. This is because
standard time is already available for most elements of a job.
For example, a job of publishing a book contains four elements viz; typing, editing,
printing and binding. The time taken for doing each element is first found out.
Suppose, typing takes 40 days, editing takes 30 days; printing takes 20 days and
binding takes 10 days. Then the time taken to do all the elements are totaled.
That is, it takes 40 + 30 + 20 + 10 = 100 days to publish a book. This information is
taken from previous time studies of other printing jobs or from the standard data.
Synthesis technique also considers the level of performance. Level of performance
refers to the speed of performance, which is either, normal, fast, or very-fast.
The benefits or advantages of synthesis method:
 METHODS OF WORK MEASUREMENT
5. Predetermined motion time system
In ’Predetermined Motion Time System’ method or simply PMTS technique, the
normal times are fixed for basic human motions. These time values are used to fix the
time required for doing a job. Normally, three times are fixed for one job. That is, one
time is fixed for each level of performance. The level of performance may be normal,
fast and very-fast.

PTMS is better than motion studies because it gives the detailed analysis of the
motion, and it fixes the standard time for doing that motion.
The benefits or advantages of PMTS method:
It is a very accurate method. It avoids subjective judgement or bias of rater.
It is an effective and economical method for repetitive jobs of short duration.
There is no interference in the normal work routine, and so it does not face any
resistance from the employees.
It helps to improve the work methods because it gives a detailed analysis of the
motions.
It is more economical and fast compared to normal time studies.
 METHODS OF WORK MEASUREMENT
6. Analytical estimating
• Analytical estimating method or technique is used
for fixing the standard time for jobs, which are very
long and repetitive. The standard-time is fixed by
using standard-data. However, if standard data is not
available, then the standard time is fixed based on
the experience of the work-study engineer.
 Time Study
• Timing a worker’s performance
• Tools
– Observation: stopwatch
– Film, video
– tablet and spreadsheets
• Steps to take
– Define task
– Break into elements
– Determine amount of measurement
– Time and record elements and set standards
 PLANT LOCATION
PLANT LOCATION : Plant location means establishment of an industry at a
particular place. the selection on pure economic consideration will ensure an easy
and regular supply of raw materials , labour force , efficient plant layout ,proper
utilization of production capacity and reduce cost of production.

An ideal location may not by itself guarantee success ;but it

certainly contributes to the smooth and efficient working of an organization.

Need for selection of location :The need for the selection of the location may arise

under any of the following conditions:

1. When the business is newly started .

2. The existing business unit is outgrown.

3. The extant of market and establishment of new branches of business.

Need for facility location planning : Revenue and cost are both affected by facility
location . A technique called break even analysis
helps relate costs and revenues to facility location.

Break even analysis: Break even analysis is a graphical and algebraic representation
the relationship among the volume of output, cost ,and revenues.
Break even point: The level of output volume for which total cost equal to total revenues .

TR TR= Total revenue

TC = Total cost
E = Break even point
TC (FC+ VC)

E
.In Rs

VC

FC

0
Volume of output
 Cost structure and BEP for operations in two locations

Location 1: Location 2:
High Fixed cost Low Fixed cost
Low variable cost High variable cost

Total Revenue Total Revenue

Region of Total cost

Region of Profit
Profit Total cost
Region of
Region of
loss e loss e
Rs

Rs
VC
VC

FC
FC
o o
Out put volume Out put volume
 Break Even Chart for operating one facility and two facility

Total Revenue

Profit region 3

Profit region 2

TC of
facility A & B
for two shift
TC of
facility A & B
Profit region 1 Single shift
FC of
Rs

facility B
TC of
facility A

FC of
facility A

o BEP 1 BEP 2

Out put volume

Nature of plant location : no location can be considered to be unique and can remain
competitive for the all life. any location found optimum or
most appropriate today, may not remain optimum tomorrow .

Centralization vs. Decentralization of plant

Similar type of industry at some particular place is known as Centralization or localization .

and decentralization is an indication that there are many goods locations for many
industries.

Factor responsible for plant location

• Quantitative factors – cost of labour, material, land, transport, etc.

• Qualitative factors – words used as average, good, best, etc.
Choice of plant location should be based on following consideration

1. Availability of raw material

2. Nearness to potential market

3. Near to the sources of operating power

4. Supply of labour

5. Transport and communication facilities

6. Integration with other groups of companies

7. Suitability of land and climate

8. Availability of housing and other amenities

9. Local building and planning regulation

10. Safety requirement

Location Analysis : The selection of appropriate location depending upon the size of the
industry can be done into two stages.
1. Evaluation of various geographic areas & the selection of an optimum area.
2. With in the each area there is a choice of proper site , which can be urban, sub urban or
rural are generally known as industrial zone.

Measures for the selection of location: the selection of an area for a plant needs a careful
study if a good job is to be done.
The analysis can be divided into two categories :

1. Involving quantitative factors

a) Comparative cost analysis.
b) Break even analysis.
2. Comparison of qualitative factors .
1 - Analysis based on quantitative factors:

a) Comparative cost Chart: This simple type of analysis is appropriate where

The location problems concerns the placements of a single plant. this is based on location cost
Summery chart.

8 Lack
6 Lack
1=labour
4
5 Lack

4 Lack
2=material
Total Cost

4 3= Land
3
4
4 4= Transport
3 3

3 2
2
2
2
1
1 1 1

A B C D

Locations
b) Break even analysis: break even analysis is a graphical and algebraic representation
the relationship among the volume of output, cost ,and revenues.
Break even point: The level of output volume for which total cost equal to total revenues .

TR TR= Total revenue

TC = Total cost
E = Break even point
TC (FC+ VC)
Total Cost

E
VC

FC

0
Volume of output
2. Analysis based on Qualitative factors :

a) Drawing a comparative chart for various locations:

Factors Location A Location B

Labour Adequate Excellent

Recreation Good Very Good

Union activity Significant Not Significant

Education Good Very good

b) Ranking and weight methods

 The process of selecting a new facility location involves a series of steps.

1. Identify the important location factors and categorize them as dominant or

secondary.
2. Consider alternative regions; then narrow the choices to alternative
communities and finally to specific sites
3. Collect data on the alternatives from location consultants, state development
agencies, city planning departments, chambers of commerce, land developers,
electric power companies, banks, and on-site visits.
4. Analyze the data collected, beginning with the quantitative factors- factors that
can be measured in rupees, such as annual transportation costs or taxes.
5. Consider qualitative factors pertaining to each site into the evaluation. A
qualitative factor is one that cannot be evaluated in rupees terms, such as quality
of life or community attitudes. To merge quantitative and qualitative

factors, some managers review the expected performance of

each factor, while others assign each factor a weight of relative importance and calculate a
weighted score for each site, using a preference matrix. What is important in one situation
may be unimportant or less important in another.
The site with the highest weighted score is best.
 PLANT LAYOUT

In the words of James, “ layout

involves the allocation of space and
the arrangement of equipment in such
a manner that overall operating costs
are minimized”.
.
Types of plant layout:

1.Line or Product layout – In this layout machines,

equipments and other necessary operations are
arranged in some definite order or sequence. Ex – textile,
sugar, petroleum, paper, etc..
 This layout is used for continuous manufacturing system
 The position or order for a machine is fixed.
 Once a machine is in line, no other activity can take place which is not designated.
 There is continuous flow of material during the production process
 Production takes place in large quantities
 Lesser inspection, low cost labour and lesser training required
 Reduced material handling, reduced processing time
 Minimum need for buffer stock
 Requires heavy capital investment
 Provides economy in materials and labour
 Product layout of a car wash

Waiting Cars

M4 M5

Hot water Top wash Side wash Final clean

Clean out
spray & brush & brush spray

M1 M2 M3
Exit
Hand wipe &
Hot Blower
cleanup

M7 M6
 Storage 1 Storage 2
Output
Input
Machine A Machine B Machine C

Line Layout

Polishing Panting
Start Production Drill press
machine machine

Packaging
Lathe machine

Finish Product
Product layout in manufacturing product
2. Process or Functional layout – There operations of similar nature are grouped together in
same department. Hence, machines performing same type of work are arranged at one
place only. Ex – electronic products, mills, etc..

 Used for intermittent system

 Smaller output quantities
 Wide flexibility
 Effective supervision
 Low capital investment
 More material handling
 Longer processing time
 Requires more floor space
 Frequent inspection
 Requires highly skilled labour
 Machine loading is high
 Buffer stock is essential
 High investments in raw-material and work in –progress
 Provides cohesiveness.
 INPUT INPUT

Product 1 Product 2
Process or
Functional layout
Machine A

Machine B Machine D

Machine C Machine E

FINISHED
PRODUCT
3. Stationary layout – this type of layout is used where semi-finished and finished goods
are of immovable nature. Ex – ship building, construction works, etc..

1. Material, men and machinery are moved to site

2. Simple layout and capable of frequent adjustments

3. Skilled labour required

4. Huge investments needed

5. Operation shifts to another task only when first is complete

6. Long duration projects

Objectives of plant layout:

1. Economies in material, facilitate manufacturing process, careful handling of

semi finished and finished goods

2. Proper and efficient utilization of available floor space

3. Ensure that work proceeds from one point to another without delay

4. Provision for better supervision and control of operations

5. Careful planning to avoid frequent changes in layout

6. Provide adequate safety to workers from accidents

7. Meet quality and capacity requirements

8. Provision for medical facilities

9. Efficient material handling

10. Suggest improvements in production process.

Features of good layout:
1. Sufficient space for workers
2. Adequate safety and security
3. Proper arrangement of machines and equipments
4. Stores for in-process material
5. Supervision, control and co-ordination among activities
6. Sufficient scope for making adjustments and modifications

Factors relevant in choice of layout:

1. Nature of product
2. Size of output
3. Nature of manufacturing system
4. Location of plant
5. Arrangement of machines and equipments
6. Climatic conditions, light requirements, etc..
PLANT LAYOUT PROCESS:
1. Product demand

2. Production requirement

3. Component and parts analysis

4. Work methods and measurement

5. Machine requirement

6. Handling and movement requirement

7. Space requirements
Advantages of a good layout :
a) To The Worker:
1. Lesser no. of operation and material handling.
2. Minimize the production time as well as activity of workers.
3.More Labour productivity ie. More output per man i.e low work in
progress and high turnover.
4. More safety and security
5. Better Working conditions.
b) In Manufacturing Cost
1. Maintenance and replacement cost are reduced.
2. Loss due to waste and spoilage is minimized.
3. Improved quality of product with reduction in handling w.r.t movement
time and cost .
4. Better cost control.
c) In Production Control and Supervision
1. Provides more space for production operations.
2. Control and supervision operations are provided at appropriate place.
3. Better and convenient storage facility.
4. Efficient arrangement for receipt, transportation and delivery of raw -
material and finished goods.
5. Results in less inspection activity.
6. Cost and efforts in the supervision of production process are minimized.
Balancing Production Lines: The Sequence of machines and equipment arranged
to produce the desired product is known as production lines.
There can be situation that different machines in the system may produce
varying amount of product during the same period. This property is known as unbalancing and
the corresponding arrangement in plant is known as unbalanced production line.

Unbalanced production line

Machine Operation No. Time required to Units processed by

perform the the machine in one
operation/unit hour
A 1 15 min 4 unit

B 2 20 min 3 unit

C 3 30 min 2 unit
Balanced production line

Machine No. of Operation No. Time required to Units processed by

Machine perform the the machines in one
available operation/unit hour

A 3 1 15 min 12unit

B 4 2 20 min 12 unit

C 6 3 30 min 12 unit