INTRODUCTION TO PRODUCTION AND OPERATION

MANAGEMENT
SYSTEM
It consists of elements or components. The elements or components are interlinked together to achieve the
objective for which it exists. Eg: human body, educational institutions, business organizations.
Components of a system:
The input, processing, output and control of a system are called the components of a system.
Figure 1.1 - Components of a system

Control:
There are two types of control, namely Proactive Control and Reactive Control.
Proactive Control:
When an operation is carried out on a product in a workstation, the quality inspector goes to the workstation and
inspects the product. When the samples that he has taken for the inspection are not confirming to the quality, he
stops the machine and identifies the reason for the deviation and corrects the problem, so that the produced
product thereafter conform to the specifications. This type of control prevents any major quality setback after the
production. This is an example for proactive control.
Reactive Control:
In a planning period, usually the quality target is fixed. Suppose, an organization feels to fix 5% defective is safe
in the targeted production quantity and assumes that at the end of the planning period it finds that the defective
output exceeds the targeted defective products. Then, it has to find out the reason for the deviations, namely,
whether the problem is due to the method of doing the work or the resources used in the process.Then the

planner uses this knowledge to prevent any problem in the future. Thus a Reactive Control is a post mortem
case.
Business System:
The business organization is classified into different subsystems based on the functions like marketing,
production/operation, finance and human resource etc.
Figure 1.2 Business System

Each subsystem will have more sub subsystems.

Production / Operation System

Figure 1.3 Production / Operation System

Operations Management
Operation system is either manufacturing sector or service sector. The input requirements are shown in
figure1.3 The transformation process, in which part of the value addition takes place to get the required quantity
of the product or services with the targeted quality within the specified time period, is carried out in a most
economical way. Operation Management Plan coordinates and controls all the activities in the operation system
to achieve the stated objectives.
Thus (the activities listed in the diagram) the Operations Management activities, ensure the objective of
quantity, quality, delivery time and economical way of doing work. The communication links between the various
activities are shown in the figure1.3. Each activity is dealt in detail in different sections of this material. This
figure (figure1.3) will be very much appreciated after getting a clear understanding of all the activities.
What is operation management (OM)?
Operation Management is a way or means through which the listed objectives of an operating system are
achieved. There is always confusion between the word OM & PM (Production Management). It is accepted
norm that OM includes techniques which are enabling the achievement of operational objectives in an operation
system.
The operation system includes both manufacturing sector as well as service sector, but when you use the word
PM, you should be careful to note that it refers to the manufacturing sector but not the service sector. Suppose,
you are designing a layout for the hospital you should say that you are applying Operations Management
Technique not the Production Management Technique.
When you design a layout for a manufacturing sector you can say that you are applying Production Technique
or Operation Technique or vice versa. From, the above discussion we can come to a conclusion that production
management is a subset of Operations Management.

HISTORY OF OM

Physical
(Manufacturing,
Mixing)
Location Services
(Transportation)
Exchange Services
(Retailing/wholesaling)
Storage Services
(Warehouse)
Other Private
Services
Primary Resources

(Insurance, Finance,
Utilities, Real Estate)

External
Materials and
Government
Market
Supplies
Nature
of Production Systems:
Legal/Political
Services
Competition
Personnel
Social
(Local, State, Federal)
Product
Capital
and
Economic
Information
Conversion
Capital Goods
Inputs
SystemsSystem
Technological
Control
Customer desires

Products and
Services
Outputs

F
e
e
d
b
a
c
k

Types of Production System:

Job Shop
Batch
Mass
Continuous Production

Job Shop Production System:

1. Few Quantities of products designed and produces as per the customer

specification within prefixed time and cost.
2. Low volume and high variety of products.
The industries involved in the following activities are classified as the Job Shop production:

Auto repairing

Hospital

Machine shop

Characteristics:

Low volume and high variety of products

Use of general purpose machines
Large inventory of materials, tools and parts.
High Skilled Operations who can take up each job as a challenge because of
uniqueness.

Merits/Demerits

Larger Space requirement

Higher cost due to frequent set up changes.
Higher Inventory Costs.

Batch Production System:

1. Manufacture of limited number of products produced at regular
intervals and stock awaiting sales.
2. Job passes through the functional departments in lots/batches.
The industries involved in the following activities are classified as the Intermittent Production.
Shoe manufacturing
Bottling plant
Cloth manufacturing

Characteristics:

Shorter Production runs.

Plant and machinery are flexible.

Manufacturing lead time and cost are lower.

Merits/Demerits

Production planning and control and material handling are also complex.
Higher setup cost

Mass Production System:

1. Manufacture of discrete parts or assemblies using a continuous process are
called mass production.
2. Large volume of production
3. Machines are arranged in a line/product layout.
4. All output follow same path.
The industries involved in the following activities are classified as the Mass Production Industries:

Auto Manufacturing

TV Manufacturing

Cigarettes

Characteristics:

Large volume of products

Production planning and control is easy.
Perfectly balanced production lines.
Standardization of product and process sequence.
Shortest cycle time of production.

Merits/Demerits

High rate of production, Less skilled operators, Higher capacity

Breakdown of one machine will stop an entire production line.
Cycle time is determined by the slowest operations.

Recent Trends In POM

Global Competition
Operations Strategy
Flexibility

 Cycle Time Reduction

Business Process Re-engineering
Supply Chain Management
Workers Involvement
Lean Manufacturing TQM
Global Competition Global Market Global Suppliers
Operations Strategy Quality based Time based
Flexibility Variety of products High Volume as well as Low Volume
Cycle Time Reduction The less time RM (Raw Material), WIP (Work In
Process), FG (Finished Goods) spend in the Manufacturing and Logistics
process, the less opportunity they have to absorb costs. Business
Process Re-engineering Value added and NVA activities
Supply Chain Management NOT from RM storage to FG warehouse
From the original suppliers to final consumers
Workers Involvement Workers are not costs, they are assets
Lean Manufacturing Inventory is waste
Total Quality Management
Introduction to production and operations management

Definition: Production and Operations Management ("POM") is about the

transformation of production and operational inputs into "outputs" that,
when distributed, meet the needs of customers.
The process in the above diagram is often referred to as the "Conversion
Process". There are several different methods of handling the conversion or
production process - Job, Batch, Flow and Group
POM incorporates many tasks that are interdependent, but which can be
grouped under five main headings:
PRODUCT
Marketers in a business must ensure that a business sells products that
meet customer needs and wants. The role of Production and Operations is
to ensure that the business actually makes the required products in
accordance with the plan. The role of PRODUCT in POM therefore concerns
areas such as:
-

Performance
Aesthetics
Quality
Reliability
Quantity
Production costs
Delivery dates

PLANT

To make PRODUCT, PLANT of some kind is needed. This will comprise the bulk of the fixed
assets of the business. In determining which PLANT to use, management must consider
areas such as:
-

Future demand (volume, timing)

Design and layout of factory, equipment, offices
Productivity and reliability of equipment
Need for (and costs of) maintenance
Heath and safety (particularly the operation of equipment)
Environmental issues (e.g. creation of waste products)

PROCESSES
There are many different ways of producing a product. Management must choose the best
process, or series of processes. They will consider:
-

Available capacity
Available skills
Type of production
Layout of plant and equipment
Safety
Production costs
Maintenance requirements

PROGRAMMES
The production PROGRAMME concerns the dates and times of the products that are to be
produced and supplied to customers. The decisions made about programme will be
influenced by factors such as:
-

Purchasing patterns (e.g. lead time)

Cash flow
Need for / availability of storage
Transportation

PEOPLE
Production depends on PEOPLE, whose skills, experience and motivation vary. Key peoplerelated decisions will consider the following areas:

- Wages and salaries

Safety and training
Work conditions - Leadership and motivation
- Unionisation Communication

Goods

Can be resold
Can be inventoried
Some aspects of quality measurable
Selling is distinct from production
Product is transportable
Site of facility important for cost
Often easy to automate
Revenue generated primarily from tangible product
Product is transportable
Site of facility important for cost
Often easy to automate

 Revenue generated primarily from tangible product

Services

Provider, not product is transportable

Site of facility important for customer contact
Often difficult to automate
Revenue generated primarily from intangible service
Reselling unusual
Difficult to inventory
Quality difficult to measure
Selling is part of service
http://www.referenceforbusiness.com/management/Pr-Sa/ProjectManagement.html

Types of production system:

Intermittent Production System:

In the intermittent production system, goods are produced based on customer's orders.
These goods are produced on a small scale. The flow of production is intermittent
(irregular). In other words, the flow of production is not continuous. In this system, large
varieties of products are produced. These products are of different sizes. The design of
these products goes on changing. It keeps changing according to the design and size of
the product. Therefore, this system is very flexible.

1. The work of a goldsmith is purely based on the frequency of his customer's orders. The
goldsmith makes goods (ornaments) on a small-scale basis as per his customer's
requirements. Here, ornaments are not done on a continuous basis.
2. Similarly, the work of a tailor is also based on the number of orders he gets from his
customers. The clothes are stitched for every customer independently by the tailor as
per one's measurement and size. Goods (stitched clothes) are made on a limited scale
and is proportional to the number of orders received from customers. Here, stitching is
not done on a continuous basis.

The
characteristics of an intermittent production system are listed as follows:

The flow of production is not continuous. It is intermittent.

Wide varieties of products are produced.
The volume of production is small.
General purpose machines are used. These machines can be used to produce
different types of products.
The sequence of operation goes on changing as per the design of the product.
The quantity, size, shape, design, etc. of the product depends on the customer's
orders.

1.

Project production flows

Here, in project production flows, company accepts a single, complex order or contract.
The order must be completed within a given period of time and at an estimated cost.
Examples of project production flows mainly include, construction of airports, dams,
roads, buildings, shipbuilding, etc.

Characteristics of Project Production Flows:

The requirement of resources is not same (it varies). Generally, the resource
requirement at the beginning is low. Then in mid of production, the requirement
increases. Finally, it slows down when the project is near its completion phase.
Many agencies are involved in the project. Each agency performs specialized jobs.
Here, coordination between agencies is important because all jobs are
interrelated.
Delays take place in completion of projects due to its complexity and massiveness.
As routing and scheduling changes with fresh orders, proper inspection is required
at each stage of production.

2. Jobbing production flows:

Here, in jobbing production flows, company accepts a contract to produce either one or
few units of a product strictly as per specifications given by the customer. The product is
produced within a given period and at a fixed cost. This cost is fixed at the time of
signing the contract.
Examples of such jobbing production flows include, services given by repair shops,
tailoring shops, manufacturer of special machine tools, etc.

The characteristics or features of jobbing production flows are as follows:

 The production of items takes place in small lots. Sometimes only one product is
produced at one time.
The items are manufactured strictly as per customer's specifications.
Highly skilled labour is required to perform specialized jobs.
There is disproportionate manufacturing cycle time. For e.g. the time needed to
design the product may be more than the manufacturing time.
3. Batch production flows:
In batch production flows, the production schedule is decided according to specific orders
or is based on the demand forecasts. Here, the production of items takes place in lots or
batches. A product is divided into different jobs. All jobs of one batch of production must
be completed before starting the next batch of production.
Examples of batch production flows include manufacturing of drugs and
pharmaceuticals, medium and heavy machineries, etc.

The characteristics or features of batch production flows are as follows:

The products are made and kept in stock until their demand arises in the market.

General purpose machines and handling equipments, which can do many different
jobs quickly are installed. This is because large varieties of items are to be
produced.
There is a possibility of large work-in-progress due to many reasons.
There is a need for detailed production planning and control.

Continuous production system:

Continuous means something that operates constantly without any irregularities or
frequent halts.
In the continuous production system, goods are produced constantly as per demand
forecast. Goods are produced on a large scale for stocking and selling. They are not
produced on customer's orders. Here, the inputs and outputs are standardized along with
the production process and sequence.
Following chart highlights the concept of a continuous production system.

The production system of a food industry is purely based on the demand forecast. Here,
a large-scale production of food takes place. It is also a continuous production.
Similarly, the production and processing system of a fuel industry is also purely based
on, demand forecast. Crude oil and other raw sources are processed continuously on a
large scale to yield usable form of fuel and compensate global energy demand.
The features of a continuous production system are depicted below.

The characteristics of a continuous production system are listed as follows:

The flow of production is continuous. It is not intermittent.

The products are standardized.
The products are produced on predetermined quality standards.
The products are produced in anticipation of demand.
Standardized routing sheets and schedules are prepared.

Types of continuous production system:

1. Mass production flows

Here, company produces different types of products on a large-scale and stock

them in warehouses until they are demanded in the market.
The goods are produced either with the help of a single operation or uses a series
of operations.

The characteristics or features of mass production flows are as follows:

There is a continuous flow of production. However, this depends on the demand in

the market.
Here, there is limited work-in-progress.
Supervision is easy because only few instructions are necessary.
The material handling is done mostly by machines, i.e. conveyors and automatic
transfer machines.
The flow of materials is continuous. There is little or no queuing at any stage of
production.

2. Process Production Flow:

Here, a single product is produced and stocked in warehouses until it is demanded in the
market. The flexibility of these plants is almost zero because only one product can be
produced.
Examples of these plants include, steel, cement, paper, sugar, etc.

The
characteristics or features of process production flows are as follows

There is a highly mechanized system for handling materials. Conveyors and

automatic transfer machines are used to move the materials from one stage to
another.
Low-skilled labour and skilled technicians are required.
There is very less work-in-progress because material flow is continuous.
The production planning and scheduling can be decided well in advance.
The full production system is designed to produce only one specific type of item.

Cellular Production System:

In cellular manufacturing, production work stations and equipment are arranged in a
sequence that supports a smooth flow of materials and components through the
production process with minimal transport or delay.

Define Production System:

"The methods, procedure or arrangement which includes all functions required to accumulate
(gather) the inputs, process or reprocess the inputs, and deliver the marketable output
(goods)."

Examples:
The examples of a production system are as follows:
Tangible goods: Consider an example of a manufacturing industry like a Sugar Industry.
Here, sugarcane is first used as an input, and then the juice of sugarcane is processed
through a conversion process, finally to get an output known as a refined sugar (used for
mass consumption).
Intangible goods: Consider an example from a service industry that of a softwaredevelopment firm or company. Here, initially, written program codes are used as an
input. These codes are then integrated in some database and are provided with a userfriendly interface through a conversion process. Finally, an output is made available in
form of an executable application program.
CLASSIFICATION OF MANUFACTURING SYSTEMS:

Facility Layout:
A layout is the physical configuration of departments, workstations, and equipments in the conversion
process. it is arrangement of physical resources used to create the product. Success of operations
depends on the physical layouts of the facilities. Flow of raw material. Productivity and human
relationship are all affected by the arrangements of the conversion facilities.
Plant layout involves: i) planning and arranging facilities in new plant ii) improvements in existing
layout to introduce new methods.

FACILITY LAYOUT
Layout decisions have long term consequences on cost and companies ability to serve the customers.
Major objectives of layout

Providing enough production capacity

Reducing material handling costs
Easy supervisions
Improvement in productivity
Efficient utilisation labour
Increase in morale of the employees
Reducing accidents and hazards to personnel
Reducing congestion
utilizing the space efficiently and effectively.

FACTORS AFFECTING LAYOUT

1. Material materials need storage. Layout should cater to storage and transportation of materials.
2. Product Layout should suit to the nature of product and its method of production. i.e. aircraft
manufacturing and car manufacturing layouts will be different. Sales also affects the layout.
3. Machinery Size of machinery based on product, its volume and labour, affects the layout
4. labour Movement of workers, facilities for workers like canteen, toilet, restroom etc affects the
layout.
5. Location Type of building depends on the soil condition. Location decides the transportation and
layout plan has to take care of this aspect.
6. Managerial policies top management decides the layout objectives
7. Type of industry
CRITERIA FOR GOOD LAYOUT:
1. Flexibility
2. Maximum coordination
3. Maximum visibility
4. Maximum accessibility
5. Minimum distance
6. Minimum handling
7. Minimum Discomfort Proper light, Ventilation etc.
8. Inherent Safety
9. Efficient Process Flow
10. Identification- Provision of space to workers.

Types of Layouts:
The layouts are differentiated by the types of workflow they entail and workflow in turn is
dictated by the nature of product. Basic layouts are:
1. Process layout
2. Product layout
3. Grouping technology layout
4. Fixed position layout

5. Hybrid layout
Process layout
These are appropriate for intermittent operations where work flow is not consistent for all output.
Variable workflow occurs when variety of products or variation of single product are produced. This is
also called as functional layout or job-shop layout. In this layout similar equipments are grouped and
located at one place like lathe, drilling machines etc.Workers should be highly skilled. Intensive job
instructions should be given to them and technical supervision is required. These layouts
are quick to change and adapt to the unique batches of the products.

Grouping together of similar machines in one department

Material moves from one group of machines to the other

Movement over longer distance and along criss-cross paths

May also involve part finished inventory waiting

Advantages
1.
2.
3.
4.
5.

Greater Flexibility
Better and more efficient supervision possible through specialization
Breakdowns can be taken care by shifting the job to another machine
Capacity of different product line can be expanded easily.
Better utilization of men and machine

Disadvantages
1. More work in progress
2. More floor space
3. More distances traveled by the product
Examples :
1. Car servicing
2. Hospital-Patient requiring various tests
3. Volume low & variety is more
4. Garment factory producing half sleeve shirts, full sleeve shirts, pants and suits.
5. Office buildings, schools, universities, hospitals, aerodrome, library, book store or amusement
centers are planned on this basis.

Assembly
& Test

Milling

Drilling

Grinding
Plating

Process Layout - work travels

to dedicated process centers

Product layout
It is appropriate for producing one standardized product, usually in large
volume. It is also called as flow shop layout or straight line layouts. The
machines are arranged according to the progressive steps by which the
product is made. Examples: Chemical, paper, rubber, refineries, cement
industry.
Advantages:
1. Mechanization of materials is possible and material handling cost
can be reduced.
2. It requires less floor area.
3. It facilitates better production control
4. Production bottlenecks are avoided.
Disadvantages
1. Expansion of production line is difficulty
2. There is difficulty in supervising
3. Breakdown of equipment disrupts the production.
Example:

Delivery
Counter

Fixed Position Layout:

A fixed-position layout is appropriate for a product that is too large or too heavy to move.
For example, battleships are not produced on an assembly line. For services, other
reasons may dictate the fixed position (e.g., a hospital operating room where doctors,
nurses, and medical equipment are brought to the patient). Other fixed-position layout
examples include construction (e.g., buildings, dams, and electric or nuclear power
plants), shipbuilding, aircraft, aerospace, farming, drilling for oil, home repair, and
automated car washes. In order to make this work, required resources must be portable
so that they can be taken to the job for "on the spot" performance.

Due to the nature of the product, the user has little choice in the use of a fixed-position
layout. Disadvantages include:
Space. For many fixed-position layouts, the work area may be crowded so that little
storage space is available. This also can cause material handling problems.
Administration. Oftentimes, the administrative burden is higher for fixed-position
layouts. The span of control can be narrow, and coordination difficult.
COMBINATION LAYOUTS
Many situations call for a mixture of the three main layout types. These mixtures are
commonly called combination or hybrid layouts. For example, one firm may utilize a
process layout for the majority of its process along with an assembly in one area.
Alternatively, a firm may utilize a fixed-position layout for the assembly of its final
product, but use assembly lines to produce the components and subassemblies that
make up the final product (e.g., aircraft).

Cellular Layout:
Cellular manufacturing is a type of layout where machines are grouped according to the
process requirements for a set of similar items (part families) that require similar
processing. These groups are called cells. Therefore, a cellular layout is an equipment
layout configured to support cellular manufacturing.
Processes are grouped into cells using a technique known as group technology (GT).
Group technology involves identifying parts with similar design characteristics (size,
shape, and function) and similar process characteristics (type of processing required,
available machinery that performs this type of process, and processing sequence).
Workers in cellular layouts are cross-trained so that they can operate all the equipment
within the cell and take responsibility for its output. Sometimes the cells feed into an
assembly line that produces the final product. In some cases a cell is formed by
dedicating certain equipment to the production of a family of parts without actually
moving the equipment into a physical cell (these are called virtual or nominal cells). In
this way, the firm avoids the burden of rearranging its current layout. However, physical
cells are more common.
An automated version of cellular manufacturing is the flexible manufacturing system
(FMS). With an FMS, a computer controls the transfer of parts to the various processes,
enabling manufacturers to achieve some of the benefits of product layouts while
maintaining the flexibility of small batch production.
Some of the advantages of cellular manufacturing include:

Cost. Cellular manufacturing provides for faster processing time, less material handling,
less work-in-process inventory, and reduced setup time, all of which reduce costs.
Flexibility. Cellular manufacturing allows for the production of small batches, which
provides some degree of increased flexibility. This aspect is greatly enhanced with FMSs.
Motivation. Since workers are cross-trained to run every machine in the cell, boredom is
less of a factor. Also, since workers are responsible for their cells' output, more autonomy
and job ownership is present.

Cellular layout:
Advantages:

Reduced material handling and transit time

Reduced setup time

Reduced work-in-process inventory

Better use of human resources

Better scheduling, easier to control and automate

Disadvantages:

When volume of production changes, number of workers are adjusted and workers
are reassigned to various cells. To cope with this type of reassignments, workers
must be multi-skilled and cross-trained.

Sometimes, machines are duplicated in different cells. This increases capital

investment.