PRODUCTION AND OPERATIONS MANAGEMENTCOURSE OUTLINE (8509)

Level: MBA (3½ Years) Credit Hours: 03

Unit 1: Introduction to Production and Operations Management

What is Operations Management?Operations management refers to the activities, decisions and responsibilities of managing the resources which are dedicated to the production and delivery of products and services.

The part of an organisation that is responsible for this activity is called the operations function and every organisation has one as delivery of a product and/or service is the reason for existence.

Operations managers are the people who are responsible for overseeing and managing the resources that make up the operations function. The operations function is also responsible for fulfilling customer requests through the production and delivery of products and services.

Depending on the type of industry or business, other titles can be used interchangeably, such as a ‘fleet manager' in a distribution company or a ‘store manager' in retail businesses.[1]

Although the operations function is central to any organisation, it is only one of the three main core functions, the others being marketing and finance. The marketing function is responsible for communicating the organization’s products and services to its markets and researching customer wants and needs.[2] The finance function is responsible for providing information to assist in economic decision making and the overall management of financial resources.[3]

 There are also other functions which are not core to an organisation; however, their contribution is crucial to the smooth running of any organisation. Commonly known as support functions, they include accounting, information systems, human resources and engineering.

Often, there is no clear division between the various functions and one of the biggest difficulties faced by management is the ability to work effectively with other parts of the organisation. It is critical to the success of your business that functional boundaries do not interfere with efficient internal processes.

Being a small business owner, you may feel as though operations management does not apply to your business. However, this is far from the truth and in reality, the concepts and principles behind operations management is applicable to all businesses. The only difference is that you may have to take on several roles as many smaller organizations simply don't have the resources to dedicate individuals to specialized roles.

Systems Approach to Operations Management

An organized enterprise does not, of course, exist in a vacuum. Rather, it is dependent on its external environment; it is a part of larger systems such as the industry to which it belongs, the economic system, and society. Thus, the enterprise receives inputs, transforms them, and exports the outputs to the environment. However, this simple model needs to be expanded and developed into a model of operational management that indicates how the various inputs are transformed through the managerial functions of planning, organizing, staffing, leading, and controlling. Clearly, any business or other organization must be described by an open system model that includes interactions between the enterprise and its external environment.

Inputs and Claimants

The inputs from the external environment may include people, capital, and managerial skills, as well as technical knowledge and skills. In addition, various groups of people will make demands on the enterprise. For example, employees want higher pay, more benefits, and job security. On the other hand, consumers demand safe and

reliable products at reasonable prices. Suppliers want assurance that their products will be bought. Stockholders want not only a high return on their investment but also security for their money. Federal, state, and local governments depend on taxes paid by the enterprise, but they also expect the enterprise to comply with their laws. Similarly, the community demands that enterprises be “good citizens,� providing the maximum number of jobs with a minimum of pollution. Other claimants to the enterprise may include financial institutions and labor unions; even competitors have legitimate claim for fair play. It is clear that many of these claims are incongruent, and it is manager’s job to integrate the legitimate objectives of the claimants.

The Managerial transformation Process

It is the task of managers to transform the inputs, in an effective and efficient manner, into outputs. Of course, the transformation process can be viewed from different perspective. Thus, one can focus on such diverse enterprise functions as finance, production, personnel, and marketing. Writers on management look on the transformation process in terms of their particular approaches to management. Specially, writers belonging to the human behavior school focus on interpersonal relationships, social systems theorist analyze the transformation by concentrating on social interactions, and those advocating decision theory see the transformation as sets of decisions. Perhaps, however, the most comprehensive and useful approach for discussing the job of managers is to use the managerial functions of planning, organizing, staffing, leading, and controlling as a framework for organizing managerial knowledge.

The Communication System

Communication is essential to all phases of the managerial process for two reasons. First, it integrates the managerial functions. For example, the objectives set in planning are communicated so that the appropriate organization structure can be devised. Communication is essential in the selection, appraisal, and training of managers to fill the roles in this structure. Similarly, effective leadership and the creation of an environment conductive to motivation depend on communication. Moreover, it is through communication that one determines whether events and performance conform to plans. Thus, it is communication which makes managing possible.

The second purpose of the communication system is to link the enterprise with its external environment, where many of the claimants are. For example, one should never forget that the customer, who is the reason for the existence of virtually all businesses, is outside a company. It is through the communication system that the needs of customers are identified; this knowledge enables the firm to provide products and services at a profit. Similarly, it is through an effective communication system that the organization becomes aware of competition and other potential threats and constraining factors.

External Variables

Effective managers will regularly scan the external environment. While it is true that managers may have little or no power to change the external environment, they have no alternative but to respond to it.

Outputs

It is the task of managers to secure and utilize inputs to the enterprise, to transform them through the managerial functions — with due consideration for external variables – to outputs.

Although the kinds of outputs will vary with the enterprise, they usually include many of the following: products, services, profits, satisfaction, and integration of the goals of various claimants to the enterprise. Most of these outputs require no elaboration, only the last two will be discussed.

The organization must indeed provide many “satisfactions� if it hopes to retain and elicit contributions from its members. It must contribute to the satisfaction not only of basic material needs (for example, employees’ needs to earn money for food and shelter or to have job security) but also of needs for affiliation, acceptance, esteem, and perhaps even self-actualization so that one can use his or her potential at the work-place.

Another output is goal integration. As noted above, the different claimants to the enterprise have very divergent — and often directly opposing — objectives. It is the task of managers to resolve conflicts and integrate these aims.

Trends in Operations ManagementRecent Trends

From Division of Labour to Scientific Management and Mass Production, Operations has always tried to adjust to the need of the businesses by improvising and innovating with several trends. Similarly, the following discussion illustrates how Operations are strategized these days and what are the recent trends, which are affecting Operations Management.

Computer-aided Design and Manufacturing (CAD/CAM):

After the trend of Scientific Management and automation, the next big step was CAD/CAM. These computer-aided operations meant that all the designing and manufacturing of the product would be done with the help of computers making the operations way more efficient (Groover, 1997).These systems immensely helped in new product development and redesigning the processes.

General Motors had its first brush with computer-aided systems in 1996 and ended up saving time and money by using these systems. It helped the company launch new vehicles faster and more efficiently by making the process much smoother (ICMR, 2002).

Shrinking product life cycle:

In the past, product life cycle used to be comparatively longer and when a product was introduced, it generally stayed in the market for a longer period of time. Now with the fast expansion of technology, product life cycles have become short and almost every product gets replaced by a new product in shorter time spans (Stevenson, 2005). Due to this reason, companies are forced to introduce rapid development of new products with encouraging innovation (Smith, 1992). This has provided a new challenge and requires redesigning of operations making the process faster.

Supply-Chain Management:

Supply Chain partners are required to be more in tune with the needs of the end users as a result of shorter product life cycles, demanding customers, fast changes in technology, material and processes (Davis, 1993). And because suppliers can contribute unique expertise, operations managers are outsourcing and building long-term partnerships with critical players in the supply chain (Christopher, 1998).

Mass Customization:

In the past, there used to be large-scale standardized mass production to gain economies of scale. Now with increased flexibility and competition, companies are forced to respond with creative product designs and flexible production processes that cater to the individual whims of consumers (Stevenson, 2005). The trend has now been changing towards customised production of goods, whenever and wherever needed. This has led to change in the way operations were designed earlier leading to better and more efficient processes (Beaty, 1996).

Employee Involvement:

In the past, employees were treated as just another input to the production process where they were treated more or less like machines and worker concerns were generally ignored. The knowledge explosion and more technical workplace have combined to require more competence in the workplace (Hanna, 2000). Operations managers now respond by moving more decision making to individual workers (Hutchins, 1998). With the development of HRM alongside, firms tend to focus more on employee empowerment, treating employees as resources that bring competitive edge to the firm. Quality management training based on lean philosophy has been very popular recently, making employee involvement an essential part of the improvement process (Clegg et al, 2010).

Sustainability, Environmentally sensitive production (Green Manufacturing):

In the past, the focus of the production was aimed on obtaining resources at lowest possible cost ignoring the damage made to the environment. Operations’ managers now are increasingly getting concerned with design of products and processes that are ecologically sustainable (Johnson, 2006). That means designing and packaging products that minimize resource use, are biodegradable, can be recycled and generally environment friendly (Heizer and Render, 2010). In other words, Green production has been seen as a recent trend in operations management concerning ecological sustainability.

Operations turning Lean:

Interestingly, all the trends discussed above can boil down to the “Lean” philosophy. Be it Sustainability or Mass Customization, both the trends are two different aspects of lean operations. Businesses can lead to successful Sustainable Management, only by following a part of lean philosophy: continuous improvement or Kaizan (Johnson, 2006). In fact, Mass Customization has been possible just because JIT, since it helps customise the products according to the customers’ needs or preferences without increasing costs or manufacturing time (Beaty, 1996).

Same is the case of Employee Involvement. Lean philosophy considers employees to be the most important asset of the organization and successful implementation of this philosophy depends on

the people to a very large extent (Hutchins, 1998). Inevitably, involving them at every step of the process, helps make the system leaner (Hanna, 2000).

Even Computer-aided systems and Supply-chain Management fall under the Lean philosophy since the main aim of these concepts is to make the process faster, reduce costs and avoid any waste (Groover, 1997). Continuous improvements, as an aspect of lean, help face the challenge of shrinking product life cycle by making the system more efficient and reducing waste at every step (Nersesian, 2000).

Following, the paper will discuss the lean philosophy in general touching upon all the major aspects of Lean Operations and concepts related to it, with Toyota being the case in point.

Management ProcessManagement planning is the process of assessing an organization's goals and creating a realistic, detailed plan of action for meeting those goals. Much like writing a business plan, a management plan takes into consideration short- and long-term corporate strategies. The basic steps in the management planning process involve creating a road map that outlines each task the company must accomplish to meet its overall objectives.

Establish Goals

The first step of the management planning process is to identify specific company goals. This portion of the planning process should include a detailed overview of each goal, including the reason for its selection and the anticipated outcomes of goal-related projects. Where possible, objectives should be described in quantitative or qualitative terms. An example of a goal is to raise profits by 25 percent over a 12-month period.

Identify Resources

Each goal should have financial and human resources projections associated with its completion. For example, a management plan may identify how many sales people it will require and how much it will cost to meet the goal of increasing sales by 25 percent.

Establish Goal-Related Tasks

Each goal should have tasks or projects associated with its achievement. For example, if a goal is to raise profits by 25 percent, a manager will need to outline the tasks required to meet that objective. Examples of tasks might include increasing the sales staff or developing advanced sales training techniques.

Prioritize Goals and Tasks

Prioritizing goals and tasks is about ordering objectives in terms of their importance. The tasks deemed most important will theoretically be approached and completed first. The prioritizing process may also reflect steps necessary in completing a task or achieving a goal. For example, if a goal is to increase sales by 25 percent and an associated task is to increase sales staff, the company will need to complete the steps toward achieving that objective in chronological order.

Create Assignments and Timelines

As the company prioritizes projects, it must establish timelines for completing associated tasks and assign individuals to complete them. This portion of the management planning process should consider the abilities of staff members and the time necessary to realistically complete assignments. For example, the sales manager in this scenario may be given monthly earning quotas to stay on track for the goal of increasing sales by 25 percent.

Establish Evaluation Methods

A management planning process should include a strategy for evaluating the progress toward goal completion throughout an established time period. One way to do this is through requesting a monthly progress report from department heads.

Identify Alternative Courses of Action

Even the best-laid plans can sometimes be thrown off track by unanticipated events. A management plan should include a contingency plan if certain aspects of the master plan prove to be unattainable. Alternative courses of action can be incorporated into each segment of the planning process, or for the plan in its entirety.

Responsibilities of Operations ManagementOperations managers are essential to any large business organization. A total of 1.7 million general operations managers were employed in the United States in 2010, according to the Bureau of Labor Statistics. These managers earned average salaries of $113,100 per year. The core responsibilities of operations managers tend to be similar across many industries.

Policy Formulation

Formulating policy is one of the core duties of an operations manager. Companies must operate and function on a daily basis within a prescribed set of guidelines. These guidelines are generally established by operations managers. These can include how different departments within the company or organization communicate and cooperate with one another. Policies can also include disciplinary actions taken when employees break company rules.

Planning

The planning of various company operations and activities is another major concern of the operations manager. Operations managers tend to determine which products are bought and sold, what prices they are bought or sold for and to whom they will be marketed, according to O*NET Online. The operations manager also helps plan and

coordinate activities between various departments such as determining what types of sales promotions the company will engage in.

Controlling Resources

Controlling major company resources is yet a third major function of an operations manager. Operations managers oversee the implementation of payroll policies and procedures, how much employees are paid, how funds are allocated for benefits packages and how other funds are spent to keep the company operating smoothly on a day-to-day basis. Operations managers regularly review financial statements to ensure that the company is operating as efficiently and as profitably as possible.

Communication

A final core responsibility of an operations manager is communicating with other management professionals within the organization to keep the company running smoothly, and communicating with other companies and organizations with which the company does business. Operations managers are responsible for putting together reports and financial statements that are essential for other top executives within the company or organization.

The Problems of Production Management

Operations StrategyAn operations strategy for a business is the company's plan for how the business will operate to achieve a set of goals. Compare it to a machine; the machine is used to achieve a certain purpose or function, but all components of the machines must operate correctly and in conjunction with each other for the machine to work successfully. An operations strategy in a business is essentially the same thing. It defines how different components of the business will work together to achieve success. Companies define operations strategies differently, based on the management style and needs of the company.

Retail

Wal-Mart is one of the most successful and largest retailers in U.S. history. It's operations strategy is to use low inventory levels and prices to generate faster sales based on low prices and value. Keeping inventory low allows the company to keep prices low for their customers, as well as replace products with new items once inventory is gone. This also increase demand. High demand combined with low prices leads to increased sales for the company.

Online

Online merchants typically have very different operations strategies than brick-and-mortar retailers. For example, the operations strategy for an online merchant likely involves creating and maintaining a website that is easy to use and reliable, so when customers come to the site, they can easily navigate through it to make a purchase. An online merchant's operations strategy puts a lot of emphasis on the design and usability of the site, which includes product photos and descriptions that entice visitors to make a purchase. The checkout process also must be easy and fast.

B2B

B2B, or business to business, companies sell products and services to other businesses and also have different operations strategies than retailers, who sell products and services to consumers. An operations strategy for a B2B company might be to establish the company or management team as industry experts and thought leaders. This is done in a variety of ways, including obtaining speaking engagements at trade shows, publishing articles on

different angles within the industry and expanding the company's professional network as much as possible. Companies that have a reputation as the experts in a certain industry are more likely to get business than companies with no reputation in the industry.

Non-Profit

Non-profit companies often operate similarly to other companies, though the ultimate goal of a non-profit is not about making as much money as possible. Thus, the operations strategy for a non-profit is different than a for-profit company. Non-profit company operations strategies might include fundraising efforts to pay employee salaries and partnering with local organizations to improve or resolve a situation. For example, in an area with high population of homeless people, a non-profit agency might arise to help create free meal service and shelter to help those in need.

Unit 2: Designing Products, Services and Processes

Sources of New Product Ideas

Products such as gadgets, raw materials, creative services and day-to-day necessities, are the lifeblood of a business. While ideas for new products do occasionally strike people like Newton's proverbial apple, such unbidden inspiration cannot be relied upon. Whether you are trying to expand your company's product line, spice up a flagging offering, or head in a new direction, gather product ideas from the people and places that characterize your company.

Employees

Seek new product ideas from your employees and business associates. Let your employees know that you are on the lookout for ways to expand the company's product offerings. Depending upon the industry and the nature of your company's offerings, you could even allow full-time employees to devote a percentage of their working hours to internal projects of their own design. Such "creativity time" served as the genesis of several Google innovations, including Google Person Finder, which has been used to help people locate loved ones in the wake of a natural disaster.

Customers

Solicit product ideas from a group of people vital to making your company a success--your customers. Getting new product ideas from customers can be as low-tech and low-guidance as a "new product suggestion box" placed on the reception desk or as high-tech and focused as a splashy multimedia campaign encouraging your company's customers and fans to submit a video about their idea for the chance to win a prize.

Everyday Surroundings

Open your eyes to your everyday surroundings for a source of inspiration for your next new product idea. Take notes about little problems and frustrations you encounter in the course of day-to-day tasks like working in the office, running errands and caring for your family. Ask yourself whether you could solve one of those little problems with a new product. The problem doesn't have to be a world-scale one in order for a product solution to be a success--it just has to be a fairly common problem.

Existing Products

Get a new perspective on existing products--and potentially walk away with a new product idea or two--by examining them while pondering the question of how they could be different or better. For example, if your company produces a successful product line, brainstorm ways in which that line could be expanded with a deluxe offering (perhaps a larger size or a "premium" flavor) or a novel approach (such as an exotic flavor or an easier form of preparation).

Product DevelopmentWhat is a Product Development?

First let’s understand the meaning of word viz., product and development.

1. Product means any marketable thing with some utility in it, produced either by a labor or through series of automated processes.

2. Development is an act of making or achieving a continuous progress in something by someone. Progress transit from an earlier policy (traditional approach) to an advanced policy (modern approach).

Product development is a specialized activity. It is done to improve the existing product or to introduce a new product in the market. It is also done to improve the earlier features or techniques or systems. Generally, it means a new-product development. New-product development means to introduce a brand-new product in the market. It means to add a fresh product to an existing line of products. Normally, a company starts with one or two products. However, after some time it has few more products in its line (say from 15 to 20). This is possible only because of new-product development.

Product development takes place, works or functions as under:

1. Creation of an entirely new product or upgrading an existing product by exploring all possibilities and outcomes.2. Innovation of a new or an existing product to deliver better and enhanced services to end-users.3. Continuous improvement of a new product or enhancing an existing product by giving preference to satisfy the

demand of end-users.4. Enhancing the utility of a new product or upgrading features of an existing product, for the personal and/or

commercial use, to expand the defined goal (objective).

Product development involves risk of investing precious time, money (capital) and intellectual resources. Therefore, it is necessary that it is well-planned.

A good product development helps to:

1. Create new business opportunities and bring growth.2. Boost productivity and profitability of the entrepreneurs.3. Enhance the satisfaction levels of the consumers.

Definition of Product Development

In general, the definition of product development can be stated as follows:

“Product Development is a creation, innovation, utility enhancement or continuous improvement of earlier features (design, service, etc.) of an existing product or developing (manufacturing) an entirely new kind of product to satisfy the requirements of its end-users (consumers).”

Example of Product Development

Following are some common examples of product development.

Packing wheat flour in retail bags for household consumption. Packing cooking oil in retail pouches for household consumption. Converting land line phones into wireless handsets for easy portability and full-time access to communication. Modify desktop computers into light-weight laptops to ease portability. Transform a traditional library into an e-library to facilitate faster searching and accessibility of electronic books and

other digital documents. Convert a simple airplane into a fighter jet to achieve a greater speed.

Steps for Product Development

#1.   Idea Generation

The development of a product will start with the concept. The rest of the process will ensure that ideas are tested for their viability, so in the beginning all ideas are good ideas (To a certain extent!)

Ideas can, and will come, from many different directions. The best place to start is with a SWOT analysis, (Strengths, Weaknesses, Opportunities and Threats), which incorporates current market trends. This can be used to analyse your company’s position and find a direction that is in line with your business strategy.

In addition to this business-centred activity, are methods that focus on the customer’s needs and wants. This could be:

Under-taking market research Listening to suggestions from your target audience – including feedback on your current products’ strengths and

weaknesses. Encouraging suggestions from employees and partners Looking at your competitor’s successes and failures

#2.   Idea Screening

This step is crucial to ensure that unsuitable ideas, for whatever reason, are rejected as soon as possible. Ideas need to be considered objectively, ideally by a group or committee.

Specific screening criteria need to be set for this stage, looking at ROI, affordability and market potential. These questions need to be considered carefully, to avoid product failure after considerable investment down the line.

#3.   Concept Development & Testing

You have an idea and it’s passed the screening stage. However, internal opinion isn’t the most important. You need to ask the people that matter – your customers.

Using a small group of your true customer base – those that convert – the idea need to be tested to see their reaction. The idea should now be a concept, with enough in-depth information that the consumer can visualise it.

Do they understand the concept?

Do they want or need it?

This stage gives you a chance to develop the concept further, considering their feedback, but also to start thinking about what your marketing message will be.

#4.   Business Analysis

Once the concept has been tested and finalised, a business case needs to be put together to assess whether the new product/service will be profitable. This should include a detailed marketing strategy, highlighting the target market, product positioning and the marketing mix that will be used.

This analysis needs to include: whether there is a demand for the product, a full appraisal of the costs, competition and identification of a break-even point.

#5.   Product Development

If the new product is approved, it will be passed to the technical and marketing development stage. This is when a prototype or a limited production model will be created. This means you can investigate exact design & specifications and any manufacturing methods, but also gives something tangible for consumer testing, for feedback on specifics like look, feel and packaging for example.

#6.   Test Marketing

Test marketing (or market testing) is different to concept or consumer testing, in that it introduces the prototype product following the proposed marketing plan as whole rather than individual elements.

This process is required to validate the whole concept and is used for further refinement of all elements, from product to marketing message.

#7.   Commercialization

When the concept has been developed and tested, final decisions need to be made to move the product to its launch into the market. Pricing and marketing plans need to be finalized and the sales teams and distribution briefed, so that the product and company is ready for the final stage.

#8.   Launch

A detailed launch plan is needed for this stage to run smoothly and to have maximum impact. It should include decisions surrounding when and where to launch to target your primary consumer group. Finally in order to learn from any mistakes made, a review of the market performance is needed to access the success of the project.

New product development can be made much simpler and focused, with a higher likelihood of success, by following these steps to guide you.

Role of Research and Development

A company's research and development department plays an integral role in the life cycle of a product. While the department usually is separate from sales, production and other divisions, the functions of these areas are related and often require collaboration. A thorough understanding of the functions of the research and development department allows you to maximize those duties at your small business, even if you don't have a big department.

New Product Research

Before a new product is developed, a research and development department conducts a thorough study to support the project. The research phase includes determining product specifications, production costs and a production time line. The research also is likely to include an evaluation of the need for the product before the design begins to ensure it is a functional product that customers want to use.

New Product Development

The research paves the way for the development phase. This is the time when the new product is actually developed based on the requirements and ideas created during the research phase. The developed product must meet the product guidelines and any regulatory specifications.

Existing Product Updates

Existing products of the company also fall under the scope of research and development. The department regularly evaluates the products offered by the company to ensure they are still functional. Potential changes or upgrades are considered. In some cases, the research and development department is asked to resolve a problem with an existing product that malfunctions or to find a new solution if the manufacturing process must change.

Quality Checks

In many companies, the research and development team handles the quality checks on products created by the company. The department has an intimate knowledge of the requirements and specifications of a particular project. This allows team members to ensure the products meet those standards so the company puts out quality products. If the company also has a quality assurance team, it may collaborate with research and development on quality checks.

Innovation

The research and development team aids the company in staying competitive with others in the industry. The department is able to research and analyze the products other businesses are creating, as well as the new trends within the industry. This research aids the department in developing and updating the products created by the company. The team helps direct the future of the company based on the information it provides and products it creates.

Evaluation of Product Design

Successful product design involves learning from other designs which have features similar to the ones you want in your product.

You also need to be able to evaluate the quality of your product and to understand how to maintain quality throughout the design and manufacturing stage.

Approaching designIt is important that you, the designer, are able to identify the features of a product that make it either a success or failure.

The first stage of design of a new product involves studying other products with similar or desirable features, through identification, analysis and evaluation.

This process helps the designer in a number of ways:

It avoids copying other designers' work (this is called plagiarism). It identifies features or aspects of existing products which could be improved - such as by reducing the

cost, adding extra features, making it easier or more comfortable to use or making it look more attractive to certain groups.

It can identify technologies or ideas which could be transferred or applied to a new function or area.

Evaluating designSuccessful designs: Apple iPod and Dyson vacuum cleaner

What makes a design successful? How do you judge a design? There are a wide range of methods and strategies for analysing and evaluating designs. The two methods that follow are easy-to-remember acronyms:

F.A.C.E. value

Function - What does it do and how does it work? Aesthetics - Is it attractive, why and what makes it so? Construction - What is it made from, how and why? Economics - How much does it cost and is this good value for money?

C.A.F.E.Q.U.E.

Cost - How much does it cost and is it good value for money? Aesthetics - Is it attractive, why and what makes it so? Function - What does it do and how does it work? Ergonomics - How easy or comfortable is it to use? Quality - How well is it built, what materials are used? User - Who is it for and is it appropriate? Environment - What effect do the product's manufacture, use and disposal have?

A product's unique characteristics and features are called the product specification. You need to be able to identify these and compare them with the specification of other similar products. This will help you to evaluate how successful a product's design has been.

Quality control

Quality control or QC is a way of controlling a manufacturing system. It is accomplished by a series of checks and inspections throughout the design and making of the product to ensure it is being made to specification and to the required standard. The results of the quality control checks are then fedback into the system to rectify any shortcomings. Quality control is also sometimes known as quality assurance or QA.

The criteria you might use for checking the quality of a circuit board are listed below.

Neatness of soldering Top view - circular shape around leg. Side view - 'volcano' shape. Appearance - bright and shiny.

Accuracy of soldering Solder located evenly around component leg. Solder on the pad not along the track. No solder 'stains' or 'dribble' on the printed circuit board (PCB).

Circuit performance The circuit works the way it was intended. The circuit functions consistently over time. The circuit works whilst being shaken.

Product assembly The PCB, parts, and components are secure. There is no overlap of assembled parts. The circuit works even when shaken.

Quality of finish It is a marketable product (ie you might buy it). It is an attractive product. It is well made.

As a systems and control designer you need to be able to devise and apply test procedures to check the quality of your work, as well as identify critical stages of the manufacture for quality checks.

Design SpecificationsA design specification provides explicit information about the requirements for a product and how the product is to be put together. It is the most traditional kind of specification, having been used historically in public contracting for buildings, highways, and other public works, and represents the kind of thinking in which architects and engineers have been trained. Its use is called for where a structure or product has to be specially made to meet a unique need. For example, a design specification must include all necessary drawings, dimensions, environmental factors, ergonomic factors, aesthetic factors, cost, maintenance that will be needed, quality, safety, documentation and description. It also tells specific examples of how the design of the project should be executed, helping others work properly.

Design Specifications describe how a system performs the requirements outlined in the Functional Requirements. Depending on the system, this can include instructions on testing specific requirements, configuration settings, or review of functions or code. All requirements outlined in the functional specification should be addressed; linking requirements between the functional requirements and design specification is performed via the Traceability Matrix.

Design Specification Examples

Good requirements are objective and testable. Design Specifications may include:

Specific inputs, including data types, to be entered into the system Calculations/code used to accomplish defined requirements Outputs generated from the system Explaining technical measures to ensure system security Identify how the system meets applicable regulatory requirements

For more examples and templates, see the FastVal Design Specification Template.

System Requirements and verification of the installation process are usually tested in the Installation Qualification. Input, Processing, Output, and Security testing are usually tested in the Operational Qualification.

Due to the extremely technical nature of most design documents, there is currently some discussion in the industry about who needs to review the Design Specification. The Design Specification is reviewed and approved, at minimum, by the System Owner, System Developer, and Quality Assurance. Quality Assurance signs to ensure that the document complies with appropriate regulations and that all requirements were successfully addressed, but they do not necessarily need to review technical information.

Depending on the size and complexity of the program, the design specification may be combined with the functional requirements document.

Design of Services and Service ProcessService design is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and customers. The purpose of service design methodologies is to design back and front office of services according to the needs of customers and the competences/capabilities of service providers, so that the service is user-friendly, competitive and relevant to the customers, while being sustainable for the service provider. For this purpose service design uses methods and tools derived from different disciplines, from ethnography (Segelström et al., Ylirisku and Buur, 2007, Buur, Binder et al. 2000; Buur and Soendergaard 2000) to information and management science (Morelli, 2006), and interaction design (Holmlid, 2007, Parker and Heapy, 2006). Service design concepts and ideas that are typically portrayed visually, using different representation techniques according to the culture, skills and level of understanding of the stakeholders involved in the service processes (Krucken and Meroni, 2006, Morelli and Tollestrup, 2007). Service design may inform changes to an existing service or creation of new services.

Manufacturing Process Technology

Manufacturing process management (MPM) is a collection of technologies and methods used to define how products are to be manufactured. MPM differs from ERP/MRP which is used to plan the ordering of materials and other resources, set manufacturing schedules, and compile cost data.

A cornerstone of MPM is the central repository for the integration of all these tools and activities aids in the exploration of alternative production line scenarios; making assembly lines more efficient with the aim of reduced lead time to product launch, shorter product times and reduced work in progress (WIP) inventories as well as allowing rapid response to product or product changes.

Quality, Planning and ControlProduct QualityWhat is quality?If a product fulfils the customer’s expectations, the customer will be pleased and consider that the product is of acceptable or even high quality. If his or her expectations are not fulfilled, the customer will consider that the product is of low quality. This means that the quality of a product may be defined as “its ability to fulfil the customer’s needs and expectations”. Quality needs to be defined firstly in terms of parameters or characteristics, which vary from product to product. For example, for a mechanical or electronic product these are performance, reliability, safety and appearance. For pharmaceutical products, parameters such as physical and chemical characteristics, medicinal effect, toxicity, taste and shelf life may be important. For a food product they will include taste, nutritional properties, texture, shelf life and so on.

Product quality

The collection of features and characteristics of a product that contribute to its ability to meet given requirements. Early work in controlling product quality was on creating standards for producing acceptable products. By the mid-1950s, mature methods had evolved for controlling quality, including statistical quality control and statistical process control, utilizing sequential sampling techniques for tracking the mean and variance in process performance. During the 1960s, these methods and techniques were extended to the service industry. During 1960–1980, there was a major shift in world markets, with the position of the United States declining while Japan and Europe experienced substantial growth in international markets. Consumers became more conscious of the cost and quality of products and services. Firms began to focus on total production systems for achieving quality at minimum cost. This trend has continued, and today the goals of quality control are largely driven by consumer concerns and preferences.

There are three views for describing the overall quality of a product. First is the view of the manufacturer, who is primarily concerned with the design, engineering, and manufacturing processes involved in fabricating the product. Quality is measured by the degree of conformance to predetermined specifications and standards, and deviations from these standards can lead to poor quality and low reliability. Efforts for quality improvement are aimed at eliminating defects (components and subsystems that are out of conformance), the need for scrap and rework, and hence overall reductions in production costs. Second is the view of the consumer or user. To consumers, a high-quality product is one that well satisfies their preferences and expectations. This consideration can include a number of characteristics, some of which contribute little or nothing to the functionality of the product but are significant in providing customer satisfaction. A third view relating to quality is to consider the product itself as a system and to incorporate those characteristics that pertain directly to the operation and functionality of the product. This approach should include overlap of the manufacturer and customer views. See Manufacturing engineering

Quality control (QC) is the collection of methods and techniques for ensuring that a product or service is produced and delivered according to given requirements. This includes the development of specifications and standards, performance measures, and tracking procedures, and corrective actions to maintain control. The data collection and analysis functions for quality control involve statistical sampling, estimation of parameters, and construction of various control charts for monitoring the processes in making products. This area of quality control is formally known as statistical process control (SPC) and, along with acceptance sampling, represents the traditional perception of quality management. Statistical process control focuses primarily on the conformance element of quality, and to somewhat less extent on operating performance and durability. See Process control, Quality control

Concurrent engineering, quality function deployment, and total quality management (TQM) are modern management approaches for improving quality through effective planning and integration of design, manufacturing, and materials management functions throughout an organization. Quality improvement programs

typically include goals for reducing warranty claims and associated costs because warranty data directly or indirectly impact most of the product quality dimensions. See Engineering design

Importance of Quality to a CompanyHow to Determine and Improve QualityTotal Quality ManagerQuality Control MethodsStatistical Quality ControlEmployees InvolvementContinuous ImprovementImproving Quality through TQMControl Charts and Acceptance InspectionAccepting Sampling

Unit 4: Job Design and Work MeasurementProduction and Operations StandardsWork MeasurementMethods Analysis

Motion studyMan-machine analysisFlow process charting

Time AnalysisTime studyWork samplingLearning curve analysisConsiderations in Work AnalysisJob descriptionJob specificationHuman factorsEqual employment opportunityAffirmative actionSafety and health considerationsWorking ConditionsIncentive Pay SystemsEmployees Benefits

Health benefitsPayment for time not workedPayment for unusual work hoursPayment for job related costsCompany paid life insuranceLearning Level

Unit 5: Capacity Planning and Facility LocationCapacity Planning EnvironmentDefining And Measuring Capacity

When selecting a measure of capacity, it is best to choose one that doesn't need updating. When dealing with more than one product, it is best to measure capacity in terms of each product. For example, the capacity of a firm is to either produce 100 microwaves or 75 refrigerators. This is less confusing than

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just saying the capacity is 100 or 75. Another method ofmeasuring capacity is by referring to the availability of inputs. Note that one specific measure of capacity can't be used in all situations; it needs to tailored to the specific situation at hand.

Design capacityEffective capacityActual outputWaiting Line ModelsSimulationLocation of FacilityTransportation Methods

Unit 6: Forecasting Demand

What is Forecasting

Forecasting is a decision-making tool used by many businesses to help in budgeting, planning, and estimating future growth. In the simplest terms, forecasting is the attempt to predict future outcomes based on past events and management insight.

There are two forecast types: judgment-based (e.g. “gut feel”) and quantitative (e.g. statistics). The most trustworthy forecasts combine both methods to support their strengths and mitigate their weaknesses.

Judgment Forecasting

Judgment forecasting uses only our intuition and experience. Our minds are able to make connections and understand context in a way that no computer can. However, we’re also prone to certain biases that make analyzing large amounts of data difficult. Judgment forecasting is best where there is little to no historical data- such as new product launches, competitor actions, or new growth plans.

Quantitative Forecasting

Quantitative forecasting uses analytics to analyze large amounts of historical data in order to discern trends and patterns. Quantitative forecasting is excellent at churning through large amounts of data and is less prone to bias. However, it is weakest when there is little to no historical data that can be analyzed. Quantitative forecasting relies, more or less, on identifying repeated patterns in your data so it may take a while to see the same pattern repeat more than once. Combining judgment and quantitative forecasting gets the best results.

Factors that Influence Demand

Even though the focus in economics is on the relationship between the price of a product and how much consumers are willing and able to buy, it is important to examine all of the factors that affect the demand for a good or service.

These factors include:

Price of the Product

There is an inverse (negative) relationship between the price of a product and the amount of that product consumers are willing and able to buy. Consumers want to buy more of a product at a low price and less of a product at a high price. This inverse relationship between price and the amount consumers are willing and able to buy is often referred to as The Law of Demand. 

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The Consumer's Income

The effect that income has on the amount of a product that consumers are willing and able to buy depends on the type of good we're talking about. For most goods, there is a positive (direct) relationship between a consumer's income and the amount of the good that one is willing and able to buy. In other words, for these goods when income rises the demand for the product will increase; when income falls, the demand for the product will decrease. We call these types of goods normal goods.

However, for some goods the effect of a change in income is the reverse. For example, think about a low-quality (high fat-content) ground beef. You might buy this while you are a student, because it is inexpensive relative to other types of meat. But if your income increases enough, you might decide to stop buying this type of meat and instead buy leaner cuts of ground beef, or even give up ground beef entirely in favor of beef tenderloin. If this were the case (that as your income went up, you were willing to buy less high-fat ground beef), there would be an inverse relationship between your income and your demand for this type of meat. We call this type of good an inferior good. There are two important things to keep in mind about inferior goods. They are not necessarily low-quality goods. The term inferior (as we use it in economics) just means that there is an inverse relationship between one's income and the demand for that good. Also, whether a good is normal or inferior may be different from person to person. A product may be a normal good for you, but an inferior good for another person.

The Price of Related Goods

As with income, the effect that this has on the amount that one is willing and able to buy depends on the type of good we're talking about. Think about two goods that are typically consumed together. For example, bagels and cream cheese. We call these types of goods compliments. If the price of a bagel goes up, the Law of Demand tells us that we will be willing/able to buy fewer bagels. But if we want fewer bagels, we will also want to use less cream cheese (since we typically use them together). Therefore, an increase in the price of bagels means we want to purchase less cream cheese. We can summarize this by saying that when two goods are complements, there is an inverse relationship between the price of one good and the demand for the other good.

On the other hand, some goods are considered to be substitutes for one another: you don't consume both of them together, but instead choose to consume one or the other. For example, for some people Coke and Pepsi are substitutes (as with inferior goods, what is a substitute good for one person may not be a substitute for another person). If the price of Coke increases, this may make Pepsi relatively more attractive. The Law of Demand tells us that fewer people will buy Coke; some of these people may decide to switch to Pepsi instead, therefore increasing the amount of Pepsi that people are willing and able to buy. We summarize this by saying that when two goods are substitutes, there is a positive relationship between the price of one good and the demand for the other good.

The Tastes and Preferences of Consumers

This is a less tangible item that still can have a big impact on demand. There are all kinds of things that can change one's tastes or preferences that cause people to want to buy more or less of a product. For example, if a celebrity endorses a new product, this may increase the demand for a product. On the other hand, if a new health study comes out saying something is bad for your health, this may decrease the demand for the product. Another example is that a person may have a higher demand for an umbrella on a rainy day than on a sunny day.

The Consumer's Expectations

It doesn't just matter what is currently going on - one's expectations for the future can also affect how much of a product one is willing and able to buy. For example, if you hear that Apple will soon introduce a new iPod that has more memory and longer battery life, you (and other consumers) may decide to wait to buy an iPod until the new product comes out. When people decide to wait, they are decreasing the current demand for iPods because of what they expect to happen in the future. Similarly, if you expect the price of gasoline to go up tomorrow, you may fill up your car with gas now. So your demand for gas today increased because of what you expect to happen tomorrow. This is similar to what happened after Huricane Katrina hit in the fall of 2005. Rumors started that gas stations would run out of gas. As a result, many consumers decided to fill up their cars (and gas cans), leading to long lines and a big increase in the demand for gas. This was all based on the expectation of what would happen.

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The Number of Consumers in the Market

As more or fewer consumers enter the market this has a direct effect on the amount of a product that consumers (in general) are willing and able to buy. For example, a pizza shop located near a University will have more demand and thus higher sales during the fall and spring semesters. In the summers, when less students are taking classes, the demand for their product will decrease because the number of consumers in the area has significantly decreased.

Types of Forecasting Techniques Least Square Method

Time Series AnalysisTime series analysis: a naïve method of forecasting from past data by using least squares statistical

methods to identify trends, cycles, seasonality and irregular movements. A Time Series is a collection of data

recorded over a period of time. The data may be recorded weekly, monthly, or quarterly. This is one of the most

frequently used forecasting methods. This method attempts to forecast future values of time series by examining

past observations of the data only, on the assumption that the time series will continue to

move in the past pattern.

COMPONENTS OF A TIME SERIES

If we plot most economic time-series data, we discover that they fluctuate or vary over

time.

This variation is usually caused by secular trends, cyclical fluctuations, seasonal variations,

and irregular or random influences. These sources of variation are shown in the above

Figure and are briefly explained below:

1. Secular trend refers to a long-run increase or decrease in the data series (the straight

solid line in the top panel of Figure). For example, many time series of sales shows rising

trends over the years because of population growth and increasing per capita

expenditures. Some, such as typewriters, follow a declining trend as more and more

consumers switch to personal computers and from personal computers to laptops.

2. Cyclical fluctuations are the major expansions and contractions in most economic time series that seem to

recur every several years (the heavy dashed curved line in the top panel of Figure). For example, the housing

construction industry follows long cyclical swings lasting 15 to 20 years, while the automobile industry seems to

follow much shorter cycles.

3. Seasonal variation refers to the regularly recurring fluctuation in economic activity during each year (the

heavy dashed curved line in the bottom panel of Figure) because of weather and social customs. Thus, housing

starts used to be much more common in spring and summer than in autumn and winter (because of weather

conditions), while retail sales are greatest during the second and last quarter of each year because of weather

conditions again. Seasonal variation is a rhythmic annual pattern in sales or profits caused by weather, habit, or

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social custom such as Basant or religious festivities such as Eid-ul-fitr, Eid-ul-Azha and

Ramazan.

4. Irregular or random influences are the variations in .the data series resulting from

wars, natural disasters, strikes, or other unique events. These are shown by the solid line

segments in the bottom panel of Figure.

Moving Average Weighted Moving Average Exponential Smoothing

Regression and CorrelationCoefficient of DeterminationQualitative Techniques for Forecasting

Measures of Forecast ErrorHow computers assist in forecasting

Unit 7: Inventory and Materials ManagementInventory ConceptsInventory CostsInventory Modeling

Classical Inventory ModelProduction Order Quantity ModelABC Inventory Model

Computation of Inventory Order QuantitiesReorder Points and Optimum Number of OrdersAggregate PlanningMaster bill of Materials Planning for Materials NeedsMaterial Requirement Planning Just in Time System Scheduling

Unit 8: Maintenance and Safety ManagementBasic Approaches to MaintenanceFactors Determining the Efficiency and Effectiveness of MaintenancePreventive and Remedial MaintenanceCauses for Component and Equipment FailureMeans and Objectives of Measuring MaintenanceComputation of Estimates of ReliabilityImportance of Safety ConsiderationsMajor Considerations in Setting-up Safety ProgramSafety EngineeringObjectives and Process of Safety Inspection

Accident Frequency Rate, Injury Frequency Rate, and Average Severity Rate

Unit 9: Managing Complex ProjectsManaging ProjectsNetwork Methods (CPM)Probabilistic Time Estimate (PERT)Cost ConsiderationResource LimitationBenefits and Limitations of PERT/CPM Systems

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