Source: Adapted from Robert Hayes, Gary Pisano, David Upton, and Steven Wheelwright, Operations Strategy and Technology: Pursuing the Competitive Edge (Hoboken, NJ: 2005), p. 120 - PowerPoint PPT Presentation

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Source: Adapted from Robert Hayes, Gary Pisano, David Upton, and Steven Wheelwright, Operations Strategy and Technology: Pursuing the Competitive Edge (Hoboken, NJ: 2005), p. 120

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Title: Source: Adapted from Robert Hayes, Gary Pisano, David Upton, and Steven Wheelwright, Operations Strategy and Technology: Pursuing the Competitive Edge (Hoboken, NJ: 2005), p. 120


1
  • Source Adapted from Robert Hayes, Gary
    Pisano, David Upton, and Steven Wheelwright,
    Operations Strategy and Technology Pursuing the
    Competitive Edge (Hoboken, NJ 2005), p. 120
  • Source Adapted from R. Chase, N. Aquilano, and
    R. Jacobs, Operations Management for Competitive
    Advantage (New YorkMcGraw-Hill, 2001), p. 210
  • Chase, and Aquilano, Production and Operations
    Management, 7th Edition, McGraw Hill, 1995
  • Vollmann, Berry, and Whybark, Manufacturing
    Planning and Control Systems, 5th Edition,
    McGraw Hill, 2005
  • Tersine, Principles of Inventory and Materials
    Management, 3rd Edition, Elsevier Science
    Publishing, 1988
  • Gaither and Frasier, Operations Management,9th
    Edition, South-Western Publishing, 2002
  • Krajewski and Ritzman, Operations Management,
    6th Edition, Prentice Hall, 2002
  • http//www.vendormanagedinventory.com/setup.htm

2
  • WHY is ______ Successful?
  • DELL,RAHUL SINGH/711, JAPAN, VISHAL
    BAMBANI/WALLLMART,SAMU RAM SANDIL/HP,WAIEL Sony
    Sajid MD/AMAZON.COM,TWARITA NAYAN , NIKET-
    AMUL IS SUCCESSFUL ?
  • AND.
  • WHAT IS THE ROLE OF IT IN SUPPLY CHAIN
    MANAGEMENT? WHAT ARE THE STEPS so that new
    investment in IT is beneficial ( especially in
    Supply Chain Mgmt environment)?
  • Hard Copies
  • 1 week time

3
What is role of supply chain in the success of
the chosen company? 1. Electronic files the
Powerpoint 1 Word file Folder Back up of
internet article/ppt/pdf store in ARC 10 2.
Individual Submit Word file Hard copy
2weeks Date of
Submission 31/ Mar
  • Amway Anuradha
  • VimalJayanta
  • E-bay Nidhi
  • Dell DevikaKaran
  • GailKishore Bhaskar
  • Oriflame AvantikaLoveleenDebayan
  • Percept Picture Company / INOX Arijit
  • AmulGoutam, Amresh, Niket,
  • McDonalds Felix DeepakDebashish
  • NestleKanchanAbhijit
  • Levis Anubha
  • Nike Kushal
  • Adidas MainakAbhishekNag Gautam
  • Café Coffee Day Kaberi

4
What is role of supply chain in the success of
the chosen company? 1. Electronic files
Powerpoint 1 Word file Folder Back up of
internet article/ppt/pdf 2. Submit Word file
Hard copy 2weeks Date of Submission 28/
Mar
  • Ratul Santanu Nano
  • Rohit Sandip DHL/ Fed Express
  • Ranbaxy /Baxter
  • Priya Simran Amway
  • Richa Waiel Walmart,
  • Praveen Sonia Rebok Nike
  • Dell Sarvesh Vishal
  • Coca cola Prashant Vincent

5
  • Evaluation and Grade Sheet

Good....................OK....................
Poor 4 3
2 1 0 Introduction ___
___ ___ ___ ___ Clarity
___ ___ ___ ___
___ Organization ___ ___
___ ___ ___ Professionalism ___
___ ___ ___ ___
Communication ___ ___ ___
___ ___ Conclusion ___
___ ___ ___ ___ Time limits
___ ___ ___ ___
___ Completeness ___ ___ ___
___ ___ Understanding ___
___ ___ ___ ___ Questions
___ ___ ___ ___
___ Oral_Pres_Papers.doc
6
Session-1 Nature and scope of Resources of an
organization Strategic operations
management Introduction to Operations Management
and its role in organization strategy- for
manufacturing and service organization. Session-2
Production Processes, Manufacturing and
Service Operations, Process Planning and Process
Design Understanding the role and characteristics
and nature of product and process planning
7
Session-1 Nature and scope of Resources of an
organization
Rs 1/loaf
Rs 2/loaf
Rs 3/loaf
Rs 1/loaf
Rs 5/loaf
Rs 1/loaf
Rs 14/loaf
8
Session-1 Nature and scope of Resources of an
organization
Inputs
PROCESSES
Outputs
Environment
Machines Men Material
1. Machines
2. Men
3 Key Rsources
3. Materials
9
Session-1 Nature and scope of Resources of an
organization
Inputs
Resources
Outputs
Environment
Machines Men Material
1. Machines
Age, condition, Utilisation rate, Value,
Replacement, Patents, Buildings
Number, skills, Wage Costs, Proportion of total
costs,
2. Men
Source, suppliers, partnering, waste, water
(Energy)
3. Materials
10
Product -
Session-1 Nature and scope of Resources of an
organization -
Inputs
PROCESSES
Outputs
Environment
Machines Men Material
Value Chain
Outputs
Processing
Materials
Flour, yeast,
Bread
Transporting Raw Material
Labels Plastic wrapper sheets
Making a recipe
Baking
Water
Cutting
Energy
Labor
Packing
Men
Building
Labeling Transporting the finished Bread
Machines
Oven Equipment
11
Service
Hospital Process
Inputs
Processing
Outputs
Doctors, nurses Patients
Examination
Healthy patients
Hospital
Surgery
Medical Supplies
Monitoring
Equipment
Medication
Laboratories
Therapy
12
Rs 1/loaf
Rs 2/loaf
Rs 3/loaf
Rs 1/loaf
Rs 5/loaf
Rs 1/loaf
Rs 14/loaf
13
1. Machines
Age, condition, Utilisation rate, Value,
Replacement, Patents, Buildings
Number, skills, Wage Costs, Proportion of total
costs,
2. Men
Source, suppliers, partnering, waste,
3. Materials
How efficient are their activities? Outsourcing,
JIT
4. Methods
Credit and turnover periods, Cash surplus
deficits, Short term finance and long term finance
5. Money
Size, management skills, loyalty, Career
progression, structure
6. Management
Ability to generate and disseminate ideas,
innovation, Information system
7. Management Information
Products and customers
8. Markets
Culture, Structure
9. Make-up
14
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15
Historical Evolution of Operations Management
  • Industrial revolution (1770s)
  • Scientific management (1911)
  • Mass production
  • Interchangeable parts
  • Division of labor
  • Human relations movement (1920-60)
  • Decision models (1915, 1960-70s)
  • Influence of Japanese manufacturers
  • Toyota
  • TQM
  • Major trends
  • The Internet, e-commerce, e-business
  • Management technology
  • Globalization
  • Management of supply chains
  • Agility

16
Session-2 Strategic operations management
Who will get more market share ?
17
Session-2 Strategic operations management
Least Cost strategy producer Differentiation
Strategy Rs 14/loaf as fruit bread Focus
strategy Rs 14/loaf with more hygenically
produced and sold to airlines
3 Types of Competitive strategy
18
Session-2 Strategic operations management
Inputs
Processes
Outputs
Environment
Machines Men Material
Methods
Money
Money
Markets
Management Information
Management
19
Session-2 Production Processes , Process
Planning and Process Design Understanding the
role and characteristics and nature of product
and process planning
  • Strategy
  • an organizations overall approach for physically
    producing goods and services
  • Competitive strategy Differentiation Strategy,
    Cost Strategy, Focus strategy
  • Process
  • a group of related tasks with specific inputs and
    outputs
  • Process design
  • tasks need to be done and coordinated among
    functions, people, and organizations
  • Types of Process design project, batch, mass
    production
  • Capital Requirements for process design
  • high investment or low investment
  • Process planning
  • What is process planning ? converts designs into
    workable instructions for manufacture or delivery
  • How do we do process planning? 3 Process planning
    aids Assembly charts, Operations process charts,
    flow process charts

20
Session-2 Production Processes , Process
Planning and Process Design Understanding the
role and characteristics and nature of product
and process planning
  • Projects
  • one-of-a-kind production of a product to customer
    order
  • Batch production
  • systems process many different jobs through the
    system in groups or batches
  • Mass production
  • produces large volumes of a standard product for
    a mass market
  • Continuous production
  • used for very-high volume commodity products

21
Process Selection with Break-Even Analysis
Session-2 Production Processes , Process
Planning and Process Design Understanding the
role and characteristics and nature of product
and process planning
  • Cost
  • Fixed costs
  • constant regardless of the number of units
    produced
  • Variable costs
  • vary with the volume of units produced
  • Revenue
  • price at which an item is sold
  • Total revenue
  • is price times volume sold
  • Profit
  • difference between total revenue and total cost

22
Process Selection with Break-Even Analysis
Session-2 Production Processes , Process
Planning and Process Design Understanding the
role and characteristics and nature of product
and process planning
Total cost fixed cost total variable cost TC
cf vcv Total revenue volume x price TR
vp Profit total revenue - total cost Z TR
TC vp - (cf vcv)
23
Break-Even Analysis Example
Session-2 Production Processes , Process
Planning and Process Design Understanding the
role and characteristics and nature of product
and process planning
Fixed cost cf Rs 2,000 Variable cost cv
Rs 5 per Loaf Price p Rs10 per loaf
24
Break-Even Analysis Graph
Session-2 Production Processes , Process
Planning and Process Design Understanding the
role and characteristics and nature of product
and process planning
25
Process Selection
Session-2 Production Processes , Process
Planning and Process Design Understanding the
role and characteristics and nature of product
and process planning
Below 2,667, choose A Above 2,667, choose B
26
Process Selection Graph
Session-2 Production Processes , Process
Planning and Process Design Understanding the
role and characteristics and nature of product
and process planning
27
Process Plans
  • Set of documents that detail manufacturing and
    service delivery specifications
  • assembly charts
  • operations sheets
  • quality-control check-sheets

28
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29
(No Transcript)
30
Process Analysis
  • Process flowcharts
  • Symbolic representation of processes
  • Incorporate
  • nonproductive activities (inspection,
    transportation, delay, storage)
  • productive activities (operations)

31
Process Flowchart Symbols
32
Process Flowchart of Apple Processing
33
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34
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35
Session-2 Production Processes , Process
Planning and Process Design Understanding the
role and characteristics and nature of product
and process planning
Cost behaviour operational gearing Operational
Gearing means Ratio of Fixed Costs to Variable
cost
Sales
B E pt
Fixed Cost
Variable Cost
Total Cost
Time
Fixed Costs High
Fixed Costs low
As Machine Investment high, so small investment
in men 2 firms have same breakeven point
Rs
36
Profit zone
Sales

Fixed Cost
Variable Cost
Rs
Total Cost
loss zone
loss zone
Time
Fixed Costs High
Fixed Costs low
As Machine Investment high, so small labour
force 2 firms have same breakeven point
37
What are the supply chain drivers of supply chain
?
What is the fit between supply chain strategy and
competitive strategy ?
25 What is the role of IT in supply chain ?
26 How does E-Business help supply chain?
E-business frame work and B2B addition to the
E-Business
38
Session 3 Production Technology Understanding
automation and mechanization in production
2
Session-4 Objectives and functions of
purchasing, purchasing cycle,
39
Session 3 Production Technology Understanding
automation and mechanization in production
Mission (Objectives) Strategy
1. Machines
2. Men
3. Materials
4. Methods
5. Money
40
Session 3 Production Technology Understanding
automation and mechanization in production
41
Product Technology
  • Computer-aided design (CAD)
  • Group technology (GT)
  • Computer-aided engineering (CAE)
  • Collaborative product commerce (CPC)
  • Creates and communicates designs electronically
  • Classifies designs into families for easy
    retrieval and modification
  • Tests functionality of CAD designs
    electronically
  • Facilitates electronic communication and exchange
    of information among designers and suppliers
  • Product data management (PDM)
  • Product life cycle management (PLC)
  • Product definition
  • Keeps track of design specs and revisions for the
    life of the product
  • Integrates decisions of those involved in
    product development, manufacturing, sales,
    customer service, recycling, and disposal
  • Confines products built by customers who have
    selected among various options, usually from a
    Web site

42
A Technology Primer (cont.)
Process Technology
  • Standard for exchange of product model data
    (STEP)
  • Computer-aided design and manufacture (CAD/CAM)
  • Computer aided process (CAPP)
  • E-procurement
  • Set standards for communication among different
    CAD vendors translates CAD data into
    requirements for automated inspection and
    manufacture
  • Electronic link between automated design (CAD)
    and automated manufacture (CAM)
  • Generates process plans based on database of
    similar requirements
  • Electronic procurement of items from
    e-marketplaces, auctions, or company websites

43
A Technology Primer (cont.)
Manufacturing Technology
  • Computer numerically control (CNC)
  • Flexible manufacturing system (FMS)
  • Robots
  • Conveyors
  • Machines controlled by software code to perform a
    variety of operations with the help of automated
    tool changers also collects processing
    information and quality data
  • A collection of CNC machines connected by an
    automated material handling system to produce a
    wide variety of parts
  • Manipulators that can be programmed to perform
    repetitive tasks more consistent than workers
    but less flexible
  • Fixed-path material handling moves items along a
    belt or overhead chain reads packages and
    diverts them to different directions can be very
    fast

44
A Technology Primer (cont.)
Manufacturing Technology
  • Automatic guided vehicle (AGV)
  • Automated storage and retrieval system (ASRS)
  • Process Control
  • Computer-integrated manufacturing (CIM)
  • A driverless truck that moves material along a
    specified path directed by wire or tape embedded
    in floor or by radio frequencies very flexible
  • An automated warehousesome 26 stores highin
    which items are placed in a carousel-type storage
    system and retrieved by fast-moving stacker
    cranes controlled by computer
  • Continuous monitoring of automated equipment
    makes real-time decisions on ongoing operation,
    maintenance, and quality
  • Automated manufacturing systems integrated
    through computer technology also called
    e-manufacturing

45
A Technology Primer (cont.)
  • Business to Business (B2B)
  • Business to Customer (B2C)
  • Internet
  • Intranet
  • Extranet
  • Electronic transactions between businesses
    usually over the Internet
  • Electronic transactions between businesses and
    their customers usually over the Internet
  • A global information system of computer networks
    that facilitates communication and data transfer
  • Communication networks internal to an
    organization can be password (i.e., firewall)
    protected sites on the Internet
  • Intranets connected to the Internet for shared
    access with select suppliers, customers, and
    trading partners

46
A Technology Primer (cont.)
Information Technology
  • Bar Codes
  • Radio Frequency Identification tags (RFID)
  • Electronic data interchange (EDI)
  • Extensive markup language (XML)
  • Enterprise resource planning (ERP)
  • A series of vertical lines printed on most
    packages that identifies item and other
    information when read by a scanner
  • An integrated circuit embedded in a tag that can
    send and receive information a twenty-first
    century bar code with read/write capabilities
  • A computer-to-computer exchange of business
    documents over a proprietary network very
    expensive and inflexible
  • A programming language that enables computer to
    - computer communication over the Internet by
    tagging data before its is sent
  • Software for managing basic requirements of an
    enterprise, including sales marketing, finance
    and accounting, production materials
    management, and human resources

47
A Technology Primer (cont.)
Information Technology
  • Supply chain management (SCM)
  • Customer relationship management (CRM)
  • Decision support systems (DSS)
  • Expert systems (ES)
  • Artificial intelligence (AI)
  • Software for managing flow of goods and
    information among a network of suppliers,
    manufacturers and distributors
  • Software for managing interactions with customers
    and compiling and analyzing customer data
  • An information system that helps managers make
    decisions includes a quantitative modeling
    component and an interactive component for
    what-if analysis
  • A computer system that uses an expert knowledge
    base to diagnose or solve a problem
  • A field of study that attempts to replicate
    elements of human thought in computer processes
    includes expert systems, genetic algorithms,
    neural networks, and fuzzy logic

48
Session-4 Objectives and functions of
purchasing, purchasing cycle,
Vision Mission Strategy D, C,
F Process Objectives
Decisions in Materials offer maximum Scope for
cost reduction strategy in traditional
manufacturing firms
1. Machines
2. Men
3. Materials
4. Methods
5. Money
49
Session-4 Objectives and functions of
purchasing, purchasing cycle,
Vision Mission Strategy D, C, F Objectives
Materials Maximum Scope for cost reduction
1. Machines
Pay reasonably low prices
Recruit and develop people of Purchase
department Develop co-ordination with Production
and other departments
2. Men
Develop source of supply ( long term contracts
with single source) Locate new materials for
production and packaging Keep low inventories but
no stockouts Rate the suppliers ( good/ bad,
partnering) based on Rt quality, Rt qty, Rt
delivery date
3. Materials
How efficient are their activities? Outsourcing,
JIT
4. Methods
Credit and turnover periods, As per Material
budget,
5. Money
50
Session-4 Objectives and functions of
purchasing, purchasing cycle,
Objectives
Men in the department function
1. Machines
Pay reasonably low prices
Obtain reasonably low prices Select and train
Select vendors Award purchase orders to
vendors Follow up on deliveries Adjust and
settle complaints
Recruit and develop people Develop co-ordination
with Production and other departments Inform Top
management how to reduce cost
2. Men
Develop source of supply, Locate new materials
for production and packaging Keep low inventories
but no stockouts Rate the suppliers ( good/ bad,
partnering) based on Rt quality, Rt qty, Rt
delivery date
3. Materials
How efficient are their activities? Outsourcing,
JIT
4. Methods
Credit and turnover periods, As per Material
budget,
5. Money
51
Session-4 Objectives and functions of
purchasing, purchasing cycle,
1.Recognition of Need
2.Description of Need
3.Select suitable source
5. Prepare purchase order and send to supplier
6. Supplier sends acceptance of supply order
7. Follow up to ensure timely delivery
8. Checking and approving the invoice for
payment, Final payment
52
Store department raises a Bill of Materials
Session-4 Objectives and functions of
purchasing, purchasing cycle,
User department Raise a purchase requisition
1.Recognition of Need
2.Description of Need
3.Select suitable source
  • A listing of all raw materials, parts,
    subassemblies, and assemblies needed to produce
    one unit
  • Product structure Tree with 3 levels

Level
5. Prepare purchase order and send to supplier
0
X
6. Supplier sends acceptance of supply order
C
B(2)
1
7. Follow up to ensure timely delivery
F(2)
E(2)
E
D(3)
2
8. Checking and approving the invoice for
payment, Final payment
53
Session-4 Objectives and functions of
purchasing, purchasing cycle,
1.Recognition of Need
2.Description of Need
3.Select suitable source
5. Prepare purchase order and send to supplier
6. Supplier sends acceptance of supply order
7. Follow up to ensure timely delivery
8. Checking and approving the invoice for
payment, Final payment
54
Session-4 Objectives and functions of
purchasing, purchasing cycle,
Group Exercise
1.Recognition of Need
2.Description of Need
3.Select suitable source
Calculate the Vendor rating.
C
A
B
Suppliers data Quantity Supplied Quantity
accepted Price of each item Delivery
promised Delivery actually made
5. Prepare purchase order and send to supplier
100
100
100
78
70
80
6. Supplier sends acceptance of supply order
Rs 4 Rs 4.2 Rs 3.9
6 weeks
6 weeks
6 weeks
7. Follow up to ensure timely delivery
6.2 weeks
7 weeks
8 weeks
8. Checking and approving the invoice for
payment, Final payment
Vendor Rating 70 X Quality 20 X Price
10 X Delivery
55
Session-4 Objectives and functions of
purchasing, purchasing cycle,
Group Exercise
1.Recognition of Need
2.Description of Need
3.Select suitable source
Calculate the Vendor rating.
C
A
B
Suppliers data Quantity Supplied Quantity
accepted Price of each item Delivery
promised Delivery actually made
5. Prepare purchase order and send to supplier
100
100
100
78
70
80
6. Supplier sends acceptance of supply order
Quality
0.78
0.8
0.7
7. Follow up to ensure timely delivery
Rs 4 Rs 4.2 Rs 3.9
Price
4/ 3.9
4.2/ 3.9
1.0
6 weeks
6 weeks
6 weeks
8. Checking and approving the invoice for
payment, Final payment
6.2 weeks
7 weeks
8 weeks
Delivery
6/8
6/6.2
6/7
Vendor Rating 70 X Quality 20 X Price
10 X Delivery
56
Session-5 Plant Layout / Facilities
layout Understanding the basic infrastructure
decisions of Operations Management.
Session-6 Types of layouts, special arrangements
for particular types of plants /
facilities Understanding the choice of layouts
for operations.
57
McDonalds - New Kitchen Layout
Session-5 Plant Layout / Facilities
layout Understanding the basic infrastructure
decisions of Operations Management.
  • Major innovation - kitchen design
  • No food prepared ahead except patty
  • Elimination of some steps, shortening of others
  • New bun toasting machine (11 seconds vs 30
    seconds)
  • Repositioning condiment containers (one motion,
    not two)
  • Sandwiches assembled in order
  • Production levels controlled by computer
  • Discard only meat when sandwiches do not sell
    fast enough
  • Savings of 100,000,000 per year in food costs

58
Session-5 Plant Layout / Facilities
layout Understanding the basic infrastructure
decisions of Operations Management.
Vision Mission Strategy D, C, F Objectives
Decisions in Layout for cost reduction
strategy Efficient flow of management
information, material, men
1. Machines
After
Before
2. Men
3. Materials
4. Methods
59
Session-5 Plant Layout / Facilities layout
-Services Understanding the basic infrastructure
decisions of Operations Management.
Vision Mission Strategy D, C, F Objectives
Class Work
IT Hardware
Hospital
Retail
Decisions in Layout for cost reduction strategy
Increases availability of goods -gt Increase of
sale ( Impulse purchase) Increase sale by
exposing customers to high margin goods
1. Markets (customers)
Improves employee morale safety
2. Men
3. Materials
Reduces in-house transportation costs Reduce
in-factory transportation time Reduces material
storage costs Reduce delays and wastes in process
4. Methods
5. Management Information
Efficient flow of information, material,
people
Utilization of space, Machine (equipment) Men
60
Session-5 Plant Layout / Facilities
layout Understanding the basic infrastructure
decisions of Operations Management.
61
Retail/Service Layout
Session-5 Plant Layout / Facilities
layout Understanding the basic infrastructure
decisions of Operations Management.
  • Design maximizes product exposure to customers
  • Decision variables
  • Store flow pattern
  • Allocation of (shelf) space to products
  • Types
  • Grid design
  • Free-flow design

62
Retail Layouts - Some Rules of Thumb
Session-5 Plant Layout / Facilities
layout Understanding the basic infrastructure
decisions of Operations Management.
Visit a retail unit, provide examples of
instances in which these rules were implemented ?
  • Locate high-draw items around the periphery of
    the store
  • Use prominent locations such as the first or last
    aisle for high-impulse and high margin items
  • Remove crossover aisles that allow customers the
    opportunity to move between aisles
  • Distribute what are known in the trade as power
    items (items that may dominate a shopping trip)
    to both sides of an aisle, and disperse them to
    increase the viewing of other items
  • Use end aisle locations because they have a very
    high exposure rate

63
Retail /Service Layout -Grid Design
Session-5 Plant Layout / Facilities
layout Understanding the basic infrastructure
decisions of Operations Management.
64
Store Layout - with Dairy, Bread, High Drawer
Items in Corners
65
Identify differences between Grid layout 1 and
Free flow layout 2.
66
Retail Store Shelf Space Planogram
67
Hospital Emergency Room Layout
Session-5 Plant Layout / Facilities
layout Understanding the basic infrastructure
decisions of Operations Management.
evaluate alternative layouts for an emergency
room. Perhaps a visit to view a local emergency
room might be helpful.
68
Hospital Emergency Room ( ER)Layout
Session-5 Plant Layout / Facilities
layout Understanding the basic infrastructure
decisions of Operations Management.
69
An Assembly Line Layout
Session-6 Types of layouts, special arrangements
for particular types of plants /
facilities Understanding the choice of layouts
for operations.
70
Repetitive Layout
Session-6 Types of layouts, special arrangements
for particular types of plants /
facilities Understanding the choice of layouts
for operations.
71
Office Layout Floor Plan
Session-6 Types of layouts, special arrangements
for particular types of plants /
facilities Understanding the choice of layouts
for operations.
72
Session-6 Types of layouts, special arrangements
for particular types of plants /
facilities Understanding the choice of layouts
for operations.
Types of layouts
Variability in Service Require-ments
Degree of Contact with Customer
73
A Absolutely necessary E Especially
important I Important O Okay U
Unimportant X Undesirable
Production
Offices
Stockroom
Shipping and receiving
Locker room
Toolroom
A
A
E
I
O
Production
O
U
U
X
Offices
A
O
U
Stockroom
U
Shipping and receiving
O
Locker room
O
Toolroom
74
Relationship Diagramming Example
A Absolutely necessary E Especially
important I Important O Okay U
Unimportant X Undesirable
75
Relationship Diagrams Example (cont.)
76
Relationship Diagrams Example (cont.)
A Absolutely necessary E Especially
important I Important O Okay U
Unimportant X Undesirable
(a) Relationship diagram of original layout
(b) Relationship diagram of revised layout
Key A E I O U X
77
Session-7 Production Planning and Control (PPC),
Role, importance, benefits, objectives and
functions. Understanding the need and importance
of management in production Nature and method of
production and planning. Session-8 Resource
Requirement Planning (RRP) Nature and various
systems for RRP ERP and MRP I II systems used
for Resource Requirement Planning
78
Session-7 Production Planning and Control (PPC),
Role, importance, benefits, objectives and
functions.Understanding the need and importance
of management in production Nature and method of
production and planning.
Vision Mission Strategy D, C, F Objectives
IT Hardware
Hospital
Retail
Decisions in Planning - Level production or
Chase Demand
1. Markets (customers)
Demand
Production
2. Men
Units
3. Materials
4. Machine
5. Management Information
Time
6. Management
79
Session-7 Production Planning and Control (PPC),
Role, importance, benefits, objectives and
functions. Understanding the need and importance
of management in production Nature and method of
production and planning.
External to firm
Planning for production
Internal to firm
80
Session-7 Production Planning and Control (PPC),
Role, importance, benefits, objectives and
functions. Understanding the need and importance
of management in production Nature and method of
production and planning.
Vision Mission Strategy D, C, F Objectives
P, Q, C, D, S, M
Decisions in Planning
Benefits
Offers advantage over competitors
1. Markets (customers)
1. Balanced production, Productivity improves
Production / Operations Planners
Mktg Dept
Purchase Dept
2. Men
3. Materials
Mkt research
2. Balanced quality of inventory of RM, WIP and FG
Product Planning System
Production Planning
3. Cost reduction through Inventory Cost, setup
cost, indirect costs
4. Methods
Process Planning System
5. Management Information
4. Reliable Delivery (in qty, quality, time)
Production Control
5.Safety of people, 6.Morale goes up
81
Session-7 Production Planning and Control (PPC),
Role, importance, benefits, objectives and
functions. Understanding the need and importance
of management in production Nature and method of
production and planning.
Vision Mission Strategy D, C, F Objectives
P, Q, C, D, S, M
PPC Objectives
Resources
1. Machines
Productivity Maximum productivity of all
resources- 9 Ms Improve Productivity Output
per m/c Improve Manpower
productivity Output per person Quality Reduce
reject incoming RM Reduce rejects in WIP Reduce
rejects in FGs Reduce wastage, scrap
in-transport to market Cost Measure the cost of
wastage Aim for least total cost in the chain of
RM to Market least inventory cost Delivery Ensure
delivery dates are met Safety Aim for
safety for people i.e no accidents
Aim for safety of papers/ old financial
records Morale Improve job satisfaction
No of hours of training, No of hours of
entertainment paid leaves,
incentive No of new ideas for
improving the business
2. Men
3. Materials
4. Methods
5. Money 6. Management Information 7.
Management 8. Markets 9. Make up
82
Session-7 Production Planning and Control (PPC),
Role, importance, benefits, objectives and
functions. Understanding the need and importance
of management in production Nature and method of
production and planning.
Vision Mission Strategy D, C, F Objectives
Class Work
How do you plan for goods / services in your
company?
IT Hardware
Hospital
Retail
Decisions in Planning
Production / Operations Planners
Mktg Dept
Purchase Dept
Mkt research
Get Firm orders from Mktg
Production Control
Production Planning
Estimating Routing Scheduling Loading
Dispatching Expediting, follow up, check
progress Evaluate and Correct
83
Example
Marketing department has given the following
demand for 1 year.
U can choose to produce for 1 year at fixed level
of average demand with 100 people Or Chase
demand by hiring workmen when demand is more than
what can be produced by 100 workmen and
terminating when demand is less than what can be
produced by 100 workmen
Cost of Hiring a worker Rs 100 per worker
Cost of terminating Rs 500 per
worker Regular production cost per bag
Rs 2.00 Inventory
carrying cost Rs 0.50 per quarter
Production per employee 1,000 bags per
quarter Beginning
work force 100 workers
Which choice is cost effective? Produce at
fixed level of avg demand Or Chase demand by
hiring and firing
Produce at fixed level of avg demand
Chase demand by hiring and terminating the workmen
Spring 80,000 Summer 50,000 Fall 120,000 Win
ter 150,000 100,000
Spring 80,000 80,000 Summer 50,000 50,000 Fall 1
20,000 120,000 Winter 150,000 150,000
84
Level Production Strategy
85
Chase Demand Strategy
SALES PRODUCTION WORKERS WORKERS WORKERS QUARTER
FORECAST PLAN NEEDED HIRED Terminated
Spring 80,000 80,000 80 0 20 Summer 50,000 50,000
50 0 30 Fall 120,000 120,000 120 70 0 Winter 150,
000 150,000 150 30 0 100 50
Cost of Chase Demand Strategy (400,000 X Rs2.00)
(100 x Rs100) (50 x Rs500) Rs 835,000
86
Mixed Strategy
  • Combination of Level Production and Chase Demand
    strategies
  • Examples of management policies
  • no more than x of the workforce can be laid off
    in one quarter
  • inventory levels cannot exceed x dollars
  • Many industries may simply shut down
    manufacturing during the low demand season and
    schedule employee vacations during that time

87
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88
Session-7 Production Planning and Control (PPC),
Role, importance, benefits, objectives and
functions. Understanding the need and importance
of management in production Nature and method of
production and planning.
Vision Mission Strategy D, C, F Objectives
Class Work
IT Hardware
Hospital
Retail
Decisions in Planning level production or Chase
demand
1. Markets (customers)
Build demand into in period of low demands by
Incentives, Sales promotions, Advertising
campaigns
Add men / reduce manpower to meet demand Or Keep
manpower same, if possible - Overtime
2. Men
3. Materials
Build supplier partnership to reduce information
distortion along the supply chain
Add machine to meet demand Or Add vendors if
possible or Overtime on m/c if not working 3
shifts
4. Machine
5. Management Information
6. Management
89
Session-8 Resource Requirement Planning
(RRP) Nature and various systems for RRP ERP and
MRP I II systems used for Resource Requirement
Planning
  • Resource Requirement Planning (RRP) is
    Enterprise Resource Planning system based on 3
    systems master production schedules, Material
    requirement planning and capacity requirement
    planning.

Resource Requirement Planning (RRP)
Outputs Resource Requirement Planning
Inputs
Marketing Give short range Demand forecast
Master Production Schedule (MPS)
Production schedule- what month to produce what
item. Manpower schedule what month what
manpower Raw material Orders planned to be
released Raw Material/ Inventory status
(Beginning of period)
Finance Determine cash Availability
Material Requirement Planning (MRP)
Production Give production capacity Give norms
for inventory
Purchase Give production capacity Give norms for
inventory
Capacity Requirement Planning (CRP)
Engineering Specification of product
HR Availability of people
90
Session-8 Resource Requirement Planning
(RRP) Nature and various systems for RRP ERP and
MRP I II systems used for Resource Requirement
Planning
91
MRP Material Resources Planning
  • Computerized inventory control and production
    planning system
  • When to use MRP?
  • Dependent demand items
  • Discrete demand items ( not continuous demand)
  • Complex products
  • Assemble-to-order environments

92
Materials requirements planning (MRP) is a means
for determining the number of parts, components,
and materials needed to produce a product MRP
provides time scheduling information specifying
when each of the materials, parts, and components
should be ordered or produced MRP is a software
93
Class Work
What is the Material requirement plan for the
bag?
Lead Times A 1 day B 2 days C 1 day D 3
days E 4 days F 1 day
Total Unit Demand Day 10 50 A Day 8 20 B
(Spares) Day 6 15 D (Spares)
94
Example of MRP Logic and Product Structure Tree
Given the product structure tree for A and the
lead time and demand information below, provide a
materials requirements plan that defines the
number of units of each component and when they
will be needed
Product Structure Tree for Assembly A
Lead Times A 1 day B 2 days C 1 day D 3
days E 4 days F 1 day
Total Unit Demand Day 10 50 A Day 8 20 B
(Spares) Day 6 15 D (Spares)
95
First, the number of units of A are scheduled
backwards to allow for their lead time. So, in
the materials requirement plan below, we have to
place an order for 50 units of A on the 9th day
to receive them on day 10.
Lead Times A 1 day B 2 days C 1 day D 3
days E 4 days F 1 day
Total Unit Demand Day 10 50 A Day 8 20 B
(Spares) Day 6 15 D (Spares)
96
Next, we need to start scheduling the components
that make up A. In the case of component B
we need 4 Bs for each A. Since we need 50 As,
that means 200 Bs. And again, we back the
schedule up for the necessary 2 days of lead time.
Lead Times A 1 day B 2 days C 1 day D 3
days E 4 days F 1 day
97
97
Finally, repeating the process for all
components, we have the final materials
requirements plan
Lead Times A 1 day B 2 days C 1 day D 3
days E 4 days F 1 day
Total Unit Demand Day 10 50 A Day 8 20 B
(Spares) Day 6 15 D (Spares)
98
Example of Time Fences
  • Frozen
  • No schedule changes allowed within this window
  • Moderately Firm
  • Specific changes allowed within product groups as
    long as parts are available
  • Flexible
  • Significant variation allowed as long as overall
    capacity requirements remain at the same levels

99
MRP Example
Requirements include 95 units (80 firm orders and
15 forecast) of X in week 10
100
X
It takes 2 As for each X
A(2)
101
X
B(1)
A(2)
It takes 1 B for each X
102
X
A(2)
B(1)
C(3)
It takes 3 Cs for each A
103
X
A(2)
B(1)
C(2)
C(3)
It takes 2 Cs for each B
104
X
A(2)
B(1)
D(5)
C(2)
C(3)
It takes 5 Ds for each B
105
MRP Scheduling Terms
  • Gross Requirements Total expected demand
  • Scheduled receipts Open orders scheduled to
    arrive
  • Planned on hand Expected inventory on hand at
    the beginning of each time period
  • Projected available balance how many items
    available at the start of plan
  • Net requirements Actual amount needed in each
    time period
  • Planned order receipt Quantity expected to
    received at the beginning of the period, keeping
    in mind the lead time
  • Planned order release Planned amount to order
    in each time period

106
Closed Loop MRP
Master Production Scheduling Material
Requirements Planning Capacity Requirements
Planning
107
Session-8 Resource Requirement Planning
(RRP) Nature and various systems for RRP ERP and
MRP I II systems used for Resource Requirement
Planning
Material Requirement Planning Plan for
dependent demand items.
MRP I systems
MRP II systems
Set of computer programs Goal Plan and monitor
all resources of a manufacturing firm (closed
loop) manufacturing marketing finance enginee
ring Simulate the manufacturing system
Set of computer programs Goal Plan and monitor
few critical resources of a manufacturing firm
1. Order planning and Control 2.
Priority planning and control 3. Planning
capacity Does not include marketing finance e
ngineering
108
Session-9 Aggregate Planning, Nature and
objective, Operations Planning and Scheduling
System, Need and steps in aggregate capacity
planning, Approaches to aggregate planning,
Master Production Schedule, The role of aggregate
planning in supply chain, Identify the types of
decisions that are best solved by aggregate
planning and its role in supply chain. Session-10
Benefits and Limitations of PPC, Effectiveness
of PPC, PPC is different production system,
Understand the role of PPC.
109
Session-9 Aggregate Planning, Nature and
objective, Operations Planning and Scheduling
System
Forecast Horizon Time Span Item Being Forecast Units of Measure
Long-Range DCF Years Product lines Factory capacities Planning for new products Capital expenditures Facility location or expansion RD Rs, tons, etc.
Medium-Range Lowest cost 3 Months -1 year Product groups Department capacities Sales planning Production planning and budgeting Rs, tons, etc.
Short-Range Weeks Specific product quantities Machine capacities Planning Purchasing Scheduling Workforce levels Production levels Job assignments Physical units of products
Aggregate Planning
Objective of aggregate planning is to develop
plans that are feasible to meet demand within
financial constraints.
110
Session-9 Aggregate Planning, Nature and
objective, Operations Planning and Scheduling
System
  • Main objective Specify the optimal combination
    of
  • production rate (units completed per month or
    week ) for example
  • Jan Feb March April May June
  • 1000 1200 1250 2000 1500 1200
  • workforce level (number of workers)
  • inventory on hand (inventory carried from
    previous period)
  • so that cost being least.
  • This planning is done over an intermediate-range
    planning period of 3 to 18 months

111
Balancing Aggregate Demand and Aggregate
Production Capacity
Session-9 Aggregate Planning, Nature and
objective, Operations Planning and Scheduling
System
10000
Suppose the figure to the right represents
forecast demand in units
10000
8000
8000
7000
6000
5500
6000
4500
4000
2000
0
Now suppose this lower figure represents the
aggregate capacity of the company to meet demand
Jan
Feb
Mar
Apr
May
Jun
forecast demand
9000
10000
8000
8000
6000
6000
4000
4500
4000
What we want to do is balance out the production
rate, workforce levels, and inventory to make an
aggregate plan for 6 months.
4000
2000
0
Jan
Feb
Mar
Apr
May
Jun
aggregate capacity
112
Aggregate Planning Examples Unit Demand and Cost
Data
Suppose we have the following unit demand and
cost information
Demand/mo Jan Feb Mar Apr May Jun 4500 5500 7000
10000 8000 6000
Materials Rs 5/unit Holding costs Rs 1/unit
per mo. Marginal cost of stockout Rs 1.25/unit
per mo. Hiring and training cost Rs
200/worker Layoff costs Rs 250/worker Labor
hours required .15 hrs/unit Straight time labor
cost Rs 8/hour Beginning inventory 250
units Productive hours/worker/day 7.25 Paid
straight hrs/day 8
113
Cut-and-Try Example Determining Straight Labor
Costs and Output
Given the demand and cost information below,
what are the aggregate hours/worker/month,
units/worker, and Rs /worker?
Demand/mo Jan Feb Mar Apr May Jun 4500 5500 7000
10000 8000 6000
7.25 hrs/dayx22
Productive hours/worker/day 7.25 Paid straight
hrs/day 8
7.25x0.1548.33 units /day 48.33x221063.33
22x8hrsxRs 8Rs1408
114
Below are the complete calculations for the
remaining months in the six month planning horizon
115
Chase Strategy (Hiring Firing to meet demand)
Lets assume our current workforce is 7 workers.
116
Below are the complete calculations for the
remaining months in the six month planning
horizon with the other costs included
117
Level Workforce Strategy (Surplus and Shortage
Allowed)
Lets take the same problem as before but this
time use the Level Workforce strategy
This time we will seek to use a workforce level
of 6 workers
118
Below are the complete calculations for the
remaining months in the six month planning horizon
Note, if we recalculate this sheet with 7 workers
we would have a surplus
119
Below are the complete calculations for the
remaining months in the six month planning
horizon with the other costs included
Note, total costs under this strategy are less
than Chase at Rs 260.408.62
120
Session-9 Aggregate Planning, Nature and
objective, Master Production Scheduling (MPS)
System
Resource Requirement Planning (RRP)
Time schedule for items promised to customer /
marketing department ( In Jan , mktg has given 6
months demand)
Master Production Schedule (MPS)
Demand/mth Jan Feb Mar Apr May Jun 450 550
700 1000 800 600
Material Requirement Planning (MRP)
Concept of Time fence ( could be month or 1
week)
Demand/mth Jan Feb Mar Apr May Jun 08
jul aug 450 550 700 1000 800 600
1000 1000 1000
Capacity Requirement Planning (CRP)
In the beginning of Jan, we are planning for 6
months,
Frozen demand , Moderately Firm Demand, flexible
demand and open demand
Frozen demand No schedule changes allowed within
this window of 1 month (or 1 week) Moderately
Firm Specific changes allowed within product
groups as long as parts are available Flexible
demand Significant variation allowed as long as
overall capacity requirements remain at the same
levels.
121
Session-9 The role of aggregate planning in
supply chain, Identify the types of decisions
that are best solved by aggregate planning and
its role in supply chain.
P, Q, C, D, S, M
Aggregate planning
Organisational Objectives
Resource Requirement Planning (RRP)
Productivity Maximum productivity of all
resources- 9 Ms Improve Productivity Output
per m/c Improve Manpower
productivity Output per person Quality Reduce
reject incoming RM Reduce rejects in WIP Reduce
rejects in FGs Reduce wastage, scrap
in-transport to market Cost Measure the cost of
wastage Aim for least total cost in the chain of
RM to Market least inventory cost Delivery Plan
for firm demand Flexibility for demand over
time fence Ensure delivery dates are met
Plan for Raw Materials Safety Aim
for safety i.e no accidents Morale Improve job
satisfaction
Master Production Schedule (MPS)
Material Requirement Planning (MRP)
Capacity Requirement Planning (CRP)
122
Session-10 Benefits and Limitations of PPC,
Effectiveness of PPC, PPC is different production
system, Understand the role of PPC
Vision Mission Strategy D, C, F Objectives
P, Q, C, D, S, M
PPC Benefits
Resources
1. Machines
Improved Productivity Maximum productivity of
all resources- 9 Ms Improve Productivity
Output per m/c Improve Manpower
productivity Output per person Higher
Quality Reduce reject incoming RM Reduce
rejects in WIP Reduce rejects in FGs Reduce
wastage, scrap in-transport to market Lower Cost
Aim for least total cost in the chain of RM to
Market Reduced inventory leading to least
inventory cost On time Delivery Ensure delivery
dates are met Reduced
manufacturing cycle time. Safety Aim for
safety i.e no accidents Morale Improve job
satisfaction
2. Men
3. Materials
4. Methods
5. Money 6. Management Information 7.
Management 8. Markets 9. Make up
123
Session-10 Benefits and Limitations of PPC,
Effectiveness of PPC, PPC is different production
system, Understand the role of PPC
Vision Mission Strategy D, C, F Objectives
P, Q, C, D, S, M
Limitations
Resources
1. Machines
Based on assumptions of forecast of demand, plant
capacity, availability of Raw Material. If
assumptions go wrong, PPC is in
effective. Productivity standards may be set by
management but workmen may say that these norms
are too tough or wage needs to be increased. Low
morale may lead to poor quality , low safety and
delivery and higher costs. When external factors
change rapidly PPC is ineffective. 1. technology
changes 2. Customer taste changes so demand
changes 3. Government policy changes
4. Suppliers negotiating power increases
5. rivalry in firms
2. Men
3. Materials
4. Methods
5. Money 6. Management Information 7.
Management 8. Markets 9. Make up
124
Session-10 Benefits and Limitations of PPC,
Effectiveness of PPC, PPC in different production
system, Understand the role of PPC
Vision Mission Strategy D, C, F Objectives
P, Q, C, D, S, M
PPC Effectiveness
Resources
1. Machines
Improved Productivity Reduction in overtime
hours worked Improve Productivity Output
per m/c Improve Manpower
productivity Output per person Higher
Quality Reduce reject incoming RM Reduce
rejects in WIP Reduce rejects in FGs Reduce
wastage, scrap in-transport to market Lower Cost
Reduced inventory leading to least inventory
cost Value of obsolete inventory, value of non-
moving inventory On time Delivery Ensure
delivery dates are met, reduction in late
Reduced manufacturing cycle time.
Safety Aim for safety i.e no
accidents Morale Improve job satisfaction
2. Men
3. Materials
4. Methods
5. Money 6. Management Information 7.
Management 8. Markets 9. Make up
125
Session-10 Benefits and Limitations of PPC,
Effectiveness of PPC, PPC in different production
system, Understand the role of PPC
Production Planning Control in Job production
Production Planning Control in Batch
production
Production Planning Control in Continuous
production
Production Planning Control in Process
Industry
Vision Mission Strategy D, C, F Objectives
JOB
BATCH
CONT.
Process
  • Type of product

Unique e.g Shipbuilding
Made-to- order (customized)
Made-to- stock (standardized )
Commodity e.g Cement
Type of customer
One-at-a-time
Few individual customers
Mass market
Mass market
Product demand
Infrequent
Fluctuates
Stable
stable
Production Planning Control
Relatively Tough Routing is not
automatic. Scheduling is tough
Routing is automatic. Scheduling is easy
Relatively Simple Routing is automatic. Schedulin
g is easy
126
Session-10 Benefits and Limitations of PPC,
Effectiveness of PPC, PPC in different production
system, Understand the role of PPC
Production Planning Control in Job production
Production Planning Control in Batch
production
Production Planning Control in Continuous
production
Production Planning Control in Process
Industry
Examples
Construction, shipbuilding, spacecraft
Machine shops, print shops, bakeries, education
Automobiles, televisions, computers, fast food
Paint, chemicals, foodstuffs
MPS (Master Production Schedule)
Maintain flow of work at a pre-determined rate
Maintain flow of work as a project
Lot of effort before production planning to
design flow of work
Flow of work as per demand
Material Requirement Planning Dispatching
Issue of repetitive orders
Slow but detailed quality
Issue of repetitive orders
Once in while Demand leads to non Uniform
dispatching
127
Session 11 Process and Process Quality, Quality
Control and TQM, Inventory Management and Control
factors, benefits and process. Understanding of
complementing areas of Operations
Management Session 12 Nature and importance of
productivity, Methods of improving of
productivity Understanding the role and
importance of Human as a resource in Operation
Management.
128
Session 11 Process and Process Quality, Quality
Control and TQM, Inventory Management and Control
factors, benefits and process. Understanding of
complementing areas of Operations Management
  • Process Analysis
  • Process Flowcharting
  • Types of Processes
  • Process Performance Metrics

129
Process Analysis Terms
  • Process Is any part of an organization that
    takes inputs and transforms them into outputs.
  • Cycle Time Is the average successive time
    between completions of successive units.
  • Utilization Is the ratio of the time that a
    resource is actually activated relative to the
    time that it is available for use.

130
Process Performance Metrics
  • Operation time Setup time
  • Run time
  • Throughput time Average time for a unit
    to move through the system
  • Velocity Throughput time
  • Value-added time

131
Process Performance Metrics
  • Cycle time Average time between completion
    of units
  • Throughput rate 1 .
  • Cycle time
  • Efficiency Actual output
  • Standard Output

132
Process Performance Metrics
  • Productivity Output
  • Input

133
Cycle Time Example
  • Suppose you had to produce 600 units in 80 hours
    to meet the demand requirements of a product.
    What is the cycle time to meet this demand
    requirement?
  • Answer There are 4,800 minutes (60 minutes/hour
    x 80 hours) in 80 hours. So the average time
    between completions would have to be Cycle time
    4,800/600 units 8 minutes.

134
Session 11 Process and Process Quality,
Quality Control and TQM, Inventory Management
and Control factors, benefits and process,
Understanding of complementing areas of
Operations Management
  • Websters Dictionary
  • degree of excellence of a thing
  • American Society for Quality
  • totality of features and characteristics that
    satisfy needs
  • Consumers and producers perspective

135
Meaning of Quality
136
Total Quality Management
  • Commitment to quality throughout organization
  • Principles of TQM
  • Customer-oriented
  • Leadership
  • Strategic planning
  • Employee responsibility
  • Continuous improvement
  • Cooperation
  • Statistical methods
  • Training and education

137
Demings 14 Points
  1. Create constancy of purpose
  2. Adopt philosophy of prevention
  3. Cease mass inspection
  4. Select a few suppliers based on quality
  5. Constantly improve system and workers

138
Demings 14 Points (cont.)
  1. Institute worker training
  2. Instill leadership among supervisors
  3. Eliminate fear among employees
  4. Eliminate barriers between departments
  5. Eliminate slogans

139
Demings 14 Points (cont.)
  1. Remove numerical quotas
  2. Enhance worker pride
  3. In
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