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Manish Singh

Why should you study


Because ………….
*Understanding of modern approaches to managing

*Provides a systematic way of looking at

organizational process

*Presents interesting career opportunities

*Concepts & tools of OM is widely used in other


Production involves the step by step
conversion of one form of material into
another through chemical & mechanical
processing to create or enhance the utility
of the products.

What is operations management?

# Operations management refers to the direction and
control of the processes that transform inputs into finished
goods & services
*Organizations can be described as production

Set of inputs : Materials, Labour, Facilities,

Equipments, Land, Energy
Outputs : Goods & Services

Operation Inputs Outputs

Bank Tellers, Staff, Computer Loan, deposit, safekeeping

College Faculty, staff, library, Educated students, research


Airline Aircrafts, pilots, flight Transportation from one

attendant etc. location to another
Any activity or group of activities that takes
one or more inputs, transforms & adds
value to them and provides one or more
outputs for its customers.

Nested Process:
Concept of a process within a process

It is the part of the system that adds value
to the input
Value can be added in four ways:

Manufacturing Goods & Services

Tangible Intangible
Transfer of ownership No transfer of ownership

Homogenous Heterogeneous

A thing An activity or process

Production & distribution are Production, Distribution, Consumption

separated from consumption are simultaneous process.

Core value produced in factory. Core value produced in buyer seller

Can be stored Cannot be stored

Customers do not participate in Customers participate in production

production process process
Quality control is possible Difficult to control

Requires physical distribution Mostly worked with personal contact

Attributes can be determined before Difficult to evaluate in advance.

purchase eg. Colour, size etc.
Shelf life – days to years Shelf life zero

*Manufacturer not only produces goods and service
organizations not only offer services. Both type of
organization offer a package of goods & services.
*Despite the fact that service providers cannot
inventory their outputs, they must inventory the
inputs for their products.
*Many service operations have little outside
customer contact.

It is the value of outputs (goods & services)
produced divided by the values of input resources

Productivity measures:
Restaurant : Customer (meals) per labour hour
Retail Store: Sales per square foot
Utility Plant: Kilowatts per ton of coal
Insurance firm: office productivity as no. of policies
processed per employer per week.
Operations Managers key skill areas:
*Quantitative analysis to solve problems
* Knowledge of information system to manage vast
quantities of data.
*Concepts of organizational behaviour to aid in
designing jobs and managing jobs.
*An understanding of international business methods
to gain useful ideas about facility location,
technology, and inventory management

OM as a function
*Coordination & effective communication among
various functions are essential to achieve
organizational goal.

Various functions & their responsibilities in
an organization.

Various functions & responsibilities:

*Operations/Production transforms inputs into


*Accounting collects, summarizes, and interprets

financial information.

*Distribution deals with the movement, storage,

handling of inputs & outputs.

*Engineering develops product & service designs and

production methods.
*Finance secures and invests the company’s capital

*Human resources hires & trains employees.

*Marketing generates demand for the company’s


Decisions in POM
Decisions can be divided into 5 categories:
*Strategic Decisions: determines company’s global
strategies & Competitive priorities.

*Process Decisions: job work, automation,

improvements, technology decisions.

3. Quality Decisions: to establish quality objectives &

the ways to improve it (TQM) & the use of
inspection & statistical method to monitor the
quality produced (SPC)

4. Capacity, Location & Layout Decisions:

5. Operating Decisions: Supply Chain Management,

Forecasting, Inventory management, Resource
planning & Scheduling decisions are done.
Types of Production
There are 3 types of production:

Job Production
A process with the flexibility needed to
produce a variety of products or services in
significant qualities. (customer
requirements of special order)

Eg: machining a metal casting for a customized

product, handling a special delivery mail, making
customized cabinets etc.
Batch Production
A process that differs from the job process
with respect to volume, variety & quantity.

Eg: making components to feed the assembly line,

processing loan, manufacturing medicines etc.

Continuous Production
The extreme end of high volume,
standardized production with rigid line

Eg: Petroleum refineries, chemical plants, plants

making beer, steel etc.

Two types of continuous production:

a. Mass Production
b. Flow Production

Objectives of Production Mgmt.

1. Ultimate Objective
The primary responsibility of the
manufacturing activity is to produce a
product or products at
#pre-established cost
#according to specified quality
#with stipulated time frame

i.) Manufacturing Cost:

Reduction in Variable Cost, Fixed Cost, Increase in
volume of production & allocation of fixed overheads.

ii) Product Quality

Quality standards should be maintained, cost and
time schedule should not be compromised.

iii) Manufacturing Schedule

Time schedule should be broken into sub systems
& should not be set for shipment alone

2. Intermediate Objectives:
To attain optimum utilization of various
types of inputs.
i) Machinery & Equipment:
Acquisition & Utilization of machinery &

ii) Materials:
per unit material cost should be specified &
efforts should be made to increase the
inventory turnover.

iii) Manpower
Manpower should be closely allied with the
objective of manpower selection, placement,
training, rewarding & utilization

iv) Manufacturing services

Provision of proper & adequate services that
directly affect the utilization of inputs
(men, machine, material) like, power, water
supply, material handling etc.