Module IV - OPERATIONS MANAGEMENT

Work study, method study, work measurement, work sampling, work environment.
Capacity Planning and Break Even Analysis. Outsourcing and supply chain strategy.

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Work study:
It is a system of assessing methods of working, to achieve the maximum output and
efficiency.
(OR) Work study is a means of enhancing the production efficiency (productivity) of
the firm by elimination of waste and unnecessary operations.
(OR) Work study is a tool or technique of management involving the analytical study
of a job or operation. Work study helps to increase productivity.
It is the only accurate and systematic procedure oriented technique to establish time
standards. Method study and work measurement is part of work study. Part of method
study is motion study, work measurement is also called by the name ‘Time study’.

Role of Work Study:

1. To standardise the method of doing a work,
2. To minimise the unit cost of production,
3. To determine the standard time for doing a task,
4. To minimise the material movement, and operators movement,
5. To eliminate unnecessary human movements,
6. To utilise facilities such as man, machine and materials most effectively, and
7. To a systematic investigation of all factors.

Objectives of Work Study:

(i) Work study brings higher productivity;

(iii) It eliminates wasteful elements;
(iv) It sets standard of performance;

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(v) It helps to use plant and human more effectively;
(vi) It improves by saving in time and loss of material also
1. Increased efficiency,
2. Better product quality,
3. To choose the fastest method to do a job,
4. To improve the working process,
5. Less fatigue to operators and workers,
6. Effective labour control,
7. Effective utilisation of resources,
8. To decide equipment requirements,
9. To pay fair wages,
10. To aid in calculating exact delivery,
11. To formulate realistic labour budgeting, and
12. To decide the required manpower to do a job.

Advantages of Work Study:

o It helps to achieve the smooth production flow with minimum interruptions.
o It helps to reduce the cost of the product by eliminating waste and unnecessary
operations.
o Better worker-management relations.
o Meets the delivery commitment.
o Reduction in rejections and scrap and higher utilization of resources of the
organization.
o Helps to achieve better working conditions.
o Better workplace layout.
o Improves the existing process and helps in standardization and simplification.
o Work study ensures higher productivity,
o Better working conditions with less fatigue,

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 o Higher wages to workers,
o Uniform production flow,
o Job satisfaction and job security to workers,
o Reduction in unit cost of production,
o Quality products to consumers,
o Fast delivery schedule, 
o Harmonious employer-employee relation, and
o Better service to customers.

Steps Involved in Work Study:

(i) It selects the jobs which are to be studied;
(ii) It defines new method;
(v) It also installs the new method;
(vi) It also maintains the new standard;
(vii) It develops most economic and appropriate methods;
(viii) It measures the work content in the method, that is selected and compute a standard
time.

Types of Work Study:

1. Method Study:
“ It is the systematic recording, analysis and critical examination of existing and proposed
ways of doing work and the development and application of easier and more effective
method”. In short, it is a systematic procedure to analyse the work to eliminate unnecessary
operations.

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Objectives of method study are:
(i) It improves the proper utilisation of manpower, machine and materials;
(ii) It also improves the factory layout, work place, etc.;
(iii) It also improves the process and procedure;
(iv) It develops better physical working environment;
(v) It reduces undesirable fatigue.

Steps of method study are:

(i) At first select the proper work which are to be studied;
(ii) Record all the facts of existing method;
(iii) Examine the facts very critically;
(iv) Develop the most practical, economic, and effective method;
(v) Install the method and the same should be maintained.

2. Time And Motion Study:

Time Study: “The technique used to calculate the time necessary to carry out a given
activity at a different standard of performance”.‘
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In other words, “time study is the art of observing and recording time required to do each
detailed element of an individual operation.”
Motion study, is the study of the body motion used in performing an operation by
eliminating unnecessary motion and thus establishing the most favourable motion
sequence for maximum efficiency.
Time Study’ means the determination of standard time that is taken by a worker of
average ability under normal working conditions for performing a job.‘Motion Study’
determines the correct method of doing a job to avoid wasteful movements, for which the
workers are unnecessarily tired.
Steps:
1. Time and Motion studies eliminate wasteful movements;
2. They examine the proposed method critically and determine the most effective one;
3. They determine for each element having a stop-watch;
4. They record all the parts of a job which are done by the existing method;
5. They install the method as standard one;
6. They critically observe the workers who are engaged with the work;
7. They assess the proper speed of the operator who is working

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WORK MEASUREMENT
Work Measurement is the application of techniques designed to establish the time for an
average worker to carry out a specified manufacturing task at a defined level of
performance. It is concerned with the length of time it takes to complete a work task
assigned to a specific job.
Definition:
As “the art of observing and recording the time required to do each detailed element of an
Industrial activity/operation.” Thus time study standardizes the time taken by average
worker to perform these operations.

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(or) “Work measurement is the application of techniques designed to establish the time
taken for a qualified worker to carry out a specified job (task) at a defined level (rate) of
performance.
Meaning of Work Measurement
Work measurement means to:
1. Find out the different elements (parts) of the production process (job).

2. Find out the time taken by each element.

3. Fix the standard time for performing the production process.
For example, publishing a book is a production process. There are many elements, which
are involved in the publication of a book. In other words, book publication involves
production steps like typing a manuscript, editing the written matter, proof reading it,
followed by printing and binding.
Work measurement involves finding out the time taken for doing each element. The
time taken for each element is totalled. This is the standard time for publishing the book.
Here, provisions are also made for relaxation, breakdown of machines, etc.

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Objectives of Work Measurement:
(1) Target time for each job can be scientifically estimated
(2) Sound comparison of alternative methods is possible by comparing their basic times.
(3) Useful wage incentive schemes can be formulated on the basis of target times.
(4) It can lead to proper balancing of the work distribution.
(5) It can help to eliminate or reduce unnecessary or repetitive operations so that human
effort can be minimized.
(6) To standardise the efficient method of performing operations.
(7) To standardise conditions for efficient performance.
(8) To determine man and machines ratio for effective and efficient utilisation of both.
(9) To provide information’s and basis for production planning and scheduling activities.

Work Measurement Techniques

Work measurement techniques are listed below:
1. Historical data method - It uses the past performance data to set performance
standards.
2. Time study - It uses stop watch and is best suited for short-cycle repetitive jobs.
3. Work sampling - Here, workers are observed many times at random.
4. Synthesis method - Here, the full job is divided into element or parts.
5. Predetermined motion time system (PMTS) - Here, normally, three times are fixed for
one job namely; normal, fast, and very-fast.
6. Analytical estimating - It is used for fixing the standard time for jobs, which are very
long and repetitive.
(each one explained briefly down)
1. Historical data method
This method uses the past-performance data. Here, past performance is used as a guideline
for setting work performance standards. The main advantage is that it is simple to
understand, quicker to estimate and easier to implement. This is because there may be
many changes in technology, employees’ behaviour, abilities, etc.

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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 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. Divide the job into elements. Here, ’element’ is a part of the job.
5. Find out the time taken to do every single element.
6. Lastly, fix the standard time for doing the job.
3. Work sampling:
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). i.e It helps to observe the worker at selected
intervals and record (write down) whether he is working or not.

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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 (totalled). This gives the total
time taken for doing the full 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.
5. Predetermined motion time system
Here, 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.
6. Analytical estimating
This method 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.

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 Purpose of Work Measurement

 Manpower planning:
Work measurement data is used for manpower planning. This is because it gives
information about the total hours required to perform the job. This helps to estimate the
number and type of employees who are required to do the job. It ensures that there will not
be any excess staff.
Work measurement data also helps to estimate the number of machines and
equipment that will be required in the future. This helps to find out the number of
employees who will be required to handle these machines and equipment.

2. Production planning and scheduling

Work measurement data is used for production planning and scheduling. This is
because this data is used for making production standards and also used for scheduling.
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Scheduling means to fix starting and finishing time for each job. This cannot be done
without work measurement data.
3. Estimating productions costs:
Work measurement data helps to estimate the production cost. This is because it gives
management accurate data about production time. This data helps to estimate the labour
costs, fuel and power consumption, rent and salaries of staff, etc
4. Cost reduction and control
Work measurement data is used to reduce and control costs. It helps to reduce the labor
cost by making optimum use of the available manpower. Also helps to reduce material costs
& to increase machine productivity.
5. Rational basis for incentives
Work measurement data is used for making incentive schemes for the employees. Incentive
schemes motivate employees to work hard. The efficient employees are rewarded by giving
them a higher wage rate.
6. Performance appraisal
Performance appraisals are done to find out whether the employees are efficient or not. It is
done to find strengths & weaknesses of employees. Thus work measurement helps to do
performance appraisals.
7. Training of employees
Work measurement helps to train the employees, especially the new employees. It divides
the full job into small elements (parts). It gives complete details about each element of the
job. It gives details about; how to do each element, the time taken for each element, the
machines and tools involved in each element, etc. These details are used for training the
employees.
8. Comparing alternative methods
There are many methods for doing a job. Work measurement data helps to choose the best
method for doing a job.

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9. Accepting new orders
Work measurement data tells us when will each job be completed. So, it helps the company
to decide whether to accept new orders or not. In other words, it helps to find out whether
the new-order will be completed within a specific time limit.

10. Fixing the selling cost

Work measurement data also helps to fix the selling cost of product. This is because it
estimates the cost of production, especially the labor cost. Selling cost is decided after fixing
the estimated production cost.
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WORK SAMPLING:
Work sampling is the statistical technique for determining the proportion of time spent by
workers in various defined categories of activity (e.g. setting up a machine, assembling two
parts, idle…etc.).
One important usage of the work sampling technique is the determination of the
standard time for a manual manufacturing task. Similar techniques for calculating the
standard time are time study, standard data, and predetermined motion time systems.
In a work sampling study, a large number of observations are made on the workers
over aperiod of time. For statistical accuracy, the observations must be taken at random
times during the period of study. Work sampling is a sampling method and depends upon
the laws of probability. A sample taken at random from a large population provides a good
estimate of the distribution of the population.
A worker while working during his shift either does the job assigned to him or
remains idle for one or the other reason. The following table shows that out of total 50
observations, there were 45 working observations and five idle observations.
State of worker No.of observations
Working 45
Idle 5
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In this Example, the idle time percentage would be 5/50 x 100 = 10%
Working time would be 45/50 x 100 = 90%
This investigation is for one worker for a shift of 8 hours a day and indicates that the
operator was idle for 10% or 48 minutes in a shift of 8 hours (480 minutes) while working
for 90% or 432 minutes in one shift.
The accuracy of result depends upon the number or observations and the limits of
confidence level because the sampling procedure used involves certain degree of error. So it
is important to decide, what level of confidence is desired the final “Work Sampling” results.
During an investigation, if we increase the number of observations considerably and in each
observation then number of activities are large we can obtain a smoother curve called
normal distribution curve as shown in below:

The most common confidence level is 95%. This indicates that the probability is 95% of the
observations will be true and the 5% is false.
For majority of cases, an accuracy of 5% is considered satisfactory. This is usually referred
to as the percentage standard error.

Procedure for Work Sampling Study:

1. Define the Problem.

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(a) State the main objectives or purpose of the problem.
(b) Describe the details of each element to be measured.
2. Obtain the co-operation of the operators to be studied and they should also understand
the purpose of study.
3. Determine the desired accuracy of the final results in the form of standard error or
percentage.
4. State the confidence level.
5. Make a preliminary estimate of the percentage occurrence of the activity or delay to be
measured for one day or two days. This may be estimated on the basis of past experience.
6. (a) Design the study with the number of:
(i) Observations to be made.
(ii) Observations needed. Select and instruct them.
(iii) Days or shifts needed for the study.
(b) Make plans for taking the observations such as time for taking and the route to be
followed by the observer.
(c) Design the observations form.
7. Make the observations and record the data.
8. Summarize the data at the end of the each day.
9. Check the accuracy or precision of the data at the end of the study.
10. Prepare the report and state results. If required make recommendations

Advantages of Work Sampling

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Disadvantages of Work Sampling

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WORK ENVIRONMENT
The term work environment is used to describe the surrounding conditions in which
an employee operates.  The work environment can be composed of physical conditions,
such as office temperature, equipment, computers, Machines etc.  ie. Location where a task
is completed

Characteristics of Work Environment:

1. A clear vision and identity. Employees want to know where the company is
pointed, what the company believes in and what everyone is working toward.
2. Honest leadership.
3. Provides growth for employees.

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 4. A culture of collaboration. creates better work, better results and better culture.
5. Open communication. Great places to work are open about how the company is
performing.
6. Craves honest feedback from its employees.
7. Good atmosphere.
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Capacity Planning (Refer 3rd Module)
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BREAK EVEN ANALYSIS:
 The Break-Even Point (BEP) is the point at which total cost and total revenue are
equal.ie. it is the point where No profit and No loss occurs.
 Break-even point is the level of sales at which profit is zero. At break even point total
sales are equal to total cost (variable + fixed).
Profit :
Sales > Variable Expenses + Fixed Expenses
Break-even Point
Sales = Variable Expenses + Fixed Expenses
Loss
Sales < Variable Expenses + Fixed Expenses
The break-even point is one of the simplest least used analytical tools in
management. Inbreak-even analysis, fixed costs (FC) are constant and the variable costs
changes with respect to the output produced. In the starting of the business it does not yield
profit but requires more profit. Later at a particular point, it yields No profit and No loss.
Later it keeps generating profit.

BEP can be calculated as:

Where:
 R is revenue generated
 C is cost incurred

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  P is Price per unit

Advantages:
1. Measure profit and losses at different levels of production and sales.
2. Predict the effect of changes in sales prices.
3. Analyze the relationship between fixed and variable costs.
4. Predict the effect of cost and efficiency changes on profitability.
Disadvantages
1. Assumes that sales prices are constant at all levels of output.
2. Assumes production and sales are the same.
3. Break even charts may be time consuming to prepare.
4. It can only apply to a single product or single mix of products
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SUPPLY CHAIN STRATEGY

A supply chain strategy is defined as a formal written plan that details what actions
the organization is going to take over a multi-year horizon.
Supply chain strategy is an iterative process that evaluates the cost- benefit trade-
offs of operational components
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 A supply chain is a system of organizations, people, activities, information, and
resources involved in moving a product or service from supplier to customer. Supply chain
activities involve the transformation of natural resources, raw materials, and components
into a finished product that is delivered to the end customer.

Supply chain management involves the management and integration of flows of goods,
services and information into the company to create the goods and services that will then
flow out of the company to its customers.
Supply Chain Elements
A supply chain consists of all the activities relating to the flow of goods, services and
information that come into and out of a company from creation of goods and services
through distribution to end users.
Example.
The supply chain necessary for manufacturing a car is complex. A simple automobile supply
chain may include:
 Procurement and transportation of raw materials and components to the company
 Producing the vehicle from raw materials and components

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  Distribution of finished automobile to retail dealerships
 Delivery of automobile from dealership to consumer
All supply chains consist of four essential elements that we can glean from our example
above. These elements include:
1. Purchasing the resources necessary to make the company's goods and services
2. Production of the goods and services from the resources acquired
3. Managing the inventory of material necessary for product and the inventory of
finished goods and services
4. Transportation& distribution of the resources necessary for production and
distribution of goods and services to wholesalers, retailers or through direct sales to
customers.

Supply Chain Elements & Strategy : goals in managing the supply include:
 Managing quality
 Satisfying customers
 Maintaining competitiveness

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OUTSOURCING:
Outsourcing is a practice used by different companies to reduce costs by transferring
portions of work to outside suppliers rather than completing it internally.
Outsourcing is an effective cost-saving strategy when used properly. It is sometimes
more affordable to purchase a good from companies with than it is to produce the good
internally.

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Benefits of Outsourcing:
 Better quality:Better at building a product or delivering a service for which the part
or service to be outsourced, like tires. To buy a tire, even in the aftermarket, all you
need to know are three measurements. If the tire matches those three measurements,
you can put it on your car.
 Improved return on investment: A mainstay of outsourcing is its ability to reduce
the investment in plant and equipment needed to produce a product, which must be
booked as an asset. If you can retain the bulk of the profits for the product and not
lose too much to supplier markups, then your return on investment should increase.
 Lower costs: Generally speaking, outsourcing to low-cost labor means a company
can reduce the labor cost that goes into the outsourced components. For example,
labor costs in China are lower than in Western nations, so some firms hire Chinese
companies to perform labor-intensive, low-skill activities, like cutting and sewing
clothing.

*********** THE END ****************

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