Category Archives: Production and Operations

Factors Affecting Scheduling

The factors affecting scheduling can be broadly classified into two categories:

  1. Internal factors – which affect from within the organization
  2. External factors – those affect from outside the organization


Internal Factors Affecting Scheduling

Followings are the internal factors affecting scheduling:

Scheduling depends on how much stock of finished goods is kept by the company. Most companies keep, one month’s supply of each product, as stock. If the company’s product is fast moving or slow moving, then scheduling will have to be changed.

2. Process intervals

It depends on the process intervals of each product. Process interval is the time required to produce a product. Different products have different process intervals. For example, the process interval of a car is more than that of a soap. Scheduling will be different for each process interval.

3. Type of machines available

It also affected by the type of machines available. If the company has old and outdated machines, the schedule must keep provisions for the breakdown of machines. Modern and computerized machines makes scheduling very easy.

4. Availability of personnel

Scheduling also depends on the availability of personnel. If the company has untrained and inexperienced employees, then they will take more time to produce a product. So, the schedule must keep provisions for this. A faster schedule will be required for trained and experienced employees.

5. Availability of materials

It is also affected by the availability of materials. If a regular supply of materials is available, then the company can do normal-scheduling. However, if the supply of materials is irregular, the schedule must be made flexible. That is, when the supply is good then the schedule will be fast and vice versa.

6. Manufacturing facilities

Scheduling depends on the manufacturing facilities available in the company. This includes space for new machines, employees, etc. It also includes the availability and supply of electricity and water, which may be required for production. If all the required infrastructure is available, then the production schedule can be fast and vice versa.

7. Economic production run (EPR)

It also depends on the economic production runs. Economic production runs (EPR) means the optimum lot size. That is, how many items must be produced in one lot in order to minimize the cost of production. If the company produces more or less than the optimum lot size, then the cost of production will increase. There are many formulas for calculating optimum lot size. Scheduling must be done only after calculating the optimum lot size.

External Factors Affecting Scheduling

The external factors affecting scheduling are as follows:

1. Consumer demand

Scheduling also depends on the consumer demand. Consumer demand can be found out by sales forecast. So, the production schedule is prepared according to the sales forecast. However, it has to be adjusted (changed) when the actual demand is different from the sales forecast.

2. Consumer delivery dates

The production schedule also depends on the consumer delivery dates. The consumer is the most important person in a business. So, this factor must be given more importance than other factors. The production schedule must be made in such a way that it will guarantee timely delivery to the consumers. In case of seasonal goods, production must be spread out throughout the year; so, there will not be too much pressure in demand season.

3. Dealers and retailers inventories

It also depends on the stock of goods (inventories) with dealers and retailers. The production manager must find out how much stocks is held by dealers and retailers. He must also know why they are keeping this stock. Are they keeping this stock to meet current demand? If yes, then normal-scheduling can be done. However, if they are keeping stock in anticipation of future demand, the scheduling will have to be slowed down because there will be fewer orders in the future.


Scheduling: Principles and Strategies

Scheduling can be defined as “prescribing of when and where each operation necessary to manufacture the product is to be performed.”

Principles of Scheduling

  1. The principle of optimum task size: Scheduling tends to achieve maximum efficiency when the task sizes are small, and all tasks of same order of magnitude.
  2. Principle of optimum production plan: The planning should be such that it imposes an equal load on all plants.
  3. Principle of optimum sequence: Scheduling tends to achieve the maximum efficiency when the work is planned so that work hours are normally used in the same sequence

Inputs to Scheduling

  1. Performance standards: The information regarding the performance standards (standard times for operations) helps to know the capacity in order to assign required machine hours to the facility.
  2. Units in which loading and scheduling is to be expressed.
  3. Effective capacity of the work centre.
  4. Demand pattern and extent of flexibility to be provided for rush orders.
  5. Overlapping of operations.
  6. Individual job schedules.

Scheduling Strategies

Scheduling strategies vary widely among firms and range from ‘no scheduling’ to very sophisticated approaches.

These strategies are grouped into four classes:

  1. Detailed scheduling: Detailed scheduling for specific jobs that are arrived from customers is impracticable in actual manufacturing situation. Changes in orders, equipment breakdown, and unforeseen events deviate the plans.
  2. Cumulative scheduling: Cumulative scheduling of total work load is useful especially for long range planning of capacity needs. This may load the current period excessively and under load future periods. It has some means to control the jobs.
  3. Cumulative detailed: Cumulative detailed combination is both feasible and practical approach. If master schedule has fixed and flexible portions.
  4. Priority decision rules: Priority decision rules are scheduling guides that are used independently and in conjunction with one of the above strategies, i.e., first come first serve. These are useful in reducing Work-In-Process (WIP) inventory.


Scheduling: Meaning

Let us take a look at some of the definitions of scheduling to understand what scheduling means.

According to Leon Alford and Henry Beatty, “Fitting specific jobs into a general time-table so that orders may be manufactured in accordance with contracted liability, or in mass production, so that each component may arrive at and enter into assembly in the order and at the time required.”

According to Richard Lansburgh and William Spriegel, “Scheduling involves establishing the amount, of work to be done and the time each element of the work will start, or the order of work. This includes allocating the quality and rate of output of the plant or department and also the date or order of starting of each unit of work at each station along the route prescribed.”

In simple terms, it is assigning an appropriate number of workers to the jobs during each day of work.

Determining when an activity should start or end, depending on its

  1. Duration,
  2. Predecessor activity (or activities),
  3. Predecessor relationships,
  4. Resource availability, and
  5. Target completion date of the project.

Meaning of Scheduling

The principle aim of scheduling is to plan the sequence of work so that production can be systematically arranged towards the end of completion of all products by due date.

The meaning of scheduling is explained by below diagram:

Meaning of Scheduling

Scheduling is the last step in production planning alone. However, it is the second step in production planning and control.

It comes after routing. It is a time-table of production. It gives the starting and completion date and time for each operation of job (task or work). It is just like a railway time-table.

The production process is divided into many different jobs. Scheduling arranges all these jobs in the order of priority. That is, it tells which job must be done first, which job must be done second and so on. Then it fixes starting and completion date and time for each job.

It gives a lot of importance to the time element in the production process.

It is also done for materials, parts, machines, etc.

The main purpose or objective of scheduling is to see that all production operations are completed in a given time. If the production is completed in an allotted time, only, then, the delivery of goods can be made on time. If this happens, it will increase the goodwill of the company

The functions or procedure of scheduling is as follows:

  • Make a list of all the production activities.
  • Fix the starting time for each activity.
  • Fix the finishing time for each activity.
  • Prepare the time-table.

Scope of Operations Management

Production and operations management concern with the conversion of inputs into outputs, using physical resources, so as to provide the desired utilities to the customer while meeting the other organizational objectives of effectiveness, efficiency and adoptability. It distinguishes itself from other functions such as personnel, marketing, finance, etc., by its primary concern for ‘conversion by using physical resources.’ Following are the activities which are listed under production and operations management functions

  1. Location of facilities
  2. Plant layouts and material handling
  3. Product design
  4. Process design
  5. Production and planning control
  6. Quality control
  7. Materials management
  8. Maintenance management.

Scope of Operations

1. Location of facilities

Location of facilities for operations is a long-term capacity decision which involves a long term commitment about the geographically static factors that affect a business organization. It is an important strategic level decision-making for an organization. It deals with the questions such as ‘where our main operations should be based?’

The selection of location is a key-decision as large investment is made in building plant and machinery. An improper location of plant may lead to waste of all the investments made in plant and machinery equipments. Hence, location of plant should be based on the company’s expansion plan and policy, diversification plan for the products, changing sources of raw materials and many other factors. The purpose of the location study is to find the optimal location that will results in the greatest advantage to the organization

2. Plant layouts and material handling

Plant layout refers to the physical arrangement of facilities. It is the configuration of departments, work centres and equipment in the conversion process. The overall objective of the plant layout is to design a physical arrangement that meets the required output quality and quantity most economically.

According to James Moore, “Plant layout is a plan of an optimum arrangement of facilities including personnel, operating equipment, storage space, material handling equipment’s and all other supporting services along with the design of best structure to contain all these facilities”.

‘Material Handling’ refers to the ‘moving of materials from the store room to the machine and from one machine to the next during the process of manufacture’. It is also defined as the ‘art and science of moving, packing and storing of products in any form’.

It is a specialized activity for a modern manufacturing concern, with 50 to 75% of the cost of production. This cost can be reduced by proper section, operation and maintenance of material handling devices. Material handling devices increases the output, improves quality, speeds up the deliveries and decreases the cost of production. Hence, material handling is a prime consideration in the designing new plant and several existing plants.

3. Product design

Product design deals with conversion of ideas into reality. Every business organization has to design, develop and introduce new products as a survival and growth strategy. Developing the new products and launching them in the market is the biggest challenge faced by the organizations. The entire process of need identification to physical manufactures of product involves three functions: marketing, product development, and manufacturing.

Product development translates the needs of customers given by marketing into technical specifications and designing the various features into the product to these specifications. Manufacturing has the responsibility of selecting the processes by which the product can be manufactured. Product design and development provides link between marketing, customer needs and expectations and the activities required to manufacture the product.

4. Process design

Process design is a macroscopic decision-making of an overall process route for converting the raw material into finished goods. These decisions encompass the selection of a process, choice of technology, process flow analysis and layout of the facilities. Hence, the important decisions in process design are to analyze the workflow for converting raw material into finished product and to select the workstation for each included in the workflow.

5. Production and planning control

Production planning and control can be defined as the process of planning the production in advance, setting the exact route of each item, fixing the starting and finishing dates for each item, to give production orders to shops and to follow up the progress of products according to orders.

The principle of production planning and control lies in the statement ‘First Plan Your Work and then Work on Your Plan’. Main functions of production planning and control includes planning, routing, scheduling, dispatching and follow-up

6. Quality control

Quality Control (QC) may be defined as ‘a system that is used to maintain a desired level of quality in a product or service’. It is a systematic control of various factors that affect the quality of the product. Quality control aims at prevention of defects at the source, relies on effective feedback system and corrective action procedure.

Quality control can also be defined as ‘that industrial management technique by means of which product of uniform acceptable quality is manufactured’. It is the entire collection of activities which ensures that the operation will produce the optimum quality products at minimum cost.

The main objectives of quality control are:

  • To improve the companies income by making the production more acceptable to the customers i.e., by providing long life, greater usefulness, maintainability, etc.
  • To reduce companies cost through reduction of losses due to defects.
  • To achieve interchangeability of manufacture in large scale production.
  • To produce optimal quality at reduced price.
  • To ensure satisfaction of customers with productions or services or high quality level, to build customer goodwill, confidence and reputation of manufacturer.
  • To make inspection prompt to ensure quality control.
  • To check the variation during manufacturing.

7. Materials management

Materials management is that aspect of management function which is primarily concerned with the acquisition, control and use of materials needed and flow of goods and services connected with the production process having some predetermined objectives in view.

The main objectives of materials management are:

  • To minimize material cost.
  • To purchase, receive, transport and store materials efficiently and to reduce the related cost.
  • To cut down costs through simplification, standardization, value analysis, import substitution, etc.
  • To trace new sources of supply and to develop cordial relations with them in order to ensure continuous supply at reasonable rates.
  • To reduce investment tied in the inventories for use in other productive purposes and to develop high inventory turnover ratios.

8. Maintenance management.

In modern industry, equipment and machinery are a very important part of the total productive effort. Therefore, their idleness or downtime becomes are very expensive. Hence, it is very important that the plant machinery should be properly maintained.

The main objectives of maintenance management are:

  • To achieve minimum breakdown and to keep the plant in good working condition at the lowest possible cost.
  • To keep the machines and other facilities in such a condition that permits them to be used at their optimal capacity without interruption.
  • To ensure the availability of the machines, buildings and services required by other sections of the factory for the performance of their functions at optimal return on investment.

Plant Location and Layout: In case of Global Location

Because of globalization, multinational corporations are setting up their organizations in India and Indian companies are extending their operations in other countries. In case of global locations there is scope for virtual proximity and virtual factory.

Virtual Proximity

With the advance in telecommunications technology, a firm can be in virtual proximity to its customers. For a software services firm much of its logistics is through the information/communication pathway. Many firms use the communications highway for conducting a large portion of their business transactions. Logistics is certainly an important factor in deciding on a location—whether in the home country or abroad. Markets have to be reached. Customers have to be contacted. Hence, a market presence in the country of the customers is quite necessary.

Virtual Factory

Many firms based in USA and UK in the service sector and in the manufacturing sector often out sources part of their business processes to foreign locations such as India. Thus, instead of one’s own operations, a firm could use its business associates’ operations facilities. The Indian BPO firm is a foreign-based company’s ‘virtual service factory’. So a location could be one’s own or one’s business associates. The location decision need not always necessarily pertain to own operations.

Reasons for Global Location


The tangible reasons for setting up an operations facility abroad could be as follows:

a. Reaching the customer: One obvious reason for locating a facility abroad is that of capturing a share of the market expanding worldwide. The phenomenal growth of the GDP of India is a big reason for the multinationals to have their operations facilities in our country. An important reason is that of providing service to the customer promptly and economically which is logistics-dependent. Therefore, cost and case of logistics is a reason for setting up manufacturing facilities abroad. By logistics set of activities closes the gap between production of goods/services and reaching of these intended goods/services to the customer to his satisfaction. Reaching the customer is thus the main objective. The tangible and intangible gains and costs depend upon the company defining for itself as to what that ‘reaching’ means. The tangible costs could be the logistics related costs; the intangible costs may be the risk of operating is a foreign country. The tangible gains are the immediate gains; the intangible gains are an outcome of what the company defines the concepts of reaching and customer for itself.

The other tangible reasons could be as follows:

  1. The host country may offer substantial tax advantages compared to the home country.
  2. The costs of manufacturing and running operations may be substantially less in that foreign country. This may be due to lower labour costs, lower raw material cost, better availability of the inputs like materials, energy, water, ores, metals, key personnel etc…
  3. The company may overcome the tariff barriers by setting up a manufacturing plant in a foreign country rather than exporting the items to that country.


The intangible reasons for considering setting up an operations facility abroad could be as follows:

1. Customer-related Reasons

  1. With an operations facility in the foreign country, the firm’s customers may feel secure that the firm is more accessible. Accessibility is an important ‘service quality’ determinant.
  2. The firm may be able to give a personal tough.
  3. The firm may interact more intimately with its customers and may thus understand their requirements better.
  4. It may also discover other potential customers in the foreign location.

2. Organizational Learning-related Reasons

  1. The firm can learn advanced technology. For example, it is possible that cutting-edge technologies can be learn by having operations in an technologically more advanced country. The firm can learn from advanced research laboratories/universities in that country. Such learning may help the entire product-line of the company.
  2. The firm can learn from its customers abroad. A physical location there may be essential towards this goal.
  3. It can also learn from its competitors operating in that country. For this reason, it may have to be physically present where the action is.
  4. The firm may also learn from its suppliers abroad. If the firm has a manufacturing plant there, it will have intensive interaction with the suppliers in that country from whom there may be much to learn in terms of modern and appropriate technology, modern management methods, and new trends in business worldwide.

3. Other Strategic Reasons

  1. The firm by being physically present in the host country may gain some ‘local boy’ kind of psychological advantage. The firm is no more a ‘foreign’ company just sending its products across international borders. This may help the firm in lobbying with the government of that country and with the business associations in that country.
  2. The firm may avoid ‘political risk’ by having operations in multiple countries
  3. By being in the foreign country, the firm can build alternative sources of supply. The firm could, thus, reduce its supply risks.
  4. The firm could hunt for human capital in different countries by having operations in those countries. Thus, the firm can gather the best of people from across the globe.
  5. Foreign locations in addition to the domestic locations would lower the market risks for the firm. If one market goes slow the other may be doing well, thus lowering the overall risk.

Plant Layout and Location: For Existing Organization

In this case a manufacturing plant has to fit into a multi-plant operations strategy. That is, additional plant location in the same premises and elsewhere under following circumstances:

  1. Plant manufacturing distinct products.
  2. Manufacturing plant supplying to specific market area.
  3. Plant divided on the basis of the process or stages in manufacturing.
  4. Plants emphasizing flexibility.

The different operations strategies under the above circumstances could be:

1. Plants manufacturing distinct products: Each plant services the entire market area for the organization. This strategy is necessary where the needs of technological and resource inputs are specialized or distinctively different for the different product-lines.

For example, a high quality precision product-line should not be located along with other product-line requiring little emphasis on precision. It may not be proper to have too many contradictions such as sophisticated and old equipment, highly skilled and semi-skilled personnel, delicates processes and those that could permit rough handlings, all under one roof and one set of managers. Such a setting leads to much confusion regarding the required emphasis and the management policies.

Product specialization may be necessary in a highly competitive market. It may be necessary to exploit the special resources of a particular geographical area. The more decentralized these pairs are in terms of the management and in terms of their physical location, the better would be the planning and control and the utilization of the resources.

2. Manufacturing plants supplying to a specific market area: Here, each plant manufactures almost all of the company’s products. This type of strategy is useful where market proximity consideration dominates the resources and technology considerations. This strategy requires great deal of coordination from the corporate office. An extreme example of this strategy is that of soft drinks bottling plants.

3. Plants divided on the basis of the process or stages in manufacturing: Each production process or stage of manufacturing may require distinctively different equipment capabilities, labour skills, technologies, and managerial policies and emphasis. Since the products of one plant feed into the other plant, this strategy requires much centralized coordination of the manufacturing activities from the corporate office that are expected to understand the various technological aspects of all the plants.

4. Plants emphasizing flexibility: This requires much coordination between plants to meet the changing needs and at the same time ensure efficient use of the facilities and resources. Frequent changes in the long-term strategy in order to improve be efficiently temporarily, are not healthy for the organization. In any facility location problem the central question is: ‘Is this a location at which the company can remain competitive for a long time?’

For an established organization in order to add on to the capacity, following are the ways:

(a) Expansion of the facilities at the existing site: This is acceptable when it does not violate the basic business and managerial outlines, i.e., philosophies, purposes, strategies and capabilities. For example, expansion should not compromise quality, delivery, or customer service.

(b) Relocation of the facilities (closing down the existing ones): This is a drastic step which can be called as ‘Uprooting and Transplanting’. Unless there are very compelling reasons, relocation is not done. The reasons will be either bringing radical changes in technology, resource availability or other destabilization.

All these factors are applicable to service organizations, whose objectives, priorities and strategies may differ from those of hardcore manufacturing organizations.

Plant Layout and Location: Starting a New Organization

Cost economies are always important while selecting a location for the first time, but should keep in mind the cost of long-term business/organizational objectives. The following are the factors to be considered while selecting the location for the new organizations:

1. Identification of region: The organizational objectives along with the various long-term considerations about marketing, technology, internal organizational strengths and weaknesses, region specific resources and business environment, legal-governmental environment, social environment and geographical environment suggest a suitable region for locating the operations facility.

2. Choice of a site within a region: Once the suitable region is identified, the next step is choosing the best site from an available set. Choice of a site is less dependent on the organization’s long-term strategies. Evaluation of alternative sites for their tangible and intangible costs will resolve facilities-location problem. The problem of location of a site within the region can be approached with the following cost-oriented non-interactive model, i.e., dimensional analysis.

3. Dimensional analysis: If all the costs were tangible and quantifiable, the comparison and selection of a site is easy. The location with the least cost is selected. In most of the cases intangible costs which are expressed in relative terms than in absolute terms. Their relative merits and demerits of sites can also be compared easily. Since both tangible and intangible costs need to be considered for a selection of a site, dimensional analysis is used.

When starting a new factory, plant location decisions are very important because they have direct bearing on factors like, financial, employment and distribution patterns. In the long run, relocation of plant may even benefit the organization. But, the relocation of the plant involves stoppage of production, and also cost for shifting the facilities to a new location. In addition to these things, it will introduce some inconvenience in the normal functioning of the business. Hence, at the time of starting any industry, one should generate several alternate sites for locating the plant. After a critical analysis, the best site is to be selected for commissioning the plant. Location of warehouses and other facilities are also having direct bearing on the operational The existing firms will seek new locations in order to expand the capacity or to place the existing facilities. When the demand for product increases, it will give rise to following decisions:

  • Whether to expand the existing capacity and facilities
  • Whether to look for new locations for additional facilities
  • Whether to close down existing facilities to take advantage of some new locations

Plant Layout and Location

Plant location or the facilities location problem is an important strategic level decision making for an organization. One of the key features of a conversion process (manufacturing system) is the efficiency with which the products (services) are transferred to the customers. This fact will include the determination of where to place the plant or facility.


The selection of location is a key-decision as large investment is made in building plant and machinery. It is not advisable or not possible to change the location very often. So an improper location of plant may lead to waste of all the investments made in building and machinery, equipment.


Before a location for a plant is selected, long range forecasts should be made anticipating future needs of the company. The plant location should be based on the company’s expansion plan and policy, diversification plan for the products, changing market conditions, the changing sources of raw materials and many other factors that influence the choice of the location decision. The purpose of the location study is to find an optimum location one that will result in the greatest advantage to the organization.


“A plant should be located at a place where in habitants are interested in its success, the product can be sold profitably and production cost is minimum.” Dr. Vishweshwarya.


Dr. Vishweshwarya says that decision of plant location is based on 10 M’s,:

  1. Man
  2. Money
  3. Material
  4. Means of Power
  5. Momentum to early start
  6. Market
  7. Motive
  8. Means of Communication
  9. Management
  10. Machinery


Need for selecting suitable location arises because of three factors:

  1. When starting a new organization
  2. In case of existing organization
  3. In case of Global Location


We will be looking at these three factors in details over next three days

ABC Analysis

ABC analysis is that technique of material control in which we divide our material into three categories and investment is done according to the value and nature of that category’s materials. After this, we control of material according to their level of investment. We need not to control all the categories but we have to control those materials which are in a category.

ABC analyses have the potential to provide rich qualitative data for identifying antecedents and consequences associated with challenging behavior, as well as some quantitative information.

This analysis recommends that the management should focus on key issues of decision making to simplify the decision making process. It will help the management to put their energy and efforts towards the majority areas requiring utmost attention. As per this analysis, the total inventory list will be divided into three classes A, B and C:

ABC 01

A category materials and its control

In these category materials, we include 10% of total material, but its cost will be high, so its investment requirement will also be very high and it may be 70% of total investment in inventory. Store keeper should make safe these materials from any wastage, because its price or demand is very high. Store keeper also keeps its economic order quantity and tries to decrease misuse of money in this category.

A category which will also require special attention due to the “large amount of money” they represent. A small “mistake” in managing the few A Category materials may cost a lot to your company.

B category materials and its control

In this category, there are many normal materials can be included which are needed for production. Store keeper can classify 20% of material and we need 20% of total investment in this type of inventory for buying. But its control is also necessary, because without this, production may be delay. So, store keeper should not ignore its control and for continuing supply, storekeeper should maintain its minimum, maximum and re-order level.

C category materials and its control

There is no need to control this type of material but normal care is needed for keeping this material in right position before using it for production. Its quantity is of 70% of total quantity but cost is 10% of total investment in inventory. So, overstocking can increase store cost and interest on capital. So, purchase should be in hand.

The ABC approach states that, when reviewing inventory, a company should rate items from A to C, basing its ratings on the following rules:

A-items are goods which annual consumption value is the highest. The top 70-80% of the annual consumption value of the company typically accounts for only 10-20% of total inventory items.

C-items are, on the contrary, items with the lowest consumption value. The lower 5% of the annual consumption value typically accounts for 50% of total inventory items.

B-items are the interclass items, with a medium consumption value. Those 15-25% of annual consumption value typically accounts for 30% of total inventory items.

The control of inventory is exercised as follows:

ABC 02

Objective of Production Management

Production management is ‘a process of planning, organizing, directing and controlling the activities of the production function. It combines and transforms various resources used in the production subsystem of the organization into value added product in a controlled manner as per the policies of the organization’.

E.S. Buffa defines production management as follows:

‘Production management deals with decision-making related to production processes so that the resulting goods or services are produced according to specifications, in the amount and by the schedule demanded and out of minimum cost’.

The objective of the production management is ‘to produce goods services of right quality and quantity at the right time and right manufacturing cost’.


The quality of product is established based upon the customer’s needs. The right quality is not necessarily best quality. It is determined by the cost of the product and the technical characteristics as suited to the specific requirements.


The manufacturing organization should produce the products in right number. If they are produced in excess of demand the capital will block up in the form of inventory and if the quantity is produced in short of demand, leads to shortage of products.


Timeliness of delivery is one of the important parameter to judge the effectiveness of production department. So, the production department has to make the optimal utilization of input resources to achieve its objective.


Manufacturing costs are established before the product is actually manufactured. Hence, all attempts should be made to produce the products at pre-established cost, so as to reduce the variation between actual and the standard (pre-established) cost.