Industrial

Management
UNIT I

 Industrial Management &

Productivity
 MANAGEMENT

 Traditional Author says that
management is an art of getting
things done through people







 where as modern authors says that
management is a process of
accomplishing certain objectives
through the utilization of human and
other resource.
IMPORTANCE OF MANAGEMENT

 For the accomplishment of the goals.

 For effective utilization of the
resources.
 Sound Organization.
 Providing vision &Foresight.
 For the harmony in work.
 To help employees in achieving
personal objective.
 Development of the society and
nation.
 INDUSTRIAL MANGEMENT

 Industrial management is now a

branch of engineering which
facilitates creation of management
system and integrates same with
people and their activities to utilize
the resources.
 Industrial management is structured
approach to mange the operational
activities of the organization.

SCOPE OF INDUSTRIAL
MANGEMENT
 Related to Designing of the
production system.
 This includes production engineering & Design of
tools, design development, installation of Equipment &
selection and optimization of the size of the firm.
 Production Engineering includes selection of plant,
plant layout, Material handling system, Problem of
human Factor and Research & Development.
 Relating to analysis & control of
production operation.(see notes)
 This includes Production Planning, Production Control
etc.

APPLICATION OF THE
INDUSTRIAL MANGEMENT
Planning Function
For Designing Conversion System

For Scheduling Conversion System

Organizing Function

Organizing for conversion

Structuring of Operation Staffing

Job & Work Design.

For Production & Operation

Standard.
For Payment system.
Controlling Function

•Quality
•Quantity
•Time
•Inventory
•Cost
•Maintenance
 PRODUCTIVITY

 Productivity measures the

efficiency of the production
system. Or productivity may be
defined as ratio between output
and input.
 Output means the amount
produced or the number of items
produced.
 Input are the various sources
employed like land. Building,
equipment, machinery, material,
labor, etc
 PRODUCTIVITY INDEX

 Performance Achieved (Effectiveness)

 PRODUCTIVITY INDEX=
 Input Resources Consumed
(Efficiency)

Efficiency
 is the ratio of actual output attained to the
standard expected output. It measures of how well the
resources
 are utilized to accomplish the target or
result.

Effectiveness is the degree of accomplishing the
objectives
 Production System

 Production is transformation of inputs

into the output of commodity in a
specific period of time with the
given technology.
 The production system can be viewed
as a framework or skeleton of
activities within which the creation
of value can occur.
 The difference between the value of
input and the value of output
represent the value created through
INPUT OUTPUT MODEL
(ANALYSIS OF PRODUCTION
SYSTEM)
 It is one of the basic models of the
production system.
 Production system is the set of
interconnected input output element.
 It is made up of three component parts
namely – Input, Output and Process.
 A wide variety of inputs are transformed
so that they give out a set of output.
 The transforming process can be
complicated and the design of an
actual input and output system for
manufacturing may be expensive and
difficult.

INPUT OUTPUT MODEL
(ANALYSIS OF PRODUCTION
SYSTEM)
Material

Men Plant & Facilities Goods & Services

Energy
 Purpose to Increase Productivity:
 FOR MANAGEMENT
Ø To produce good earning (profit).
Ø To clear the debt or loans acquired from different
sources.
Ø To sell more.
Ø To stand better in the market.
 FOR WORKERS
Ø HIGHER WAGES.
Ø Better Working Conditions.
Ø Higher standard of living.
Ø Job Security and Satisfaction

 FOR CUSTOMER
Ø To reduced price of the article.

 INDUSTRIAL OWNER SHIP

   Sole Proprietorship
   Partnership
 Co – operative Organization
 Joint Stock Company
 State & Central Govt .



 Three basic forms of
business ownership
•Sole
proprietorship

•Partnership

•Corporation
Sole proprietorship

•A business
owned and
Advantages of sole
proprietorships
•Easy and inexpensive to create .
•Owner makes all business
decisions .
•Owner receives all profits .
•Least regulated form of
business
Disadvantages of sole
proprietorships
•Owner has unlimited liability for
all debts and

actions of the business . Unlimited

liability :

The
Partnership

A form of
business
ownership in
which two or
more people
share the
assets ,
liabilities ,
and profits .
Types of Partnerships
•General partnership : A partnership
in which all

partners have unlimited personal

liability and take

full responsibility for the

Advantages of partnerships
•Shared decision making and
management

responsibilities .
•Easier to raise capital than
in a sole
Disadvantages of
partnerships

•Partnerships may lead to

disagreements .
•Some entrepreneurs are not
willing to share

responsibilities and
Corporation

A business that is
chartered by a state and
legally operates apart
from its owners .
Types of corporations
•C - corporation : The most common form
of

corporation . It protects the

entrepreneur from being

personally sued for the actions

Advantages of
corporations
•Can raise money by issuing
shares of stock .
•Offers owners limited
liability . Limited liability :

Owners are liable

only up to the amount of
Disadvantages of
corporations
Legal assistance is needed to
•
start a

corporation .
•Start - up is costly .
•Corporations are subject to
more
Alternate approaches to
starting a business
•Buy an existing
business .
•Enter a family
business .
•Own a franchise
business .
 Sole Proprietorship

 Merits –
 Easy Formation
 Easy to Operate
 Secrecy
 Simplicity


 Demerits
 Limited Resources
 Lack of Continuity
 Unlimited Liability
 Limited Managerial Ability
 Partnership

 Partnership

Merits
 Demerits
 Legal Entity  Unlimited Liability
 Risk Sharing  Limited Resources
 More Funds  Possibility Of Conflict
 Continuity  Lack of Public Interest
 Mutual Agency  

 
 Joint Stock Company

Merits
 Demerits


 Limited Liability  Complexity in

 Transfer of Interest Formation
 Perpetual Existence  Lack of Secrecy
 Scope for Management  Impersonal Work
Environment
 Professional
Management  Numerous Regulation
 Delay In Decision
Making
 Co – Operative Undertaking

Merits
 Demerits


 Limited liability  Limited Resources

 Economy in Operation  Inefficiency in
 Support From Management
Government  Lack Of Secrecy
 Stable Existence  Government Control
 Ease of Formation  Difference Of Opinion
   


Basis of Sole Partnership Corporative Company
Comparison proprietorship Society

Formation Easy (minimum Registration is Registration Lengthy &

Legal Formalities Optional Compulsory, Expensive
Greater Legal Formation Process
Formalities
Members Only Owner Minimum – 2 At least 10 no Min (Pvt) – 2,
Maximum - 20 maximum limit max – 50,
Min (Pub)- 7,
Max – Unlimited
Capital Limited Finance Limited but more Limited Large Financial
Contribution then SP Resources

Liability Unlimited Unlimited & Joint Limited Limited

Control & Owner takes all All Partners Managing Board Of

Management decision Committee Directors

Continuity No More Stable Stable Stable Because of

Separate Legal
Status
UNIT II

 Management Function
Management

 Management refers to the tasks and activities

involved in directing an organization or one of
its units: planning, organizing, leading, and
controlling.
 The process of reaching organizational goals by
working with and through people and other
organizational resources.
 What are the Types of Managers?
vFunction: A classification referring to a group
of similar activities in an organization like
marketing or operations.

vFunctional Managers: A manager responsible for

just one organizational activity such as
accounting, human resources, sales, finance,
marketing, or production
Focus on technical areas of expertise

Use communication, planning and

administration, teamwork and self-
management competencies to get work
done
 What are the Types of Managers?
(cont’d)

vGeneral Managers: responsible for the operations

of more complex units—for example, a company or
division

Oversee work of functional managers

Responsible for all the activities of the unit
Need to acquire strategic and multicultural
competencies to guide organization
Basic Managerial Functions

Organizing

Leading
Planning

Controlling
Management Process and Goal Attainment
Management and Organizational
Resources
 Planning
Planning involves tasks
that must be performed to
attain organizational goals,
outlining how the tasks
must be performed, and
indicating when they
should be performed.
 Planning

Determining organizational goals and

means to reach them
Managers plan for three reasons

1.Establish an overall direction for the

organization’s future
2.Identify and commit resources to achieving
goals
3.Decide which tasks must be done to reach
those goals
 Organizing

Organizing means assigning the planned tasks to

various individuals or groups within the
organization and cresting a mechanism to put plans
into action.
 Organizing

Process of deciding where decisions will be made, who

will perform what jobs and tasks, and who will report
to whom in the company
Includes creating departments and job descriptions
 Leading

Leading (Influencing) means guiding the activities

of the organization members in appropriate
directions. Objective is to improve productivity.
 Leading

Getting others to perform the

necessary tasks by motivating them to
achieve the organization’s goals
Crucial element in all functions
 Controllin
g

1. Gather information that measures recent performance

2. Compare present performance to pre-established standards
3. Determine modifications to meet pre-established standards
 Controlling


Process by which a person, group,
or
organization consciously monitors
performance and takes corrective
action

Basic Levels of Management
(adapted from Figure 1.3)

Top
Top
Managers
Managers
MiddleManagers
Middle Managers

First-Line
First-Line
Managers
Managers
Nonmanagers
Nonmanagers
 Levels of Management
 First-line Managers: have direct responsibility for
producing goods or services Foreman, supervisors,
clerical supervisors
 Middle Managers:
 Coordinate employee activities
 Determine which goods or services to provide
 Decide how to market goods or services to
customers
 Assistant Manager, Manager (Section Head)

 Top Managers: provide the overall direction of an

organization Chief Executive Officer, President, Vice
President
What Managers Do

Managers (or Administrators)

Individuals who achieve goals through other people

Managerial
Managerial Activities
Activities
••Make
Make decisions
decisions
••Allocate
Allocate resources
resources
••Direct
Direct activities
activities ofof
others
others to
to attain
attain goals
goals
 Scientific Management


F W Taylor, a management guru, listed



different principles to guide management:

 Each worker should have a large, clearly
defined, daily task

 Standard conditions are needed to ensure
the task is more easily accomplished

 High payment should be made for successful
completion of tasks
F W Taylor’s Principles cont:

 Taylor also listed ‘new duties’ of

management:
 The Development of a true science

 The Scientific selection, education and
development of workmen


 Friendly close co-operation between

management and workers
Administrative Management

 Henry Fayol aimed at developing a

science of administration for
management

 He believed managers, at higher
levels, are less dependent on
technical knowledge and more on a
knowledge of administration
Fayol’s 14 principles of
management:
1.
2.Division of Labor
3.Authority
4.Discipline
5.Unity of command
6.Unity of direction
7.Subordination of Individual Interest to
general interest
8.Remuneration or Salary and wages

Fayol’s 14 principles of
management Contd:


8. Centralization
9. Scalar Chain

10. Order

11. Equity

12. Stability of tenure of personnel

13. Initiative

14. Esprit de corps

What are the Basic Seven Tools
of Quality?
 Fishbone Diagrams/Cause & Effect
Diagrams
 Histograms
 Pareto Analysis
 Flowcharts
 Scatter Plots
 Run Charts
 Control Charts
The Basic Seven (B7) Tools of
Quality


 Fishbone Diagrams


 No statistics involved


 Maps out a process/problem


 Makes improvement easier


 Looks like a “Fish Skeleton”

 Constructing a Fishbone
Diagram
 Step 1 - Identify the Problem
 Step 2 - Draw “spine” and “bones”

 Example: High Inventory Shrinkage at local Drug Store


S h rin ka g
e
 Constructing a Fishbone
Diagram
 Step 3 - Identify different areas where
problems may arise from
 Ex. : High Inventory Shrinkage at local Drug Store


e m p lo ye e s

S h rin ka g
e

sh o p lifte rs
 Constructing a Fishbone
Diagram
 Step 4 - Identify what these specific causes
could be

 Ex. : High Inventory Shrinkage at local Drug Store


Shrinkag
e Anti-theft tags poorly
Expensive merchandise designed
out in the open

No security/
surveillance shoplifters
 Constructing a Fishbone
Diagram
Step 5 – Use the finished diagram to brainstorm solutions
to the main problems .
 Ex. : High Inventory Shrinkage at local Drug Store


employees
attitude
training
new
trainee
benefits practices

Shrinkage
Anti-theft tags poorly designed
Expensive merchandise out in the
open

No security/ surveillance

shoplifters
The Basic Seven (B7) Tools of
Quality
 Histograms
 Bar chart
 Used to graphically represent groups of
data
 From a set of data compute
 sum
 mean (x)
 Max
 Min
 Range (max-min)

 Constructing a Histogram
 Use range to estimate beginning and
end
 Calculate the width of each column
by dividing the range by the
number of columns

R ange
= Width

# of Columns
 Example
 Let’s say the owner wants a
distribution of Acme’s Thursday
Night Sales
 Data Set from last Thursday(slices)
 0212241312122434143223212212214221
2122121212121212221212112223142232
2212322422441222322122421242172122
3121121222122121222424
 Example
Mean = 2.032258
Max = 7

Min = 0

Range = 7

Question
For 7 columns what would the width be?

R a n g e / C o lu m n s= 7 / 7 = 1 slice
Example
H isto g ra m

70 65

60
50

40 33
# times ordered

30
20
12
8
10
0 0 1
0
1 2 3 4 5 6 7
S lice s o f Pizza
 Constructing a Histogram
How is this helpful to Acme?
 2 slices of pizza most common order
placed
 Distribution of sales useful for
forecasting next Thursday’s late night
demand

 If you were an Acme manager how
could you apply this information?
The Basic Seven (B7) Tools of
Quality
 Pareto Analysis


 Very similar to Histograms



 Use of the 80/20 rule


 Use of percentages to show importance
 (part 2)
Slices Frequency %
 0 1 .3
 1 33 13.09
 2 65 25.79
 3 8 3.17
 4 12 4.76
 5 0 0
 6 0 0
 7 1 .3

 (part 2)
 The completed Pareto Analysis results in the following
graph:

70

60
50

40
# times ordered

30

20
10

0
21 1
2 43 34 75 56 67
S lice s o f Pizza
The Basic Seven (B7) Tools of
Quality
 Flowcharts


 A graphical picture of a PROCESS



Pro ce ss
D e cisio n

T h e p ro ce ss
flo w
 Flowcharts
Don’t Forget to:


 Define symbols before beginning


 Stay consistent

 Check that process is accurate
 Example (Flowchart)


 Window Take Customer Money?

 (start) Order
 yes


 no
Get Pizza


 Lockup
 Put More in
Oven 2 Pies
no


 Available?



yes
 Time no
 to close? yes
 Take to Customer
The Basic Seven (B7) Tools of
Quality
 Scatter Plots
 2 Dimensional X/Y plots
 Used to show relationship
between independent(x) and
dependent(y) variables

 (Scatter Diagram)
 Minutes Cooking Defective Pies
 10 1
 45 8
 30 5
 75 20
 60 14
 20 4
 25 6


 In this simple example, you can find the existing

relationship without much difficulty but…
 Scatter Diagrams

•Easier to see 25

direct

Defective Pizzas
20
relationship
15

10

0
0 20 40 60 80

Time Cooking
(minutes)
 Scatter Diagrams
 As a quality tool
 What does this tell Acme
management about their
processes?
 Improvements?
25

Defective Pizzas
20

15

10

0
0 20 40 60 80

Time Cooking (minutes)

The Basic Seven (B7) Tools of
Quality
 Run charts
 Time-based (x-axis)


 Cyclical


 Look for patterns


 Run Charts
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
Slices/ho
ur

8 9 10 11 12 1 8 9 10 11 12 1 8 9 10 11 12 1 Time
2 3 4PM- AM 2 3 PM
4 - AM 2 3 PM
4 - AM
Thursday Thursday Thursday
Week 1 Week 2 Week 3
The Basic Seven (B7) Tools of
Quality
 Control Charts
 Deviation from Mean


 Upper and Lower Spec’s



 Range
 Control Charts
 Upper Limit



X


 Lower Limit

U n a cce p ta b
le d e via tio n
 Control Charts
Management wants to get in on the control chart action
•Average Diameter = 16 inches
•Upper Limit = 17 inches
•Lower Limit = 15 inches
 example Control Charts
 Upper Limit
 17 inches


 X
16
 inches=


Lower Limit
15 Inches

S m a llPie
Work Study
 generic term for management services and
system engineering techniques, used to
investigate
 methods of performing work (method study)
and improve its efficiency and economy
 the time taken to do it (work measurement)
with a view to rationalization, routinisation,
utilisation, cost and incentive improvement
 the worker-work system-technology
relationship: how this is best designed
and improved (ergonomics and the
human-machine-information interfaces)
A work study curriculum - 1

 historical development & commitments of

Work Study
 basic concepts, objectives and procedures
 Method Study approaches and tools of
Method Analyst
 Flow Diagrams & Process Charts etc
 Critical questioning techniques
 Work Measurement and calculating times
for Jobs
 Defining job elements & calculating
 performance rating and standard/basic times
 Determining allowances: fatigue, unavoidable & avoidable delays,
extra allowances
 various incentive plans
A work study curriculum - 2
 examining worker-machine relationships
 workload & line balancing & staff/machine inefficiencies
 material handling, human controls, tools and devices
 Workstation layout & design (EU work-station directive)
 Occupation Health & Safety:signals, reaction times, eyes,
backs, RSI safety criteria, preventing accidents
 Ergonomics & human-machine-
environment interfaces
 use of visual displays for dynamic information
 Designing for: lighting systems, industrial noise, thermal
controls, vibration etc
 Systems analysis the human-machine
information system
 data capture and processing
 design of the user interface
 Business process re-engineering (BPR)


System relationships
Proces Engineer workflows
s
analys
is Design work station &
information arrangements

Method Plant
Jobs study layout

Work Time
breakdown study
s

Incent
standa ive
rd reward
times s
 Methods, times and
systems for performance

 improve methods - get it

right:
 Method study
 O & M & Ergonomics
 Industrial & systems
engineering
 define & maintain work
standards
 incentive schemes e.g. piece
work & measured day work
 human-computer interface &
systems analysis & design
 rationalisation, automation & Braverman and de - skilling in
substitution of machine the labour process
technologies for people
 Method study
 Select job/process to be examined &
observe current performance
 high process cost, bottlenecks,
tortuous route, low productivity,
erratic quality
 Record & document facts
 activities performed
 operators involved - how etc
 equipment and tools used
 materials processed or moved
 apply critical examination -
challenge job components &
necessity (purpose, place,
sequence, method).
 develop alternative methods &
present proposals
 document as base for new work
system
 Install, monitor (slippage) & maintain

ASME Symbols & Process Charting

Operation

Move

Delay

Store

Inspect /
process

Decision
 Traditional O&M critical
examination questions
 Purpose
 What, Why, What else might &
Should be done ? aaactivity
sound reason
sound
activity
reason for
for every
every
 Place
 Where, Why, Where else &
Where should it be done ?
nonocheck
assumptions so
assumptions
check
so double
double

 Sequence quality
quality, , safety
must not
must
safety and
and health
not compromised
compromised
health
 When, Why then, When else
could & When should ?
 People
 Who, Why, Who else might &
should do it?
 Method
 How, Why, How else could,
How else should


Other types of process
modelling
 multiple activity charts
 string diagrams
 3-dimensional models
 recording methods - video,etc
 computer-based modeling
 Measuring Work

 Why Toyota Avensis

Toyota
service
Avensis 10000
10000 mile
mile
service
define/measure MOT testing
MOT testing
work? Service times
Service times && queue
management
queue
 standard, reliable management
methods Banks
Banks
 control performance & Airline check
Airline check-in
-in
quality Call centres
Call centres
 obtain predictability Out-sourcing
Out -sourcing && service
service
 defined labour costs & level agreements
level agreements
performance Work-load
Work -load balancing
balancing
 set pay rates & provide Work related
Work related bonuses
bonuses
data for effort-reward
relationship

 Why set standard
times
 assumptions about
competent, motivated
workers
 be clear about
Work Measurement

 techniques to establish the time for a qualified,

motivated worker to carry out a task at a
defined rate of working.
 time Study:
 establish standard times - management knowledge
 rate operator performance - criteria for appraisal
 gather information to calculate production
capabilities & data for capacity planning.
 define/cost work content of finished goods and
services e.g. for charging & estimating
A Time Study
 select job & identify the work tasks
 check the method - is it efficient/agreed?
 start a Time Study sheet & break work task into "units"
 several times with a stop watch & for a sample of workers,
time measure
 completion times for each unit of work in the job sequence
 average for each worker
 determine & apply worker effort rating for each worker (BSI
scale)
 Apply fatigue, personal & other allowances
 From the observation data (worker average times) calculate
standard time for the task
 Assumes: set sequence, routine work cycle (all workers),
little discretion, 100% effort rating - trained/qualified,
motivated/committed, working at normal pace & not
fatigued
 Fix standard time and enter into measured work
manual/database
Example standard time
calculation
Element Basic time Relaxation % Effort % Standard time

1 2.50 +10% 110% 3.03

2 4.80 + 5% 110% 5.81

3 3.60 + 15% 110% 4.55

Standard time Total 13.39 minutes

 Incentive Schemes

 What are incentives?

 Effort-reward cost
co stsa savivinnggss??
relationships eeco
connoomm yy ooffooppeera rati
ti
oonn ??
 Economic orientation eeaasi
silyly uunnddeersto
rstooodd ??
mm aaininta
tainin sa
safe
fetyty sta
stannddaard
rdss??
& motivation eeqquuita
itabblele to
to aall?
ll?
 Time rates of pay &
assumptions/requirements conntro
co trollaanndd imim ppro
rove
ve
 Piecework eeffe
ffecti
cti venneess
ve ss&&stastannddaardrdss??
 Measured day work comm mm oonn ggooaal?
co l?
 Group Schemes
 Incentive scheme
problems
 Criticism and
prevalence
Process Analysis and BPR
Management services & business process re-


engineering


 how work is done & data for planning, staffing & control
functions.
 applied across a wide range of industrial/commercial
activity: manufacturing, office, service industries,
facilities layout, materials handling, logistics, IT and IS
 Identify process components & interrelationships (inputs,
processes/transformations, rules, outputs, interfaces
 break down the process into its logical sub processes (work
breakdown structure)
 map using
 process flow charts etc
 describe the business process & jobs at sub process levels
 document for: capacity planning, quality (zero defects &
process orientation, inspection), operator intervention,
safety, accounting/cost, planned maintenance, JIT
purposes
FROM WORK STUDY TO
SYSTEMS ANALYSIS AND
DESIGN

Human
activity

Information
modelling Analysis
& design
Socio-tech

Keep
Our focus
in mind
 Analysis, Design, Build Projects
Business
Situation New system
& •Add modules
Informatio Contribution / VfM?
•Review
n performance
Processing •Devel. Team
Requiremen dispersed
t Accept
Continuity contracts •Maintenance
Feasibility
• Technological
• Finan cial
• Organisational BSOs , TSOs Design
Requirements Specification

Analysis Design Build & test Implement

•data flows •databases •databases •Fine-tune
•d-structures •programs •programs •Conversion
•events •HCI •HCI •Training
•Hardware •Hardware •Cut-over
•security

Prototyping
System Development Costs
Modelling the Information
System
Our 'model' of the information system

Requirements
•information processing
functions
•data to store

Input Data Output

- triggers items to activities
activities which use the
processed
information
Data Flow Modelling (DFDs)

 Data flows across the system boundary &

within the system
 Processes (functions that process data)
 Data stores
 Sources/sinks (external entities)
 Functional decomposition (levels &
modularisation)
 Do not show
 Time (when things happen & sequence)
 Decisions (see process specification)
 System boundary
 Diagrams - better than narrative
 CASE tools to draw and record details
 Production Planning

Aggregate planning
 Definition
 Choosing production rates, work force levels,
and inventory levels


 Horizon
 6-18 months into future


 Prerequisites
 Forecasting
 Company policies on
 Max./min. inventories
 Hiring/firing
 Overtime
Production Planning 112
Policy considerations in aggregate
planning

 Flexibility
 Are work force and inventories
maintained at a level sufficient to meet
unexpected demand?

 Work force stability
 Improves quality, productivity, union
relations

 Production rate stability
 Makes materials planning easier, reduces
uncertainty in physical distribution

113
Policy considerations in aggregate
planning (cont.)
 Production capacity
 Will overtime reduce quality? When will
physical capacity (space, machinery,
equipment) become inadequate?


 Customer service
 Have lead time and stock availability
goals been met?


114
 Aggregate planning in services
 Definition
 Balancing service capacity with demand


 Tactics
 Change operating hours
 Change staffing
 Nbr. of workers
 Full vs. part-time
 Modify type of service
 Influence demand
 Advertising
 Pricing
 Build more service outlets

111
Aggregate planning in services
(cont.)

 Evaluation
 Waiting time
 Throughput
 Service time
 Nbr. of lost customers

116
  Production – Inventory System
 Information Flow
 Material Flow
 Days for transit time
#
 Days to process or# to
 handle and issue orders


 25 Day De- 5 Day Delay 25 Day Delay 13 Day Delay

 lay to sense to sense for Review for Review
 needs, place needs, place and and
 and transmit and transmit Transmission Transmission
 orders M.O.s of orders of orders


 Demand


 Raw Factory Factory Distributor Retail Ultimate

 Material Warehouse Inventory Inventory Customer
 Vendor 35 4 2 1
3 1

1 5 1
0 0



Company System 50 Independent 500 Independent
 Under Distributors Retailers
 Managerial Control Dynam . xls

Production Planning 117

 Response of inventories

10,000 10

Retail inventory (units)



-4%


+45% Factory production output (units/week)


7500 7.5

Distributor inventory (units)
 +10%

+32% +12%

Weeks

Retail sales RRR
5000 5
(units/week)

-10%

-15% -3%


 Factory warehouse inventory

 (units)
 2500 2.5


 0 0

Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun J

Production Planning 118

The role of hierarchical production
planning in modern corporations:
An MRP-based “push” framework
(borrowed from Heizer and Render)
 Production Planning through
Time-based Decomposition
Corporate Strategy

Aggregate Unit Aggregate Planning

Demand
( Plan . Hor .: ½ - 2 years , Time Unit : 1 month )

Capacity and Aggregate Production Plans

End Item (SKU) Master Production Scheduling

Demand
( Plan . Hor .: a few months , Time Unit : 1 week )

SKU-level Production Plans

Manufacturing Materials Requirement Planning

and Procurement
lead times ( Plan . Hor .: a few months , Time Unit : 1 week )
Component Production lots and due dates

Part process Shop floor-level Production Control

plans ( Plan . Hor .: a day or a shift , Time Unit : real - time )
A CONWIP-based “pull” framework
(borrowed from Hopp & Spearman)
Functional Specification
(Requirements – Inception)
 Minimum necessary documentation to begin
formal design and implementation
 Forms common denominator for all stake
holders
 Formal design in UML (Elaboration)
 Implementation and testing (Construction)
 System deployment (Transition)
 Homework 6 & 7 – Functional Specification
 Homework 8 – Function specification briefing
 Homework 9 – Sprint 1
 Typical Product Life Cycle

Why? What? How? Execute!

Concept Requirements Design & Operation &

Production Phase Out &
Development Analysis Development Maintenance Disposal
Product Life Cycle
 Concept Development
 Identify customer needs
 The consumer/user need is identified as a basic concept.
 It is later expanded to include features which are simply
desirable.
 Product Planning Function
 Marketing analysis, feasibility study, advanced product
planning.
 Product Research Function.
 Basic research and applied research.
 Evolution from basic research to product design and
development.
 Product Requirements & Design Function.
 Design requirements, conceptual design, preliminary system
design, and detailed design.
 Prototyping, and transition from design to production.
 Production and Construction.
 Production requirements, operational analysis, and manufacturing.
 Methods engineering, production control.
 Product Evaluation
 Evaluation requirements, test preparation phases, formal test
and evaluation.
 Data collection, analysis, reporting, corrective action,
retesting.
 Product Operation & Maintenance
 Product is distributed to the consumer/user and in operational use.
 Development Life Cycle Models
Each life cycle phase is completed before
WATERFALL the next is started .

INCREMENTAL After requirements are established , design ,

code and test is done in overlapped stages .

PHASED Multiple iterations are done throughout the

life cycle .

EVOLUTIONARY
System evolves based on prototype versus an
established set of requirements .

TRANSFORM Automatic transformation of a formal

specification into code .

SPIRAL Repetition of cycles , where each cycle

involves same or similar steps ( e . g .,
prototyping ). On the final spiral the final
product is produced .
Agile
Scrum or similar implementation , rapid
iterations of
features on feature backlog .
 Spiral Model
Cumulative cost

Progress through
Determine steps
objectives ,
alternatives , and Risk analysis
constraints Evaluate alternatives
identify , resolve risks
Risk analysis

Risk analysis

Risk
analysis Operation
Commitment Prototype Prototype al
Review P1 2 3 Prototype
Partition Reqmts plan
Life cycle Concept of
Develop , plan operation Software
Verify reqmts Software Detailed
next - level product design
process plans Develop - Requirement
ment design
validation Code
Evaluate process plan Unit
alternatives ; Integration test
identify , resolve Design validation
process risks and verification Integrati
and test on and
Determine process test
object , Formal
alternatives Implementation test
plan
,
constraints
Develop , Verify
Figure based on the concept by Barry Boehm published in Next - Level Product
Information Technology in Action, Prentice Hall, 1993.
Development Model Thoughts
 There is no magic model – they are
largely the creation of academia
 Many experienced software & systems
engineers create development life
cycles as needed
 In particular, rapidly evolving software
technology leaves most standard
models in the dust


 Don’t be afraid to experiment!

A Simplified Software
Engineering Process
Software Engineering
Inputs ...
• Environment
• Technology Base
Management
•Outputs from Prior • Plan
Phase • Manage Risk
• Program Decisions • Assess
• Requirements
Applied Through
• Control
Regulations,
Specifications and
Standards
•Outputs of Systems
Engineering Process Outputs…
Technical • Baselined Set of
requirements
•Requirements Final
• software design
•Design •Final Code & Executable
•I mplementation Final
• software tests
•Testing Well
• Defined Engineering
Process
Sprint Product Life Cycle

Weekly
Review Daily
Scrum

Product

Release
Release Plan

Test
Test &
& Analyze/Maps
Analyze/Maps
Document
Document Requirements
Requirements

Production
Our Functional Spec
 HTML Functional Specification with links to artifacts
 (Folder) Project Description (word)
 User Conops (how the user sees the product)
 System Conops (perspective of technology)
 Requirements Table (id, description, sprint no., date
complete)
 (Folder) UI Storyboard (your favorite graphics editor
or html)
 Screen Flow Diagrams (a -> b -> c
 Screen prototypes
 (Folder) Business Processes (Argo UML)
 Activity Diagrams
 Class Diagrams
 Sequence Diagrams
 (Folder) Feature Backlog (Excel)
 Prioritized List of features and requirements
 Sprint Plan – Assign features to sprints
 Percent Complete
UNIT III

 Inventory Management
OVERVIEW

 Overview of Material Management

 Concept of Inventories
 Inventory control
 Inventory cost
 Inventory Techniques
 Inventory Models
 Deterministic Model
 EOQ
 Supply chain mgt and Inventory control
 Just-In-Time Inventory
CONCEPT OF MATERIAL
MANAGEMENT
 “Material management is a scientific
technique, concerned with Planning,
Organizing &Control of flow of materials,
from their initial purchase to
destination”.


AIM OF MATERIAL MANAGEMENT



 The Right quality

 Right quantity of supplies
 At the Right time
 At the Right place
 For the Right cost

SCOPE OF MATERIALS
MANAGEMENT
What is Inventory?

 “Inventory is the total amount of goods

and/or materials contained in a store or
factory at any given time”.


 Store owners need to know the

precise number of items on their shelves
and storage areas in order to place
orders or control losses. Factory
managers need to know how many units
of their products are available for
customer orders. Restaurants need to
order more food based on their current
supplies and menu needs.
Why We Want to Hold
Inventories
Ø Time - The time lags present in the supply chain,
from supplier to user at every stage, requires
that you maintain certain amounts of inventory
to use in this "lead time.“
Ø
Ø Uncertainty - Inventories are maintained as
buffers to meet uncertainties in demand, supply
and movements of goods.
Ø
Ø Economies of scale - Ideal condition of "one unit
at a time at a place where a user needs it, when
he needs it" principle tends to incur lots of costs
in terms of logistics. So bulk buying, movement
and storing brings in economies of scale, thus
 INVENTORY TYPES
 Raw materials and purchased components:
These are raw - materials, parts and components
which enter into the product Direct during the
production process and generally form part of
the product.
 In process inventory: Semi-finished parts, work-
in-process and partly finished products formed at
various stages of production.
 Finished Products: Complete finished products
ready for sale.
 Maintenance, repair and tooling inventories:
Maintenance, repairs and operating supplies
which are consumed during the production
process and generally do not form part of the
product itself (e.g. Petroleum products like
petrol, kerosene, diesels, various oils and
lubricants, machinery and plant spares, tools,
INVENTORY TYPES

For example:


 A canned food manufacturer's

materials inventory includes the
ingredients to form the foods to be
canned, empty cans and their lids (or
coils of steel or aluminum for
constructing those components),
labels, and anything else (solder, glue,
...) that will form part of a finished
can. The firm's work in process
includes those materials from the time
of release to the work floor until they
become complete and ready for sale
Inventory

 Current trends in inventory management

Nature of Inventory

 Two Fundamental Inventory

Decisions
 Terminology of Inventories
 Inventory Costs
 Inventory Techniques
 Inventory Models
Two Fundamental Inventory
Decisions
 How much to order of each material
when orders are placed with either
outside suppliers or production
departments within organizations?
 When to place the orders?
 Ø Stock Keeping Unit (SKU) is a unique
SPECIAL TERMSofUSED
combination IN DEALING
all the WITH
components that are
INVENTORY
assembled into the purchasable item.
Therefore, any change in the packaging or
product is a new SKU. This level of detailed
specification assists in managing inventory.


Ø Stockout means running out of the inventory of

an SKU.


Ø "New old stock" (sometimes abbreviated

NOS) is a term used in business to refer to
merchandise being offered for sale that was
manufactured long ago but that has never been
used. Such merchandise may not be produced
anymore, and the new old stock may represent
TYPOLOGY IN INVENTORY MANAGEMENT

Ø Buffer/safety stock- Buffer Stock is a stock held to reduce

the negative effects (stock-out costs) of an unusually
large usage of stock.
Ø
Ø Cycle stock -Used in batch processes, it is the available
inventory, excluding buffer stock
Ø
Ø De-coupling (Buffer stock that is held by both the supplier
and the user). Inventory “decouples” in different stages.
It might be raw material, WIP, finished goods inventory.
Ex: customer has inventory for 10 days for consumption.
For 10 days customer is decoupled from producer. So,
decoupling inventory is the one which decouples
customer and producer.
Ø
Ø Anticipation stock -Building up extra stock for periods of
increased demand - e.g. ice cream for summer.
 Contd…
ØPipeline stock ( Goods stillin transit or in the process of
distribution - have left the factory but not arrived at the
customer yet). It can be raw material, work in progress or finished
goods inventory Ex: Assume supplier is far away. Consumption per
day is 20 units, 5 days for transportation 20X5= 100 units are
required for the period of transportation. So if you keep 100
units in your stock it becomes your pipeline inventory.
Ø
ØLead Time : Lead time is the period between a customer's order
and delivery of the final product. A small order of a pre-existing
item may only have a few hours lead time, but a larger order of
custom-made parts may have a lead time of weeks, months or even
longer. It all depends on a number of factors, from the time it
takes to create the machinery to the speed of the delivery system.
What is Inventory control?


The simplest language, inventory
controlmay be said to be a planned
method whereby investment in
inventories held in stock is
maintained in such a manner that it
ensures proper and smooth flow of
materials needed for production
operations as 'well sales, while at
the same time, the total costs of
investment in inventories is kept at
 OBJECTIVES OF INVENTORY
Ø To ensure adequate supply of products to customer and
CONTROL
avoid shortages as far as possible.
Ø To make sure that the financial investment in inventories is
minimum (i.e., to see that the working capital is blocked
to the minimum possible extent).
Ø Efficient purchasing, storing, consumption and accounting
for materials is an important objective.
Ø To maintain timely record of inventories of all the items and
to maintain the stock within the desired limits.
Ø To ensure timely action for replenishment.
Ø To provide a reserve stock for variations in lead times of
delivery of materials.
Ø To provide a scientific base for both short-term and long-
term planning of materials.

BENEFITS OF INVENTORY
CONTROL
Ø Improvement in customer’s relationship
because of the timely delivery of
goods and service.
Ø Smooth and uninterrupted production
and, hence, no stock out.
Ø Efficient utilisation of working capital.
Helps in minimising loss due to
deterioration, obsolescence damage
and pilferage.
Ø Economy in purchasing.
Ø Eliminates the possibility of duplicate
Inventory

 Inventory Costs
 Inventory Costs
Ø Cost Of Ordering/ Replenishment cost :
 Every time an order is placed for stock replenishment,
certain costs are involved, and for most practical purposes,
it can be assumed that the cost per order is constant. The
ordering cost (Co) may vary, depending upon the type of
items; raw material like steel against production components
like casting. However, it is assumed that an estimate Co can
be obtained for a given range of items. This cost of ordering,
Co includes:
 Paper work costs, typing and despatching an order.
 Follow-up costs required to ensure timely supplies –
includes the travel cost for purchase follow-up,
telephone, telex and postal bills.
 Costs involved in receiving the order, inspection,
checking and handling in the stores.
 Any set up cost of machines if charged by the
supplier, either directly indicated in quotations or
assessed through quotations for various quantities.
 The salaries and wages to the purchase department.
 Inventory Costs (continued)
Ø Holding\Inventory Carrying cost:
 This cost is measured as a percentage of the unit cost of
the item. This measure, gives a basis for estimating what it
actually costs a firm to carry stock. This cost includes:
 interest on capital.
 insurance and tax charges.
 storage costs – any labour, the costs of provisions
of storage area and facilities like bins, racks,
etc.
 allowance for deterioration or spoilage.
 salaries of stores staff.
 Obsolescence.
 These charges increase as inventory levels rise. To
minimize carrying costs, management makes frequent
orders of small quantities. Holding costs are commonly
assessed as a percentage of unit value, rather than
attempting to derive monetary value for each of these costs
Inventory Costs (continued)

Ø Ordering costs:
 Ordering costs have to do with
placing orders, receiving and storage.
Transportation and invoice processing
are also included. Lowering these costs
would be accomplished by placing small
number of orders, each for a large
quantity. Unlike carrying costs, ordering
expenses are generally expressed as a
monetary value per order. If the business
is in manufacturing, then to production
setup costs are considered instead.

Inventory Costs (continued)

Ø Stock-out costs:
 Stockout or shortfall costs(Ks) represent lost sales
due to lack of supply for consumers. How these costs are
calculated can be a matter of contention between sales
and logistics managers. Sales departments prefer these
numbers be kept low so that an ample stock will always
be kept. Logistics managers prefer to err on the side of
caution to reduce warehousing costs. They include sales
that are lost, both short and long term, when a desired
item is not available; the costs associated with back
ordering the missing item; or expenses related to
stopping the production line because a component part
has not arrived. These charges are probably the most
difficult to compute, but arguably the most important
because they represent the costs incurred by customers
when an inventory policy falters.

INVENTORY CONTROL
TECHNIQUES
vABC Analysis - based on annual
consumption.
vVED Analysis - criticality for
production.
vSDE Analysis - availability.
vGOLF analysis-based on suppliers
vHML Analysis - weight / cost permit.
vFSN Analysis - consumption rate.
vSOS Analysis-based on seasonality
vXYZ Analysis-Left out stock value
vTwo-Bin System
ABC ANALYSIS

Ø ABC is said to connote “Always Better

Control”.
Ø ABC analysis is the analysis of the
store items cost criteria.
Ø Of the various techniques, ABC
classification is the most important
technique.
Ø It will be seen that first 10% of items
approximately account for 70%, the
next 20% for 20% of value and the
last 70% account for 10% of value.
 ABC ANALYSIS Contd…
A- Items B- Items C- Items

 
Tight controls Moderate control
 Ordinary control measure


 


 Rigid estimates
 of requirements Purchase based on rigid
 Purchase based on usage estimates


requirements

Strict and close watch
 Reasonably strict watch and
 Controls exercises by store keeper.


( monitoring) control

 Safety stocks should be low Safety stocks moderate

 Safety stocks high


Management of items should be

 Management be done at middle Management be done at lower
done at top management level. level levels.
ABC ANALYSIS Contd…
 ABC ANALYSIS Contd…
Class Number of items Rupee value in items

A 10% of total items 70%

B 20% of total items 20%

C 70% of total items 10%

ABC ANALYSIS Contd…
Steps in computing A-B-C analysis: procedure of A-B-C


analysis
Ø First we are trying to prepare a list of items and calculate their
annual usage in rupees. This can be obtained by multiplying
the quantity ( number of units) of the item consumed in one
year by its unit price.
Ø Arranging all these items in the descending order of their
individual dosage in rupees. That means the first item in the
list will now show the maximum annual usage in rupees, the
second item the second maximum, the third item the third
maximum and so on. After having done this the total of
annual usage in rupees is put at the bottom of  the list.
Ø Those items which together form about 70% of the total
annual usage may be total annual usage may be
categorized as A items. Similarly. Items which contribute the
next 20 to 25 % of the aggregate are listed as B items. The
rest which contributes 5 to 10% of the total percentage of
annual usage are called C items.
Ø Placing of the orders on the basis of this classification.
VED ANALYSIS
 VED analysis is done to control a critical inventory
situation. Through this analysis, we identify the criticality of
production situation and accordingly plan for the inventory.
Materials are classified into the three types as under:
Ø V-Vital: items without which production will completely
stop. i.e. non- availability can not be tolerated. Eg. Due
to the absence of bearing, rolling machine cannot
operate. Airlines industry is bound to keep stand-by
engines as its absence; at times, the industry may
require flight cancellation, which costs to the industry an
enormous revenue loss.
Ø E-Essential: items whose cost of non availability can be
tolerated for 2-3 days, because similar or alternative
items are available. For example, some paper mills,
bamboo is an important raw material. Availability of
bamboo from the forests, at times, becomes uncertain
because of number of reasons due to climate, natural
calamities etc.,
Ø Desirable: items whose non availability can be tolerated
for a long period.
SDE ANALYSIS
This analysis is based spares availability of an item –
Ø S-Scarce Items
Ø D-Difficult Items
Ø E-Easy Items
 

Ø S - refers to Scarce Items, especially imported and those which

are very much in short supply. Due to their nature, these items
are procured on yearly interval.
 

Ø D - are Difficult items which are procurable in market but not

easily available. For example, items which have to come from
far off cities or where there is not much competition in market
or where good quality supplies are difficult to get or to be
procured.
 

Ø E - refers to Easy items – Items are those which are easily

available; mostly local items. Due to their easy availability,
organizations may not require to hold these items in large
volume in their stock.

GOLF ANALYSIS
 It is similar to SDE analysis, and it is based on the
nature of market and suppliers. Suppliers or Vendors are
classified as under:
  
Ø G-Government
Ø O-Ordinary or Non-government
Ø L-Local
Ø F-Foreign
  
Ø All these suppliers have their own payment terms, own
administrative procedure and soon. For a materials
Manager, therefore, it is important to keep in mind all
these issues to function efficiently and smoothly.

HML ANALYSIS

The cost per item (per piece) is considered for



this analysis.


Ø High cost items (H),

Ø Medium Cost items (M) and
Ø Low Cost item (L) help in bringing controls
over consumption at the departmental level.

FSN ANALYSIS
 This analysis is to help control obsolescence and is
based on the consumption pattern of the items. The
items are analyzed to be classified as
Ø Fast-moving (F),
Ø Slow-moving (S) and
Ø Non-moving (N) items.
Ø
 The Non-moving items (usually not consumed over a
period of two years) are of great importance. Scrutiny of
non-moving items is to be made to determine whether
they could be used or be disposed off. The fast and slow-
moving classifications help in arrangement of stock in
stores and their distribution and handling methods.

 SOS ANALYSIS
 SOS Analysis is done, keeping in view the seasonality or
non-seasonality of the item.
Ø S- Seasonal Items
Ø OS – non-seasonal Items
 Depends on seasonality and non-seasonality of the items,
procurement actions vary. Example: in case of sugar mills whose
procurement is seasonal, these companies need to procure their
requirement for a longer duration so as to adjust their
production plans. Green tea leaves are available for a longer
duration from February to October. Non-seasonal items are
available throughout the year without any major price variation.
Since seasonal items, which are available for a limited period,
are procured in bulk to manage the production process
throughout the year.

XYZ ANALYSIS

This analysis is made based on the value of
left out stock in the stores.
Ø ‘X’ items are those whose value of left out
stock is very high.
Ø ‘Y’ items are those whose left-out stock value
is moderate.
Ø ‘Z’ items are the residual items, whose left-out
stock value are neither high nor moderate.
Materials managers, based on such analysis,
can plan not only for procurement but also
for secured storage of items.

THE TWO-BIN SYSTEM
 One of the earliest systems of stock control is two-bin
system, which is a simple method of control exercised by
two simple rules. One is when the order should be placed,
and the other is what quantity should be covered. The
following diagram shows this simple method. The bins
contain, say, mild-steel bolts and nuts. The bolts and nuts
are issued from the first bin as and when required, and as
soon as the first bin is empty, more bolts and nuts are
ordered. The replenishment arrives just when the second bin
is empty. While delivery is awaited, the nuts and bolts from
the second bin are issued. When the delivery arrives, then
both the bins are again filled in.
THE TWO-BIN SYSTEM Contd…
INVENTORY MODELS

Ø
Ø
Ø Deterministic models [Known
Demand]


Ø Probabilistic models [Unknown

Demand]

What is Deterministic and
Probabilistic inventory control?
v Deterministic optimization models
presume the state of affairs to be
deterministic and consequently render
the numerical model to optimize on
system arguments. Since it conceives
the system to be deterministic, it
automatically means that one has full
information about the system.
v Probabilistic situation is also known as a
situation of uncertainty. Although this
is present everywhere, the vagueness
always makes us comfortless. So
people keep attempting to lessen
uncertainty.

Determining Order Quantities

 Basic EOQ
 EOQ for Production Lots
 EOQ with Quantity Discounts
Model I: Basic EOQ

Underlying assumptions of the EOQ model



v Demand is known and is deterministic, ie. constant.

v The lead time, ie. the time between the placement of the
order and the receipt of the order is known and constant.
v The receipt of inventory is instantaneous. In other words
the inventory from an order arrives in one batch at one
point in time.
v Quantity discounts are not possible, in other words it does
not make any difference how much we order, the price of
the product will still be the same. (for the Basic EOQ-
Model)
v That the only costs pertinent to the inventory model are the
cost of placing an order and the cost of holding or storing
inventory over time
 . . . more
  Purchase cost:This is the variable cost of goods,
indicated by per unit purchase price × annual
demand quantity. This is indicated as P×D
 Ordering cost: This is the cost of placing orders, each
order has a fixed cost S, and we need to order D/Q
times per year. Where
 Order Cost = The Number of Orders Placed in
the period x Order Costs. This is indicated as S × D/Q
 Holding cost: the average quantity in stock (between
fully replenished and empty) is Q/2. and Holding
cost/Carrying Cost = Average Inventory Level x
the Carrying Costs of 1 unit of Stock for one
periodso this cost is H × Q/2

Model I: Basic EOQ



 The order quantity where the TSC is
at a minimum (EOQ) can be found
using calculus (take the first
EOQset
derivative, = 2itDS / C to zero and
equal
solve for Q)

Balancing Carrying against
Ordering
Annual Cost ($) Costs
Minimum
Higher

Total Annual
Stocking Costs

Total Annual
Stocking Costs
Annual
Carrying Costs
Lower

Annual
Ordering Costs
Order Quantity
Smaller EOQ Larger
Example: Basic EOQ

 Zartex Co. produces fertilizer to sell

to wholesalers. One raw material –
calcium nitrate – is purchased from a
nearby supplier at $22.50 per ton.
Zartex estimates it will need 5,750,000
tons of calcium nitrate next year.
 The annual carrying cost for this
material is 40% of the acquisition cost,
and the ordering cost is $595.
 a) What is the most economical order
quantity?
 b) How many orders will be placed
per year?

Example: Basic EOQ

 Economical Order Quantity (EOQ)



 D = 5,750,000 tons/year
 C = .40(22.50) = $9.00/ton/year
 S = $595/order
EOQ = 2DS/C


 EOQ = 2(5,750,000)(595)/9.00


 = 27,573.135 tons per

order
Example: Basic EOQ

 Total Annual Stocking Cost (TSC)



 TSC = (Q/2)C + (D/Q)S

 = (27,573.135/2)(9.00)
 + (5,750,000/27,573.135)
(595)
 = 124,079.11Note:
+ 124,079.11
Total Carrying Cost
equals Total Ordering Cost
 = $248,158.22
Example: Basic EOQ

 Number of Orders Per Year

 = D/Q
 = 5,750,000/27,573.135
 = 208.5 orders/year
Note: This is the inverse


 Time Between Orders

of the formula above.
 = Q/D
 = 1/208.5
 = .004796 years/order
 = .004796(365 days/year) = 1.75
days/order
Model II: EOQ for Production
Lots
 Used to determine the order size,
production lot, if an item is
produced at one stage of
production, stored in inventory, and
then sent to the next stage or the
customer
 Differs from Model I because orders
are assumed to be supplied or
produced at a uniform rate (p) rate
rather than the order being
received all at once
Model II: EOQ for Production Lots

 It is also assumed that the supply rate,

p, is greater than the demand rate, d
 The change in maximum inventory level
requires modification of the TSC
equation
 TSC = (Q/2)[(p-d)/p]C + (D/Q)S
 The optimization results in
2DS  p 
EOQ =
C  p − d 
Example: EOQ for Production
Lots
 Highland Electric Co. buys coal from
Cedar Creek Coal Co. to generate
electricity. CCCC can supply coal at the
rate of 3,500 tons per day for $10.50 per
ton. HEC uses the coal at a rate of 800
tons per day and operates 365 days per
year.
 HEC’s annual carrying cost for coal
is 20% of the acquisition cost, and the
ordering cost is $5,000.
 a) What is the economical production
lot size?
 b) What is HEC’s maximum inventory
level for coal?
Example: EOQ for Production
Lots
 Economical Production Lot Size


 d = 800 tons/day; D = 365(800) =

292,000 tons/year
 p = 3,500 tons/day
EOQ =S =(2DS/C)[p/(p-d)]
$5,000/order C = .20(10.50)


= $2.10/ton/year

EOQ = 2(292,000)(5,000)/2.10[3,500/(3,50
0-800)]


 = 42,455.5 tons per order


Example: EOQ for Production
Lots
 Total Annual Stocking Cost (TSC)


 TSC = (Q/2)((p-d)/p)C + (D/Q)S

 = (42,455.5/2)((3,500-
800)/3,500)(2.10)
 + (292,000/42,455.5)(5,000)
 = 34,388.95 +Note: Total Carrying Cost
34,388.95
equals Total Ordering Cost
 = $68,777.90

Example: EOQ for Production
Lots
 Maximum Inventory Level


 = Q(p-d)/p
 = 42,455.5(3,500 – 800)/3,500
 Note: HEC will use 23%
= 42,455.5(.771429)
of the production lot by the
 = 32,751.4 time
tonsit receives the full lot.
Model III: EOQ with Quantity
Discounts
 Under quantity discounts, a supplier
offers a lower unit price if larger
quantities are ordered at one time
 This is presented as a price or discount
schedule, i.e., a certain unit price over
a certain order quantity range
 This means this model differs from
Model I because the acquisition cost
(ac) may vary with the quantity
ordered, i.e., it is not necessarily
constant
 . . . more
Model III: EOQ with Quantity
Discounts
 Under this condition, acquisition cost
becomes an incremental cost and
must be considered in the
determination of the EOQ
 The total annual material costs (TMC)
= Total annual stocking costs (TSC)
+ annual acquisition cost


 TSC = (Q/2)C + (D/Q)S + (D)ac



 . . . more
Model III: EOQ with Quantity
Discounts
 To find the EOQ, the following
procedure is used:


 1. Compute the EOQ using the lowest

acquisition cost.
 If the resulting EOQ is feasible (the
quantity can be purchased at the
acquisition cost used), this quantity is
optimal and you are finished.
 If the resulting EOQ is not feasible, go
to Step 2
 2. Identify the next higher acquisition
cost.
Model III: EOQ with Quantity
Discounts
3. Compute the EOQ using the


acquisition cost from Step 2.

 If the resulting EOQ is feasible, go to
Step 4.
 Otherwise, go to Step 2.
4. Compute the TMC for the feasible
EOQ (just found in Step 3) and its
corresponding acquisition cost.
5. Compute the TMC for each of the

lower acquisition costs using the

minimum allowed order quantity for
each cost.
6. The quantity with the lowest TMC is
Example: EOQ with Quantity
Discounts
 A-1 Auto Parts has a
regional tire warehouse in Atlanta. One
popular tire, the XRX75, has estimated
demand of 25,000 next year. It costs A-1
$100 to place an order for the tires, and
the annual carrying cost is 30% of the
acquisition cost. The supplier quotes
these prices for the tire:
 Q ac


 1 – 499 $21.60
 500 – 999 20.95
 1,000 + 20.90
Example: EOQ with Quantity
Discounts
EOQ Economical
= 2DS/C Order Quantity
i i

EOQ 3 = 2(25,000)100/(.3(20.90) = 893.00

 This quantity is not feasible, so try
EOQ ac2 =
= $20.95
2(25,000)100/(.3(20.95) = 891.93


 This quantity is feasible, so there is

no reason to try ac = $21.60

Example: EOQ with Quantity
Discounts
 Compare Total Annual Material Costs
(TMCs)


 TMC = (Q/2)C + (D/Q)S + (D)ac



 Compute TMC for Q = 891.93 and ac

= $20.95
 TMC2 = (891.93/2)(.3)(20.95) +
(25,000/891.93)100
 + (25,000)20.95
 = 2,802.89 + 2,802.91 +
523,750
 = $529,355.80
Example: EOQ with Quantity
Discounts
Compute TMC for Q = 1,000 and ac =
$20.90
 TMC3 = (1,000/2)(.3)(20.90) +
(25,000/1,000)100
 + (25,000)20.90
 = 3,135.00 + 2,500.00 +
522,500
 = $528,135.00 (lower than
TMC2)



PROBABLISTIC MODEL
ASSUMPTIONS
 Demand is NOT deterministic but
probability distribution is known
 Lead time MIGHT NOT BE
deterministic
 Shortages MAY OCCUR
 All ordered units arrive at once
 Purchasing cost is independent of the
order quantity

SUPPLY CHAIN MANAGEMENTN AND INVENTORY
CONTROL

 Supply chain management (SCM)

is the management of a network of
interconnected businesses involved
in the ultimate provision of product
and service packages required by
end customers. Supply chain
management spans all movement
and storage of raw materials, work-
in-process inventory, and finished
goods from point of origin to point
of consumption .
JUST-IN-TIME INVENTORY

 JIT, or just in time, inventory is an inventory

management strategy that is aimed at
monitoring the inventory process in such a
manner as to minimize the costs associated
with inventory control and maintenance. To a
great degree, a just-in-time inventory
process relies on the efficient monitoring of
the usage of materials in the production of
goods and ordering replacement goods that
arrive shortly before they are needed. This
simple strategy helps to prevent incurring
the costs associated with carrying large
inventories of raw materials at any given
point in time.
UNIT IV

 Quality Management
Organization
8 - 10 members
Same area
Supervisor / moder
ator Training
Group
processes
Presentation Data
Implementation collection
Monitoring Problem
analysis

Problem
Identificati
on
Solution List
Problem results alternatives
Problem Consensus
Analysis Brainstormin
Cause and g
effect
Data
collection
and analysis
 Quality Management
Meaning of Quality
 Webster’s Dictionary
 degree of excellence of a thing
 American Society for Quality
 totality of features and
characteristics that satisfy
needs
 Quality is the ‘totality of features
and characteristics’
 Meaning of Quality:
Consumer’s Perspective

 Fitness for use

 how well product or
service does what
it is supposed to
 Quality of design
 designing quality
characteristics
into a product or
service
 A Mercedes and a Ford are
equally “fit for use,” but
with different design
dimensions

 Dimensions of Quality:
Manufactured Products

 Performance
 basic operating characteristics of a
product; how well a car is handled or
its gas mileage
 Features
 “extra” items added to basic features,
such as a stereo CD or a leather
interior in a car
 Reliability
 probability that a product will operate
properly within an expected time
frame; that is, a TV will work without
repair for about seven years
Dimensions of Quality:
Manufactured Products (cont.)

 Conformance
 degree to which a product meets pre–
established standards
 Durability
 how long product lasts before replacement
 Serviceability
 ease of getting repairs, speed of repairs,
courtesy and competence of repair
person
Dimensions of Quality:
Manufactured Products (cont.)

 Aesthetics
 how a product looks, feels, sounds,
smells, or tastes
 Safety
 assurance that customer will not
suffer injury or harm from a
product; an especially important
consideration for automobiles
 Perceptions
 subjective perceptions based on
brand name, advertising, and
the like
 Dimensions of Quality:
Service

 Time and Timeliness

 How long must a customer wait for
service, and is it completed on time?
 Is an overnight package delivered
overnight?
 Completeness:
 Is everything customer asked for
provided?
 Is a mail order from a catalogue
company complete when delivered?
 Dimensions of Quality:
Service (cont.)

 Courtesy:
 How are customers treated by
employees?
 Are catalogue phone operators nice and
are their voices pleasant?
 Consistency
 Is the same level of service provided to
each customer each time?
 Is your newspaper delivered on time
every morning?
Dimensions of Quality:
Service (cont.)

 Accessibility and convenience

 How easy is it to obtain service?
 Does a service representative answer you calls
quickly?
 Accuracy
 Is the service performed right every time?
 Is your bank or credit card statement correct every
month?
 Responsiveness
 How well does the company react to unusual
situations?
 How well is a telephone operator able to respond
to a customer’s questions?
 Meaning of Quality:
Producer’s Perspective

 Quality of Conformance
 Making sure a product or service is
produced according to design
 if new tires do not conform to
specifications, they wobble
 if a hotel room is not clean when a
guest checks in, the hotel is not
functioning according to
specifications of its design
 Meaning of Quality:
A Final Perspective

 Consumer’s and producer’s

perspectives depend on each
other
 Consumer’s perspective: PRICE
 Producer’s perspective: COST
 Consumer’s view must dominate
 Meaning of Quality

Meaning
Meaning of
of Quality
Quality

Producer
Producer’’ss Perspective
Perspective Consumer
Consumer’’ss Perspective
Perspective

Quality
Quality of
of Quality
Quality of
of Design
Design
Conformance
Conformance

Production
Production •Conformance to •Quality characteristics Marketing
Marketing
specifications •Price
•Cost

Fitness
Fitness for
for
Consumer
Consumer Use
Use
Meaning of Control

 Control is a system
 For measuring and checking
(inspecting) a phenomenon.
 Suggests when to inspect, how often
to inspect and how much to inspect.
 It incorporates a feedback
mechanism which explores the
causes of poor quality and takes
corrective action.

Quality Control

 Defined as the entire collection of

activities which ensures that the
operation will produce the optimum
Quality products at minimum cost.
 It is a technique of management for
achieving required standards of
products.

Definition:

 As per A.Y.Feigorbaum Total Quality

Control is: “An effective system for
integrating the quality
development, Quality maintenance
and Quality improvement efforts of
the various groups in an
organization, so as to enable
production and services at the most
economical levels which allow full
customer satisfaction”

 Factors Affecting Quality
 Market Research i.e. demand of
purchaser.
 Money i.e. capability to invest.
 Management i.e. Management policies
for quality level.
 Production methods and product design.
Objectives of Quality
Control
 To decide about the standard of
quality of a product that is easily
acceptable to the customer and at
the same time this standard should
be economical to maintain.
 To take different measures to improve
the standard of quality of product.
 To take various steps to solve any
kind of deviations in the quality of
the product during manufacturing.
Statistical Quality Control
(S.Q.C)
“ S ta tistica lq u a lity co n tro lca n b e sim p ly


d e fin e d a s a n e co n o m ic & e ffe ctive

syste m o f m a in ta in in g & im p ro vin g th e
q u a lity o f o u tp u ts th ro u g h o u t th e w h o le
o p e ra tin g p ro ce ss o f sp e cifica tio n ,
p ro d u ctio n & in sp e ctio n b a se d o n
co n tin u o u s te stin g w ith ra n d o m
sa m p le s.”


 B y -:
 YA LU N
“Statistical quality control should be viewed as a


kit of tools which may influence decisions to

the functions of specification, production or
inspection.


 By-:
 EUGENE L. GRANT

CHARACTERISTICS OF S.Q.C.-:

Ø Designed to control quality standard of goods produced for

marketing.
Ø
Ø Exercise by the producers during production to assess the
quality of goods.
Ø
Ø Carried out with the help of certain statistical tools like Mean
Chart, Range Chart, P-Chart, C-Chart etc.
Ø
Ø Designed to determine the variations in quality of the goods &
limits of tolerance.
CAUSES OF VARIATIONS IN
QUALITY-:
1. ASSIGNABLE CAUSES-: It refers to those
changes in the quality of the products which
can be assigned or attributed to any particular
causes like defective materials, defective
labour, etc.
2. CHANCE CAUSES-: These causes take place as
per chance or in a random fashion as a result of
the cumulative effect of a multiplicity of
several minor causes which cannot be
identified. These causes are inherent in every
type of production.
METHODS OF S.Q.C.-:

1. PROCESS CONTROL-: Under this the quality of

the products is controlled while the products
are in the process of production.
 The process control is secured with the technique
of control charts. Control charts are also used in
the field of advertising, packing etc. They ensures
that whether the products confirm to the specified
quality standard or not.
Control Chart
AAcontrol
controlchart
chartisisaatime
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plotof
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suchasasaasample
samplemean,
mean,range,
range,
standarddeviation,
standard deviation,or orproportion,
proportion,with
withaacenter
centerline
lineand
andupper
upperand
andlower
lower
controllimits.
control limits. The
Thelimits
limitsgive
givethe
thedesired
desiredrange
rangeofofvalues
valuesfor
forthe
thestatistic.
statistic.
Whenthe
When thestatistic
statisticisisoutside
outsidethe
thebounds,
bounds,or orwhen
whenitsitstime
timeplot
plotreveals
revealscertain
certain
patterns,the
patterns, theprocess
processmay maybebeout
outof
ofcontrol.
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Value
This
This point
point is
is out
out of
of the
the control
control limits
limits
UCL
3σ Center
Line
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LCL
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AAprocess
processisisconsidered
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hasno
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onlynatural
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variation.
PURPOSE & USES OF CONTROL
CHARTS
1. Determines the quality standard of the products.
2. Detects the chance & assignable variations in the
quality standards by setting two control limits.
3. Reveals variations in the quality standards of the
products from the desired level.
4. Indicates whether the production process is in
control or not.
5. Ensures less inspection cost & time in the process
control.
Types-:
CONTROL CHATS FOR VARIABLES

Ø  CHART/ MEAN CHART-: This chart is

constructed for controlling the variations in the
average quality standard of the products in a
production process.
Ø R-CHART-: This chart is constructed for
controlling the variations in the dispersion or
variability of the quality standards of the
products in a production process.
EXAMPLE-:

Sample No. Weights

1 15 10 11 14

2 18 10 8 22
3 19 17 10 13

4 12 19 14 20

5 20 19 26 12 23

Conversion factors for n=5, A2 =0.577, D3=0, D4=2.115


 Solution-:
Sample no. Weights (X) Total  =(ΣX/5) Range
Weights R=(L-S)
(ΣX)

1 15 10 11 14 70 14 10
2 18 10 8 22 70 14 14
3 19 17 10 13 80 16 11
4 12 19 14 20 80 16 8
5 20 19 26 12 23 100 20 14

K=5 Σ  =80 ΣR=57

GRAND = Σ/K = 80/5=16

MEAN CHART

2
UCL
5
=22.

SAMPLE MEANS
Grand Chart .
57
Grand = 16 (Central line) . . CL
2
. . =1
Control limits-: 0 6
LCL=9.4
23
UCL = Grand + A2  1
= 16 + 0.577 x 11.4
= 22.577
5

LCL = Grand - A2  1 0 1 2 3 4
= 16 – 0.577 x 11.4 0 5SAMPLE
6
= 9.423 NOS.
 = ΣR/K = 57/5 = 11.4


Range Chart RANGE

 = 11.4 (Central line) 2 CHART

5 UCL=24.
09

SAMPLE RANGE

Control limits-: 2
 UCL = D4.  0 . .

= 2.115 x 11.4 .
. CL=1
1 . 1.4

= 24.09
 5 LCL=0
LCL = D3. 
1 0 1 2 3 4



= 0 x 11.4 0 5SAMPLE
6

=0 NOS.

 Ø σ Chart-: This chart is constructed to get a better picture of
the variations in the quality standard in a process than that is
obtained from the range chart provided the standard
deviation(σ) of the various samples are readily available.

Example-: Quality control is maintained in a factory with

the help of standard deviation chart. Ten items are
chosen in every sample. 18 samples in all were chosen
whose ΣS was 8.28. Determine the three sigma limits of
σ- chart. You may use the following-:
n = 10, B3 = 0.28, B4 = 1.72, K = 18.

Solution-:  = ΣS/K = 8.28/18 = 0.46

UCL = B4.  LCL = B3. 
= 1.72 x 0.46 = 0.28 x 0.46
= 0.7912 = 0.1288
Control Charts for Attributes-:

Ø p-chart-: This chart is constructed for

controlling the quality standard in the
average fraction defective of the products
in a process when the observed sample
items are classified into defectives & non-
defectives.
Ø np-chart-: This chart is constructed for
controlling the quality standard of
attributes in a process where the sample
size is equal & it is required to plot the no.
of defectives (np) in samples instead of
fraction defectives (p).
Example-:
Sample No. Size of sample (n)No. of defectives Fraction
1 100
2 100
3 100
4 100
5 100
6 100
7 100
8 100
9 100
10 100
K = 10
(d) defectives (d/n)
5 0.05
3 0.03
3 0.03
6 0.06
5 0.05
6 0.06
8 0.08
10 0.1
10 0.1
4 0.04
Σd = 60
 = Total no. of defectives/Total no. of units =
60/1000 = 0.06
»q̅ = 1-  = 1- 0.06 = 0.94

 = 0.06 (central line)

UCL =  + 3√ . q̅ /n
= 0.06 + 3√0.06x0.94/100
= 0.1311
LCL =  - 3 √ . q̅ /n
= 0.06 - 3 √ 0.06x0.94/100
= -0.0111 = 0
 p-CHART

.
1
UCL=0.1311
FRACTION DEFECTIVE

. . .
1 . CL=0.0
2 . . 6
. .
.
. . .
0 LCL=0
8 0 1 2 3 4 5 6 7 8 9 10

. SAMPLE NOS.
0
Example-:

An inspection of 10 samples of size 400 each from 10 lots reveal
the following number of defectives:

17, 15, 14, 26, 9, 4, 19, 12, 9, 15

Calculate control limits for the no. of defective units.



Solution-: n = 400, k (No. of samples) = 10, Σd (total no. of
defectives) = 140



n = Σd/k = 140/10 = 14



Now,  = n/n = 14/400 = 0.035,


 »q̅= 1-  = 1- 0.035 = 0.965




n = 14 (central line)



UCL= n + 3√ n q̅ LCL= n - 3√ n q

̅ = 14 + 3√400x0.035x0.965 = 14 - 3√400x0.035x0.965

= 25.025 = 2.975

 np-CHART

.
2 UCL=25.025
FRACTION DEFECTIVE

5
.
.
2 . .
0 .
CL=14
.
.
.
1
5 . LCL=2.975

1 0 1 2 3 4 5 6 7 8 9 10
0 SAMPLE NOS.

5
ØC-Chart-: This chart is used for the control of
no. of defects per unit say a piece of
cloth/glass/paper/bottle which may
contain more than one defect. The
inspection unit in this chart will be a
single unit of product. The probability of
occurrence of each defect tends to
remain very small.
USES

 The following are the field of application of C-

Chart-:
 Number of defects of all kinds of aircraft final
assembly.
 Number of defects counted in a roll of coated
paper, sheet of photographic film, bale of
cloth etc.
ACCEPTANCE SAMPLING

Meaning-:
Another major area of S.Q.C. is “Product

Control” or “Acceptance Sampling”. It is

concerned with the inspection of manufactured
products. The items are inspected to know
whether to accept a lot of items conforming to
standards of quality or reject a lot as non-
conforming.
DEFINATION-:

“ Acceptance Sampling is concerned with the



decision to accept a mass of manufactured items as

conforming to standards of quality or to reject the
mass as non-conforming to quality. The decision is
reached through sampling.”


 By-:
 SIMPSON AND KAFKA
Risks in Acceptance sampling

1. Producer’s risk-: Sometimes inspite of good

quality, the sample taken may show defective
units as such the lot will be rejected, such type
of risk is known as producer’s risk.


2. Consumer’s Risk-: Sometimes the quality of the lot

is not good but the sample results show good
quality units as such the consumer has to accept
a defective lot, such a risk is known as
consumer’s risk.
Types of Sampling Inspection Plan

Single Sampling Plan-: Under single sampling



plan, a sample of ‘n’ items is first chosen at

random from a lot of N items. If the sample
contains, say, ‘c’ or few defectives, the lot is
accepted, while if it contains more than ‘c’
defectives, the lot is rejected (‘c’ is known as
‘acceptance number’).
Single Sampling Plan
 Double Sampling Plan-:
1. Choose at random from the lot of size ‘N’, a sample of
‘n1’ items
2. If the sample contains, say, ‘c1’ or few defectives, the
lot is accepted; if it contains more than ‘c2’
defectives, the lot is rejected.
3. If however, the number of defectives in the sample
exceeds ‘c1’, but is not more than ‘c2’, a second
sample of ‘n2’ items is take from the same lot.
4. If now, the total no. of defectives in the two samples
together does not exceed ‘c2’, the lot is accepted;
otherwise it is rejected.
5. ‘c1’ is known as acceptance no. for the first sample.
6. ‘c2’ is the acceptance no. of both the samples taken
together
Double Sampling Plan-:
Multiple Sampling Plan-:

Under this sampling plan, a decision to accept or



reject a lot is taken after inspecting more than

two samples of small size each. In this plan,
units are examined one at a time & after
examining each unit decision is taken.
“However, such plan are very complicated &
hence rarely used in practice.”
 ADVANTAGES OF S.Q.C.-:
Ø Helpful in controlling quality of a product
Ø Eliminate Assignable causes of variation
Ø Better quality at lower inspection cost
Ø Useful to both consumers & producers
Ø It makes workers quality conscious
Ø Helps in earn goodwill



LIMITATIONS-:

Ø Does not serve as a ‘PANACEA’ for all quality

evils.
Ø It cannot be used to all production process.
Ø It involves mathematical & statistical problems
in the process of analysis & interpretation of
variations in quality.
Ø Provides only an information services.

Total Quality Management

 Commitment to quality throughout

organization
 Principles of TQM

 Customer-oriented
  Leadership
  Strategic planning
 Employee
responsibility
 Continuous
improvement
 Cooperation
 Statistical methods
 Training and
education
Quality Gurus

 Walter Shewart
 In 1920s, developed control charts
 Introduced the term “quality assurance”
 W. Edwards Deming
 Developed courses during World War II to
teach statistical quality-control techniques to
engineers and executives of companies that
were military suppliers
 After the war, began teaching statistical quality
control to Japanese companies
 Joseph M. Juran
 Followed Deming to Japan in 1954
 Focused on strategic quality planning
Quality Gurus (cont.)

 Armand V. Feigenbaum
 In 1951, introduced concepts of total quality
control and continuous quality
improvement
 Philip Crosby
 In 1979, emphasized that costs of poor
quality far outweigh the cost of preventing
poor quality
 In 1984, defined absolutes of quality
management—conformance to
requirements, prevention, and “zero
defects”
 Kaoru Ishikawa
 Promoted use of quality circles
 Developed “fishbone” diagram
 Emphasized importance of internal customer
 Deming’s 14 Points

1 . Create constancy of purpose

2 . Adopt philosophy of
prevention
3 . Cease mass inspection
4 . Select a few suppliers based
on quality
5 . Constantly improve system
and workers
Deming’s 14 Points (cont.)

6.Institute worker training

7.Instill leadership among
supervisors
8.Eliminate fear among
employees
9.Eliminate barriers between
departments
10.Eliminate slogans
Deming’s 14 Points (cont.)

11.Remove numerical quotas

12.Enhance worker pride
13.Institute vigorous training
and education programs
14.Develop a commitment from
top management to
implement above 13 points
Deming Wheel: PDCA
Cycle

4 . Act 1 . Plan
Institutiona Identify
lize problem and
improvement ; develop
continue plan for
cycle . improvement .

3. 2 . Do
Study / Check Implement
Assess plan ; plan on a
is it working? test basis .
TQM and…

 … Partnering
 a relationship between a
company and its supplier
based on mutual quality
standards
 … Customers
 system must measure customer
satisfaction
 … Information Technology
 infrastructure of hardware,
networks, and software
necessary to support a quality
program

Quality Circle
Organization
8 - 10 members
Same area
Supervisor / moderato
r

Training
Presentation Group processes
Implementation Data collection
Monitoring Problem
analysis

Problem
Identificat
Solution ion
Problem results List
alternatives
Problem Consensus
Brainstorming
Analysis
Cause and
effect
Data
collection and
analysis
 Strategic Implications of
TQM

 Strong leadership
 Goals, vision, or mission
 Operational plans and
policies
 Mechanism for feedback
 Six Sigma

 It is a disciplined, data-driven
approach and methodology
ü For eliminating defects in any
process -- from manufacturing to
transactional and from product to
service.

Two Six Sigma
sub-methodologies:
DMAIC and DMADV
 DMAIC process (defines, measure,
analyze, improve, control) is an
improvement system for existing
processes falling below specification
and looking for incremental
improvement
 DMADV process (define, measure,
analyze, design, verify) is an
improvement system used to
ISO 9000

 A set of procedures and  ISO 9001:2000

policies for  Quality Management
international quality Systems—
certification of Requirements
suppliers  standard to assess
 Standards ability to achieve
customer satisfaction
 ISO 9000:2000  ISO 9004:2000
 Quality  Quality Management
Management Systems—Guidelines
Systems— for Performance
Fundamentals Improvements
and Vocabulary
 guidance to a company
 defines for continual
fundamental improvement of its
terms and quality-management
definitions used system
 V UNIT

Environmental
Issues
 The Ecosystem

 The interrelationships between all living

things and the environment.
 Emphasis is on interdependence of all
things.
 People, nature, and the earth form a
delicately balanced system.
 Ozone is a rare form of oxygen that is
poisonous to human beings at ground
level but is necessary in the upper
atmosphere to absorb the deadly
ultraviolet radiation of the sun.
 Environmental Issues

 Bio-Geo-Chemical Cycles
 Greenhouse Effect & Global Warming
 Ozone Layer Depletion
 Acid Rain
 Deforestation
 Other Issues*
 *Other Issues

 Energy Issues,
 Over-Population,
 Lend Degradation,
 Environmental Degradation,
 Ocean Deoxygenating
 Sustainable Development,
 Environmental Pollution

Environmental Pollution
© Norman R. Rowan/Stock Boston

 Pollution is the harmful

alteration of our
environment by our
own actions.
 pollutant – The agents
that cause pollution.

 Agricultural Waste,
 Kitchen Waste,
 Pesticides,
 Plastics
 DDT
 Aluminum Foil
 Aesthetic Damage
 Contributors to Pollution

 Chemical & Nuclear Plants

 Industrial Factories,
 Human Sewage,
 Population Density,
 Degree of recycling,
 Standard of living,
 Mining,

 Major Forms of Environmental
Pollution
 Air pollution
 Water pollution
 Soil pollution (contamination)
 Noise Pollution.
 Light Pollution
 Radioactive Pollution
 Thermal Pollution
 Air pollution
 Air pollution is the presence of
contaminants of chemicals,
particulate matter, or
biological materials that cause
harm or discomfort to humans or
other living organisms, or cause
damage to the natural environment
or built environment, into the
atmosphere.

 Sources of Air Pollution

 Harmful Gases
 Factory Chimneys
 Home Furnaces
 Burning Refuse
 Burning fuel for light. Heat, power
and transportation,
 Gaseous emissions from automobiles.
 Effects of Air Pollution

 Ozone Depletion,
 Acid Rain,
 Reduced lung functioning,
 Cancer, Asthma Attack,
 Premature death,
 harmful effects on natural ecosystems
 Increased respiratory disease such as
bronchitis.

Prevention of Air Pollution
 Carpool,
 Plantation,
 Save energy,
 avoid the use of air conditioner ,
 Avoid the use of firecrackers,
 Always buy recycled products,
 Water pollution
 Water pollution may also be defined as the
addition to a natural body of water of any
material which diminishes the optimal
economic use of the water by the population
which it serves.


 Water Pollutants
 Organic sewage
 Industrial Waste
 Silt from Degraded Catchment
 Chemical Agents of Fertilizers &
Pesticides
 Water Pollutants

 Sediments from land corrosion

 Radioactive substances
 Waste heat from power plants and
industry
 Organic chemicals
 Inorganic and miscellaneous
chemicals



 Causes of Water Pollution
 Factories & Refineries,
 Waste Treatment Facilities,
 Use of chemicals in Agriculture
 Industrial processes produce toxic
waste
 construction industry
 Animal wastes
 Boating ponds
 Household Chemicals
 Effects of Water Pollution

 The food chain is damaged

 Diseases can spread via polluted
water
 Acid rain
 Negative impact on Health &
Environment
 Harmful fore marine life,
 Changes in Temperature
 Land Pollution
 Land pollution basically is about
contaminating the land surface of the
Earth through dumping urban waste
matter indiscriminately, dumping of
industrial waste, mineral exploitation,
and misusing the soil by harmful
agricultural practices.
 Causes of Land Pollution

 Wastes from Agriculture

 Wastes from Mining
 Wastes from Industries
 Garbage
 Deforestation
 Haphazard use of Fertilizers


 Effects of Land Pollution

 Cause problems in the respiratory

system
 Cause problems on the skin
 Lead to birth defects
 Cause various kinds of cancers

 Noise Pollution

 Noise is defined as unwanted sound.

Sound, which pleases the listeners,
is music and that which causes pain
and annoyance is noise. At times,
what is music for some can be noise
for others.

Causes of Noise Pollution

 Product of industrialization,
 Urbanizations and
 Modern civilization
 Effects of Noise Pollution

 decreases the efficiency of a man

 Lack of concentration
 Fatigue
 It causes Blood Pressure
 Temporary of permanent Deafness
 Effects on Vegetation
Legal Control over Pollution

 Right to Life
 Right to Religion and Noise
 Directive Principal of State Policy
 Fundamental Duties
(a)Cr.P.C. Section 133
(b)I.P.C. Public Nuisance 268-295
(c)Noise Pollution Control Rule 2000
 Conclusion

 Everything on our planet is

interconnected, and while the
nature supplies us with valuable
environmental services without
which we cannot exist, we all
depend on each other’s actions and
the way we treat natural resources.
 Conclusion

 Perhaps we should adopt a holistic

view of nature – it is not an entity
that exists separately from us; the
nature is us, we are an inalienable
part of it, and we should care for it
in the most appropriate manner.
Only then can we possibly solve the
problem of environmental pollution.
