INTRODUCTION

UNIT - 1
SYLLABI

• UNIT I INTRODUCTION 9
Objectives and benefits of planning and control-Functions of production control-
Types of production job- batch and continuous-Product development and design-
Marketing aspect - Functional aspects Operational aspect-Durability and
dependability aspect aesthetic aspect. Profit consideration Standardization,
Simplification & specialization- Break even analysis-Economics of a new design.
INTRODUCTION

• Production Planning is a managerial function which is mainly concerned

with the following important issues:
• What production facilities are required?
• How these production facilities should be laid down in the space available for
production? and
• How they should be used to produce the desired products at the desired rate of
production?
INTRODUCTION

• Broadly speaking, production planning is concerned with two main aspects:

(i) routing or planning work tasks
(ii) layout or spatial relationship between the resources.

• Production planning is dynamic in nature and always remains in fluid state as plans may
have to be changed according to the changes in circumstances.
THREE PHASES OF PRODUCTION PLANNING
AND CONTROL
• Pre- planning phase
• a. Product development and design
• b. Process design
• c. Work-station design
• d. Sales forecasting
• e. Estimation
• f. Factory layout and location
• g. Equipment policy
• h. Pre-planning production
THREE PHASES OF PRODUCTION PLANNING
AND CONTROL
• 2. Planning phase: The choice from several alternatives of the best utilizing
the available resources to achieve the desired objective
• a. Materials
• b. Methods
• c. Facilities, machines and manpower
• d. Routing
• e. Estimating
• f. Scheduling
THREE PHASES OF PRODUCTION PLANNING
AND CONTROL
• 3. Control phase: The monitoring of performance through a feedback
by comparing the results achieved with planned targets so that
performance can be improved
• a. Dispatching
• b. Inspection
• c. Expediting
• d. Evaluation
SCENARIO

• You are owning a import/export of Spices company to European country(specify

the country name) for the value of 30 crores per year. Demonstrate how you are
managing such a huge turn over to future entrepreneurs.
• You are running a garage in pudupet for the past 10 years. Your garage is always
filled with 10 cars minimum. How are you managing so many cars in a chaotic
area. Explain your space management technique.
• You are the proprietor of the agarbathi manufacturing industry at ambatur. You
are exporting to the different Asian countries. Explain how are you managing
your business/manufacturing system?
INTRODUCTION

• Production control is a mechanism to monitor the execution of the plans. It has several important
functions:
 Making sure that production operations are started at planned places and planned times.
 Observing progress of the operations and recording improperly.
 Analyzing the recorded data with the plans and measuring the deviations.
 Taking immediate corrective actions to minimize the negative impact of deviations from the
plans.
 Feeding back the recorded information to the planning section in order to improve future
plans.
OBJECTIVES AND BENEFITS

• Minimize costs / maximize profits

• • Maximize customer service
• • Minimize inventory investment
• • Minimize changes in production rates
• • Minimize changes in work-force levels
• • Maximize the utilization of plant and equipment
FUNCTIONS OF PRODUCTION CONTROL

• Production function encompasses the activities of procurement, allocation and utilization of

resources.
• The main objective of production function is to produce the goods and services demanded by the
customers in the most efficient and economical way.
• Therefore, efficient management of the production function is of utmost importance in order to
achieve this objective.
ARCHITECTURE OF CONTROL SYSTEM
TYPES OF PRODUCTION SYSTEMS

• A production system can be defined as a transformation system in which a saleable product or

service is created by working upon a set of inputs.
• Inputs are usually in the form of men, machine, money, materials etc.
• Production systems are usually classified on the basis of the following:
• Type of product,
• Type of production line,
• Rate of production,
• Equipments used etc.

• They are broadly classified into three categories:

• Job shop production Batch production Mass
production
JOB SHOP PRODUCTION

• In this system products are made to satisfy a specific order.

• However that order may be produced only once or at irregular time intervals as and when new order
arrives or at regular time intervals to satisfy a continuous demand
• The following are the important characteristics of job shop type production system:
• Machines and methods employed should be general purpose as product changes are quite
frequent.
• Planning and control system should be flexible enough to deal with the frequent changes in
product requirements.
JOB SHOP PRODUCTION

• Man power should be skilled enough to deal with changing work conditions.
• Schedules are actually non existent in this system as no definite data is available on the product.
• In process inventory will usually be high as accurate plans and schedules do not exist. Product cost
is normally high because of high material and labor costs.
• Grouping of machines is done on functional basis (i.e. as lathe section, milling section etc.) This
system is very flexible as management has to manufacture varying product types.
• Material handling systems are also flexible to meet changing product requirements.
BATCH PRODUCTION

• Batch production is the manufacture of a number of identical articles either to meet a specific order
or to meet a continuous demand.
• Batch can be manufactured either-only once or repeatedly at irregular time intervals as and when
demand arise or repeatedly at regular time intervals to satisfy a continuous demand
• The following are the important characteristics of batch type production system:
• As final product is somewhat standard and manufactured in batches, economy of scale can be
availed to some extent.
•  Machines are grouped on functional basis similar to the job shop manufacturing.
•  Semi automatic, special purpose automatic machines are generally used to take advantage of the
similarity among the products.
BATCH PRODUCTION

• Labor should be skilled enough to work upon different product batches.

•  In process inventory is usually high owing to the type of layout and material handling
policies adopted.
•  Semi automatic material handling systems are most appropriate in conjunction with the
semi automatic machines.
MASS PRODUCTION

• In mass production, same type of product is manufactured to meet the continuous demand of the
product.
• Usually demand of the product is very high and market is going to sustain same demand for
sufficiently long time.
• The following are the important characteristics of mass production system:
• As same product is manufactured for sufficiently long time, machines can be laid down in order of
processing sequence. Product type layout is most appropriate for mass production system.
• Standard methods and machines are used during part manufacture. Most of the equipments are semi
automatic or automatic in nature. Material handling is also automatic (such as conveyors).
MASS PRODUCTION

• Semi skilled workers are normally employed as most of the facilities are automatic.
• As product flows along a pre defined line, planning and control of the system is much
easier. Cost of production is low owing to the high rate of production.
• In process inventories are low as production scheduling is simple and can be
implemented with ease.
PRODUCT DESIGN

• Product design is a strategic decision as the image and profit earning capacity of a small firm
depends largely on product design.
• Once the product to be produced is decided by the entrepreneur the next step is to prepare its
design. Product design consists of form and function.
• The form designing includes decisions regarding its shape, size, color and appearance of the
product.
• The functional design involves the working conditions of the product.
• Once a product is designed, it prevails for a long time therefore various factors are to be considered
before designing it
FACTORS

• (a) Standardization • (g) Product simplification

• (b) Reliability • (h) Quality Commensuration with cost
• (c) Maintainability • (i) Product value
• (d) Servicing
• (j) Consumer quality
• (e) Reproducibility
• (k) Needs and tastes of consumers.
• (f) Sustainability
PRODUCTION TYPES

• (a) Continuous production

• (b) Job or unit production
• (c) Intermittent production
CONTINUOUS PRODUCTION

It refers to the production of standardized products with a standard set of process and operation
sequence in anticipation of demand.
It is also known as mass flow production or assembly line production
This system ensures less work in process inventory and high product quality but involves large
investment in machinery and equipment.
The system is suitable in all plants involving large volume and small variety of output
e.g. oil refineries reform cement manufacturing etc.
JOB OR UNIT PRODUCTION

• It involves production as per customer's specification each batch or order consists of a small lot of
identical products and is different from other batches.
• The system requires comparatively smaller investment in machines and equipment.
• It is flexible and can be adapted to changes in product design and order size without much
inconvenience.
• This system is most suitable where heterogeneous products are produced against specific orders.
INTERMITTENT PRODUCTION

• Under this system the goods are produced partly for inventory and partly for customer's orders.
• E.g. components are made for inventory but they are combined differently for different customers.
Automobile plants, printing presses, electrical goods plant are examples of this type of
manufacturing.
MARKETING ASPECT

• Sales and Marketing is a key function whose participation is often hard to enlist.
• Sales and Marketing are critical functions in this process, since they provide the starting point of
the planning and scheduling process ‑‑ the forecasts and customer order demands
• They are also vital from the viewpoint of providing the proper customer perspective whenever
changes need to be made to plans and schedules based on mismatches of resources to customer
demands.
• Only with a proper level of participation in Planning and Scheduling, can Sales and Marketing
optimally leverage its performance and create a trusting and consensus based working relationship
with Manufacturing, Purchasing, Planning, Engineering and all other functions in the company.
FUNCTIONAL ASPECTS

• It reveals the functional scope of the product. How the product

functions.
• It influences the design of the machine, its complexity, its appearance
and its price
• Offering functional versatility of the product increases the range of
applications of product to the customer.
• Versatility of production machinery may quite often result in substantial
savings in floor space and capital expenditure.
OPERATIONAL ASPECTS:

The product should also be easy to handle and simple to operate.

The product is used at different conditions and the customers vary with
respect to skill knowledge.
These factors in addition with multifunctional features complicate the
product designer’s problem.
STANDARDIZATION

• •Sizes for screws, nuts bolts and other threaded fasteners were first standardized based on work of
by JosephWhitworth..
• Pipe sizes
• Shoe size standardization
• The screw base size and thread dimensions of electric lamp bulbs was standardized by Thomas
Edison.
• Electrical voltage and frequency
• Electrical wiring and device standards
DURABILITY

• It refers to the length of the active life or endurance of the product under given
• working condition.
• Another aspect of durability is that of maintenance and repair. The amount of repair
• and the preventive maintenance required for some products are closely related to
• quality and design policy.
DEPENDABILITY ASPECTS:

• It refers to the reliability with which the product serves its intended function When a
product does not function at the right moment when it is called upon to do the job, then it
has very poor or no dependability.
AESTHETIC ASPECTS:

• It refers to the final shape and appearance around the basic skeleton which are required for
performance of intended functions.
• Aesthetics make the product attractive and induce in the customer a willingness to possess.
• It helps the marketing function of the product by attracting the customers and creating the deep
impression about the product.
• Designers use variety of techniques to build aesthetic characteristics into the product.
• Some of the techniques to enhance the aesthetic appeal in product design:
• 1. Use of specific material 2.Use of colour, texture as supplement to colour,Packaging.
ECONOMIC ANALYSIS:

• Profit consideration
• o Effect of standardization, simplification, and specialization
• o Break even analysis
•  Cost-volume-profit analysis.
PRODUCTION ASPECTS

• Design of ease of manufacturing of the components of a product.

• Guidelines for general approach to DFM.
• o Design for minimum number of parts.
• o Minimize part variations.
• o Design parts to be multi- functional.
• o Design parts for ease of fabrication
AESTHETIC ASPECTS

• It refers to the final shape and appearance around the basic skeleton which are required for
performance of intended functions.
• Aesthetics make the product attractive and induce in the customer a willingness to possess.
• It helps the marketing function of the product by attracting the customers and creating the deep
impression about the product.
• Designers use variety of techniques to build aesthetic characteristics into the product.
• Some of the techniques to enhance the aesthetic appeal in product design:
• 1. Use of specific material 2.Use of colour, texture as supplement to colour,Packaging.
ECONOMIC ANALYSIS

• o Profit consideration
• o Effect of standardization, simplification, and specialization
• o Break even analysis
•  Cost-volume-profit analysis.
PRODUCTION ASPECTS

• Guidelines for selection of the manufacturing processes.

•  Guidelines for particular processes.

•  Guidelines for assembly.

• o Design for assembly(DFA) means the design of the product for ease of assembly

• o Minimize the number of parts

• o Minimize assembly surfaces

• o Design for top- down assembly.

• o Improve assembly access.

PRINCIPLES OF PRODUCT DEVELOPMENT:

• There are various methods available to support the product design and development process.
• Standardization
• Simplification
• Specialization
STANDARDIZATION

• It is defined as the process of defining and applying the conditions necessary to ensure that a given
range of requirements can normally be met with a minimum variety and in a reproducible and
economic manner on the basis of the best current techniques.
• Fixation of appropriate size, shape, quality, manufacturing process, and other characteristics as
standards to manufacture a product of desired variety and utility.eg shaving blades, television
• It is applicable to all kind of production.
BREAK EVEN ANALYSIS

• A break-even analysis is a financial tool which helps a company to determine the stage at which the
company, or a new service or a product, will be profitable.
• In other words, it is a financial calculation for determining the number of products or services a
company should sell or provide to cover its costs (particularly fixed costs).
• Break-even is a situation where an organisation is neither making money nor losing money, but all
the costs have been covered.
• Break-even analysis is useful in studying the relation between the variable cost, fixed cost and
revenue.
• Generally, a company with low fixed costs will have a low break-even point of sale
COMPONENTS OF BREAK EVEN ANALYSIS

• Fixed cost
• Fixed costs are also called overhead costs. These overhead costs occur after the decision to start an
economic activity is taken and these costs are directly related to the level of production, but not the
quantity of production.
• Fixed costs include (but are not limited to) interest, taxes, salaries, rent, depreciation costs, labour
costs, energy costs etc. These costs are fixed respective of the production. In case of no production
also the costs must be incurred.
COMPONENTS OF BREAK EVEN ANALYSIS

• Variable costs
• Variable costs are costs that will increase or decrease in direct relation to the production volume.
• These costs include cost of raw material, packaging cost, fuel and other costs that are directly
related to the production.
• Breakeven analysis is performed to determine the value of a variable of a project that makes two
elements equal, e.g. sales volume that will equate revenues and costs.
COMPONENTS OF BREAK EVEN ANALYSIS

• The analysis is based on the relationship:

• Profit = revenue – total cost = R – TC
• At breakeven, there is no profit or loss, hence,
• Revenue = total cost or, R = TC
• Note: It is to be noted that +ve sign is used for both the revenue and the costs. If we are to use
• –ve sign for costs and +ve sign for revenue, then the above relationships become:
• Profit = R + TC and R + TC = 0 at breakeven.
• With revenue and costs given in terms of a decision variable, the solution yields the breakeven quantity for the
decision variable.
COMPONENTS OF BREAK EVEN ANALYSIS

• TC = FC + VC
• Revenue also changes with the decision variable.
WAYS TO MONITOR BREAKEVEN POINT

• Pricing analysis: Minimize or eliminate the use of coupons or other price reductions offers, since such
promotional strategies increase the breakeven point.
• Technology analysis: Implementing any technology that can enhance the business efficiency, thus increasing
capacity with no extra cost.
• Cost analysis: Reviewing all fixed costs constantly to verify if any can be eliminated can surely help. Also,
review the total variable costs to see if they can be eliminated. This analysis will increase the margin and
reduce the breakeven point.
• Margin analysis: Push sales of the highest-margin (high contribution earning) items and pay close attention to
product margins, thus reducing the breakeven point.
•  Outsourcing: If an activity consists of a fixed cost, try to outsource such activity (whenever possible), which
reduces the breakeven point.
BENEFITS

• Catch missing expenses: When you’re thinking about a new business, it’s very much possible that
you may forget about a few expenses. Therefore, a break-even analysis can help you to review all
financial commitments to figure out your break-even point.
• Set revenue targets: Once the break-even analysis is complete, you will get to know how much
you need to sell to be profitable. This will help you and your sales team to set more concrete sales
goals.
• Make smarter decisions: Entrepreneurs often take decisions in relation to their business based on
emotion. Emotion is important i.e. how you feel, though it’s not enough. In order to be a successful
entrepreneur, decisions should be based on facts.
BENEFITS

• Fund your business: This analysis is a key component in any business plan. It’s generally a
requirement if you want outsiders to fund your business. In order to fund your business, you have to
prove that your plan is viable. Furthermore, if the analysis looks good, you will be comfortable
enough to take the burden of various ways of financing.
• Better Pricing: Finding the break-even point will help in pricing the products better.This tool is
highly used for providing the best price of a product that can fetch maximum profit without
increasing the existing price.
• Cover fixed costs: Doing a break-even analysis helps in covering all fixed cost.
BEP
BEP
BEP
LIMITATIONS OF BEP ANALYSIS
ECONOMICS
OF A NEW
DESIGN
ECONOMICS OF
A NEW DESIGN