Production Management

Production Management is the process of effectively planning and regulating that part of an enterprise which is responsible for the actual transformation of material into finished products.(E.F.L.Brech) PM is concerned with those processes which convert the inputs into the outputs. The inputs are various resources like raw materials, men, methods etc and the outputs are goods and services.(H.A.Harding)
1-1

Operation Management
Operations Management is a systematic approach to addressing issues in the transformation process that converts inputs into useful,

revenue generating outputs

1-2

1-3

Various Design and Operating Decisions

Decisions
Forecasting

Basic Question
How much, When and What Products and Services Organization Offering How Much capacity will be needed What should be the location Best arrangement for departments for proper work flow How can products and design be improved

Design- Product and Services Selection Capacity Location Layout

Product and service design

Design of Work System

What is the best way to motivate employees

1-4

Decisions
Operation - Aggregate Planning

Basic Question
How much capacity will be needed

Inventory Mgmt Materials Requirement Plan Scheduling Project management Waiting Lines

How much to order What materials, parts will be needed How can job best be schedule Which activities are the most critical to the success of project How can bottlenecks be reduced

Quality Assurance

How can quality be improved

1-5

Responsibility of Operations Manager

Planning
Capacity Location Products and Services Layout Projects Scheduling

Controlling
Inventory Control Quality Control

1-6

Responsibility of Operations Manager

Organizing
Degree of Centralization Make or Buy Subcontracting

Staffing
Use of Overtime Hiring/laying off

Directing
Incentive plans Issuance of work orders Job assignments
1-7

Factors Influencing process choice

Volume: Average quantity of the products produced in a manufacturing system Variety: Number of alternative products and variants of each product that is offered by a manufacturing system Flow: Flow indicates the nature and intensity of activities involved in conversion of components and material from raw material stage to finished goods stage

1-8

Relationship Between Volume and Variety

1-9

Types of Production/Production System

Types of Production

Continuous or Flow

Intermittent

Jumbled

Mass Production

Process Production

Assembly Line

Job Production

Batch Production

Analytical Production

Synthetic Production

1-10

Continuous Flow Production Characteristics

Large Volume Standardized Design Automatic Machines

Merits
Minimum Work in Progress inventory Negligible waiting times Minimum Cost of Material Handling
1-11

Cont
Demerits Rigid Fault in one operation stop whole It is necessary to avoid collection of work at any stage

1-12

Example

1-13

Characterized by mid-volume, mid-variety products/services Increases the flow complexities Flow and capacity balancing are difficult but important Process industries use batch production methods Discrete industries use alternative methods of designing layout issues Capacity Estimation is hard Production Planning & Control is complex
1-14

Mass Production When Production is in bulk Large Scale production Standardized processes Process Production Manufacturing is divided into various processes.

1-15

Analytical Process Where raw material is broken into different finished products like in petroleum refineries crude oil is broken into different finished goods like petrol, Diesel, Kerosene oil, etc. Synthetic Process When two or more materials are mixed or blended together to have one finished product like chemical industries. Assembly Line All machines and operations are sequentially arranged.
1-16

Intermittent Production
IM are those where facilities must be flexible enough to handle a variety of products and sizes, or where the basic nature of activities imposes changes in inputs.

1-17

Characteristics of Intermittent Promotion Flow of production is not continuous Volume is small Wide variety of Products General purpose machines are used No single sequence of operations, changed periodically

1-18

Job production Involves the manufacturing of a single complete unit with the use of group of operators and processes as per customers order. Each job is individually planned Process is custom made or non standard Fixed position layout is used Wide range of general purpose machines are used
1-19

Merits Small investments in machinery Flexible Fault of one operation do not affect others De merits Inefficient utilizations of machines Speed of work is slow

1-20

Productivity

Output Productivity = Input

1-21

Types of Productivity Measures

Labor Productivity
Ratio of Output and labor hours worked/time

Examples Yards of Carpet Installed : Labor Hours (Yards per hour) Number of Offices Cleaned : Number of Shifts (Offices per shift)

1-22

 Machine Productivity
When labor replaced by machine Number of pieces per hour by a machine

1-23

Multifactor Productivity
Involves measuring inputs and outputs using a common unit of measurement.
Measuring output in terms of cost or money with input in terms of cost or money

1-24

Calculate the productivity for the following operations

a. Three employees process 600 insurance policies in a week. They work 8 hours per day, 5 days per week.

SOLUTION Policies processed a. Labor productivity = Employee hours 600 policies = = 5 policies/hour (3 employees)(40 hours/employee)

1-25

Calculate the productivity for the following operations

b. A team of workers makes 400 units of a product, which is sold in the market for $10 each. The accounting department reports that for this job the actual costs are $400 for labor, $1,000 for materials, and $300 for overhead. SOLUTION Value of output a. Multifactor productivity = Labor cost + Materials cost + Overhead cost

(400 units)($10/unit) $4,000 = = 2.35 $400 + $1,000 + $300 $1,700

1-26

Natalie Attire makes fashionable garments. During a particular week

employees worked 360 hours to produce a batch of 132 garments, of

which 52 were seconds (meaning that they were flawed). Seconds are sold for $90 each at Attires Factory Outlet Store. The remaining 80 garments are sold to retail distribution at $200 each. What is the labor productivity ratio of this manufacturing process?

1-27

SOLUTION
Value of output = (52 defective 90/defective) + (80 garments 200/garment) = $20,680 Labor hours of input = 360 hours Output $20,680 Labor productivity = = Input 360 hours

= $57.44 in sales per hour

1-28

Factors Affecting Productivity

Methods Capital Quality Technology Management

1-29

Improving Productivity
Develop Productivity Measures for all department- Measurement is the first step in managing and controlling an operation. Look at system as whole in deciding which operations to concentrate on- it is overall productivity that is important. (Example Bottleneck situation) Develop methods for achieving productivity improvements- soliciting ideas from worker, engineers, etc.
1-30

 Establishing reasonable goals for improvements Make it clear that management supports and encourages productivity- Incentives to reward worker for contribution

Measure improvements and publicize them.

1-31

Major Issues that Influence Managerial Decisions

Productivity Government Regulation Pollution Control The International Scope of Operations Foreign Competition Cost and Quality- Consumer awareness Technology The Increasing Importance of Service Operation Managerial Attention to Employee Viewpoint
1-32

 Competitiveness Price Quality Product Differentiation Flexibility Delivery Time Strategy (Japanese vs US)
1-33