OPERATIONS MANAGEMENT

Q.1.: WHAT IS OPERATIONS MANAGEMENT? WHAT

IS THE
IMPORTANCE?

ANS:

Operations

management is

an

area

of management concerned with overseeing, designing, controlling

the process of production and redesigning business operations in
the

production

of

goods

and/or

services.

It

involves

the

responsibility of ensuring that business operations are efficient in

terms of using as few resources as needed, and effective in terms
of meeting customer requirements. It is concerned with managing
the process that converts inputs (in the forms of materials, labor,
and energy) into outputs (in the form of goods and/or services).
The set of interrelated management activities,
which are involved in manufacturing certain products, is called as
production management. If the same concept is extended to
services

management,

then

the

corresponding

set

of

management activities is called as operations management

IMPORTANCE OF OPERATIONS MANAGEMENT

OPERATIONS MANAGEMENT MAKE A OPERATION MANAGER TO
LEARN ABOUT1. PLANNING

Activities that establishes a course of action and guide

future decision-making is planning.
The operations manager defines the objectives for the operations
subsystem of the organization, and the policies, and procedures
for achieving the objectives. This stage includes clarifying the role
and focus of operations in the organizations overall strategy. It
also involves product planning, facility designing and using the
conversion process.
2. ORGANIZING
Activities that establishes a structure of tasks and
authority.
Operation managers establish a structure of roles and the flow of
information within the operations subsystem. They determine the
activities required to achieve the goals and assign authority and
responsibility for carrying them out.
3. CONTROLLING
Activities that assure the actual performance in
accordance with planned performance.
To ensure that the plans for the operations subsystems are
accomplished, the operations manager must exercise control by
measuring actual outputs and comparing them to planned
operations management. Controlling costs, quality, and schedules
are the important function here.
4. BEHAVIOUR

Operation managers are concerned with how their efforts to

plan, organize, and control affect human behavior. They also want
to

know

how

the

behavior

of

subordinates

can

affect

managements planning, organizing, and controlling actions. Their

interest lies in decision-making behavior.
5. CUSTOMER SERVICE
The operating system must provide something to a
specification which can satisfy the customer in terms of cost and
timing. Thus, primary objective can be satisfied by providing the
right thing at a right price at the right time
6. RESOURCE UTILISATION
Customer service must be provided with the
achievement of effective operations through efficient use of
resources. Inefficient use of resources or inadequate customer
service leads to commercial failure of an operating system.

Q2: WHAT IS PRODUCTION CONTROL? WHAT ARE

ITS OBJECTIVES?
ANS: Production control is systematic planning, coordinating, and
directing of all manufacturing activities and influences to insure

having goods made on time, of adequate quality, and at

reasonable cost.
Every enterprise is different, but no matter what
method of organization is adopted, production must be planned
and controlled so that products are" supplied in the right quantity
and quality, at the right time, and at the minimum cost.
Production control is often overlooked or under-utilized
by catering management. in this area that many control systems
are used, such as, restaurant and kitchen checking systems, daily
sales analysis, cash handling systems, stores requisitions, kitchen
percentage budgets, etc. Therefore, the following statements are
desirable:
Daily control - expressed in readily available physical, units.
Weekly control - summarizing the daily controls, but using
costs as much as possible.
Weekly control summary - expressing the weekly result from
several, associated departments in a concise form for the higher
management.

OBJECTIVES OF PRODUCTION CONTROL

The success of an enterprise greatly depends on the performance
of its production control department. The production control
department generally has to perform the following functions:
1. Provision of raw material, equipment, machines and labor.
2. To organize production schedule in conformity with the
demand forecasts.
3. The resources are used in the best possible manner in such a
way that the cost of production is minimized and delivery
date is maintained.

4. Determination of economic production runs with a view to

reduce setup costs.
5. Proper co-ordination of the operations of various
sections/departments responsible for production.
6. To ensure regular and timely supply of raw material at the
desired place and of prescribed quality and quantity to avoid
delays in production.
7. To perform inspection of semi-finished and finished goods
and use quality control techniques to ascertain that the
produced items are of required specifications.
8. It is also responsible for product design and development.
9. Thus the fundamental objective of production control is to
regulate and control the various operations of production
process such a way that orderly flow of material is ensured
at different stages of the production and the items are
produced of right quality, in right quantity, at the right time
with minimum efforts and cost.

Q.3: Define Operation Management? What is

the scope of Operation Management?
ANS: Operations management refers to the administration of
business practices to create the highest level of efficiency
possible within an organization. Operations management is
concerned with converting materials and labor into goods and
services as efficiently as possible to maximize the profit of an
organization.
Operations management teams design the method of conversion
of inputs (materials, labor, proprietary information, etc.) into
outputs (goods, services, value-added products, etc.) that is most
beneficial to the organization. Operations management teams
attempt to balance costs with revenue to achieve the highest net
operating profit possible.

THE SCOPE OF OPERATION MANAGEMENT

Production and operations management concern with the
conversion of inputs into outputs, using physical resources, so as
to provide the desired utilities to the customer while meeting the
other organizational objectives of effectiveness, efficiency and
adoptability. It distinguishes itself from other functions such as
personnel, marketing, finance, etc., by its primary concern for
conversion by using physical resources.
Following are the activities which are listed under production and
operations management functions:
1. Location of facilities

2. Plant layouts and material handling

3. Product design
4. Process design
5. Production and planning control
6. Quality control
7. Materials management
8. Maintenance management.

LOCATION OF FACILITIES
Location of facilities for operations is a long-term capacity
decision which involves a long term commitment about the
geographically static factors that affect a business organization. It
is an important strategic level decision-making for an
organization. It deals with the questions such as
Where our main operations should be based?
The selection of location is a key-decision as large investment is
made in building plant and machinery. An improper location of
plant may lead to waste of all the investments made in plant and
machinery equipments. Hence, location of plant should be based
on the companys expansion plan and policy, diversification plan
for the products, changing sources of raw materials and many
other factors. The purpose of the location study is to find the
optimal location that will results in the greatest advantage to the
organization.
PLANT LAYOUT AND MATERIAL HANDLING
Plant layout refers to the physical arrangement of facilities. It is
the configuration of departments, work centers and equipment in

the conversion process. The overall objective of the plant layout is

to design a physical arrangement that meets the required output
quality and quantity most economically.
According to James Moore, Plant layout is a plan of an
optimum arrangement of facilities including personnel,
operating equipment, storage space, material handling
equipments and all other supporting services along with
the design of best structure to contain all these facilities.
Material Handling refers to the moving of materials from the
store room to the machine and from one machine to the next
during the process of manufacture. It is also defined as the art
and science of moving, packing and storing of products in any
form. It is a specialized activity for a modern manufacturing
concern, with 50 to 75% of the cost of production. This cost can
be reduced by proper section, operation and maintenance of
material handling devices. Material handling devices increases
the output, improves quality, speeds up the deliveries and
decreases the cost of production. Hence, material handling is a
prime consideration in the designing new plant and several
existing plants.

PRODUCT DESIGN
Product design deals with conversion of ideas into reality. Every
business organization have to design, develop and introduce new
products as a survival and growth strategy. Developing the new
products and launching them in the market is the biggest
challenge faced by the organizations. The entire process of need
identification to physical manufactures of product involves three
functions: marketing, product development, and manufacturing.
Product development translates the needs of customers given by

marketing into technical specifications and designing the various

features into the product to these specifications. Manufacturing
has the responsibility of selecting the processes by which the
product can be manufactured. Product design and development
provides link between marketing, customer needs and
expectations and the activities required to manufacture the
product.

PROCESS DESIGN
Process design is a macroscopic decision-making of an overall
process route for converting the raw material into finished goods.
These decisions encompass the selection of a process, choice of
technology, process flow analysis and layout of the facilities.
Hence, the important decisions in process design are to analyse
the workflow for converting raw material into finished product and
to select the workstation for each included in the workflow.
PRODUCTION PLANNING AND CONTROL
Production planning and control can be defined as the process of
planning the production in advance, setting the exact route of
each item, fixing the starting and finishing dates for each item, to
give production orders to shops and to follow up the progress of
products according to orders. The principle of production planning
and control lies in the statement First Plan Your Work and then
Work on Your Plan. Main functions of production planning and
control includes planning, routing, scheduling, dispatching and
follow-up. Planning is deciding in advance what to do, how to do
it, when to do it and who is to do it. Planning bridges the gap from
where we are, to where we want to go. It makes it possible for
things to occur which would not otherwise happen. Routing may
be defined as the selection of path which each part of the product
will follow, which being transformed from raw material to finished
products. Routing determines the most advantageous path to be

followed from department to department and machine to machine

till raw material gets its final shape.
Scheduling determines the programme for the operations.
Scheduling may be defined as the fixation of time and date for
each operation as well as it determines the sequence of
operations to be followed.

Dispatching is concerned with the starting the processes. It gives

necessary authority so as to start a particular work, which has
already been planned under Routing and Scheduling. Therefore,
dispatching is release of orders and instruction for the starting of
production for any item in acceptance with the route sheet and
schedule charts. The function of follow-up is to report daily the
progress of work in each shop in a prescribed proforma and to

investigate the causes of deviations from the planned

performance.
QUALITY CONTROL
Quality Control (QC) may be defined as a system that is used to
maintain a desired level of quality in a product or service. It is a
systematic control of various factors that affect the quality of the
product. Quality control aims at prevention of defects at the
source, relies on effective feedback system and corrective action
procedure.
Quality control can also be defined as that industrial
management technique by means of which product of uniform
acceptable quality is manufactured. It is the entire collection of
activities which ensures that the operation will produce the
optimum quality products at minimum cost.
The main objectives of quality control are:
1. To improve the companies income by making the production
more acceptable to the customers i.e., by providing long life,
greater usefulness, maintainability, etc.
2. To reduce companies cost through reduction of losses due to
defects.
3. To achieve interchangeability of manufacture in large scale
production.
4. To produce optimal quality at reduced price.
5. To ensure satisfaction of customers with productions or services
or high quality level, to build customer goodwill, confidence and
reputation of manufacturer.
5. To make inspection prompt to ensure quality control.
6. To check the variation during manufacturing.

MATERIALS MANAGEMENT
Materials management is that aspect of management function
which is primarily concerned with the acquisition, control and use
of materials needed and flow of goods and services connected
with the production process having some predetermined
objectives in view. The main objectives of materials management
are:
1 To minimize material cost.
2. To purchase, receive, transport and store materials efficiently
and to reduce the related cost.
3. To cut down costs through simplification, standardization, value
analysis, import substitution, etc.
4. To trace new sources of supply and to develop cordial relations
with them in order to ensure continuous supply at reasonable
rates.
5. To reduce investment tied in the inventories for use in other
productive purposes and to develop high inventory turnover
ratios.

MAINTENANCE MANAGEMENT
In modern industry, equipment and machinery are a very
important part of the total productive effort. Therefore, their
idleness or downtime becomes are very expensive. Hence, it is
very important that the plant machinery should be properly
maintained.

The main objectives of maintenance management are:

1. To achieve minimum breakdown and to keep the plant in good
working condition at the lowest possible cost.
2. To keep the machines and other facilities in such a condition
that permits them to be used at their optimal capacity without
interruption.
3. To ensure the availability of the machines, buildings and
services required by other sections of the factory for the
performance of their functions at optimal return on investment.

Q.4: PLANNING AND CONTROL OF JOB

SHOP PRODUCTION.

ANS:

In job shop production predictions of demand for products

is not possible. In a job shop different jobs are performed with a
prescribed set of operations and the time taken by each
operation. The equipment for job shop productions are divided for
use in different departments. The requirement of each machine is
different based on the operation to be performed for a particular
job. The job shop is waiting line system in the respect that when a
job is finished from one machine, it waits in line to enter the next
machine because there are earlier jobs in line too. Vice versa, the
machines also wait for jobs while running idly. So, a proper system
of planning and control has to be in place for optimizing the job
shop production.

Aspects of job shop production:

the proper sequencing and prioritizing is must for such
production to avoid confusion and wastage.
the scheduling should be done based on the estimated time
taken by each job.
the running time of a machine should be calculated while it is
performing an operation.

The performance of a facility is measured by following

standards:
1. The average time taken by each job.
2. The total processing time.
3. The mean of the number of jobs completed before stipulated
time and the jobs completed after the stipulated time.
4. The mean waiting time of each job.
5. The average of number of jobs to be done in a unit.

The factors affecting a job shop unit are as follows:

Total number of jobs to be done
Total number of machines required
Manufacturing facilities
Evaluation and assessment of efficiency of men and machines.

Q.5: PLANNING CONTROL OF PROJECT.

ANS: A project is a set of continuous and connected activities

and operations. One activity or stage of operation once done is
not repeated. Hence every project is exclusive and unique. An
example of a project is to design a new car. This project involves
activities like designing an entirely new or better function than
the existing models. Thus a project is a series of correlated
activities to achieve a common goal. The completion of a project
on time depends on various variables or factors such as:

1. The factors which cannot be controlled. These are

unforeseen factors like environmental forces or fluctuation in
the market or sudden dip or rise in demand.
2. Factors which can be controlled. These include alterations in
the existing facility to accommodate expansion, hiring more
employees and training existing ones, acquiring more
machines.
3. The objective factor: The objective of a project is to complete
all operations on time at minimum cost with the maximum
utilization of resources.

EVENT:

An event denotes the beginning or the end point of an activity or

operation. It is also referred to as a node. So a node or an event
indicates the starting or the end of a project and signifies an
important point in the project.

NETWORK DIAGRAM:

All activities and events in a project are connected to each other

in a logical and sequential manner forming a network. Network
diagrams represent the beginning and end of each activity and
specify the predecessor and successor events. Also which
activities are done simultaneously?

PROJECT NETWORKS

Consider the following project:

If we draw a network diagram from the above table then the

project can be shown as following:

This above diagram shows that the starting activities are A and D.
The nodes or events are labeled from A to G. The initial event is
the one which has arrows coming out of it and none entering it.

Time management of projects: All the activities have a different

time schedule.
1. There are projects for which there can be a fairly accurate
estimation of time. In such cases time management is done
by Critical Path Method (CPM).
2. There are other projects for which estimation of time is
difficult. In these cases Programme Evaluation and Review
Technique (PERT) method is followed.

Critical Path Method:

It is a process to plan and control projects where activity time is

known. This method is followed when the time of completion of
activity is known. The critical path is the longest route or path
which is followed to get a project completed. The length of the
critical path ascertains the minimum time in which a project can
be completed. The critical path prioritizes the activities. It
determines the activities are to be completed first. It also
establishes the jobs or activities which are non critical and whose
delay does not affect the master schedule of the project.

PERT:

In projects involving research and development, the time taken to

complete the project cannot be computed accurately. In CPM, the
cost of the project is taken into account but in PERT, the control
over time is given priority. Two types of estimates are done:
normal estimate and crash estimate. The normal estimate of time
represents the most likely time estimate in PERT. The crash
estimate represents the significant reduction in time to complete
the job. It means that the priority jobs are given the most
resources and the process is speeded up to meet the deadlines. It
is done by getting more employees to do overtime, increasing the
workforce and acquisition of more equipment.
The projects can thus be planned and controlled by:
1. Listing the activities or operations to be done.
2. Then the network diagram is drawn and the critical path is
located.
3. Then the least expensive and least time consuming activity
is crashed(decreasing the time of the activity) and this is
done till a critical path is obtained in which all jobs are at
their crash time.
4. The process is then reversed by uncrashing (increasing the
time on the activity) the most expensive activity first and
proceeding to the least expensive one.

To understand the project planning and control, let's take an

example of research and development in a pharma company.

The demand and need of a drug is first assessed in the market,

then the medicines are developed using active ingredients. These

medicines are then tested on random sample of people from a

similar geographical region. Based on the result of these studies,
the effectiveness and side effects are determined. Then
depending on these conclusions, the drug is manufactured
commercially. For this kind of an R and D project, time taken to
complete it cannot be estimated accurately. So the resources are
distributed accordingly to each stage of this project like recruiting
the specialists and researchers and undertaking clinical trials. The
project is done under controlled conditions.