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  Production Management  


Postini Alternative

(a) Comparative/Least Cost Center Analysis: This simple type of analysis is appropriate where the location problem concerns the placement of a single plant. There can be two approaches, namely

(i) Comparative cost chart
(ii) Least cost centre analysis

Production management, alternatively referred to as manufacturing management, is required for transforming raw materials and partly, fabricated materials into finished products. Production management does not imply management of productive process alone, but it covers all there activities which go into the making of production. To make production a concrete reality, one ,must pay heed to the factors of production like land, labour, capital and organization, or to speak in the language of business, materials, men, money, machines and methods. Production management thus calls for the work of planning and control pertaining to each of these factors of production.

Production management does not involve a mechanical assemblage of relevant factors. In contrast to mere transformation of raw materials into finished products, it aims at transmuting and permuting resources of higher productivity so that the greatest outputs are obtained from the least inputs. With its end in views, production management embraces the productive process too and involves planning, directing and controlling operations till their successful completion. Quality, quantity, cost and time of production have an important bearing on productivity of the manufacturing enterprise. Accordingly, it is the task of production management to see that effective utilization of resources is made, time is shortened, wastes and scrapings are avoided, and harmonious working is made to prevail in the plant.

For effective managerial performance, the work of production department is required to be organized on sound lines. All the principles and practices of organizing are to be applied in building a sound structure for improving the result of production management. Successful production management is not practicable without the existence of an appropriate organization structure. Consequently, managerial efforts are to be directed in designing an organization structure that conforms to the needs of the product, size of the enterprise and availability of production facilities. Organizing for production may be conceived in broader sense to include some aspects of works engineering or works organization like plant layout and factory building.

The problems of production management differ form case to case and are mainly related to the system of production. There are several systems of production which determine the magnitude of production work and the problems to be tackled in manufacturing operations. Hence, a familiarity with the different systems of production is required for understanding the intricacies of production management. Of course, the system of production is dictated in a particular case by the volume of sales and the nature of product. The quantity to be produced is nothing but an answer to the question of 'what can be sold”. In the ultimate analysis, therefore, sales are the regulator of a system of production.

The management of transformation process of inputs into output is the essence of production management. In present competitive world the production process in every enterprise needs some effective and scientific planning as well as proper control. Thus production management can be defined as “Management which by scientific planning and regulation sets into motion the part of an enterprise to which it has been entrusted the task of actual transformation of inputs into output”. In the words of Mr. E.L. Brech, “Production Management then becomes the process of effectively planning and regulating the operations of that part of an enterprise which is responsible for the actual transformation of materials into finished products”.

This definition appears to be incomplete as it does not include the human factors involved in a production process. It lays stress only on the materialistic features.

In broader sense, production management actually deals with decision making related to production processes, so that the resulting goods and services are produced in accordance with the quantitative specifications and demand schedule with minimum cost. To attain these objectives the two main activities of Production Management are the Design and Control of production systems.

In production management effective planning and control are essential. In the absence of effective planning and regulation of any production activity the goals cannot be achieved, the customers may not be satisfied and ultimately certain activities may be closed which may lead to social evils.

In an engineering sense efficiency can be simply stated as the ratio of useful energy obtained to energy applied. We can all understand that. Put succinctly, that is what is really meant by efficiency of production, but the difficulty is to see the relationship between input and output of production, or to measure performance. Which brings us right to the heart of the problem of efficiency of production: how to measure performances.

There is usually some difficulty about measuring the comparative performance of several departments in a Company or different companies. If two factories are turning out the same product which is measured in tons or feet, then overall cost per ton or per foot is a measure of performance which can be obtained readily and used for comparison. But how does one compare the costs or efficiency of two factories or department s making dissimilar products ? Cost per ton or unit is no good. As between two different firms, only the percentage net profit is any measure, and that is affected by the type of market and selling cost which are not production costs. And between different departments in the same firm there would seem to be, at first sight, no measure of efficiency on a common and therefore comparable basis.

If, however, the amount of “effort” (or cost-material, labour and overhead services) which should have been sued to make a given quantity of a product is known and also the amount actually used, then surely the correct amount as a proportion of the actual amount is a measure of performance of efficiency. It is in reality an efficiency formula again, output over input. The real value of output, in effort, hours or s.d., is the amount of cost which goes out of the factory or department in a useful form, i.e., it does not include all wastage and excess costs, avoidable, and of no benefit to customer or company. And input is the total of all effort and costs absorbed. Including excess costs.


The work of a Production Planning Department generally falls into three sections, dealing with three stages of the sequence of operations. They are:

i) Compiling and recording facts.
Developing plans.
Putting plans into operation and controlling results.

In the first stage and section, information is gathered together, recorded and filed in a way which is suitable for use by planners, and so that reference to it is easy and rapid. The information is of three kinds, relating to:

a) Customers' orders and requirements;
Stocks of materials and components;
Plant available, capacities, operations and times.

Unless the organization is of such a size that each kind of information is dealt with in a separate section, it is advisable for all of it to be handled by one section under the supervision of a person skill din the work. Its organization is mainly a problem of filing and entering-up figures or records form vouchers, i.e., transferring information and striking balances. It can usually be staffed with Juniors, female, or relatively unskilled labour, but must be carefully supervised and checked by very reliable people. The absolute accuracy and therefore double checking required in banks is not essential, but inaccuracies can be troublesome and costly.

The second stage and section comprises the vital part of planning. It is her that the effectiveness or indifference of results is ensured. And where the ability to scheme, think ahead and take all factors into account is so essential. It is a job mainly done on paper,juggling as it were with figures and charts. Sales budgets must be broken down into or integrated with long-term production plans, factory and departmental plans formulated, and weekly or daily or even hour-by-hour loads prepared. In small factories a few simple charts or schedules suffice, but in very large organizations a vast amount of detailed information, in the form of masses of figures, flows into the section, and must be rapidly and regularly collated and reissue for action. Extreme tidiness is essential, and if those concerned are not to be bogged down by a continuous stream of insistent inquiries demanding attention, much of the work must so be organised as to be dealt with in a routine manner by juniors.

The third stage consists of translating the plans into instructions and can be mainly of a clerical nature. In practice, however, it is at this stage that a certain amount of decentralization is advisable, and the hour-by-hour machine or operation loading and the actual issue of jobs to operators is done either in or adjacent to the forman's office, or in a shop office. Progress work, that is, checking performance against plans and reporting results (with recommendations for corrective action and requests for urgent actions) to foremen or other supervisors, which is really an aspect of control, is frequently carried out form the same of and even by the same persons.

The complexity of an organization structure for production planning depe4nds on the type of industry or manufacture rather than its scale. In mass-production and continuous-process manufacture, production planning consist of balancing the flow of materials (or components) from outside or component manufacturing departments, with consumption by the factory or assembly departments. Particularly is this so in the automobile or similar industries, where a good deal of preliminary work on materials in subcontracted, no large stocks of materials are kept (or could be for the immense consumption rate) and a small interruption to production affects a large part of the factory and is very expensive. In those factories engaged on batch production of partly standardized products there is the added complexity of setting-up (time and cost), varying batch sizes, and the synchronization of finishing dates for parts and sub assemblies when batches vary so much. It is predominantly a question of continual adjustment in order to maintain balanced loads on departments and to correct for unforeseen delays. When the product is designed to customers' requirements, the total process time is increased by the time required for design or preparation for each order, and consequently the period over which planning must extend is greater, making the problem more complex. Production planning is most complex when the product is mainly to customers' requirements, but is designed to incorporate many standard parts kept in stock. When the number of orders exceeds something like 50 per week, the amount of information to be handled becomes large and the department correspondingly so.


The purpose of production order is to provide information about various operations involved in a production process. Once a production order is formulated, there arises the necessity to determine that when and where each operation is to be done. The reasons in that the operations described in a production order may be executed in several ways to get the final product and one may like to use a production strategy which makes most effective use of an, machine and material in the system. The best strategy is planned through the methods of Routing and Scheduling. Thus scheduling and routing is the final stage in production planning and have the following objectives:

(i) to prescribe where and by whom each operation necessary to manufacture a product is to be executed. This is known as routing.

the establishment of times at which to begin and/or complete each even or operation. This is termed as scheduling.

In this lesson various techniques or Routing and Scheduling have been discussed.


Layout problems are fundamental to every type of organization/enterprise and are experienced in all kinds of undertakings. Housewife must arrange her kitchen, retailer must arrange his counters and display the items in such a manner which facilitates movement and attract the attention of customers, office management positions the desks, tables and other equipment in such a way that it facilitates the flow of work. The manufacturing organizations must arrange their facilities, not only the department within the factory but also the plant, stores and services so as to achieve smooth flow of products.

The adequacy of layout affects the efficiency of subsequent operations. It is an important perquisite for efficient operations and also has a great deal in common with many of the problems.

The simplest of situations with comparatively fewer items to arrange have many alternatives available. Import the layout decisions were based merely on intuition, experience, judgment and some sort of improvisation but with increase in the complexities of organizations the layout problems are solved scientifically.

Once a decision about location of the plant has been taken, next important problem before the management is to plan suitable layout for the plant. Efficiency and performance of good machines and sturdy building depend to a great extent on the layout of a plant. Plat layout is the method of allocating machines and equipment, various production processes and other necessary services involved in transformation process of a product with the available space of the factory so as to perform various operations in the most efficient and convenient manner providing output of high quality and minimum cost.

In the words of James Lundy, “layout identically involves the location of space and the arrangement of equipment in such a manner that overall operating costs are minimized.” Alternately, plant layout is an effort to arrange machines and equipment, and other services within a predesigned building ensuring steady, smooth and economical flow of material.

Planning the layout of a plant is a continuous process as there are always chances of making improvements over the existing arrangement specially with shifts in the policies of management of techniques of production.

The disposition of the various parts of a plant alongwith all the equipment used is known as plant layout. It should be so designed that the plant functions most effectively.

Layout problems are common to all kinds of organization. A retailer must arrange his counter, display of items etc., office management must position desks, tables etc. in such a way that it facilitates the flow of work. A manufacturing organization must position its machinery and other equipment so as to achieve smooth flow of products through their factories.

A good layout results in comforts convenience, safety, efficiency, Compactness and profits. A poor layout results in congestion, waste, frustration and inefficiency.

Thus after plant location the proper design of plant layout is most significant for smooth functioning and success of the organization.

More Notes on  PLANT LAYOUT 

1. Process charts
   (i) Operations Process Charts
   (ii) Flow process Chart

11. Process Flow Diagrams
111. Machine data cards
IV. Visualization of Layout
    (i) Two-dimensional plan or Templates 
    (ii) Three-dimensional Plan or machine models



The performance of an enterprise is considerably affected by its location. The location of an industry is as important as the choice is for the location of a business or a shop in a city or locality. Unscientific and unplanned industrialization is harmful not only to the industrial unit but also to the social and economic structure of the country as a whole.

Nearly sixty years before, much importance was not given to the selection of appropriate location and the decisions in this regard were mainly governed by the individual preferences of the entrepreneurs and social customs. This resulted in failure of any organization which otherwise could have been successful. Government also with the objective of establishing socialistic pattern of society became instrument all in the selection of site for various industries in undeveloped areas by providing various investment benefits and other incentives. All this encouraged a large number of industrialists to follow a more scientific an logical approach towards the selection of site for establishing their industries.

The degree of significance for the selection of location for any enterprise mainly depends on its size and nature. Sometimes, the nature of the product itself suggest some suitable location. A small scale industry mainly selects the site where in accordance with its capacity the local market for the product is available. It can easily shift to other place when there is any change in the market. But for large scales industries requiring huge amount of investment there are many considerations other than the local demand int the selection of proper plant location. These plants cannot be easily shifted to other place and an error of judgment in the selection of site can be very expensive to the organization.

More Notes on  PLANT LOCATION 

One activity of the administrative side of production is concerned with finding and stating the one best way to do all jobs. No longer is this left to the skilled and interested operator, proceeding by trial and error, successive operators making the same, or sometimes a different result. As more machines, tools and equipment, some of them highly specialized, have been designed and become available, and new materials and process materials and process developed, it has become increasingly a skilled technical job to keep abreast of developments and always to know the up-to-date or best way to do a job. It would be quite impossible today for the craftsman at the bench or machine to keep himself so informed and do a job of producing. Skilled men are still required, but increasingly today they become setters, minders, or maintenance men.

The old type of foreman is apt to think that the appointment of a production engineer, process engineer, or chemist, reduces his usefulness, his value to the Company, or his status. It does nothing of the kind, of course. It is true that, before the development of production engineering, and the use of chemists in the works as well as in the analytical laboratory, the Work Manger and his foreman supplied the production “know-how”, and decided how a job should be done. But it is now recognized that the training and supervising of person is a much more complex job than it once was, and to relive a foreman of a large amount of administrative work makes a higher general performance possible and his job more valuable, not less. It is essential to separate planning form doing, administration from execution.

When a new material is developed or a new product designed, the method of production is obviously either known or worked out. But form then onwards all is change. Better method of production are being discovered continually. Furthermore, in many factories, particularly those engaged in engineering, the detailed method of production for each part to be manufactured, the machines to be used and equipment required, is decided subsequent to design. The task of deciding the best method of production, of saying how a job shall be produced, and of finding new and better ways of doing so, should be the responsibility of a Method of Production Engineering Department. Similarly, in a company where the technical knowledge is supplied by chemists, production method would be the responsibility of the works laboratory.

In deciding the one best way of doing a job, the production engineer or chemist must have regard for the costs of production, and therefore for the time to do the job. He must have regard for the costs of production, and therefore for the time to do the job. He must have some say also in new tools or equipment required. These are the three divisions into which the activities of the production or methods engineer usually fall that is to say, work study or methods, work measurement or time study and tool design.

These three aspects all call for close collaboration with the designer and works departments. The design of jigs and tools might be thought to be a logical development of the Design or D
rawing Office work and in some works it is done in the Drawing Office. But it cannot be effectively developed without detailed study of methods and work being done in the factory, and, as will be shown later, this study forms the basis of standards for time, and hence for payment by results, production planning and costs. This study work calls for a specialized technique and training quite different form Drawing Office work. The outlook required is different too. It is more successful in practice if it is recognized as a separate activity, and combined with the design of tools and equipment. To avid it becoming too remote from or independent of the Drawing Office, Design Department, or Technical Department, new drawings, designs, or technical developments should always be referred to, and discussed with, the production engineers before final issue.

The development of production engineering as a special skill and the extensive use of specially designed tools and equipment have contributed largely to the very much greater output per man-hour. There is no doubt that it is through such development, adding horse-power to man-power, and taking out the manual efforts from jobs, that the way lies to reduce man-hour requirements.

Because production engineers tend to get machine or gadget minded, they are apt to forget or neglect the human factor. Machines cannot yet operate without human agency, and men should not be made into robots. The foremen may have something to say if the division of labour, for example, is carried too far, or if new methods are forced on them without consultant. Continued and close co-operation between the production engineers and works departments is absolutely essential.

The function of the production Engineering or Methods Department is to determine, in collaboration with the Design and Works Departments, the most effective, economical and suitable method of production, today down standards for material and time, and to design special tools and equipment required.


Planning may be defined as “Any information which either specifies or guides the taking of future actions by tis members geared towards overcoming existing or anticipated problems”. Billy E. Goetz has rightly remarked planning as “fundamentally choosing”, and “ a planning problem arises when an alternative course of action is discovered”. So, in simplest way, we may define production planning as planning of production. But production planning requires a careful and elaborate study of co-ordinating and related activities which are necessarily performed by different departments. Messrs. Bethol, Smith and others in their book 'Industrial Organization and Management' have defined the production planning as “It is a series of related and co-ordinated activities performed by not one but a number of different departmental groups, each activity being designed to systematize in advance the manufacturing efforts in its area”.

Conclusively, production planning may be defined in the words that “It is the predetermination of manufacturing requirements such as available materials, money men, order, priority, production process etc. within the scope of Industrial unit for efficient production of goods to cope with its sale requirements.

Production planning mainly depends on the type of manufacturing plants which can be divided into two categories: (a) Continuous type of manufacturing plants such as rayon, yarn, shoes, paper plants etc. and (b) Intermitted type of manufacturing plants such as Engineering type of plants and also repetitive type of industries-automobiles, typewriters etc.

Planning in the continuous type of plant is somewhat easy as we have only to decide what and when and not to decide how and where. In intermittent type of plant. Planning becomes difficult by the entry of a number of complex factors into picture. The same machine is engaged for production of different parts at different times, the machine is kept busy to meet the requirements for various parts to the customer's best satisfaction. In the repetitive type of plant such as automobiles the process appears to be continuous but we have depend on so many parts meeting the schedule before we can move on to the next; thus planning becomes complex. For example, in an automobile plant, a sub-assembly process can not be said to be complete unless all the various parts whether manufactured on the plant or sub-contracted form outside are available as complete.

Climatic conditions of factors relevant in the choice of the layout
Climatic conditions of factors relevant in the choice of the layout  Read Full Article Climatic conditions of factors relevant in the choice of the layout
Revising and improving plant Layout
To maintain operating efficiently over a period of time, the existing plant layout must ordinarily be modified and improved continuously.  Read Full Article Revising and improving plant Layout
Factors responsible for inefficient layout can be
Factors responsible for inefficient layout can be   Read Full Article Factors responsible for inefficient layout can be
Procedure to identify the necessity of revising existing layout
A scientific layout study is a disciplined objective procedure that clearly determines the goals to be attained, collects all relevant facts, thoroughly analyses the data and achieves an improved layout.   Read Full Article Procedure to identify the necessity of revising existing layout
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