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PRODUCTION AND PRODUCTION AND OPERATIONSOPERATIONS’’ MANAGEMENTMANAGEMENT

INTRODUCTIONINTRODUCTIONThis course gives you an introduction to, the functional This course gives you an introduction to, the functional

area of production and operations management as, area of production and operations management as, practiced in manufacturing industries and the services practiced in manufacturing industries and the services sector.sector.

It includes :-It includes :- Nature & Scope of Production & Operation Mgmt,Nature & Scope of Production & Operation Mgmt, Facility location, Facility location, Types of Manufacturing Systems & layouts, Layout Types of Manufacturing Systems & layouts, Layout

Planning & Analysis Planning & Analysis

Material Handling, Material Handling, Production Planning & ControlProduction Planning & Control Capacity PlanningCapacity Planning Aggregate Planning,Aggregate Planning, Work study Work study Method Study Method Study Work Measurement Work Measurement EtcEtc……

Production and operations managementProduction and operations management (POM) (POM) is the management of an organizationis the management of an organization ’’s s production system.production system.

A A production systemproduction system takes inputs and converts takes inputs and converts them into outputs.them into outputs.

The The conversion processconversion process is the predominant is the predominant activity of a production system.activity of a production system.

The primary concern of an The primary concern of an operations manageroperations manager is the activities of the conversion process.is the activities of the conversion process.

Production managementProduction management

Production is the basic activity of all the industrial unit.Production is the basic activity of all the industrial unit. Production activity is nothing but the step by step Production activity is nothing but the step by step

conversion of one form of material in another, either conversion of one form of material in another, either chemically or mechanically.chemically or mechanically.

Production in the other word, is a transformation Production in the other word, is a transformation system where inputs are converted into outputs. The system where inputs are converted into outputs. The transformation could be physical, location, exchange transformation could be physical, location, exchange based, storage based and informational based.based, storage based and informational based.

Production Management Production Management Production management is concerned with those Production management is concerned with those

processes which convert the input into outputs. The processes which convert the input into outputs. The input are various resources like row material, men, input are various resources like row material, men, machine, method and the output are the goods and the machine, method and the output are the goods and the services.services.

H.A.Harding H.A.Harding Production management deals with decision making Production management deals with decision making

related to production processes so that the resulting related to production processes so that the resulting goods and services is produced according to goods and services is produced according to specification in the amount and by the schedule specification in the amount and by the schedule demand and at minimum cost.demand and at minimum cost.

E.S.Buffa E.S.Buffa

Operational managementOperational management

Operational management is understood as the process Operational management is understood as the process where by resources or inputs are converted into more where by resources or inputs are converted into more useful products. The term Operational management is useful products. The term Operational management is more frequently used for a system where various inputs more frequently used for a system where various inputs are transformed into intangible services such as banks, are transformed into intangible services such as banks, airlines, super bazaar, library.airlines, super bazaar, library.

But the term production management is used for the But the term production management is used for the system where the tangible goods are produced.system where the tangible goods are produced.

NATURE OF POMNATURE OF POM

Production as a SystemProduction as a System Production as an Organization FunctionProduction as an Organization Function Decision Making in POMDecision Making in POM

Production as a SystemProduction as a SystemProduction as a System

InputsInputs OutputsOutputsConversionConversionSubsystemSubsystem

Production SystemProduction System

ControlControlSubsystemSubsystem

Inputs of a Production SystemInputs of a Production System

External Environment:-Political , Economic, Social, Technological

Market:-Competition, Customer Desires, Product Info.

Primary Resources:-Materials, Personnel, Capital, Utilities

Conversion SubsystemConversion Subsystem

••Physical (Manufacturing)Physical (Manufacturing)••Location Services (Transportation)Location Services (Transportation)••Exchange Services (Retailing, Wholesaler)Exchange Services (Retailing, Wholesaler)••Storage Services (Warehousing)Storage Services (Warehousing)••Other Private Services (Insurance)Other Private Services (Insurance)••Government services (Banking, Railways)Government services (Banking, Railways)

Outputs of a Production SystemOutputs of a Production System

Direct•Products•Services

Indirect•Waste•Pollution

Production as an Organization Production as an Organization Production as an Organization FunctionFunctionFunction

Companies cannot compete using marketing, Companies cannot compete using marketing, finance, accounting, and engineering alone.finance, accounting, and engineering alone.

We focus on POM as we think of global We focus on POM as we think of global competitiveness, because that is where the vast competitiveness, because that is where the vast majority of a firmmajority of a firm’’s workers, capital assets, and s workers, capital assets, and expenses required.expenses required.

To succeed, a firm must have a strong To succeed, a firm must have a strong coordination teaming with the other coordination teaming with the other organization functions.organization functions.

Decision Making in POMDecision Making in POMDecision Making in POM

Strategic Decisions:-Strategic Decisions:-

Decisions of strategic importance and have Decisions of strategic importance and have

long-term significance for the organization.long-term significance for the organization.Examples include deciding:Examples include deciding:the design for a new productthe design for a new product’’s s

production processproduction processwhere to locate a new factorywhere to locate a new factorywhether to launch a new-product whether to launch a new-product

development plandevelopment plan

Operating Decisions:-Operating Decisions:- These decisions are necessary if the These decisions are necessary if the

ongoing production of goods and services ongoing production of goods and services is to satisfy market demands and provide is to satisfy market demands and provide profits.profits.

Examples include deciding:Examples include deciding: how much finished-goods inventory to carryhow much finished-goods inventory to carry the amount of overtime to use next weekthe amount of overtime to use next week the details for purchasing raw material next the details for purchasing raw material next

monthmonth

Control Decisions:-Control Decisions:- These decisions concern the day-to-day These decisions concern the day-to-day

activities of workers, quality of products activities of workers, quality of products and services, production and overhead and services, production and overhead costs, and machine maintenance.costs, and machine maintenance.

Examples include deciding:Examples include deciding: labor cost standards for a new productlabor cost standards for a new product frequency of preventive maintenancefrequency of preventive maintenance new quality control acceptance criterianew quality control acceptance criteria

Scope of POMScope of POMLONG TERM DECISIONSLONG TERM DECISIONS

Product selection and designProduct selection and design Process selection and planningProcess selection and planning Location facilityLocation facility Capacity planningCapacity planning Material Handling facilityMaterial Handling facility

SHORT TERM DECISIONSSHORT TERM DECISIONS Production planningProduction planning Production control Production control Inventory controlInventory control Quality controlQuality control Method studyMethod study Maintenance and replacementMaintenance and replacement Cost reductionCost reduction

Objective of the production Objective of the production managementmanagement

Ultimate objective Manufacturing cost Product Quality Manufacturing schedule

Intermediate objective Machinery and equipment Material Manpower Manufacturing services

Function of the production Function of the production management management

Improving the volume of production Reducing rejection rate Maintaining delivery schedule Controlling ideal machine and manpower Updating processes and the procedure Maintain the accuracy and timeliness of the MIS Controlling overtime Decreasing machine setup time Efficient training and the team work TQM

Today's Factors Affecting POMToday's Factors Affecting POMToday's Factors Affecting POM

Global Competition Quality, Customer Service, and Cost

Challenges Computers and Advanced Production

Technology Growth of Service Sector Scarcity of Production Resources Issues of Social Responsibility Availability of skilled Employee

RECENT TRENDS IN POMRECENT TRENDS IN POM

Global market placeGlobal market place Production and Operational strategyProduction and Operational strategy TQMTQM FlexibilityFlexibility Time ReductionTime Reduction TechnologyTechnology Worker involvementWorker involvement Re EngineeringRe Engineering Environmental issuesEnvironmental issues Supply Chain managementSupply Chain management

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Facility Location

What is facility? Production unit, where goods and

services are produced.What is location?

Place where a facility is located So the major decision is- WHERE

should the facility be located?

Reasons for the Reasons for the Reasons for the Facility Location Decision ArisesFacility Location Decision ArisesFacility Location Decision Arises Changes in the market

Expansion Contraction Geographic shift

Changes in inputs Labor skills and/or costs Materials costs and/or availability Utility costs

Reasons for the Reasons for the Reasons for the Facility Location Decision ArisesFacility Location Decision ArisesFacility Location Decision Arises

Changes in the environment Regulations and laws Attitude of the community

Changes in technology

STEPS INVOLVE INSTEPS INVOLVE IN LOCATION DECISIONS LOCATION DECISIONS

Political, social, economic stability;

Climate; Customer concentrations;

Transportation system availability;Preference of management; . . . . .

Site size/cost; Environmental impact; . . . . .

National DecisionNational Decision

Regional DecisionRegional Decision

Community DecisionCommunity Decision

Site DecisionSite Decision

Regional Location DecisionRegional Location Decision

Attractiveness of region (culture, taxes, climate, etc.)

Labor availability, costs, attitudes towards business/union

Cost and availability of utilities Environmental regulations of state and town Government incentives Proximity to raw materials & customers Land/construction costs

Community/Locality Decisions Rural Area or Village Area

Advantages (cheaper rate of land, taxes are negligible, spacious layout, avoidance of danger,)

Disadvantages (lack of transportation, skilled labour, power facility, training facility for labour is not available, facility of banking)

Urban Area or City Area Suburban Area nearer to the Urban Area

Site Location DecisionsSite Location Decisions Site size and cost Air, rail, highway, waterway systems Nearness of services/supplies needed Communication facility Availability of power Possibility of plant expansion

Factors Affecting the Plant LocationFactors Affecting the Plant LocationFactors Affecting the Plant Location Primary /Economic Factor

Supply of Raw Material Nearness of Market Transportation Facility Labour Supply Availability of Power Supply of Capital

Secondary/Non-economic Factor Natural and Political Training and employment services Personal or Community’s attitude Education system Recreation and cultural attractions Religious and Historical Factor Government subsidies and facility

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Types of Types of Manufacturing/Production Manufacturing/Production

SystemsSystems

TYPES OF PRODUCTION

INTERMITTENT PRODUCTION

CONTINOUS PRODUCTION

MASS AND FLOW PRODUCTION

PROCESS PRODUCTION

PROJECT PRODUCTION

JOB PRODUCTION

BATCH PRODUCTION

INTERMITTENT(DISCONTINOUS)INTERMITTENT(DISCONTINOUS)

PRODUCTIONPRODUCTION Wide range/Variety of products is Wide range/Variety of products is

producedproduced

CONTINOUS CONTINOUS PRODUCTIONPRODUCTION Few/one standard products/ productFew/one standard products/ product High quantitiesHigh quantities High rate of demandHigh rate of demand

PROJECT PRODUCTIONMajor characteristics areMajor characteristics are…….... Single assignment (one product)Single assignment (one product) Complex set of activities- Product orientedComplex set of activities- Product oriented Short life cycleShort life cycle Involvement of different specialized agenciesInvolvement of different specialized agencies Fixed position layout (fixed site)Fixed position layout (fixed site) High cost overrunsHigh cost overruns Scheduling and controlling- difficult, CPM-Scheduling and controlling- difficult, CPM-

PERTPERT Examples- Aircraft, Ships, Roads and buildingsExamples- Aircraft, Ships, Roads and buildings

JOB PRODUCTIONMajor characteristics are…. Variety of products Each product with different set of processing

steps Discontinuous flow of materials Customized- Made to order Highly skilled labour Customer satisfaction is higher Examples -Tailor Shop (size, design)

BATCH PRODUCTION Major characteristics are……..

Manufacturing of a no. of identical articles Manufacturing of a no. of identical articles either to meet the specific order or to satisfy the either to meet the specific order or to satisfy the continuous demand.continuous demand.

Limited numbers of productsLimited numbers of products Many qualities at regular intervalsMany qualities at regular intervals The customer order size determine the batch The customer order size determine the batch

size.size. Examples- Pharmaceuticals, Paints, Ready Examples- Pharmaceuticals, Paints, Ready

made garmentsmade garments

Mass and flow production systemMass and flow production systemMajor characteristics areMajor characteristics are…….... Same type of product is producedSame type of product is produced Separate line for each productSeparate line for each product Semiskilled or unskilled labourSemiskilled or unskilled labour Relatively permanent set up (same size, shape, Relatively permanent set up (same size, shape,

quality product)quality product) Example-(cars, bikes, FMCG product)Example-(cars, bikes, FMCG product)

Process ProductionProcess Production

Major characteristics areMajor characteristics are…….... The product must be standardized.The product must be standardized. Work must conform to quality standard.Work must conform to quality standard. Inspection must in line with production.Inspection must in line with production. There must be continuity in the demand.There must be continuity in the demand. High accuracy.High accuracy. Reduced material handling.Reduced material handling. Example-crude oil, gasoline, diesel, petrol Example-crude oil, gasoline, diesel, petrol

etc.etc.

PLANT/ FACILITY LAYOUTPLANT/ FACILITY LAYOUT

An arrangement of personnel, departments, An arrangement of personnel, departments, stores, equipment etc..stores, equipment etc..

It is determined by-It is determined by- Type of productType of product Type of production processType of production process Volume of productionVolume of production

OBJECTIVES OF LAYOUTOBJECTIVES OF LAYOUT1.1. Economy in material handlingEconomy in material handling2.2. Minimization of delay and bottlenecksMinimization of delay and bottlenecks3.3. Minimum manufacturing cycle timeMinimum manufacturing cycle time4.4. Least resistant to the smooth flow Least resistant to the smooth flow 5.5. Efficient utilisation of spaceEfficient utilisation of space6.6. Safe and proper working conditionsSafe and proper working conditions7.7. Flexibility to change in product design and Flexibility to change in product design and

expansionexpansion8.8. Easy and simple plant maintenanceEasy and simple plant maintenance9.9. Improved productivity and qualityImproved productivity and quality10.10. Effective controlEffective control

PRINCIPLES OF PLANT LAYOUTPRINCIPLES OF PLANT LAYOUT1.1. Integration of factorsIntegration of factors2.2. Minimum movement of men and materialMinimum movement of men and material3.3. Smooth and continuous flowSmooth and continuous flow4.4. Effective use of space-vertical /horizontalEffective use of space-vertical /horizontal5.5. Safe and improved environmentSafe and improved environment6.6. Maximum flexibilityMaximum flexibility7.7. Unidirectional flowUnidirectional flow8.8. Maximum visibility and accessibilityMaximum visibility and accessibility

Factors Influencing Layout Material (low price, stored properly, easy move) Product (heavy or light, big or small, liquid or

solid) Workers (skilled, unskilled employee) Machinery (types of product, process and volume) Location ( expansion of plant, size of the site,

mode of transportation, the storage of the product) Managerial Policies (volume of production,

purchasing policies, delivery of goods to customer

TYPES OF LAYOUTSTYPES OF LAYOUTS Process layoutProcess layout Similar operations at one placeSimilar operations at one place Machines arranged according to their functionsMachines arranged according to their functions

Product layoutProduct layout Operations according to product and in sequenceOperations according to product and in sequence Suitable for continuous productionSuitable for continuous production

Static product or fixed position layoutStatic product or fixed position layout Big/heavy or difficult to move productBig/heavy or difficult to move product Product position is fixed and operations brought to itProduct position is fixed and operations brought to it

Combined layoutCombined layout It is the combination of process and the product layoutIt is the combination of process and the product layout

Cellular Manufacturing layoutCellular Manufacturing layout Machine are grouped into cells and cells function somewhat a Machine are grouped into cells and cells function somewhat a

product layout with in the large process layout.product layout with in the large process layout.

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