MODULE

Oper
ati
onsManagement
WithTQM
BY:

JAYSONREYES ANGELYNAMUL JOJOCONTI

MODULE1
CHAPTER1

Oper
ati
onsManagementConcept
s

Chapt
erOut
li
ne

1 LearningObj
ecti
ves
2.TOPI
CS:
1.
1INTRODUCTI ON
1.
2HISTORICALDEVELOPMENT
1.
3CONCEPTOFPRODUCTI ON
1.
4PRODUCTI ONSYSTEM
1.
5CLASSIFICATIONPRODUCTI ONSYSTEM
1.
6PRODUCTI ONMANAGEMENT
1.
7OPERATIONSSYSTEM
1.
8OPERATIONSMANAGEMENT
1.
9OPERATIONSMANAGEMENTOBJECTI VES
1.
10THESTRATEGI CROLESOFOPERATIONS
1.
11THESTRATEGI CPLANNING
1.
12THETREND:I NFORMATIONANDNONMANUFACTURI
NGSYSTEMS
1.
13PRODUCTI VITY
1.
14FACTORSAFFECTI NGPRODUCTIVI
TY
1.
15SCOPEOFOPERATI ONSMANAGEMENNT

3 Let
’sSum Up

Lear
ningObj
ect
ives

Definediff
er entoperat i
onsmanagementconcept s
Discusshistor i
caldev elopmentandt heimport
ancet obusinessand
organizati
ons, Determi net heef fect
ivenesstotheorganizat
ion.
Explaintheconceptofpr oduct ion,system andmanagement
Descr i
bethedi f
ferentoper at
ionsManagementobj ecti
vesandstrat
egi
c
r
olesinoper at
ions.’
Explainthedi f
ferentinfor mat i
onandnonmanuf act
ur i
ngsystems
Determinet heconceptofpr oductiv
ity
Definethescopeofoper ationsmanagement

1.
1Int
roduct
ion

Operati
oni sthatpartofasor gani
zat
ion,whichisconcernedwi t
hthe
t
ransformationofarangeofinput
sintotherequi
redoutput(ser
vices)havi
ng
t
her equisi
tequali
tyl
evel
.Managementi stheprocess,whichcombi nesand
t
ransforms
variousresourcesusedi nt heoperati
onssubsyst
em oft heorganizat
ioninto
value added servi
cesi n a contr
oll
ed manneras pert he pol
i
cies oft he
organizat
ion.
Thesetofi nterr
elatedmanagementact i
vi
ti
es,whi chareinvolv
edi n
manuf actur
ingcertainpr oducts,i
scall
edasproduct i
onmanagement .Ifthe
sameconcepti sext endedt oservi
cesmanagement ,thenthecorresponding
setofmanagementact i
viti
esiscall
edasoperat
ionsmanagement .

1.
2Hi
stor
icalDev
elopment

Thet radi ti
onalv i
ew ofmanuf act ur i
ngmanagementbegani neighteent h
cent ur ywhenAdam Smi t
hr ecogni zedt heeconomi cbenef it
sofspeci alization
ofl abor .He r ecommended br eaki ng ofj obs down i nt o subtasks and
recogni zeswor kerst ospeci al
izedt asksi nwhi cht heywoul dbecomehi ghl y
skil
ledandef fi
cient .I
nt heear lytwent iethcent ury,F.W.Tay lorimplement ed
Smi th’st heor i
esanddev elopedsci ent i
f i
cmanagement .From t hent i
ll1930,
manyt echni queswer edev elopedpr ev aili
ngthet r
aditionalview.
Product i
onManagementbecomest heaccept abl etermf rom 1930st o
1950s.As F. W.Tay lor’
s wor ks become mor e wi dely known,manager s
dev elopedt echni quest hatf ocusedoneconomi ceff i
ciencyi nmanuf acturing.
Wor ker swer est udiedingr eatdet ailt oel iminatewast efuleffortsandachi eve
great eref ficiency .Atthesamet i
me, psy chologists,soci al
istsandot hersoci al
scient ists began t o study peopl e and human behav iori nt he wor king
env i
r onment .
Wi tht he1970semer get wodi st inctchangesi nourv iews.Themost
obv iousoft hese,r efl
ectedi nt henew nameOper at i
onsManagementwasa
shifti nt heser viceandmanuf acturingsect orsoft heeconomy .Asser vice
sect orbecamemor epromi nent ,thechangef rom ‘product i
on’t o‘operations’
emphasi zedt hebr oadeni ngofourf ieldt oserv i
ceor ganizations.

Hi
stor
ical
summar
yofoper
ati
onsmanagement

Dat
e Cont
ribut
ion Cont
ribut
or
1776 Speci
ali
zat
ionofl
abouri
nmanuf
act
uri
ng Adam Smi
th
1799 I
nter
changeabl
epar
ts,
costaccount
ing El
iWhi
tney&ot
her
s
1832 Divi
sionofl
abourbyski
l
l;assi
gnmentofj
obsbySki
l
l;basi
csof Char
lesBabbage
ti
mest udy
1900 Sci
enti
fi
cmanagementti
mestudyandwor
kst
udyDev
eloped; Fr
eder
ickW.
Tay
lor
di
vi
dingplanni
nganddoi
ngofwork
1900 Mot
ionofst
udyofj
obs Fr
ankB.Gi
l
bret
h
1901 Schedul
ingtechni
quesf
orempl
oyees,
machi
nesJobsi
n Henr
yL.Gant
t
manufactur
ing
1915 Economi
clotsi
zesf
ori
nvent
orycont
rol F.
W.Har
ri
s
1927 Humanr
elat
ions;
theHawt
hor
nest
udi
es El
tonMay
o
1931 Stat
ist
ical
inf
erenceappl
i
edt
opr
oductqual
i
ty:
qual
i
tycont
rol W.
A.Shewar
t
char
ts
1935 Stat
ist
ical
Sampli
ngappl
i
edt
oqual
i
tycont
rol
:i
nspect
ion H.
F.Dodge&H.
G.Rom i
ng
sampli
ngplans
1940 Oper
ati
onsr
esear
chappl
i
cat
ionsi
nwor
ldwarI
I P.
M.Bl
acker&ot
her
s
1946 Di
git
alComput
er JohnMauchl
l
yandJ.
P.Ecker
t
1947 Li
nearPr
ogr
ammi
ng G.
B.Dant
zig,
Wil
l
iams&ot
her
s
1950 Mat
hemat
ical
progr
ammi
ng,
on-
li
nearandst
ochast
icpr
ocesses A.
Charnes,W .
W .Cooper&ot
hers
1951 Commer
cial
digi
tal
comput
er:
lar
ge-
scal
ecomput
ati
onsav
ail
abl
e Sper
ryUni
vac
1960 Or
gani
sat
ional
behav
iour
:cont
inuedst
udyofpeopl
eatwor
k L.
Cummi
ngs,
L.Por
ter
1970 I
ntegrati
ngoperat
ionsint
oov er
allst
rat
egyandpoli
cyComputer
appl
icati
onstomanuf act
uri
ng,schedul
ing,
andcontr
ol,
Mater
ial W.
Ski
nnerJ.
Orl
i
cky&G.Wr
ight
RequirementPl
anning(MRP)
1980 Qual
i
tyandpr
oduct
ivi
tyappl
i
cat
ionsf
rom Japan:
robot
ics, W.
E.Demi
ng&J.
Jur
an
CAD-
CAM
1.
3ConceptofPr
oduct
ion

Pr oductionf uncti
oni s‘thepar tofanor ganizati
on,whi chisconcer ned
wit
ht he transformat i
on ofa r ange ofi nputsi ntot he requir
ed outputs
(pr
oduct s)hav i
ngt herequi sit
equal i
tylevel’.
Pr oductioni sdef i
nedas‘ thest ep-by -
stepconv er
sionofonef orm of
mater i
alintoanot herformt hroughchemi calormechani calprocesst
ocr eate
orenhancet heut i
li
tyofthepr oductt ot heuser ’
EdwoodBuf fadef i
nespr oductionas‘ apr ocessbywhi chgoodsand
servi
ces ar e created’.Some exampl es ofpr oducti
on ar e:manufactur i
ng
custom- madepr oductslike,boi l
erswi thaspeci ficcapacity,constr
uct
ingflats,
some st ructural fabrication wor ks f or sel ected cust omers, et
c.,and
manuf acturi
ng st andardi zed pr oduct sl ike,car ,bus,mot orcy cl
e,radi o,
tel
evision,etc.

1.
4Pr
oduct
ionSy
stem

Thepr oduct
ionsystem is‘t
hatpartofanor gani
zation,whichpr oduces
pr
oductsofanor gani
zati
on.I tisthatacti
vi
tywher ebyr esour
ces,f l
owing
wi
thin a defi
ned syst
em,ar e combined and t
ransformed in a control
led
mannert o add val
ue in accordance wi
ththe poli
cies communi cated by
management ’
.

1.
5Cl
assi
fi
cat
ionofpr
oduct
ionSy
stem

Product
ion sy
stemscanbeclassi
fi
ed asJob-
shop,Bat
ch,Massand
Conti
nuousproducti
onsy
stems.
 Job-
ShopPr
oduct
ion

Job-
shoppr oducti
onar
echaract
eriz
edbymanufact
uri
ngoneorfewquanti
ty
ofproduct
sdesi gnedandproducedasperthespeci
ficat
ionofcust
omers
wit
hinpref
ixedtimeandcost
.

Hi
ghv
ari
etyofpr
oduct
sandl
owv
olume.

Useofgener
alpur
posemachi
nesandf
aci
l
iti
es.

Hi
ghl
yski
l
ledoper
ator
s

Lar
gei
nvent
oryofmat
eri
als,
tool
s,par
ts.

Det
ail
edpl
anni
ngf
orsequenci
ngt
her
equi
rement
sofeachpr
oduct
.

Advantages
1.Becauseofgener alpurposemachinesandfaci
li
ti
esv ar
iet
yofproduct
scan
beproduced.
2.Oper at
orswillbecomemor eski
ll
edandcompet ent,
aseachj obgi
vesthem
l
earningoppor t
uni t
ies.
3.Ful
l potent
ialofoper at
orscanbeut i
li
zed.
4.Oppor t
unit
yexi st
sf orCreat
ivemethodsandinnovat
iveideas.

Bat
chPr
oduct
ion

I
tischar
acter
izedbythemanuf
actur
eofl
imit
ednumberofpr
oduct
s
pr
oducedatregul
arint
erv
alsandst
ockedawai
ti
ngsal
es.

Shor
terpr
oduct
ionr
uns.

Pl
antandmachi
ner
yar
efl
exi
ble.

Pl
antandmachi
ner
ysetupi
susedf
ort
hepr
oduct
ionofi
tem i
nabat
ch.

Manuf
act
uri
ngl
ead-
ti
meandcostar
elower.
.

Adv
antages
1.
Betterutil
izati
onofplantandmachi nery.
2.
Promot esf uncti
onalspecial
izat
ion.
3.
Costperuni ti
slowerascompar edt ojoborderpr
oduct
ion.
4.
Loweri nvestmentinplantandmachi nery.
5.
Flexi
bil
itytoaccommodat eandpr ocessnumberofproduct
s.
6.
Jobsat isf
act i
onexist
sf oroperators.

MassPr
oduct
ion

Manuf
actur
eofdiscret
epartsorassembl
iesusi
ngacont i
nuousprocess
arecal
l
edMassPr oduct
ion.Thi
sproducti
onsyst
em i
sjust
if
iedbyv er
ylarge
vol
umeofproduct
ion.

St
andar
dizat
ionofpr
oductandpr
ocesssequence.

Machi
neshav
inghi
gherpr
oduct
ioncapaci
ti
esandout
putr
ates.

Lar
gev
olumeofpr
oduct
s.

Shor
tercy
clet
imeofpr
oduct
ion.

Loweri
npr
ocessi
nvent
ory
.
 
Per
fect
lybal
ancedpr
oduct
ionl
i
nes.

Fl
owofmat
eri
als,
component
sandpar
tsi
scont
inuous.

Pr
oduct
ionpl
anni
ngandcont
rol
iseasy
.

Mat
eri
alhandl
i
ngcanbecompl
etel
yaut
omat
ic

Adv
antages
1.
Higherrateofproducti
onwithr
educedcycl
eti
me.
2.
Highercapacit
yut i
l
izat
ionduet
olinebal
anci
ng.
3.
Lessskill
edoperatorsarer
equi
red.
4.
Lowpr ocessinventor
y.
5.
Manufacturi
ngcostperunitisl
ow.

Cont
inuousPr
oduct
ion

Producti
onf aci
li
ti
esarear ranged aspert hesequenceofpr oduct
ion
oper
ationsfrom thefir
stoperati
onst othefinishedproduct
.Theitemsar e
madet oflow t
hroughthesequenceofoper ationsthr
oughmat er
ialhandl
ing
devi
cessuchasconv eyors,
transferdev
ices,
etc.

Dedi
cat
edpl
antandequi
pmentwi
thzer
ofl
exi
bil
i
ty.

Mat
eri
alhandl
i
ngi
sful
l
yaut
omat
ed.

Pr
ocessf
oll
owsapr
edet
ermi
nedsequenceofoper
ati
ons.

Componentmat
eri
alscannotber
eadi
l
yident
if
iedwi
thf
inal
product
.

Pl
anni
ngandschedul
i
ngi
sar
out
ineact
ion.

Adv
antages
1.
Standardizati
onofproductandprocesssequence.
2.
Higherrateofproducti
onwi t
hreducedcy cl
etime.
3.
Highercapacityut
il
izat
ionduetolinebalanci
ng.
4.
Manpoweri snotr
equiredformateri
alhandli
ngasiti
scompl
etel
y
automat i
c.

1.
6Pr
oduct
ionManagement

Productionmanagementi s‘apr ocessofpl anning,organizi

ng,di
rect
ing
andcont r
olli
ngt heacti
vit
iesoft hepr oduct
ionf unct i
on.Itcombinesand
tr
ansforms v ar
ious r
esources used int he pr
oduct ion subsyst
em oft he
organizati
oni ntovalueaddedpr oductinacont r
olledmanneraspert he
poli
ciesoft heorgani
zati
on’.

E.
S.Buf
fadef
inespr
oduct
ionmanagementasf
oll
ows:

‘
Producti
onmanagementdealswit
hdecisi
on-maki
ngrelat
edtopr oducti
on
processessot hattheresul
ti
nggoodsorservi
cesareproducedaccordingto
specif
icat
ions,inthe amountand by t
he schedul
e demanded and outof
minimum cost’.

Obj
ect
ivesofpr
oduct
ionManagement

1.
RightQual
it
y
2.
RightQuant
ity
3.
RightTi
me
4.
RightManufactur
ingCost
1.
7Oper
ati
onsSy
stem
 Oper
ati
onssy stem conv er
tsi
nputsi
nordert
opr
ovideout
put
s, whi
chare
requir
edbyacust omer .
I
tconvert
sphy sical r
esourcesint
ooutput
s,t
hef
uncti
onofwhichisto
sati
sfycustomerwant s.
(
a)Manufact uringOper at
ions
(
b)Servi
ceOper ations

EverettE.Adam &Ronal dJ.Eber tdefi

nesas‘ Anoper atingsy stem ist he
par
tofanor ganizationt hatproducest heor ganizati
on’sphy si
calgoodsand
ser
vices’
.
RayWi ld defi
nesoper ati
onssy st
em as‘ aconf igurationofr esources
combinedf ortheprov i
sionofgoodsorser vi
ces’ .
Adepar t
ment alstore'shasani nputl
ikel anduponwhi cht hebui ldi
ngi s
l
ocated,laborasast ockcl er
k,capitalinthef orm ofbuilding,equipmentand
merchandise,managementski ll
sint heform oft hestoresmanager .Out put
wil
lbeser vi
cedcust omerwi t
hdesi r
edmer chandi se.Random f l
uctuationswi l
l
befrom externalorinter
nal sources,monitoredt hroughaf eedbacksy stem.

Oper
ati
onssy
stem f
ordepar
tmentst
ores

AFr
amewor
kofManagi
ngOper
ati
ons

Pl
anni
ng
 Theact
ivi
tyt
hatest
abl
i
shesacour
seofact
ionandgui
def
utur
edeci
sion-
maki
ng.

Organizi
ng
Theydeter
mi netheactivi
ti
esrequi
redt
oachiev
ethegoal
sandassi
gn
authori
tyandresponsibi
l
ityf
orcarr
yingt
hem out
.

Contr
oll
ing
Theactivi
ti
esthatassur
etheact
ualper
for
mancei
naccor
dancewi
th
pl
annedperfor
mance.

1.
8Oper
ati
onsManagement

Joseph G .Monks defi

nes Oper
ations Managementas the pr
ocess
wherebyresour
ces,fl
owi ng wi
thi
n a defi
ned sy
stem,are combi
ned and
tr
ansfor
medbyacont r
olledmannertoaddv al
ueinaccordancewi
thpol
ici
es
communicatedbymanagement .

Thedef
ini
ti
onoft
heoper
ati
onsManagementcont
ainsf
oll
owi
ng
key
words:

Resources
Resourcesarethehuman,materi
alandcapi
tali
nput
stot
hepr
oduct
ion
process.
Humanr esourcesaret
hekeyassetsofanorgani
zati
on.

Systems\
Sy
stems aret he ar
rangementofcomponents desi
gned t
o achi
eve
object
ivesaccordi
ngtothepl an.Thebusi
nesssy
stemsaresubsyst
em of
l
argesocialsyst
ems.

Tr ansformationandValueAddi ngActi
vit
ies
Theobj ecti
veofcombi ni
ngresourcesundercont
roll
edcondit
ionsisto
transform them into goodsand ser v
iceshaving ahigherval
uet han t
he
originalinputs.Thet r
ansformati
onprocessappliedwillbei
nt hef or
m of
technol ogytotheinput
s

Schemat
icmodel
foroper
ati
ons/
product
ionsy
stem
1,
9Oper
ati
onsManagementObj
ect
ives
 1.CUSTOMERSERVI
CE

Thef irstobj
ecti
veofoperati
ngsy stemsi st outil
i
zer esour
cesf ort he
sati
sf acti
onofcustomerwants.Therefore,customerserviceisakeyobj ect
ive
ofoper ati
onsmanagement.Theoperatingsy stem mustprovidesomethingtoa
specificat
ion,whi
chcansat
isf
yt hecustomeri nt ermsofcostandti
mi ng.Thus,
providingthe‘ri
ghtthi
ngatar i
ghtpr i
ceatt her ightt
ime’cansatisf
ypr imary
objective.

Pr
inci
pal Pr
inci
pal
cust
omerwant
s

f
unct
ion Pr
imar
yconsi
der
ati
ons Ot
herconsi
der
ati
ons

Manuf
act
ure Goodsofagi
ven,
request
ed Cost
,i.
e.pur
chasepr
iceorcostofobt
aini
ng

oraccept
abl
especi
fi
cat
ion goods.Ti
ming,
i.
e.del
i
ver
ydel
ayf
rom or
deror

r
equestt
orecei
ptofgoods.

Tr
anspor
t Managementofagi
ven, Cost
,i.
e.costofmov
ement
s.Ti
ming,
i.
e.

r
equest
edoraccept
abl
e 1.
Dur
ati
onort
imet
omov
e.

speci
fi
cat
ion 2.
Wai
tordel
ayf
rom r
equest
ingt
oit
s

commencement
.

Suppl
y Goodsofagi
ven,
request
edor Cost
,i.
e.pur
chasepr
iceorcostofobt
aini
ng

accept
abl
especi
fi
cat
ion goods.Ti
ming,
i.
e.del
i
ver
ydel
ayf
rom or
deror

r
equestt
orecei
ptofgoods.

Ser
vice Tr
eat
mentofagi
ven,
request
ed Cost
,i.
e.costofmov
ement
s.Ti
ming,
i.
e.

oraccept
abl
especi
fi
cat
ion 1.
Dur
ati
onort
imer
equi
redf
ort
reat
ment
.

2.
Wai
tordel
ayf
rom r
equest
ingt
reat
mentt
oit
s

commencement
.
2.RESOURCEUTI
LIZATI
ON

Anothermaj orobj
ecti
veofoper ati
ngsy stemsi stout i
l
izer
esourcesfor
thesat i
sfactionofcust omerwant sef fecti
vely.Cust
omerser v
icemustbe
providedwitht heachievementofeffect
iveoper ati
onsthr
ougheffi
cientuseof
resources.Ineffici
entuseofresourcesori nadequatecustomerser
v i
celeads
tocommer cialfail
ureofanoperat
ingsy stem.

Thecust
omerser
viceobj
ect
ive Ther
esour
ceut
il
izat
ionsobj
ect
ive

i
.e.t
opr
ovi
deagr
eed/
adequat
elev
elsofcust
omer i
.
e.t
oachi
eveadequat
elev
elsofr
esour
ce

ser
vice(
andhencecust
omersat
isf
act
ion)bypr
ovi
ding ut
il
izat
ions(
orpr
oduct
ivi
ty)e.
g.t
oachi
eve

goodsorser
viceswi
tht
her
ightspeci
fi
cat
ion,
att
her
ight agr
eedl
evel
sofut
il
izat
ionsofmat
eri
als,

costandatt
her
ightt
ime. machi
nesandl
abour
.

1.
10St
rat
egi
cRol
eofOper
ati
ons

(
a)ASTRATEGICPERSPECTIVE
Over
all
organi
zat
ional
str
ategymustbedev
eloped:

Qual
i
ty(
productper
for
mance)
.

Costef
fi
ciency(
lowpr
oductpr
ice)
.

Dependabi
l
ity(
rel
i
abl
e,t
imel
ydel
i
ver
yofor
der
stocust
omer
s).

Fl
exi
bil
i
ty(
respondi
ngr
api
dlywi
thnewpr
oduct
sorchangesi
nvol
ume)
.

(
b)OPERATIONSOBJECTI VES
Product
/ser
vicecharact
eri
sti
cs.
 Processchar acteri
stics.
Product /servi
cequal ity.
Ef
f i
ciency
Ef fectiv
eempl oyeer el
ati
onsandcostcont r
olofl
abor.
Costcont rolofmat eri
al.
Costcont rolinfaci l
i
tyutil
izati
on.
Customerser vice(schedul e)
Pr oduci ngquant i
tiestomeetexpect eddemand.
Meet ingther equireddeliv
er ydat
eforgoodsorser
vices.
Adapt abili
tyforfuturesur vi
val.

(c)OPERATI ONSALTERNATI VESANDTRADEOFFS

Theoper ationssub- goal scanbeat t
ainedthroughthedeci sionsthatare
madei nt hev ari
ousoper at ionsareas.Onceadeci sionismade,i tl
eadst o
manychoi ces.
Wher eshoul df
aciliti
esbel ocated?
Howl argeshoul dtheybe?
Whatdegr eeofaut omat i
onshoul dbeused?
Howski ll
edmustl aborbet ooper atetheautomatedequi pment?
Willthepr oductbepr oducedonsi te?
Howdot hesedeci sionsimpactqual it
y,eff
ici
ency,schedule
(customerser vice)
,andadapt abil
it
y?
Arewepr epared f orchangesi n productorser vi
ce,ordo t hese
decisi
onsl ocki nouroper ations?

1.
11TheSt
rat
egi
cPl
anni
ng

Strat
egicPl anni
ngf orProduct
ionandOper ati
ons
I
nthepr oducti
onoroper ati
onsf unct
ion,str
at egicplanningist hebr oad,
overal
lpl anning thatpr ecedes the mor e detailed operationalplanni ng.
Executi
veswhoheadt heproductionandoper ationsf unct
ionar eact ively
i
nv ol
vedinst r
ategi
cpl anni
ng,developingplanst hatar econsi st
entwi tht he
fi
rm’sov erallstrat
egiesaswel lassuchf unctionsasmar ket
ing,finance
accounti
ngandengi neeri
ng.Productionandoper ationsstrategicplansar e
thebasisf or(1)operati
onalplanni
ngoff acil
it
ies(desi gn)and( 2)operati
onal
planni
ngf ortheuseoft hesefacil
it
ies.

Strategi
cPlanning—ForcedChoiceModel
Oneofmanypl anningmodel sthathavebeenusedi nstrategicplanni
ngis
af orcedchoicemodel ,showni nf i
gure.In-groupsessi onsori ndivi
dual
ly,
analysts assess env i
ronmental consi derati
ons t ogether wi t
h t he
organizat
ion’
s cur rent pr oducti
on/operati
ons posi tion, t hus f orci
ng
managementt odevelopstrat
egicopti
onsf oroper at
ions.
 Af
orcedchoi
cemodel
ofst
rat
egi
cpl
anni
ngf
oroper
ati
ons

Str
ategicPlanni
ngAppr oachesf orProduction/Operations
Therear emanyappr oachest ost r
ategicplanning.Thekeypoi ntisthat
operat
ionsst r
ategi
esmustbeconsi st
entwi t
ht heov eral
lstrat
egi esoft he
fi
rm.Oper ati
onst y
pical
lyutili
zet heov er
allcor por
ateappr oacht ost rat
egic
pl
anning,withspecialmodi f
icati
onsandaf ocusuponoper at
ionsi ssuesand
opport
uniti
es.Onegener alappr oacht ostrategicplanningisaf orcedchoi ce
model gi
venbyAdam andEber t
.

AStrat
egicPlanningOperationsModel
Onef eat
ureoft hi
sappr oacht hatiscruci
altocompet i
ti
venessismarket-
basedviewofst r
ategicplanning.Itsuggeststhatanyst r
ategicbusi
nessunit
ofacompanyoper atesinthecont ex
tofitscorporat
er esources,t
hegeneral
andcompet i
ti
veindustryenv i
ronment ,andthespecif
iccorporategoal
softhe
company .I
nanyar eainwhi cht hecompanychoosest ocompet eisasetof
speci
fi
cmar ket-
basedcr i
teri
af orsuccess.
1.
12TheTr
end:I
nfor
mat
ionandNonManuf
act
uri
ngSy
stems

Manuf
actur
ingi
schar
act
eri
zedbyt
angi
bleout
put
s(pr
oduct
s).
Consumpt
ionofout
put
satover
ti
me.

Fol
lowi
ngchar
acteri
sti
cscanbeconsi
deredfordi
sti
ngui
shi
ng
Manufact
uri
ngOper
ationswit
hServi
ceOperati
ons:

Tangi
ble/
Int
angi
blenat
ureofout
put

Pr
oduct
ionandconsumpt
ion

Nat
ureofwor
k(j
ob)

Degr
eeofcust
omercont
act

Cust
omerpar
ti
cipat
ioni
nconv
ersi
on

Measur
ementofper
for
mance

Qual
i
tyofout
put

I
nvent
oryaccumul
ated

1.
13Pr
oduct
ivi
ty

Producti
v i
tyisdefinedi
ntermsofutil
i
zat
ionofresources,l
ikemater
ialandl
abor
.
I
nsi
mpl eterms, pr
oduct i
vi
tyistherat
ioofoutputt
oi nput.
Productivi
tycanbei mprovedby
(a)controll
inginputs
(b)improvingpr ocesssothatthesameinputyiel
dshi gherout
put,and
(c)byimpr ovementoft echnol
ogy.

Moder
nDy
nami
cConceptofPr
oduct
ivi
ty

1.
14Fact
orsAf
fect
ingPr
oduct
ivi
ty

Capi
tal
/l
aborr
ati
o

Scar
cit
yofsomer
esour
ces

Wor
k-f
orcechanges

I
nnov
ati
onsandt
echnol
ogy

Regul
ator
yef
fect
s
 
Bar
gai
ningpower

Manager
ial
fact
ors

Qual
i
tyofwor
kli
fe

1.
16ScopeofOper
ati
onsManagement

Locat
ionoff
aci
l
iti
es.

Pl
antl
ayout
sandMat
eri
alHandl
i
ng

Pr
oductDesi
gn.

Pr
ocessDesi
gn.

Pr
oduct
ionandPl
anni
ngCont
rol
.

Qual
i
tyCont
rol

Mat
eri
alsManagement
.

Mai
ntenanceManagement
.

Let
’sSum Up

Oper ati
oni sthatpar tofasor gani zation,whi chi sconcer nedwi ththe
transformat ionofar angeofi nputsintot her equiredout put( services)hav i
ng
ther equisit
equal i
tylevel.
Managementi st hepr ocess,whi chcombi nesandt ransf ormsv ari
ous
resour cesusedi ntheoper ationssubsy stem oft heor gani zationi nt
ov al
ue
addedser vicesinacont roll
edmanneraspert hepol i
ciesoft heor ganization.
Product ionfunctioni s‘thepar tofanor ganizati
on,whi chi sconcer ned
wi t
ht he transfor
mat ion ofa r ange ofi nputsi ntot he r equired outputs
(product s)hav i
ngther equisit
equal i
tylev el’
.
Product ionisdef inedas‘ t
hest ep-by -stepconv er sionofonef orm of
mat erialintoanotherf ormt hroughchemi calormechani calpr ocesst ocreate
orenhancet heuti
li
tyoft hepr oducttot heuser ’
.
Thepr oducti
on sy st
em i s‘ t
hatpar tofan or ganizat i
on,whi chpr oduces
product sofanor ganizati
on.Itisthatactivitywher ebyresour ces, fl
owi ngwi t
hina
definedsy stem,
 are combi ned and t r
ansf ormed i n a contr
olled mannert o add v alue in
accor dancewi t
hthepol i
ciescommuni catedbymanagement .
Product ionmanagementi s‘aprocessofpl anning,or ganizi
ng,di r
ecti
ng
andcont rolli
ngt heact i
vitiesoft hepr oducti
onf unct i
on.I tcombi nesand
tr
ansf orms v ar
ious resour ces used int he product ion subsy stem oft he
organi zat
ioni ntov al
ueaddedpr oducti nacont r
olledmanneraspert he
poli
ciesoft heorganizati
on’ .
Joseph G.Monks def ines Operations Managementas t he process
wher ebyr esour ces,flowing wi thi
n a def i
ned sy st
em,ar e combi ned and
tr
ansf ormedbyacont roll
edmannert oaddv alueinaccor dancewi t
hpol i
cies
communi cat edbymanagement .

Ref
erences:

Ev
eret
t,E.Adam,Jr
.RonaldJ.Eber
t,Pr
oduct
ionandOper
ati
onsManagement
,Pr
ent
ice-
Hal
lof
I
ndi
aPri
vat
eLi mi
ted,
5thEdit
ion,1994.

R.Pannersel
vam,
Product
ionandOper
ati
onsManagement
,Pr
ent
ice-
Hal
lofI
ndi
aPr
ivat
eLi
mit
ed,
9t
hpri
nt,2004.

Joseph,G.Monks,
Theor
yandPr
oblemsofOper
ati
onsManagement
,Tat
aMcGr
aw-
Hil
l
Publ
i
shingCompanyLimit
ed,
2ndEdi
ti
on,2004.

Joseph,
G.Monks,
Oper
ati
onsManagement
,McGr
aw-
Hil
lI
nter
nat
ional
Edi
ti
on,
3rdEdi
ti
on.

S.Ani
lKumar,N.Sur
esh,Product
ionandOper
ati
onsManagement
,NewAgeI
nter
nat
ional
(P)
Li
mit
edPubli
sher
s,2ndEdit
ion,
2008.

Oper
ati
onsManagement .Accessed August7,2020.
ht
tps:/
/www.sl
ideshar
e.net
/Kadi
rikj
s24/
operat
ions-
management
-69329225
 CHAPTER2

Oper
ati
onsDeci
sion-
Maki
ng

Chapt
erOut
li
ne

1 Learni
ngObjecti
ves
3.TOPI
CS:
2.
1INTRODUCTI ON
2.
2MANAGEMENTASASCI ENCE
2.
3CHARACTERI SCTI
CSOFDECISIONMAKI
NG
2.
4FRAMEWORKOFDECI SIONMAKING
2.
5DECISIONMETHODOLOGY
2.5.
1COMPLETECERTAI NLYMETHODS
2.5.
2RISKSANDUNCERTAI NTYMETHODS
2.5.
3EXTREMEUNCERTAI NTYMETHODS
2.5.
4DECISION-MAKINGUNDERUNCERTAINTY
2.5.
5DECISION-MAKINGUNDERRISKS
2.
6DECISIONSUPPORTSYSTEM
2.
7ECONOMI CMODELS(BREAKEVENANALYSIS
2.
8STATISTICALMODELS
2.
9DECISIONTREE

3 Let
’sSum Up

Lear
ningObj
ect
ives;

Di
scussthedi ff
erentconcept sofdecisi
on-makinginoperat
ions.
Expl
ainmanagementofsci ence.
Defi
nethedifferentcharacteri
sti
csofdecisions.
I
denti
fytheframewor kf
ordecisionmakingandits
methodologyExpl ainthediff
erenteconomicmodelsand
waysonhowt osol ve.
Defi
newhati sdeci siontr
eeandi tsi
mpor t
ancetooperati
ons
managementdeci si
onmaki ng.

4.I
ntr
oduct
ion

Thousandsofbusi nessdeci sionsaremadeev eryday.Notal lt

he
decisionswi l
lmakeorbr eaktheor gani
zat
ion.Buteachoneaddsameasur e
ofsuccessorf ai
lur
etot heoper ati
ons.Hencedecision-maki ngessent
ial
ly
i
nv olv
eschoosi ngapar ticul
arcour seofacti
on,aft
erconsi deri
ngthepossibl
e
al
t er
natives.Thischapterexami nesmanagementasasci enceandt he
characterist
icsofdecisions.Theuseofeconomi candst atisti
calmodelsi
s
discussedal ongwithdeci si
ontrees.
5.ManagementasaSci
ence

Managementsci entist
shol dt hat,
educat i
on, sci
enti
fi
ctrai
ningand
experi
encecani mpr oveaper son’ sabil
it
yt omakedeci sions.Scient
if
ic
decisi
on-maki ngrestsuponor ganizedpr i
nciplesofknowledgeand
dependslargelyupont hecol lectionofempi r
icaldataandanal y
sisofthe
datainawayt hatrepeatabl
er esultswillbeobt ained.
Thusmanagementasasci encei scharacterizedby
1.
Or ganizedprinci
pl eofknowl edge.
2.
Useofempi r
icaldat a.
3.
Sy stemat i
canalysisofdat a.
4.
Repeat ableresults.

6.Char
act
eri
sti
csofdeci
sions-
maki
ng

Oper ationsdeci sionr angef rom simpl ej udgment stocompl exanal yses,
whichal soi nv olvesj udgment .Judgmentt y
pi call
yincor porat esbasi c
knowl edge, exper ience, andcommonsense.Theyenabl et obl end
objectivesandsub- object i
vedat atoar ri
veatachoi ce.
Theappr opriat enessofagi ventypeofanal ysisdependson:
a.Thesi gni fi
cantorl ongl astingdeci si
ons,
b.Thet i
meav ailabili
tyandt hecostofanal ysis,
andc.Thedegr eeofcompl exi t
yoft he
deci sion.
Thesi gni fi
cantorl ongl astingdeci si
onsdeser vemor econsi der
ations
thanr out i
neones.Pl anti nvestment, whichi sal ong- r
angedeci sion,may
deser vemor et hor oughanal ysi
s.Thet i
meav ai
labil
ityandt hecostof
analysisal soi nfluencet heamountofanal ysis.Thedegr eeofcompl exityof
thedeci sioni ncreaseswhenmanyv ar i
ablesar ei nvolved,v ariablesare
highlyindependentandt hedat adescr i
bingt hev ari
abl esar euncer t
ain.
Busi nessdeci si on-maker shaveal way shadt owor kwi thi ncompl eteand
uncer t
aindat a.Fi gur eont her i
ghtdepi ctsthei nformat i
onenv ironmentof
decisions.I nsomesi t
uat ionsadeci sion-makerhascompl etei nformation
aboutt hedeci sionv ari
abl es;attheot herext remes, noi nfor mat ionis
avail
abl e.Oper ationsmanagementdeci sionsar emadeal lalongt hi
s
continuum.
7.Fr
amewor
kofDeci
sion-
Maki
ng

Ananal
yti
cal
andsci
ent
if
icf
ramewor
kfordeci
sioni
mpl
i
est
hef
oll
owi
ng
sy
stemati
csteps

Def
ini
ngt
hepr
obl
em.

Est
abl
i
sht
hedeci
sioncr
it
eri
a.

For
mul
ati
onofamodel
.

Gener
ati
ngal
ter
nat
ives.

Ev
aluat
ionoft
heal
ter
nat
ives.

I
mpl
ement
ati
onandmoni
tor
ing.

DEFI NINGTHEPROBLEM
Defi
ningt hepr oblem enablestoidenti
fytherel
ev antvar
iablesandt he
causeoft hepr oblem.Car efuldefi
niti
onoftheproblem iscrucial.Fi
ndingthe
rootcauseofapr oblem needssomequest i
oninganddet ecti
v ework.Ifa
problem definedi stoonar r
ow, rel
evantvari
ablemaybeomi tted.Ifi
tis
broader,manyt angibleaspectsmaybei ncl
udedwhi chleadst othecompl ex
rel
ationships.

ESTABLISHTHEDECI SIONCRI TERIA

Establi
shthedecisioncri
teri
onisimpor t
antbecauset hecri
ter
ionrefl
ects
thegoal sandpurposeoft hewor keff
orts.Formanyy earsprofi
tsserv
edasa
conv eni
entandaccept edgoal f
ormanyor ganizat
ionsbasedoneconomi ctheory
.
Nowaday sorgani
zati
onwi ll
havemul ti
plegoalssuchasempl oy
eewel f
are,hi
gh
productivi
ty,st
abi
li
ty,
mar ketshare,growth,i
ndustri
alleader
shipandothersocial
objectiv
es.

FORMULATI ONOFAMODEL
Formulat
ionofamodel li
esatt hehear
tofthesci
enti
fi
cdecisi
on-
makingprocess.Modeldescri
bestheessenceofaproblem or
r
elat
ionshi
pbyabstract
ingrelevantvar
iabl
esfr
om therealwor
ldsit
uat
ion.
Modelsareusedtosimpli
fyor
approx imaterealit
y,sot her el
ati
onshi
pscanbeexpr essedi ntangibl
e
form andst udiedini sol
ation.
Model i
ngadeci sionsituati
onusuall
yrequiresbot hformulati
ngamodel
andcol lect
ingt herelevantdat atousei
nt hemodel .Mat hemat i
caland
stati
sticalmodel sar emostusef ulmodelsforunder standingthecomplex
businessoft hepr oblem.Mat hemati
calmodelscani ncorporatefact
orthat
cannotr eadil
ybev i
sualized.Wi t
htheaidofcomput er sandsi mulati
on
techniques,thesequant i
tativemodelsref
lexi
ble.

GENERATI NGALTERNATI VES

Alternat i
vesaregeneratedbyvaryi
ngthevaluesofthepar ameters.
Mathemat icalandstati
sti
calmodelsarepar
ti
cularl
ysuitabl
ef orgenerati
ng
alt
ernati
v esbecauset heycanbeeasilymodifi
ed.Themodel buil
dercan
experi
mentwi t
hamodel bysubst
it
uti
ngdiff
erentvaluesforcontrol
lableand
uncontrollablevari
able.

EVALUATI ONOFTHEALTERNATI VES

Evaluationoft healt
ernat
ivesisrelat
ivel
yobjecti
veinananal yt
ical
deci
sionpr ocessbecauset hecriter
iaforevaluat
ingthealternativ
eshav e
beenpr eci
selydef i
ned.Thebestal t
ernat
iveistheonet hatmostcl osely
sati
sfi
est hecrit
er i
a.Somemodel sli
keLPPmodel automat ical
lyseekouta
maximizingormi nimi
zingsol
ut i
on.Inproblemsv ar
iousheur ist
icand
stat
ist
icaltechniquescanbeusedt osuggestt hebestcour seofact i
on.

IMPLEMENTATI ONANDMONI TORING

I
mpl ementati
onandmoni t
ori
ngareessenti
al f
orcompl eti
ngt he
manager ial
action.Thebestcourseofacti
onort hesolutiontoapr obl
em
determinedt hr
oughamodel i
simplementedinthebusi nesswor l
d.Other
manager shav etobeconvincedofthemer i
tofthesolut i
on.Thent hefol
l
ow-
uppr oceduresarerequi
redtoensureaboutappropriat
eact iontaken.Thi
s
i
ncludesananal y
sisandevaluati
onofthesolut
ionalongwi ththe
recommendat i
onsforchangesoradjustments.

8.Deci
sionMet
hodol
ogy

Theki
ndandamountofinf
ormat
ionavail
abl
ehel
pstodeter
mi ne
whichanaly
tical
met
hodsaremostappropr
iat
eformodel
ingagiven
decisi
on.
 Thisill
ust
rat
essomeusefulquanti
tat
ivemet hodst hatareclassi
fi
ed
accordingtot
heamountofcert
aintyt
hatexistswi t
hr especttothedecisi
on
vari
ablesandpossi
bleout
comes.Theseanal y
ticaltechniquesoftenserveas
thebasisforf
ormul
atingmodel
s,whichhelptor eachoper ati
onaldeci
sions.

Thedegreeofcert
aint
yiscl
assi
fi
edascompl
etecer
tai
nty
,ri
skand
uncer
tai
ntyandextr
emeuncertai
nty
.

2.5.1Compl eteCer taintymet hods

Undercompl etecertai ntycondi t
ions, al
l relev anti nformationaboutt he
deci
sionv ar i
abl esandout comesi sknownorassumedt obeknown.
Foll
owingar esomeoft hemet hodsused:
Algebr a:
Thisbasi cmat hemat i
callogicisv eryusef ulforbot hcertaintyand
uncertaintyanal ysis.Wi thvalidassumpt ions, algebr apr ovi
des
determi ni
st i
csol uti
onssuchasbr eak-evenanal ysisandbenef itcost
analysis.
Calcul us:
Thebr anchofmat hemat icspr ovidesausef ul t
ool f
ordet ermini
ng
optimal valuewher ef unctionssuchasi nv ent orycost s,
aretobe
maxi mi zedormi ni
mi zed.
Mat hemat icalprogr ammi ng:
Progr ammi ngt echni queshav efoundext ensi v eappli
cationsin
maki ngapr oductmi xdeci si
ons; mi nimi zi
ngt ranspor tati
oncost s,
planningandschedul ingpr oduct ionandot herar eas.

(
All
inf
ormat
ion) (
Somei
nfor
mat
ion) (
Noi
nfor
mat
ion)

Al
gebr
a: St
ati
sti
cal
anal
ysi
s: Gamet
heor
y

Br
eak-
even zObj
ect
iveandsubj
ect
ivepr
obabi
l
iti
es Fl
i
pcoi
n

Benef
it
/cost zEst
imat
ionandt
est
sofhy
pot
hesi
s

Cal
cul
us zBay
esi
anst
ati
sti
cs

Mat
hemat
ical
progr
ammi
ng: zDeci
si
ont
heor
y

Li
near zCor
rel
ati
onandr
egr
essi
on

Non-
li
near zAnal
ysi
sofv
ari
ance

I
nteger zNon-
par
amet
ri
cmet
hods

Dy
nami
c Queui
ngt
heor
y

Goal Si
mul
ati
on
 Heur
ist
icmet
hods

Net
wor
kanal
ysi
stechni
ques:

Deci
siont
rees

PERTandCPM

Ut
il
it
ytheor
y

Quant
it
ati
vemet
hodsasaf
unct
ionofdegr
eeofcer
tai
nty

2.5.2Risksanduncer t
aintyMet hods
Inriskanduncertai
ntysituat
ions,inf
ormati
onaboutt
hedeci
sion
vari
ablesortheoutcomesi sprobabili
sti
c.Fol
l
owingaresomeofthe
usefulapproaches:

Stati
sticalanaly
sis:
Objectiveandsubj ecti
veprobabil
it
ieswiththeuseofpr obabil
ityand
probabi l
it
ydi st
ri
bution,Esti
mationandt est
sofhy pot
hesis,Bayesian
stati
stics,Decisiontheory,Cor
relat
ionandr egr
essiontechniquefor
forecastingdemandandAnal y
sisofv ari
ancearesomeoft hetechniques
usedf ordeci si
on-making.

Queui
ngt
heor
y:
 Theanalysi
sofqueuesi
ntermsofwait
ing-
timel engt
handmeanwaiti
ng
t
imeisusefulinanal
yzi
ngser
vicesy
stems,maintenanceact
ivi
ti
es,
andshop
f
loorcont
rolacti
vi
ti
es.

Si
mulati
on:
Si
mulati
on duplicates the essence of an act i
vi
ty. Computer
si
mulat
ionsarevaluabletool
sfortheanalysisofinv
estmentoutcomes,
pr
oducti
onprocesses,scheduli
ngandmai ntenanceact
ivi
ti
es.

Heuri
sti
cmethods:
Heuri
sti
cmethodsinvol
v esetofrul
es,
whi
chfaci
l
itatesol
uti
onsof
schedul
i
ng,lay
outanddistr
ibuti
onprobl
emswhenappliedinaconsi
stent
manner.

Net
wor
kanal
ysi
stechni
ques:
 Networkapproachesincl
udedeci
siontr
ees,CPM andPERTmethods.
Theyarehelpf
uli
ni dent
if
yingal
ter
nat
ivecourseofact
ionandcont
rol
l
ing
thepr
ojectact
ivi
ti
es.

Util
i
t yt
heor
y:
Util
i
t yt
heor
yorprefer
encet
heoryal
lowsdecisi
on-
makerstoincor
por
ate
theirownexperienceandval
uesi
ntoarelat
ivel
yfor
mali
zeddecisi
on
structure.

2.5.
3ext r
emeUncer t
aintyMethods
Underextremeuncer tai
nty,
noi nformationisavail
ablet
oassesst he
l
i
kel
i
hoodofal t
ernat
iveoutcomes.
Foll
owingar esomeofst rat
egiest osolvethis:
1.Gamet heory:
Gamet heoryhelpsdecision-makerst ochoosecourseof
acti
onwhent hereisnoinformat i
onaboutwhatcondi ti
onswill
prevail.
2.Coinfl
ip:
Fl
ippingacoinissomet imesusedi nsi t
uati
onwheret he
decision-makersarewholl
yi ndif
ferent.

2.5.4Decisi
on- MakingUnderUncer
tainty
Noi nformat
ioni savai
labl
eonhowlikelythev
ari
ousst
atesofnat
urear
e
underthoseconditions.
Fourpossibledeci
sioncr
it
eri
aare:
1.Maximin,
2.Maximax,
3.Lapl
ace,and
4.Mini
maxr egr
et.

Maximi n:
Det erminetheworstpossibl
epay -
offforeachalt
ernat
ive,andchoose
thealternati
vethathasthe“bestworst.
”TheMaxi minapproachis
essentiall
yapessimisti
conebecausei ttakesint
oaccountonlytheworst
possibleoutcomef oreachalt
ernat
ive.Theactualoutcomemaynotbeas
badast hat
,butthi
sapproachestabl
ishesa“ guarant
eedmi ni
mum.

Maxi
max
:
 Determinethebestpossi blepay-of
f,andchooset heal
ternati
vewit
hthatpay-
off.TheMaxi maxappr oachi sanopt i
misti
c,“goforit
”str
ategy;i
tdoesnottake
i
nt o
accountanypay -
offotherthant hebest
.
Minimaxr egret:
Determinethewor stregretforeachalter
nati
ve,andchooset he
al
ternativ
ewi ththe“bestwor st.
”Thisapproachseekst ominimizethe
diff
erencebet weenthepay -offthati
sreali
zedandt hebestpay-offf
oreach
stateofnature.

Laplace:
Determi
netheaveragepay-
offf
oreachal
ter
nat
ive,
andchooset
he
al
ternativ
ewiththebestaver
age.TheLapl
aceappr
oachtr
eat
sthestat
esof
natureasequall
yli
kely
.

2.5.5Deci sion-MakingUnderRi sks

Betweent hetwoext remesofcer tai
ntyanduncer taint yli
esthecaseof
ri
sk: Thepr obabi l
it
yofoccur renceforeachst at
eofnat ur eisknown.( Note
thatbecauset hest at
esar emut uall
yexcl usi
veandcol lect iv
elyexhausti
ve,
thesepr obabilit
iesmustaddt o1. 00.)Awi del
yusedappr oachundersuch
cir
cumst ancesi stheexpect edmonet ar
yv al
uecr i
teri
on.
Theexpect edv al
ueiscomput edf oreachal t
ernati
v e,andt heonewi t
h
thehi ghestexpect edvaluei sselected.Theex pectedv aluei sthesum ofthe
pay-of f
sf oranal t
ernati
vewher eeachpay -
offisweightedbyt heprobabil
it
y
forther elevantstateofnat ure.

9.Deci si
onSuppor tSy stem
Decisionsuppor tsy stem (DSS)
iscomput er-basedsy st emsdesi gnedtoaiddeci sion-makersofanyst age
ofthedeci sionpr ocessint hedevelopmentofal ternat
ivesandev aluat
ionof
possiblecour seofact ion.Thei rpurposeistopr ovidetheinformati
onand
analyt
ical supportthatenabl esmanager stobet tercontrolandguidethe
decisi
onpr ocess.Emphasi si sgiv
enf orgivi
ngusef uli
nf or
mat i
onand
appropr i
atequant it
ati
v emodel sthatsupportthemanager ’sski
ll
s.Thus,DSS
areal ogicalextensionoft hemanager i
aldeci
sionpr ocesses.Thishelpsthe
manager st olearnbet ter,howt oappl ydataprocessingand
model
ingcapabi
l
iti
esofcomput
erst
otheanal
ysi
sofi
l
l-st
ruct
uredand
val
uebaseddeci
sions.

10.Economi
cModel
s(Br
eakEv
enAnal
ysi
s)

Break-evenAnalysis
Oneoft hetechniquest
ost udythet ot
alcost,
totalr
evenueandoutput
rel
ationshipisknownasBr eak- evenAnalysi
s.‘
ABr eak-
evenAnalysi
s
i
ndicatesatwhatl evelofoutput,costandrevenueareinequil
ibr
ium’
.In
otherwor ds,i
tdeterminesthelevelofoperati
onsinanenterpr
isewhere
theunder taki
ngneithergai
nsapr ofitnori
ncursaloss.

Br
eak-ev
enchart(
BEC):
I
tisagr aphshowingthevar
iati
oni nt
otalcost
satdif
ferentl
evel
sof
out
put(costli
ne)aswellasthev ar
iat
ioni
nt hetot
alr
evenuesatv ar
ious
l
evel
sofoutput

Break-evenpoint:
Itisthatpointofact i
vity(sal
esvol
ume)wher etotalr
evenuesandtotal
expensesar eequal.I
tispointofzeropr
ofi
t,i
.e.stageofnoprofi
tandnoloss.
BEPcanbeusedt ost udytheimpactofvar
iationsinvol
umeofsal esandcost
ofproductiononprofit
s.

Angl
eofi ncidence:
I
tisanangl eatwhichtotalrevenueli
neintersect
stotalcostli
ne.The
magnit
ude,ofthisangleindi
catest hel
evelofpr of
it
.Largertheangleof
i
nci
dence,higherwi l
lbetheprofit
sperunitincreaseinsalesandvicever
sa.

Margi
nofsafety:
I
tisexcessofbudgetedoractualsalesoverthebr
eak-evensalesvol
ume
i
.e.mar gi
nofsafet
y=( actual
salesminussalesatBEP) /
actualsal
es.Ahigh
mar gi
nofsafetywouldmeant hatevenwi t
hal eanper
iod,wheresalesgo
down, t
hecompanywoul dnotcomei nlossarea.Asmallmar gi
nofsafet
y
meansasmal lr
educti
oninsalewouldt akecompanytocr ossBEPandcome
i
nr edzone.
CALCULATI ONOFBEP
Relati
onshipbet weencost sandact i
vit
ylev el(
AL)i salsoassumedt obe
l
inear.Forev er
yelement alcost,act
ualcostfiguresatdi f
ferentacti
vitylevel
s
areplot t
ed,andby‘ l
eastsquar eanaly
sis’a‘li
neofbestf i
t’isobtained.This
woul dgi v
eaf ixedcostcomponentandav ariabl
ecostcomponentf orthe
element alcost.
This anal ysi
si s carri
ed outf oral lelement alcost s.The t otalcost
functionwoul dgivetotalfixedcostandt otalv ar
iablecostf orthecompany .
TheBr eak-evenPoi ntisthatv olumewher et hefixedandv ari
ablecost sare
cov er
ed.Butnopr ofitexists.ThusatBEP,t het otalrevenuesequalt othe
totalcosts.
Pr
ofitvol
umerati
o(PVR)isdef
inedast
her
ati
obet
weenCont
ri
but
ion
MarginandSal
esRevenue.

i
.e.
Pr
ofi
tVol
umeRat
io(
f)=Cont
ri
but
ion⋅
Mar
gin/
Sal
es.Rev
enue

Mar gi
nofsaf ety(
MOS)
i
sdef inedast her at
iobet
weenOperat
ingProf
itandContri
but
ionMargin.I
t
signif
iesthefract
ionalr
educt
ioni
nthecurr
entact
ivi
tyl
evelr
equir
edt
or each
thebreak-evenpoint.

Sal
est urnov
er( STO)isdefi
nedasrat
iobet
weenSalesRevenueandthe
Capit
al Employed.Itr
epresent
sthenumberoft
imescapit
alemploy
edis
tur
nedov erto
reachthesal
esr
evenuel
evel
thati
scal
l
edOper
ati
ngmanagement
perfor
mance[OMP].

I
MPROVI NGOMP
Acompanyi nt
erestedinimprovi
ngi t
sOMPwi l
lhav
etoimprov
eitsoperat
ing
prof
it.
Foll
owinganyofthest r
ategi
esgivenbeloworacombi
nati
onofthem candothi
s:
(
a)Byr
educi ngvari
abl
ecost s
(
b)Byreducingfi
xedcosts
(
c)Byi
ncreasingsalespr
ice
(
d)Byi
ncreasingtheacti
vityl
evel.

A)Reducti
oninvar
iabl
ecost
swi
ll
bri
ngdownBEP, i
ncreasePVrat
ioand
i
ncreasemarginofsaf
ety
.
Toachievearequi
redTar
get
edPr
ofi
t(Z)
,var
iabl
ecostwouldhavetobe
contr
oll
edat
V=SR–( F+Z)

b)Areduct
ioninfixedcostswill
bri
ngdownBEPandi ncreasemargi
nof
safet
y.I
twillhav
enoef fectonPVr at
io.Toachi
evearequir
edTPby
contr
oll
i
ngf i
xedcostalone,thefi
xedcostwouldhav
et obecont
roll
edas
F=(SR–V)–Z
c)Anincr
easeinsell
ingpri
cewi
llbr
ingBEPdown, itwil
li
ncreasePVrat
io
anditwil
lal
soincreasethemar
ginofsafety.Togetthetar
getedpr
ofi
tlev
el
thei
ncreaserequi
redinsell
i
ngpr
iceisgi
v enby

=(
b' F+Z) xb
(
b-a)

2.8St ati
sticalModel s
Mostbusi nessdeci sionsar emadewi t
honl yli
mi tedori ncompl ete
i
nfor mat i
on.St atisti
cal theorycanhel ptocont r
ol errorassoci atedwi ththe
amountofdat ausedi nt hedeci sionpr ocess.Deci si
onmaker sutili
ze
probabilit
ies, whichar et hemostbasi cmeasur esofuncer tainty.
Probabi l
it
iesat tachaquant i
tativev al
ue( between0and1)t ot heoccur rence
ofanev ent.Ev entsar ecal l
edi ndependenti ftheoccur renceofonei nno
wayaf f
ectsanyot herone.Mut ual l
yex cl
usiveev entsaut omat ical
lypr eclude
eachot her ,suchascl assi f
yingani tem asgoodordef ecti
ve.Fol l
owi ngar e
therulesf orappl y i
ngpr obabi l
i
t i
es.
Therear ethreet ypesofpr obabi l
i
ties.
(a)Classical probabi l
it
iesar ebaseduponequal lylikelyout comest hat
canbecal culatedpr iort oanev entont hebasisofmat hemat icallogic.
(b)Empi ri
cal probabi l
iti
esar ebaseduponobser veddat aandexpr esst he
rel
ativef r
equencyofanev entint helongr un.
(c)Subjectivepr obabi l
it
iesar ebaseduponper sonal exper ienceorj udgment
andar esomet i
mesusedt oanal yzeone- t
imeoccur r
ences.
11.Deci sionTr ee
Adeci siontreei saschemat i
crepresent ationoft healt
ernatives
avail
abl etoadeci sionmakerandt hei
rpossi bleconsequences.Thet er
m
getsitsnamef r
om t hetreeli
keappear anceoft hedi agram (seeFi gure2.8
below) .Althought reedi agramscanbeusedi nplaceofapay -
offtabl e,t
hey
arepar ti
cularlyusef ulforanalyzi
ngsituationst hati nvolvesequent ial
decisions.
Adeci siontreei scomposedofanumberofnodest hathav ebr anches
emanat i
ngf rom them ( seeFigure2.8bel ow) .Squar enodesdenot edeci sion
points,andci rcularnodesdenot echanceev ents.Readt hetreef r
om l eftt
o
ri
ght.Br anchesl eav i
ngsquar enodesr epr esental ternati
ves;branches
l
eav i
ngci rcularnodesr epresentchanceev ents( i
.e.,thepossiblest atesof
nature).

Aschemat
icr
epresent
ationoftheavai
labl
ealt
ernat
ivesand
t
heirpossibl
econsequences

Let
’sSum Up

Managementsci entistshol dt hat ,educat i

on, sci entif
ict r
ai ningand
experiencecani mpr ov eaper son’ sabi li
tytomakedeci si
ons.Sci enti
fi
c
decision- maki ngr est suponor ganizedpr i
nci plesofknowl edgeand
dependsl argel yupont hecol lect i
onofempi rical dat aandanal ysisoft he
datainawayt hatr epeat abler esultswi l
lbeobt ained.
Thedegr eeofcer t
ai nt
yi scl assifiedascompl etecer tainty, r
iskand
uncertaint yandext remeuncer tainty .
Scient i
ficframewor kfordeci sioni mpliest hef oll
owi ngsy stemat ic
stepsar e: Definingt hepr oblem, Est abli
sht hedeci sioncr i
teri
a,
Formul ationofamodel ,Gener at i
ngal ternatives, Ev aluationoft he
alt
ernat i
v esandI mpl ement ati
onandmoni t
or ing.
‘
ABr eak- evenAnal ysisindicat esatwhatl ev elofout put,costandr evenue
areinequi li
br i
um’ .Inot herwor ds,itdet erminest hel ev elofoper at i
onsinan
enterprisewher etheunder takingnei thergainsapr ofitnorincur sal oss.
Adeci siont reei saschemat icr epresent ationoft heal ternat ives
avail
abl et oadeci si onmakerandt heirpossi bl econsequences.
Ref
erences:

Joseph,G.Monks,
Theor
yandPr
oblemsofOper
ati
onsManagement
,Tat
aMcGr
aw-
Hil
l
Publ
i
shingCompanyLimit
ed,
2ndEdi
ti
on,2004.

Joseph,
G.Monks,
Oper
ati
onsManagement
,McGr
aw-
Hil
lInt
ernat
ional
Edi
ti
on,3rdEdi
ti
on.

S.
AnilKumar,N.Suresh,
Producti
onandOperat
ionsManagement
,NewAge
I
nter
nati
onal(P)Li
mitedPubli
shers,
2ndEdit
ion,
2008.

Operat
ionsManagement .Accessed August9,2020.
ht
tps:/
/www.sl
ideshar
e.net/Kadi
rikj
s24/
operat
ions-
management
-69329225
 CHAPTER3

Pr
ojectManagement

Chapt
erOut
li
ne

1 Lear ni
ngObj ecti
ves
12.TOPI CS:
3.1INTRODUCTI ON
3.2PROJECTLI FECYCLE
3.2.
1THEI NI TIATI ONPHASE
3.2.
2THEPLANNI NGPHASE
3.2.
3THEEXECUTI ONPHASE
3.2.
4THETERMI NATI ONPHASE
3.3BEHAVI ORALAS[ ECTOFPROJECTMANAGEMENT
3.3.
1ORGANI ZATI ONCULTURESI NFLUENCE
3.3.
2PEOPLECENTRI CPROJECTMANAGEMENT
3.3.
3INSTRUMENTALELEMENTSFORSUCCESSFULI MPLEMENTATI ONOF
PEOPLECENTRI CPROJECTMANAGEMENT( PCPM)
3.4WORKBREAKDOWNSTRUCTURE
3.4.
1RESOURCEBREAKDOWNSTRUCTURE( rbs)
3.4.
2HOW TOCREATEAWORKBREAKDOWNSTRUCTURE
3.5PLANNI NGANDSCHEDULI NGWITHGANTTCHART
3.5.
1WHATI SAGANTTCHART
3.6PERTANDCPM
` 3. 6.
1DEFI NITIONOFPERT
3.6.
2DEFI NITIONOFCPM
3.6.
3ADVANTAGESOFPERT
3.7DETERMI NI
STI CANDPROBABI LI
STICSCHEDULING
3.7.
1DETERMI NISTICSCHEDULING
3.7.
2PROBABI LISTI CSCHEDULI
NG
3.8BUDGETCONTROL
3.8.
1PLANNI NGI SSUE
3.8.
2TOP- DOWNANDBOTTOM- UPSCHEDULING
3.8.
3ROLLI NGBUDGET
3.8.
4ACTUALANDBUDGETEDPERFORMANCE*( i
nthousandsofdol
l
ars)*I
ncome
taxesignored.
3,9RISKMANAGEMENT’
3.9.
1PROJECTRI SKMANAGEMENT
3.10PROJECTMANAGEMENTSOFTWARE
3.10.
1TYPESOFPROJECTMANAGEMENTSOFTWARE

3 Let
’sSum Up

Lear
ningObj
ect
ives

Di
scusst
hedi
ff
erentconcept
sofpr
ojectmanagementandi
tsl
i
fecy
cle.
 Determi nethebehav ioralaspectofproj
ectmanagement .
Expl
aint hediff
erentwor kbreakdownandhowt ocr eat
eitscomponent
s.
Describet heimportanceandusesofGant tChartinproperschedul
i
ng.
Diff
erent i
atePERTt oCPM andi t
simport
ancetooper at
ions.
Determi neotherprojectmanagementway sandr i
skmanagementt o
operations.
Definet hedif
ferentpr oj
ectmanagementsof t
war e.

3.
1INTRODUCTI
ON

Proj
ectmanagement ,then,istheappl icati
onofknowl edge,ski l
l
s,tool
s,
andt echniquestoproj
ectact i
vit
iestomeett hepr oj
ectr
equirements.
Projectmanagementbr ings a uni que f ocus shaped by t he goal
s,
resourcesandschedul eofeachpr oject.Thev alueofthatfocusispr ov
edby
therapid, worl
dwidegrowthofpr oj
ectmanagement :
A,Asar ecognizedandst rategi
cor ganizati
onalcompet ence
B.Asasubj ectfortr
ainingandeducat i
on
C.Asacar eerpath

3.
2PROJECTLI
FECYCLE

Apr oj
ectl
if
ecy cl
eisthesequenceofphasest hataprojectgoesthr
ough
from itsini
ti
ati
ontoitsclosur
e.Thenumberandsequenceoft hecycl
eare
determinedbyt hemanagementandv ariousotherfact
orslikeneedsofthe
organizati
oninvol
vedintheproject
,t henat ur
eoft hepr
oject,andit
sareaof
appli
cation.Thephaseshav eadef init
est art
,end,andcontrolpoi
ntandare
constrainedbyti
me.Thepr oj
ectli
fecy clecanbedef i
nedandmodi fi
edasper
theneedsandaspect softheorganization.

3.2.1THEI NITI
ATI ONPHASE
Thei niti
ationphaseai mst odef i
neandauthorizethepr
oject
.The
pr
ojectmanagert akes the given infor
mati
on and creat
es a Proj
ect
Chart
er .ThePr oj
ectChar terauthorizestheproj
ectanddocumentst he
pr
imar yrequirement sfortheproject.It
Project’
spur pose,visi
on,andmi ssi
on
Measur ableobjectivesandsuccesscrit
eri
a
Elaboratedpr oj
ectdescripti
on,condi
ti
ons,andri
sks
 Nameandaut
hor
it
yoft
hepr
ojectsponsor

3.2.2THEPLANNI NGPHASE
Thepur poseoft hi
sphasei stolaydownadet ail
edstr
ategyofhow
t
heprojecthastobeper f
ormedandhowt omakeitasuccess.
ProjectPlanni
ngconsi stsoftwopar t
s:
1.Str
ategi
cPl anning
2.ImplementationPlanni
ng
I
nstr
ategicplanni
ng, t
heov eral
lapproachtotheproj
ecti
sdev el
oped.I
n
i
mpl
ementati
onplanning,theway stoapplythosedeci
sionsar
esought .

3.
2.3THEEXECUTI ONPHASE
I
nt hi
sphase,t
hedecisi
onsandactivi
ti
esdefineddur i
ngtheplanning
phasear eimplement
ed.Duringthi
sphase,t heprojectmanagerhast o
supervisetheproj
ectand preventanyer r
orsf r
om t aking pl
ace.This
processisalsotermedasmoni tor
ingandcont r
oll
ing.Af t
ersati
sfact
ion
fr
om t hecust
omer,sponsor
,andstakehol
der’
send,het akestheprocess
tothenextstep.

3.
2.4THETERMI NATIONPHASE
Thi
sisthelastphaseofanypr
oject
,andi
tmar
kst
heof
fi
cialcl
osur
e
oft
heproj
ect.

Thegener
icl
i
fecy
clest
ruct
urecommonl
yexhi
bit
sthef
oll
owi
ngchar
act
eri
sti
cs:

Atthestar
t,costandst
affi
nglev
elsarelowandreachapeakwhenthewor
kisi
n
pr
ogress.I
tagainstar
tstodroprapi
dlyasthepr
ojectbegi
nst
ohal
t.

Thet ypi
calcostandstaf
fingcur
vedoesnotappl
ytoallpr
oject
s.
Consider
ableexpensesarerequir
edtosecur
eessent
ial
resour
cesearl
yini
tsl
i
fe
cycl
e.

Ri
skanduncert
aint
yareatthei
rpeakatthebegi
nni
ngoftheproj
ect
.
Thesef actor
sdropov ert
heli
fecycleoftheproj
ectasdecisi
onsare
reached,anddel
i
ver
ablesar
eaccepted.

Theabili
tytoaff
ectthefinalpr
oductoft
heproj
ectwi t
houti
mpacti
ng
t
hecostdrast
ical
lyi
shighestatthestar
tofthepr
ojectanddecr
easesas
t
heproj
ectadvancestowardscomplet
ion.

3.
3BEHAVI
ORALAS[
ECTOFPROJECTMANAGEMENT
 Thebehav ioralaspectsofpr ojectmanagementconsi stofmanydi ff
erent
areast hatapr ojectmanagermustmast er.Theor gani zationalcultureisone
areat hatcant aketimet omast erf ormanypr ojectmanager s.Thecul t
ureof
anor ganizati
oncanbet hesuccessort hefailureofapr oject.Management
mustshar ecommonbel i
efsandv aluesandbewi ll
i
ngt ost andbyt hem att he
mostcr i
ti
calti
mes.
Tobui l
dandmanageasuccessf ulproj
ectteam t heprojectmanagermust
beski ll
edinmanyar eas.Theprojectmanagerhast obeabl et oselectteam
member sthatwi llf
itinwiththeteam, managemeet i
ngsski ll
full
y,establ
isha
team i denti
tyandv isi
on,establ
ishway sofr ewar dingt het eam aswel las
i
ndiv i
duals,manageconf l
ict
swi thinandout sidet het eam,andbeabl et o
rej
uv enatetheteam ov erlongproject s.

3.
3.1ORGANI ZATI ONCULTURESI NFLUENCE
Organizat ional cul tur
e r esearch has i denti
fi
ed t en pr i
mar y
characteristicst hatl eadtosuccessfulorunsuccessfult
eamswi thi
nan
organizati
on.These char acteri
sti
cs wil
lint ur
n affectthe sel
ection,
sponsor ship,pr i
oriti
zati
on,and ulti
matesuccessofal lproj
ect
si nan
organizati
on( Gr ay,Larson,2011).
1.
MemberI dent i
ty
2.
Team Emphasi s
3.
Managementf ocus
4.
Uni tint egrati
on
5.
Cont r
ol
6.
Ri skt olerance
7.
Rewar dcr it
eria
8.
Conf l
ictt olerance

3.3.2PEOPLECENTRI CPROJECTMANAGEMENT
People cent ri
c pr oject management emphasi zes t hat pr oject
management shoul d be based on Exper i
ence,Dy nami cs,Human
Psychol ogyr athert han sol elyon Pr ocesses.Wi se projectmanager s
focus on l earning and under standing how peopl ef unction i n an
organization– bot hasi ndi vi
duals– andasat eam.I ti simpor tantt o
fi
gur e out dur ing pr oj
ect i nit
iati
on how peopl ei nt he per formi ng
organizationbehav eandadapt .
Theaspectofpr ojectst hatgivespr oj
ectmanager ssleeplessnight sis
peoplebehav i
or–especi all
yf actorsemer gi
ngfrom t hem –suchaspush-
back,r esi
stancet ochange,accept ance,trustetc.Ther ear esev eralr eal
l
ifescenar i
ospr ojectmanager sencount er– thatemanat ef r
om t hese
aspect s.Projectmanager sar eencour agedt oimpl ementpeopl ecent ri
c
managementt echni quest hatwi l
leventuallywillhel pthem i mpl ement
processesaswel lasmanagebehav i
oralaspectsofpeopl esuccessf ull
y .
 3.3.
3INSTRUMENTALELEMENTSFORSUCCESSFULI
MPLEMENTATI
ON
OFPEOPLECENTRICPROJECTMANAGEMENT(PCPM)

1.UNDERSTANDCULTURE–PEOPLEVSPROCESSES
Culturei
ssomet hi
ngt hatcomeswi thpeopleasabaggageal ongwi t
h
them.Itisimperat
ivethatapr ojectmanagerunderst
andandi nter
pretwhat
thecul t
ureoft heperforming organi
zat
ionis.Thisbecomesi ncreasi
ngly
chall
engingwit
hv i
rt
ualglobalteams.Whenat eam memberr espondsswi ft
ly
“Iti
si mpossi
bleforust ocar ryoutthiswork”withoutanal
yzingthewor k
assigned– iti
sl i
kel
yt hatempl oyeesarestri
vi
ngwi thi
nanor ganizati
onal
cult
urethati
snotsuppor t
iveoftheiref
for
ts!

St
udy:Peopl
ewilll
i
kel
ynotunderstandt hi
sconceptattheoutset–since
PCPM focuses on how peoplef unction and how they apply proj
ect
managementtobepeoplecentr
ic.Managi ngtr
ipl
econstr
aints(Scope,Ti
me
andCost
)istheobj
ecti
veofheal
thyprojectmanagement.

Anal y
ze:How y ou go abouti mpl
ement
ing PCPM v ari
es fr
om one
organizationtoanot her.Itneedst obeapartoftheorganizati
onalstrategy
.
Organi zati
onswoul dbepr ojectbased–wherelar
gepartsoft heworkforceis
i
nv olv
edi nmul t
ipleprojects.Analyzi
nghow t
heor gani
zationisstructured
helpst hepr oj
ectmanagermakesomeoft hemostimportantpeoplerelated
decisionsi naneffecti
vemanner .

AdjustorAdapt ?:Mostproj
ectmanager
st end t
o enforceprocesses
withoutunderstandi
ngthecult
ureandcapabi
li
ti
esoft heprojectt
eam and
stakeholder
s.InPCPM –f ocusshoul
dbeonadj ust
ingprocessestofitthe
cultur
eandbehav ior
al
responsesr
athert
hantryi
ngtoadapthumannat
uretofol
low pr
ocesses.
Adjustther
oleandprocessesf
orpeopl
e– donotenf
orceprocesseson
people.

ProposeChanges:Createagovernancecommi t
teeorst
eeringcommi t
tee
thatispartofthel
eadershipteam.EnsurethatthePMO,SeniorManagement
areonboar danddev i
seast rat
egyonhow y ouwillmovefrom rat
ionalto
behaviorcentr
icpr
ojectmanagement.

GainBuy-
In:Thechall
engeformostpr oj
ectmanagersistowor kwi
th
seniormanagementandt heteam intandem,togai
nbuy -
inanddecideon
adjusti
ngoradapt
ing.Adj
usti
ngoradapti
ngdoesnothappenover
night
.

Implement( Kaizen):PCPM wi llnothappenov erni

ghtbutwi l
lrequi
rea
cul
tural t
ransformat i
on. PMs shoul d qui ckly identi
fy str
engths and
weaknesses oft eam member s and encour age peoplet oidenti
fytheir
str
engthsandwor kwi t
ht hei
rstrengths.Somepeopl ewillhavecompeti
tiv
e
str
engthsanditisimpor tantt
oleveragetheircompet i
tiv
eskill
s.

Int
rospect:I
tisessent
ialt
hatprojectmanager
sint
rospecthowPCPM is
being implemented.The intr
ospect
ion fr
equencywil
ldepend on several
factors such as the t
eam si
ze,stakeholdersi
ze,l
ocati
on ofteams and
stakeholders,
seniormanagementdemandset c.

2.ENGAGETEAM MEMBERS

Engagingproj ectteam member si

st hefoundationtopr oj
ectsuccess.In
PCPM,i tisext r
emel yimpor t
antthatt
hegr oundworkbel ai
dtoengaget eam
member sandst akeholder
sandf i
nal
lysustainint heshor tandl ongterm.
Focus shoul d be set ti
ng keyperfor
mance/ producti
vit
yi ndi
catorsf orthe
performing team as a whol e.The levelofengagementoft eam and
stakeholdersshoul dbemoni toredandstrat
egiesbedev isedtomaxi mizethe
engagementl evelsofbot h atthesamet ime.Per for
mance,Pr oduct
ivi
ty,
Effi
ciencyandEf ficacymustbemaxi mizedoratami ni
mum bal anced.

2.I
MPORTANCEOFEMOTI
ONS&MOTI
VATI
ON

Emot ionshav etodowi thhor monesandneur otransmitt

ersi nthehuman
body .Emot ionsdr i
veempl oyeemot i
vati
onpositi
vel
yornegat i
vely.Ohboy !I
sn’tit
diff
icultt o psy cho-physi
o-bio-l
ogicall
y scan a per son’s mi nd and body t o
antici
patewhatt heEx pressi
ons, Feeli
ngs,BodyLanguage, andAct i
onsheorshe
mayex hibite.g.–theyaresomet i
mesHappy ,Sad,Angr y,Exci
ted,Tender,Scared
etc.Thi s has been a l ong standing chall
enge formostpeopl e manager s,
especiall
ypr ojectmanager s!
Feelings,MoodsandAct i
onsaf fectthemanneri nwhi cht eam member s
andst akehol derscar r
youtt heirwor konpr oj
ectsandsomanagementof
emot ionalaspect sissupr emef orsuccessf ulprojectmanagement .Agood
projectmanagershoul dnotj ustbeat echnicalper sonbutshoul dbear are
breedofi ndivi
dualwhoshoul dbeabl et omanagebot hthet echnicaland
emot ional factors.
 4.I
DENTFYBEHAVI
ORALRI
SKSUSI
NGI
NTUI
TIVEMI
ND-
READI
NG

Behav i
orrefer
st ot her angeofact i
onsandmanner i
smsexhi bi
ted–i n
thi
s case – bypeopl e.Cer t
ain desir
ed behav i
ori s assumed bypr oject
manager swhent heyst itchandi nt
egrateseveraloftheest abli
shedpr oject
managementpr ocesses.Thi s assumpt i
on is based on f actors such as
Culture,Atti
tudes,Emot ions,Per cepti
ons,Values,Ethics,Authorit
y,Rappor t
,
Hy pnosis,MindsetandPer suasion, amongot hers.
Onmostoccasi onssomeoft heseassumpt ionsdon’thol dquitev ali
d.
Whenpeopl edon’tbehav el i
ket hewayweor i
ginall
yassumedt hem t o,their
behav i
orseemsunpr edi ctabl etous.And,whenpeopl ebehav iorbecomes
unpredictable– projectout comei sinevi
tablyaf f
ect
ed– ei t
herposi tively
(success)ornegat i
vely(failure).

5. …AND LASTLY: COMMUNI

CATI
ON, COMMUNI
CATI
ON &
COMMUNI
CATI
ON!

I
nPCPM,i tmustbethedail
ydutyforpr
ojectmanager
stomaintai
nthe
l
i
neofcommunicat
ionv
eryopensothatt
heykeepcat
eri
ngtothebasi
cneeds
t
oemploy
ees.

Whatneeds t
o getcommuni
cat
ed across and t
op t
hings pr
oject
manager
sneedt
okeepinmi
ndwhi
lei
mplementi
ngPCPM?

Under
standandbel
iev
ethatpr
ojectmanager
shav
ethemosti
mpacti
nopeni
ng
u

pcommu ni
cati
onchannel
s.
Communi
cat
ewhati
sexpect
edofeacht
eam member

Est
abl
i
shacl
earsenseofwhateacht
eam member
’sdut
yorr
olei
s.

Pr
ovi
der
ecogni
ti
on–t
hisi
sact
ual
l
ypar
tofcommuni
cat
ion!

Empowert
eam member
s’wi
tht
her
ightt
ool
sandt
echni
quest
odot
hej
ob

Keepy
ourear
sopent
osuggest
ions

Haveopenconversati
onsaboutev
eryaspectt
hatr
equi
rest
hePCPM
f
r

ameworktobeadj
u sted.
Fr
equent
lyt
alkt
oteam member
saboutt
hei
rpr
ogr
essandpr
ovi
def
eedback–

Lear
nfrom peopl
eonhowtheythi
nktheyconnectt
othemi
ssi
onoft
hepr
oject
t
eam andcomparethatwi
thhowyouthi
nktheyconnect
.

Communicat
ebetweent
hecur
rentst
atef
utur
est
atet
hegapandhowi
sthe
t
eam memberisdoi
ng.

MakeActi
onPl
ansforthel
ongert
ermtoensur
eyouareact
ivel
ymanagi
ng
t
heemot
ional
andmot
ivat
ional
aspect
sofALLthepeopl
e

Gat
herf
eedbackandinput
sonhowar
epeopl
eint
eractwi
theachot
heron
t
hei
rcommunicat
ionchannel
.
 
Fi
nal
l
y,i
tist
heprojectmanagersdutytoensur
ethati
nter
act
ionsonALL
communi
cat
ionchannelsyi
eldposi
ti
veresult
s!

3.
4WORKBREAKDOWNSTRUCTURE

Awor k-breakdownst ructure(WBS)inpr oj

ectmanagementandsy stems
engineeri
ng,i sadel i
verable-
ori
entedbr eakdownofapr ojectintosmal l
er
component s.A wor kbreakdownst r
uctureisakeypr oj
ectdel iverabl
et hat
organizesthet eam'swor kintomanageabl esecti
ons.
A work-breakdownst r
uctureelementmaybeapr oduct,data,ser v
ice,or
anycombi nat i
ont hereof
.AWBSal soprov i
desthenecessar yframewor kfor
detail
ed costest i
mat i
ng and cont rolalong with provi
ding gui dance for
scheduledev elopmentandcont r
ol

Aconst r
uctionprojectWBSexampl e
Thisi sat hree-t
ierWBSwi theachl ev
eldenot edwithnumer i
calnotat
ion
(suchas“ 1.1.
2”).Foreachsubsequentl evel,y
ou’daddanot herdecimaltothe
notat i
on( suchas“ 1.1.
2.1”)
.
Alsonot ehow t heWBSi sor gani
zedintobr oaddeliverabl
esandsub-
deli
v erables,al
lofwhi char enouns,notact i
vi
ties.Furt
her,i
fy ouweretoadd
upal lt hedeliverabl
est ogether,you’dgetthef i
rstlev
elint heWBS,i.e.the
100%r ule.
Thisi sthekeydef i
ningtraitofagoodWBS.
 3.
4.1RESOURCEBREAKDOWNSTRUCTURE(
rbs)

Aresourcebreakdownstr
uct
ureconsi
stsofbotht
hemat
eri
aland
humanresourcesr
equiredt
ocompl
eteadel
iver
abl
e.

3.
4.2HOW TOCREATEAWORKBREAKDOWNSTRUCTURE

Theout putoftheWBSdev elopmentpr ocessmi ghtseem si

mple:a
shor
tdocumentwi thalistofdeli
verables.Tocreat
eit,however
,youneed
athoroughunderst
andingoft heproject’
sscope,yourteam’scapabi
l
iti
es,
andyourstakehol
ders’
requirements.

1.Under
standt
hePr
oject
’sScope

2.Det
ermineMaj orDeli
verabl
es
Onceyouhaveanunder standi
ngoftheproj
ectscope,st
artt
heWBS
dev
elopmentprocessbyfiguri
ngoutthekeydel
iver
ables.

3.DetermineWor kPackages
Awor kpackage, asyoul ear
nedabov e,i
sadel i
verableatthelowestl
evel
ofaWBS.
Thisisoneoft hemosti mpor t
antpartsoft heWBSdev elopmentprocess
andonet hatwil
lrequi reextensi
veinputfrom yourpr ojectt
eam and
stakeholders.
Yourgoal i
stopi ckamaj ordeli
verabl
e,thenident i
fyallt
hewor k
necessar ytocompl et eit
.Thisworkpackagemustbe:
I
ndependent :Thewor kpackagemustbemut ual
lyexclusiveandhaveno
dependenceonot herongoi ngelement s.
Definable:
Thewor kpackageshoul dhaveadef i
nit
ebegi nni
ngandend,
andshoul dbeunder stoodbyal lpr
ojectpart
icipants.
Esti
mabl e:Youshoul dbeabletoest i
mat ethewor kpackage'sdurati
on
andr esourcerequirement s.
 Manageabl e:Thepackagemustrepresenta"meaningfuluni
tofwork",
i.
e.
i
tmustaccompl i
shsomet hi
ngconcr
ete,andcanbeassi gnedt oanindi
vi
dual
orteam.Itshouldalsobemeasurabl
e.
Int
egratable:Thepackagemustintegratewit
hot herelementstocreate
the parent level
. Adaptabl
e: I
deall
y,t he package must be abl e to
accommodat echangesinscopeaspert heproj
ect'
srequir
ement s.

4.Creat
eaWBSDi cti
onar
y
TheWBSdi cti
onaryisadocumentthatout
li
nesthedefi
nit
ionandscope
ofeachelementcontai
nedintheWBS.Itisasuppor
tingdocumentmeantto
hel
pincomingproj
ectteamsunder
standeachworkpackagebetter
.

Her
e'sanexampl
eofamor
esimpli
fi
edWBSdi cti
onar
ywi
thel
ementI
D,
name,anddescr
ipt
ion:

5.UsetheRightWBSFor mat
Therearesever
alWBSf ormat sy oucanfoll
ow.Thesimplestwayt
odo
thi
sistocreat
etext-
basedhierarchicalgr
oupings.Byconvent
ion,
youuse
numbersanddecimal poi
ntstoindicatethel
ev eloft
heelement.

Vi
sual
tabul
arst
ruct
ure

f
lowchar
t

3.
5PLANNI
NGANDSCHEDULI
NGWI
THGHANTTCHART

Nowadaysi
t'
spossibl
et ousemoder
nGanttchartpl
anni
ngtobetter
manageyourpr
ojectr
esourcesandcont
rol
forunexpect
edsit
uat
ions.Ther
e's
ar
easonwhywest il
l
uset hi
ssol
ution,becauseevenafteracentury,westil
lhaven'tbeenabl eto
thinkofanyt
hingbetter.I
nthisart
icl
ewe'llgi
vey ouracompr ehensi
vegui de
tousingGanttchartsforschedul
i
ngandpl anning.Whatexactlytheyare,the
elementsofclassi
candmoder ndayv er
sions,andwhatkindofadv antages
you'l
lseewhenusingt hem.

3.
5.1WHATI
SAGHANTTCHART

AGanttchartisavi
sualproj
ectmanagementt
oolt
hathel
pst
opl
an
andschedul
eproject
sofeverysi
ze.

Gant
tchart
slooklikeahor i
zontalbarchartthatshowspr oject
managementti
meli
nes,taskstar
tingandendingdates,dependencies
bet
weendif
fer
entt
asks,andgeneralpr
ojectt
askf
low.

Itisav i
sualinterpr
etat
ionoftheprojectwhi
chgivesanover
viewof
t
heproject
’sprogress,t
imeli
ne,andtasksoveri
tsent
ir
et i
mefr
ame.

Acl
assi
cGant
tchar
tconsi
stsof

Projectsdatesandt imel
i
ne-t hisgiv esprojectmanager sanov erv
iew
ofal lthepr oj
ectdates.From thest art,todat esconnect edwi t
hpr oject
tasks,and t othef i
nish.You hav et hecompl et
et i
mef rameaty our
fi
nger t
ips!
Gant tchartbar s as pr
ojectt asks -pr ojects normal l
yconsi stof
diff
erentt asksandt heGanttcharti sagr eatwayt oseet hem al
li none
place.Av isualovervi
ewhelpsy oumakesur et hateveryt
hingi si
nt heright
placeont hetimeli
neandnot hingisf orgotten.Tasknamesar enor mally
setont heGant tchart
.Luckil
y,moder nchar t
sar emadesot haty oucan
easilychanget helocati
onandt helengthoft het askbar.
 Mi lestones-mi l
est onesar et helit
tle“ wins”oft hepr oject s.Theyar e
normal l
yatt heendoft het askandhol dsomesi gnif
icancef ort heproject.
Usual l
y ,mi lestonesar edi splayedasdi amond- shaped-whi chf eelsli
kea
bonusaf tert hecompl eti
onoft het ask.TI P:Al wayscel ebr at
ey ourli
ttl
e
“wins”.Theyhel ptobr eaky ourpr ojectintomor eachi evablepi eces.
Dependenci es-ther ear ealway stasksi ny ourproj ectsthatneedt obe
compl et ed bef orethe nextt ask can begi n orend.So one t ask is
dependentont heot her ’sst artorf ini
sh.I nGant tchar t
s,dependenci es
betweent het asksar eshownwi thlit
tlear rows.TI P:dependenci escan
helpy ouf ocusont hebaset askst hatar edi r
ectl
yconnect edwi t
ht he
gener al projectf l
ow.
Resour ces-I nacl assicGant tchart,y oucanaddar esour cet oyour
taskt oseewho’ sresponsi blef orthet askandwho’ swor ki
ngoni t.In
moder n Gant tchart s,t her e are way st o make i tmor ev isualand
under st andabl e.It
’snotr aretouseGant tchar t
sf orresour cepl anningand
projectpor tfoli
omanagement ,
inaddi ti
ont osi ngleproj ectplanni ng.

HerearetheTOPadv ant agesofGant tchartinschedul

i
ngmanagement
wit
h
Gant
tchartsoftwar e:
Getav isual overviewaboutt hewhol eproject
All
project-relatedi ssuesi nasi ngleplace
Usey ourresour cesmor eef fecti
vel
y
Agil
eandr eal-t
imechanges
Keepaney eonf utur e,long-term pl
anning
Solv
et hepr oblemsbef oret heyhappen
Handlet hedependenci esbet weenthetasks
Theycanbeusedi nev eryindustry

3.
6PERTANDCPM

Proj
ectmanagementcan be under stood as a sy stemat i
c way of
planning,scheduli
ng,execut
ing,moni
tori
ng,contr
oll
ingthedi f
ferentaspects
oft he pr oj
ect,so as to att
ainthe goalmade att he time ofpr oject
formulation.PERTandCPM ar ethetwonetwork-basedprojectmanagement
techniques,whichexhibi
ttheflowandsequenceoft heacti
v i
ti
esandev ents.
Program ( Proj
ect) Management and Rev iew Techni que ( PERT) i s
appropriateforthepr oj
ectswherethet i
meneededt ocompl etediff
erent
activi
ti
esar enotknown.
` 3.
6.1DEFI
NITI
ONOFPERT
 PERT i s an acronym f orPr ogr
am ( Pr
oject
)Ev aluati
on and Rev i
ew
Technique,i n whi ch planning,scheduling,or gani
zing,coor di
nating and
contr
olli
ng uncer tain acti
vities t
ake place.The t echnique studies and
repr
esent sthet asksunder takentocompl eteapr oj
ect,toidenti
fyt heleast
ti
mef orcompl eti
ngat askandt hemi ni
mum t i
mer equiredtocompl et
et he
wholepr oject
.Itwasdev elopedi nthelat
e1950s.I tisaimedt or educet he
ti
meandcostoft heproject.

3.
6.2DEFI
NITI
ONOFCPM

Dev eloped i
nt hel ate1950s,Cr i
ti
calPat h Met hod orCPM i san
algori
thm used f orpl anning,schedul i
ng,coor dinati
on and cont r
olof
activi
ti
esi naproj
ect.Her e, i
tisassumedt hattheact ivi
tydurati
onisfixed
andcer tain.CPM isusedt ocomput etheear l
iestandl atestpossibl
est ar
t
ti
mef oreachact i
vit
y.
Thepr ocessdifferentiatesthecr it
icalandnon- cr
iti
calactivi
ti
est o
reducet het i
meandav oidt hequeuegener ati
oni nt hepr ocess.The
reasonf ortheidenti
ficationofcr it
icalactivi
tiesist hat,i
fanyact ivi
tyis
delayed, itwil
lcauset hewhol eprocesst osuff er
.Thati swhyi ti
snamed
asCr i
tical Pat
hMet hod.

Thefol
lowingst
epsar
erequi
redf
orusi
ngCPM andPERTf
orpl
anni
ng
andschedul
ing:

(
i)Eachproj
ectconsi
stsofsev
erali
ndependentjobsoract
ivi
ti
es.All
t
hesejobsoract
ivi
ti
esmustbeseparat
elyl
ist
ed.Iti
simport
anttoident
if
y
anddisti
ngui
shthevariousacti
vi
ti
esr
equi
redf
ort
hecompl
eti
onoft
he
proj
ectandli
stt
hem separat
ely
.
 (i
i
)Oncet heli
stofvar
iousacti
vi
ti
esisreadytheorderofprecedence
fort
hesejobshast obedeter
mined.Wemustseewhi chjobshavetobe
complet
edbef or
eother
scanbest art
ed.Obviousl
y,cer
tai
njobswi l
lhave
tobedonefir
st.

Manyj obsmaybedonesi mult

aneousl
yand certai
nj obswil
lbe
dependentuponthesuccessf
ulcompleti
onoftheearl
ierjobs.Al
lthese
rel
ati
onshi
psbetweenthevari
ousjobshavetobecl
ear
lylai
ddown.

(
ii
i)Thenextstepi stodrawapi ctur
eoragraphwhi chport
ray
seach
ofthesej obsandshowst hepredecessorandsuccessorrel
ati
onsamong
them.I tshowswhi chjobcomesf irstandwhichnext.I
talsoshowst he
ti
mer equi r
edforcompletionofvar
iousjobs.Thi
sisknownast heproj
ect
graphort hearr
owdi agram.

I
nthisgraphjobsar
eshownasarrowsleadi
ngf r
om onecircl
eont he
gr
aphtoanot her
.Thus,
thearr
owconnecti
ngthetwocir
clesrepresent
sa
j
ob.Cir
cleoneandt worepr
esentj
obai.
e.for
ecast
ingofunit
ssal ewhich
woul
dtake14day s.

Cir
cles2and4r epresentjobbwhi chwi l
ltaketenday sandsoon.I t
wouldbeseent hatjobci snotdependentuponj obbandt heref
or e,the
twojobscanbedonesi multaneously.Oncewer educet hepr ojectt o
networ
kofact iv
iti
esandev entsandweest imateactivi
tydur ati
ons,we
areinapositi
ont odeterminet hemi ni
mum timer equi
redforcompl et
ion
ofthewholeproj
ect.
Todoso,wemustf i
ndthel ongestpathorsequenceconnect i
ngt he
acti
vi
ti
est hr
ought henet work.Thi siscalledt he‘cri
ti
calpat h’oft he
project
.Thel
ongestpathi
sthecr
it
icalpat
h.I
nourexampl
e,t
herear
etwo
paths.Oneisconnect
ingci
rcl
enumbers1,2,4and5.Thi
spathwil
ltake
14+10+10=34day s.
 Theotherpat
h,isconnectingcir
cles1,
2,3,
4and5,thispathwil
ltakes14
+7
+4+10=35day s.Obv i
ouslythe2ndpat hi sthecrit
icalpat
handt he
projectofbudgetpresentati
onwi l
ltakethi
smuchoft i
me.Thest udents
willhowevernoticethatt hi
st i
mei sshorterthanthet otalt
imel i
sted
underTable1whi chwi l
lbe45day s.Thisisbecausejobsbandccanbe
donesi mult
aneousl
y.

3. 6.3ADVANTAGESOFPERT
1.I tcompel smanager st opl anthei
rpr oject
scr it
icallyandanal yseal l
factorsaf fecting thepr ogressoft hepl an.Thepr ocessoft henet wor k
analysi srequi rest hatt hepr ojectplanningbeconduct edonconsi derabl e
detailf r
om t hest arttothef inish.
2.I tpr ov i
dest hemanagementat oolf orf orecasting t hei mpactof
schedul echangesandbepr eparedt ocor r
ectsuchsi tuat i
ons.Thel ikely
troublespot sar el ocated ear lyenoughso ast o appl ysomepr event i
v e
measur esorcor rectiveactions.
3.al otofdat acanbepr esentedinahi ghlyor deredf ashi on.Thet ask
relati
onshi ps ar e gr aphi callyr epr
esent ed for easi er ev aluat
ion and
i
ndi vidualsi ndi fferentlocat ionscaneasi lydeter
mi net hei rroleinthet otal
taskr equi r
ement s.
4.ThePERTt i
me( Te)i sbasedupon3- wayest i
mat eandhencei st he
mostobj ect i
vet i
mei nt hel ightofuncer t
ainti
esandr esul t
si ngr eat er
degr eeofaccur acyi ntimef or ecasti
ng.
5.I tr esul tsi ni mpr ov ed communi cati
on;t he net wor k provides a
common gr ound f orv arious par t
ies such as desi gner s,cont ract ors,
projectmanager set c.andt heymustal lunder st
andeachot her’
sroleand
cont ri
but i
ons.

3.
7DETERMI
NISTI
CANDPROBABI
LISTI
CSCHEDULI
NG

3.7.1DETERMI NISTICSCHEDULI NG
Deterministi
c scheduling i st he most commonl y used schedul ing
technique.Int hi
smet hod,t heschedul edevel
opedisanet workofactivi
ties
l
inkedbydependenci es.
Thev aluessuchasdur ati
on,st ar
tandf i
nishdatesf oractivi
ti
es,ar e
deterministi
ci n nature and t hus each one is all
ocated a singlev alue
esti
mat ion.Theest i
mat edv aluesrolluptotheproj
ectleveltodefineproject
durati
on,alongwi t
hstartandf i
nishdates.Thestat
ist
icaltoolgeneral
lyused
i
sCr it
icalPathMet hod( CPM) .

3.
7.2PROBABI
LISTI
CSCHEDULI
NG
 Thisschedul i
ngt echni
quei nv
olvessameact i
vi
ti
esasi ndetermi
nisti
c
scheduli
ng,suchasl i
sti
ng
of tasks,allocat
ing resources,estimati
ng dur
ati
on,def i
ning st
art and
completiondates,and
basedont heinputsdev el
opaGant tchart
.Theonl
ydiff
erenceliesi
ntheway
ofesti
mat i
ng
dur
ati
onandst
ati
sti
cal
tool
usedt
odev
elopt
heschedul
e.

3.
8BUDGETCONTROL

Theterm“ budget”tendstoconjureupinthemi ndsofmanymanager s

i
magesofi naccur at
eest i
mates,producedi
ntediousdet ai
l,whichar enever
exactlyachievedbutwhoseshor t
fall
soroverr
unsr equir
eexpl anat
ions.And
thatiswhatbudget sarelikef
ormanysmal l
erbusinesses.Thiswast efulway
ofusi ngbudget sov er
looksimport
antmanagerialobjecti
vest hatbudget i
ng
canhel pachieve.

3.8.1PLANNINGI SSUE
Itharmonizestheenter
prise’sst
rat
egywit
hitsorgani
zat
ionalst
ruct
ure,i
ts
managementandper sonnel,andt
hetaskst
hatneedtobedonetoimplement
str
ategy
.

3.
8.2TOP-
DOWNANDBOTTOM-
UPSCHEDULI
NG

Thet
op-downapproachallowstheowner
-managerandothersatthetop
to putf
orwardthei
rcompr ehensi
vev i
ews ofthe organi
zat
ion and i
ts
economi
c and competit
ive envi
ronment
s.Top managementknows t he
company’
s goal
s,str
ategi
es,and av
ail
abl
eresour
ces.I
ndeed,i
n a smal
l
companytheowner
-managermaybethe
onlyonewithsuchknowl edgeasot hersar ealmosttotall
yinvolv
edwi t
hday -
to-
dayoperations.
Thebot tom-upappr oach,ont heot herhand,makesuseofoper ati
ng
management ’sdet ail
edknowl edgeoft heenv ir
onmentandt hemar ketplace,
knowledgethati sav ail
ableonlytot hosewhoar einvolvedonadai lybasi s.
Themor eresponsi bi
li
tyunitmanager shav eforinnov at
ion,themor et heir
i
nputsar eneededi nbudgetf ormulati
on,f ortheyarebestabl etodeci de
coursesofact i
onandt argetsfortheirunits.Theyknowwhatmustbedone,
wheret heoppor tuniti
esl i
e,whatweaknessesneedt obeaddr essed,and
whereresourcesshoul dbeal l
ocated.

3.8.3ROLLI NGBUDGET
Theadv antageofar oll
ing budgeti si tscov erage.Asonecompany
presidentstatedinear ly1983:
“Wewoul dhav ecutouri nvent ori
esandpr oduct ionear l
ylastf al
lifwet hen
hadabudgett hatlookedouti ntot hefi
rstquar teroft hi
sy ear.Asitwas,we
mov edt oolateandi tcostusal otofmoney .That ’
swhywe’ rechangingtoa
roll
i
ngbudgetasofnextJul y1. ”
Ont henegat iv
esi de,ar ollingbudgett akesmor eofmanagement ’stime
topr epareand,mor eov er,oper ati
onsar edi sruptedf ourt i
mesay ear,rat
her
thanonce, forplanning.
Thosewho pr eferr oll
i
ng budget sar guet hatmanager sgetbet terat
budget i
ngwi t
hpr act i
ce,andt herefor
eneednomor et i
met odoquar t
erl
y
budget sthanoneannualbudget .And,asoper atingmanager sshouldalways
beengaged i npl anning,budget i
ng fourt imesay eari snotadi srupti
ve
processf orthem.

3.8.4ACTUALANDBUDGETEDPERFORMANCE*( inthousandsof
doll
ars)*Incomet axesignored.
Contri
buti
ont oov er
headandpr ofi
t—thedirectcostsandr ev
enuest hat
eachmanagercont rol
sintheshor tr
un.
Departmentpr ofi
t—contri
buti
on to overhead and profi
tl essthe fixed
coststhatare directl
yat t
ribut
ablet o each depart
ment ’s operat
ion.The
depart
mentmanagermaycont rolthesef i
xedcost seitherbydeci di
ngt o
r
epl
aceequi
pmentort
omov
etoanew
l
ocat ionorbyi ncreasi ngordecr easingt hedepar t
ment ’
suseofacor porate
resour cesuchasacent ralcomput er,legal department ,orbui l
di ngspace.
Cor porat e pr ofi
t —t he f i
nal“ bottom l i
ne”af teral lcost s hav e been
deduct ed,i ncludi ngcost sov erwhi chdepar tmentmanager shav enocont rol
andf orwhi cht heyhav enodi rectresponsi bil
it
y .
Budget senhancet heski l
lsofoper at i
ngmanager snotonl ybyeducat ing
them abouthow t he company f unct ions,butal so by gi v i
ng t hem t he
oppor tunity,and t he spur ,t o manage t heir subor dinates i n a mor e
professi onalmanner .Thi saspectofbudget i
ngi sof tenov er
lookedbecause
thebudgeti sv iewedessent iallyasat ool fortheowner sandt opmanagement
ofacompany .Abusi nessuni tmanagercanuset hebudget ,fori nstance,to
encour agesal espeopl et ot hinkaboutt hei rcustomer sint ermsofl ong-t
erm
strategicgoal s.
Budget sal sohav ev ariousr ami fi
cat ions,somesubt l
eandsomenotso
subtle.Formaxi mum ef fect,keept hef ollowi ngi nmind:
Abudgeti sapl an.
Abudgeti sacont rol.
Itcangui decor por ateoper ations.
Itcanext endt her eachoft opmanagementbysuppor tingdel egati
on.
Itcancoor dinat ecompanyact iv
ities.
Itcancommuni catecompanyobj ect iv
esandact i
vit
iesdur i
ngi ts
prepar ationandser veasabasi sforcommuni cationthr oughouti tster
m.
Itcandi r
ect,gui de,andr ewardoper ati
ngmanager sandf orm abasi s
forper formanceev aluation.
Itcaneducat ecompanyempl oyeesast owhati stobedoneand
assistt hem i ndoi ngi t
.
Itcanl eadt o“ games”i nvolvi
ngf al seest i
mat esandot hercount er-
product ivebehav i
or .
Howi twor ksdependsonot hermanagementsy stemsi npl ace.
Itsef fectivenessdependsont hewayi ti
susedbyt opmanagement .

3,
9RI
SKMANAGEMENT’

Riskscancomef r om v ari
oussour cesi ncludinguncer t
aint
yi nfinancial
mar kets,t hreatsfrom pr ojectf ail
ures( atanyphasei ndesi gn,dev el
opment ,
product i
on,orsust ainingofl i
fe-cycles),legall i
abi l
it
ies,creditri
sk,accidents,
naturalcausesanddi sast ers,deli
ber ateat tackf rom anadv ersary,orevent s
ofuncer tainorunpr edi ctabler oot-cause.Ther ear etwot ypesofev entsi.e.
negativeev entscanbecl assifi
edasr iskswhi l
eposi ti
veev entsareclassif
ied
asoppor tuniti
es.
Fort hemostpar t,thesemet hodsconsi stoft hef oll
owingel ement s,
performed, mor eorless, int hefoll
owi ngor der.
Ident i
fythethreat s
Assesst hevul nerabili
tyofcr it
ical assetst ospeci f
ic
threatsDet ermi net herisk(i.e.theex pect edl i
keli
hood
andconsequencesofspeci f i
ct ypesofat tackson
speci f
icasset s)Ident i
fyway stor educet hoser i
sks
Pr i
orit
izeriskreduct i
onmeasur es

TheInt
ernat
ionalOrgani
zat
ionf
orStandardi
zat
ion(
ISO)i
dent
if
iest
he
fol
lowi
ngpri
nciplesofri
skmanagement:[
Riskmanagementshoul d:
Createv alue–r esourcesexpendedt omi t
igateri
skshoul
dbel
esst
han
theconsequenceofi naction
Beani nt egr
alpartofor ganizationalprocesses
Bepar tofdeci si
onmaki ngpr ocess
Expli
citlyaddressuncer taintyandassumpt ions
Beasy stematicandst r
ucturedpr ocess
Bebasedont hebestav ail
ableinformation
Betailorable
Takehumanf actorsintoaccount
Betranspar entandi nclusive
Bedy nami c,i
terati
veandr esponsivet ochange
Becapabl eofcontinual improvementand
enhancementBecont inuallyorper i
odicall
yr e-
assessed

3.9.1PROJECTRI SKMANAGEMENT
Proj ectr i
skmanagementmustbeconsi deredatt hedi f
ferentphasesof
acquisit i
on.I nt he begi nni ng ofa pr oject,t he adv ancementoft echni cal
development s,ort hreatspr esent edbyacompet i
tor'sprojects,maycausea
ri
skort hreatassessmentandsubsequentev aluat i
onofal ternatives( see
Analysi sofAl ternat ives).Onceadeci sioni smade,andt hepr ojectbegun,
mor ef ami l
iarprojectmanagementappl i
cationscanbeused:
Planni nghowr i
skwi llbemanagedi nt hepar ticularproject.Plansshoul d
i
ncluder iskmanagementt asks, responsi bi
liti
es, act i
viti
esandbudget .
Assi gni ngar i
skof fi
cer–at eam memberot hert hanapr ojectmanager
who i sr esponsi blef or f or eseeing pot entialpr oject probl ems.Ty pical
charact er i
sticofr iskof fi
ceri saheal thyskept icism.
Mai nt aini
ngl ivepr ojectr iskdat abase.Eachr iskshoul dhav ethef oll
owi ng
att
ribut es:openi ngdat e,t itle,shor tdescr i
ption,pr obabili
tyandi mpor tance.
Optional lyar i
skmayhav eanassi gnedper sonr esponsi bl
ef ori tsresolut i
on
andadat ebywhi cht her iskmustber esolved.
Creat i
nganony mousr i
skr epor t
ingchannel .Eacht eam membershoul d
havet hepossi bilityt orepor tr iskst hathe/ shef or eseesi nthepr oject.
Prepar i
ngmi tigat i
onpl ansf orr i
skst hatar echosent obemi t
igated.The
purposeoft hemi tigati
onpl ani st odescr i
behow t hisparti
cul arriskwi llbe
handled– what ,when,bywhom andhow wi lli tbedonet o av oidi tor
minimi zeconsequencesi fitbecomesal i
abili
ty.
 Summari
zi
ng planned and faced r
isks,ef
fect
iveness of mi
ti
gat
ion
act
ivi
ti
es,
andef
for
tspentforther
iskmanagement.

3.
10PROJECTMANAGEMENTSOFTWARE

Miscommuni cat
ion and inef
fici
encies iny our pr oject management
processcanl eadtoconfusingandstressfulexperi
encesf oryouremployees,
andhindery ourcompany '
sabil
it
yt osati
sfyy ourcl
ients'needsorhitend-of-
yeargoals.Thiscanleadtomajorlossesov erti
me.

For
tunatel
y,thereareplent
yoff r
eeprojectmanagementsof
twareopt
ions
tokeepy ourteam on-trackwithoutbreakingthebank.Tostreamli
neyour
processandensur eev eryoneony ourt
eam i sonthesamepage,takealook
atthesetenexcept i
onalfreepr
ojectmanagementt ool
s.

Pr
ojectmanagementsof
twar
e(PMS)

Projectmanagementsof tware( PMS)has t he capaci t

yt o help plan,
organize,and manage r esource t
ools and dev elop r
esour ce estimates.
Dependi ngont hesophist
icat
ionoft hesoft
ware,i tcanmanageest imati
on
andpl anni
ng,scheduli
ng,costcontrolandbudgetmanagement ,resource
al
locat i
on,coll
aborati
onsoftware,communi cat
ion,decision-making,qual i
ty
management ,time management and document ati
on or admi nistr
ati
on
systems.Today ,numerous PC and br owser-
based pr ojectmanagement
softwar eandcontractmanagementsof t
waresolutionsexist,andar efindi
ng
applicati
onsinalmosteveryty
peofbusiness.
Schedul
ing
Oneoft hemostcommonpr ojectmanagementsof twaret ooltypesis
schedul
i
ngt ool
s.Schedulingtool
sar eusedt osequenceprojectacti
vi
ti
esand
assi
gn datesand r esourcestot hem.Thedet ailand sophisti
cati
on ofa
schedul
eproducedbyaschedul i
ngt oolcanvaryconsi
derablywiththeproj
ect
managementmet hodologyused,t hef eat
uresprovi
dedandt hescheduling
methodssupported.Scheduli
ngtool smayincludesuppor
tf or:

Mul
ti
pledependencyr
elat
ionshi
pty
pesbet
weenact
ivi
ti
es.

Resour
ceassi
gnmentandl
evel
i
ngCr
it
ical
pat
h

Act
ivi
tydur
ati
onest
imat
ionandpr
obabi
l
ity
-basedsi
mul
ati
on

Act
ivi
tycostaccount
ing.

Provi
dingInfor
mat ion
Projectplanning sof twarecan beexpected t
o prov
ideinfor
mat i
ont o
vari
ouspeopl eorst akeholder
s,andcanbeusedt omeasur eandjusti
fythe
l
evelofef f
ortrequiredt ocompl et
ethepr
oject
(s)
.Typi
calrequi
rementsmight
i
nclude:

Ov
erv
iewi
nfor
mat
iononhowl
ongt
askswi
l
ltaket
ocompl
ete.

Ear
lywar
ningofanyr
iskst
othepr
oject
.

I
nfor
mat
iononwor
kload,
forpl
anni
nghol
i
day
s.

Ev
idence.

Hist
ori
cali
nfor
mat i
ononhowpr oj
ectshavepr
ogr
essed,
andi
npar
ti
cul
ar,
how
a

ct
ualandpl
annedp er
formancear
e rel
ated.
Opt
imum ut
il
izat
ionofav
ail
abl
eresour
ce.

Costmai
ntenance.

Col
l
abor
ati
onwi
theacht
eammat
esandcust
omer
s.

I
nst
antcommuni
cat
iont
ocol
l
abor
ator
sandcust
omer
s.

3.
10.
1TYPESOFPROJECTMANAGEMENTSOFTWARE

Desktop
Proj
ectmanagementsoftwarehasbeeni mplementedasapr ogram t
hat
runsonthedeskt
opofeachuser .Pr
ojectmanagementt oolsthatare
i
mpl ement
edasdesktopsoft
war earetypical
l
ysingle-
userappli
cationsused
bytheproj
ectmanageroranothersubjectmatterexper
t,suchasaschedul er
orri
skmanager.

Web- based
Pr oj
ectmanagementsof twarehasbeeni mplementedasaweb
appli
cationt
obeaccessedusi ngawebbr owser.Thismayalsoi ncludethe
abil
i
tyt ouseasmartphoneort ablettogainaccesst otheapplicati
on.
Softwareasaservi
ce( SaaS)isalsoweb- basedandhasbecomeacommon
deli
verymodelformanybusi nessappl i
cations,i
ncludi
ngprojectmanagement,
proj
ectmanagementi nformationsystem (PMI S)andproj
ectpor tf
olio
management( PPM).SaaSi stypical
lyaccessedbyuser susingat hincli
ent
vi
aawebbr owser.
Si
ngl
euser
 Asingl
e-usersystem i
sprogrammedwi t
htheassumpt i
onthatonl
yone
personwi l
leverneedt oedi
ttheproj
ectpl
anatonce.Thismaybeusedi n
smal lcompanies,oroneswhereonlyafewpeopleareinvol
vedintop-
down
projectpl
anning.Desktopappli
cati
onsgener
all
yfal
lint
ot hi
scategor
y.

Collaborat i
v e
Acol l
abor ativesystem isdesi gnedtosuppor tmul t
ipleusersmodi f
y i
ng
dif
ferentsect i
onsofthepl anatonce; f
orexampl e,updat i
ngt heareast hey
personal l
yar eresponsiblef orsucht hatthoseest imat esgetintegratedinto
theov erallplan.Web-basedt ools,i
ncludingext r
anet s,generall
yfallintothi
s
categor y,buthav etheli
mi tationthattheycanonl ybeusedwhent heuser
hasl i
veI nternetaccess.Toaddr esst hisl
imitati
on, somesof t
war etools
usingcl i
ent –serverar
chi t
ect ureprovidear i
chcl i
entt hatrunsonuser s'
desktopcomput erandr epli
cat esprojectandt askinf ormati
ont oot her
projectteam member st hroughacent r
alserverwhenuser sconnect
periodicall
yt othenetwor k.

Let
’sSum Up

Projectmanagement ,t hen,i st heappl i

cat i
onofknowl edge,ski ll
s,tool s,
andt echni quest opr oj ectact ivi
t i
est omeett hepr oj ectr equi r
ement s.
Apr oj ectlifecy clei sthesequenceofphasest hatapr ojectgoest hrough
from i tsi nitiationt oi tscl osur e.Thenumberandsequenceoft hecy clear e
det ermi nedbyt hemanagementandv ar i
ousot herf act orslikeneedsoft he
organi zat ioni nv ol
v edi nt hepr oject ,t henat ur eoft hepr oject,andi tsar eaof
appl ication.
Tobui ldandmanageasuccessf ul pr ojectt eam t hepr ojectmanagermust
beski ll
edi nmanyar eas.Thepr ojectmanagerhast obeabl et osel ectt eam
member st hatwi l
lf itinwi tht het eam, managemeet i
ngsski l
lfully, establisha
team i dent ityandv ision,est ablishway sofr ewar dingt het eam aswel las
i
ndi v i
dual s,manageconf l
ict swi thinandout sidet het eam,andbeabl et o
rejuv enat et het eam ov erl ongpr oject s.
Awor k-breakdownst ruct ure( WBS) inpr ojectmanagementandsy stems
engi neer ing,i sadel iverabl e-or i
ent edbr eakdownofapr ojecti nt osmal l
er
component s.A wor kbr eakdownst r
uct urei sakeypr ojectdel i
ver ablet hat
organi zest het eam' swor ki ntomanageabl esect ions.
Gant t char tsl ook l i
ke a hor i
zont albar char tt hat shows pr oject
management t i
mel ines,t ask st ar ting and endi ng dat es,dependenci es
bet weendi fferentt asks, andgener al pr ojectt askf low.
PERT i s an acr ony m f orPr ogr am ( Pr oject)Ev aluation and Rev i
ew
Techni que,i n whi ch pl anni ng,schedul i
ng,or gani zi
ng,coor dinat i
ng and
cont rolli
nguncer t
ainact ivi
t i
est akepl ace.
Dev elopedi nt hel at e1950s,Cr iti
calPat hMet hodorCPM i sanal gor i
thm
used f orpl anni ng,schedul ing,coor dinat i
on and cont rolofact iviti
esi na
proj ect.Her e,itisassumedt hatt heact ivitydur ationi sfixedandcer tain.CPM
i
susedt ocomput et heear li
estandl at estpossi blest arttimef oreachact ivi
ty .
Riskscancomef rom v ar i
oussour cesi ncl udinguncer t
ai ntyi nf inanci al
mar kets,t hreat sf rom pr ojectf ailur es( atanyphasei ndesi gn,dev elopment ,
product i
on,orsust ai ningofl ife-cy cles) ,legall i
abi l
ities,cr editr i
sk,acci dent s,
nat
uralcauses.
Ref
erences:
 Ever
ett
,E.Adam,Jr
.RonaldJ.Eber
t,Pr
oduct
ionandOper
ati
ons
Management,Pr
enti
ce-
HallofIndiaPr
ivat
eLimi
ted,5t
hEdi
ti
on,1994.

R.Panner
selvam,Producti
onandOperat
ionsManagement
,Pr
ent
ice-
Hal
lofIndi
aPriv
at eLi
mited,9t
hpri
nt,
2004.

Joseph,G.Monks,
Theor
yandProbl
emsofOper
ati
ons
Management ,
Tat
aMcGr aw-
Hil
lPubl
i
shi
ngCompanyLi
mit
ed,
2nd
Edi
ti
on,2004.

Joseph,
G.Monks,
Oper
ati
onsManagement
,McGr
aw-
Hil
lInt
ernat
ional
Edi
ti
on,3rdEdi
ti
on.

S.Ani
lKumar
,N.Suresh,Pr
oduct
ionandOperat
ionsManagement
,
NewAgeInter
nat
ional
(P)Limit
edPubli
sher
s,2ndEdit
ion,
2008.

https:/
/www. pmi.
or g/
about/l
ear
n-about-
pmi/what -
is-
projectmanagement
https:/
/ www.pr
ojectti
mes.com/art
icl
es/does-peopl
e-behav i
or-
impact
-
projects-
how-and-what -
do-we-do-about-
it
.ht
ml
https://www.wor kamaji
g.com/blog/guide-
to-work-breakdown-str
uctur
es-
wbs

htt
ps:/
/keydifferences.com/ di
fference-bet
ween-pert
-and-cpm.ht
ml
htt
ps:/
/hbr.org/1984/ 07/budget-choice-pl
anni
ng-ver
sus-contr
ol
htt
ps:/
/en.wikipedia.org/wiki
/Risk_ management
htt
ps:/
/blog.hubspot .com/mar keting/f
ree-
proj
ect-
management -
soft
ware

Operat
ionsManagement .Accessed August7,2020.
ht
tps:/
/www.sl
ideshar
e.net/Kadi
rikj
s24/
operat
ions-
management
-6932922
 CHAPTER4

FORECASTI
NGDEMAND

Chapt
erOut
li
ne

4.
1 I
ntr
oduct
ion 4.
5 Exponent i
alSmoot
hing
4.
2 For
ecast
ingObject
ivesandUses 4.
6 RegressionandCorr
elati
onMet hods
4.
3 For
ecast
ingDecisi
onVariabl
es 4.
7 Appli
cationsandControlofFor
ecast
4.
4 For
ecast
ingMethods • References

4.
1INTRODUCTI
ON

Pl
anni
ngisanessentialpartofamanager’
sjob.Theymakedeci
sionswi t
houtknowi
ngwhat
wi
llhappeninthefut
ure.For
ecast shelpmanagersbyreduci
ngsomeuncer tai
nty,enabl
i
ngthem t
o
makegoodesti
matesanddev elopmor emeani
ngfulpl
anstowardor
gani
zationalgoals.

Forecast
ingistheartandsci
enceofpredi
cti
ngthefut
ureval
ueofavar
iabl
esuchasdemand.
For
ecasti
ngmayi nvolv
et aki
nghist
ori
caldat
aandpr oj
ecti
ngthem i
ntot
hefut
urewithsomesortof
mathemati
calmodel.Oritmayinvol
veacombi nat
ionofmanager'
sgoodj
udgment.

4.
2FORECASTI
NGOBJECTI
VESANDUSES

For ecastingf orbusinesspur posesinv ol

vessi mil
arapproaches.Operat
ionsmanager sare
pri
mar il
yconcer nedwi t
hf orecastsofdemand—whi char eoftenmadeby( orinconjuncti
onwi t
h)
mar keti
ng.Howev er,
manager sal
sousef or
ecast sasthebasisforbudgeti
ng,pl
anningcapaci
ty,sal
es,
productionandi nventory,personnel
,purchasing,andmor e.Generall
y,t
her
ear et wousesf orthe
forecast.Onei st ohel pmanager splanthesy stem,andt heotheri
st ohel hem pl
pt antheuseoft he
system.Thi sr esultsinbet t
eruseofcapaci ty,mor eresponsiv
eservicetocustomers,andimproved
profit
abili
ty.

4.
3FORECASTI
NGDECI
SIONVARI
ABLES

For
ecasti
ngacti
vi
ti
esareafuncti
onof(1)thety
peoff
orecast(
2)t
het
imehor
izon(
3)t
he
dat
abaseavai
labl
e,and(
4)themet
hodologyempl
oyed.

Ty
pesofFor
ecast
s

Or
gani
zat
ionsuset
hreemaj
ort
ypesoff
orecast
sinpl
anni
ngf
utur
eoper
ati
ons:

1. Economi cf orecastsaddr esst hebusinesscyclebypredictinginf

lat
ionrates,money
suppli
es,andot herwi del
yfollowedindi
cator
s.
2. Technologicalf orecastsar econcernedwiththeinvest
igationoftrendsandr atesof
technol
ogical progress,whichcanresulti
nthebir
thofnewpr oduct
s,requi
ri
ngnewpl ant
s
andequipment .
3. Demandf orecastsar eprojecti
onsofcustomerdemandt oopt imi
zesupplydecisionsby
acompany ’
spr oductsorser vi
ces.

TheTi
meHor
izons

Whenconsideri
ngy ourfor
ecasts,i
tisusuall
yclassif
iedbyt
hefutureti
mehori
zon
thati
tcov
ers.Ti
mehor i
zonsfall
int
othreecategor
ies:
1. Theshort-
rangeforecasthasatimespanofupt o1y earbuti
sgeneral
lyl
esst
han3
 months.Itisusedf orplanni
ngi nventor
y,j
obschedul
ing,workforcelevel,j
obassi
gnment,
andproduct i
onlevel.
2. Medium- rangeforecastgener al
lyspansf r
om 3mont hsto3y ears.Itisusef
ulinsales
andproduct i
onplanning,budgeting,andanal
ysi
sofvariousoperati
ngpl ans.
3. Long-rangef or
ecastspansf rom 3y earsormoreandi susedinpl anninganewpr oduct
,
faci
l
itylocati
on,andresearchanddev el
opment.

Forecastsofdemandar ebasedpr i
maril
yonnon- r
andom trendsandr el
ati
onshi
ps,withan
all
owancef orrandom components.For
ecastsforgroupsofproductstendtobemor eaccurat
et han
thoseforsi ngl
epr oduct
s,andshort-termforecastsaremor eaccuratethanlong-
termforecasts
(great
erthanf i
veyears)
.Quant
if
icati
onalsoenhancestheobj
ecti
vit
yandpr eci
si
onofaf or
ecast.

4.
4FORECASTI
NGMETHODS

Ther
earenumerousmet hodstof orecasti
ngdependingontheneedoft
hedeci
sion-
maker
.
Thesecanbecat
egori
zedintwoway s:
 Opini
onandJudgment alMethodsorQuali
tati
veMethods.
 TimeSeriesorQuanti
tat
iveForecasti
ngMethods.

4.4.
1Opi nionandJudgment alMet hods
Insomesi tuati
ons,forecastersrel
ysol el
yonj udgmentandopi ni
onaboutcasual
fact
orst hatunder l
iethedemandf orcer
tainproduct
sorser v i
ces.Ifmanagementmust
haveaf orecastquickl
y,t
heymayi ncorpor
atesuchfactorsasthedecisionmaker
’si
ntui
ti
on,
emotions,consumersur vey
s, opini
onofex pert
s,andvaluesystem.

Execut
iveOpini
ons
Af or
ecast
ing techni
que thattakes t
he opi
nion ofa smal
lgr
oup ofhi
gh-
lev
el
managersandcollect
ivel
ydevel
opaf or
ecast.

DelphiMethod
Thi
sf or
ecast
ingtechni
queall
owsindivi
dual
sinanint
eract
ivegr
ouppr
ocessand
contri
but
esmeaningful
l
yinmakingaconsensusfor
ecast
.

Salesf
orceOpini
ons
Member softhesalesst
affareoftengoodsourcesofinf
ormat
iont
oest
imat
ethe
expectedsal
escauseofthei
rdi
rectcont
actwit
htheconsumers.

ConsumerSur veys
Af orecast
ing met
hod t
hati
nvol
vesdir
ectintervi
ewsfrom therealmarketf
iel
d
regar
dingfuturepur
chasi
ngpl
ansbutt
hisr
equi
resalargenumberofworkf
orce.

4.4.
2TimeSer i
esMethods
A Timeseri
esi sat i
me-or
der
edsequenceofobser vat
ionsofav ar
iabl
etakenat
regul
arinter
val
s(dail
y,weekly
,monthl
y,quar
ter
ly,andannuall
y).For
ecasti
ngtime-
seri
es
dataimpli
esthatf
utur
evaluesoft
heseri
escanbeest i
mat
edf r
om pastval
ues.

Decomposi
ti
onoft
heTi
meSer
ies

Anal yzingt i
meser i
esr equi
resanal yststobreakdownpastdat aintocomponent sand
thenprojectthem f orward.Thesecomponent scanbedescr i
bedasfoll
ows:
1. Trend( T)r eferstothegr aduall
ong- ter
m upwar dordownwar dmov ementofthedat a.
2. Seasonal it
y( S)ref
erst oashort-t
erm simi l
arv ar
iati
onsoccurri
ngdur i
ngcorresponding
periods
3. Cycles( C)ar et helongt erm swingsorwav eli
kev ari
ati
onsofmor ethanoney ear’
s
durat i
on.
4. Random component( R)arespor adiceffectsduet ounusualcircumstances.Theyar e
ther esi
dual aft
erthetrend,cycl
ical,andseasonal v
ariat
ionsareremoved.
 Timeseri
esaretabul
atedorgr
aphedt oshowthenat
ureofthetimedependence.
Theforecastv
alue(Ye)iscommonlyexpressedasamulti
pli
cat
iveoraddi
ti
vef unct
ion
ofi
tscomponent s;
examplesher
ewillbebaseduponthecommonl yusedmult
ipli
cat
ive
model.
Yc =T.S.C.Rmul
ti
pli
cati
vemodel
Yc =T+S+C+Raddi t
ivemodel

Fi
gure4.
1i l
l
ustr
atesademandov era4y earperi
od.Itshowstheaverage,tr
end,
seasonalcomponent
s,andrandom vari
ati
onsaroundthedemandcur ve.Theav erage
demandisthesum oft
hedemandforeachperi
oddivi
dedbythenumberofdat
aper i
ods.

Figure4.1 Demand Char

ted ov
er4y
ear
swi
thaGr
owt
hTr
end and Seasonal
it
y
Indicat
ed.
(
Hei
zer&Render
,2011)

Met
hod Descr
ipt
ion Ti
me Rel
ati
ve
hor
izon cost
Opi
nionandj
udgment(
qual
i
tat
ive)
Sal
esf
orcecomposi
tes Est
imat
esf
rom f
iel
dsal
espeopl
ear
eaggr
egat
ed SR-
MR L-
M
Execut
iveopi
nion(
and/
orpanel
s) Market
ing,
finance,
andpr
oduct
ionmanager
sjoi
ntl
y SR-
LR L-
M
pr
eparefor
ecast
Fi
eldsal
esandpr
oduct
-l
ine
management Est
imat
esfrom r
egionalsalespeopl
earereconci
l
ed MR M
wit
hnat
ionalpr
oject
ionsfrom product
-l
inemanager
s
Hi
stor
ical
anal
ogy Forecastfr
om compari
sonwi
tht
hesi
mil
arpr
oduct SR-
LR L-
M
previ
ouslyi
ntr
oduced
Del
phi Expert
sansweraseriesofquest
ions(
anony
mousl
y), LR M-
H
recei
vefeedback,
andrevi
seesti
mates
Mar
ketsur
vey
s Questi
onnai
res/
int
erv
iewsf
ordat
atol
ear
nabout MR-
LR H
consumerbehavi
or
Ti
meser
ies(
quant
it
ati
ve)
Nai
ve For
ecastequalst
hel
atestv
alueorl
atestpl
usormi
nus SR L
somepercentage
Mov
ingav
erage Thefor
ecasti
stheav ageofnmostr
er ecentper
iods SR L
(canal
sobeweight
ed)
Tr
endpr
oject
ion Theforecastisl
i
near
,exponent
ial
,orot
herpr
oject
ion MR-
LR L
ofpasttrend
Decomposi
ti
on Timeseri
esisdiv
idedint
oat
rend,
seasonal
,cy
cli
cal
, SR-
LR L
andrandom components
 Thefor
ecasti
sanex ponent
ial
l
yweightedmov
ing
Exponent
ial
smoot
hing aver
age, SR L
wherel
atestv
aluescarr
ythemostweight
Box-
Jenki
ns Ati
me-
ser
ies-
regr
essi
onmodelisproposed,st
ati
sti
cal
l
y MR-
LR M-
H
t
est
ed,
modifi
ed,andr
etest
edunti
lsati
sfact
ory
Associati
ve(quanti
tat
ive)
Regressionandcorrel
ation Useoneormor eassoci
atevari
abl
estoforecastvi
a SR-
MR M-
H
(andleadingi
ndicat
ors) aleast
-squar
esequati
on(regr
essi
on)orviaaclose
associ
ati
on(cor
rel
ati
on)withanexpl
anatoryvari
abl
e
Economet
ri
c Useasi mul
taneoussolut
ionofmul
ti
pler
egressi
on SR-
LR H
equati
onsthatrel
atet
oabr oadr
angeofeconomic
acti
vi
ty
Ti
meser
ies(
quant
it
ati
ve)
Nai
ve Forecastequal
sthel
atestv
alueorl
atestpl
usor SR L
minussomeper cent
age
Mov
ingav
erage Thefor
ecasti
stheav ageofnmostr
er ecentper
iods SR L
(canal
sobeweight
ed)
Tr
endpr
oject
ion Theforecasti
sli
near
,exponent
ial
,orot
herpr
oject
ionof MR-
LR L
pastt
rend
Decomposi
ti
on Timeseri
esisdiv
idedint
othet
rend,
seasonal
,cy
cli
cal
, SR-
LR L
andrandom components
Exponent
ial
smoot
hing Thefor
ecasti
sanexponenti
all
ywei
ght
edmovi
ng SR L
aver
age,wher
ethel
atestval
uescar
ryt
hemostwei
ght
Box-
Jenki
ns At i
me- seri
es-regressi
onmodeli
sproposed, MR-
LR M-
H
stat
isti
callytested,modif
ied,
andret
est
eduntil
sati
sfactory
Associati
ve(quanti
tat
ive)
Regressionandcorrel
ation Useoneormor eassociat
ev ari
ablest oforecastv i
a SR-
MR M-
H
(andleadingi
ndicat
ors) aleast
-squar
esequation(regression)orv i
aacl ose
associ
ati
on(cor
rel
ati
on)wi thanex planatoryvariabl
e
Economet
ri
c Useasimult
aneoussol
uti
onofmulti
pler
egressi
on SR-
LR H
equati
onst
hatrel
atet
oabr oadr
angeofeconomic
acti
vi
ty

Key
:L=l
ow,
M =medi
um,
H=hi
gh,
SR=shor
trange,
MR=medi
um r
ange,
LR=l
ongr
ange.

Tabl
e4.
1Summar
yofFor
ecast
ingMet
hods
Not
e:Adaptedf
rom “For
ecasti
ngDemand”byS.
A.Kumar
,N.Sur
esh,Oper
ati
onsManagement(
p.106)
)2009,
NewDel
hi,NewAgeInter
nat
ional

FORECASTI
NGPROCEDUREFORUSINGTIMESERI ES
Fol
lowi
ngar
ethest
epsi
nti
meser
iesfor
ecast
ing:
2 Pl
othi
stor
ical
dat
atoconf
ir
mrel
ati
onshi
p(e.
g.,
li
near
,exponent
ial
).
3 Dev
elopat
rendequat
i T)t
on( odescr
ibet
hedat
a.
4 Dev
elopaseasonal
i SI
ndex( e.
, g.
,mont
hlyi
ndexv
alues)
.
5 Pr
ojectt
rendi
ntot
hef
utur
e(e.
g.,
mont
hlyt
rendv
alues)
.
6 Mul
ti
plyt
rendv
aluesbycor
respondi
ngseasonal
indexv
alues.
7 Modifyproject
edv al
uesbyany
knowledgeof :C)Cy
( cli
cal
business
condi
tions,
(R)Antici
patedir
regularef
fect
s.

Techni
quesf
orAv
eragi
ng

Amovi
ngaveragefor
ecasti
ngmethodthatav
eragesanumberofr
ecentact
ual
val
ues,
updat
edasnewval
uesbecomeav ai
labl
e.Asi
mplemov i
ngaver
ageisexpr
essedas
 wher
e

Whena
detectabl
e t
rendorpat
ter
nis
present,weighscanbeusedtoplacemoreemphasisonrecentvalues.Thi
spracti
cemakes
forecasti
ngtechniquesmorer
esponsi
vetochangesbecausemor erecentper
iodsmaybemor e
heav i
lyweighted.Aweight
edmov i
ngaver
agemaybeex pressedas

wher
e

4.
5EXPONENTI
ALSMOOTHI
NG

Exponenti
alsmootheni
ngi sasophi
sti
catedmoving-averagef or
ecasti
ngtechniquethat
wei
ghtspastdat ainanexponenti
almannersothatmostr ecentdat acarr
ymor ewei ghti
nt he
movingaverage.Eachnew f
orecasti
sbasedont hepr
eviousf orecastplusapercentageoft he
di
ff
erencebetweenthefor
ecastandtheval
ueoftheser
iesatt hatpoint
.Thatis:

wher
e

4.
5.1 Adj
ust
edExponent
ial
Smoot
hing

Adj
usted exponenti
alsmoothing models have al
lthe f
eat
ures of si
mple
exponenti
alsmoothingmodel s,pl
ustheyproj
ectint
othebyaddingatrendcor
recti
on
i
ncrement,Tt,
tothecurrentperi
odsmoothedaver
age,Fˆ
t.

Figure4.2depictst hecomponentsofat rend-

adjust
edforecastt
hatutil
izesa
secondsmoot hingcoeffi
cientβ.Theβv al
uedeterminestheext
enttowhichthet rend
adjustmentr el
iesont helatestdi
ff
erencei
nfor
ecastamount s(Ft −Ft−1 )v
ersust he
previoustrendTt–1Thus:
 Fi
gur
e4.
2Componentsoft
rendadj
ustedf
orecast
(Kumar&Suresh,
2009)

REGRESSI
ONANDCORRELATI
ONMETHODS

Regr
essi
onandcor
rel
ati
ont
echni
quesquant
if
ythest
ati
sti
calassoci
ati
onbet
weent
woor
mor
evari
abl
es.

a) Si
( mpleregr
essionisastrai
ght-
li
nemat hematicalmodelthatexpr
essest
herel
ati
onshi
p
betweenadependentv ar
i eYandani
abl ndependentvar
iableXinter
msofthesl
ope
andinter
ceptoftheli
neofbestfitr
elat
ingthet wovar
iables.

b) Si
( mplecorrel
ati
onexpressesthedegreeofclosenessoftherel
ati
onshi
pbetweentwo
vari
ablesinter
msofacor r
elat
ioncoeff
ici
entthatprov
idesanindi
rectmeasureoft
he
vari
abil
it
yofpoi nt
sf r
om theli
neofbestf it
.Neitherr
egressi
onnorcorrel
ati
ongiv
es
proofofacause-eff
ectrel
ati
onshi
p.

4.
6.1 Regr
essi
on
Thesi
mplel
inearr
egr
essi
onmodel
takest
hef
orm Yc=a+bx

wher
e

Thecoef
fi
ci saandboft
ent hel
i
near
ebasedont
hef
oll
owi
ngt
woequat
ions:

wher
e

4.6.
2 Cor rel
ation
Thesimplelnearcor
i rel
ati
oncoeff
ici
entrisanumberbet ween–1and+1t hat
descri
bes the str
ength and di
recti
on ofthe r
elat
ionshi
p bet
ween two vari
abl
es.A
corr
elat
ionof+1. 00indi
catesthechangesinonev ariabl
earealwaysmatchedbyt he
 changesintheot her
;acorrel
ati
onof- 1.
00indicat
esthatincr
easesinonev ar
iabl
ear e
matchedbydecreasesi nt
heother,andacorrel
ati
onclosetozeroindi
cat
esal i
tt
lel
inear
rel
ati
onshi
p between two vari
ables.The corr
elat
ion bet
ween two vari
abl
es can be
computedusingtheformul
a

4.
7 APPLI
CATI
ONSANDCONTROLOFFORECAST

Contr
oloff or
ecastisav i
talaspectoff or
ecast i
ng,sofor
ecast
erswantt omi nimizethe
f
orecaster
roralthoughiti
simpossi
bletoperf
ectl
ypr edictt
hefut
ureval
uesofthevari
ables.Asimple
measureofforecasterrori
stocomput ethedeviati
onbet weentheval
uethatoccursandt hev al
ue
t
hatwaspredictedforagiventi
meperiod.Hence,
For ecasterr
or=act
ualdemand–f orecastdemand:

Theindi
vi
dualf
orecaster
ror
sareusual
lysummari
zedinast
ati
sti
csuchasav
erageer
ror
,
meansquarederr
or(MSE),ormeanabsol
utedevi
ati
on(
MAD) .

Theest
imat
eoftheMADcanbecont
inual
l
yupdat
edbyusi
nganexponent
ial
smoot
hing
t que.Thust
echni hecur
rentMADti
s:

wher
e∝i sasmoot hi
ngconst
ant
.Hi
gherv
aluesofαwi
l
lmaket
hecur
rentMAD,
mor
eresponsi
ve
t
ocurrentf
orecaster
ror
s.

Whentheav
eragedevi
ati
on(
MAD)i sdi
videdint
othecumul
ati
vedev
iat
ion
[
(Act
ual
–for
ecast
)]
,ther
esul
tisat
racki
ngsignal:

Thetr
acki
ngsi
gnali
st herati
oofrunni
ngsum offor
ecaster
rort
ot hecorr
espondi
ngMAD
v
alue.I
tmeasur
eshowwel
ltheforecasti
skeepi
ngpacewit
hanygenuinechangesindemand.

ForecastAppli
cation
Accuratefor ecastsar enecessaryforthesuccessoft hedailyactiv
iti
esofev er
y
businessorganization.Low- accuracymethodsmaysuf fice;higheraccuracyusual l
ycosts
mor etodesignandi mpl ement.Long-t
ermf or
ecasts—usedf orlocati
on,capacit
y ,andnew-
productdeci
sions-requiretechniqueswi
thlong-
ter
m horizons.Short-
termforecasts— suchas
thoseforproduction-and-invent
orycontr
ol,l
aborlev
els,andcostcont rol
s–canr elymor eon
recenthi
stor
y .

Towat
ch:FORECASTI
NGATHARDROCKCAFE
Vi
deo4.
1htt
ps:
//www.
yout
ube.
com/
wat
ch?
v=wM7gul
_j
fY4

Di
scussi
onandRev
iewQuestions
1. Whatisdemandforecasti
ngandgiveit
si mportance?
2. Whatarethedi
ff
erentforecast
ingdeci
sionvari
ables?
3. Whatarethedi
ff
erenttypesofDemandf orecasti
ngTechni
ques?
 4. Whatdoyouunder
standbytheEx
ponent
ial
Smoot
hingTechni
que?
5. Whati
sregr
essi
onanalysi
s?

Obj
ect
ive–TypeQuest
ions
Tr
ue/False

1. Demandf or
ecasti
ngist heacti
vit
yofest i
mat i
ngthequanti
tyofapr oductorser
vicet
hat
wi
ll
beinrequi
rementintherecentfut ure.
2. Thedemandf or
ecastisnotamanagementf uncti
on.
3. Thefor
ecasti
ngtechniquesundertakenshoul dneverbecost
-ef
fecti
ve.
4. Thefor
ecastmustbet echni
call
yunf i
tasitisbasedonassumpt ions.
5. TheDelphii
saqualit
ativef
orecastingt echnique.

Mul
ti
pleChoi
ce

1. Demandf
orecastr
equi
rescert
ainessent
ial
charact
eri
sti
cssuchas
a.Accur
acy b.Openness c.Cl
oseness d.Pur
it
y

2. Economi
cfor
ecasti
ngdoesnotf
ocusonapredict
ionabout
a.GDP b.I
nfl
ati
on c.Gr
owt hrate d.Companyname

3. Whi
choft
hef
oll
owi
ngisnotaTimeser
iesFor
ecast
ingTechni
que?
a.Del
phi b.Weight
edMAc.Simpl
eMA d.Doubl
eMA

4. Regressi
onAnal
ysi
sis..
a.
Simulati
on b.Casual
Techni
que c.Del
phi
Techni
que d.Opi
nion

5. Whi
choft
hef
oll
owi
ngisnotaQual
i
tat
ivet
echni
queoff
orecast
ing?
a.MAD b.Sur
vey c.Del
phi d.Si
mul
ati
on

ACTI
VITY

Keepat r
ackofy ourpr
epai
dmobi l
ephonel
oadconsumpt
ionf
ort
hel
astf
ivemont
hs.Now t
ryt
o
for
ecastyourconsumpt
ionf
ornextmont
h.

Ref
erences:

J.
R.Ev
ans.AndW.
M.Li
ndsay
,“Tot
alQual
i
tyManagement
”,CengageLear
ningAsi
a,2013.

J.Heizer,B.Render
,Oper
ati
ons Management
,10t
h Gl
obalEdi
ti
on.New Jer
sey
:Pear
son
Educat
ion,2011.

S.Ani
lKumar
,N.Sur
esh,
Oper
ati
onsManagement
,NewDel
hi,
NewAgeI
nter
nat
ional
,2009

S.Kal
e,Pr
oduct
ionandOper
ati
onsManagement
,NewDel
hi,
McGr
aw-
hil
leducat
ion,
2013.

W.
J.St
evenson,
“Oper
ati
onsManagement
”.12thEdi
ti
on.NewYor
k:McGr
aw-
hil
leducat
ion,
2015.

W.JStevensonandS.
C.Chuong,"
Oper
ati
onsManagement
".2ndEdi
ti
on.NewYor
k:McGr
aw-
hil
l
educat
ion,2014.
S.

Operat
ionsManagement .Accessed August7,2020.
ht
tps:/
/www.sl
ideshar
e.net/Kadi
rikj
s24/
operat
ions-
management
-6932922
 MODULE2
I
ntendedLear
ningOut
comes

1.Di
scusst
heconcept
sandf
act
orst
oconsi
deri
ndesi
gni
ngqual
i
typr
oduct
s.
2.Ex
plai
nthepr
inci
plesofqual
i
tymanagement
,inspect
ionandt
he
i
mpor
tanceofst
ati
sti
cal
processcont
rol
.
3. Anal
yzet
heconcept
sofpl
antl
ocat
ion,
thef
act
orst
obe
consi
der
edi
nsel
ect
ingpl
antl
ocat
ion,
itsst
rat
egi
cimpor
tance
andv
ari
ousmodel
s

Qual
i
tyi
svi
tali
nachi
evi
ngt
hegoal
sofanyor
gani
zat
ion.Thus,i
t
shoul
d be a cont
inuous pr
ocess ofqual
i
tyi
mpr
ovementt
oreach t
he
maxi
mum sat
isf
act
ionoft
hechangi
ngdemandsoft
hemar
ket
.Thi
smodul
e
wi
l
llety
ouexpl
oret
heconcept
sofpr
oductdesi
gn,t
hequal
i
tymanagement
sy
stem,andt
hef
aci
l
ityl
ocat
iondeci
sions.Chapt
er5consi
der
sthest
rat
egi
c
i
mpl
i
cat
ions ofpr
oductdesi
gn t
othe ov
eral
lpl
an and pol
i
cies oft
he
or
gani
zat
ion.Chapt
er6f
ocusesonqual
i
tymanagementaspar
tofev
ery
busi
nessor
gani
zat
ionandqual
i
tyt
ool
sthatcanbeusedf
ori
mpr
ovement
.
Par
ti
cul
aremphasi
sis pl
aced on t
he appl
i
cat
ion oft
he Tot
alQual
i
ty
Managementappr
oach asa cont
inuousquestf
orqual
i
tyi
mpr
ovement
s.
Chapt
er7r
evi
ewst
hepl
antl
ocat
ionst
rat
egi
cdeci
sionswhi
chal
sohav
elong-
t
ermi
mpl
i
cat
ionsont
hebusi
nessor
gani
zat
ion.
 CHAPTER5

PRODUCTDEVELOPMENTANDDESI
GN

Chapt
erOut
li
ne

DesignforManufact
ure
5.
1 I
ntroduct
ion 5.
5 (DFM)
5.
2 PurposeofaPr oductDesi
gn 5.
6 DesignforExcel
l
ence
5.
3 ProductAnal
ysis  References
5.
4 AFr ameworkforProcessDesi
gn

5.
1INTRODUCTI
ON

Foranybusinessor ganizat
ion,t
hepr oductdesignisthepri
mar ystepin
manuf act
uri
ng ventur
e.The pr ocesses formanuf actur
e,the planni
ng of
product i
on,theprocessesandchecksf orqualit
y,orev enthelogisti
csare
structuredbasedont hepr oductdesign.Hence,greatproductdesignisthe
keyt osuccess.Thedev elopmentofpr oductspr ovi
desanoppor t
unit
yfor
growingt hebusi
nessbutt hiscanhav eimpactsandchangest hroughoutthe
organizati
onandt heenti
resupplychain.

5.
2PURPOSEOFPRODUCTDESI
GN

Organizati
onsar emor elikel
ytoachi evethei
rgoalswithwel l
-desi
gned
products.Theyshoul d servet hei
rpur posewhi lebeing creati
vewi ththe
design.Design is usual l
ymor e concerned withthe process ofappl yi
ng
scienti
fi
cpr i
nciplesandi nventions( RoyandWei l
d,1993).Theneedsand
expectati
ons oft he customers ormar ketpl
ace aret he basis ofdesign
conceptuali
zationandef fort
.Mar keti
nggat hersinf
ormationfrom customers
andpot enti
alcust omerstoident i
fycustomerneedsandexpect ati
onsandt o
positi
ont hecompanydi f
ferentl
yamongstcompet i
tor
s.Thus,mar keti
ngis
al
soi mpactedbypr oductdesign.

Productdesignhasst r
ategi
ci mplicat
ionswi ththecompany’
sov eral
l
plans and pol i
cies.Thi s may i nclude decisions wi
threspect t
ot he
specifi
cati
onoft her equir
ement soneachmat erialt
obeused,thesuppl
iers
ornet works to be i nv
olved,the technologyr equi
rementand pr
ocesses,
war ehousi
ng,andt hesupplychainsystem.

Productdev
elopmentanddesi
gnarepri
maril
ygover
nedbymanagement
deci
si
onsinformul
ati
ngquali
tygoal
sandcosttar
gets,
andpri
cingpol
i
cy.

5.
3PRODUCTANALYSI
S

Everypr oductisdesignedinapart
i arway-pr
cul oductanalysi
senables
ust ounder standt hef actor
sinconnectionwit
hpr oductdev el
opmentand
design,characteri
stics,andfactor
sassociat
edwithdif
ferentfi
eldswhichare
requir
ed bef ore any pr oductcan be manufactur
ed.Al lthese f
act
ors ar
e
i
nterr
elatedandeachpr esent
smanyissuesthathavet
obecar
eful
l
yconsi
der
ed,as
i
ndicat
edbyFi gur
e5.1.
Someofthesefactorsmaybegroupedasfol
l
ows:
1.
Marketi
ngaspect-
2.
Productchar
act
eri
sti
cs
 (i
)Functional aspect,
(i
i)Operati
onal aspect,
(i
ii
)Durabili
tyanddependabi l
i
tyaspect
s,and
(i
v)Aesthet i
caspect .
3.Economicanal ysis
(i
)Thepr ofitconsiderat
ion,
(i
i)Theef f
ectofst andardizat
ion,
simpl
if
icat
ion,
and
special
i
z ati
on, and(ii
i
)Thebr eak-ev
enanaly
sis.
4.Producti
onaspect

Fi
gur
e5.
1Somei
nter
rel
ati
onsi
nvol
vedi
npr
oductdesi
gn
Sour
ce:Adapt
edfr
om ProductDev
elopmentandDesi
gn(p.
131)byS.
A.KumarandN.Sur
esh,
Oper
ati
onsManagement2009, NewDel
hi,
NewAgeInter
nat
ional
Marketi
ngAspect
Themar ket
ersoftheor gani
zati
onsev aluatethestr
ength oft
he
marketdemandf ortheproduct,theenv i
ronment,andhow thisadaptst
he
possi
blechangesthatmi
ghtaffecttheproduct'
sfuturesal
esandcosts.

ProductCharacteri
stics
Ast he customers’needsand expectati
onsar et o be sat
isfi
ed,t he
desi
gnoft heproductshouldbefuncti
onal
lysound.Iti
simpor t
anttounder stand
thedi
ffer
encebet weenproductfunct
ionsandproductfeat
ures.Ast ofunctionis
thepurposeforwhi chtheproductisdesignedwhi l
ethef eat
urei ssomet hing
addedtotheproductasaspecial
att
racti
on.Anotheraspecti
st hecomponentst
hatshoul
dbewit
hint
hereach
oftheor gani
zat
ion.Moreover,thequal
it
yand durabi
li
tyoft
hematerial
s
shouldalsobespecifi
ed.

Economi
cAnal
ysi
s
Havingobtai
nedsuff
ici
enti
nfor
mationaboutcustomer s’r
equirementsand
marketpotenti
ali
ti
es,t
henex timpor
tantfactoristhepr oductfeasibil
i
tyont he
economi
cgr oundwhichinv
olv
escapit
alexpendit
ures,
costv al
eandf uncti
onalval
ue
ofthepr
oduct

Pr
oducti
onAspect
I
tisalsoi
mpor
tantt
oconsidert
heoperat
ionalconv
eni
enceoft
he
manuf
actur
erandt
heav
ail
abi
l
ityoft
hemater
ial
s.

5.
4AFRAMEWORKFORPROCESSDESI
GN

Oneoft hereasonswhysomeor ganizat i

onsf ai
listhattheyplacemost
oftheirattenti
ont opr oductdesignandnotenoughonpr ocessdesign.The
desi
gnpr ocessisaser i
esofst epst hatpr oductt eamsf oll
ow dur i
ngt he
for
mul at
ionofapr oductf r
om st arttof inish.I ti
sv iewedasani nteractiv
e
exerci
se,meant osay ,issuesaresol vedsequent i
all
y.Thenaf tereachst age,
orperhapsaf terseveralstages,thepr eviousst agesar ereexaminedtoseei f
l
ater st eps hav e Thisprocessisshowni nFi g. af
fectedthebestway
i
nwhi chthesest epsshou 5.
2.a
l
dh v ebeendesi gned.

Pr
oductPl
anni
ng

Productplanningandprocessdesignar eintegratedsot hatatt heend

oft hedesignst aget herei
sapr oductwi t
ht heopt imum qual i
ties,anda
processt oproducei t.Ther
ear emanyact ivi
tiest obef i
rstrecognizedand
thencoor di
nated;someact i
vit
iesareworkedi nsequence.I ntheear lystage,
theperceivedneedsoft hecustomersarei dentif
iedandwi llber efl
ectedin
theproduct'sproposedquali
ty,cost
,funct
ion,reli
abil
it
y,andappear ance.

Pr
ocessDesi
gn

Process planning isav eryessent i

aland pri
marypar tofpr oj
ect
managementi nt hef i
eldofmanuf act
uring.Themacr operspecti
veoft he
pr
ocessdesi gni
sconsi stsofworkstat
ionselect
ionandawor kf
lowanalysis.
Whereas,thechoiceofwor kstati
onpertainstot
heselect
ionofmachi nesto
beusedi ntheproduct i
onprocesswhil
et hechoiceofworkf
lowi saboutthe
pr
ogressbetweenst ages.
 Fi
g.6.
13Thepr
ocesspl ngt
anni ask
Source:Adapt
edfr
om ProductDevel
opmentandDesi
gn(p.
131)byS.A.KumarandN.Sur
esh,
Operati
onsManagement2009,NewDelhi
,NewAgeInter
nati
onal
.Adaptedwi
thper
missi
on.

The micr
o perspective of the process design compr i
ses the
operati
onalcont
entand t he oper
ati
onalmet hod.Operat i
onalContent
concernswiththepr operar r
angementoft hepr ocesst hatshould be
assignedtoawor kst at
ion.Ont heotherhand,t heoperationalmethod
focusesonensur
ingthemaxi mum product
ivi
tyoftheprocess.

5.
5DESI
GNFORMANUFACTURE(
DFM)

Manuf actur
abil
it
yis one of t
he key at
tri
but
es of a sy
stem in
manufactur
inggoods:easeoffabri
cat
ionand/
orassembl
yisimportantf
or
cost
,producti
vit
y,andqual
i
ty.

Designformanufact
uri
ng(DFM)i stheideaofmodifyi
ngori mprovi
ng
t
hedesi
gnandpr ocessoft
heproductconsi
deringt
hecompany ’scapabil
i
ties
t
omanufactur
ethesameeasier
,quicker
,andlesscostwi
thoutcompr omisi
ng
t
hequal
it
y.Iti
sconsider
edtobeacompet i
ti
vebenchmarki
ngt ool.

Anotherrelat
edconceptinmanufact
uringisthedesi gnforassembly
(DFA)whi chf ocusesonr educi
ngthenumberofpar t
sandsi mpli
fi
cat
ion
processesinanassembl y.Eachcomponentinthedesigni sexaminedhowit
i
st obeor i
entedandmov edforassembly
.Table5. 1pr esentssomeDFM
pri
ncipl
esforassembl i
es.

I
.Minimizethenumberofpart
s
i
()Reducetheabsol
uter
equir
ementofav
ari
etyofpar
ts.
  Desi
gnt
hepr
oducti
nsuchawayt
hati
tconsi
stsofv
eryf
ewpar
ts.
 Useadi ffer
entt echnology ,
ifnecessar
y.
i
(i
)Combi
nepar tswher efeasible
Par
tscanbecombi nedwi thot herpart
swhen:
 Theyar eoft hesamemat eri
al.
 Theydonotmover el
ativetootherpartsoftheassembly.
 Theircombi nati
onwoul dnotaf f
ecttheassemblyofotherpar
ts.
 After
-salesservicedoesnotr equir
ethesetobeseparated.

I
I.St
andar
dizedesi
gns

 Part
s,modules,sub-
assembl ies,
manuf actur
ingprocesses,
and
syst
emsmaybest andardized.
 Wherethepartscannotbet hesame, seeiftheycanbesi mi
lar
.
 Apply‘
grouptechnol
ogy ’
conceptof‘ f
ami l
i
es’ ofpar
ts.
 Wherepossibl
eusest andardcatalogcomponent s.

I
II
.Mi
nimizethenumberofoper ati
onsistheassembl y
 Sl i
ghtchangesinapar t'
sgeomet rycanreducethedif
fi
cul
tyi
n
grasping,
positi
oning,andinserti
ngapart.Theeffor
tandti
me
takencanr educesigni
ficant
ly.Humaner r
orsofputti
ngawrong
partorofor i
enti
ngitwronglycanber educed.

V.Usemodul
es
Thi
sal
lowsformor
est
andar
dizat
ionandspeedsupt
heassembl
ypr
ocess.

VI
.Minimi
ze‘
new’
-
ness
Mi
nimize:
 newpar
 ts
 newpr
 ocesses
 newsuppl i
ers
 newmachi nes
Newthi
ngs—par t
icularl
yt oomanynewt hi
ngs—intr
oducemany
i
mponderablesandincr easeuncer
taint
yand,consequent
ly,
err
orsr
esul
ti
ng
i
nunacceptabl
equal it
yandt i
medel aysi
nassembl i
ng.

VII
.Use‘PokaYoke’
orf ool
-pr
oofi
ng
Designi
nsuchawayt hatthepar
tscannotbeassembl
edi
ncor
rect
ly.
Tabl
e5.
1DFM Pr
inci
plesf
orAssembl
ies
Not
e:Adapt
edf
rom “
Forecast
ingDemand”byS.
A.Kumar
,N.Suresh,Oper
ati
onsManagement
(
p.106)
)2009,NewDelhi
,NewAgeInt
ernat
ional

5.
6DESI
GNFOREXCELLENCE

Customerser vi
ceshoulddriv
ethedesi gners’effortincreati
ngbetter
quali
typroducts.Thus,theeffor
tsshoul
dbet owar dsdesi gnforexcell
enceor
DFx.Desi
gnf or
excell
enceisacombi nat
ionofSixsigmaprinci
ples,met hodsonhowt heproduct
has been desi gned,and st andards f
orquality cont r
ibuting t
ot he overal
l
excell
enceoft hecompany .
Ref
erences:

J.R.Ev
ans.AndW.M.Li
ndsay
,“Tot
alQual
i
tyManagement
”,Cengage
Learni
ngAsia,
2013.

J.Heizer
,B.Render
,Operati
onsManagement
,10t
hGl
obal
Edi
ti
on.New
Jersey:
PearsonEducati
on,2011.

Roy
,R.andWei
ld,D,
ProductDesi
gnandTechnol
ogi
cal
Innov
ati
on,
Open
Uni
ver
sit
yPr
ess,Mil
tonKeynes,
1993.

S.Ani
lKumar,N.Sur
esh,
Oper
ati
onsManagement
,NewDel
hi,
NewAge
I
nter
nati
onal
,2009

S.Kale,Pr
oduct
ionandOper
ati
onsManagement
,NewDel
hi,
McGr
aw-
hil
l
educat
ion,
2013.
t
h
W.J.St
evenson,“Operati
onsManagement
”.12 Edi
ti
on.NewYor
k:
McGraw-hi
lleducat
ion,2015.

W.JSt
evensonandS.C.Chuong,"
Operat
ionsManagement
".2ndEdi
ti
on.
NewYork:McGraw-
hil
leducat
ion,
2014.

Operat
ionsManagement .Accessed August10,2020.
htt
ps:/
/www.sl
ideshar
e.net/Kadi
rikj
s24/
operat
ions-
management
-
69329225
 CHAPTER6

MANAGEMENTOFQUALI
TY

Chapt
erOut
li
ne

1 Ev
6. olut
ionofQuali
tyManagement 6.
8 Qual
i
tyTool
s
TheFoundati
onsofModer nQual
i
ty
6.
2 6.
9 Qual
i
tyCont
rol
Management :TheGur
us
3 I
6. nsightsofQuali
tyManagement 10 I
6. nspect i
on
Stati
sti
calProcess
4 Qual
6. ityAwards 11 Cont
6. rol
5 Qual
6. ityCert
if
icat
ions 12 Pr
6. ocessCapabi l
it
y
6 Tot
6. alQuali
tyManagement  References
Problem Sol
vingandProcess
7 I
6. mpr ovement

I
NTRODUCTI
ON

Quali
tyisameasur eofthecompany '
sexcel l
ence.Qualit
yr ef
erst othe
abil
ity ofa pr oductorser v
ice to consistentl
y meetorexceeds st ated
requir
ement s orexpectati
ons oft he customer s(Stevenson,2015) .Itis
i
mpor tantto under st
and t
hedi f
ferentper specti
vesfrom whi ch quali
tyis
viewedt ofull
yappr eci
atetherol
ei tplaysi nthemanypar t
sofabusi ness
organizat
ion.

6.
1EVOLUTI
ONOFQUALI
TYMANAGEMENT

Duri
ngt hemi ddleages,theskill
edcr af
tsper
sonallst
agesofproducti
on.
Qualit
yassur ancewasi nfor
mal;oneper sonorasmal lgr
oupofpeoplewer e
respondingt othefinalproducttheyproduced.Thesethemeswerelostinthe
adventoft heI ndustri
alRevolut
ionwher eeachwor kerwasthenresponsi
ble
foronlyasmal l por
tionofeachpr oduct
.

Intheearl
y1900s,t
he“FatherofScient
if
icManagement”,Fr
eder
ickW.
Tayl
orled to anew phil
osophyofpr oducti
onand inspecti
onaspr i
mary
means of quali
ty cont
rol
.G. S Radfordi mproved Tayl
or’
s method by
consi
deri
ngquali
tyear
lyi
ntheproductdesignstage.

In1924,Bel lTelephoneLaborat
ori
esintroducedSt ati
sti
calprocess
controlchart
s,whichbecameapopul armeansofidentif
yingquali
typrobl
ems
i
npr oductionprocessesandensuri
ngconsist
encyofout put
.H.F.Dodgeand
H.G.Romi gdevelopedthesampli
nginspect
iontablesi
nt heearl
y1930s.

Duri
ngthe1950’
s,quali
tycont
rolevol
vedtoqualit
yassur
ancewit
h
emphasis
onpr oblem avoi
danceratherthanpr obl
em detect
ionandi nvol
vementof
uppermanagementi nqual
ity
.
Inthe1960’
s,Phil
ipCrosbyintr
oducedthephilosophyofZerodef
ect
managementwhi chfocusedonempl oyeemotiv
ationandawarenessandthe
expect
ati
onofper
fect
ionf
orm eachempl
oyee.
 Duri
ng the1970’s,qual
it
yassurancemet hodsgained t
of ocuson
serv
ices.Japaneseproduct
shadasigni
ficantgl
obali
mpactonthemar ketas
theyintegr
ated qual
i
t yinthei
rorgani
zationsand dev
eloped a cul
tur
eof
conti
nuousimpr ov
ement.

6.
2THEFOUNDATI
ONSOFMODERNQUALI
TYMANAGEMENT:THEGURUS

WalterShewhartwasanAmer icanstat
isti
cianandknownasthe“fat
her
of st
atisti
calquali
ty cont
rol
”.Shewhar t
’s wor kfocused on how the
manufacturi
ng pr
ocesscould bemoni t
ored in such a wayastoreduce
var
iat
ionsanddeterminewhencorr
ecti
veactionwasnecessary.

W.Edwar dsDemi ng,an Ameri

can professorand st ati
sti
cian,who
hel
ped i n Japan'
sr ecover
y afterWorl
d WarI It hrough his stati
sti
cal
knowledgeandmet hodsini mprovi
ngquali
tyandpr oductiv
ity
.Dr .Deming’s
famous14poi nt
st hathebel i
evedwer
et heprescri
ptionneededt oachieve
qual
it
yi nanorganizati
on.

Joseph M.Juran was a Romani an-bor n American engi neerand

managementconsul t
antandknownast he" fatherofmoder n-dayqual i
ty
management ".Li
ke Deming,he was al so invited and assistJapanese
manufacturer
sonhowt oimprovethequali
tyoft heirpr
oducts,het oo, canbe
regar
dedasamaj orforceinJapan'
ssuccessi nquality
.Itishi sv iew that
quali
tybeginsbyconsideri
ngwhatcust omerswant .A keyel ementofhi s
phil
osophyisthecommitmentoftheorgani
zati
ont ocont i
nuousi mpr ovement .

Armand Fei genbaum wasan Amer i

can quali
tycont r
olexper twho
recognizedthatqualit
ywasnotsimplyacollecti
onoft oolsandt echni
ques,
buta“ t
ot alf
ield”t
hatint
egr
atedt
heprocessoftheorganizat
ion.Accordingt
o
Feigenbaum, itist
hecustomerwhodefi
nesquali
ty.

Phil
ipB.Crosbywasal egendinthedisci
pli
neofqual
it
y.Heiswidel
y
recogni
zedi nhisconceptof“ zerodefect
s”andhebel i
evedthatther
eis
absolut
elynoreasonforhav
ingerrorsordef
ectsi
nanyproduct
sorservi
ces.

KaoruIshikawa i
sconsi dered the Fat
herofJapanese Qual
i
ty.He
developedthefi
shboneort hecause-and-ef
fectdi
agr
am whereuser
scansee
al
lpossi bl
ecausesofar esul
twhi chcanhel pforprobl
em-sol
vi
ngandthe
i
mpl ementati
on of quality cir
cles, which invol
ve workers i
n qual
it
y
i
mpr ovement.His

GenichiTaguchimadeasi gni
fi
cantcontr
ibuti
ont ohismethodologyi
n
i
mprov
ingthequali
tyandreducingthecost.Taguchilossfunct
ioninvolv
esa
f
ormul
afordeter
miningthecostofthepoorquali
ty.

Tai
ichiOhnoandShi geoShingobothdevelopedthephilosophyand
methods of kai zen or r
apidimpr ovement pr
ocess which focuses on
el
iminati
ngwast e,improv
ingproducti
vi
ty,andachiev
ingsustai
nedcontinual
i
mpr ovement.
6.
3INSI
GHTSOFQUALI
TYMANAGEMENT
 Onewayt odefi
netheconceptofquali
tyisthedegreet owhicht he
perf
ormance ofa productorservice meet
s orexceeds the customer ’
s
expect
ati
ons.Customerexpectat
ions can be broken down int
o sever al
dimensi
onsthatcust
omersusetoevaluat
ethequal
ityofaproductorser
vice.

Davi
d A.Gav i
n suggest
sthatpr
oduct
s and ser
vices hav
e many
di
mensi
onsofqual
i
ty.

TheDi
mensi
onsofQual
it
y–Pr
oduct

Perfor mance-pr imaryoper atingchar acter

ist
icsoft heproduct.
Aesthet ics-appear ance,feel,smel l
,tasteorsoundsofapr oduct
Speci alFeatures-ext r
achar act eri
sti
cs.
Conf ormance– t hedegr eet owhi ch apr oductcor responds t o
design
specif i
cations.
Reli
abi li
ty-dependabl eper f
ormance.
Durabi li
ty-abil
itytoperform ov ert
ime.
Percei vedQual i
ty-indir
ectev aluationoft hequal i
ty
Serviceabilit
y– speed,cour t
esy ,andcompet encei nthehandlingof
compl aint
sorr epairs.

TheDi
mensi
onsofQual
it
y–Ser
vice

Conv enience-t heav ailabili

tyandaccessibi
li
tyoftheser vi
ceReliabi
l
ity
-theabi l
it
yt oper f
orm whatwaspr omi sedofaser v
ice,dependably,
consistentl
y ,andaccur ately.
Responsi v
eness-t hewi ll
ingnessofser vi
ceprovi
derstohelpcustomer st
odeal
withpr obl ems.
Time-t hespeedwi thwhi chservicei
sdel i
ver
ed.
Assur ance-t heknowl edgeandcour tesybyper sonnelwhocomei nt o
contactwi t
hacust omerandt heirabil
it
ytoconv eytrust
andconf idence
Courtesy-t hewaycust omer sar et
reatedbyempl oyeeswhocomei nto
contact
withthem
Tangibles-t hephy sical appearanceoff aci
l
iti
es,equipment,andpersonnel

Note:Adapt
edfr
om “
ManagementofQual
it
y”byW.
J.Stevenson,Oper
ati
ons
t
h
Management(
12 Edi
ti
on)2015,
NewYork,McGraw-
hil
lEducati
on.Adapt
edwith
per
missi
on.

Assessi
ngSer
viceQual
it
y

SERVQUALi samul
ti
-dimensi
onalr
esearchinst
rumentdesi
gnedto
obtainf
eedbackonanorganizat
ion’
sabil
it
yt oprovi
dequali
tyservi
ceto
customers.I
tfocusesonconsumerexpect at
ionsandpercepti
onsofa
servi
cealongthef i
vedi
mensions:tangi
bles,rel
i
abil
i
ty,r
esponsiv
eness,
assur
ance,
andempat
hy.
 TheDeter
minant
sofQual i
ty
1.Desi
gn.
2.Howwel l
theproductorser
viceconf
ormst
othedesi
gn.
3.Easeofuse.
4.Serv
iceaft
erdeli
ver
y.

Quali
tyofdesi
gnr ef
erstotheintenti
onoftheproducerorsuppli
ert
o
i
ncl
udeorexcludecertai
nf eat
uresinaproductorser
vice.
Quali
tyofconfor
mance-r efer
st othelevelt
owhichgoodsand
ser
vicesmeetthei
rdesi gnspeci
fi
cat
ions

I
mpl
icat
ionsofQual
it
y

CompanyReput ati
on–qual i
tywillshow upi ntheperceptionof
thef irm'spr oducts,empl oymentpr acti
ces,andnet wor k
relati
ons.
Productliabil
it
y–t heor ganizati
onmustpayspeci alatt
entiont o
damagesori nj
uriesr esul
ting intheuseoft heirf aul
ty
product sorpoorwor kmanshi p.
Globali
mpl icati
ons–i nferi
orpr oductsharm af i
rm'sprof
itabili
ty,
anat ion'sbalanceofpay ment s,andmaybecomeamaj or
issuenat ionwide.

6.
4QUALI
TYAWARDS

Thephil
osophi
esofDemi ng,Juran,Cr
osby,andot her
sservemuch
hel
pi nthefor
m of"bestpracti
ces"t omanagersaroundtheworld,l
eadingto
thedev el
opmentandal otofawar dsandcerti
fi
cati
onsf ortheeffecti
ve
appl
icati
onofTotalQual
it
ypr i
nciples.

TheMal
col
m Bal
dri
geNat
ional
Qual
it
yAwar
d

TheBaldri
geAwar dannual
l
yadmi ni
ster
edbyt heNat i
onalInsti
tuteof
StandardsandTechnology.Theaward’
sCr i
ter
iaf
orPer for
manceExcel l
ence
i
sdesi gnedtoencouragecompaniestoenhancet heircompetit
ivenessand
recognizequali
tyachiev
ementsofi nt
egrati
ng t
otalqualit
ypr i
nciplesand
practi
cesinanyorgani
zati
on.

TheEur
opeanQual
it
yAwar
d

Europe'smostprest
igi
ousawardwasdesignedt oincr
easeawar
enessoft
he
gr
owi ngimpor
tanceofqualit
ytothecompetit
ivenessofthebusi
nessint
he
i
ncreasingl
ygl
obalmarketandthest
andar
dsofl i
fe.
TheInter
nat
ionalAsi
aPacif
icQual i
tyAwar d
Thisawardisgiv
entoor gani
zat i
onsincountr
iesborder
ingthePacifi
c
Ocean and the I
ndi
an Ocean,dedi cated t
o achi
eving cont
inuous qual
i
ty
i
mpr ov
ementofgoodsandser v
icesandl i
fef
orpeopl
earoundthewor l
d.

TheDemi
ngPr
ize

Thi sawardi
sJapan’shi
ghl
ycovet
edawardrecognizi
ngsuccessf
ul quali
ty
eff
orts.Itisgivenannual
l
yt oal
lcompani
esthatmeett heprescri
bedstandard.
Themaj orfocusoft
hecrit
eri
aisonst
ati
sti
calqual
it
ycont r
olwhichal
sor efl
ects
theinvolvementofseniormanagementandempl oyees,cust
omersatisfacti
on,
andtraining.

6.
5QUALI
TYCERTI
FICATI
ONS

Asquali
tybecameamaj orf
ocusofmanyf i
rmst hatdobusiness
i
nter
nati
onal
l
y,var
iousor
gani
zat
ionsdev
elopedst
andardsandguidel
i
nes.

I
nter
nat
ionalOr
gani
zat
ionf
orSt
andar
dizat
ion(
ISO)

The Inter
nat
ional Organizati
on for St andar
dizat
ion pr omotes worldwi
de
standardst
oachieve,
mai ntai
n,andseekt oconti
nuouslyimpr ov
eproductqual
it
y
throughaseri
esofst andardsandgui deli
nes.Twooft hemostwel l
-knownare
ISO9000andI SO14000whi chbot
hr elat
et oanor ganizat
ion'
sprocessesand
stressi
ngcont
inual
improv ement.

ISO 9000isasetofst andar

dsthatper t
ainstoquali
tymanagement
t
hathelpswhatanor gani
zati
ondoestoensur ethatit
sproductsorser
vices
meetits customer’
s and st
akehol
der
’s needs.I t
s st
andards i
ncl
ude the
f
oll
owingcategori
es:

• Syst
em requirements
• Managementr equi
rement
s
• Resourcerequirements
• Real
izati
onrequi r
ements
• Remedialrequirements

I
SO14000concernsthest
andar
dsr el
atedt
oenvi
ronmentalmanagement
tohelpt
heorgani
zat
ionsminimi
zethenegati
veeff
ect
sofitsoperat
ionsont
he
envi
ronment
.

Eightqualit
ymanagementpr inci
plesf
ormt
hebasi
soft
hel
atest
versionofI
SO9000:
• Acust omerf ocus
• Leader shi
p
• Involv
ementofpeopl e
• Apr ocessappr oach
• Asy stem approacht omanagement
• Conti
nuali
mpr ov ement
• Useofafactual approachtodecisi
onmaking
• Mutual
lybeneficialsuppl
ierr
elat
ionshi
ps
6.
6TOTALQUALI
TYMANAGEMENT

Theuseofqual i
tymanagementhasbecomewi despread i
n every
organi
zat
ion’
sdai lyoperati
ons.Theai msoft hebusi nessesmaydi ff
er,but
theimpor
tanceofcust omersisamat terofcommoni nterestandtheabili
tyof
organi
zat
ionst oadapttonewcust omerrequir
ement sonagl obalmarketisof
vit
alimportance f orlong-t
erm success.Thus,qual i
ty has become an
i
mpor t
antfactortoachievethegoalsofthebusinesses.

Tot
alQual
it
yManagement(
TQM)

Total-madeupofthewholeandeveryaspectofit
s
businessQual
it
y-degr
eeofexcel
lenceaproductor
servi
ceprovi
des
Management-act ,
artormannerofplanning,contr
oll
i
ng,
dir
ect
ingandor
gani
zi
ng

Ther
efor
e,TQM i
sthear
tofmanagi
ngt
hewhol
etoachi
eveexcel
l
ence.

Totalquali
tymanagementi s an appr oach t hator ganizati
ons use
conti
nuouslytoquestf orqualit
yandi mprovet heirint er
nalprocessesand
i
ncreasecustomersat i
sfact
ion.Stevenson(2014)poi nt edoutthat ,“
ther
eare
thr
ee key philosophi
es int his approach:cont inuous i mprov ement,the
i
nvolvementofev ery
one int he organizat
ion,and t he goalofcust omer
sati
sfacti
on”.

Si
xSi
gma

Six Sigma is a setofmanagementt echniques thatf ocuses on

i
mprovingqual i
ty,reducingcost
,andincreasingcust omersat i
sfacti
onby
mini
mizingtheoccur renceofdefect
sander rors.Itcanbei nt
egratedwith
desi
gn,ser
vice,producti
on,inv
ent
orymanagement ,anddeli
very.

Inmanyway s,si
xsi
gmapr ov
idesabl
ueprintfortheimpl
ement
ati
onofa
tot
alqual
it
ysy stem.Alt
houghtheyhaveadi
fferentapproachandcanbeused
i
ndependent
ly,theyarecompat
iblet
obeusedt ogetherandincr
easet
heoutput
ofimpr
ovement .

6.
7PROBLEM SOLVI
NGANDPROCESSI
MPROVEMENT

Problem-solv
ingi st heactofdefini
ngapr obl
em andf i
ndingsoluti
ons
i
nanor derlymannerusi ngappropr
iat
et oolsandtechni
ques.Itisoneoft he
basicpr oceduresofTQM wher etheuser soft hisapproachel i
minatethe
causesot hatthepr oblem doesnotr ecur.Iti
salsoanimpor tantfact
orfor
userst ot hi
nk ofpr oblems as "opportunit
ies f
orimpr ovement"t o be
successful.
Basicstepsi nproblem- solvi
ng

St
ep1 Def
inet
hepr
obl
em andest
abl
i
shani
mpr
ovementgoal
.
St
ep2 Devel
opper
for
mancemeasur
esandcol
l
ectdat
a
St
ep3 Anal
yzet
hepr
obl
em
 St
ep4 Gener
atepot
ent
ial
sol
uti
ons
St
ep5 Chooseasol
uti
on
St
ep6 I
mpl
ementt
hesol
uti
on
St
ep7 Moni
tort
hesol
uti
ont
oseei
fitaccompl
i
shest
hegoal
t
h
Note:Adapt
edfr
om “
ManagementofQual
i
ty”byW.
J.St
evenson,
Oper
ati
onsManagement(
12 Edi
ti
on)
2015,NewYork,
McGraw-
hil
lEducat
ion

ThePl
an-
Do-
Check-
ActCy
cle

ThePlan-
Do-Check-
ActCy cl
e,devel
opedbyWalt
erShewhart
,isafour-
stepcircul
arconceptualmodelusedasabasi sforimprovi
ngapr ocess,
solvi
ngapr obl
em,andcontinuousimprovement
.ThePDCAcy cl
eisshownin
Fi
gure6. 1asacir
cletostr
essthatconti
nuousimpr
ovementisanever-
endi
ng
process.

Fi
gur
e6.
1Shewhar
tsPDCAModel
Not
e:Adaptedfr
om “Quali
tyManagementandI nt
ernat
ionalStandar
ds”byJ.
th
HeizerandB.Render
,Oper at
ionsManagement(10 Edi t
ion)2011,New
Jersey,Pear
sonEducati
on

Pr
ocessI
mpr
ovement

ProcessImprovementisapr oacti
vet askofimpr ovi
ngt heprocess.It
i
nvolves document at
ion, measurement, and anal ysis t o i mprove the
f
unctioning ofa process.Typicalgoalsofpr ocessimpr ov ementi ncl
ude
i
ncreasingcustomersat i
sfacti
on,achiev
inghi gherqual i
ty,reducingwast e,
r
educingcost ,
incr
easingproducti
vi
ty,
andr educingprocessingt ime.
 t
h
Note:Adapt
edfr
om “
ManagementofQual
i
ty”byW.
J.St
evenson,
Oper
ati
onsManagement(
12 Edi
ti
on)
2015,NewYork,
McGraw-
hil
lEducat
ion

6.
8QUALI
TYTOOLS

Numeroust
oolsthatanorganizat
ioncanusefori
mprovementhave
beenproposedovertheyears.Thetoolsaidindat
agather
ingandanalysi
s
andprovidet
hebasisfordecisi
onmaking.Thesear
ethesevenbasi
cqualit
y
tool
s.

Fl
owchartsareagr aphicalr
epresent
ati
onofaprocessorst
ep.Thesear
e
bestdev
elopedbyhavingalll
evel
sinvol
vedi
nthepr
ocess.

Checksheet
sar
esi
mpl
etool
sfr
equent
lyusedf
oror
gani
zi
ngandcol
l
ect
ingdat
a.

Thehistogr
am isabasicst
ati
sti
calt
oolt
hatgr
aphi
cal
l
yshowsanempi
ri
cal
fr
equencydist
ri
but
ion.

Paret
oDi agr
ams,namedaf teranItal
ianeconomi
stVil
fredoParet
o,oft
en
usedtoanalyzedatacoll
ectedinchecksheet
sbyclassi
fyi
ngprobl
em ar
eas
accor
dingtothedegreeofimport
ance.

Cause-and-
Eff
ectDiagrams off
era st
ruct
ured appr
oach t
o assi
stthe
generat
ionofideasforcausesoft
heprobl
em andserveasthebasisf
or
fi
ndingthesol
uti
on.

Scatt
erDiagr
amsar eusef
uli
ndeci
dingi
fther
ear
eimpor
tantr
elat
ionshi
ps
betweent
wov ar
iabl
es

Cont
rolChart
sareastat
ist
icalpr
ocesscont
rolt
oolusedt
omoni
torhow a
pr
ocesschangesov
ert
ime.
6.
9QUALI
TYCONTROL

Quali
tycontr
oli
saprocesst
hateval
uatesthequali
tyoff
actor
sinvol
ved
i
npr oductiontoensuret
hatt
heoutputadher
estoast andar
dofquali
tyormeets
therequirementsofthecust
omers.I
tissimi
larto,butnoti
denti
calwit
h,qual
it
y
assurance.

Quali
ty assurance can be def
ined as the syst
ematic act
ivi
ti
es
i
mplementedtoprovideaconf i
dentconf
irmat
ionthattheproductorservi
ce
f
ulf
il
ledt
hespecifi
edrequir
ements.

6.
10I
NSPECTI
ON

Inspecti
oninv olvesmeasur ing,examining,andt esti
ngofpr oductsor
servi
cesandcompar ingt hem tothest andar
d.Thi ssepar at
esgoodandI tcan
occurbef or
e,during,andaf terthepr oducti
on.I nspecti
onper formedei t
her
before( raw mat erial
si nspecti
on) and af t
er pr oducti
on ( pre-
shipment
i
nspection)ofteninvolvesacceptancesampl i
ngpr ocedures;inspecti
ondur i
ng
theproducti
onpr ocessi sreferr
edt oaspr ocesscont rol
.Figure6.2showsan
overvi
ew oft heaccept ancesampl ingandpr ocesscont rolinthepr oduct
ion
process.

Fi
gur
e6.
2Accept
ancesampl
i
ngandpr
ocesscont
rol
Sour
ce:Adapt
edfrom ManagementofQual
i
ty(p.
412)byW.J.Stev
enson,
Oper
ati
ons
t
h
Management(12 Edit
ion)2015,
NewYork,McGraw-
hil
lEducat
ion

Therateatwhichapr ocessmaygooutofcontrolorthev
olumeofthe
bat
chesbeinginspectedisoneoft hemosti
mpor
tantfact
orst
oconsi
derin
det
ermini
ngthefrequencyofinspect
ion.

CentPercentI
nspect
ionor100percenti
nspecti
oni
nvolv
esinspect
ingeveryi
tem
pr
oducedandi ncomi
ngmateri
altoensurethatnodef
ecti
veproductwouldgoto
market
.

6.
11STATI
STI
CALPROCESSCONTROL

Stati
sticalprocesscontr
ol(
SPC)isastat
ist
icaltechni
queappl
iedto
t
hecont
rolofthepr ocesseswit
hacert
aindegr
eeofv ar
iabil
it
ytoensur
ethat
pr
ocessesmeett
hest
andar
d.
 Contr
olchart,developedbyWal terShewhar t
,isasi
mplebutpower ful
tool
;i
ti sat i
me-orderedplotofprocessdat aov erti
meusedt odetermineifa
manuf actur
ingprocessiswi thi
ntherangeofaccept ableoroutofcontr
ol.The
contr
olchar tisshowni nFigure6.3whi chconsistsofameanv al
uewi thtwo
boundar yli
nes,t
heuppercont r
olli
mit(UCL)andt helowercont
roll
imit(LCL).
Thepur poseofthecont rolcharti
stodet erminethecapabil
it
yofaprocesson
qual
itymeasur es,topicturethecurrentstatusofpr ocessqual
it
yandensur e
i
tssmoot hfl
ow.

Fi
gur
e6.
3Ex
ampl
eofCont
rol
Char
t
Sour
ce:Adapt
edfrom ManagementofQual
i
ty(p.
420)byW.J.Stev
enson,
Oper
ati
ons
t
h
Management(12 Edit
ion)2015,
NewYork,McGraw-
hil
lEducat
ion

6.
12PROCESSCAPABI
LITY

Processcapabi l
it
yi st heabi l
it
yoft her esour
cesandpr ocessto
produceapr oductwhichconsi stentl
ymeet sthedesignspeci
fi
cationssetby
thecustomerr equir
ementsandexpect at
ion(Kal
e,2013).I
tist
her angeofthe
performancel evelinwhicht henat uralvari
ati
onsoft heprocessmustbe
stableunderthestati
sti
calcontrol.

Therearetwopopularst
ati
sti
csindexthatcanbeusedt omeasur e
thecapabil
it
yoft hepr
ocessthatusesbothprocessv ar
iabi
li
tyandprocess
cont
rolspecifi
cati
on:processcapabi
li
tyrati
o( Cp)and processcapabil
i
ty
i
ndex(Cpk).

Thepr
ocesscapabi
l
ityr
ati
o,Cp,i
scomput
edusi
ngt
hef
oll
owi
ngf
ormul
a:

Cpi
sar
ati
othatdet
ermi
neswhet
herapr
ocessf
all
insi
det
hespeci
fi
cat
ionl
i
mit
s.
 Exampl
e6.
1:Comput
ati
onofCp
Adapt
edf
rom St
ati
sti
calProcessContr
ol(p.
263)byJ.HeizerandB.Render
,Oper
ati
ons
t
h
Management( 10 Edit
ion)2011,NewJersey
:PearsonEducati
on

ThecapableprocesshasaCpofatleast1.
0,butiftheCpisl
essthat
1.
0theprocessproducesproduct
soutsidet
hespecif
icat
ions.Ther
efor
e,the
pr
ocessfr
om theExample6.1iscapabl
e.

Thepr
ocesscapabi
l
ityi
ndex
,(Cpk)
,iscomput
edas:

wher
e:x=processmean
=standar
ddevi
ati
onoft
hepr
ocesspopul
ati
on

Cpk i
ndexi
susedt odeter
minethenumberofdef ect
sbyt aki
ngthe
di
ff
erencebet weenthedesi
redandtheactualdi
mensionsofproductsbei
ng
pr
oduced.Acapabl epr
ocessmusthaveaCpkofatleast1.
0.

Exampl
e6.
2:Comput
ati
onofCpk
Adapt
edf
rom St
ati
sti
calProcessContr
ol(p.
264)byJ.HeizerandB.Render
,Oper
ati
ons
t
h
Management( 10 Edit
ion)2011,NewJersey
:PearsonEducati
on
Exampl e6.2showsanappli
cati
onofCpk.Becausethemachi
nehasaCpk
ofonly0.67,thenewmachineisnotcapabl
e.Therefor
e,thenewmachineshoul
d
notrepl
acet heexist
ingone
 CHAPTER7

Faci
l
ityLocat
ionandLay
out
Chapt
erOut
li
ne

1 Learni
ngObject
ives
2 Topic1ConceptofFacil
ityLocati
on
3 Topic2ConceptofFacil
i
tyLay out
4 Topic3Serv
iceFacil
it
yLay out
s
5 Let’
sSum Up

Lear
ningObj
ect
ives

Explaintheconceptoffaci
li
tylocation
Discussf act
orsaff
ecti
ngfacil
itylocat
iondeci
sions
Explaintheprocedur
esandt echniquesforsel
ecti
ngfaci
l
ityl
ocat
ion
Explaintheconceptoffaci
li
tylayout
Li
stt hetypesoffaci
li
tylay
outs
Descr i
beservicef
acil
i
tylayouts

ConceptofFaci
li
tyLocat
ion

Facili
tylocat
ionmaybedef i
nedasapl acewher ethefacilit
ywi l
lbesetup
forpr oducinggoodsorser v
ices.Theneedf orlocati
onsel ectionmayar i
se
underanyoft hefollowingconditi
ons:
a.Whenabusi nessi snewlystarted.
b.Whent heexi st
ingbusinessuni thasout grownitsoriginalfaci
li
ti
esand
expansi onisnotpossi ble;
henceanewl ocat
ionhast obef ound.
c.Whent hev olumeofbusi nessort heext entofmarketnecessi t
atesth
establishmentofbr anches.
d.Whent hel
easeexpi resandt hel andl
orddoesnotr enewt helease.
e.Ot hersoci
al oreconomi creasons.

Needf
orFaci
li
tyLocat
ionPl
anni
ng

Facil
itylocat i
onplanni ngisal
sor equi r
edf orprovidingacostbenefit
tothe or ganization.
Thelocat ionplanningshoul dhelpinr educingthet ranspor
tati
oncost
organizat
ion.Thisulti
mat elyhelpsi ndecreasingthecostof
forthe producti
on
and generat i
ngcostadv antagefortheor ganization.
Iti
sal soneededt oidentif
yproximityt othesour cesofr awmat er
ial
s
and tr
anspor tationfacil
i
t i
es.
Afacilit
yshoul dideallybelocatedatapl acewher er awmat er
ial
sare
avail
abl
e.Thi si s necessar yf ormai ntaini
ng cont i
nuit
yi nt he producti
on
pr
ocess.

Fact
orsAf
fect
ingFaci
li
tyLocat
ionDeci
sions

Whi
lesel
ect
ingafaci
li
tyl
ocat
ion,anorgani
sat
ionshoul
dconsi
der
v
ari
ousf
act
orst
hatmayhavesi
gni
fi
cantimpactonit
sperf
ormance.
Thesef
act
orsar eexplainedbelow:
➢ Avail
abil
it
yofpower
➢ Transport
ation
➢ Suit
abil
it
yofcl imate
➢ Governmentpol icy
➢ Compet i
ti
onbet weenstates
➢ Avail
abil
it
yofl abor

Fact
orsAf
fecti
ngFacil
it
yLocat i
onDecisions
➢ Civ
icameniti
esf orworker
s
➢ Exi
stenceofcompl ementaryandcompeti
ngindust
ri
es
➢ Fi
nanceandr esearchameniti
es
➢ Avail
abi
li
tyofwat erandfi
re-f
ight
ingf
aci
li
ti
es

Pr
oceduresandTechni
quesforSel
ecti
ngFaci
li
tyLocat
ion
Anorgani
sati
onfol
lowscert
ainst
epstomakeacor r
ectl
ocat
ionchoi
ce.

Thesest
epsar
e:

Pr
ocedur
esandTechni
quesf
orSel
ect
ingFaci
li
tyLocat
ion

Fol
l
owi
ngar
esomemai
ntechni
quesusedi
nmaki
ngl
ocat
iondeci
sions:

➢ Locati
onrati
ngf actortechnique:Inthistechnique,fi
rstofallan
or
ganizat
ionneedstoidentif
ythef actor
st hati
nfluenceitslocati
ondecision.
Next
,eachf act
ori
sprovidedawei ghtbet ween‘0’to‘1’accordingtothelevel
of i
mpor t
ance,where‘ 0’denotes leasti mportantand ‘ 1’denotes most
i
mportant.

➢ Cent r
e-of-gr
avit
ytechnique:Thi
stechni
queemphasi zeson
transportati
on
cos i
nt hedet erminati
onoff acil
it
ylocati
on.Transpor
tat
ioncostmai nly
t dependsdi stance,weightofmer chandi
seandt heti
mer equi
redfor
on tr
ansportati
on.
Centr
e-of-
gravi
tymapsvari
oussuppl
ierl
ocat
ionsonaCar t
esi
anplaneand
suggest
s
a centr
alfaci
l
ityl
ocat
ionwit
hrespectt
othelocat
ionsofsuppl
ier
s

Pr oceduresandTechni quesf orSelectingFaci lityLocation

➢ Tr anspor t
ation technique:I n simpl e wor ds,t he transpor
tati
on
techniqueev aluatesmul t
ipletranspor tationroutesofshi ppinggoods
from mul ti
ple
originstomul ti
pledest i
nat i
onsandf indsordev elopst heleastcostr out
e.The
technique i s often used i n determining f acili
tyl ocati
ons f orev al
uati
ng
transportati
oncost sofr outesbysel ect i
ngdi fferentfacil
it
yl ocati
ons.Inthe
transportati
ont echnique,
mul t
iplefacil
it
yl ocati
onsf i
tsarei dentifi
edandt hei
rr el
ati
ve
transportati
on
cost s ar ecalculated.Finall
y,thelocationthati sr el
atedtot helowestcost
routesis
selected.

➢Facili
tyl ayoutmaybedef i
nedast hearrangementofmachinery,
equi
pment,andot herameniti
esinaf aci
l
ity
,whichshouldensur
easmoot h
movementofmat erial
s.
➢ Accordi
ngt oMoore,f
aci
li
tyl
ayoutist
heplanofort
heactofpl
anningan

opti
mum arrangementoffaci
lit
ies,i
ncl
udingpersonnel,operat
ingequipment,
stor
agespace,materi
alhandl
ingequipment,andallothersupportingser
vices
al
ongwiththedesignofthebeststruct
uretocontai
nthesef aci
lit
ies.

Obj
ect
ivesofanEf
fect
iveFaci
li
tyLay
out

Ty
pesofFaci
li
tyLay
out
s
Ty
pesofFaci
li
tyLay
out
s
 ➢Pr ocesslayout:Processlayout,alsocal l
edf unct
ionallay
outor
bat
chproducti
onlayout,ischaract
eri
sedbyt hegroupingtogetherofsimi
l
ar
machi
nes,basedupont hei
roperati
onalcharacter
ist
ics.

➢ Pr
oductl ayout
:Inproductl
ayout
,alsocalledstraightli
nelayout
,
machi
ner
y arr
anged in one l
i
ne as perthe sequence ofpr oduct
ion
i
sMateri
als oper ati
ons.fedi
ntothefi
rstmachi
neandf i
nishedproducts
ar
e comeoutoft hel
ast
machi
ne.

➢Fixedposit
ionlayout:
Thistypeoffacil
i
tylay
outisusedtoassemble
pr
oduct
sthatar
et oolar
ge,heavyorfragi
letomov etoalocat
ionforcompl
eti
on.
I
nthe
fi
xedpositi
onlayout,machinery,men,aswellasotherpiecesof
ar materi
al,br
oughtt othelocati
onwher etheproductistobe
e assembled.
➢ Cell
ularmanuf actur
inglayout:
InCellul
arManufacturi
ng(CM)layout
,

machinesaregroupedint
ocel
ls,
whi
chfunctionsomewhatl
i
keaproduct
l
ayoutinalargershoporapr
ocessl
ayout.Eachcel
li
ntheCM l
ayouti
s
for
medt oproduceasingl
epartf
ami
ly,t
hatis,afewpar
tswi
thcommon
charact
eri
sti
cs.

➢ Combi nationorhy br
idl
ay out:
Itisdi
ff
icul
ttousethepri
nci
plesof
pr
oduct
l
ay out
, processl
ay out,orf
ixedlocationlay
outinfaci
li
ti
esthati
nvol
vefabr
icat
ionof
partsand assembl y.Fabr
icati
ontendst oemploytheprocessl
ayout
,whil
e
assembly
areasoftenemployt heproductlayout.

Fact
orsAf
fect
ingaFacil
it
yLay out
 Mater
ial
s
 Pr
oduct
 Machi
nery
 Ty
peofIndust
ry
 ManagementPoli
cies

Pr
erequi si
tesf orDev el
opingaFaci l
ityLayout
Dev eloping pr ocess char t
s: A pr ocess char tis the gr aphi
cal
represent at
ion ofpr oducti
on act i
vi
ti
es perfor
med byan or gani
zati
on.
Processchar t
sf acil
i
tateasy stematicanalysi
sanddemonst rati
onoft he
enti
repr oducti
onpr ocess.Thesechar t
sar efurthercl
assi
fi
edi ntotwo
categories,namel yoperati
onpr ocesschartandflowprocesschart.

Makingprocessf l
owdi agr
ams: Apr
ocessfl
owdiagram r
epr
esentst
he
mov ementofmat eri
als on a fl
oorlay
out.These diagr
ams hel
p an
organi
zati
oni nav oidi
ngneedl essmateri
almovementandr ear
rangi
ng
faci
li
tyoperat
ions.

Dev el
opi
ng machi
ne dat
a cards:A machi
ne dat
a car
d hel ps i
n
devel
opingequi
pmentlay
out(pi
ecesofequi
pmentlay
outinrelat
ionto
every
thingi
ncl
udingtheper
sonsusingt
hem)bypr ov
idi
nginformati
on
rel
atedtopowerandmateri
alshandl
i
ngr
equi
rement
sandcapaci
tyand
dimensi
onsofdi
ff
erentmachi
nes.

Vi
sual
izi
ngthelayout
:Itr
epresent
sthemostcommont echni
quethati
s
depl
oyedforl
ayoutpl
anni
ng.I
tinvol
vescr
eat
ingdupl
i
cat
ionofmachi
nesand
equi
pment
 andar
rangingthem i
ntwo-ort
hree-
dimensi
onal
plansf
ordet
ermi
ningt
he
eff
ect
ivenessofalayout
.

Pr
ocessofFaci
li
tyLay
outDesi
gni
ng

Techni
quesf
orDesi
gningaFaci
li
tyLayout
Twomaintechni
quesofdesi
gningaf
aci
li
tyl
ayoutar
e:

Techni
quesf
orDesi
gni
ngaFaci
li
tyLay
out

Blockdi
agrammi ng: Thebl ockdiagr
am canbepr eparedbyf ol l
owingt he
stepsgi
venbelow:
1.Anal y
zet heuni tl
oadsummar ythatprovidesinformationaboutt he
average
numberofuni tloadsmov edbetweendiff
erentdepar t
ment sofan
organizati
on.
2.Calculatethecomposi t
emov ements(back-and-forthmov ement )of
theunit
betweent hedepar tmentsandrankthem from thehi ghestmov ement
l
oad t othe
l
owest mov ement .
3.Placet hetriallayout
s,whicharedesignedusi ngther anking
between
onagr i
d.Thisgri
drepresentsther el
at i
vedistance
department s, bet ween
department s
the .

Ri
char
d Mut
her’
ssy st
emat
iclayoutpl
anni
ng(SLP):I
nt histechni
que,agrid
di
spl
ayst
herat
ingsofther
elat
ivei
mport
anceofthedi
stancebetweendif
fer
ent
department
s
or
ganizat
ion.Thi sgri
disalsocall
ed‘cl
osenessrat
ingchart’
.I
nt his
ofan chart,t
he
rati
ng depart
me A r el
ati
vet odepartmentB i ssimil
artot her ati
ng
for nt of
departmentB depar tmentA.Cl osenessrati
ngsaregiventodepartmentsi n
to t
hef orm
ofcodes, thedesiredclosenessofthedepartmentsaccordingt o
which depict t
he
rel
ativ
estrengthof
thei
r closeness.
NewAppr
oachest
oLay
outDesi
gn

Rev
isi
onofaCur
rentLay
out

Thef
oll
owi
ngdev el
opment snecessi
tat
ether
evi
sionoft
heexi
sti
ngl
ayout
:
 Expansion
 Technologi
calAdvancement
 ImprovementoftheLayout

Ser
viceFacili
tyLay outs
 Theobj ectivesofser vicef acili
tylayoutsdiff
erfrom thoseof
manuf acturingfacil
itylayouts.
 Thi sisbecauseamanuf acturingf aci
li
tyaimst omakeon- ti
medel i
very
ofpr oductst o customer s,wher eascust omer scome to a service
faci
li
tytor eceiveser vi
ces.
 Ther efore,cust omer susual lypr eferaser vi
cef aci
li
tythatiscloset o
them, especi all
y when t he ser v
ice delivery process requires
considerablecust omercont act.Forexampl e,ifyouar ehungry,you
wouldpr efertogot oar estaur antneary ou.

Ser
vicefaci
lit
ylay outsar eoftencat egorizedundert hreeheads,whichare:

➢ Pr oductlayout:Thistypeofl ayouti
susedonl yincaseswher eservices
areorganizedinasequence.
➢ Pr ocesslayout:Thesel ayoutsarehighl
ycommoni nserv
icefacil
i
tiesas
theysuccessfull
ydeal wit
ht hev ar
iedcustomerpr ocessingrequir
ement s.
➢ Fixedposi ti
onl ayout
:I nt histypeofservicelayout,mat er
ial
s,laborand
equipmentar ebroughttot hecustomer ’
splace.Thislayouti
susedi nser v
ices
l
ikeappliancerepair,
landscapi ng,
homer emodeling,etc.

Ty
pesofSer
viceFaci
li
tyLay
out
s

War
ehouseandst
oragel
ayout
s:
 Thelayout sofwar ehouseandst or
agef aci
li
ti
esar edesi gnedby
consi
deringthef requencyofor der.It
emst hatareor deredfrequentlyare
pl
aced neart he f aci
l
ity entrance.Howev er
,i t
ems thatar e notor dered
fr
equentl
yar eplacedatt her earoft hefacil
it
y.Apartfrom thi
s,cor r
elati
on
betweent womer chandisesi salsoimportantwhiledesigningalayoutf ora
warehouseandst oragefacil
ity.

Retaillay outs:A retailstorelay outref

erst oasystematicarr
angementof
merchandi segroupswi thinast ore.Awell-
plannedr
etai
lstor
elayoutprovi
des
adescr i
ptionoft hesizeandl ocat i
onofeachdepartmentofthestore,fi
xtur
e
l
ocat ions,andt raff
icpat t
erns.Italsohelpsconsumersfindproductsoftheir
choicei nashor ttime.Differentretai
ll
ayoutsare:
➢ Gr idlay out
➢ Fr ee-forml ayout
➢ Loopl ay out
➢ Spi nel ayout

Offi
celayouts:Designingofoffi
cel
ayoutsiswit
nessingrevol
uti
onar
ychangesas
paperworkisnow r eplacedwithdi
ff
erentmodesofel ectr
oniccommunicat
ions.
Today,offi
cel ayoutsf ocusmoreoncr eat
inganimageofopenness.Low- rise
part
it
ionsarepr eferr
edbet weendepart
ment stofacil
i
tateeasycommunicati
on
amongwor kers.

Let
’sSum Up
 Af aci
li
tyl ocati
onmaybedef inedast hepl acewhereafacili
tywi l
lbe
setupf orpr oducinggoodsorser vi
ces.
 Sel ect
ionofasui t
ablef acili
tyl ocati
oni simport
antasi tdeci dest he
fateofabusi ness.Agoodl ocat ionmayr educethecostofpr oduction
anddistributiontoaconsi derabl eex t
ent.
 Onceest abli
shed, alocationcannotbechangedf r
equentlyasi tincurs
hugecost s.
 Af aci
li
tyl ayoutisdef i
nedast hear rangementofmachi nery,equipment
andot herameni t
iesinaf aci l
i
t ytoensur ethesmoot hmov ementof
mat er
ials.
 The obj ect i
ves of ser v ice f acil
it
yl ayouts di
ffer fr
om t hose of
manuf act uri
ngf acil
itylay outs.Thi si sbecauseaser vi
ceoper at
ion
aimst oor ganiseal lact i
v i
ti
esandpr ocessestodel i
verser vicest o
customer s.

Ref
erences:

J.R.Ev
ans.AndW.M.Li
ndsay
,“Tot
alQual
i
tyManagement
”,Cengage
Learni
ngAsia,
2013.

J.Heizer
,B.Render
,Operati
onsManagement
,10t
hGl
obal
Edi
ti
on.New
Jersey:
PearsonEducati
on,2011.

Roy
,R.andWei
ld,D,
ProductDesi
gnandTechnol
ogi
cal
Innov
ati
on,
Open
Uni
ver
sit
yPr
ess,Mil
tonKeynes,
1993.
S.Ani
lKumar,N.Sur
esh,
Oper
ati
onsManagement
,NewDel
hi,
NewAge
I
nter
nati
onal
,2009
S.Kale,Pr
oduct
ionandOper
ati
onsManagement
,NewDel
hi,
McGr
aw-
hil
l
educat
ion,
2013.
t
h
W.J.St
evenson,“Operati
onsManagement
”.12 Edi
ti
on.NewYor
k:
McGraw-hi
lleducat
ion,2015.

W.JSt
evensonandS.C.Chuong,"
Operat
ionsManagement
".2ndEdi
ti
on.
NewYork:McGraw-
hil
leducat
ion,
2014.

Faci
lit
yPlanni
ngandManagementRet r
ievedfr
om:
htt
ps://www.mit
sde.com/
media/student%20corner
/Next
-Gen-
Learni
ng/Sample%20PPT_Faci
l
ity
%20Locat i
on%20and%20Layout
.pdf

Operat
ionsManagement .Accessed August7,2020.
htt
ps:/
/www.sl
ideshar
e.net/Kadi
rikj
s24/
operat
ions-
management
-
69329225
 ASSESSMENT

DI
SCUSSI
ONQUESTI
ONS:

1.Explainwhati smeantbypr oductdesign.

2.Discusst hef act
orsinv ol
vedi nproductdesign.
3.Whati stheconceptofDesi gnf orManufacturi
ng?
4.Whatar et hest r
ategicadvant agesofproductdesign?
5.Explainther oleofinspectioninqual i
tymanagement .
6.Whatar et hecont r
ol chart
s?Howt heycanbeusedt ocontrol
qual
it
y?
7.Whati sSi xSigmaphi l
osophy ?Givetheadv ant
agesofimplementi
ng
sixsigma?
8.Discussinbr ieftotalquali
tymanagement .
9.Explainhowi mprov i
ngqual i
tycanl eadtoreducedcosts.
10.
Whati smeantbyDesi gnforExcel l
enceinthecontextofqual
i
tymanagement
?
 ACTI
VITY1

Vi
deot owatch:ProductStr at
egyatRegalMar ine
Li
nk:https:
//www.youtube.com/ watch?v=24zvqPuHHTs
GuideQuestions:
1.Descri
bet hestr
ategi
esofRegal thatkeept hem competi
ti
ve?
2.Whatar etheli
kelybenefit
sf orRegalinvestingi
ntheresear
chand
devel
opmentofadv ancedt echnologies?

ACTI
VITY2
Towat ch:TheCultur
eandQualit
yatArnoldPalmerHospi
tal
Li
nk:https:
//www.youtube.
com/watch?
v=U_GnYwReTzc
GuideQuest i
on:
Describethestr
ategi
esofArnol
dPalmerHospit
ali
nit
seffor
t
towardsquali
tyandconti
nuousimprovement
?
 MODULE3
I
ntendedLear
ningOut
comes

1. Di
scusst
heconcept
sandi
mpact
sofsuppl
ychai
nmanagement
,OEE,
Aggr
egat
ePl
anni
ngandMast
erSchedul
i
ngt
otheor
gani
zat
ion
2. Ex
plai
nthepr
inci
plesofOEE,
MRP,
CRPandERPt
otheper
for
manceoft
he
or
gani
zat
ion
3. Anal
yzet
heconcept
sofJI
Tandl
eanpr
oduct
ionandi
tsr
elat
iont
o
schedul
i
ngandpl
anni
ng

I
ntr
oduct
ion
Suppl yChai nManagementcanbedef i
nedast hemanagementoff lowof
product sandser vices,whi chbegi nsf r
om t heor iginofpr oductsandendsat
thepr oduct '
sconsumpt ion.I tal socompr i
sesmov ementandst orageofr aw
mat eri
al st hatar ei nvolvedi nwor ki npr ogr ess,i nv ent oryandf ullyf urnished
goods.
Aggr egat e pl anni ng i st he pr ocess of dev el opi ng,anal yzing,and
mai nt
ai ningapr elimi nary,appr oxi mat eschedul eoft heov er
alloper at i
onsof
an or gani zation.The aggr egat e pl an gener ally cont ains target ed sal es
forecast s,product ionl evels, i
nv ent or ylevels, andcust omerbackl ogs.
Mat erialr equi rement spl anni ng( MRP)i sasy st em f orcal culatingt he
mat eri
al sandcomponent sneededt omanuf actureapr oduct .I
tconsi stsof
threepr i
mar yst eps:t akingi nvent oryoft hemat er ialsandcomponent son
hand,i dent if
yingwhi chaddi tionalonesar eneededandt henschedul ingt heir
product ionorpur chase.
Schedul i
ngi st hepr ocessofar r
angi ng,cont r
ol l
ingandopt imi zingwor k
andwor kloadsi napr oduct ionpr ocessormanuf act ur ingpr ocess.Schedul i
ng
i
susedt oal locat epl antandmachi neryr esour ces,pl anhumanr esour ces,
planpr oduct ionpr ocessesandpur chasemat erials.
OEE( Ov eral
lEqui pmentEf f
ect iv eness)i sthegol dst andar dformeasur i
ng
manuf act ur i
ng pr oduct ivi
ty .Si mpl yput– i ti dent if i
es t he per centage of
manuf act ur i
ngt imet hati st rulypr oduct ive.AnOEEscor eof100%meansy ou
aremanuf acturingonl yGoodPar t s, asf astaspossi ble, withnoSt opTi me.
 CHAPTER8

Suppl
yChai
nManagement

Chapt
erOut
li
ne

1 Whati saSuppl yChain

2 Whati sSupplyChainManagement
3 Suppl yv sDemand
4 Suppl yChai nStor
ies
5 Per formanceMeasur es
6 Inv entoryTurns
7 Inv entoryProduct
ivi
ty
8 Wal -
Mar t’
sSuccessandSupplyChai
n
9 Ef fi
cientSupplyChainProcur
ement
10 Effi
cientSupplyChainDist
ri
buti
on
11 ProductAssor t
ment
12 SupplyChai nDesign

WhatisaSupplyChai n?
A supply chaini st he syst
em of or ganizat
ions,people,acti
vit
ies,
i
nformati
onand r esour cesinvol
vedi nmov i
ng apr oductorservi
cef r
om
suppl
iertocustomer .Suppl ychainacti
vit
iestransformr aw mater
ial
sand
componentsi
ntoaf inishedproductthati
sdeliv
eredtot heendcustomer.
SupplyChainManagement
Suppl
y Chain Managementi st he design and managementof
processesacr
ossorgani
zat
ionalboundar
ieswiththegoalofmatchi
ngsuppl
y
anddemandi nthemostcosteff
ecti
veway .

WhysoDiff
icul ttoMat chSuppl yandDemand?
• Uncert aintyi ndemandand/ orsuppl y
• Changi ngcust omerr equi rement s
• Decreasi ngpr oductli
fecy cl
es
• Fragment at i
onofsuppl ychai nowner ship
• Conflictingobj ectiv
esi nt hesuppl ychai n
• Conflictingobj ectiv
esev enwi thi
nasi nglef i
rm
–Mar ket i
ng/Saleswant s:mor eFGIi nventory
,fastdeli
very,
many
packaget ypes,speci alwishes/ promot i
ons
–Pr oduct ionwant s:bi ggerbat chsize,depotsatfactory,
latestshi
p
dat e,decreasechangeov ers,st
abl eproducti
onplan
–Di stributi
onwant s:fulltr
uckload, l
owdepotcost s,l
ow
distributi
oncost s, smal l#ofSKUs, stabl
edistri
buti
onplan

Thr
eeFl
owsi nSC
Therearethreeki
ndsoff l
owsi nasuppl ychai
n: materi
al,
infor
mation,capit
al.
 Downst r
eam –Mat eri
al: Products,Part
s–I nformati
on: Capaci
ty,
Deli
verySchedules–Fi nance: Invoi
ces,Pri
cing,Credi
tTer ms
 Upstream –Mat eri
al:
Ret urns,Repairs,
After
-salesServices–Information:
Orders,Point-
of-
sal
eDat a–Fi nance:Payment s

Pushv
s.Pul
linsuppl
ychai
ns
 Push orBui lding-t
o-stock(BTS) :Pr oduci
ng stockon t he basisof
anti
cipated demand.Demand f orecasting can be done v i
aav ari
ety of
sophisti
cated techniques( some f rom t he Operati
ons Research area and
someusi ngDat aMi ning).
PullorBuil
ding- to-
order(BTO) :Producingstockinresponset oactual
demand( fi
rm order
s).ThePush- PullPoint:Inmanysupplychains,upstream
unit
sempl oyBTS,whi l
edownst r
eam uni t
sempl oyBTOst rat
egies.Thepoi nt
i
nt hesuppl ychainwher etheswi tch-over(from BTStoBTO)occur siscalled
thePush- Pull
point.
Optimallyl
ocat ingthePush- Pullpointisakeydeterminantofsuppl y
chainperformance.

Suppl
yChai
nManagement( SCM)
 A setofpr ocesses and sub- processes whi ch at
temptt o
i
mpl ementandopt imi zethefunct i
ons, connectedenti
ti
es,and
i
nter acti
ngel ementsofasuppl ychain.
 I
nv olves:– Or ganizations,procedur es,peopl e.– Acti
vi
ties:
Pur chasing,deliver
y ,packaging,checking,war ehousi
ng,etc.–
Establishment of l ong-ter
m r el
ati
onshi ps wi t
h supplier
s
(supply al l
iances) and di stri
butors – Ef fecti
ve fl
ow of
i
nf ormat i
ont hrought hesuppl ychain

LosingSightoftheCommonObj ectiv
e
SupplyChain Managementi saboutt hei nt
egrat
ed acti
vi
tiesand
processesoftheorganizati
on.Whenonear eafails,
itaff
ectstheperf
ormance
ofotherareasaswel l
.Itisimportanttoensur
et hesuccessofeachar eaand
thei
rcontri
buti
onintheent i
reorgazati
onalper
fromance.
Suppl
yChai
nSt
oryI
I OnI
I( nter
nalcommuni
cat
ionandcol
l
abor
ati
on)

Inthe mid-1990s,theSwedi sh carmanuf acturerVolvof ound itsel

fwith
excessi
vestocksofgreencars.Tomov ethem along,thesalesandmar ket
ing
depart
mentsbeganof fer
ingat t
ract
ivespecialdeals,sogreencar sstar
tedto
sell
. But nobody had t ol
d t he manuf actur
ing depar t
ment about t he
promoti
ons.Itnotedtheincreaseinsales,readi tasasi gnt hatconsumers
hadstart
edt ol
ikegr
een,andr ampeduppr oduction.
Suppl
yChai
nSt
oryVI
I(Gai
ningCompet
it
iveAdv
ant
age)

Inthelate1970s,wi thabout200st ores,Wal-Martwasar elati

vel
y
smallretai
l
er.Att hatt ime,Sear sandKmar tdominatedt heretailmar ket.
Sincet
hen, Wal
-Mar tgai nedsi gnif
icantmarketsharefrom theseretailersand
becamet helar
gestandmostpr ofi
tabl
eretai
lerintheworld.Today ,Wal -
Mart
i
sadmi redforit
scol labor ati
onandt echnol
ogydr i
vensuppl ychai
npr acti
ces
andisl
eadingtheret ail
ingi ndustrywithit
sinnovati
vesupplychainpr actices.

Suppl
yChainPerformanceMeasur es
Cost
• Total SupplyChainCosti sthesum ofall
supplychaincost
sfor
all
pr oductsprocessedt hroughasupplychai
ndur i
ngagiven
period
• InventoryTurnoveristher at
iooft
hecostofgoodssol dtothe
val
ueofav erageinventory.
• Weeksofi nvent
oryisther ati
oofaverageinv
entorytothe
averageweekl ysales

CustomerServi
ce
• Av er
age Response Ti
me isthe sum ofdel
ays ofor der
ing,
processi
ng,andt r
anspor
tat
ionbetweentheti
meanor deris
placedatacustomerzoneandthetimetheor
derarr
ivesatthe
customerzone

Whatdot hesemeasur esmean?

• I nventor
yTur nover:howoftent
hecompanyrepl
eni
shesi
nvent
ory
.High
valueofi nventoryturnov
ermeansthattheinv
entor
ywasnotsi t
ti
ng
aroundal ongtime.

• Weeks ofSuppl
y:how manyweeks wor th ofi
nvent
orydoes t
he
companyhaveonhand.Highval
ueofweeksofsuppl
ymeansthatt
he
fi
rm hasal
otofi
nvent
orysit
ti
ngaround.

I
nventoryTurns
Inv
entoryTurnsisacommonbenchmar kinret
ail
ing.Inv
entor yt
urns
measurest henumberoft i
mesi nventor
yi ssoldorusedi nast r
ictl
ydefined
ti
meper i
od.Theequat i
onforinventor
yturnoverequalst
hecostofgoodssol d
di
videdbyt heav er
ageinventory.Theresultdispl
aysther at
ioshowi nghow
manyt i
mesacompany '
sinventoryissol
dandr eplacedoveraperiod.
Inventor
yPr oduct
ivi
ty
Inventor
yproducti
vit
yatitssi
mplestcanbedefi
nedast heamountof
salesandgr ossprofi
tdoll
arsaninventor
yinvest
mentgenerat
esov eragiven
periodoft i
me,usual l
yay ear.Andt hemostbasicmeasur esofi nvent
ory
producti
vit
yar einventor
yturnoverandgr ossmargi
nr et
urnoni nvestment
(GMROI )
.

Wal
-Mar
t:Ef
fi
cientSuppl
yChai
n
 
Pr
ocur
ement

Di
str
ibut
ion

Pr
oductAssor
tment

Pr
ici
ng

Ef
fi
cientSuppl
yChai n:Procurement
• I n90s,Wal-Martbegant obypasswholesal
ers
• Ex pandedpr i
vatelabelbusi
ness(usedunbrandedsuppl
i
ers)
• Bui l
dpartnershi
pswi thmanysupplier
s
• Ret ai
lLi
nk: suppli
erscouldaccessPOSandi nvent
ory
– Whatar ethebenef i
ts?
• Ex ample:Wal -
Mar tandP&Gpar t
nershi
p(JI
TI I
)

Wal-MartandP&GPar tnership
Consumer -Pr
oduct sGi antHelpsHugeRet ail
erMakeSpeci alt
yI t
ems
Mainstr
eam,Jan 31,2005.Ear lyon,P&G empl oyees,who rel
ocat ed to
Fayett
evil
letobecl oset oWal -Mar t
,calledt heiradopt edhomeFay ette-nam,
andoftengr i
pedaboutWal -Mar t'sdemands.St il
l,P&GandWal -Mar
tcameup
wit
hspeci f
icgoals.Int heirf ir
stcol l
abor ati
on,Wal -Martcomplained that
Pamper sdiaperssatf ort ool ongi nitswar ehouses,cost i
ngitmoney .Wal-
Martbuy erswereshi ppingdi aper sfrom t hef actoryev er
ytwoweeks.Af t
er
gai
ning accesst o Wal -Mar t
'ssal esdat a,P&G assi gned onemanagert o
monitorthedataandor derjustenoughPamper st omeetsal esbutnott oo
muchsot hatt
hediaper ssati nt hewar ehouse.

Ef
fi
cientSupplyChai n:Di
stri
buti
on
• Att heendof2003: 84Wal -MartDCs
• DC’ sf uncti
onedast hehubsinahub- and-spokenetwork
• Di str
ibutioncostsaccountedfor2-3%ofWal -Mart’
srevenues
compar edt o4-5%forotherretai
lers
• Wal -
Mar tmast er
edlargescale“CrossDocki ng”
• Aut omat ionofdistr
ibuti
on:RFIDtechnol ogy
• I nventoryturnswereakeymeasur eoft heov er
all
perfor
manceoft
he
supplychai n

• St
ockedmixofnat i
onal
lybr
andedandpri
vatel
abelproducts
–Whatar etheprosandconsofnat
ional
lybr
andedandpr iv
ate
• Pr
l
abelproduct
oductassor
t
s?
mentmanagedbyst
ore⇒ mor
evar
iet
y

– Whatar ethepr
– Pro:
osandconsofof
Morevar
iet
yt
feri
ngmor
hancompet
it
or
ev ari
et
s⇒ cust
y?
omersati
sfact
ion
– Con:Mor
evari
etyt
hancompeti
tor
s⇒ highercost
s

Pri
cingSt r
ategy:EDLP
HowWal -MartGotReadyEar ly
,Nov28, 2005
Anotheraggressivemov e:Wal-Martannouncedear l
ylastweekt hati
t
wouldmat chcompet i
tors'pricesonpr omotedit
ems- -eventheafter
-r
ebatepri
ce
-
-providedWal -Marthadt hei denti
calit
em i
nstock.Whilethisisn'
tanewpol i
cy
forWal -
Mar t
,itwast hef i
rstt i
met hecompanyr epeatedl
yadv ert
isedit
."By
remi
ndingpeopl ewemat ch
pr
ices,shopperswi l
lknowt heydon'thavetorunar ound.
"saidMr.[
Sonny
Li
ttl
efi
eld],
theArli
ngtonst oremanager .
• Wal -
Mart:everydaylowpr ice(EDLP)retail
er
– Whatar et headvantagesofEDLP?
• St or
emanager sall
owedt omat chorbeatt helowestcompet
ingpr
ice
• Whati sreal
lyal l
owingWal -Marttohavelowestprices?

Wal
-Mar
t:MarketPositi
on
• Fi
rst:Smalltownruralst
rat
egy
– Only55%compet edir
ectl
ywi t
hKmar tand23%wi thTar
get
– Hav edispl
acedsmalllocalmerchants
– Onlycompet i
tioni
stheWal -Marti
nthenextt own
• Second:Clearl
ydefi
nedcompet it
iveposi
ti
on: emphasisonnat
ional
l
y
brandedproductsandEDLP
– ReinforceEDLPbypost i
ngcompet i
tors’pr
icesweekl
y

Howusual purchasewor ksinabr i

ckworld
Uniquefeat
ureofcat al
ogandI nter
netbusiness:
inf
ormati
onandproductfl
ow
di
sinter
mediati
on.
Somecompani esuseDSsomenot .Why?
SupplyChainDesignisabi gpainforret
ail
erandwholesal
er.Wher
ewasi t
usedbeforetheinventi
onoft heInter
net?
 Aboutay earago,For beshadanar ti
cletitl
ed“ CHEAPTRI CKS” .This
arti
cledescr
ibedSpun.com, aCDr et
ail
eront heInternet.Star-upcapi t
alabout
$800,000– mi ghtseem al ot.Butont heI nter
net ,amaj ordi mensionof
compet i
ti
onisproductv ar
iety,andSpun.com henceof fer
s200, 000CDt i
tles
avail
ableforimmediateshipment .I
fstockinganav erageof5CDsf oreach
ti
tleatanaveragewholesalepr i
ce$7,t
hiswoul drequi r
eani nv estininventory
aloneatabout$7, 000,000– i nadditi
ont oal lotherst art-upi nvestment s
requir
ed.SohowdoesSpun. com doit
?
Examplesofout sour
cing
• Toshi
bahasout sour
cedmanuf acturi
ngt oSol ect
ron
• GM hasout sourcedit
sinteri
ordesi gntoDel phi
• Manyfirmsoutsourceproblem solv
ingtoMcKi nsey&Co.
• Advert
isingisoftenoutsourcedcompl etely
.
• Manycompani esoutsourcelogist
icsandt ransportat
ion.

Whydof
irmsout source?
• Organi
zati
onal reasons
-Focusonser vi
ce
-Focusoncor ecapabi
li
ties
-Transformt heorgani
zation
-I
ncreasef lexi
bil
i
ty
• Operat
ionalreasons
-I
mpr oveper for
mance( quali
ty,
product
ivi
ty,
etc.
)
 -Obtainexperti
se,skil
l,andtechnology
-Riskmanagement
• Fi
nancialr
easons
-Transferassetstotheout sourci
ngpartner.
-Freeupr esourcesforinvestmentinotherpurposes.
• Costdri
venr easons
-Transformf i
xedcostsi nt
ov ar
iabl
ecost s.
-Reducecost sthroughout sour
cingpartnereff
ici
encies.
• Revenuedrivenreasons
-Expandandgr owwi t
ht hehelpofanotherorganizat
ion.
-Obtainaccesst ooutsourcingpartner
’snetwork.

Ref
erences:

J.R.Ev
ans.AndW.M.Li
ndsay
,“Tot
alQual
i
tyManagement
”,Cengage
Learni
ngAsia,
2013.

J.Hei
zer
,B.Render
,Oper
ati
onsManagement
,10t
hGl
obal
Edi
ti
on

S.Ani
lKumar,N.Sur
esh,
Oper
ati
onsManagement
,NewDel
hi,
NewAge
I
nter
nati
onal
,2009
t
h
W.J.St
evenson,“Operati
onsManagement
”.12 Edi
ti
on.NewYor
k:
McGraw-hi
lleducat
ion,2015.

W.JSt
evensonandS.C.Chuong,"
Operat
ionsManagement
".2ndEdi
ti
on.
NewYork:McGraw-
hil
leducat
ion,
2014.

Ghose, A. (2005). Suppl

y Chain Management.Retri
eved f
rom:
ht
tps:
//www.
sli
deshare.
net
/hazman/
suppl
y-
chai
n-management

Suppl
yChainManagementRet ri
evedfrom:
htt
ps:
//www.google.com/ ur
l?sa=t&rct
=j&q=&esrc=s&sour
ce=web&cd=&ve
d=2a
hUKEwjkn9i
D64zrAhVhF6YKHf 6YBlAQFjAMegQI BhAB&url
=htt
p%3A%2F
%2Fwww. pr
ism.gatech.edu%2F~bt 71%2Fmgt 3501%2FSupply%2520Chai
n
%2520Management _08.
ppt&usg=AOv Vaw3NJszUOHSEP1SCzav rHsl
e

Operat
ionsManagement .AccessedAugust12,2020.
htt
ps:/
/www.sl
ideshar
e.net/Kadi
rikj
s24/
operat
ions-
management
-
69329225
 CHAPTER9

Mat
eri
alsandI
nvent
oryManagement

Chapt
erOut
li
ne
9.1Introduct i
onandMeani ng
9.2ScopeorFunct i
onsofMat eri
alsManagement
9.3 Mat eri
al PlanningandCont rol
9.4 Purchasi ng
9.5St oresManagement
9.6Inv entor yCont r
ol orManagement
9.7TheNat ureandI mpor tanceofI nventor
ies
9.8Requi rement sforEf fecti
veI nventory
9.9.I nv entoryOr deri
ngPol i
cies
9.10HowMucht oOr der:Economi cOrderQuant
it
y
9.11 Reor derPoi ntOr deri
ng
9.12HowMucht oOr der:Fi
xedI ntervalModel
9.13TheSi ngle-PeriodModel

Intr
oduct i
onandMeani ng
(i
)‘MaterialsManagement ’
isat erm usedtoconnot e“control
li
ngthe
kind,amount ,l
ocat i
on, movementandt i
mi ngofv ar
iouscommodi t
iesusedin
product i
onbyindust rial
enter
pri
ses”.
(i
i)Mat erials Managementt heplanning,direct
ing,cont
roll
ingand
i
scoor di
natingthoseact i
vi
ti
eswhich concer ned wi th mat er
ials and
arer equirements,f rom thepointofinv entory i
ncepti
on to t
hei
r
theirmanuf act
uringpr ocess. i
nt r
oduct i
onintothe

ScopeorFunct i
onsofMat eri
alManagement
Mat erial
s management i s concerned wi th management f unct i
ons
supporti
ngt hecompl etecy cl
eofmat eri
alfl
ow,from t hepurchaseandi nternal
contr
olofpr oducti
onmat erial
st oplanningandcont r
olofwor kinpr ocess,t o
warehousing,shi ppi
ng and distri
buti
on oft hefinished product.An ef fectiv
e
materi
alsmanagementpr ocessensur esthattherightkindsofmat er
ialsar eat
theri
ghtplacewhenev erneeded.
Mat er i
alsmanagementi sconcer ned wi th planni
ng,directing and
contr
olli
ngt heki nd,amount ,locat
ion,mov ementandt imingofv ari
ousf lows
ofmat eri
alsusedi nandpr oducedbyt heprocess.
Objecti
vesofMateri
alsManagement:
Materi
alsmanagementobject
ivesar
ecat
egor
izedi
nto:
1.Pri
mar yobj
ect
ive
2.Secondaryobj
ecti
ves

Pri
maryObj ecti
ves
“
Maki ng avail
abl
e(supply
)ofmat eri
alsin speci
fi
ed quant
it
yand
qual
it
y at economi c cost and mai nt
aining the conti
nuit
y of supply
.
Mini
mizati
onofi nvest
mentsinmat er
ialsandi nvent
orycosts,andassur
ing
hi
ghinventoryturnover
.”

Secondar yObjectives
Secondar y object
ives help to achievet he primary object i
ves.
Purchasingt heitemsf rom areli
ablesour ceateconomi
cpr ice.Reductionof
costsbyusi ngv ari
ouscostr educti
ont echni
quessuchasv ari
etyreduction,
standardizati
onandsi mpl i
fi
cati
on,valueanalysi
s,inv
ent
orycont r
ol,purchase
researchet c.Co- ordi
nati
onoft hef unctionssuchaspl anning,scheduling,
storageandmai ntenanceofmat eri
als.

ScopeofMateri
alsManagement:
Materi
alsmanagementencompassesalltheaspectsoft hemat er
ialsi
.e.
materi
al cost
s, materi
al suppl
y and mat er
ial uti
l
izat
ion. Mat eri
als
managementis concer
ned wit
h mater
ialplanni
ng and mat eri
als cont
rol
acti
vi
ti
es.Thedetai
lsofplanni
ngandcont r
olactiv
iti
esarer epr
esentedin
tabl
e1.3.

IntegratedMat erial
sManagement :
Mat eri
alsrequi
redforproduct i
onpur posear enormal l
ypr ocuredand
storedi nt heplantandissuedt omanuf acturingwhent her
ei sar equisi
tion.
Mat eri
al sar etobepur chasedinadv anceandst oredtoensur euni nter
rupt ed
supply.
Ther eshould bea pr operco- or dinati
on and co-oper ati
on among
differ
entf uncti
onalheadsofmat eri
alsdepar tmentt ooptimizet heoper ati
ons
ofmat erials management .The mat erialsf unction to be ef fectiv
e,t he
objectivemustbet omaxi mizematerial
spr oductiv
ity.Anintegratedappr oach
tomat erialsmanagementi .
e.materialspl anningandcont r
olmustl ooki nt o
thepr obl em ar easinaco-coor dinatedmanneri nordert omaxi mizet he
effecti
v enessofmat eri
alsmanagement .

Anint
egratedmater
ial
smanagementwil
lresulti
nthefoll
owingadv ages:
ant
a.Bet
teraccount
abi
l
ityf
ormater
ial
sandmat er
ial
concernedcost
s.
b.Bett
erco-ordi
nati
onwithi
nt hematerial
sfunct
ionsandal
soot
herf
unct
ional
areasofbusiness.
c.Bett
erperformanceandeffecti
veness.
d.Adapt
abi
l
ityt
oaut
omat
edandcomput
eri
zedsy
stems.

Thei mportantareastoi
mpr ovemateri
alsplanni
ngandcont
rolar
e:
1.Valueanalysisandpurchasepri
ceanalysi
s.
2.Mat er
ial
splanningandcontrol
(Inv
entoryContr
ol)
.
3.Storescontrol.
4.Wast emanagement .
5.Mat er
ial
shandl i
ng.

Var
iousel
ement
sofi
ntegr
atedmat
eri
alsmanagementar
erepr
esent
edi
ntabl
e
1.
4.

FlowofMat erial
sinManuf acturi
ng:
I
nanymanuf acturingor ganization,therei saf l
ow ofmat erialsat
variousst agesofmanuf acturi
ngi .e.fr
om i nputtoout put.Theflowoft angi bl
e
mat eri
alsf rom inputt hroughmanuf acturingtoout putofamanuf act uri
ng
oper at
ioni sr epresent
edi nt hefig( 1.
10).
The f l
ow withr eference t oi nput sinv ol
v es such activit
ies as
purchasi ng,t raff
iccontrolandr eceivi
ng.Theact ivit
iesassociatedwi thf low
withint he f actoryinclude t he mat er
ialhandl i
ng act iv
iti
es atdi f fer
ent
wor kst
at ionsaspert heor derofpr ocessing.Out putr el
atedactiv
iti
esi nclude
packagi ng, shippinganddi stri
bution.

Ir
respect i
ve oft he type oft he organi
zati
on,t
he basi
c mat
eri
alr
elat
ed
functionsper f
ormedatt heorgani
zationar
e:
1.Purchasing
2.Inboundt raf
ficfrom suppl
ierstocompany
3.Receiving
4.InventoryCont r
ol
5.Product i
oncont r
ol
6.I
npl antstorage
7.Mater i
alhandli
ng
8.Packagingandshi ppi
ng
9.Outboundt raff
ic
10.War ehousi
nganddi st
ri
but
ion

Mat
eri
alsManagement
:Obj
ect
ives,
ScopeandFunct
ions!

Mat erial
s management i s concerned wi th management f unct i
ons
supporti
ngt hecompl etecy cl
eofmat eri
alfl
ow,from t hepurchaseandi nternal
contr
olofpr oducti
onmat erial
stopl anningandcont r
olofwor kinpr ocess,t o
warehousing,shi ppi
ng and distr
ibuti
on oft hefinished product.An ef fectiv
e
materi
alsmanagementpr ocessensur esthattherightkindsofmat er
ialsar eat
theri
ghtplacewhenev erneeded.
Mat er i
alsmanagementi sconcer ned wi th planni
ng,directing and
contr
olli
ngt heki nd,amount ,l
ocation,mov ementandt imingofv ari
ousf lows
ofmat eri
alsusedi nandpr oducedbyt heprocess.

Purchasing:
Purchasingplaysacr ucialrolei
nt hemat er
ial
smanagementbecauseitis
concerned f
r om inputst age up tot he consumpt
ion i
n manufact
uri
ng.
Purchasingfuncti
onsasamoni tor
,clear
inghouseandapi pel
i
netosupply
materi
alsneededf orproduction.

Dr.Walt er
sdefi
nessci ent
if
icpurchasingas:
“Procurementbypur chaseofthepropermat er
ial
s,machineryandequi
pment
andsuppl i
esofstoresusedinmanuf acturi
ngofthepr oduct,
adopt
edto
mar ket
ingintheproperquanti
tyandqual i
tyatthepropertimeandatthe
l
owestpr i
ceconsi
stentwithquali
tydesir
ed.”

Purchasi
ngCycle:
Thepurchaseproceduref
oll
owedvari
esfrom companyt
ocompanyand
al
sof r
om oneindustr
ytoother
.Thepurchasi
ngcycl
eisr
epr
esent
edas
showni
nfi
g(1.
11)
.
Thebasi
cel
ement
sinpur
chasi
ngar
e:

1.The or igin ofdemand f ormat erial

s and component s based upon t
he
requisiti
onsmadet opurchasedepar tmentbyuserdepar tmentswithallt
he
detail
sl i
kedescr i
ptions,quantit
yandqual i
tyspeci
f i
cati
ons.
2.Speci ficati
onsarecheckedandv er
ifiedandpur chaseplanismadef or
i
temsdemanded
3.Selectionofsour ceofsuppl y.
4.Prepar ati
onofpur chaseor derbysuppl i
er(orderacceptance)and
accept anceoft er
msandcondi t
ions.
5.Followupt oensur epr
omptdel i
veryofr i
ghtqualit
yandquant it
yofmateri
als.
6.Incominginspecti
onofmat eri
als(bothtocheckqual
it
yandquant
it
y)to
ensurecorr
ectmat eri
alasperspecif
icati
on.
7.Checki
ngsuppl yinvoi
ceagainstpurchaseorderandgoodsr
ecei
vedand
paymentsaremade.

Met
hodsofBuy
ing:
Met
hodsofpurchasi
ngwi
l
lvar
yaccor
dingt
othenat
ureofdemandandt
he
mar
ketcondi
ti
ons.

Thepr i
nciplemet hodsofbuyi
ngar e:
1.Purchasingbyr equi
rement(Handtomout hbuy
ing)
.
2.Purchasingforaspecifi
edfutur
eperiod.
3.Marketpur chasing.
4.Speculati
vebuy ing.
5.Contractbuy i
ng.
6.Grouppur chasingofsmalli
tems.
7.Forwardbuy ing.
8.Hedging.

Sour
ceSelecti
on(VendorSelecti
on):
Thesel
ecti
onofrightsourceofsuppl
yisanimportantaspecti
nmat er
ial
s
management.Thev endori
stobeexami nedwit
hrespecttohiscapabi
li
ty
andcompetencytosupplyri
ghtquali
tyofmater
ialatr
ightti
meandata
competi
ti
vepri
ce.

Thebuy erlooksf ort

hef ol
lowi
ngdetail
sbef
oreadecisi
onregarding
vendorselectionismade:
1.ProductionCapabi l
iti
es:
(a)Capacitytomanuf actur
etheproduct
sasperthespeci
fi
cati
onsand
requi
redquant it
ies.
(b)Avai
l
abi l
it
yofspar ecapacit
y.
(c)Capabili
tytounder st
andtheneedsofBuyerCompanybothtechni
cal
and
commer cial.

2.FinancialPosit
ionoftheVendor :
(d)Thetypeoft hecompany–Pr i
vatel
imit
ed,Par
tner
shiporSol
epropr
iet
orshi
p.
(e)Company ’scapit
alst
ructur
e.
(f)
Financialposit
ionandprofi
tabi
li
tyofthecompanysincel
ast3-
4years.

3.TechnicalCapabil
it
ies:
(g)
Whet hertheavai
lablepl
antandequi pment ’
sereinaposi ti
ont
omeetthe
quali
tyandquantit
yspecifi
cat i
onsoft hecust omer.
(h)
Whet herther
eareenought echnical
lyskil
ledandt r
ainedpeopl
e.
(i
)Whet herR&Dfaci
lit
iesareav ail
able.
(j
)Whati sthemarketstandingoft hev endorwithrespecttoqual
it
yand
del
iverycommi t
ment s(Rel
iabili
tyofsupply).
(k)
Whet herhehasenoughst ori
ngandwar ehousingfacil
it
ies.
(
l)Qual
i
tycont
rol
procedur
es–whet
heranI
SO-
9000cer
ti
fi
edsuppl
i
er.

4.OtherCondi t
ions:
(m)Workingcondi ti
onsinthevendorcompany.
(n)
Industr
ial
r el
ationsandbargaini
ngpowerofuni
ons.
(o)
Possiblereasonsf ori
nter
rupti
onsinsuppl
y.

VendorRel ati
ons:
Purchasedepar tmentshouldest abli
shasoundr elati
onshipwi t
hv endors
basedonmut ual t
rustandbenef i
ttoensur esmoot hsuppl yofmat eri
als/
parts
aspert hequal i
tyandquant ityrequired.So,apartfrom af ormalcommer cial
rel
ationshipasacust omer,alongl asti
ngandmut ual l
yrewar di
ngrelati
onship
i
st obeest abl
ished.
Ast rategi
cpar t
nershipbetweent hebuyerandsuppl ierisdefinedasa
continuingr el
ati
onshi pinvol
vi
ngacommi tmentov eranext endedtimeper i
od,
anexchangeofi nformat i
onandacknowl edgmentofr isksandr ewardsoft he
partnership.A soundr el
ati
onshipemer gesf r
om t hepr operhel p and co-
ordi
nat i
onont hepar tofbothbuy erandsupplier
.

Theexpect ationsfrom buy er

sinclude:
a.Promptnessi ndel i
very.
b.Meetst hequalit
yandquant it
yrequir
ement
s.
c.Enter
tainsoccasi onalrushorders.
d.Flexi
bil
i
t yinquant i
tytobesupplied.
e.Canwai tforthebi l
ls.
f.Competitiv
epr i
cing.

Theexpect ati
onsf rom t
hevendors:
a.Consistentorders
b.Promptpay mentoft hebil
ls.
c.Extendhelpdur i
ngdiffi
cul
tybot
hfinanci
alandt
echni
cal
.
d.Continuit
yofor ders.

VendorRati
ng(Eval
uat
ionofSuppl
ier
s):
Theapprai
saloft
hevendorper
for
manceisacont
inuespr
ocess.

Thev endorcanber atedonv ariouschar acteristi

cssuchas:
1.Del i
very(Todel iverasont i
measpert heor der).
2.Qual it
y(Todel i
v eryasperspeci fi
cati
ons) .
3.Price.
4.Ot herfactorssuchascapabi l
itytomeetur gent /
rushordersreadinesst o
tryoutnewdesi gnsornewmet hodset c.
Invendorr ating,oneusual l
ygiveswei ghtaget ot hesevariouscharacteristi
cs
andmeasur est heper f
ormanceoft hev endorsper iodi
call
yont hebasi sof
certainnormsandpr ocedures.Everycompanyshoul dhav eaformal vendor
rati
ngsy st
em.I tisnotonl ybenef ici
altot hebuy ercompanybutal sof ort he
suppl i
ercompany .Vendor swil
lgett hefeed-backbasedonobj ect
ive
evaluationandcancompar ei
tsownper formancewi ththatofcompet itors.I
t
i
saf aireval
uat i
onsi ncet herati
ngi sbased
onfact
sandnotonopini
onsorpr
ejudi
ces.VendorCompani
escan
knowthei
rshor
tcomi
ngsandimproveuponthem.

Generall
y,t
herear
ethreemet
hodsofv
endorr
ati
ng:
1.Categori
cal
plan
2Weightedpointmet
hod
3.Costrati
omethod.

JustI
nTi
me(
JIT)Pur
chasi
ng:
Justinti
mepurchasingisamaj orcomponentofJI Tmanuf actur
ingsystem.
ThebasicconceptofJITpurchasingistoestablishagreementwi thvendors
todeli
versmallquant
it
iesofmat eri
als/
partsjustinti
mef orproducti
on.This
approachisqui
tecontrastt
otraditi
onalapproachofbul kbuying.

Thef eatur
esofJITpur chasingare:
a.Reducedl otsi
zes
b.Frequentand.rel
iabledeli
veryschedules.
c.Reducedandhi ghlyrel
iabl
eleadtimes.
d.Highqual i
tyl
evelofpurchasedpar ts.
TheJI Tpurchasi
ngai msatasi ngl
er eli
abl
esourceforeachi
tem and
consolidat
ionofseverali
temsf rom eachsuppl
ier.

Thereduct i
onofnumberofsuppl i
ersinJITpur
chasi
nghast
he
fol
lowingadv antages:
1.Consistentqualit
y
2.Minimum inv est
mentandr esour
cessuchasbuyer’
sti
me,t
rav
eland
engineeri
ng
3.Focusedat t
ent i
ononvendors
4.Savingsont ooli
ng
5.Establi
shmentofl ong-
ter
mr elat
ionshi
p.

FormakingJI Twork,t
hefol
lowi
ngcondi t
ionsar
eputonpurchasing
department:
1.Reducti
oninnumberofsuppli
ers.
2.Locati
ngthesuppli
erswhoarenearby.
ThesuccessofJITpurchasi
ngdependsonhowwel lt
hef
irm est
abli
shest
he
str
ategyofsingl
esourci
ng.Thesuppli
ersshoul
dbeseenas“ Outsi
de”
part
nerswhocancont ri
but
etothelongrunwellfar
ebuyi
ngfirm.

Ref
erences:

J.R.Ev
ans.AndW.M.Li
ndsay
,“Tot
alQual
i
tyManagement
”,Cengage
Learni
ngAsia,
2013.

J.Hei
zer
,B.Render
,Oper
ati
onsManagement
,10t
hGl
obal
Edi
ti
on
 S.Ani
lKumar,N.Sur
esh,
Oper
ati
onsManagement
,NewDel
hi,
NewAge
I
nter
nati
onal
,2009
t
h
W.J.St
evenson,“Operati
onsManagement
”.12 Edi
ti
on.NewYor
k:
McGraw-hi
lleducat
ion,2015.

W.JSt
evensonandS.C.Chuong,"
Operat
ionsManagement
".2ndEdi
ti
on.
NewYork:McGraw-
hil
leducat
ion,
2014.

Ghose, A. (2005). Suppl

y Chain Management.Retri
eved f
rom:
ht
tps:
//www.
sli
deshare.
net
/hazman/
suppl
y-
chai
n-management

Mat er
ial
s Management Ret
r i
eved f
rom:
https:
//www. y
ourarti
clel
i
brary
.com/materi
al-
management /
materi
als-
management -
objecti
ves-
scope-and-
functi
ons/57432#:~:text
=Scope%20of%20Mat eri
als%20Management%3A%20
M
ateri
als%20management %20encompasses%20al l,
and%20contr
ol%20acti
vi
ti
e
s%2
0are%20represented%20in%20tabl
e%201.
3.

Operat
ionsManagement .AccessedAugust12,2020.
htt
ps:/
/www.sl
ideshar
e.net/Kadi
rikj
s24/
operat
ions-
management
-
69329225
 CHAPTER11

Ov
eral
lEqui
pmentEf
fect
iveness

Chapt
erOut
li
ne
1.
WhatisOEE?
2.
Whatist hebenef
it
sofusingOEEt oi mproveoperat
ional
perfor
mance?
3.
HowdoesOEEbui l
dandsuppor tacul t
ureofLeanManuf act
uri
ng?
4.
HowisOEEused?
5.
From whereandwhendi dOEEor i
ginate?
6.
Whataret hebenefi
tsofanautomat eddatacoll
ecti
on?
7.
Howist heOEEModel i
mplemented?

WhatisOEE?
TheOver
all
Equi
pmentEf
fect
iveness(
OEE)ofamachi
neorsetofequi
pment
i
saKeyPerfor
manceI
ndi
cat
or(
KPI
)thati
ndi
cat
est
heequi
pment
’sov
eral
l
oper
ati
onal
perfor
mance.I
nessence,
OEEi
sameasur
eoft
heact
ual
out
putt
hatwas
produced
wi
thamachi
ne,
compar
edwi
tht
hemaxi
mum out
putt
hatcoul
dbeexpect
edf
rom
t
he
machi
neovert
hesameper
iodoft
ime.OEEt
akesi
ntoconsi
der
ati
ont
he
cumul
ati
ve
i
mpactofthr
eef
act
ors:
theequi
pment
'sav
ail
abi
l
ity(
per
centofschedul
ed
pr
oduct
ion
ti
meinwhi
chuni
tsar
eact
ual
l
ypr
oduced,
alsocal
l
edt
heMachi
neOper
ati
ng
Time)
,
i
tsper
for
mancer
ate(
per
centofmat
eri
alpr
oducedcompar
edt
ost
andar
d),and
t
hequal
i
tyofi
tsout
put(
per
centofgoodmat
eri
alpr
oducedcompar
edt
oal
l
mat
eri
alpr
oduceddur
ingt
heMachi
neOper
ati
ngTi
me)
.Inequat
ionf
orm,OEEi
s
t
hemul
ti
pli
cat
ionoft
heset
hreef
act
ors:OEE=%Av
ail
abi
l
ityx%Per
for
mancex
%Qual
i
ty

Manymanuf
act
urer
sar
eal
readyusi
ngOEE,bot
hasaKPIandasa
cat
aly
stf
orchange.
OEEi
sast
andar
dmet
ri
cusedt
oev
aluat
emanuf
act
uri
ngper
for
manceby
t
aki
ngabr
oadv
iew ofal
laspect
sofpr
oduct
ion.Byusi
ngi
tst
hreef
act
ors,
OEEpr
ovi
desamanuf
act
urerwi
tht
hebestmeasur
eofmachi
neut
il
izat
ion
andhel
pst
hem f
ocusoni
mpr
ovement
sthatmostdi
rect
lyi
mpactt
hei
rpr
ofi
ts.
Aspar
toft
hel
eanmanuf
act
uri
ngt
oolki
t,OEEdoest
hisbyi
dent
if
yingand
dr
ivi
ngal
lel
ement
sofwast
eoutofmanuf
act
uri
ngpr
ocesses.
Whati
sthebenef
it
sofusi
ngOEEt
oimpr
oveoper
ati
onalper
for
mance?

Cont
inuousl
yand v
isi
blymoni
tor
ing and r
epor
ti
ng OEE pr
ovi
dest
he
basi
sforachi
evi
ngopt
imum oper
ati
onalef
fi
ciency
.Wheni
mpl
ement
edonkey
manuf
act
uri
ngequi
pment
,al
llev
elsoft
hemanuf
act
uri
ngor
gani
zat
ionwi
l
lbe
abl
etot
akegr
eat
ercont
roloft
hedai
l
ymanagement
,andi
mpr
ovet
heut
il
izat
ion
oft
hosepl
antasset
s.I
nshor
t,t
hiswi
l
lsav
ethecompanymoneywhi
l
eincr
easi
ng
pr
oduct
ion out
put
.In addi
ti
on,ut
il
izi
ng aut
omat
ed dat
a col
l
ect
ion and OEE
measur
ingsy
stemst
hatar
ehi
ghl
yvi
sibl
eandeasyt
ouse,
suchasOEM Par
tner
’s
Remot
eMoni
tor
ingsol
uti
ons,sav
esenor
mousef
for
tanddel
i
ver
shi
ghl
yvi
sibl
e,
r
eal
-t
imei
ntel
l
igenceont
heov
eral
lequi
pmentef
fect
ivenessofamachi
ne,a
wor
kcel
l
,orapl
ant
.Thi
sal
l
owsoper
ator
s
and super
visor
sto pr
oact
ivel
ytr
ack,moni
torand r
espond t
o oper
ati
onal
i
ssuesaswel
lasmeasur
eandj
ust
if
yongoi
ngi
mpr
ovementef
for
ts.

Ty
pical
l
y,manuf
act
urer
sar
eabl
eto achi
ever
api
dimpr
ovement
s
upont
hei
nit
iali
mpl
ement
ati
onofsuchsy
stems,andwhendonewel
l
,smal
l
i
mpr
ovement
scanr
esul
tinabi
gimpactt
othebot
tom l
i
ne:

•Ani
ncr
easei
nOEEofar
ound10-
15%canof
tenber
eal
i
zedi
nthef
ir
sty
ear
;
t
hiscant
ransl
atet
oa50% i
mpr
ovementi
nRet
urnonAsset
s(ROA)
.[R.
Hansen,
OEEf
orOper
ator
s]

•OEEi
nit
iat
ivesar
egener
all
ytent
imesmor
ecost
-ef
fect
ivet
hanpur
chasi
ng
addi
ti
onalequi
pmentcapaci
ty,and ov
ert
ime can r
educe maj
orcapi
tal
expendi
tur
esby50%.
•I
nmanymaj
ori
ndust
ri
es,
ani
mpr
ovementof1%i
nreduceddownt
imeofahi
gh
v
alueassetcant
ransl
atet
oov
er$1mi
l
li
oni
nannual
sav
ings.

•Asmachi
neOEEi
ncr
eases,
tot
alener
gyconsumpt
ionperuni
tpr
oducedi
s
r
educed.Themanuf
act
urer
’scar
bonf
oot
pri
nti
sreduced,
whi
l
etheyenj
oy
l
owercost
s.
HowdoesOEEbui
ldandsuppor
tacul
tur
eofLeanManuf
act
uri
ng?

TheOEEmet
ri
cpr
ovi
desf
orsev
eralcr
it
icalel
ement
soft
hemost
successf
ulLeanManuf
act
uri
ngi
nit
iat
ives.I
nthesecases,
OEEi
susedbyl
ean
pr
act
it
ioner
sont
heshopf
loort
oident
if
yandel
i
minat
ethesour
cesofl
osses
i
n al
lar
eas oft
he oper
ati
on.Ev
ery
one i
nthe or
gani
zat
ion f
rom upper
managementdownt
otheshopf
loori
sact
ivel
yandhi
ghl
yvi
sibl
yengagedi
n
suppor
ti
ngt
het
eamsandgi
vi
ngt
hem t
her
esour
cesneededt
obesuccessf
ul.
I
nthe mostsuccessf
ulcompani
es,measur
ement
s become consi
stent
,
accessi
ble,wi
del
yunder
stoodandaccept
ed.Toachi
evet
his,t
heyusecl
ear
ly
communi
cat
ed st
andar
ds and aut
omat
ed sy
stems f
or col
l
ect
ing and
i
nter
pret
ingdat
a,aswel
lasf
orr
epor
ti
nganddi
str
ibut
ion.I
nsomecases,
addi
ti
onali
ncent
ivesar
ecr
eat
edi
ncompensat
ionsy
stemst
hati
ncor
por
ate
anel
ementofOEEi
mpr
ovement
s.

Whenusedpr
oper
ly,OEEi
susedt
oeducat
eandt
rai
nthewor
kfor
ce,
t
ogai
nacommonsenseofpur
pose;i
tpr
ovi
desanaccept
edsy
stem of
measur
ementt
hatdr
ivesacommonunder
standi
ngf
ort
eam pr
obl
em-
sol
vi
ng.
Fur
ther
,wi
tht
he compl
eti
on ofeach pr
oject
,vi
sibl
e OEE i
mpr
ovement
s
pr
ovi
deasour
ceofmot
ivat
ionf
ort
hewor
kfor
cebycl
ear
lyshowi
ngt
he
benef
it
soft
hei
ref
for
ts.
 I
npar
ti
cul
ar,OEEdashboar
dsandr
epor
tspr
ovi
deapl
atf
orm f
or
or
gani
zat
ionst
o:

•I
ncr
easeout
putbyqui
ckl
yident
if
yingandr
espondi
ngt
othehi
ghest
pr
ior
it
ysour
cesofl
osses,t
her
ebypr
oduci
ngmor
eint
hesameamountof
t
imewi
tht
hesameequi
pment
,wi
thl
essener
gyconsumed;
•Empowershopf
loorper
sonnel
bypr
ovi
dingcl
earandv
isi
blemeasur
es
of
t
hei
r per
for
mancecompar
edt
ogoal
s;and
•Suppor
tcont
inuousi
mpr
ovement
.
Howi
sOEEused?

OEEcanbeev
aluat
edf
orasi
ngl
epi
eceofequi
pmentormachi
ne,or
f
ormul
ti
plepi
ecesofequi
pment
,ov
eradi
scr
eteper
iodoft
ime,orf
ora
par
ti
cul
arj
oborpr
oduct
.Li
kemanyst
andar
dizedmet
ri
cs,OEEhasasetof
basi
crul
est
ofol
l
owi
nit
simpl
ement
ati
on,andt
heappl
i
cat
ionoft
heser
ules
canv
ary
.Themosti
mpor
tantconsi
der
ati
ont
ofol
l
owi
nani
mpl
ement
ati
onof
OEE met
ri
cs i
sto be consi
stenti
nthe appl
i
cat
ion ofi
tsr
ules,so t
hat
compar
isonandt
rendi
nganal
ysi
sfr
om machi
net
omachi
neandi
ntr
acki
ng
i
mpr
ovementef
for
tspr
ovi
desv
ali
dresul
ts.

Themosti
mpor
tantaspect
,whi
chi
suni
ver
sal
l
yrecogni
zed,i
sthatt
he
pr
act
it
ionershoul
dknow how t
hei
rpar
ti
cul
aror
gani
zat
ion’
sint
erpr
etat
ionsand
def
ini
ti
ons ar
e appl
i
ed so t
hatt
hey can ef
fect
ivel
y use t
hem t
o obt
ain
i
mpr
ovement
s.Then,wi
thi
naconsi
stentf
ramewor
kandt
ermi
nol
ogyt
hati
s
accept
edacr
osst
hecompany
,OEEi
susedt
oident
if
ylossesassoci
atedwi
th
eachofi
tscomponent
s:Av
ail
abi
l
ity
,Per
for
mance,andQual
i
ty.Anal
ysi
soft
he
r
espect
ivel
ossesi
sper
for
medt
opr
ior
it
izei
mpr
ovementpr
oject
sanddet
ermi
ne
r
ootcauses,andt
hent
hei
mpr
ovement
sar
etr
ackedf
orv
eri
fi
cat
ionandf
urt
her
act
ionsasneeded.Forsmal
l
erpr
oject
s,f
ormalpr
ocessi
mpr
ovementt
ool
sand
t
echni
quesmaybeused,
suchasFMEA,
DOE,
8D,
DMAI
C,andPl
an-
Do-
Check-
Act
.
Mor
esubst
ant
ialoppor
tuni
ti
eswoul
d benef
itf
rom mor
esy
stemi
c,busi
ness
pr
ocessi
mpr
ovementt
ool
ssuchasVal
ueSt
ream Mappi
ngandKai
zen,and
somet
imesf
rom depar
tment
-orcompany
-l
eveli
nit
iat
ivessuchasmodi
fi
edwor
k
schedul
esorsuppl
ychai
nchanges.

Ourpl
atf
ormi
sfl
exi
bleenought
opr
ovi
def
ordi
ff
erenti
nter
pret
ati
ons,
andr
obustenought
opr
oper
lyi
mpl
ementt
hosedi
ff
erencesconsi
stent
lyand
accur
atel
yinbot
hhow i
tcal
cul
atesOEEcomponent
sandhow i
tdi
spl
ayst
he
r
esul
ts.Forexampl
e,
somecompani
esdi
ff
eri
nhow t
heyi
nter
pretwhatconst
it
utespl
annedor
unpl
anneddownt
imesi
nthemeasur
ementoft
hei
rmachi
nes’Av
ail
abi
l
ityor
Per
for
mance.Mor
e adv
anced user
s oft
he appl
i
cat
ion can t
ail
orand
aut
omat
ethem t
ofi
tsuchl
ocalcust
omsandi
nter
pret
ati
onsf
rom wi
thi
nthe
Downt
imeTr
acki
ngmodul
e,wi
thi
tsassi
gnmentofi
ndi
vi
dual
downt
imecodes
t
odi
ff
erentcat
egor
iesofdownt
ime.
Fr
om wher
eandwhendi
dOEEor
igi
nat
e?

TheconceptofOEEwasdev
elopedasamet
ri
candt
oolt
obeused
f
ori
mpr
ovi
ngoper
ati
ngef
fi
ciencyofmanuf
act
uri
ngpl
ant
s.I
tsor
igi
nscome
f
rom t
hef
ramewor
kofTot
alPr
oduct
ionMai
ntenance(
TPM)
,int
roducedby
Sei
i
chiNakaj
i
ma’
sInt
roduct
iont
o Tot
alPr
oduct
iveMai
ntenancei
n1988.
Si
ncet
hen,OEEhasbecomewi
del
yknownast
hebestmet
ri
cfr
om whi
cht
o
gai
ncont
rol
,and t
hen opt
imi
zet
heov
eral
loper
ati
onalper
for
mance,and
f
inanci
alr
etur
nonhi
ghv
aluemanuf
act
uri
ngasset
s
Whatar
ethebenef
it
sofanaut
omat
eddat
acol
lect
ion?

I
fdonepr
oper
ly,manual
l
yex
ecut
edOEEsy
stemswi
l
lident
if
ylosses
andoppor
tuni
ti
esf
ori
mpr
ovement
.Howev
er,col
l
ect
ingandi
nter
pret
ingdat
a
f
orev
aluat
ingOEEt
hiswayi
sat
ime-
int
ensi
vepr
ocesst
hati
swr
oughtwi
th
r
iskofer
rorandi
nconsi
stency
.Thet
imeandef
for
tspentdoi
ngi
tthi
sway
woul
dbemuchmor
eef
fi
cient
lyusedt
owor
konact
ual
impr
ovementpr
oject
s.
I
naddi
ti
on,
athi
gherl
evel
sofOEE,
itbecomesmor
edi
ff
icul
ttoobt
ainf
urt
her
gai
ns,whi
ch makes t
he t
ime and ef
for
tin manualsy
stems seem l
ess
wor
thwhi
l
e.I
nsomecases,t
hisi
sbecauset
hel
ossesar
eoccur
ri
ngatv
ery
hi
ghr
atesbutal
soi
nver
ysmal
lamount
s,andt
hesear
eext
remel
ydi
ff
icul
tto
capt
urewi
thanymanual
dat
acol
l
ect
ionpr
ocess.

I
nev
itabl
y,mostmanuf
act
uri
ngcont
inuousi
mpr
ovementpr
oject
sand
f
aci
l
iti
esusi
ngamanualcol
l
ect
ionmet
hodwi
l
lqui
ckl
ydi
scov
ert
hev
alueof
aut
omat
edsy
stems.Ther
ear
emanybenef
it
sofaut
omat
edOEEsy
stems.
Theyar
epower
fult
ool
susedt
opr
ovi
deaut
omat
eddat
acol
l
ect
ion,anal
ysi
s
and r
epor
ti
ng of accur
ate and consi
stent
,dat
a-based OEE ev
aluat
ion
summar
iesanddet
ail
s.Thef
oll
owi
ngt
abl
epr
ovi
desacompar
isonoft
hese
t
womet
hods,
andshowst
hepower
ful
andcost
-ef
fect
ivebenef
it
sofusi
ngt
he
OEEpr
oduct
ivi
tyt
ool
sinOEM Par
tner
’sRemot
eMoni
tor
ingpl
atf
orm.
Howi
stheOEEModeli
mpl
ement
ed?
 The pl
atf
orm uses a cr
oss-
indust
ryst
andar
dized modelf
orOEE
pr
oduct
ivi
tydat
a.I
tpr
ovi
desav
isuali
l
lust
rat
ionf
oreachcomponentofOEE
(
Avai
l
abi
l
ity
,Per
for
mance,
andQual
i
ty)andt
hecomponent
’sr
espect
ivev
alue,
i
nahor
izont
albarf
ormat
.Themodeli
sdesi
gnedt
ovi
sual
l
yrepr
esentt
he
cal
cul
atedv
alueofOEEast
heamountofGoodMat
eri
alpr
oducedasi
ts
appr
opr
iat
eequi
val
entpr
opor
ti
onoft
otalcal
endart
ime.Toaccompl
i
sht
his,
t
he maxi
mum v
alues oft
he component
s Per
for
mance and Qual
i
ty ar
e
gr
aphi
cal
l
yal
i
gnedwi
thr
espectt
othei
rrespect
ivepar
entcomponent
.For
exampl
e,t
het
heor
eti
calmaxi
mum speedoft
hemachi
nef
ort
heamountof
mat
eri
alpr
oducedi
sgr
aphi
cal
l
yal
i
gnedwi
tht
heMachi
neOper
ati
ngTi
me.
Thi
sisi
ntui
ti
vel
ylogi
calaswel
lbecausePer
for
mancei
smeasur
edonl
yov
er
t
he per
iod oft
ime t
he machi
ne i
s consi
der
ed t
o be pr
oduci
ng act
ual
pr
oduct
ionmat
eri
al.Eachoft
het
hreecomponent
sit
sel
fist
hendi
vi
dedby
t
hepr
opor
ti
onalper
cent
agesofi
tsr
espect
iveel
ement
s,e.
g.GoodMat
eri
ali
s
shown gr
aphi
cal
l
y as t
he r
espect
ive per
cent
age oft
he Tot
alMat
eri
al
pr
oduced.
Usingt hi
smodel ,r epor ti
ngofOEEpr oduct ivitydat aint her emot emoni toring
platf
ormi spr
ov idedi nt wol ev els.Thet opl ev elisanexecut ivesummar yview,
usinganaggr egat e,simpl ifi
edhor i
zontalbarchar tasshowni nFigur e2.Thi s
i
spr ov i
dedanyt i
met hatapl at f
or m userr equest sasummar yofOEEdat af or
adi screte,i.
e.non- t
rendi ng,t imeper i
od.Thecal culated v al
ueofOEE i s
provided in bol df ontatt he t op oft he char t,witht he equat ion ofi ts
component s appended f orr eference.Then onl yone bari s prov i
ded t o
i
llust
rate a summar y ofeach oft he OEE component s ofAv ai
labil
ity
,
Performance,andQual it
y,wi theachoft hecomponent s’associ at edv alue
l
abeledabov eit.Thet opbarr epr esentst hef ullcalendart imeper i
odf orwhi ch
theAv ailabi
li
tyoft hemachi nei sev aluated.I tisdi vi
dedpr opor t
ionatelyby
colorforeachoft hest andar dt ypesofdownt ime, wit
hpl annedandunpl anned
downt ime combi ned i nto one col or( grey)f orsi mplicity.Each addi t
ional
componentofOEEi st hengr aphicallyalignedwi t
hi t
spar entcomponentas
descr i
bedi nthemodelabov e,andi ssi milarlydi vi
dedpr opor t
ionatelybyi ts
respectiveelement s.Amor edet ail
eddescr iptionoft hi sfor matispr ov i
ded
below.

ThesecondlevelofOEEr epor
ti
ngpr
ovi
dedbyt heremot
emonit
ori
ng
sy
stem is a det
ail
ed breakdown ofOEE componentelement
s wi
ththeir
respect
iveval
ues.Thi
sfor
mat
,shownher
einFi
gur
e3,pr
ovi
dest
heequi
val
ent
detai
ledsummarydata,
numeri
cal
lybycomponent,andiscol
orcodedt
omat chthetoplevel
barchart
.
Thi
sisprovi
dedf ort
heleanmanufactur
ingpr
act
it
ionertodri
lldownint
ot he
det
ail
sforfurt
heranaly
sist owar
dthedesignandexecutionofact i
onable
i
mprovementplans.

Figur
e 4:Example offormatf orOEE componentdet ai
l
s The t op l
evel
summar yofdat
ashowni nFi gur
e2provi
desthev al
ueofcalcul
atedOEEf or
theselect
edti
meper i
odatt hetopofthechart
,abov et
hecomponentbar s.
Eachcomponentbarisdef
inedandformatt
edasf ol
lows:

Av ailabi l
i
ty:
Thenumer i
calv alueofAv ailabil
ityisameasur eoft het i
meamachi ne
hasbeenupandr unningandmaki nganypr oductionmat eri
al .Thismet ri
ci s
dependentupont het i
met hatt hemachi nehasbeenschedul edf orpr oduct i
on.
Dat aacqui r
eddi rectlyfr
om t hemachi neisusedt ocomput et hedownt i
mecal led
theAv ail
abili
tyLoss,ast heamountoft i
met hatthemachi nehasnotbeen
creat i
ng pr oduct i
on mat erialdur ing t he Pl antOper ati
ng Ti me.The Pl ant
Oper at i
ngTi mei sdef i
nedbyt heoper atingshi f
tschedul ef ort hemachi ne,and
doesnoti ncludeSchedul edDownt ime.Av ail
abili
tyLossmaybef urthersect i
oned
i
nto Pl anned and Unpl anned Downt ime. Thi s i s accompl ished ei ther
aut omat i
call
yormanual l
ybyt hepr actit
ioner ,t
hrought heuseofdownt i
mecodes
thatar eacqui r
edei therdi r
ect l
yfrom t hemachi neort hroughmanualassi gnment
using t hepl atf
or m.Pl anned Downt imesuch asoper atorbr eaksorpl anned
mai nt enancedur ingnor maloper atinghour sar ei ncludedi nAv ailabili
tyLoss
becauset hi
si sf ull
ybur denedt i
met hati sav ail
abletooper atet hemachi ne.For
exampl e,incel lularwor kf l
ow desi gns,speci alarrangement scanbemadet o
rotatebr eakper iodsandoper atorssopl annedbot t
lenecksdon’ tst opr unning
dur i
ng br eaks,and mai ntenance can be pl anned dur i
ng schedul ed pl ant
shut downper i
ods.
TheMachi neOper ati
ngTi mei sshowni nal i
ghtgr eencol or,wi t
ht he
remai ningtimepor tionoft hePl antOper ati
ngTi meshowni ngr ey .Al llossi n
Av ail
abl et i
me,whet herpl annedorunpl anneddownt ime,isshowni nt hisgr ey
por ti
on.Ti met hatt hemachi neorpl antisnotschedul edt ooper ate,ifther eisany
suchtimei ntheselect
edcal
endart
imeper
iod,i
sshowni nwhit
e(nocolor
)on
theri
ghtsideoft hebar
.Thetot
all
engt
hofthebarr
epresent
sthecal
endarti
me
peri
odselectedforther
epor
t.
Performance:
Theper formancepor ti
onoft heOEEMet ricr epr esent st heav erage
speedatwhi cht hemachi newasoper ateddur ingt heMachi neOper at i
ngTi me
oft he cal endart ime per i
od chosen,as a per cent age oft he t heor eti
cal
maxi mum speedt hatt hemachi necanoper ate.Itisameasur eoft hequant i
ty
ofunitsact ual lypr oducedasaper cent ageoft hequant i
tyofuni tst hatwoul d
havebeenpr oducedi nt hatsamet i
meper iodi fthemachi newer er unningat
maxi mum speed.Thi smet hod i sequi valentt o anev aluat ioni nwhi cha
machi ne’sper for mancei sr epresentedbyt hei deal,ormi nimum t imei tshoul d
taket opr oduceauni tofmat er i
alasapr opor tionoft heav er aget imei t
actuall
yt ookt opr oduceauni tofmat erialdur ingt heMachi neOper at i
ngTi me
ofthesel ectedcal endart imeper iod.
Themaxi mum speedcanbedef inedbyt hemachi ne“ namepl ate”
speed,whi chi st hemaxi mum desi gnspeedoft hemachi ne.Thi si sthe
defaultmet hod ofev aluat ing OEE,whi chcanbeused f orbenchmar ki
ng
product i
v it
yanal ysesacr osswor kcel l
sorpl ants.Al ter nat ely ,OEEcanbe
evaluatedf orspeci fi
cj obs,pr oduct sormat er
ialsbei ngpr oducedont he
machi ne.I nt hi scase,t hemax i
mum speedcanbedef inedast he“ standar d”
oridealspeedf orapar ti
cularj ob,pr oductormat eri
albei ngpr oducedas
determi nedbyt hemanuf acturingorpr ocessengi neerwhodev el opedt he
processf ort hemachi ne.Thi spr oduct -orj ob-basedmet hodofev aluati
ng
OEE can al so be i nfor mal lycal l
ed t he “ Rat ed OEE” ,t or ef lectt hatt he
evaluationwasr at edt oaspeci f
icpr oductorj ob, andt odi ffer ent iatef rom the
default,machi nenamepl atespeedbasedOEEev aluat i
on.I nt hepl at form,the
RatedOEEi sadmi ni
ster edusi ngt heJobManagementt ool s.
Thet ot alquant ityofuni tspr oduceddur ingt heMachi neOper ati
ng
Timei sr epr esent edast heent irebar( lightbl ue+gr ey ),wi tht hepor ti
on
showni nl i
ghtbl uer epresent i
ngt hei dealt i
mei twoul dhav et akent opr oduce
thesamequant ityofuni tsatt het heor et i
calmaxi mum machi nespeed.The
typeofuni tsofpr oduct i
onar edef inedbyt hepar ti
cul armachi neandi ts
avail
abl econt rol par amet er s,andsetupbyt hepl at for m admi ni strat or.

Quality:
The numer i
calv al
ue ofQual it
yist he quant i
tyofGood Mat erial
producedasaper centageoft heTot alMateri
alpr oduceddur i
ngtheMachi ne
Oper at
ingTimeoft hetimeper iodchosen.Thi si scommonl yrefer
redtoas
Fir
stPass Yi el
d.Mor e sophisti
cated monitoring syst ems wi l
lt ake i
nto
accountr el
evant,on-machinequal i
tyassuranceori nspect ionsteps,tobett
er
representtheQual i
typerformanceoft hemachi neoper ation.Insomecases,
downst ream inspecti
ondev icescanbemoni toredand di rect
lyrelat
edt o
productionont hemachi ne.Oncet hemat erialbeingpr oducedi sof fthe
machi ne,howev er
,caremustbet akent oconsideronlyt hequal i
tyaspectsof
thepar t
icul
armachi neoperati
onbei ngmeasur ed.
 CHAPTER12

MATERI
ALANDCAPACI
TYREQUI
REMENTSPLANNI
NG

Chapt
erOut
li
ne

JustInTimeandLean
12.
1 MRPandCRPObjecti
ves 12.
8 Oper ati
ons
12.
2 MRPInput
sandOutputs 12.
9 Bui l
dingBlocks
12.
3 MRPLogic 12.
10 LeanTool s
Transit
ioni
ngtoLeanTool
12.
4 System Refi
nements 12.
11 System
SafetyStock,LotSi
zi
ngandSy
stem
12.
5 Updating 12.
12 LeanSer
vices
12.
6 CRPI nputsandOutputs 12.
13 JITI
I
12.
7 Loading

12.
1MRPANDCRPOBJECTI
VES

Mat er
ialRequir
ement
sPlanni
ng(MRP)i
sadependentdemandtechni
que
usedf ordetermini
ngtheschedul
eofrequi
rementsfortheacqui
sit
ionof
subassemblies,component
s and raw mater
ial
s needed t
o sati
sfythe
producti
on.

Byi dent
if
ying preci
sel
ywhat,how many ,and when component
s are
needed,MRPsy stemsar eabl
etoreduceinvent
orycostsi
mpr ov
eschedul
ing
eff
ecti
veness,andrespondqui
ckl
ytomar ketchanges.

Capaci
tyRequir
ementsPlanni
ng(CRP)isthepr
ocessofdetermini
ng
short-
rangecapacit
yofpersonnelandequipmenttomeett heproducti
on
object
ivesembodiedinthemasterschedul
eandt hemater
ialr
equi
rements
plan.

MRP focusesupon t hepr i

ori
ti
esofmat er
ials,whereasCRP f ocuses
pr
imari
lyupont i
me.Thr oughCRP,v ari
ancesar epr oj
ected,wi ththi
st he
managersmightconsiderremediessuchasalternati
veroutings,changingor
el
i
minati
ngoflotsizi
ngorsaf et
ystockrequi
rements,andlotsplit
ting.

Fol
l
owi
ngaresomeoft
het
ermi
nol
ogi
esusedt
odescr
ibet
hef
unct
ioni
ngof
MRPsy
stems.

Dependentdemand:Demandf
orsubassembl
i
est
obeusedi
nthepr
oduct
ion
offi
nishedgoods.

Par
entandcomponenti
tems:A par
enti
sanassembl
ymadeupofbasi
c
par
ts,
orcomponent
s.

Bil
lofmater
ial
s:Al
ist
ingofallt
heraw mat
eri
alspar
ts,subassembl
i
es,and
assembl
i
esthatgoi
ntoanassembledi
tem.
Lev
elcode:
Thel
evel
onwhi
chani
tem occur
sint
hest
ruct
ure,
orbi
l
l-of
-mat
eri
alsf
ormat
.

Requi
rementsexplosi
on:Thebreakingdown(expl
odi
ng)ofparenti
temsi
nto
componentpar
tsthatcanbeindi
viduall
ypl
annedandschedul
ed.
Ti
mephasi ng:Scheduli
ngtoproduceorr
ecei
veanappropr
iat
eamount(l
ot)of
materi
alsothati
twillbeav
ail
ableint
heti
meperi
odswhenneeded-
notbef
oreor
af
ter.

Ti
mebucket
:Thet
imeper
iodusedf
orpl
anni
ngpur
posesi
nMRP-
usual
l
yaweek.

Lotsize.Thequant
ityofit
emsrequi
redforanor der
.Theor
dermaybeeit
her
purchasedfrom avendororpr
oducedin-house.Lotsi
zi
ngisthepr
ocessof
specif
yingtheor
dersize.

Lead-t
ime of
fset
:The supplyt
ime,ornumberoft
ime bucket
sbet
ween
rel
easi
nganorderandr
eceiv
ingt
hemater
ial
s.

Fi
gur
e12.
1descr
ibesMRPandCRPact
ivi
ti
esi
nschemat
icf
orm.

Fi
gur
e12.
1Mat
eri
alandcapaci
typl
anni
ngf
lowchar
t
Sour
ce:Adapt
edf r
om Materi
alandCapacit
yRequi
rementsPl
anni
ng(p.218)byS.
A.Kumar
andN.Sur
esh,Operat
ionsManagement2009,NewDel
hi,
NewAgeInter
nati
onal

12.
2MRPI
NPUTSANDOUTPUTS

An MRP system has t hree maj orsour ces ofi nfor

mat i
on:mast er
producti
onschedul
eofendi temsr equired,inventor
yr ecordsfi
le,andthebill
-
of-mater
ial
s.Whil
sttheessent i
alout putsar eclassi
fiedas:pr imaryrepor
ts,
whicharethemainreport
s( plannedor ders,rel
easesandr evi
sionsofdatat o
MPS ,and secondar yreports,whi ch are opt i
onalout puts( management
report
sandinvent
oryupdates).

Themasterpr
oduct
ionschedul
especi
fieswhi
chenditemsaretobe
made,inwhatquant
it
iesandwhent hesear
eneededinaccordancet
othe
pr
oduct
ionpl
an.Thepr
oduct
ionpl
anset
stheov
er-
all
lev
eloft
heout
put
.
 Abil
lofmat eri
alist hel istofquant i
ti
esofallt
her awmat eri
alsparts,
subassembli
es,andassembl iest hatgoi ntoanassembl editem tomakea
unitofpr
oduct.Thus, eachf inishedpr oducthasi t
sownbi llofmat eri
als.The
l
isti
nginthebillofmat er
ialsi shi erarchicalwhichshowst heneededquant it
y
foreachit
em topr oducet hepar entpr oduct .Fi
gure12.
2showsanassembl y
diagr
am forachai randasi mpl epr oductst r
uct
uretreef orthechai r.The
productstr
ucturetreepr ovideshi erarchicaldecompositi
onofi t
emsf orma
product
.

Fi
gur
e12.
2Assembl
ydi
agr
am andpr
oductst
ruct
uret
reef
orchai
rassembl
y
Source:Adapt
edfrom “
ManagementofQuali
ty”byW.J.St
evenson,Oper
ati
onsManagement
(12t
hEditi
on)2015NewYork,McGraw-
hil
lEducati
on

WhenanMRPsy stem calcul

atesrequir
ements,comput
erscant hebil
l
ofmat er
ial
slevel
-by-
levelandt heit
em iscodedatthelowestl
evelatwhichit
occurs,t
hisref
erredt
oasl ow-
levelcodi
ng.Figure12.
3showsthelevelcoding
i
nformation.Level0i sthehi ghestandl evel3thelowestforthi
spr oduct
str
ucturethr
ee.
Fi
gur
e12.
3Pr
oductst
ruct
uret
ree
Sour
ce:Adapt
edf r
om Materi
alandCapacit
yRequi
rementsPl
anni
ng(p.220)byS.
A.Kumar
andN.Sur
esh,Operat
ionsManagement2009,NewDel
hi,
NewAgeInter
nati
onal

12.
3MRPLOGI
C

MRPpr ocessingtakesthefi
nalproductrequi
rement
sspeci
fi
edbyt he
master producti
on schedule and “expl
odes” them int
o ti
me-phased
r
equirementsforcomponent
susingthebil
lofmater
ial
soff
setbyl
eadt
imes.

Fol
l
owi
ngar
esomeoft
het
ermsf
requent
lyusedonMRPpl
anni
ngf
orms.

Gross r
equir
ements: The total expected demand f or r
aw mat eri
als,
component
s,subassembli
es,orfini
shedgoodsbyt heendoft heperi
od.For
endit
ems,t
hesequantit
iesar
ecomef rom t
hemasterschedul
e( f
orendit
ems)
orfr
om t
hecombinedneedsofot herit
ems.

Scheduledreceipts:Materi
alshav
ebeenplaced(
openor der
)andareschedul
ed
toarr
ivefr
om v endorsorin-
houseshopduetoberecei
vedatthebegi
nni
ngofthe
peri
od.

Onhand/ av
ai l
abl
e:Theexpectedamountofi nv
entorytobeav ai
l
abl
eatthe
endofthet i
meper i
odinwhichitisshown.Thisincl
udesamountavai
l
able
fr
om scheduledrecei
ptspl
usavail
ablei
nvent
oryfrom l
astper
iod.

Netrequi
rements:Netamountr equi
redineacht
imeperi
od.Thi
sresul
tof
adj
usti
ngrequi
rementsforprojectedinv
ent
oryav
ail
abl
efrom t
heprevi
ous
per
iodwit
hanyscheduledr
eceipts.

Planned-or
derr
ecei
pt:Quant
it
yofmater
ial
sfrom avendororin-
houseshop
expectedtober
ecei
vedatthebegi
nni
ngoftheper
iodi
nwhichitisshown.

Planned-orderrel
ease:i
ndicatesaplannedamounttobeor deredineacht i
me
peri
odadj ustedbythelead-ti
meof fsetsothatmater
ialswillberecei
v edon
scheduleddat e.Whentheor dersareexecuted,t
he“planned-or
derreleases”
aredeletedandchangedt oscheduledrecei
pts.

Thequanti
ti
esthataregeneratedbyexplodingthebi
l
lofmat er
ialsar
e
grossr equi
rement
s;theydo nott akei nto accountanyinvent
oryt hati
s
current
lyonhandorduet oberecei
v ed.Theinventor
yonhandattheendofa
peri
odi sthesum ofthepreviousper i
odon-handamountpl usanyreceipt
s
(pl
annedorscheduled)l
essthegrossr equi
rements.

Onhand/
avai
labl
e=onhandatendofprev
iousper
iod+r
ecei
pts–gr
oss
r
equi
rements

Themateri
alst
hataf ir
m mustact uall
yacquiretomeett hedemand
generatedbythemast erschedul earet henetmat eri
alrequir
ement s.The
deter
mi nati
onofthenetr equir
ement sist hecor eofMRPpr ocessing.One
accompl i
shesi
tbysubtracti
ngf rom grossr equi
rementsthesum ofexi sti
ng
i
nventoryandit
emsalreadyonor derasr ecordedintheinvent
oryst at
usfil
e.
 Netr
equi
rement
s=gr
ossr
equi
rements–( onhand/
avai
labl
e+schedul
ed
recei
pts)

12.
4SYSTEM REFI
NEMENTS

Keyf
eatur
esofMRPsyst
emsare:thegener
ati
onoflower-l
evelr
equi
rements
ti
mephasi
ngoft
hoser
equir
ements,andt
heplanned-
orderrel
easest
hatfl
ow
fr
om t
hem.

Extrahighlightsofnumer ousMRPf ramewor ksaret heirabili

tyhandle:
Simulat i
on:Thesi mulationcapabi l
itypermitsor ganizersto"pr el
iminary
fi
t"ani nit
ialcalendaront otheMRPf r
amewor kbef oret hetimetableisr eall
y
acknowl edgedanddel i
vered.Wi t
ht hi
sel ement,anor ganizercan" attempt "a
potentialclientrequestont heframewor ktocheckwhet hermat er i
alsand
conv eyancedat escanbemetev enbef oretherequesti sacknowl edged.On
theof fchancet hatleadtimes, materi
als,andli
mi t
sar eadequat e,ther equest
canbeacknowl edged;somet hi
ngel se,changesi namount sorconv eyance
ti
mesmustbear ranged,ortherequestmustbet urneddown.

Fir
m- PlannedOr ders:Fi
rm-plannedordercapabil
itynecessit
ies,indeedin
spite
factt hatordinar
yMRPr ati
onalewouldnaturall
y or suc
oft he delay reschedul e h
orders
. Byassi gningcert
ain or
ders as “fi
rm-planned
orders,”organizerscanguar ant
eet hat t
he computer wil
l
notconsequent lyalt
erthedischarge receipt
date, t
he planned-order date, or
thearrangequant it
y

Peggi ng:Peggingint
roducest ot hecapaci tytoworkinr ever
sef rom part
todi stinguishthepar entthing,ort hingst hatproducedthosepr erequisi
tes.
Fori nst ance,assumeacarpr oducerdi scov er
edt hataportionoft hebrake
mat erialswer edamaged.The" wher eut i
lized"peggingrecordwoul dper mit
creationi nvesti
gatorstofol
lowpr erequisitesupwar dintheit
em structur
et r
ee
tofigur eoutwhatend- thi
ngmodel scont ainedthedamagedsegment s.

Modul arandPl anni

ngBi l
ls:Parti
cularbill
sofmat eri
alsdepicttheit
em
structureforessenti
alsubassembliesofpar tsthatarenormaltov ar
iousend
things.Fori nst
ance,afewmodel sofapr oducer'
scarsmaycont ainasimil
ar
transmi ssion,dri
vetrai
n,cool i
ng,and st opping mechani
sms.Bybooki ng
theset hingsas(normal)modules,creat
ioncanoncei nawhi lebeallthemore
successf ully"
smoothed"andstockv ent
ur eli
mited.

12.
5SAFETYSTOCK,
LOTSI
ZINGANDSYSTEM UPDATI
NG

Saf
etystock:Inanidealwor
ld,
therei
snorequi
rementf
orsaf
etystockasthis
i
soner easonf oruti
l
izi
ngMRPappr oachinover
seei
ngsubordi
nateint
erest
st
ockthings.Bethatasitmay,fi
rmsmaychooseforconv
eystockoncertain
thi
ngsforanassortmentofr easons.Forinstance,def
ici
enci
esmayhappeni f
order
sarel ateormanufactureorgatheri
ngt imesarelongerthanantici
pated
andthisconditi
oncarr
iedthem totheuti
li
zationofwel l
bei
ngst ocktokeepup
smootht asks.I
nthisway ,holdi
ngsecuri
t ystock,del
udethepr imaryreason
forMRPappr oach
Lotsi zi
ng:Requestamount sare notgeneral
lyindicated ahead oft i
me.
Disti
ncti
vepar tmeasur ingtechni
quesar ebeingused,t heyare(1)f ixed-
requestamountsums;( 2)EOQ orERLsums;( 3)par celforpart
,whichi s
requesti
ngt hespecifi
cmeasur eoft henetnecessit
iesf oreveryperi
od;( 4)
fi
xedper i
odpr erequi
sit
esand( 5)diff
erentl
east-
costdr awsnear,e.g.
,least-
unitcost,
least-
alloutexpense.

Thepar t-
ti
mef r
amecal culati
onisat echni
quethatutil
i
zesapr oport
ionof
requesti
ngexpensestoconv eyi
ngcostsperperiod,whichyiel
dsasect i
on
periodnumber.Atthatpointprerequi
sit
esforcur
rentandfutureperi
odsare
cumul at
edunti
lthetotalholdi
ngcost(toalimi
tedextentper
iodterms)isas
closeasconceiv
abletothisnumber

Framewor kr
efreshi
ng:MRPf rameworkst
ructuresregul
arl
yut
ili
zeoneoft wo
strat
egiestoprocessinfor
mat i
on,updat
er ecords,andguaranteethatthe
fr
amewor kdatai ssubstant
ialandadjustswi thgenuine:(
1)r egener
ati
ve
prepari
ngor(2)netchangehandli
ng

Sy st
em updat ing:MRP f r
amewor kstructuresr egul
arlyuti
li
zeoneoft wo
strategiest opr ocessi nf
ormat i
on,updater ecords,andguar ant
eet hatt he
framewor k datai s substant
ialand adj usts withr eal
:(1)r egener ati
ve
prepar i
ngor( 2)netchangehandl i
ng.Regener ati
veMRP f ramewor ks:use
clusterpr epar
ingt or et
hinktheent i
refr
amewor k(ful
lblastevery
thingbei ng
equal )allthetime( e.g.
,weekaf terweek).NetchangeMRPf ramewor ks:are
ont hewebandr espondceasel essl
ytochangesf rom theacetimetable,stock
record,anddi f
fer entexchanges.

Earl
yMRPest ablishmentsweret oagr eatextentoft heregenerati
vesort,
howev erthen asnetchangef ramewor ksgotconsummat ed,mor ef i
rms
star
tedintroducingt hem.Bet hatasi tmay ,being"mov ementdr i
ven,
"net
changef r
amewor ksareher eandt her
e" apprehensi
ve"andwi l
lingeneralgo
overboard to changes. The si gnif
icant inconveni
ence of r egener
ati
ve
fr
amewor ksi sthedel aythatexistsuntilrefr
esheddat aisjoinedintothe
fr
amewor k.

Framewor kapplicat
ion:Al
thoughMRPf ramewor ksaregenerall
yut
ili
zed,t
hey
aregener all
yv al
uableinassembl i
ngconditionswher eit
emsar eproducedto
request,oramassedt oarrangeort ostock.MRPdoesn' tgiveasmuchbi tof
l
eewayi nl ow- v
olume,exceptionall
ycompl exappl i
cat
ions orin const
ant
stream forms,f orexampl e,processingplants.Itdoes,bet hatasi tmay,
appr eci
atewi deappl i
cati
on in met al
s,paper,f ood,subst
ance,and other
handl i
ngapplicati
ons.

12.
6CRPI
NPUTSANDOUTPUTS

Capacityi
sameasur
eoftheproduct
ivecapabi
l
ityofaf
aci
li
typeruni
toft
ime.
Intermsoftherel
evantti
mehor i
zon,capaci
tymanagementdecisi
onsar
e
concernedwi
tht
hefol
lowi
ng:

l
.Longr
ange-
resour
cepl
anni
ngofcapi
tal
faci
l
iti
es,
equi
pment
,and
humanresour
ces.
2.Medi
um range-
requi
rement
spl
anni
ngofl
aborandequi
pmentt
omeet
MPS
needs.
 3.Shortrange-
cont
rol
oft
hef
low(
input
-out
put
)andsequenci
ngof
operat
ions.

Capaci t
y-requirement spl anning (CRP)appl i
espr i
mar i
lyt o medi um-range
acti
v i
ti
es.TheCRPsy st
em r ecei
v esplannedandr eleasedor dersf rom the
mat eri
al-
requirement splanningsy stem andat tempt stodev elopl oadsf orthe
fi
rm’swor kcent er
st hatar eingoodbal ancewi ththewor k-cent ercapaci t
ies.
LikeMRP,CRP i sani t
er at
ivepr ocesst hati nvol
vespl anni ng,r evisi
onof
capacity( orr evi
sion oft he mast erschedul e),and r eplanni ng unt i
la
reasonablygoodl oadpr of i
l
ei sdev eloped.Pl anned-orderr eleases( i
nt he
MRPsy stem)ar econv er
tedt ostandardhour sofl oadonkeywor kcent ersin
theCRPsy stem.Fol lowingar et heessent ialinputsandout putsi naCRP
system:

12.
7 LOADI
NG

Therear et wofundament almet hodsf orarrangingthecont r

olofacr eati
on
framewor k.One oft hese is st
acking;t he otherisplanning.Oft he two
stacki
ngi sthesimpl ertodo.Inanycase, pl
anningcangiv emor econtroland
i
smor epointbypoi nt,i
nspiteoft hefactthatitisgener
allyaccomplishedf or
ashor t
ert i
mespan.Aheapi sthemeasur eofwor kall
ocatedtoanof fi
cewor k
focusoradmi nistr
ator,andst ackingist het askofwor k.Stackingdoesn' t
determinet hesuccessi onwher eint hewor ki sdoneorwheni tist o be
fi
nished.St acki
ng ist het ot
alt askofempl oy mentsto expli
citelement s.
Sourcesofi nfofundament alf
orst acki
nginclude:

•Routi
ng
•St
andardhoursperact ivi
tyorwor kfocus
•Grossmachine/ man-houraccessibl
e
•Ef
fici
encyf
act ors
•Duedate.St acki
ngisintentl
yattachedtoscopequanti
fi
cat
ionasi
n
stacki
ngi
st hemai nsignt hatl
imitlev
elsneedmodif
ying.

Ordi
nar
il
y,the st acki
ng procedur
e considered as a si x stage
methodology.Step Ithrough 4 i
s admi ni
str
ati
ve choice advances t
hat
general
lydon'
tchangeweekt oweekormont htomont h.Thelasttwostages
arerequi
redonanoccasionalpremi
seasacont r
ibut
iontobooking.
 Therearetwoessentialmethodsf orarrangingthecontrolofacr eati
on
framewor k.Oneoft heseisstacki
ng;theot herisbooking.Ofthet wostacking
i
st hesi mplertodo.Inanycase,pl anningcangi vemor econt r
olandi smor e
i
temi zed,inspiteoft hefactthatitisgener all
yaccompl ishedforashor t
er
ti
mef rame.Aheapi sthemeasur eofwor kdoledoutt oanof f
iceworkf ocus
oradmi ni
str
ator,
andst acki
ngisthet askofwor k.Stackingdoesn'tdetermine
thegr oupingwher etheworki sdoneorwheni tistobef i
nished.Stackingis
thetot alt
askofempl oyment stoexplici
tsubstances.Sourcesofi nf
ov italf
or
stackinginclude:

12.
8 JUSTI
NTI
MEANDLEANOPERATI
ONS
Ast
rad
eor
gani
zat
ion
sendeavort
opr
ese
rvecompet
it
ivenessi
nanev
er-
changi
ngwor
ldwi
deeconomy
,theya
repr
ogr
essi
vel
ylooki
ngf
ormod
ernan
dsup
eri
orwaysofwor
king.Foraf
ew,t
hisi
mpl
iesc
hangi
ngf
rom t
heconv
ent
ionalwaysofwor
kingt
owhati
spr
esent
lyr
efer
redt
oasi
ncl
ineoper
ati
on.

Al ean oper at
ion could be an adapt ableframewor k ofoper at
ion t
hat
empl oymentssignif
icantl
ylessassets(i.
e.,
exer
cises,i
ndivi
duals,
stock,
and
fl
oorspace)t hanaconv enti
onalfr
amewor k.Addit
ionall
y,i
ncl
ineframeworks
tendt oat
tai
nmor epromi nentef
fi
ciency,l
owercosts,short
ercycl
et i
mes,and
higherquali
tythannonl eanf r
amewor ks.

Leanf ramewor ksar enowandt henr efer r

edt oasj ust -
in-ti
me(JIT)
framewor ksowi ngt ot heirexceedi ngl
yf acilit
at edexer cisesandconv eyance
ofmer chandi set hathappenf airast heyar erequi red.Thei ncl i
neapproach
wasl edbyToy ota’sor iginator ,TaiichiOhno, and
Shi ge a muc lessexpensiv e
o Shi ngo s a h quickerand way
ofcr eat i
ngaut omobi les. afterits nowaday st hei nclineappr oach
Taki ng victory, is
bei ngconnect edi n wi der unoff abr i
catingandbenef i
toper ati
ons.
a Incl i
nei s both
al ogi candat echniquet hatcent ersonki l
li
ng (nonv alue-added
squander exer cises)
oper ation
and str eaml i
ning s by
closel ypl anningal l I
ncl i
nef ramewor ks t hreeessent i
al
exer ci ses. hav e component s:
ar er equest squanderdi mi nishment ,andhav e
They dr i
v en, arecent eredona
cult uret hat 'scommi ttedt o br ill
iance and per si
st entadv ancement .
This
chapt erpor tray sthei ncl i
nepr oduct i
onappr oach, count i
ngt hef undament al
element soft hesef r
amewor ksandwhati ttakest of or mt hem wor kviably.I
t
toof ocusesoutt hebenef i
tsoft hesef ramewor ks
Bygoi
ngt
othesewast
es,
thechangei
saccompl
i
shed.
1.
Wast eofov ergener ationdi sposeofbyl esseni ngset -upt i
mes,
synchroni zingamount sandt i
mingbet weenf orms, f
or mati ssues.
Makeasi twer ewhati sr equi r
ednow.
2.
Wast eofl andupdi stributewi thbottl
enecksandadj ustunev enloads
byadapt abl ewor kconst r
ai nandhar dwar e.
3.
Wast eoft ranspor tat i
onsetupf ormatsandar east ocr eatet akingcareof
andtranspor tsur plusi ncaseconcei vable.Li mi ttranspor tat i
onand
deali
ngwi thont heof fchancet hatnotconcei vablet okill
.
4.
Wast eofpr epar ingi tsel faddr esswi t
hr espectt ot her easonsf orexist
enceof
theit
em andaf t
ert hatwhyeachhandl ei sv it
al .
5.
Wast eofst ocksdecr easi ngal lotherwast esdecr easesst ocks.
6.
Wast eofmov ementt hinksaboutf oreconomyandconsi stency .
Economymov esf orwar def fi
ciencyandconsi st encypr ogr essesqual i
ty.
Fir
stmov e
for
war dt hemov ement s,att hatpointmot orizeorcomput er i
ze
somet hingel se.Ther e'sr iskofr obot i
zi
ngt hewast e.
7.
Wast ei nOper ations. Wast eof
makingi mper fecti temscr eatethegener ationhandl et oav oid
abandonsf r om bei ngdel ivered,soast odi spensewi t
hassessment .
At
eachhandl e, don' tacknowl edgesur r
ender sandmakesnodef ects.
Maket hemet hodf ail-
saf e.Anev aluatehandl econt i
nuousl ysurrender
quali
typr oduct .

Fi
gur
e12.
4Wast
einOper
ati
on
Sour
ce:Adaptedfrom Mater
ial
andCapacit
yRequi
rement
sPl
anni
ng(p.
189)byS.A.Kumar
andN.Suresh,Operat
ionsManagement2009,
NewDelhi,
NewAgeInt
ernat
ional

Benefi
tsofJIT
Themostsigni
fi
cantbenef
iti
stoimprov
etherecept
ivenessoft
hef
ir
m
tothechangesint
hemarketpl
acethusprov
idi
nganadvantagein
competit
ion.

Fol
lowi
ngar
ethebenef
it
sofJI
T:

1.Productcost —isenormouslydecr
easedduet olesseni
ngof
fabri
catingcy cl
eti
me,decreaseofsquanderandinventor
iesand
disposal ofnon-
valueincludedoperat
ion.
2.Qual
it
y—isimprov
edbecauseofcontinuousquali
tyi
mprovementpr
ogr
ammes.
3.Desi
gn—Duet oquickreact
iontobui
l
dingalt
er,el
ect
ivepl
anscan
berapi
dlybr
oughtont heshopfl
oor.
4.
Producti
vit
yimprovement
.
5.
Higherproduct
ionsyst
em fl
exi
bil
i
ty.
6.
Admi ni
str
ati
veandeaseandsimplici
ty.

12.
9BUI
LDI
NGBLOCKS

Theplanandact iv
ityofaleanfr
amewor kgi
v etheest
ablishmentto
achi
evingtheprev i
ouslymentionedobj
ecti
ves.
1.It
em struct
ure.
2.Procedureplan.
3.Staff
/hi
erarchi
cal component
s.
4.Assembl i
ngarrangingandcontrol
.Speedandef f
ort
lessnessaretwo
ongoingthemest hatgot hr
oughthesestr
ucturesquar
es.

I
tem Desi
gn

Fourcomponent sofitem conf

igur
ati
onar
esigni
fi
cantf
oral
ean
cr
eat
ionframewor k:
1.Standardparts.
2.Secludedplan.
3.Exceptional
lycompetentcr
eati
onf
rameworkswit
hqual
i
tyi
nher
ent
.
4.Simultaneousdesigni
ng.

The i niti
al t wo component s i denti
fy wi th speed and
straight f
or war dness.Theut i
li
zat
ionofst andardpar t
si mpl
iesthatl abor ers
hav el esspar t
st omanage, andprepari
ngtimesandexpensesar edi mi nished.
Buy i
ng,t akingcar eof ,andcheckingqualit
yar emor edai l
yscheduleandl oan
themsel vest oceasel essimprovement .Anothersignifi
cantadvantagei st he
capaci t
yt out ili
zest andar
dpr epari
ng.Measur edpl anisanaugment ationof
standar dpar ts.Modul esarebunchesofpar tstreat
edasasel f-
containeduni t
.
Thissi gnificantlyl essenst hequant i
tyofpar tstomanage,r earr
angi ngget
toget her,buy ing,t aking care of,prepari
ng,et c.Nor mali
zati
on has t he
additionaladv antageofdi mi ni
shi
ngt hequantityofv ari
ouspartscont ainedi n
thebi llofmat er i
alsf ordif
ferenti
tems, i
nthismannerdi sent
angli
ngt hebi llof
mat er i
als.

12.
10LEANTOOLS

Thi
ssect
iondescr
ibessev
eralt
ool
sthatar
eusedf
orpr
ocessi
mpr
ovementi
n
l
eansyst
ems.

Val
ueSt
ream Mappi
ng

Valuest r
eam mappi ngcouldbeav isualdev
icet
oeffi
cient
lyl
ookatt heflowof
bringingani t
em oradvant
age a
mat eri
alsanddat aincludedinto customer .The
procedur ebegun itisal l
udedto I
nformat io
at Toyota,wher eas “Materi
aland n
Fl
owMappi ng.”Themap aout l
ineof wholehandlethatregularly
may bea ranges
fr
om appr oachingproducts
fr
om suppli
ers t
o shi
pment of
anitem orconveyanceofbenefi
t
to thecli
ent. Theoutli
neappear
sal l
processe theesteem st
ream,f
rom entr
iesof shi
pping
s wi
thi
n suppl
ies t
ot he of
object
iv
theitem. The e i
sto extendappr
eciat
ionto thecl
ient,
whereappr ovali
sregul
arly ter
m
character
izedin s ofqual
it
y,t i
me, t
akenat oll
,
oradapt abil
i
ty.Informationcoll
ectedami dthe
mappi ng prepar e mighti ncorporat
et imes (e.g.,cycletime,set up ti
me,
changeov ertime,t oucht i
me,leadt i
me) ,separati
onstravel
ed(e.g.,byparts,
speciali
sts,printed mat eri
al)
,bot ches (e.g.
,i t
em sur r
ender
s,i nfor
mat i
on
secti
onmi st
akes) ,wastefulwor kstr
ategies(e.
g.,addi
tionalmovement s,
over
thetoplifti
ngormov ing.

1.Mapt hev aluest r

eam i nperson.
2.Beginwithaqui ckwal kt hr
oughoft hesystem f
rom beginni
ngt oend
togetasenseoft hesy stem.
3.Thendoamor ethoroughwal kthroughfoll
owingtheactualpathwayt o
coll
ectcurrenti nf
ormat iononmat er
ialori
nformati
onflow.
4.Recor del ement soft hesy stem suchascy cleti
mes,scr apr ates,
amount s ofi nventor
y ,downt imes,numberofoper at
ors,distances
betweenpr ocesses, andt ransfert i
mes.

Valueimpr ov ementf orapr oductoraser viceembodi est hefiv

el ean
pri
nciplesdescr i
bedear l
i
erandr epeatedhere.Itbeginsbyspecifyingval
uefrom
thecust omer ’
sst andpoint.Youcanseewher ev al
uest r
eam mappingcanhel p
processi mprovement :
1.Specifyv aluef r
om thest andpointoftheendcust omer.
2.Identif
yal lthestepsi nthev al
uestream andcr eateavi
sual (
map)of
thev al
uest ream.
3.Eli
mi natest epsthatdonotcr eatevaluetocr eateflow.
4.Usenext -cust omer-i
n-the-pr
ocessdemandt opul lf
rom eachpreceding
processasneededt ocontroltheflow.
5.Repeatt hispr ocessasl ongaswast eexist
si nt hesyst
em.

Onceaval
uest ream mapiscompl et
ed,dat
aanalysi
scanuncov
er
i
mpr
ovementopportuniti
esbyaskingkeyquesti
ons,suchas:
Wher
earethepr ocessbottl
enecks?
Wher
edoer r
orsoccur ?
Whi
chprocesseshav etodealwiththemostvari
ati
on?
Wher
edoeswast eoccur?

Al
lbusi
nessorgani
zati
ons,whethert
heyarepri
maril
yengagedin
ser
v i
ceormanufact
uri
ng,canbenefi
tbyapplyi
ngleanpr
incipl
estot
heir
off
iceoper
ati
ons.

Thisincludespur chasing,accounting, orderent r

y,andotheroffice
functi
ons.
Of
fi
cewast esmi ghtinclude:
1.Excessi nventor y—excesssuppl iesandequi pment.
2.Overpr ocessing—excesspaper wor kandr edundantappr ovals.
3.Waitingt imes—or derswai t
ingtobepr ocessed,requestsfor
i
nformat ionawai tinganswer s.
4.Unnecessar ytranspor t
ati
on—i nef fi
cientrout i
ng.
5.Processi ngwast e—usi ngmor er esourcest hannecessar yto
accompl ishat ask.
6.Inefficientwor kmet hods—poorl ayoutdesi gn,unnecessarysteps,
i
nadequat etrai
ning.
7.Mistakes—or derent ryerr
ors,lostf i
les,mi scommuni cat
ions.
8.Underusedpeopl
e—Nott
appi
ngal
loft
hement
alandcr
eat
ive
capabi
li
ti
esofworkers.
 12. 11TRANSI TIONI NGTOLEANTOOLSYSTEM
Japa together
Thesuccessofi ncl i
nef ramewor ksinn and j oined states
haspul led inshar pinterestedamong
otherconv ent i
onal producer s.Ar r
angi ngaf ruit
ful
transf ormat ionto
ext endt hel i
keli
hoodoff ruitfulmov e, compani esought t oembr acea
car efullyar rangedappr oacht hatincor poratest hetakingaf ter
component s:
commi t
te
1. Makebey ond any uncer taintybeatadmi nistrat
ionisd to
thechangewhi ch
they know whatwi ll be r equired.Makebey ond any
hesitationt hatadmi nistrati
oni si nvolv
edwi thi
nt hehandl eandknowswhati t'
lltaken
tot otaltheconv ersion, whatcomesabout
at oll,how l ongit '
l
l t
ake and can
beant icipat ed.
about carefull
y ;
choose willr
equire
2. Think t he operationswhi ch par t
s the
foremostexer ti
on change
to over.
Gett hebackandpar tici
pat ionoflabor ers.Planpr epar i
ng
3. progr ams
thati ncor por atesessions i n setups,suppor tofgear , cr oss-tr
aining
fornumer ousassi gnment s,par ti
cipat i
on,and i ssue under standing.Make
bey ondanydoubtspeci al
istsar ecompl etelyeducat edar oundwhati ncli
nei s
andwhyi tisal l
uri
ng.

4.Startbyatt
empti
ng t odi
minishsetup t i
meswhereaskeepi
ng upthe
curr
entf r
amework.Enrollt
hehel pofspecial
i
stsinr
ecognizi
ngandki
l
li
ng
exi
stingissues(
e.g.
,bot
tl
enecks,
destit
utequal
it
y).

5.Continuouslychangeov eroperati
ons,start
ingatt heconclusi
onofthe
methodandwor ki
nginr ever
se.Ateacharrange,makebey ondanydoubtt
he
conversionhas
beengener al
lyef
fecti
vesomet imerecent
lymov ingon.Don'
tstar
ttodi
mini
sh
i
nventoriesunti
lmajorissueshavebeensettl
ed.

6.Asoneoft hef i
nalst
eps,changeov erprovi
der stoJI Tandbear rangedto
work cl osely wi t
ht hem.Begi n by nar rowing t he l
ist of mer chants,
dist
inguishingt hosewhoar ewi l
li
ngtogr aspt hei ncli
ner easoning.Donate
i
nclinati
ont osel l
erswhohavelong-
qualit
y .Uti
l
izemer chantsfound
term t r
ack r ecords ofunwav er
ing adjacenti
n
casef astreacti
on i
s Se upl ong-
ti
me i
mperativ
e. t term commi t
ments
withmer chants.Demandont allguidel
i
nes
of quality and adher ence t o
stri
ctconv eyance
pl
ans.
Bearranged com
7. to e
acrossdet er
rentstotransf
ormati
on.Det err
entsto
tr
ansf ormati
on conv
ersion and
conv ert
ingfrom at r
aditi
onalsy
stem toal eansystem maynotbesmoot h.
Also,manuf acturer
sthatoperatewithlargeamountsofinventor
yt ohandle
varyi
ngcust omerdemandmayhav ediff
icul
tyaccl
imati
ngthemselvestoless
i
nv entory.
 Someot
herchal
l
engesi
ncl
udet
hef
oll
owi
ng:

1.Admi
nist
rat
ion notbecompletel
ycommi tt
edormaybe
may unwil
l
ing
f
undament
alassetstotransf
ormat
ion.Usuall
y
togivethe may bethe
foremostgenuine obstruct
ion
sincethetr
ansfor
mat
ioni
sli
kel
ydest
inedwithoutgenui
ne
commi tment.

2.Laborersand/oradminist
rat
ionmay notshowaagr eeabl
eemot i
on.
pr
edicate onpar t
ici
pati
on.Dir
ectorsmay
Thef r
amewor kis d stand up
tosinceincli
neshif
ts thedut yfr
om admi ni
str
ati
ont ospeci
ali
sts
a fewof and
givesspeciali
stsmorecontrolovert hework.Laborer
smayst andupt o
sinceoftheexpandeddut yandstretch.

3.Itcanbeexcept
ional
lyt
roublesometoal
tert
hecul
tur
eoft
he
organizat
iont
oonesteadywiththeincl
i
nel
ogic.

4.Providersmayst andupt oforaf ewr easons:

a. Buy ers may not be wi ll
i
ng t o commi t heassetsessenti
alt
o
t
assi
stthem adj ustto theincli
nesystems.
b.Theymaybeuneasyar oundlong-term commi tmentstoabuy er.
c.Vi
sit,li
tt
leconveyancesmaybet roublesome, part
icul
arlyontheoff
chancet hattheproviderhas.Thebur denofqual i
tycontrolwill
mov eto
theprovider.
e.Vi
sitbuildi
ngchangesmayr esultfrom proceedingincl
ine
advancement sbyt hebuyer.

12.
12LEANSERVI
CES

Thedi scussionofincli
neframewor kshav ecenteredonmanuf act uring
basi call
ysince itwascr eated,andwher eit beenut il
izedmostr egul arl
y.
that'
swher e has I
t
i
si mper ativeto r ecognize t hatthe t otalranges ofi ncl i
nebenef i
ts ar e
mor etroubl esomet or eali
zeinbenefit anycase,ser vicescan
operati
ons.I n and
doadv ant agef r
om numer ousincl
ineconcepts.
When just-
in-t
imei sut i
lizedwi thin
t
heset t
ingofadmi nistrati
ons,thecenterisregul
arlyont hetimer equiredt oper for
m
a
isregularl
yav it
al arr
angev ictorf or
servi
ce—because speed administrations.A
fewadmi nistrat
ionsdo i
nventori
e inventorydecr ease
have s ofafewsor t
s,so is
anotherangl eofincline to Il
lustrationsof
that can apply admi nistr
ati
ons. rapi d
 conv eyance (“avail
ablewhenr equest
ed”)ar eDomi no’sPizza, FedExand
Expr
ess
Mai l,f
astfoodeat er
ies,andcrisisadmi ni
str
ations.Ot hercasesi ncorporat
e
just-i
n-t
imedi str
ibuti
ngandwor kcel l
satfast-foodeat er i
es.Inexpansi onto
speed, incl
ineadmi nist
rati
onsemphasi zerel
iable,high- quali
ty,standardwork
strategies;adaptablespecial
ists;andnearsuppl ierrelationships.Process
impr ovementandpr oblem solvi
ngcancont r
ibutetost reaml i
ningasy stem,
resulti
ngi nincr
easedcust omersat i
sfact
ionandhi gherpr oduct i
vit
y.
Bel
owar ethemanner
sinwhi
chl
eanadv
ant
agescanbeaccompl
i
shedi
n
admini
str
ations:

•El
iminat
edi
stur
bances.Forinstance,
attemptt
oabstainf
rom hav
ing
l
aborer
swhoareadj
usti
ngclientsli
kewiseanswerphones.

•Maket heframeworkadaptabl e.Thiscancausei ssuesexcepti fdr

ew near er
cauti
ously.Regul
arl
y,itisall
uringt onormalizewor ksincethatcany ieldhigh
eff
ici
ency .Then again,havi
ng t he option to manage assor tmenti nt ask
necessit
iescanbeanupperhand.Onemet hodologymaybet opr epar
el abor
er s
wit
ht hegoalt hattheycandealwi thmor eassortments.Anothermaybet o
appointworkaspercl ai
mstof ame,wi thspecif
iclabor
erstaki
ngcar eofv ari
ous
ki
ndsofwor kasindicatedbytheirfor
te.

•Reducear rangementtimesandpr epar

ingti
mes.Hav easoftenaspossible
uti
lized apparat
uses and ext
ra part
s promptlyaccessi
ble.Moreover
,f or
admi nist
rat
ioncall
s,attempttoev al
uatewhatpartsandsuppl i
esmaybe
required so t
heywi l
lbe close by,and abstai
nf r
om conv eyi
ng gi
gantic
i
nv entori
es.

•Simplif
ythepr
ocess.Thi
sincor
porat
esmi st
akesandcopywor
k.Keept
he
accent
uati
ononqual
it
yandunifor
m assi
stance.

•Minimizework-
in-
process.Modelsi
ncorporat
erequestshol
dingbacktobe
handled,cal
lsst
andi
ngbyt ober epl
i
ed,bundlesholdi
ngont obeconveyed,
tr
uckshol di
ngont obeempt i
edorst acked,appl
icat
ionshol
dingontobe
prepared.

•Simpli
fythepr
ocedure.Thiswor ksparti
cular
lywhencl
i
entsareapieceof
the f
ramework(sel
f-
administr
ation fr
amewor ks i
ncl
udi
ng ret
ailact
ivi
ti
es,
ATMsandcandymachines,admi nist
rat
ionstati
ons,
andsofor
th.
).

12.
13JI
TII

In certain occur
rences,or ganizati
ons permitpr ovi
dersto ov ersee
restocki
ngofst ockgotfrom theproviders.Apr ovi
derdelegat
ewor ksdirectl
y
i
nt heor ganization'
splant,ensuri
ngt her
ei saf it
ti
ngf l
exibl
ycloseby .The
term JITIIi
sut i
li
zedtointroducetot histrai
ning.JI
TIIwaspr omot edbyt he
BoseCor poration.Iti
softenrefer
redt oasv endor-managedinvent
ory(VMI ).

.
 References
J.R.Evans.AndW.M.Li
ndsay
,“Tot
alQual
i
tyManagement
”,Cengage
LearningAsia,
2013.

J.Heizer
,B.Render
,Operati
onsManagement
,10t
hGl
obal
Edi
ti
on.New
Jersey:
PearsonEducati
on,2011.

S.Ani
lKumar,N.Sur
esh,
Oper
ati
onsManagement
,NewDel
hi,
NewAge
I
nter
nati
onal
,2009
t
h
W.J.St
evenson,“Operati
onsManagement
”.12 Edi
ti
on.NewYor
k:
McGraw-hi
lleducat
ion,2015

W.JSt
evensonandS.C.Chuong,"
Operati
onsManagement
".2ndEdi
ti
on.
NewYork:McGraw-
hil
leducat
ion,
2014.S.
Operat
ionsManagement .AccessedAugust12,2020.
htt
ps:/
/www.sl
ideshar
e.net/Kadi
rikj
s24/
operat
ions-
management
-
69329225
 CHAPTER13
SCHEDULI
NGANDCONTROLLI
NGPRODUCTI
ONACTI
VITI
ES

Chapt
erOut
li
ne

1I
13. nt
roduct
ion 13.9 Johnson’ sProblem
13.
9.
2 ConceptofSi
13. ngl
eMachi
neSchedul
i
ng 1 Johnson’ sAlgori
thm
13.
9.
3 Measur
13. esofPer f
ormance 2 ExtensionofJohnson’ sRule
4 Shor
13. testProcessingTime(SPT)Rule 13.10 ICDSHeur i
stic
5 WSPTRul
13. e 13.11 Job-ShopPr oblem
6 Ear
13. l
i
estDueDat e(EDD)Rul
e 13.12 TypesofSchedul es
7 Mi
13. ni
mi zi
ngtheNumberofTar dyJobs 13.13Heuristi
cPr ocedures
8 Fl
13. owShopSchedul i
ng 13.14 Pri
orityDispatchingRules
TwoJobsandM Machi nes
13.15 Scheduling

13.
1INTRODUCTI
ON

Scheduli
ngcanmaketheshopfl
ooreff
ici
entbypr
ovi
dingacalendartofoll
owsetof
tasks.I
tisapr
ovi
sionofbegi
nni
ngandendingt
imeofapart
icularsequenceofj
ob.

The single machi

ne-scheduling probl
em invol
ves n tasks 
witht he same single
operati
on on each oft asks. 
On the otherhand,flow shop- scheduli
ng pr
oblem
i
nv ol
v n 
es  taskswihm pr
t oceduresoneachoft hetasks.Int hisscenari
o,allthe
taskswillhavethesamemannerofpr ocedur
es.Thej ob-shopschedul i
ngproblem
i
nv ol
vesnt askswihm pr
t oceduresoneachoft hetasks;whi l
ef orthi
sinst
ancet he
orderofthejobwil
lbedifferentfr
om eachother.

13.
2CONCEPTOFSI
NGLEMACHI
NESCHEDULI
NG

Thef
oll
owi ngscenarioischar
acteri
zedbybasi csinglemachinescheduling:
1.Att i
mezer o, agroupofindependent,singl
e-operat
iontasksisav ai
l
abl
efor
processing.
2.Theset -
up t i
meofeacht askcanbei ncludedinitspr ocessi
ngti
me
becauseset -up t i
meofeacht aski snotdependentofi t
sor derinjobs
sequence.
3.Tasksr equir
ementsaregivenbef or
ehand.
4.Whenj obiswaiti
ngonemachi necontinuouslyaccessibl
eandshoul dnotbe
i
dle.
5.Eacht askisdoneunti
litisfi
nishedwithoutinterr
upt
ion.

Thet otalnumberofj obordersinthebasicsingl

emachi
neprobl sn!whi
em i chisthe
numberofdi f
ferentpermutationofnelements.I
nthi
sscenar
io,onecanseeone–t o
-oner ati
obet weenaj obor dersofthenj obsandapermutati
onoft hej
obi ndi
ces
1, …n.Todef
2, i
nejobsi nadet er
minist
icsingl
emachine-
schedul
ingproblem,the
foll
owi ngfundamentaldataar eneeded.
 Processi
ngt i
me( tj)
:Itisthetimenecessar ytodoa jobj
.Thepr ocessing
ti
me, t
jwil
lusuall
yconsistbothactualprocessingtimeandset-
upti
me.I ti
sthet i
me
requi
redtoprocessjobj. Readyt i
me( rj)
:Itisthetimewherei
njobjispreparedfor
processi
ng.Thereadyt i
meofaj obi sthediffer
encebetweenthearr
ivalti
meoft hat
j
obandt het i
meatwhi chthatjobistakenf orprocessi
ng.I
nthebasicmodel,asper
condit
ionI,r
j=0f oral
ljobs.

Duedat
e(dj)
:Jobj
shoul
dbef
ini
shedatt
hist
ime

Completi
onti
me( Cj):Jobjiscompletedi
nanor derat t
hist
het i
me.
Ev
aluat
ingschedul
esareusuall
yfunct
ionofjobcompl
eti
ont i
meofperfor
mance
measur
es.Flow ti
me,Lat
eness,Tardi
ness,et
caretheexampleofperfor
mance
measur
es.

Flowti
me( Fj):I
tistheamountofti
mejobjusesinthesy st
em.Fl owtimeis
ameasure,whichshowst hewaiti
ngtimeofjobsinasy stem.Thi sint ur
ngives
someideaaboutin-
processinvent
oryduet
oaschedule.I
tist hedif
ferencebetween
thecompl
eti
ontimeandt hereadyti
meofthejobji.
e.Fj=Cj–r j.

Lateness( Lj):
:Itisthet otaltimebywhi chthecompl etiontimeofj obj.I tis
thedifferenceofcompl etiont i
meanddue( Lj=Cj–d) .Latenessi saquant if
iest he
measur eaboutconf ormityoft hej obsi naschedul et oagi vensetofduedat esof
thejobs.Lat enesscanbeei therposi ti
velatenessornegat iv
el ateness.Ifthej obi s
compl etedaf t
eri t
sduedat ei tisPosi ti
velatenessofaj ob.Ift hej obiscompl eted
beforeitsduedat eitisanegat ivelatenessofaj ob.Theposi ti
v elatenessisapr oof
ofpoorser vi
cewhi l
enegat i
vel atenessi saemphasi zeabet terser vi
ce.Insev eral
cases andaddi t
ionalcost sandsepar atepenaltiesarer esultofposi tiv
el ateness,
butingener al,noaddedv aluear egi v
ent onegativelateness.Thi sresultstoopt i
mi ze
onlyposi t
ivelatenessonly .
Tardiness( Tj):Iflatenessofj objf ail
st omeeti t
sduedat e,orzer o,iti s
Tardiness,otherwise

13.
3 MEASURESOFPERFORMANCE

Singlemachi
neschedul
ingusesdi
ff
erentmeasur
esofper
for
mancewi
tht
he
foll
owingequat
ionbel
ow.
 SHORTESTPROCESSI
NGTI
ME(
SPT)RULE

13.
4

ShortestPr ocessing Time (SPT)sequencing is sequencing the jobs in

i
ncreasingorderofpr ocessingti
mei nasingl
emachi neschedul i
ngproblem.
Reducingt het i
mespentbyj obsinthesyst em i
ssomet i
mesouri nterest.
This,i
nt ur
n,willl
essent hein-pr
ocessinvent
ory
.Wemayal sobei nterest
edi nrapid
tur
naroundt i
mesoft hejobs.
Flow timei st het imeused up byaj ob inthesy stem,and the‘ r
apid
tur
naroundt i
me’i si tsmeanf low ti
me( F)
.Shortestprocessi ngtime( SPT)r ul
e
minimizesthemeanf lowtime.

I
LLUSTRATI
ON1:
Giv
ent
hef
oll
owi
ngsi
ngl
emachi
ne-
schedul
i
ngpr
obl
em.

Findt
heopt
imalsequence,whi
chwi
l
lmi
nimi
zet
hemeanf
lowt
imeandal
soobt
ain
themini
mum meanfl
owt i
me.

SOLUTI
ON

No.ofj
obs=5
Ar
rangethej
obsaspert
heSPTor
der
ing

Ther
efor
e,thejobsequence,whi
chwi
l
lmi
nimi
zet
hemeanf
low t
ime,i
s2-
3-5-
4-1.
Computat
ionofFmin

Si
nce,
ther
eadyt
imer
j=0f
oral
lj
,thef
lowt
ime(
Fj)i
sequal
toCj
foral
lj
.

Ther
efor
e,t
heopt
imal
meanf
lowt
ime=21.
4hour
s.
 13.
5WSPTRul
e

Underaninst
ance that jobsinasingl
emachine-schedul
i
ngprobl
em wi
l
l
nothav
eequalimport
ance,eachjobisassi
gnedaweight,wj.Themeanf l
owti
me,
whichiscomputedafterconsi
dering wji
scall
ed,weight
edmeanf l
ow ti
me,as
shownint
heequati
onbelow:

Sequencingt hejobsini ncr

easingorderofwei ghtedprocessi
ngt i
me In
singl
emachineschedulingprobl
em isknownasWei ght
edShor t
estProcessi
ngTi
me
(WSPT)sequencing.Thewei ghtedprocessi
ngt i
meofaj obisobt ai
nedbygett
ing
thequot
ientofi
tspr ocessi
ngtimebyi t
sweightrespecti
vely
.

I
LLUSTRATION 2:Letusst
udyt
hef
oll
owi
ngsi
ngl
emachi
ne-
schedul
i
ngpr
obl
em
wi
thweight
s:

Getthesequence,whichwi
l
lmini
mizet
hewei
ght
edmeanf
low t
imeoft
hegi
ven
abov
e.Fi
ndthewei ght
edmeanf
lowti
me.

SOLUTI
ON

Arr
angethejobsi
nfrom small
estt
olargestoftj/wj(
i.
e.WSPTor
der
ing)
.Fr
om t
he
abovesol
uti
on,wegett
hef ol
l
owingrel
ati
on.

Ther
efor
eopt
imal
sequence,
whi
chwi
l
lmi
nimi
zet
hewei
ght
edmeanf
lowt
ime,
is,
2–5–3–4–1.
13.6Ear
li
estDueDate(EDD)Rule
Thelat
eness(Lj)ofaj
obisdef
inedast hedi
ff
erencebet
weenthecompl
eti
on
ti
meandt heduedateofthatj
ob.Lj
canbeeitherposi
ti
veornegati
vev
alues.

Themaximum j
oblat
eness(Lmax)andthemaxi mum j
obtardi
ness(Tmax)
areminimi
zedbyEarl
i
estDueDatesequenci
ng.‘
Earl
iestDueDateRule’i
sthe
sequenci
ngofj
obsinincr
easi
ngorderofduedat
einasi ngl
emachini
ngscheduli
ng
probl
em.

ILLUSTRATI
ON3:
Consi
dert
hef
oll
owi
ngsi
ngl
emachi
ningschedul
i
ng
pr
obl
em:

Det
ermi
nethesequencewhi
chwil
lmini
mizethemaxi
mum l
ateness(
Lmax)
.
Al
so,
det
ermineLmaxwit
hrespectt
otheopt
imalsequence.

SOLUTI
ON:Arranget
hejobsasperEDDr ule(
i.
e.int
heor
deroft
hei
rdue
dat
es)
.TheEDDsequenceis2-
4-3-
1-5-
6.Thi
ssequencegiv
esamini
mum val
uefor
Lmax.

Fr
om thetabl
e,t
hemax i
mum i
s35.Thisi
stheopt
imal
val
uef
orLmax.The
LmaxofanyothernonEDDsequencewi
l
lnotbelesst
han35.

13.
7 Mi
nimi
zingt
heNumberofTar
dyJobs

Tar
dyjobi
saj obiscomplet
edbey ondi
tsduedate;ot
herwisei
tiscal
l
ednon-
t
ardyj
ob.Maj
ori
tyofor
ganizat
ion’
sobject
iveistomi ni
mizethetotalnumberoft
ardy
j
obs.
IftheEDDsequencey i
eldszerotardy,ori
tyi
eldsexactl
yonetardyjob,t
henit
i
sanopt i
mal sequenceformini
mizingthetotalnumberoftar
dyjobs(NT)
,Ifity
iel
dsmor e
thanonet ardyjob,theEDD sequencemaynoty i
eldtheopt i
malsol
ution.Anex act
algor
it
hm forthegeneralcasei
sgivenbelow.

(a)Fir
st,aset(E)ofearl
yjobs, i
nEDDor der.
(b)Then,aset( L)ofl
atejobs,inanyorder.
Thisalgori
thm givesopt
imal sequence,whi
chwi
l
lresul
tinmi
nimum numberof
tar obs(
dyj NT).

HODGSON’
SALGORI
THM TOMI
NIMI
ZENT

Step1:Ar r
angethejobsinEDDor derandassumet hi
s,assetE.LetsetLbe
empty .
Step2:I fnojobsinEar elat
e,thenstop.Findt heunionofEandL( Note:
Ther emai ni
ngj obsinEshoul dbei nEDDor der.Butt hejobsinLcanbei nany
order
) ;
otherwi se,i
denti
fythefi
rstl
atejobinE.LetitbejobK.
Step3:I dent
ifythelongestjob,amongt hef i
rstKj obsint hesequence.
Remov et hisjobf r
om Eandpl aceitinL.Revisethecompl eti
ontimesofthejobs
remainingi nEandr et
urn,toStep2.Thi salgori
thm isdemonst rat
edusingthe
fol
lowingpr oblem.

ILLUSTRATION4.
Acomput ersystem consulti
ngcompanyi sundercont ractt
ocar r
youtsev enpr oj
ect
s,al
l
withdeadli
nessassuredi nday sfrom now.Theconsul t
ant
sar easmal lgroupandt hey
workt oget
heron each pr oject
,so t hatthe projectwi l
lbe st art
ed and completed
sequenti
all
y.Underthet ermsofcont r
act,theconsultantswil
lrecei
v eRs.24,000foreach
proj
ectcompl et
edont ime,butt heywi l
lincurRs.40, 000inpenal t
iesforeachpr oj
ect
completedlat
e.Eachpr ojecthasan,associatedduration,whi
chistheant i
cipatednumber
ofdaysrequir
edt ocarr
youtt heprojectasshownbel ow.

Howshoul
dthepr
oject
sbesequencedi
nor
dert
omaxi
mizenetr
evenues?

SOLUTION:From thest at
ementoftheprobl
em,onecanident
ifyt
hattheobject
iveist
o
maxi
mi zenetrevenues.Thiscanbeachi
evedbysimpl
yobtai
ningasequence,whichwi
ll
mini
mize the numberoft ar
dyjobs (
NT),Hence,we applyHodgson’
s algor
ithm t
o
mini
mizeNT.

St
ep1:Theear
li
estduedat
eor
deri
sshownbel
ow:
Pl
acet
heabov
esequenceofpr
oject
swhichisinEDDorderi
nsetE.Ther
efor
e,
SetE=(1,2,5,6,
4,7,
3)
SetL=(Empt y
)

St
ep2:Thel
atenessoft
hepr
oject
sar
echeckedasshownbel
ow:

Int heabov et able,inthelastr ow,0meanst hatthepr ojectisnon-tar

dyand1
meanst hatt
hepr ojectistardy.
Aspert hesequencei nthesetE,t herearefivet ar
dypr oject
s.Thef ir
sttar
dy
proj
ectis5,whichisi nthet hi
rdposit
ion[ 3].
Step3:Thepr ojectwi t
hthelargestdur ati
onamongt hefir
st-
threeproject
sinthe
sequencei s5.Remov et hisprojectandappendi ttoL.Therefore
L={ 5}
E={ 1,2,6,4,7,
3}.
Thecompl et
iontimesoft heproj
ectsi nthesetEar erevisedasshownbel ow:

Step2:From Step3, i
tisclearthatt
herearethr
eetardyprojects.Thefi
rstt
ardy
proj
ecti
s4,whi chisinthef ourt
hposit
ionofthesequencei nthesetE.
St
ep3:Thepr ojectwit
ht helongestdur
ati
onamongt hef
irst-
fourproj
ectsis6.
Remov et
hepr oj
ect -
6from thesetEandappendi tt
ot hesetL.Ther ef
ore
E={1,2,4,
7,3}
L={ 5,
6}.
Thecompleti
onti
mesoft heprojectsinthesetEarerevi
sedasshown:
 Step2:Fr
om thetableshowni nStep3itisknownthattherearetwotardypr oj
ects.
Thefi
rsttar
dypr
ojecti
s7, whichisatthefour
thpositi
oninthesetE.
Step3:Theprojectwit
ht helongestdurati
on.Amongt hefir
st-f
ourprojectsinthe
setEare7.Removethisjobfrom thesetEandappendi tt
ot hesetL.E={1,2, 4,3}L={ 5,
6,7}
.Thecompleti
onti
mesoft heproject
sarerevi
sedasshownbel ow:

Step2:Fr om t
hetableintheprevi
ousstep,iti
scleart
hatallt
heproj
ect
sarenon-
t
ardyjobs.Hence,wereachedtheoptimalsequenceinE.
Nowmer geEandLt ogetthecompletesequence.
Finalsequence=EL={ 1,
2,
4,3,
5,
6,7}
Intheabov eopti
malsequence,t ot
alnumberoft ardypr
ojectsi
s3,whichisthe
mini
mum v alue.

13.8FLOW SHOPSCHEDULI NG
There arenj obs Inflow shop scheduli
ng probl
em wher ei
n each r equi
re
processi
ngonm di ffer
entmachines.Processsequenceofthatjob i
stheorderinwhich
themachi nesarer equi
redtopr ocessaj ob.Processi
ngtimesf orvari
ousjobsona
machinemaydi ff
erwhi l
eprocesssequencesofallt
hejobsarethesame.Thepr ocessi
ng
ti
meoft heoperati
onoft hatj
obisassumedaszer oifanoperat
ionisabsenti
naj ob.

Thef
low-
shopschedul i
ngpr oblem canbecat egor
izedasfoll
ows;:
1.Asetofmul ti
ple-operati
onjobsisr eadyforprocessi
ngatt i
mezer o(Eachjob
needsm operat
ionsandeachoper at
ionwi l
luseadiffer
entmachine).
2.Set-uptimesarei ncl
udedi nprocessingti
mesandi ssequenceindependentf
or
the oper ati
ons,
3.Beforehand,j
obr equir
ement saregiven.
 4.constantav ai
labi
li
tyofm dif
ferentmachi nes.
5.Eacht askisdoneuntil
iti
sfinishedwi t
houtinterrupti
on
Theinsertedidleti
memaybeadv antageousi nfl
owshopschedul i
ng,thatistheonly
maindiff
erenceoft heflowshopschedul i
ngf r
om t hebasicsinglemachinescheduling.,I
f
thejobfrom thepr evi
ousmachi neisnotr el
easedt othecur rentmachi
ne,t hought he
curr
entmachi nei sf r
ee,processi
ngcannotbegi nont hatj ob.Theref
oret hecur r
ent
machinehast obei dl
ef orsometime.Hence,opt imal
ityofi nsertedi
dletimeonsome
machines.

Forexampl
e,consi
dert
hef
oll
owi
ngf
low-
shoppr
obl
em:

Ift
hesequenceofthejobis2-1-
4-3,t
henthecor
respondingmakespani
scomputedas
showninFigur
ebelow.Herethemakespanis25.Also,notet
heinsert
edidl
eti
meson
machi
ne2ar ef
rom 0to3,4to8and12t o15.

Gant
tchar
tforsequence2-
1-4-
3

Gant
tchar
tforsequence3-
4-1-
2
 Consideranot hersequencesay3-4-
1-2.TheGant tchar
tforthi
ssequencei s
showninFig10. 2.Themakespanf ort
heschedul
einFig.10.
2is26.Themachi
ne2has
i
dleti
mef r
om 0t o6andf rom 8to13.
Thispr oblem has4 jobs.Hence,4!sequencesarepossibl
e.Unli
kein si
ngle
machineschedul ing,i
nflow shopschedul
i
ng,inser
tedidleti
mewoul dmini
mizet he
makespan.

Intheabovetwosequences,2-1-4-
3and3- 4-1-2,t
hef ir
stsequencehasl esser
makespan.Li
kethi
s,onecanenumer at
eall4!sequences,thenselectthesequencewith
themini
mum makespanast heopt
imalsequence.Since,n!growsexponent i
all
ywit
hn,
oneneedssomeeffi
cientpr
ocedur
etosolvetheprobl
em.Forl ar
gesi zeofn,i
t

13.
9JOHNSON’
SPROBLEM

The funct
ion grows exponentiall
ywi t
h an i
ncrease i
nt he probl
em si ze as
mentionedintheear l
i
ersecti
on.Thismeanst hatti
mecompl exi
tyfuncti
onforagener al
fl
owshoppr oblem isexponent
iali
nnat ure.However,foraprobl
em with2machi nesand
njobs,Johnsonhaddev el
opedapol ynomi alal
gori
thm togetopti
malsol ut
ion,i
.e.,i
na
defi
nit
etime,onecangett heopti
mal soluti
on.
Consi
derthef ol
lowi
ngflowshoppr obl
em:

I
ntheabov
etabl
e,t
jr
i epr
esent
sthepr
ocessi
ngt
imeoft obi
hej ont nej
hemachi .

13.
9.1Johnson’ sAlgori
thm
Step1:Findt hemini
mum amongv arioust1a
i ndt2.
i
Step2a:Ift
hemi ni
mum pr ocessingtimerequi r
esmachine1, placet
he
associ
atedj obinthefisti
r 2avail
ablepositioninsequence.Got oStep3.
Step2b:Ifthemi ni
mum pr ocessingtimerequi r
esmachi ne2,placet
he
associ
atedj obinthelastavail
ablepositi
oni nsequence.Got oStep3.
Step3:Remov etheassignedjobf r
om consi der
ati
onandr eturntoStep1
unti
lal
lposit i
onsinsequencear efil
led.(
Tiesmaybebr okenrandoml y
.)
Theabov ealgori
thm i
si l
lust
ratedusingthef oll
owingproblem:

ILLUSTRATI ON5: Consi

dert
hefoll
owingtwomachi
nesandsi
xjobsfl
owshop-
scheduli
ngpr obl
em.UsingJohnson’
salgor
it
hm,obt
aint
heopt
imalsequence,
whi
chwi
l
l
minimizethemakespan.
SOLUTION:Thewor
kingsoft
heal
gor
it
hm ar
esummar
izedi
nthef
orm ofat
abl
e,whi
chi
s
shownbel
ow:

Theopt i
malsequenceis2-5-
3-6-
1-4.Themakespani
sdeter
minedasshown
bel
ow.I
nt hefol
lowingt
abl
e:[Ti
me-i
nonM/ c2=max[ M!c1Time-
outoft
hecur
rentj
ob,
M/c2Ti
me- outofthepr
evi
ousjob]

Themakespanf
ort
hisschedul
eis53

13.9.
2 Ext
ensi
on of
Johnson’sRule
Considera ‘
three machi
nes and
nj obs’flow shop schedul
ing probl
em
asshowni nTable 13.1.
 Tabl
e13.
1Thr nesandnj
eemachi obs’
flowshopschedul
i
ng

OnecanextendJohnson’
salgor
it
hm tothepr
obl
em showni
nTabl
e13.
1if
any
oneoft
hefol
l
owingtwoconditi
onsissati
sfi
ed.
I
fmi
nti1≤maxt i2or
i
fmi
nti3≤maxti2

Ifanyoneoft heabov econdi ti

onsi
ssat i
sfiedthen,wecanextendthe
Johnson’salgori
thm inthef oll
owi ngway .
Createahy pot het
icalproblem withtwomachi nesandnjobsasshowni n
Table13.2. Theobj ectiveistoobt
ainopt imalsequencefort
hedatagiveni
n
theTable13.2.Later,t
hemakespani stobedetermi nedfortheopti
malsequenceby
usingthedataoft heoriginalproblem shownint able.
Thisconceptofext endingJohnson’salgor it
hm tothi
stypeofprobl
em is
demonst r
atedusinganexampl epr oblem.

I
LLUSTRATI
ON6:
Consi
dert
hef
oll
owi
ng3machi
nesand5j
obsf
lowshop
pr
obl
em:

SOLUTIONIntheabov etabl
e,
Min(
til)
=6Max( ti
2)=6
Si
ncethecondit
ionmin(til
)≤max(ti2)issati
sfi
ed,
wecanext
endt
he
Johnson’
sal
gori
thm t
ot hi
sproblem.Sothemodi
fi
edprobl
em maybegi
venasf
oll
ows:
 Thefol
l
owingi
stheoptimalsequencef
ortheabov
epr obl
em:
3-2-
5-1-
4The
makespanoft
heabovesequenceisdeter
minedasshownbelow:

Themakespanf
ort
hispr
obl
em i
s51uni
tsoft
ime.

13.
10CDSHEURI
STI
C

Since t he fl
ow shop scheduli
ng isa combi natori
alprobl
em , l
arge size
problems woul dbechal l
engi
ngt ogetbestsoluti
oni nl
imitedtime,
.Thismeanst he
ti
mecompl exityfuncti
onofflow shoppr obl
em isexponent i
alinnat
ure.Hence,we
havet ouseef f
ici
entheuri
sti
csf orl
argesizeproblems.CDS( Campbell
,Dudekand
Smi t
h)heur i
st i
cisonesuchheur i
sti
cusedf orflow shopscheduling.TheCDS
heuri
sticcor respondst omulti
stageuseofJohnson’ srul
eappl i
edtoanewpr oblem
formedf rom t heorigi
nalpr
ocessingti
me.Atst age1t1At  
stage1

I
n otherwords,Johnson’
sr ul
eisappl
i
ed t
othef
ir
stand mt
h oper
ati
onsand
i
nter
mediat
eoperati
onsareignor
ed.

Atst
age2

Thatis,Johnson’srul
eisappl
i
edt
othesum oft
hef
ir
stt
woandt
hel
astt
wo
oper
ationprocessi
ngti
mes.
I
ngener al
atstagei,

Foreachst
agei(
i=1,2,.
..m –1)
,thej
obor
derobt
ainedi
susedt
ocal
cul
atea
makespanf
ort
heorigi
nalproblem.Af
term –1,st
ages,t
hebestmakespanamong
t
hem –1schedul
eisident
if
ied.(Someoft
hem –1sequencesmaybeident
ical
).

ILLUSTRATI
ON6:Fi
ndt
hemakespanusi
ngt
heCDSheur
ist
icf
ort
hef
oll
owi
ngf
low
shopprobl
em:

SOLUTI
ON

Theopt
imal
sequencef
ort
heabov
epr
oblem i
sasshownbel
ow:
3-
2-1-
4

Themakespancal
cul
ati
onf
ort
heabov
eschedul
eisshownbel
ow:

Makespanoft
hispr
obl
em =31.
Stage2
13.
11THEJOB-
SHOPPROBLEM

Weassumet hateachj
obhasm dif
fer
entoperat
ionsi
njob-
shoppr
oblem.
Requi
rednumberofdummyoperat
ionswi
thzer
oprocessti
mesisassumedI
fsome
ofthej obsar ehav i
ngl esst hanm oper at i
ons.Thecondi ti
onofequalnumberof
operat i
onsf oral lthejobsi sensur edbyt hisassumpt i
on.Thepr ocesssequencesof
thejobsar enott hesame Inj ob-shopschedul i
ngpr oblem.Ther efore,theflow of
eachj obi njob-shopschedul i
ngi snotundi r ecti
onal
.
Heur i
sti
cappr oachesar epopul ari nt hi
sar eabecauset het imecompl ex i
ty
functionoft hejobshoppr obl em iscombi natori
alinnat ure.Hencet her eisnoi ni ti
al
machi net hatper formsonl yt hef irstoper ati
onofaj obnort her ei sat ermi nal
machi net hatper formsonl yt helastoper ationofaj obunl i
ket hef lowshopmodeli n
thef l
ow shop.Ther efor e,ther eisnoneedt odisti
ngui shbet weent hem.Howev er,
dif
ferentj obswi llhavedi f
ferentoper ationsequencesi nt hejobshopcase.Thus, we
cannotassumeast r
ai ghtf l
ow f ort hej obshoppr oblem.Eachoper ati
onji nt he
operat i
onsequenceoft hej obii nt hej obshoppr obl em wi llbedescr i
bedwi t
ht riplet
(i
,j,k)wher eki sther equi r
edmachi nef orpr ocessingt hej thoper at i
onoft heithj ob.
Consi dert hef ollowingdat aofaj obshopschedul i
ngi nv olv
ingf ourj obs,t hree
operat i
ons and hence t hree machi nes.The f i
rstt able consi st
s ofoper at i
on
processi ngt i
mesandt hesecondt ableconsi stsofoper at i
on( process)sequencesof
thej obs.Thesetofmachi nesr equi r
edf oragi venj obconst itutear outi
ng.For
exampl e, j
ob4hasar out i
ngof1- 3-2.

13.1
2 TYPESOFSCHEDULES
Foranyj obshoppr oblem,infinitenumberoff easibl eschedul esi spossi ble
i
ngener albecauseonecani nsertanyar bit
raryamountofi dletimeatanymachi ne
betweenadj acentpairsofoper ati
ons.Thesei dletimesar enotusef ulinanyl ogic.In
fact,thesewi l
lleadtonon- optimalsolut i
onwhi l
er educingmakespanmeasur e.
I
nt heGant tchartshowni nFi g.,oneshoul dt ryt omov ev ari
ousoper ation
blockst othel eftasmuchaspossi bleoneachmachi ne.Thi swi llhelpust ohav ea
compactschedul e,whichwi llgenerall
ymi nimizet hef amousmakespanmeasur e.
Adjust i
ng thest artt i
meofsomeoper ati
onst owar dsl eftwi thoutaf fecti
ng t he
operat i
onssequenceswi llminimizetheunwant edidlet ime.Adj ustingt hestarttime
ofsomeoper ati
onst hi
swayi sequivalentt omov inganoper ationbl ockt othelef tof
theGant tchar twhilepreservi
ngt heoper ationsequences.Thi st ypeofadj ustmenti s
call
edl ocal-l
eft-shift
,oral i
mi t
ed-l
eft-shift
.Givenanoper ationsequencef oreach
machi ne,thereisonl yoneschedul einwhi chnol ocal-
lef t
-shiftcanbemade.Theset
ofallschedul esi nwhi chnol ocal-l
eft-shif
tcanbemadei scal ledt hesetofsemi -
activ
eschedul esandi sequivalenttot hesetofal lschedul est hatcont ainnoneof
theunwant edidletimedescr i
bedabov e.Thi ssetdomi nat est hesetofal lschedules,
whichmeanst hatitissuf f
ici
entt oconsi deronlysemi -activeschedul est oopt i
mi ze
anyr egularmeasur eofper formance.
 Thenumberofsemi -activeschedul esi sf init
eandi sl esst hant het otal
numberofpossi ble schedul es.I n a semi -
acti
v e schedul e,t he st ar ttime ofa
par t
icularoper ati
oni sconst rainedei therby( a)pr ocessi ngadi fferentj obont he
samemachi neor( b)bypr ocessi ngt hedi rect
lypr ecedi ngoper at i
ononndi ffer
ent
machi nes.I nt hef ormercase,wher et hecompl eti
onofanear lieroper at
ionont he
samemachi nei sconst rai
ned,i tmayst il
lbepossi bl
et of indobv iousmeansof
i
mpr ov ement .Ev en when no l ocal-shifts ar
e possi ble,a bet terschedul e can
obv i
ousl ybedev i
sedbyshi ftingoper ati
onst othel ef tandbey ondot heroper ati
ons
alreadyschedul ed on some machi ne.Thi st ype ofadj ust menti n whi ch some
oper ation.i sbegunear li
erwi thoutdel ay i
nganyot heroper ati
oni scal l
edagl oballeft-
shiftorsi mpl yal ef t
-shif
t.
Thesetofal lschedul esi nwhi chnogl oball eft-
shiftcanbemadei scal l
ed
thesetofact i
v eschedul es.Iti scl earlyasubsetoft hesetofsemi -
act i
v eschedul es.
Thesetofact i
v eschedul esdomi natest hesetofsemi -activeschedul esint ermsof
opt i
mi zinganyr egul armeasur eofper formance.Soi tissuf ficientt oconsi deronl y
act i
veschedul es.
I
fnomachi neiskepti dleatat i
mewheni tcoul dbegi npr ocessi ngsome
oper ation t hen i ti scal led a non- delayschedul e.We can i dent ifya subsetof
schedul esf rom t hesetofact iveschedul essati
sf y
ingt hispr oper ty,whi chi sknown
asasetofnon- del ayschedul es.
Allnon- del ayschedul esar eact iveschedul es, sincenol ef t
-shi fti
spossi ble.
Ther ei snoguar ant eet hatt henon- del aysubsetwi l
lcont ainanopt imum.TheVenn
diagram showi ngt her el
at i
vesi zesbet weendi f
ferentt y
pesofschedul esi sshowni n
thef oll
owi ngFi g.10. 3.Ther ewi llbeatl eastoneopt imal schedul ei nthesetofact iv
e
schedul es

Fi
gur
e13.
12VennDi
agr
am showi
ngdi
ff
erentschedul
es

13.
13 HEURI
STI
CPROCEDURES

Since,thejobshopproblem comesundercombi nat

ori
alcategory
,t heti
me
takent o obt
ainopt i
mum solutionwi l
lbeex ponenti
alinnature.Int hi
st y
peof
problem,thenumberoff easi
blescheduleswil
lgrow exponenti
all
y,evenf orsmall
i
ncr ementinpr obl
em size.Asar esul
t,itwi
llbei mpossibl
et osolvelar gesize
problemsopt imall
y.Hence,weshoul dresor
tt o heur
isti
capproacht o getnear
optimalsolut
ion

13.
14 PRI
ORI
TYDI
SPATCHI
NGRULES

Incomplet
eenumer ati
onprocedur
eorbranchandboundprocedure,
thenumberof
schedul
esgenerat
edbef or
ereachi
nganopt i
malschedul
ewouldbeenormous.But,
heuri
sti
cprocedur
eswi l
lgener
all
yaimtogenerat
eonlyoneful
lschedul
e.Whenever,
ther
eisatie(conf
li
ct)i
nselecti
nganoperat
ionfr
om amongcompet i
ngoperat
ions,
 wewillhav
etouseapr i
ori
tyr
ule.I
fthereareti
esatdi
ffer
entl
evel
s,t
henweneed
morethanonepri
ori
tyrul
etobreakdeept i
es.Foragi
venpri
ori
tyr
uleR,aheur
ist
ic
basedontheact
iveschedul
egenerati
onisgivenbel
ow:

Heur
ist
icAct
iveScheduleGenerati
on
St
ep1:Lett=and assume Pt={ φ}.
St={Al
loperat
ionswit
hnopr edecessor
s}.

St
ep2:
 Decide 
q*=mi n{
qj}andt
hecor
respondi
ngmachi
nem*onwhi
chq*coul
d
bereali
zed.j
ES.

Step3:Foreachoper ati
onwhi chbel ongstoS, thatrequir esmachi nem*and
satisf
iest hecondi tionPj <q* ,
ident if
yanoper ationaccor dingt oaspeci fi
cpr i
ori
ty
andaddt hisoper ationt oPIasear l
yaspossi ble,thuscr eat i
ngonl yonepar tial
schedul e,PI+1f ort henextst age.
Step4:Foreachnewpar ti
alschedul ePI+1cr eat edinSt ep3, updat et hedat asetas
foll
ows: (a)Remov eoper ati
onj f r
om SI .(b)For m SI+Ibyaddi ngt hedi rect
successorofoper ationj toSI.(c)I ncrementtbyone.
Step5:Repeatf rom St ep2t oSt ep4f oreachPI+1cr eat edinSt ep3andcont inuei
n
thismannerunt ilallact i
veschedul esar egener ated.Simi larl
y ,anot herheur isti
ccan
bedev isedf r
om t henon- delayschedul egener ationalgor ithm byr eplacingt he
conditionPj<q*wi thPj =p*i nSt ep3.Theset woheur istical gorithms( onef oracti
ve
dispatchingandt heot herfornon- delaydispat ching)mayconst ructdi fferent
schedul es.Thequal ityofthesol ut i
onobt ainedbyt heseheur isti
csmai nlydepends
ont heef f
ectivenessofpr i
orit
yr uleswhi char eusedi nthem.

Asampl esetofpr i
ori
tyrulesar epresent edbelow:
(a)SPT( shortestpr
ocessingt ime):Sel ectt heoperati
onwi t
ht hemi ni
mum
processingtime.
(b)FCFS( fi
rstcomef i
rstser ved):Selectt heoperationthatenter edSIearl
i
est.
(c)MWKR( mostwor kremai ning):Selectt heoperationassociat edwit
hthejob
havingthemostwor kremai ningtobepr ocessed.
(d)MOPNR( mostoper ati
onsr emai ning) :Sel
ecttheoper at
iont hathasthelar
gest
numberofsuccessoroper at i
ons.
(e)LWKR( l
eastworkr emaining):Selectt heoperati
onassoci atedwiththejobhavi
ng
theleastwor kremaini
ngt obepr ocessed.
(f)RANDOM ( Random) :Selecttheoper ationatrandom

13.
15 TWOJOBSANDM MACHI
NESSCHEDULI
NG

TwojobsandM machi nesscheduli

ngi saspecialproblem underjobshop
schedul
ing.The problem consist
s of2 j obs,whi ch requi
re processing on M
machines.Theprocessingsequencesoft hejobsarenott hesame.Si nce,thi
sisa
speci
alkindunderthej obshopschedulinglike,Johnson’sproblem (njobsand2
machines)underf l
ow shop scheduli
ng,we hav e a gr
aphicalprocedur eto get
opti
mum schedul
e.

Thegraphi
calpr
ocedur
econsist
softhef
oll
owi
ngsteps:
St
ep1:Const
ructatwodimensi
onalgraphi
nwhichx-
axi
sr epr
esent
sthej
ob1,i
ts
sequenceofoper at i
onsandt heirpr ocessingtimes,andy -axisrepresentst hejob2,
i
tssequenceofoper ationsandt heirprocessingtimes( usesamescal eforbot hx -
axisandy -
axis).
Step2:Shadeeachr egionwher eamachi newoul dbeoccupi edbyt het woj obs
simultaneousl y.Step3:Thepr ocessi ngofbot hjobscanbeshownbyacont i
nuous
l
ineconsi stingofhor izontal ,v
er t
icaland45degr eediagonall i
nes.Thel inei sdrawn
from theor iginandcont inuedt ot heupperr i
ghtcor nerbyav oi
dingt her egions.A
diagonall i
nemeanst hatbot hj obscanbeper for
medsi multaneously.So,whi le
drawingt hel i
nef rom t heor igi
nt ot hetopr i
ghtcorner,weshoul dtryt omaxi mizethe
l
engt hofdi agonalt r
av el(sum oft helengthsof45degr eeli
nes) ,
whi chwi l
lmi ni
mi ze
themakespanoft hepr obl em.Usi ngtri
alander rormet hod,onecandr aw t hef i
nal
l
ine,whi chhast hemaxi mum di agonalpor ti
on.Thisconcepti sdemonst r
atedusi nga
numer icalproblem.
Usingt ri
alander rormet hod,onecandr aw thef inalli
ne,whi chhast he
maximum di agonalpor tion.Thi s concepti s demonst rated using a numer i
cal
problem.

ILLUSTRATI
ON8:Usegr aphi
calmethodtominimizet
heti
meneededt opr
ocessthe
foll
owingj
obsont hemachinesshown( i
.e.foreachmachine,f
indthejobwhich
shouldbeschedul
edfi
rst)
.Also,cal
cul
atethetotalt
imeel
apsedt ocomplet
eboth
j
obs.

SOLUTI
ON:Aspert
heprocedur
est
ated,
theabov
edat
aispr
esent
edi
nthef
orm ofa
gr
aphasshowni
nFigur
e10.4.

Theli
nefrom theor
igi
ntothetopri
ghtcor
nershowstheprocessi
ngdetai
ls
andmakespan.Themakespan( t
imetakentocomplet
eboththejobs)is22hours.
Thest
artandcompl etiont
imesforbothjobsaregiveninTabl
e10. 2.Star
tand
compl
eti
ontimesofjobs
 BasedonFi gur
eandTabl eonecaneasi l
yobserv
et hatthetot
alidl
eforj
ob1
i
s5 hours( 2+3).Hencet he tot
alf orcompleti
ng the j
ob 1 i sit
ssum oft he
pr
ocessi
ngtimesplusitsidleti
me, i
.e.17hrs+5hrs=22hr s.
Forjob2,t her
ei snoi dl
etime.Hencet hetot
alti
met akentocomplet
ethe
j
ob2isit
ssum oft heprocessingtimes,i.
e.20hrs.
Themakespani st hemax i
mum oft hesetwoquanti
ties.
Theref
ore,Max( 22,20)=22hr s.

I
ll
ust
rat
ionSource:
Adaptedf
rom Mater
ialandCapaci
tyRequi
rementsPlanni
ng(p.
218)byS.
A.Kumar
andN.Suresh,
Operat
ionsManagement2009,NewDelhi
,NewAgeI nt
ernati
onal

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erences:

J.R.Ev
ans.AndW.M.Li
ndsay
,“Tot
alQual
i
tyManagement
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Learni
ngAsia,
2013.

J.Heizer
,B.Render
,Operati
onsManagement
,10t
hGl
obal
Edi
ti
on.New
Jersey:
PearsonEducati
on,2011.

Roy
,R.andWei
ld,D,
ProductDesi
gnandTechnol
ogi
cal
Innov
ati
on,
Open
Uni
ver
sit
yPr
ess,Mil
tonKeynes,
1993.

S.Ani
lKumar,N.Sur
esh,
Oper
ati
onsManagement
,NewDel
hi,
NewAge
I
nter
nati
onal
,2009

S.Kale,Pr
oduct
ionandOper
ati
onsManagement
,NewDel
hi,
McGr
aw-
hil
l
educat
ion,
2013.
t
h
W.J.St
evenson,“Operati
onsManagement
”.12 Edi
ti
on.NewYor
k:
McGraw-hi
lleducat
ion,2015.
 W.JSt
evensonandS.C.Chuong,"
Operat
ionsManagement
".2ndEdi
ti
on.
NewYork:McGraw-
hil
leducat
ion,
2014.

Overal
lEqui
pmentEff
ect
iveness(
2017).Ret
ri
evedfrom:
ht
tps:/
/cp.
ener
gy/wp-
cont
ent/upl
oads/
2017/09/OEE-Ov
erv
iew-
v2.
pdf
Operat
ionsManagement .AccessedAugust12,2020.
htt
ps:/
/www.sl
ideshar
e.net/Kadi
rikj
s24/
operat
ions-
management
-
69329225
 ASSESSMENT

DI
SCUSSI
ONQUESTI
ONS:

1.Di scusst hef actorsi nvol

vedinAggr egat ePlanning?
2.Ex pl ai
nwhati smeantbyERPandSuppl yChai nManagement .
3.Whati stheconceptofOEEandi tsrelationtoor ganizati
onal success?
4.Whatar et hest rategicadv ant
agesofMast erSchedul i
ngandpr oper
i
nv entor ymanagement ?
5.Ex pl ai
nt her oleofi nspectioninmat er i
alhandling?
6.Whati sleanpr oduct i
onandhowi si tachieved?
7.Whati sflowshopschedul inganddi scusst heimpor t
anceof
performancemeasur es?
8.Di scussi nbriefwhati sforecasting?
9.Ex pl ai
nhowi mpr ov i
ngt r
anspor t
at i
onmayr educecost ?
10.Whati smeantbyLeanPr oductionandhowdoesi timprov ethe
organi zational performance?
11.Whati sMRP?CRP?
12.DifferentiateJI TandJI TII.
13.Giveoneexampl eofof fi
cewast eandhowJI Tcanhel pinreducingthi
swast
e?
14.Howcant heuseofMRPcont ri
but et oproductivit
y?
15.Whatar et wof undament al methodsf orarrangingt hecont r
ol ofa
creat i
onf ramewor k?
16.Compar eJohnsonspr oblem toJobshoppr oblem.
17.Whatar et hemai ndeci si
onar easofj ob-shopschedul ing?
18.Whatar eGant tchar ts?Howar etheyusedi nschedul i
ng?
19.Whatar et headv antagesofusi ngGant tchar t
s?
20.Whydoha ndlingar rangement soft hej obsar enott hesamei nTwo
JobsandM Machi nesSchedul i
ng?
ACTI
VITY1

Vi
deot owatch:OEE
Li
nk:htt
ps:
//www. y
outube.com/watch?
v =pPqfXK8WQCc&t=909s
GuideQuesti
ons:
3.Descr
ibetheOEEf ororgani
zati
on?
4.Howdoesi ti
mprov etheorgani
zat
ionalperf
ormance?

ACTI
VITY2
Towat ch:Cult
ureandLeanPr oduct
ion/DAbbawalasofIndi
a
Li
nk:https:
//www. yout
ube.com/wat
ch?v=Z4f
oWqVHqsE
GuideQuest i
on:
Describetheroleofdabbawal
asandhowt heyachi
eved100per
cent
accuracyintheirf
iel
dofwork

ACTI
VITY3
VI
DEO:MRPATWHEELEDCOACHAMBULANCES
Li
nk:
https:
//www.
yout
ube.
com/
wat
ch?
v=SLuQeOgRi
0c

Gui
deQuest
ion:
Descr
ibehowi
mpor
tantanaccur
atei
nvent
orysy
stem f
or
Wheel
edCoach.
MODULE4

CHAPTER14

Li
nearPr
ogr
ammi
ng

Chapt
erOut
li
ne

1 Lear ni
ngObjecti
ves
13.
TOPI CS:
14.1INTRODUCTION
14.2REQUIREMENTSOFALI NEARPROGRAMMI NGPROBLEM
14.3FORMULATI NGLINEARPROGRAMMI NGPROBLEMS
14.4GRAPHICALSOLUTI ONSTOALI NEARPROGRAMMI NG
14.4.
1GRAPHI CALREPRESENTATI ONSOFCONSTRAINTS
14.4.
2ISO-PROFITLINESOLUTIONSMETHOD
14.4.
3CORNER- POINTSOLUTIONMETHOD
14.5SENSITI
VITYANALYSI S
14.6SOLVINGMI NIMIZATI
ONPROBLEMSLI NEARPROGRAMMING
APPLICATIONS
14.6.
1EXAMPLEPROBLEM AXI MIZATI
ONANDMI NIMIZATI
ON
14.7SIMPLEXMETHODOFLI NEARPROGRAMMI NG
14.8TRANSPORTATI ONPROBLEM OFLI NEARPROGRAMMI NG
14.8.
1NORTHWESTCORNERMETHOD
14.8.
2STEPPI NGSTONEMETHOD
14.8.
3MODI FIEDDISTRI
BUTION
14.8.
4VOGEL’ S
3 Let ’
sSum Up

Lear
ningObj
ect
ives
Describet heimpor t
anceofLi nerpr obl
em techniquest ooperationsint he
organizati
ons.I dentify and f or
mul ateal inearpr ogram t echniques that
i
nv olv
esdev el
opi ngamat hemat i
cal modeltosolveLPpr oblems.
Discusst hedif
fer enttechni quesinSol v
ingLinearPr oblemsusi nggr aphi
cal
met hodsandot herr el
atedt echniques.
Discusst hedi
ffer entstructurespecialLPpr obl
emsusi ngt hetransportat
ion
andassi gnmentmodel s.

14.
1INTRODUCTI
ON

Linearprogr ammi ngisanopt i

mizat iontechniquef orasy stem ofl inearconst r
aintsand
al i
nearobj ectiv
ef unct i
on.Anobjectivef unctiondef i
nest hequantitytobeopt i
mi zed,andt he
goalofl i
nearpr ogr ammi ngistof i
ndt hev aluesoft hev ar
iabl
est hatmax imizeormi ni
mi ze
theobj ecti
vef unct i
on.
Manyoper ationsmanagementdeci sionsi nvol
vet ryingtomaket hemostef f
ectiv
euseof
anor gani-
zation’
sr esources.Resourcest y
picallyincludemachi nery( suchaspl anes,int he
caseofanai rli
ne) ,labor(suchaspi l
ots) ,money ,time,andr awmat erials(suchasj etfuel)
.
Theser esourcesmaybeusedt opr oducepr oducts( suchasmachi nes,f urnit
ure,food,or
clothing)orser vi
ces( suchasairl
ineschedul es, adverti
singpol i
cies,orinv estmentdeci si
ons).
Linearpr ogrammi ng ( LP)is a widely used mat hemat i
caltechni que desi gned t o help
oper ati
onsmanager spl anandmaket hedeci sionsnecessar ytoallocater esources.
Af ewexampl esofpr obl emsi nwhi chLPhasbeensuccessf ull
yappl iedi
n
operati
onsmanage- mentar e
1.Schedul i
ngschool busest omi nimi zethet otal distancet raveledwhen
carryingst udent s.
2.Al l
ocat ingpol icepat rol unitstohi ghcr imear east omi nimi ze
responset imet o911cal ls.
3.Schedul i
ngt ell
er satbankssot hatneedsar emetdur i
ngeachhour
oft hedaywhi lemi ni mizingt het otalcostofl abor .
4.Sel ect i
ngt hepr oductmi xi nafact orytomakebestuseofmachi ne-
andl abor -hoursav ail-ablewhi lemaxi mizingt hef irm’spr ofit
.
5.Pi ckingbl endsofr awmat eri
alsinf eedmi l
lstopr oduce
fi
nishedf eedcombi nationsatmi nimum cost
6.Det erminingt hedi stributionsy stem t hatwi l
lmi ni
mi zet otalshipping
costf rom sev er alwar ehousest ov ariousmar ketl ocations.
7.Dev elopingapr oduct ionschedul ethatwi ll
sat i
sf yfuturedemandsf ora
fi
rm’ spr oductandatt hesamet imemi nimizetot al productionand
i
nv entorycost s.
8.Al l
ocat ingspacef orat enantmi xi nanew shoppi ngmal lsoast o
maxi mi zer evenuest ot hel easingcompany .( Seet heOM i nAct ionbox
“UsingLPt oSel ectTenant si
naShoppi ngMal l.”)

Li
nearProgrammi ngAssumpt ions
Li
near i
ty:t
heimpactofdeci si
onvari
ablesi
slinearinconst
rai
ntsand
obj
ecti
vefunction
Divi
sibi
li
ty:noni
ntegervaluesofdeci
sionvar
iablesareaccept
able
Cert
ainty:val
uesofpar ametersar
eknownandconst ant
Nonnegat i
vit
y:negati
vev al
uesofdeci
sionvariabl
esareunaccept
abl
e

14.
2REQUI
REMENTSOFALI
NEARPROGRAMMI
NGPROBLEM
AllLPproblemshav efourpropert
iesincommon:
1.LP problemsseekt o maximi ze ormini
mi ze somequant it
y( usuall
y
profitorcost).Wer efertot hi
spr opert
yast heobjectivefunct
ionofanLP
problem.Themaj orobject
iveofat y
pi-
calfi
rmistomaxi mizedollarprofi
tsin
thel ongrun.I nthecaseofat rucki
ngorai rl
i
nedi s-t
ri
buti
onsy stem,t he
objecti
vemi ghtbetomi nimizeshippingcosts.
2.Thepresenceofrestr
ict
ions,
orconstrai
nts, l
i
mi t
st hedegreetowhichwecanpursueour
obj
ecti
ve.
Forexample,deci
dinghowmanyuni tsofeachpr oductinaf i
rm’spr
oductlinetomanuf
acturei
s
rest
ri
ctedbyav ail
ablelaborandmachi nery.Wewant ,t her
efor
e,tomaxi mizeorminimizea
quanti
ty(t
heobjecti
vefuncti
on)subj
ecttoli
mi t
edr esources( t
heconstr
aint
s).
3.There mustbe alternati
ve cour
ses ofact ion to choose f r
om.For
exampl e,i
facompanypr oducest hr
eedif
ferentproducts,managementmay
use LP t o deci
de how t o allocat
e among t hem i t
sl imited producti
on
resources(oflabor,machinery,andsoon) .Iftherewer enoal t
ernati
vesto
selectfrom,wewoul dnotneedLP.
4.Theobject
iveandconst r
aintsi
nli
nearprogrammi ngpr oblems
mustbeexpr essedintermsofl i
nearequat
ionsori nequal
iti
es.

14.
3FORMULATI
NGLI
NEARPROGRAMMI
NGPROBLEMS

Oneoft hemostcommonl inearpr ogrammi ngappl icat

ionsisthepr oduct-mix
problem.Twoormor eproduct sar eusual l
ypr oducedusinglimit
edr esources.
Thecompanywoul dli
ket odet ermi nehow manyuni tsofeachpr oductit
shoul dproducet omaxi mizeov erallpr ofitgivenitslimi
tedresources.
Formul ati
ngal inearpr ogram i nvolvesdev elopingamat hematicalmodelt o
representt hemanager i
al problem
Thest epsinf ormul
atingal inearpr ogram ar e
1.Compl etel
yunder standt hemanager i
alprobl
em beingfaced
2.I
denti
fyt heobjectiveandconst raints
3.Defi
net hedecisionv ariabl
es
4.Uset hedecisionv ariablest owr itemat hematicalexpr
essionsf or
theobjecti
vef uncti
onandt heconst r
aints

Exampl
e:

TheFl airFurnit
ur eCompanypr oducesi nexpensi
v etablesandchai r
s.The
product ionprocessforeachi ssimilarinthatbothrequireacer t
ainnumberof
hour sofcar pentrywor kandacer tainnumberofl abourhour sint hepaint
ing
andv arnishi
ng.Eacht abl
et akes4hour sofcar pentryand2hour sint he
paintingandv ar
nishing.Eachchai rr equi
res3hour sincar pentr
yand1hour s
i
npai nti
ngandv arni
shing.Dur i
ngt hecur r
entproducti
onper i
od,240hour sof
carpent rytimeand100hour sinpai nti
ngandv arni
shingt i
mear eav ai
lable.
Eacht ablesoldyiel
dsapr ofitof$7; eachchairproducedi ssoldfora$5pr ofit
.
Flai
rFur nit
ure’
spr oblem ist odet erminet hebestpossi blecombi nati
onof
tablesandchai r
st omanuf actureinor dertoreachthemaxi mum pr ofi
t
 Theobject
ivei
sto
Maximizeprofi
t
Theconstr
aint
sare
Thehoursofcar
pent r
ytimeusedcannotexceed240hour sperweek
Thehoursofpai
ntingandv ar
nishingti
meusedcannotexceed100
hour
sperweek
Thedecisi
onvar
iablesrepr
esentingtheact
ualdeci
sionswewill
makear
e
X1=numberoft ablestobeproducedperweek
X2=numberofchai rstobeproducedperweek
Suppose,
X1=numberoftabl
est
obepr
oduced
X2=numberofchai
rst
obepr
oduced

Wecancov
ertt
heabov
einf
ormat
iont
ofor
mul
atet
hepr
obl
em whi
chi
sasf
oll
ows:

14.
4.1GRAPHI
CALREPRESENTATI
ONSOFCONSTRAI
NTS

Graphi
cal sol
ut i
onislimitedtolinearpr ogrammi ngmodelscontaini
ngonly
twodecisionv ari
ables(canbeusedwi tht hreevariabl
esbutonl
ywi thgr
eat
dif
fi
cult
y).Graphical methodspr ovidev isualizat
ionofhowasol uti
onfora
l
inearprogrammi ngpr oblem i
sobt ained.
Gr aphicalmet hodscanbecl assi f
iedundert wocategor
ies:
1.I
so-Profit(
Cost)LineMet hod
2.Extreme-pointevaluationMet hod

Gr
aphi
calSol
uti
onofaMaxi
mizat
ion
Model
Coordi
nateAxes

Max
imi
ze

Z=$40x1+50x2
Gr
aphi
calSol
uti
on

Theobj
ect
ivei
sto
Maxi
mizeprof
it
 14.
4.2I
SO-
PROFI
TLI
NESOLUTI
ONSMETHOD

Wesupposepr ofi
tequalt osomear bi
tr
arybutsmalldoll
aramount
.
Fort
heFl
airFurni
tureprobl
em wemaychooseapr of
itof$210.
$210=7X1+5X2
Wet henfind(X1,X2)={(0,
42);(
30,0)}
$280=7X1+5X2
Wef ind(X1,X2)={(0,56);
(40,
0)}

Fol
lowingthesamewaywedr aw aseri
esofparal
lelisoprof
itl
i
nes
(
iso-
profi
tmap)unt i
lwef
indt
hehi
ghesti
sopr
ofi
tli
ne,
thatis,theonewit
h
t
heoptimal sol
uti
on.

14.
4.3CORNER-
POI
NTSOLUTI
ONMETHOD

Alter
nat
ively
,wecansol v
et heLP probl
em byusi
ngcornerpoint
met
hod.Itinvol
veslooki
ngatev er
ycornerpoi
ntoft
hefeasi
bler
egion.
Opt
imalsol
uti
onwill
lieatone(ormore)oft
hem.
 Gr
aphi
calSol
uti
onofaMaxi
mizat
ion
ModelCor
nerPoi
ntSol
uti
ons

I
npoi
nt(4)
,weneedt ofi
ndt
hev al
ueintheint
ersect
ionpoi
ntoft
wo
const
rai
nts.4X1+3X2=240[ Carpent
ryequati
on]
2X1+1X2=100[ Pai
nti
ngequati
on]

Sol
vingt
hem gi
vesthev al
uesofX1andX2,whi
ch
i
s-(X1,
X2)=(30, 40)
So,t
hetot
alpr
ofitis,π=7(30)+5(40)=$410

Becausepoi
nt(
4)producesthehi
ghestpr
ofi
tofanycor
nerpoi
nt,t
heproduct
mixofX1=30t abl
esandX2=40chai r
sistheopt
imalsol
uti
ontoFlai
rFur
nitur
e’s
problem.
Thus, hasthecoordinat
es(X1=30,X2=40).Wecancomput eits
point pr
ofi
tlev
eltocomplete
the
anal y
si
s:
Poi
n :
(X1=30,
X2=40 Poi
n :
(X1=30,
X2=40
t t

14.
5SENSI
TIVI
TYANALYSI
S

Oper
ati
onsmanager sareusuallyinterestedinmorethantheopti
mal sol
utionto
an
LPpr obl
em.I nadditi
ont oknowi ngt hev alueofeachdecisionvariabl
e( the
Xis)andthev al
ueoftheobj ecti
vef unc- t
ion, t
heywanttoknowhowsensi tive
theseanswer saret
oi nputparamet erchanges.Forexampl e,whathappensi f
thecoeffi
cientsoftheobjectivefunct ionar enotexact,oriftheychangeby
10% or15%?Whathappens i fr i
ght -
hand- si
de v
alues oft he constr
aints
change? Because sol
uti
ons are based on t he assumption t
hat i
nput
parametersar
econstant
,thesubjectofsensit
ivi
tyanal
y si
scomesint
oplay.
Sensiti
vi
tyanal
ysi
s,orpostopti
malit
yanaly
sis,isthestudyofhowsensit
ive
sol
utionsaret
oparameterchanges.
 Therearet woappr oachest odeter
miningjusthow sensit
iveanopt imal
solut
ionist ochanges.Thef ir
stissimplyat ri
al-
and-er
rorapproach.This
approach usuallyinvolves resol
vi
ng the entir
e problem,pr efer
ably by
comput er
,eacht i
meonei nputdatait
em orparameterischanged.Itcantake
alongtimetot estaseri
esofpossiblechangesinthisway.

14.6 SOLVI
NG MI
NIMI
ZATI
ON PROBLEMS LI
NEAR PROGRAMMI
NG
APPLICATIONS

Manyl i
nearpr ogrammi ngprobl emsi nv olemi
v nimizinganobj ecti
vesuchas
costi nsteadofmaxi -
mi zingapr ofi
tfunct i
on.Ar estaurant,forexampl e,may
wisht odev el opawor kschedul etomeetst affi
ngneedswhi l
emi ni
mi zi
ngthe
totalnumberofempl oyees.Al so,amanuf act urermayseekt odistr
ibutei
ts
product sf r
om sev eralf act
oriest oitsmanyr egionalwar ehousesi nsucha
wayast omi nimizetot alshi
ppi ngcost s.
Mi nimizationpr oblemscanbesol vedgr aphicallybyf i
rstset t
ingupt he
feasiblesol utionregionandt henusi ngei thert hecor ner-
pointmet hodoran
i
so- costl i
neappr oach( which isanal ogoust ot hei so-prof
itappr oachin
maxi mizationpr oblems)t o
fi
ndt hev aluesofX1andX2t haty iel
dt hemi n-i
mum cost .

Twobr andsofferti
l
izerav
ail
able-Super-gro,Crop-
qui
ck.
Fiel
dr equiresatl
east16poundsofni tr
ogenand24poundsofphosphate.
Super -
grocosts$6perbag, Crop-qui
ck$3perbag.
Problem : Howmuchofeachbr andtopur chasetomini
mizet
otal
costof
fert
il
izergivenfol
lowingdata?

Deci
sionv ari
ables
x1=bagsofSuper-gr
o
x2=bagsofCr op-
qui
ck
Model constr
aints:
2x1+4x2 16lb(ni
trogenconstraint)
4x1+3x2 24l b
(phosphateconstr
aint)
x1,x2 0
(
nonnegativ
ityconst
raint)

Theobj
ect
ivefunct
ion:
mi ni
mizeZ=$6x1+3x2
wher
e$6x1=costofbagsofSuper
-gr
o
3x2=costofbagsofCr
op-
qui
ck
Fourspecialcasesanddi
ff
icul
ti
esar
iseatt
imeswhenusi
ngt
hegr
aphi
cal
approachtosolvingLPpr
oblems:
Infeasi
bil
ity
Unboundedness
Redundancy
 Al
ter
nat
eOpt
imalSol
uti
ons.

Speci
alCasesI(
NoFeasi
bleRegi
on)

Nof easibl
esol
uti
on
Exi
st swhenther
eisnosolut
iontotheproblem t
hatsat
isf
iesall
the
constrai
nts.
Nof easibl
esol
uti
onregi
onexist
s.
Thisisacommonoccur r
enceintherealwor l
d.
Gener al
l
yoneormoreconstr
aintsarerel
axeduntil
asolut
ionisfound.

Speci
alCasesI(
Unboundedness)

Unboundedness
Sometimesal i
nearpr ogram wil
lnothav eafi
nitesol uti
on.
I
namaxi mizati
onpr oblem, oneormor esoluti
onv ariables,andthepr
ofi
t,
canbemadei nfi
nit
elyl
ar gewi t
houtv i
olat
inganyconst raints.
I
nagr aphi
calsolut
ion, thefeasi
bleregionwil
lbeopenended.
Thi
susuallymeanst hepr oblem hasbeenf or
mul atedi mproperl
y.

Speci
alCasesI
II(
Redundancy
)
 Redundancy
Ar edundantconstraintisonethatdoesnotaffectt
hefeasi
blesol
uti
on
region.
Oneormor econstraintsmaybemor ebindi
ng.
Thisisav er
ycommonoccur r
enceintherealworl
d.
Itcausesnopar t
icularproblems,buteli
minati
ngredundant
constr
aintssimpli
fi
esthemodel .

Speci
alCasesI
V(Ununi
queness)

Alt
ernateOpti
mal Soluti
ons
Occasionall
ytwoormor eopti
malsolut
ionsmayexi st.
Graphical
lythi
soccur swhentheobjecti
vefuncti
on’siso-prof
itoriso-
costli
nerunsper f
ectlyparal
l
eltooneoftheconstraint
s.
Thisactuall
yallowsmanagementgr eatfl
exibi
l
ityindecidingwhi ch
combinati
ont oselectastheprofi
tist
hesameateachal ternatesoluti
on.

14.
7SI
MPLEXMETHODOFLI
NEARPROGRAMMI
NG

Simpl
ex:al
inear-
programmingal
gor
it
hm t
hatcansol
vepr
obl
emshav
ing
mor
ethantwodecisi
onv ari
abl
es.
 Thesi mpl ext echni quei nvolvesgener ati
ngaser iesofsol ut
ionsi ntabul
ar
form,cal l
edt abl eaus.Byi nspect ingthebot t
om r owofeacht ableau,onecan
i
mmedi atelyt elli
fi tr epresent stheopt imalsolution.
Eacht ableaucor respondst oacor nerpointoft hefeasiblesoluti
onspace.
Thef ir
stt ableaucor respondst otheor i
gin.
Subsequentt abl eausar edev elopedbyshi ft
ingt oanadj acentcor ner
pointint hedi rectiont hatyieldsthehi ghest(smal lest )rateofprofit(cost)
.
Thispr ocesscont i
nuesasl ongasaposi ti
ve( negat iv
e)rateofpr ofit(
cost)
exists.
Steps:
1.Init
ialization:
a.t ransf orm al l theconst r
aint stoequali
tybyi ntroducingslack,sur pl
us,
andar tifici
al variabl esasf ollows:

b.Const
ructt
hei
nit
ialsi
mpl
ext
abl
eau

2.Testf
oropt
imal
i
ty:

Case1:
Maxi mizat
ionprobl
em
t
hecurrentBFsol uti
onisopt
imali
fev
erycoef
fi
cienti
ntheobj
ect
ive
f
uncti
onrowisnonnegat i
ve
Case2:
Mi ni
mizati
onpr obl
em
t
hecurrentBFsol uti
onisopt
imali
fev
erycoef
fi
cienti
ntheobj
ect
ive
f
uncti
onrowisnonpositi
ve

3.I
ter
ati
on

Step1:det er
minetheenteri
ngbasi
cv ar
iabl
ebyselecti
ngthevari
able
(
automat i
call
yanonbasicvar
iabl
e)wi
ththemostnegati
vev al
ue(i
ncaseof
maximizati
on)orwitht
hemostpositi
ve(i
ncaseofmi ni
mizati
on)i
nthelast
r
ow( Z-row).Putaboxaroundthecol
umnbelowt hi
svar
iabl
e,andcal
litthe
“
piv
otcol umn”
St
ep2:
 Det erminetheleavingbasi cvariablebyapplyi
ngt hemi nimum rat
iotest
asfollowing:
1. Pickouteachcoef f
icienti nthepi votcol
umnt hatisst r
ictl
yposi
tiv
e(>0)
2. Divi
deeachoft hesecoef fi
cientsintother
ighthandsi deentryf
orthesame
row
3. Identi
fytherowt hathast hesmal l
estoftheserat i
os
4. Thebasi cvariablefort hatrow i stheleavi
ngv ari
able,sorepl
acet hat
vari
ablebyt heenteri
ngv ariablei nt hebasicv ari
abl ecolumnoft henext
simplext abl
eau.Putaboxar oundt hisrowandcal li
tthe“ pi
v otr
ow”

Step3:
Solvef ort he new BF sol uti
on by usi ng element aryr ow oper ati
ons
(mul t
ipl
yordi videar owbyanonzer oconstant;addorsubt ractamul ti
pleof
oner owt oanot herr ow)t oconst r
uctanewsi mpl extableau,andt henr et
urn
totheopt imal i
tyt est.Thespeci ficelementaryrowoper at
ionsar e:
Divi
det hepi v
otr owbyt he“ pivotnumber ”(thenumberi ntheintersecti
on
ofthepi votr owandpi v
otcol umn)
Foreachot herr owt hathasanegat i
vecoef f
ici
entinthepi v
otcolumn, add
tot hisrowt hepr oductoft heabsol utevalueoft hiscoef f
icientandt henew
pivotrow.
Foreach ot herr ow t hathasaposi ti
vecoef fici
entint hepi votcolumn,
subt r
actfrom t hisrow t hepr oductoft heabsolutev al
ueoft hiscoeffi
cientand
thenewpi v otrow.

Exampl
e(Al
lconst
rai
ntsar
e)

Sol
vet
hefoll
owingpr
obl
em usi
ngt
hesi
mpl
exmet
hod
 Maximize
Z=3X1+5X2
Subj
ectto
X1 4
2X212
3X1+2X218
X1,
X20

Solut
ion
I
niti
ali
zati
on
Standardfor
m

Maxi
mizeZ,
Subj
ectt
o
Z-3X1-5X2 =0

X1 +S1 =4
2X2 +S2 =12
3X1+2X2 +S3=18
X1,X2,
S1,
S2,
S3 0
Abasi
csolut
ionisanaugment
edcornerpointsol
uti
on.
Abasi
csolut
ionhasthefol
l
owingpr
operti
es:
Eachv
ari
ableisdesi
gnat
edaseit
heranonbasicvari
abl
eorabasi
cvar
iabl
e.
 Thenumberofbasi
cvari
abl
esequalst
henumberoff
uncti
onalconst
rai
nts.Theref
ore,thenumber
ofnonbasi
cvar
iabl
esequal
sthet
otalnumberofv
ari
abl
esminusthenumberoff unct
ionalconst
rai
nts.
 Thenonbasicvar
iabl
esaresetequal
tozer
o.
The v
aluesoft he basi
cv ari
abl
esare obt
ained assimultaneoussolut
ion ofthe system of
equat
ions(
functi
onalconst
rai
ntsi
naugmentedfor
m) .Thesetofbasicvar
iabl
esarecal
led“basis”
I
fthebasi
cvar
iabl
essat
isf
ythenonnegat
ivi
tyconst
rai
nts,
thebasi
csol
uti
oni
saBasi
cFeasi
ble(
BF)sol
uti
on.

I
nit
ial
tabl
eau

Not
es:

Thebasicfeasi
blesol
ut i
onatt hei
niti
al t
ableaui
s(0,0,
4,12,18)where:
X1=0,X2=0, S1=4, S2=12, S3=18, andZ=
0WhereS1, S2,andS3ar ebasi cv
ariables
X1andX2ar enonbasi cvar
iables
Thesol
ut i
onattheini
tialtableaui
sassoci atedt
otheori
ginpointatwhi
ch
al
lthedeci
sionvari
ablesarezer o.

Opt
imal
i
tyt
est

Byi
nvesti
gat
ingthelastr
ow ofthei
nit
ialt
abl
eau,wefindthatt
her
ear
e
somenegati
venumbers.Ther
efor
e,t
hecur
rentsol
uti
onisnotopti
mal

I
ter
ati
on

Step1:Det er
mi net heent eri
ngv ariablebyselectingthevari
ablewiththe
mostnegati
vei nthel astrow.
From t
hei nit
ialtableau,inthel astrow( Zrow),thecoeff
ici
entofX1i s-3
andthecoeffi
cientofX2i s-5;therefore,themostnegat i
veis-5.consequentl
y,
X2istheenteri
ngv ariable.
X2issurroundedbyaboxandi tiscalledthepi
v otcol
umn

I
ter
ati
on

Step2:Determini
ngtheleav
ingv
ari
ablebyusi
ngtheminimum r
ati
otest
asfoll
owing:
Step3:solvi
ngforthenewBFsolut
ionbyusi
ngtheel
iminat
oryrow
operat
ionsasfoll
owing:
 Newpi
votr
ow=ol
dpi
votr
ow pi
votnumber

Thi
ssol
uti
oni
snotopt
imal
,si
ncet
her
eisanegat
ivenumber
sint
hel
ast
row

Appl
ythesamer
uleswewi
llobt
aint
hissol
uti
on:

Thissol
uti
onisopti
mal
;si
ncet
her
eisnonegati
vesolut
ioni
nt helast
row:basi
cvari
abl
esar
eX1=2,X2=6andS1=2;thenonbasi
cvar
iablesare
S2=S3=0
Z=36

14.
8TRANSPORTATI
ONPROBLEM OFLI
NEARPROGRAMMI
NG

Thetransport
ati
onproblem deal
switht hedi
str
ibut
ionofgoodsfrom
severalpoints ofsupply( sour
ces)to a numberofpoi nt
s ofdemand
(desti
nati
ons)
Usual
lywear egiv
en thecapacit
yofgoodsateachsour ceand the
requir
ementsateachdesti
nat i
on
Typi
cal
l
ytheobj
ect
ivei
stomi
nimi
zet
otal
transpor
tat
ionandpr
oduct
ion
cost
s
 Set
ti
ngUpaTr ansportat
ionPr obl
em
Thefir
ststepissetti
ngupt het r
anspor
tati
ontabl
e.Itspurposeisto
summarizeall
t her
elevantdataandkeept rackofal
gori
thm computati
ons
Transport
ationcostsperdeskforExecut
iveFurni
tur
e

I
nt hi
st abl
e,totalfact
orysuppl
yexact
lyequalstotalwarehouse
demandWhenequaldemandandsuppl yoccur,
abal ancedprobl
em
i
ssaidt oexist
Thisi
suncommoni nther
ealworl
dandwehav etechniquestodealwi
th
unbalancedpr oblems

14.
8.1NORTHWESTCORNERMETHOD

Oncewehav ear rangedthedat ainat able,

wemustest abli
shaninit
ial
feasi
ble
sol
ut i
on
Onesy stemat icappr oachisknownast he
northwestcor nerr ul
e
St artint heupperl eft-
handcel landallocate
uni
tst oshi ppingr outesasf ol
lows
1. Ex haustt hesuppl y(factorycapacity)ofeachrowbef or
emov ingdown
tothenextr ow
2. Exhaustt hedemand( warehouse)requi r
ementsofeach
col
umnbef or emov i
ngt other i
ghttot henextcolumn
3.Checkt hatal l
suppl yanddemandr equir
ement saremet .
Int
hi spr oblem ittakesf iv
est epstomaket heini
ti
alshippingassi
gnments
1.Beginningintheupperlefthandcorner
,weassi
gn100uni t
sfrom Des
Moi nestoAlbuquer
que.Thi
sexhaustt
hesuppl
yfr
om DesMoinesbutl
eaves
Albuquerque200desksshor t.Wemov etot
hesecondrow inthesame
column.

2. Assign 200 units fr

om Ev ansvi
l
le t
o Albuquerque. Thi
s meets
Albuquerque’
sdemand.Ev
ansvi
l
lehas100uni
tsr
emainingsowemov et
othe
ri
ghttothenextcol
umnofthesecondrow.

3. Assi
gn100unitsfrom Evansv
ill
etoBoston.TheEvansv
il
lesuppl
yhas
now beenexhaust
edbutBost onisst i
l
l100unitsshort
.Wemov edown
ver
ti
call
ytot
henextrowintheBostoncolumn.
4. Assi
gn100uni
tsfr
om FortLauder
dalet
oBoston.Thisf
ulf
il
lsBost
on’
s
demandandFor
tLauderdal
esti
llhas200uni
tsav
ailabl
e.

.
5.Assign200uni
tsfr
om For
tLauder
dal
etoClev
eland.Thisexhaust
sFort
Lauder
dal
e’
ssuppl
yandCl
evel
and’
sdemand.Thei
nit
ialshi
pmentschedul
eis
nowcomplet
e.

Wecaneasi
l
ycomput
ethecostoft
hisshi
ppi
ngassi
gnment

14.
8.2STEPPI
NGSTONEMETHOD
 Thest epping- st
onemet hodisaniterati
vet echniqueformovingf
rom
ani
nit
ialfeasiblesolutiontoanoptimalfeasiblesoluti
on
Therear et wodi st
inctpart
stotheprocess
Testingt hecur r
entsoluti
ontodeterminei fimprov ementi
s
possibleMaki ngchangest othecurr
entsol uti
ont oobtai
nan
improv edsol uti
on
Thispr ocesscont inuesunti
ltheopti
malsol ut
ionisreached

Thest eppi ng-stonemet hod wor ksbyt esting eachunused squar eint he
tr
anspor t
at i
ont ablet oseewhatwoul dhappent otot alshippi ngcost si
fone
unitofthepr oductwer et entati
velyshi ppedonanunusedr out e
Ther ear ef ivest epsi nthepr ocess
1.Selectanunusedsquar et oevaluate
2.Begi nning att his squar e,t r
ace a closed pat h back tot he
originalsquar ev iasquar est hatar ecur rentlybeingusedwi thonl y
hor i
zont al orv erti
cal mov esallowed
3.Begi nningwi t
hapl us( +)signatt heunusedsquar e,place
alternat emi nus( –)signsandpl ussignsoneachcor nersquar eofthe
closedpat hjustt raced
4.Cal cul
at eani mprov ementi ndexbyaddi ngt oget hertheuni t
costf iguresf oundi neachsquar econt ai
ningapl ussi gnandt hen
subt ractingt heuni tcostsi neachsquar econt ainingami nussign
5.Repeatst eps1 t o 4 unt i
lan impr ovementi ndexhasbeen
calcul atedf oral lunusedsquar es.Ifalli
ndicescomput edaregr eat
er
thanorequalt ozer o,anopt imalsol uti
onhasbeenr eached.Ifnot,it
is possi blet oi mpr ovet he cur r
entsol ution and decr ease total
shippi ngcost s.
Obt
aini
nganI
mpr
ovedSol
uti
on
 14.
8.3MODI
FIEDDI
STRI
BUTI
ON

TheMODI( modi fi
eddistr
ibution)met hodal l
owsustocomput e
i
mpr ov ementindicesquicklyforeachunusedsquar ewit
houtdrawingal lof
theclosedpat hs
Becauseoft his,i
tcanof t
enpr ovideconsiderabl
eti
mesav ingsov erthe
stepping-st
onemet hodforsolvingt ransport
ationprobl
ems
I
fthereisanegat i
veimprov ementi ndex,thenonlyonestepping-stone
pathmustbef ound
Thisisusedint hesamemanneras
beforet oobtai
nani mprovedsol ution

Theini
tial
northwestcor
nersol
uti
oni
s
repeat
edinTable10.10
NotethattousetheMODImet hodwehav
eaddedt
heRi
s(r
ows)andKj
s
(col
umns)

Thefi
rstst
epistosetupanequat
ionfor
eachoccupi
edsquare
Bysett
ingR1=0wecaneasilysol
veforK1,
R2,
K2,
R3,
andK3
Thestepswef ol
lowt odev el
opani mpr ovedsoluti
onaf t
ertheimprov ement
i
ndiceshav ebeencomput edar e
1.Beginningatt hesquar ewi ththebestimpr ovementindex,tr
acea
cl
osedpat hbackt ot heorigi
nal squarev i
asquar esthatarecurr
entlybei ng
used
2.Beginningwi t
hapl ussi gnatt heunusedsquar e,placealt
ernatemi nus
si
gnsandpl ussignsoneachcor nersquareofthecl osedpathjusttraced
3.Selectt hesmal l
estquant i
tyfoundi nt hosesquar escont ainingt he
minussignsandaddt hatnumbert oal lsquar
esont heclosedpathwi thplus
si
gns;subt r
actthenumberf rom squar eswithmi nussigns
4.Comput enewi mprovementi ndicesforthisnewsol uti
onusingt he
MODImet hod

NotethatnewRiandKjval
uesmustbecalcul
ated
Fol
lowthispr
ocedur
eforthesecondandt
hird
sol
uti
ons

14.
8.4VOGEL’
SAPPROXI
MATI
ONMETHOD(
VAM)

Vogel
’sAppr oxi
mat i
onMet hod( VAM)i snotassi mpl easthenor thwest
cornermethod, butitpr
ov i
desav erygoodinit
ialsolution,oft
enonet hatisthe
optimalsoluti
on
VAM tacklestheproblem off i
ndingagoodi nit
ialsoluti
onbyt akinginto
accountthecost sassociatedwit
heachr outealternative
Thi
sissomet hingthatthenorthwestcornerruledoesnotdo
Toappl yVAM,wef irstcomput eforeachr ow andcol umnthepenal t
y
facedifweshoul dshipov ert
hesecond- bestroutei nsteadofthel east-
cost
route

VAM Step1.Foreachr ow andcol umnoft

hetranspor
tat
iont
abl
e,f
indt
he
di
ff
erencebetweent hedistr
ibut
ioncostonthebestr outei
ntherow or
col
umnandt hesecondbestrouteinther
oworcol
umn
Thi
sistheopport
unit
ycostofnotusingt
hebestrout
e
VAM Step2.i dentif
yt heroworcolumnwi ththegr eat
estoppor t
unit
ycost,or
dif
fer
ence( columnAi nthisexample)
VAM Step3. Assignasmanyuni t
saspossi bletothelowest-costsquarei
nt he
roworcolumnsel ected
VAM Step4.El iminateanyr oworcolumnt hathasbeencompl etel
ysati
sfi
ed
bytheassignmentj ustmadebypl aci
ngXsi neachappr opri
atesquare
VAM Step5.Recomput ethecostdiff
erencesforthetransportat
iontabl
e,
omitt
ingrowsorcol umnsel imi
natedinthepreviousstep

VAM Step6.Ret
urntost
ep2fortherowsandcol
umnsr emai
ningandr
epeat
thest
epsunti
lanini
ti
alf
easi
blesol
uti
onhasbeenobt
ained
Unbal
ancedTr
anspor
tat
ionPr
obl
ems

I
nreal
-l
if
epr
obl
ems,
tot
aldemandi
sfr
equent
lynotequal
tot
otal
suppl
y
 Theseunbalancedproblemscanbehandl edeasilybyintroducingdummy
sour
cesordummydest i
nations
Iftotalsupplyis greaterthan totaldemand,a dummy dest i
nat
ion
(war
ehouse),wit
hdemandexact l
yequaltothesur pl
us,iscreated
Ift
otaldemandisgreaterthantot
alsupply,wei ntr
oduceadummysour ce
(f
actor
y)withasupplyequal t
otheexcessofdemandov ersupply
Ineit
hercase,shippingcostcoeffici
entsofzer oareassi gnedtoeach
dummyl ocati
onorrouteasnogoodswi l
lactual
lybeshi pped
Anyunitsassi
gnedtoadummydest i
nati
onr epresentexcess
capacit
yAnyunitsassignedtoadummysour cerepresent
unmetdemand

Let
’sSum Up

Li
nearprogrammi ngisanopt
imizat
iontechni
quef orasystem ofl
inearconstr
aintsand
alinearobject
ivefunct
ion.Anobj
ecti
vefunct
iondefinesthequanti
tytobeoptimized,andthe
goalofl i
nearprogrammi ngi
stofindtheval
uesoft hev ar
iabl
esthatmax imiz
eormi ni
mize
theobjecti
v ef
unction.
Gr aphical solutionislimitedtolinearprogrammi ngmodel scontai
ning
onlyt wodeci sionv ari
ables( canbeusedwi ththr
eev ariabl
esbutonlywi th
greatdi f
fi
cul t
y )
.Gr aphi
cal met hodspr ovi
dev i
suali
zat i
onofhowasol utionfor
alinearpr ogrammi ngpr oblem isobtained.
Simpl ex:al i
near -
programmi ngalgorit
hm thatcansol veproblemshav i
ng
mor et hant wodeci sionv ari
ables.
Thest eppi ng-stonemet hodi sani t
erati
vetechni quef ormovingf r
om an
i
nitialfeasi blesolut i
ontoanopt imal f
easibl
esolution.
The MODI ( modi f
ied di stri
buti
on) met hod al l
ows us t o comput e
i
mpr ov ementi ndicesqui cklyforeachunusedsquar ewi t
houtdrawi ngallof
thecl osedpat hs
Vogel ’sAppr oximationMet hod( VAM)i snotassi mpl easthenor thwest
cornermet hod, butitprov i
desav er
ygoodi nit
ialsolution,oft
enonet hatisthe
optimal solution.

Ref
erences:

Tayl
or,Bernar
d.Int
roduct
iontoManagementSci
ence,
8thed.Upper
Saddl
eRiver,NJ:Prent
iceHal
l,2005.

Render,B.
,R.M.St
air
,andMichaelHanna.Quant
it
ati
ve
Anal
ysisforManagement,
9thed.UpperSaddleRi
ver
,NJ:Prent
ice
Hall
(2006).

LeBlanc,Lar
ryJ.
,etal
.“Nu-
Kot
e'sSpreadsheetLi
nearProgrammi
ngModel
sforOpt
imi
zi
ng
Transpor
tati ”I
on. nt
erf
aces34(
Mar ch–Apri
l2004):139–146.

htt
ps://
bril
l
iant.
org/wiki/li
near-
programmi ng/
htt
ps://
en.wiki
pedia.org/wiki
/Linear_pr
ogr ammi ng
htt
ps://
www. analyti
csv i
dhya.com/ bl
og/2017/ 02/l
intr
oduct
ory
-gui
de-
on-
l
inear-
programmi ng-explai
ned-in-
simple-engli
sh/
htt
p:/
/people.
brunel.
ac.uk/~mast j
j
b/ j
eb/
or /
mor el
p.html

Operat
ionsManagement .AccessedAugust14,2020.
ht
tps:/
/www.sl
ideshar
e.net/Kadi
rikj
s24/
operat
ions-
management
-69329225