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Production Systems

And

Operations Management

Anubha Walia

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• 1. MANAGING OPERATIONS • Nature and scope of production/operation management• Relationship with other functional areas• Standardisation and simplification• Reliability and redundancy• Value engineering• Ergonomic considerations• Product (and service) design for differentiation • 2. PROCESS DESIGNING • Types of production systems and layouts• Capacity requirements planning• Facilities, location and influencing factors; evaluation of alternatives• JIT, FMS, and Group Technology• 3. PRODUCTIVITY AND WORK STUDY• Method study: Basic procedure, charts, diagram• Work measurement & Time study• Work sampling, learning curve, production standards• Aggregate production planning; heuristic methods • 4. PROCESS CONTROL • Inventory management: Basic concepts; selective inventory control models;

ordering systems; material requirement planning; operations scheduling: Meaning; dynamic and static scheduling; design rules

• Quality control; variables and attributes• Process control and acceptance sampling• Maintenance: Facilities; total productive maintenance

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Production

• Inputs (6Ms-Man, Machine, Method, Material, Money, Management)

• Process- Conversion

• Output-Good / Services

• Production is heart of Org – Fin, Mktg, HR Material Mgmt dependant

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(Input Conversion / Transformation Output)

Input Transforming Resources

FacilitiesStaff

OutputGood or Services

VolumeVarietyVariationVisibility

Input Transformed ResourcesMaterialInformationCustomer

The Transformation ProcessPhysical PropertiesInformational PropertiesPossessionLocationStorage/AccommodationPhysiological StatePsychological State

Environment :- *Customer * Competitors *Suppliers *Government regulations * Technology * Economy

Monitoring & Control

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Production Management Function

• Planning- Course of Action. Pdt planning, facility planning, Designing

• Organizing- Est structure of tasks and assigning authority.

• Controlling – ensure actual performance is in accordance with planned performance. We prepare standard

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Introduction

• Operations management is the management of an organization’s productive resources or its production system.

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

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

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

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Organizational Model

MarketingMarketing

MISMISEngineeringEngineering

HRMHRM

QAQA

AccountingAccounting

SalesSalesFinanceFinance

OMOM

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Some inter-functional relationships between the operations function and other core and

support functions

Engineering/ technical function

Accounting and finance

function

Human resources function

Information technology (IT) function

Marketing function

Product/service development

function

Financial analysis for performance and decisions

Provision of relevant

data

Analysis of new technology options Understanding of

process technology needs

Understanding of the capabilities and

constraints of the operations process

New product and service ideas

Understanding of the capabilities and

constraints of the operations process

Market requirements

Provision of systems for design, planning and

control, and improvement

Understanding of infrastuctural

and system needs

Recruitment development and training

Understanding of human resource needs

Operations function

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Objective of PM

• Optimal use of resources

• Max use of Manpower and resource

• Quality of good at minimal cost

• Contributing towards all round productivity through Decision Making & QT

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Scope of POM

• A) GENERAL PHASE1Operations Management

(Input Conversion / Transformation Output)

2Strategic Role ( Strategy and performance objectives)

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Scope of POM Cont…

• B) DESIGN PHASE

3 Design of Products and Services

4 Design of Operations Network

a) Capacity Decision

b) Layout Decision

c) Location Decision

5 Process Technology

6 Job Design & Work Organization

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Scope of POM Cont…

• C) PLANNING & CONTROL

7 Capacity Planning and Control

8 Inventory Planning and Control

9 Supply Chain Planning and Control

10 MRP ( Material Requirement Planning )

11 Quality Planning and Control

12 Project Planning and Control

13 JIT ( Just In Time) Planning and Control

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Scope of POM Cont…

• D) IMPROVEMENT

14 Failure Prevention & Recovery

15 TQM ( Total Quality Management)

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Scope of POM Cont…

• E) OPERATION CHALLENGES

a) Globalization and Environmental Protection

b) Social Responsibility

c) Technology Awareness

d) Knowledge Management

e) Industrial Safety and Security

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Why Should you study POM

• A business education is incomplete without an understanding of modern approaches to managing operations.

• Operations management provides a systematic way of looking at organizational processes.

• Operations management presents interesting career opportunities.

• The concepts and tools of OM are widely used in managing other functions of a business.

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They are all operations

Retail operation

Back office operation in

a bank

Take-out / restaurant operation

Kitchen unit manufacturing

operation

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POM

• Plan, design and operate production system / subsystems that create and deliver the firm’s primary products and services and to achieve organizational goals

• Note that:– Operations management deals with process

– Management in a broad, systems sense

– Subsystems are operations too

– Multiple goals: efficiency, productivity, cost minimization

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Managers Need Knowledge Of

• Production processes

• Operations management processes

• Decision making tools

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Operations Management As a Operations Management As a FunctionFunction

Skill Areas• Quantitative

methods• Organizational

behavior• General management• Information systems• Economics• International

business• Business ethics

and lawFigure 1.3Figure 1.3

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Japanese Production System

• Quality comes first

• Continuous improvement of products & processes

• Eliminate all forms of waste– 7 waste

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Operations Management Today

• Service economy

• Environmental awareness

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Operations Management Uses

• apply quality tools to tax work

• project management used on merger

• inventory theory for personal purchases

• job design improves home chores

• flexible spending accounts analyzed as inventory models

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POM Models

• Verbal Models- Express in words the relationship among variable – a motorist asks you to give directions for the nearest fast food station.

• Schematic – Pictorial relationship – map• Iconic – Physical replica of process eg – arch

model of new building• Mathematical – functional relationship among

variables

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Productivity & Wastivity

• Effectiveness of PM is measured by efficiency through which the i/p are converted into o/p– Productivity – output / input –Standard / Actual

• Wastivity– 1/Productivity – Amt of waste generated in the system. If we could

measure waste, then it becomes a tool for measuring the efficiency of the i/p call wastivity

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Example of waste

• Idling of resources – material waiting in the form of inventory in store, job order waiting to be processed

• Production of Defective good and services

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Productivity problem• In a manf unit the standard time allowed for the

production of a unit is 5 hrs. If in a particular month 126 units are produced by employing 4 persons and the allowable delays are found to be 44 man hours, find the productivity and wastivity

• Earned Standard Hrs – 630 hrsStd time – 5hrs, prod – 126 unit = 5x126=630hrs

• Available Man hr = 756 hrs– Manpower emp – 4 person, Monthly working hr – 4x25x8

=800 hrs– Allowed delay – Actual Man hr 800-44 = 756

– Productivity – ESH/AWH = 630/756x100=83.3%– Wastivity – 100-83.3 – 16.6%

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ERGONOMICS• British term –systematic study of how people

physically interact with the working environment, as well as their equipment, facilities, and pdt.

• Alternative name is human factor, becoz people differ in size, age, there are significant design question that must be decided

• Eg- AT&T Henry Dreyfuss designers created one of the first single unit mouth and ear telephone that was used by both adult and kids

• Ergonomics starts with physical efficiency, issue of safety and comfort

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2 topic

• Types of production systems and layouts

• Capacity requirements planning

• Facilities, location and influencing factors; evaluation of alternatives

• JIT, FMS, and Group Technology

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Plant Layout & Location

• Factory – Place in which the factors of production – land, labour, capital and enterprises are brought together for creation of good and service. The term plant layout is used with factory layout

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Optimal Criteria for Selecting Plant location

• Criteria is to achieve max ROI return on investment over long run

• ROI depends on Profit Margin and Investment Turnover• ROI (Average) = IT x PM• IT =~ long run investment PM= ~ long run profit margin• IT = SR / TA SR = Sales Revenue TA – Total Assests• PM = P / SR P = ~long run profit SR – Sales Rev• ROI = (SR / TA) x (P / SR) = P / TA• P = SR – TC were TC is Total Cost• SR depends upon the market and not location hence ROI is

directly proportional to TC/TA

• THUS, to MAX ROR, the location must be chosen so as to minimise the TA (land, building, equipment, material, cash) and TC (cost of material, transp cost, labour cost, conversion cost)

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Types of Production System (PS)

• 2 types = Continuous and Intermittent PS

• CPS – Continuous physical flow of material. Standard pdts are manuf which are large in dd. Standardized I/p and sequence of operations, machine tools and equipment are used. Less supervision, Possibility of Rigid Quality Control

• CPS are of two types- Mass production and Process production

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Mass and Process• Mass – One type of product or max 2 or 3 type

of pdt are manf in large quantities and much emphasis is not given to consumer order.

• Process – This system is used for manf those items whose demand is continuous or high. Here single Raw material can be transformed into different kinds of pdt a different stage of the production. (oil refinery to kerosene, gasoline

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Intermittent PS• Good are manf specifically to fulfill order by

customers rather than producing against stock. Eg switch gear

• Two types – Job and Batch production

• Job – production of a single complete unit by one operator or a group operators eg bridge construction – whole project considered as one operation. Require skilled labour

• Batch – Items are processed in lots. Printing press

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Plant capacity

• Capacity may be defined as the max or limiting capability of a production unit to produce ina specified period.

• This is expressed in terms of o/p per unit of time.

• Measure of capacity – different org used different measure of capacity. Steel plant-tons, beer – cans produced, auto plant – auto parts

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Capacity Planning

• Designed capacity – i.e maximum capacity that a producing unit can produce under ideal condition.

• Whenever the existing dd changes or addition of new product has been made, then re-assessment of capacity at various stage of production, depending upon the process details (i.e identifying ways of meeting desired capacity through – better utilization, higher efficiency, overtime, adding machinery or shifts

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LAYOUT TYPES• LINE LAYOUT all equipment reqd for one part or

pdt are grouped together in one department in sequence of the operation performed – higher rate of o/p as no interruption, high division of work, less inspection, lower material handling cost, better machine utilization – S, U, L shape

• Process / FUNCTIONAL LAYOUT The product is fabricated by moving it from one dept to another dept acc to sequence of operation to be performed ( high degree of pdt can be manf, flexibility to change, mach breakdown do

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FMS- Flexible Manf System• The age of mass prod is gone and era of

flexible prod is being started as competitive world is there pdt introduced, phase out results to lower order quantities.

• Rapid intro of new pdt

• Quick modification in pdt

• Consistently Q Control

• Ability to produce variety of pdt

• Increase productivity

• Saves labour cost

• Shorter preparation time for new pdt.