PRODUCTION & OPERATIONS

Management
UNIT-I

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 LECTURE-1

Overview

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 Overview
Subject Name: Production and
Operations Management
Paper Code: 305
Credits: 04
Textbook: Mahadevan B.,
Operations Management : Theory &
Practice, Pearson Education

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 a na ge ment
pe r a t i o n sM
r od u c ti o n&O
P
Lecture-1

Production: Application of resources such as

people and machinery to convert materials into
finished goods and services.
Production and Operations Management:
Managing people and machinery in converting
materials and resources into finished goods and
services.

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 PRODUCTION SYSTEM

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 Automated Plant

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 Water Bottling Machine

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 Assembly Line

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 Boeings in the making

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 COLLEGE AS A SERVICE ORGANIZATION
Input Planning & Supportive Output
controlling Subsystems
Students Class Times Bookstore Educated
Students
Professor Course
Development Library Research
Outcomes
Buildings School Computer Lab
Regulations Service to
Public
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 Examples of Production & Operations System

Operations Examples
Goods Producing Farming, mining, construction ,
manufacturing, power generation
Storage/Transportation
Warehousing, trucking, mail
service, moving, taxis, buses,
hotels, airlines
Exchange Retailing, wholesaling, banking,
renting, leasing, library, loans
Entertainment Films, radio and television,
concerts, recording
Communication Newspapers, radio and television
newscasts, telephone, satellites

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 Objective of the production
management
Ultimate objective
Manufacturing cost
Product Quality
Manufacturing schedule
Intermediate objective
Machinery and equipment
Material
Manpower
Manufacturing services
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 LECTURE-2

DIFFERENCE BETWEEN PRODUCTION

& OPERATIONS MANAGEMENT

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 Characteristics of Goods
Lecture-2
Tangible product
Consistent product
definition
Production usually
separate from
consumption
Can be inventoried
Low customer interaction

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 Characteristics of Services
Intangible product
Produced & consumed at
same time
Often unique
High customer interaction
Inconsistent product definition
Often knowledge-based
Frequently dispersed

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Goods Contain Services / Services Contain Goods
Automobile
Computer
Installed Carpeting
Fast-food Meal
Restaurant Meal
Auto Repair
Hospital Care
Advertising Agency
Investment Management
Consulting Service
Counseling

100 75 50 25 0 25 50 75 100
Percent of Product that is a Good
Percent of Product that is a Service
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 Key Differences between manufacturing and Service operations

1. Customer contact
2. Uniformity of input
3. Labor content of jobs
4. Uniformity of output
5. Measurement of productivity
6. Production and delivery
7. Quality assurance

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 Key Differences between manufacturing and Service operations

8. Amount of inventory
9. Evaluation of work
10. Ability to patent design

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 Goods vs. Service
Characteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not usual

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 New Challenges in OM
From
To Global focus
Local or national Just-in-time
focus Supply chain
Batch shipments partnering
Lengthy product Rapid product
development development
cycles Strategic alliances
Standardized
Mass customization
products Empowered
employees
Job specialization
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 Challenges faced by Operations
Manager
Global Competition
Quality, Customer Service, and Cost
Challenges
Computers and Advanced
ProductionTechnology
Growth of Service Sector
Scarcity of Production Resources
Issues of Social Responsibility
Availability of skilled Employee
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 LECTURE-3

BRIEF HISTORY OF PRODUCTION

MANAGEMENT

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 History of Operations
Lecture-3

Cottage System <1700 TIME

1700 - 1800
Industrial
Revolution
Civil War
1850s

1890s
Scientific
Management
Moving Assembly 1910s

Line
Hawthorne 1930s

Studies
Operations 1940s

Research 1970s
Global
Competition
Service 1980s

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Mass
L- 3 1990s
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 MASS PRODUCTION/ MOVING
ASSEMBLY LINE
MODEL T Machine that Changed the World
1914: Ford produced 308,162 cars, more than
all 299 other auto manufacturers combined
1927: Automobile Produced every 24 seconds
Higher volumes Lower cost Lower Prices
Increased Sales Higher Volumes

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 FORD MODEL T

First Produced:
October 1908
By 1927,
15,000,000
Produced
Any Color so long
as its Black

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 POM Assembly Lines

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 Modern Assembly Line
Worlds Second Largest
Manufacturer of Automobiles
About 240,000 Employees
Produces a Vehicle about
every Six Seconds
Consistently Profitable
GM: $1.1 Billion Quarter Loss

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 LECTURE-4

NATURE & SCOPE OF POM

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 Scope of POM

LONG TERM DECISIONS

Product selection and design
Process selection and planning
Location facility
Capacity planning
Material Handling facility

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 Scope of POM
SHORT TERM DECISIONS
Production planning
Production control
Inventory control
Quality control
Method study
Maintenance and replacement
Cost reduction

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 NATURE OF POM

Production as a System

Production as an Organization Function

Decision Making in POM

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 Nature of POM

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 contd.
INTERNAL ENVIRONMENT: Internal factors affecting
production:-
Engineering- Product quality
R& D Product development
Quality- Quality control & assurance

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 .CONTD.
EXTERNAL ENVIRONMENT: External factors affecting
production:-
Government
Competition
Technology
Economic conditions
Legal environment
Social environment
System operates in an environment, so system has to take
feedback from its environment & adjust its parameters
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accordingly.
 Nature of POM
Production as an Organization Function:
Companies cannot compete using marketing,
finance, accounting, and engineering alone.
We focus on POM as we think of global
competitiveness, because that is where the vast
majority of a firms workers, capital assets, and
expenses required.
To succeed, a firm must have a
strong coordination teaming with the other
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 Nature of POM

Decision Making in POM

Strategic Decisions:- Decisions of strategic
importance and have long-term significance for the
organization.
Examples include deciding:
the design for a new products
production process
where to locate a new factory whether to launch
a new-product development plan
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 .contd.
Operating Decisions
These decisions are necessary if the ongoing
production of goods and services is to satisfy
market demands and provide profits.
Examples include deciding:
how much finished-goods inventory to carry
the amount of overtime to use next week
the details for purchasing raw material next
month
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 contd.
Control Decisions
These decisions concern the day-to-day activities of
workers, quality of products and services, production
and overhead costs, and machine maintenance.
Examples include deciding:
labor cost standards for a new product
frequency of preventive maintenance
new quality control acceptance criteria

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 Production as an organization
function
Production makes goods & services; it plays a vital
role in achieving a firms strategic plans or goals.
Production involves greatest employees & is
responsible for large portion of the firms assets.
Production has an impact on quality of the goods.
Companies cannot compete using marketing,
finance, accounting, and engineering alone.

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 Production as an organization
function
We focus on POM as we think of global
competitiveness, because that is where the vast
majority of a firms workers, capital assets, and
expenses reside.
To succeed, a firm must have a strong
operations function teaming with the other
organization functions.

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 LECTURE-5

Five Ps of Production & Operations

Management/Transformation
systems

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 Five Ps of production/LECTURE-5

1. PRODUCT
2. PROCESS
3. PLANT
4. PLANNING & CONTROL
(PROGRAMMES)
5. PEOPLE

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 PRODUCT
Product: anything tangible that is capable of satisfying a felt
need.
New Product: - truly innovative and significantly different from
other existing products
Role of product in POM: concerns areas such as
PERFORMANCE
AESTHETICS
QUALITY
RELIABILITY
QUANTITY
PRODUCTION COSTS
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 PROCESS
A production process is a series of manufacturing
operations performed at work stations to achieve the
design specifications of the planning output
Five Types of production processes:
Project production
Job-shop production
Batch production
Assembly line/Mass production
Continuous production

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 PLANT
PLANT: bulk of fixed assets. In determining which
plant to use, management must consider areas such
as :
future demand
design & layout of factory, equipment, offices
productivity & reliability of equipment
need for ( and costs of ) maintenance
health & safety
environmental issues ( creation of waste product )

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 PLANT
Plant layout : is a floor plan of physical facilities
which are used in Production.
Objectives of plant layout :
Minimize investment in equipment
Minimize overall production time
Utilize existing space effectively
Provide for employee convenience, safety &
comfort
Maintain flexibility of arrangement & operation
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 PLANT
Classification of layout:
Process layout
Product layout
Group layout
Fixed position layout

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 PLANNING & CONTROL
PLANNING & CONTROL: planning process within an
organization is dynamic & continuous.
Production planning & control has three phases:
Planning phase
Action phase
Control phase
Planning phase: Pre-Production planning: Consists
of product development & design, forecasting,
capacity planning.
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 PLANNING & CONTROL
Active Planning: This consists of forecasting,
aggregate planning; master scheduling,
material resource planning
Action phase: Consists of dispatching which is
transition from planning phase to action phase
wherein worker is ordered to start
manufacturing the product.
Control phase: consists of progress reporting &
corrective action
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 TRANSFORMATIONS
Physical--manufacturing

Locational--transportation

Exchange--retailing

Storage--warehousing

Physiological--health care

Informational--telecommunications

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 TYPES OF TRANSFORMATIONS
Government (state, local, etc..)
Wholesale/retail (clothing, food,
stationery,etc..)
Financial services (banking, insurance,etc..)
Healthcare (doctors, dentists,hospitals,Etc..)
Personal services(laundry,dry
Cleaning,etc.)
Business services ( data processing, e-
business, etc..)
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 Characteristics of a transformation
system
Transformation is enabled by 5 Ps of
production & operations management.
Managing transformation system involves
continual monitoring of the system and
environment.
Conversion or transformation process which
transforms some of the inputs into outputs
which are useful for the consumers.
The outputs should have more value to
consumer than the cost of producing them.
Conversion is at heart of production function
& is present in some form in all organization.
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 Example of the transformation for Food Processor

Inputs Processing Outputs

Raw VegetablesCleaning Canned
Metal Sheets Making cansvegetables
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment

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 Lecture-6

Transformation systems/ Why study

POM?

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 Example of the transformation for Hospital Process

Inputs Processing Outputs

Doctors, nurses Examination Healthy

Hospital Surgery patients
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy

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 T U D Y P O M ?
WHY S
A vital function is necessary for
generating money to pay
employees, lenders, and
stockholders.
Effective production and
operations management can:
lower a firms costs of
production.
boost the quality of its goods and
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 WHY STUDY POM?
allow it to respond dependably to
customer demands.
enable it to renew itself by
providing new products.

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 Lecture-7

IMPORTANCE OF POM , ROLE OF AN

OPERATIONS MANAGER

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 Importance of POM
Improves Productivity:
Effective control of conversion process of inputs
into output (e.g. fewer defect outputs, less
wastage of material inputs, effective allocation
of staff, will lead to more output per unit of time)
Improves our ability to meet customer
needs
Ensures provision of high quality products and
services at reasonable prices.
Meeting customer needs is crucial to the long
term survival of the company

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 Importance of POM
Enables us to provide service to
our target customers better than
the competitors
Central to the building of a brand
name/reputation of the
company/firm, as a competitive
weapon: * High-quality
product/service provider * Low
cost/good value producer/service
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provider (e.g., Sony & Panasonic) *
Fast delivery or response/lead time
 Responsibilities of an Operations
Manager
Operational Planning : What, when and how
to produce
Organizing Operations: sequencing
operational activities (caned coke, 1 litre
bottles, 2.5 litres). * Operations scheduling
when to produce different product lines
(Monday, Tuesday, etc) * Operations control
ensures quality output - safe output
healthwise - quick output Operations
Management begins with the need to fulfill
identified customer needs! - What exactly
does the customer really want?
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 LECTURE-8

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 RECENT TRENDS IN POM

Global market place

Production and Operational strategy
TQM
Flexibility
Time Reduction
Technology
Worker involvement
Re Engineering
Environmental issues
Supply Chain management

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 SOME CURRENT TRENDS
Implementing/sustaining Quality Management
initiatives
Consolidating operations resulting from mergers
Speeding up the time to get new products to
market
Developing flexible production systems to enable
mass customization of products and services
Developing and integrating new technologies
Managing global supplier, production and
distribution networks
Outsourcing
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