Q1.

Explain in detail the various types of plant layout concepts that are available in operations
management. Give examples on where each of these types can be employed respectively. Briefly
explain which layout would be applicable for a Retail store format

Answer
1. Fixed or Position Layout:-
Fixed or position layout is also known as project layout. A typical fixed layout is shown in Fig.
2.1. In this type of layout the major part of an assembly or material remains at a fixed position.
All its accessories, auxiliary material, machinery, equipment needed, tools required and the labor
are brought to the fixed site to work. Thus, the product by virtue of its bulk or weight remains at
one location. Therefore the location of the major assembly, semi assembly component and
material is not disturbed till the product is ready for dispatch. This layout is suitable when one or
a few pieces of an item are to be manufactured and material forming or treating operation
requires only tools or simple machines. This layout is highly preferable when the cost of moving
the major piece of material is high and the responsibility of product quality by one skilled
workman or group of skilled workers is expected. This type of layout is mainly adopted for
extremely large items manufactured in very small quantity such as ships, aero planes, boilers,
reactors etc. It main merit of this layout is the minimum movement of men, material, and tooling
during manufacturing process. This layout is high flexible as the type of product and the related
processes can be easily changed without any change in the layout. The merit and demerit of this
type of layout is given as under.

Merits:-

Its main merits are—

1. Layout is highly flexible for varieties of products having intermittent demand as the type of
product and the related processes can be easily altered without any change in the layout.

2. There is a minimum movement of men, material, and tooling during manufacturing process.

3. The material is drastically reduced.

4. Highly skilled operators are required to complete the work at one point and responsibility for
quality is fixed on one person or the assembly crew.

5. Every personnel of manufacturing team is responsible for quality work for manufacturing the
product.

Demerits:-

The major demerits of this layout are

a. The cost of equipment handling is very high.

b. Labors and equipments are difficult to utilize fully.

c. It is limited to large items only.

Applications:-

This type of layout is mostly adopted for extremely large items manufactured in very small
quantity such as ships, aero planes, aircraft, locomotive, ship assembly shops, shipyards, boilers,
reactors etc.

2. Process or Functional Layout:-

A typical process or functional layout is shown in Fig. 2.2. In this type of layout arrangements of
similar machines, production facilities and manufacturing operations are grouped
together according to their functions. Machine tools of one kind are positioned together so that
all the similar operations are performed always at the same place e.g. all the lathes may be
grouped together for all kinds of turning and threading operations, all drilling machines in one
area for carrying out drilling work, all tapping machines in one area for carrying out tapping
work, all milling machines in one area for carrying out milling work all buffing and
polishing machines at one place for carrying out surface finishing work, and so on. This type of
layout is normally preferred for the industries involved in job order type of production
and manufacturing and/or maintenance activities of non- repetitive type. This layout needs not
to have to be changed every time of the product or component changes. Also the breakdown
of any machine does not affect the production. This type of layout is highly suitable for
batch production.
Merits:-

The major merits of this layout are :

1. There exists a wide flexibility regarding allotment of work to equipment and workers.

2. There is a better utilization of the available equipment.

3. Comparatively less numbers of machines are needed in this layout and hence thus reducing
capital investment.

4. There is an improved product quality, because the supervisors and workers attend to one type
of machines and operations.

5. Varieties of jobs coming as different job orders thus make the work more interesting for the
workers.

6. Workers in one section are not affected by the nature of the operations carried out in another
section. For example, a lathe operator is not affected by the rays of the welding as the two
sections are quite separate.

Demerits:-

The major demerits of this layout are :

1. This layout requires more space in comparison to line or product layout for the same amount
of production.

2. Production control becomes relatively difficult in this layout.

3. Raw material has to travel more which increases material handling and the associated costs.
4. This layout requires more efficient co-ordination and inspections.

5. Increased material handling cost due to more movement of process raw material to various
paths

6. More material in process remains in queue for further operations.

7. Requires large in-process inventory.

8. Completion of same product takes more time.

Application:-

1. This layout is used for batch or moderate production.

2. It specify path for group technology.

3. Line or Product Layout

A typical line or product layout is shown in Fig. 2.3. This layout implies that various
operations on raw material are performed in a sequence and the machines are placed along the
product flow line, i.e., machines are arranged in the sequence in which the raw material will
be operated upon. In this type of layout all the machines are placed in a line according to
the sequence of operations, i.e., each following machine or section is arranged to perform
the next operation to that performed by its preceding machine or section. In this layout
raw material starts from one end of production lines and moves from one machine to next
along a sequential path. Line layout is advantages in the continuous- production system where
the number of end products is small and the parts are highly standardized and interchangeable. It
is suitable for products having steady demand. This layout may have operational
sequence namely forging, turning, drilling, milling, grinding and inspection before the product is
sent to the finished goods store for packing and shipment. This layout is used for mass
production and ensures smooth flow of materials and reduced material handling. Breakdown of
any machine in the line in this layout may result in even stoppage of production.

Merits:-
1. It involves smooth and continuous work flow.

2. It may require less skilled workers

3. It helps in reducing inventory.

4. Production time is reduced in this layout.

5. Better coordination, simple production planning and control are achieved in this layout.

6. For the same amount of production, less space requirements for this layout.

7. Overall processing time of product is very less.

8. This layout involves automatic material handling, lesser material movements and hence leads
to minimum possible cost of manufacturing.

Demerits:-

The major demerits of this layout as compared with process layout are—

1. It is very difficult to increase production beyond the capacities of the production lines.

2. When single inspector has to look after many machines, inspection becomes difficult

3. This layout is very less flexible for product change.

4. The rate or pace rate of working depends upon the output rate of the slowest machine and
hence leading to excessive idle time for other machines if the production line is not adequately
balanced.

5. Machines being put up along the line, more machines of each type have to be installed for
keeping a few as stand by, because if on machine in the line fails, it may lead to shut down of the

Complete production line. That is why the line or product layout involves heavy capital
investments.
Q2.List down briefly the various inventory management techniques prevalent in the industry.
Discuss how some of these techniques would be applicable to a General Store in effective
management of their inventories; i.e. grocery supplies, etc. (assume several inventories of your
choice).

Answer:-

Concept of Inventory Management:-

Inventory management helps companies identify which and how much stock to order at what
time. It tracks inventory from purchase to the sale of goods. The practice identifies and responds
to trends to ensure there’s always enough stock to fulfill customer orders and proper warning of a
shortage. Once sold, inventory becomes revenue. Before it sells, inventory (although reported as
an asset on the balance sheet) ties up cash. Therefore, too much stock costs money and reduces
cash flow. One measurement of good inventory management is inventory turnover. An
accounting measurement, inventory turnover reflects how often stock is sold in a period. A
business does not want more stock than sales. Poor inventory turnover can lead to dead stock, or
unsold stock.

Applications:-

The Inventory Management Techniques:-

 Bulk shipment
 ABC inventory management
 Backordering
  Inventory Cycle counting

1. Bulk Shipments:-

Bulk shipping is the transportation of products in large quantities usually not packed but directly
loaded into a vessel. As such, these products are sent without any protective packaging or
packing, and the object that is transporting them, usually the hold of a ship, acts as the container.
Unlike products that are shipped in individual units, goods that are bulk shipped are transported
in larger units, such as sacks or pallets. There are generally two kinds of products bulk shipped:
solid bulk goods and liquid bulk goods. Solid bulk goods consist of things such as grains,
minerals, and chemicals, as well as things such as salt and wood. Liquid bulk goods are
chemicals or food in liquid form. This can be anything from milk and fruit juices to oil and
natural gas, as well as their derivatives. This can be applied for goods with high customer
demand like grocery supplies.

2. ABC Inventory Management:-

In materials management, ABC analysis is an inventory categorization technique. ABC analysis

divides an inventory into three categories—"A items" with very tight control and accurate
records, "B items" with less tightly controlled and good records, and "C items" with the simplest
controls possible and minimal records. The ABC analysis provides a mechanism for identifying
items that will have a significant impact on overall inventory cost, while also providing a
mechanism for identifying different categories of stock that will require different management
and controls. The ABC analysis suggests that inventories of an organization are not of equal
value. Thus, the inventory is grouped into three categories (A, B, and C) in order of their
estimated importance. 'A' items are very important for an organization. Because of the high value
of these 'A' items, frequent value analysis is required. In addition to that, an organization needs to
choose an appropriate order pattern (e.g. 'just-in-time') to avoid excess capacity. 'B' items are
important, but of course less important than 'A' items and more important than 'C' items.
Therefore, 'B' items are intergroup items. 'C' items are marginally important. Not all products are
of equal value and more attention should be paid to more popular products.
3. Backordering:-

Backordering is the process of allowing your customers to place orders even if you don’t
have sufficient stock on hand. Businesses implement backordering when a sudden increase in
sales means that products are getting sold faster than they can be stocked. It’s a common
practice, used by retailers all over when they’re faced with a surge in demand. The
businesses that use just-in-time inventory management strategy, where the companies only
receive goods when they’re demanded, thereby decreasing inventory holding costs have
items backordered on a regular basis. Therefore they must accurately predict the customer’s
demand within a stipulated amount of time. In such businesses or companies backordering is
an essential and a crucial part in sustaining business operation.
 4. Inventory Cycle Counting:-

In other words, inventory cycle count is a type of sampling technique that allows you to see how
accurately your inventory records match up with what you actually have in stock on the shelves.
Cycle counting is a key part of many businesses’ inventory management practices, as it
ultimately helps ensure that customers can get what they want, when they want it, while keeping
inventory holding costs as low as possible. Cycle counting or involves counting a small amount
of inventory on a specific day without having to do an entire manual stock take. It’s a type of
sampling that allows you to see how accurately your inventory records match up with what you
actually have in stock. Inaccurate inventory counts are one of the key ways companies lose
revenue and sales. It’s also a problem that’s easily solved. When counts are off, it affects your
ability to fulfill orders, provide excellent customer service, and it can lead to things like excess
carrying costs on inventory you don’t need and aren’t likely to sell. Because of this, maintaining
accurate inventory counts should be the goal of every business. Accurate inventory is critical to
sales forecasting, warehouse and returns management, and general logistics. It impacts nearly
every aspect of your business, and the ripple effect of inaccurate counting can affect your
business for years. Today we’ll show you how to take control of your inventory utilizing the
cycle count inventory method. You’ll learn what the cycle count is, how it can improve your
inventory accuracy and the best practices for implementing it.