INTRODUCTION

Why operations management

Business organization
Aim Product / Service Value addition Competition Cost Quality Delivery Flexibility

Historical evolution of POM

UPTO 1930 manufacturing management (Adam Smith) scientific management (Frederick W. Taylor) economic benefits of specialization of labor 1930 to 1950 Production management focused on economic efficiency in manufacturing eliminate wasteful efforts and achieve greater efficiency After 1970 Operations management

service sector became more prominent

emphasis on synthesis, rather than just analysis

conversion process
Changes/ converts inputs into outputs.

Inputs are- land, labour, capital (Others?) Output is-goods and services

operations system
operations system (function) of an organization is the part that produces the organization's products.

Operations Management

Input

Output

Definition of OM

Management of conversion process to ensure desired output Methodology to optimize efficiency To design, operate & improve a system that creates & deliver organizations primary product/servicer

Manufacturing and service organizations

Features Output Duration of consumption of output Nature of work

Manufacturing Operations Tangible High Less labour, more equipment

Service operations Intangible Immediate More labour, less equipments

Degree of customer contact

Low

Direct
Frequent Elementary method High Small

Customer involvement in conversion No Measurement of performance Variation in demand Scale of operation Sophisticated methods Low Big

Systems view of operations

What is a system?

Collection of objects related by regular interaction and interdependence.

systems model of the organization identifies the subsystems, or subcomponents, that make up the organization These systems are not independent but are interrelated co one another in many vital ways.

Boundaries separating the various subsystems are not clear and distinct.

Type of operations management

Classical school Scientific management Process orientation

Behavioral school Human relations Social systems Modeling school Decision-making Systems theory Mathematical modeling.

Mathematical modeling
Mathematical modeling refers to the creation of mathematical representations of management problems and organizations in order to determine outcomes of proposed courses of action. They show functional relationship among variables by using mathematical symbols and equations.

Optimization models
Best solution in steps normally using algorithm Heuristic models Quick satisfactory solutions using rules of thumb.

Operation strategy
1. 2. 3. 4. 5. 6. Shorter product cycle Production flexibility Low cost process Convenience & location Quality Product variety & facility design

Relationship between production & Quality

Type of product

Custom product Low volume product High volume with multiple choices Highly standardized product

Product life cycle

Types of Productive systems

Process focused systems: A)Used for custom products B)High flexibility C)Specialization in generic process D)Material flow from 1 process to another Product focus systems: A)Used for standardized product B)High efficiency C)High automation & low cost D)Continuous material flow E)High inventory

Types of Inventory systems

To-order: A)Product design flexibility B)Low inventory cost C)Better quality control

To-stock A)Better product availability B)Reduce variable cost C)Improved market share

PLC & Productive system

PLC & Technology used

Organization structure & productive system

Type of service system

Stagnant personal services Substitutable personal services Progressive services Explosive services
Financial tools for selection of asset
Pay back period : = Net investment / Net annual return Net Present value = Returns at present value Investment (expenses) at present value