Om Unit 1

Operations Management
KMBN 205
By
Dr.Anshul Pandey
Asst Prof
United Institute of Management
DR.ANSHUL PANDEY UIM PRYAGRAJ 1

Course Objectives
1. To understand the role of Operations in overall Business

Strategy of the firm.
2. To understand the application of operations management
policies and techniques to the service sector as well as
manufacturing firms.
3. To identify and evaluate the key factors and their
interdependence of these factors in the design of effective
operating systems.
4. To understand the trends and challenges of Operations
Management in the current business environment.
5. To familiarize the students with the techniques for effective
utilization of operational resources and managing the processes
to produce good quality products and services at competitive
prices

UNIT –I Production Concepts
Introduction, meaning, nature and scope of
production and operations management.
Difference between production and operations
management. Productivity, factors affecting
productivity and productivity measurement.
Work study—Method study and work
measurement. Production Technology –Types
of manufacturing processes. Plant location and
types of plant layout.
UNIT –II Operations Concepts
Services scenario in India, difference between
product and service, characteristics of services,
classification of services, product and service
design, factors affecting service design, service
designing process, service blueprinting, service
capacity planning. Dimensions of quality in
services, understanding service quality gap,
measuring service quality using SERVQUAL
model. Case Studies.
UNIT-III Material and Inventory
Management
Types of production planning, process of
production planning and control (PPC)
–routing, scheduling and loading. Master
production schedule, aggregate production
planning. Types of inventories, inventory
control techniques- EOQ, ABC, VED, FSN,
HML and SDE (Simple numerical problems on
Inventory control techniques). Just-in-time
(JIT) and KANBAN. Case Studies
UNIT-IV Supply Chain Management
Overview of supply chain management, conceptual
model of SCM, supply chain drivers, measuring
supply chain performance, core and reverse supply
chain, global supply chain, inbound and outbound
logistics, Bullwhip effect in SCM, push and pull
systems, lean manufacturing, agile manufacturing,
role of IT in SCM. Demand forecasting in supply
chain—Simple moving average method, weighted
moving average method, linear regression and
exponential smoothing method. Case Studies

UNIT-V Productivity and Quality:
TQM, Deming’s 14 principles, Juran’s quality
trilogy, PDCA cycle, KAIZEN, quality circles,
7QC tools and its 7 new management tools,
ISO 9000-2000 clauses, six sigma, Total
Productive Maintenance (TPM), 5S. Case
Studies

Historical Evolution of Production
and Operations Management
The traditional view of manufacturing management began in eighteenth century

when Adam Smith recognised the economic benefits of specialisation of labour. He
recommended breaking of jobs down into subtasks and recognises workers to specialised
tasks in which they would become highly skilled and efficient. In the early twentieth
century, F.W. Taylor implemented Smith‟s theories and developed scientific
management. From then till 1930, many techniques were developed prevailing the
traditional view.

Historical summary of operational management
Date Contribution Contributor

1776 Specialization of labour in manufacturing Adam Smith
1799 Interchangeable parts, cost accounting Eli Whitney and others
1832 Division of labour by skill; assignment of Charles Babbage
jobs by skill; basics of time study
1900 Scientific management time study and Frederick W. Taylor
work study developed; dividing planning
and doing of work
1900 Motion of study of jobs Frank B. Gilbreth
1901 Scheduling techniques for employees, Henry L. Gantt
machines jobs in manufacturing
1915 Economic lot sizes for inventory control F. W. Harris

Date Contribution Contributor
1927 Human relations; the Hawthorne studies Elton Mayo
1931 Statistical inference applied to product W. A. Shewart
quality: quality control charts
1935 Statistical sampling applied to H. F. Dodge and
quality control: inspection sampling H. G. Roming
plans
1940 Operations research applications in P. M. Blacker
World War II and Others.
1946 Digital Computer John Mauchlly and
J. P. Eckert
1947 Linear Programming G. B. Dantzig,
William & others.
1950 Mathematical programming, on-linear A. Charnes, W.
and stochastic processes W. Cooper &
others
1951 Commercial digital computer: Sperry Univac
large-scale computations
DR.ANSHULavailable.
PANDEY UIM PRYAGRAJ 12
Concept of Production
Production is defined as “the step-by-step conversion of one form of
material into another form through chemical or mechanical process to create or
enhance the utility of the product to the user.” Thus production is a value addition
process. At each stage of processing, there will be value addition.
Edwood Buffa defines production as „a process by which goods
and services are created‟.
Some examples of production are: manufacturing custom-made products
like, boilers with a specific capacity, constructing flats, some structural fabrication
works for selected customers, etc., and manufacturing standardized products like, car,
bus, motor cycle, radio, television, etc.

Concept of Production
(Contd.)
In a manufacturing organization production is

the fabrication of physical object through the
use of men money machine and material. In a
service organization production is the
discharge of a function which has some utility.

Production System
The production system of an organization is that part, which produces products
of an organization. It is that activity whereby resources, flowing within a defined system,
are combined and transformed in a controlled manner to add value in accordance with
the policies communicated by management.
The production system has the following characteristics:
Production is an organized activity, so every production system has an
objective.
The system transforms the various inputs to useful outputs.
It does not operate in isolation from the other organization system.
There exists a feedback about the activities, which is essential to control and
improve system performance.

Inputs: Transformation Outputs:
Process:
• Men • Product
• Materials • Product Design • Services
• Machines • Product Planning
• Information • Production Control
• Capital • Maintenance
Continuous:
• Inventory
• Quality
• Cost
Environment Feedback Information

t
w Fig. 1.1
DR.ANSHUL Schematic
PANDEY Production
UIM PRYAGRAJ System 16
Operations Management
Operations management (OM) is
the administration of business practices to
create the highest level of efficiency possible
within an organization. It is concerned with
converting materials and labor into goods and
services as efficiently as possible. Operations
management may be defined as the design
operation and improvement of the production
systems that creates the firms primary product
and services.
Production and Operation Management
Production and Operations Management

concerns itself with the conversion of inputs
into output, using physical resources, so as to
provide the derived utilities, place, possession
or state or a combination of these to the
customer while meeting the other
organizational objectives of effectiveness,
efficiency and adaptability.

Nature of production & Operation Management
• Dynamic- Operations management is dynamic in nature. It

keeps on changing as per market trends and demands.
• Transformational Process– Operation management is the
management of activities concerned with the conversion of
raw materials into finished products.
• Continuous Process– Operation management is a
continuous process. It is employed by organizations for
managing its activities as long as they continue their
operations.
• Administration– Operation management administers and
controls all activities of the organization. It ensures that all
activities are going efficiently and there is no
underutilization or mis-utilization of any resource.

Nature of production & Operation Management
• Results in Value Addition: Production management is a key tool available

with an organization which assist in value addition. It is a process which
enables in producing high-quality products by purchasing raw materials
from the right source, in right form, at right price and in right quantity.
These quality goods provide better satisfaction to customers thereby
improving goodwill of an organization.
• Inter-Disciplinary Approach: It is an inter-disciplinary approach which is
derived from several disciplines and subjects. Different subjects like
statistics, mathematics, economics, engineering, sociology and human
psychology have contributed toward the development of production
management approach.
• Part of General Management: Production management is an essential
component of General management. It is a tool which assist managers in
planning, organizing, coordinating and controlling all activities related to
the production of products and services.

Scope of Production & Operation Management
• Increase Productivity: Operation management played an

important role in increasing the productivity of business. It
manages all aspects of production activities to achieve highest
efficiency possible. Operation manager are responsible for
designing production plan for carrying out the operations. They
ensure that all inputs used by organizations are efficiently
transformed into outputs that is products or services.
• Raises Revenue: Operational management directly influences the
profitability of the business. It works on reducing the cost of
operations to business by reducing the wastage of resources.
Operations managers monitor every production activity and take all
necessary steps for maintaining efficiency in the organization..
• Achievement Of Organization Goals: Every organization strives
towards achievement of its desired goals. Proper management of
production activities helps business to properly implement their
strategic plans in their operation.
Scope of Production & Operation Management
• Improve Customer Satisfaction: Customer satisfaction is necessary for every business to

improving its relations with its customers. It helps them in retaining them for the long term.
Operation management monitors the quality of products manufactured by organizations. It
ensures that high-quality products are produced in accordance with the requirements of
customers.
• Reduce Investment Need: Operation management reduces the additional capital requirements
of the business. It ensures that all capital employed in the business are efficiently used.
Management of operations ensures that all production activities go uninterrupted without any
shortage of capital. By increasing the efficiency and avoiding the wastage of employed
resources, it avoids any deficiency of capital in business.
• Enhance Goodwill: Maintaining proper goodwill in the market is the goal of every business.
Operation management focuses on improving the position of the organization in the market. It
ensures that business works for providing better services to its customers
• Improve Innovation: Operation management helps in implementing innovative changes in
organizational activities. All decision regarding production planning is taken by operation
managers by doing research and analysis of prevailing market situations. It takes into account
all technological changes and builds a strong base of knowledge and operations.

Difference Between Production and Operation Management

Productivity
Productivity refers to the physical relationship between the quantity produced
(output) and the quantity of resources used in the course of production (input).
“It is the ratio between the output of goods and services and the input of resources
consumed in the process of production.”
Productivity is used to measure the efficiency or rate of production. It is the amount of
output (number of goods produced) per unit of input (Men, money, material, machine).

Concept
A relation between output

generated and input used
A critical
A key source determinantof
of economic
growth and
Productivity cost efficiency
competiveness
A method to determine
the capacity
utilization
DR.ANSHUL PANDEY UIM 25
Factors affecting Productivity

Factors affecting Productivity
Technical factors :Productivity largely depends on technology. Technical factors are
the most important ones. These include proper location, layout and size of the plant and
machinery, correct design of machines and equipment, research and development,
automation and computerization, etc. If the organization uses the latest technology, then
its productiveness will be high.

Production Factors
Productivity is related to the production-factors. The production of all departments
should be properly planned, coordinated and controlled. The right quality of
raw-materials should be used for production. The production process should be
simplified and standardized.

Organizational factor
Productivity is directly proportional to the organizational factors. A
simple type of organization should be used. Authority and Responsibility
of every individual and department should be defined properly. The line
and staff relationships should also be clearly defined. So, conflicts
between line and staff should be avoided. There should be a division of
labor and specialization as far as possible. This will increase
organization's productiveness.

Personnel Factors
Productivity of organization is directly related to personnel factors. The
right individual should be selected for suitable posts. After selection,
they should be given proper training and development. They should be
given better working conditions and work-environment. They should be
properly motivated; financially, non-financially and with positive
incentives.

Finance Factors
Productivity relies on the finance factors. Finance is the life-blood of modem business.
There should be a better control over both fixed capital and working capital. There
should be proper Financial Planning. Capital expenditure should be properly controlled.
The management should see that they get proper returns on the capital which is invested
in the business.

Management Factors
Productivity of organization rests on the management factors. The management of
organization should be scientific, professional, future-oriented, sincere and competent.
Managers should possess imagination, judgement skills and willingness to take risks.
They should make optimum use of the available resources to get maximum output at the
lowest cost.

Government Factors
Productivity depends on government factors. The management should
have a proper knowledge about the government rules and regulations.
They should also maintain good relations with the government.

Location factors
Productivity also depends on location factors such as Law and order
situation, infrastructure facilities, nearness to market, nearness to sources
of raw-materials, skilled workforce, etc.

Productivity Measurement
Productivity is a measure of the efficiency of production. The measure of
productivity is defined as a total output per one unit of a total input.
Productivity measurements must show a linkage with profitability; after
all, it is the bottom line that is the ultimate barometer of a company’s
success. Inputs in any production process comprises capital, labor,
material and energy.

Difference between Production and Productivity
Production Productivity
Definition It is defined as the act of it is defined as the rate at

manufacturing goods for which goods are produced.
their use or sale.
Use It is the actual process of It is the utilization of

conversion. resources to form goods.
Work done It is the amount of work It is the amount of work one
done or manufactured that gets for a certain spending
is the output. cost.
Measurement It is the measure of It is the measure of
produced goods. efficiency.
Important Note!
Production is a measure of output only and not a measure of efficiency
DR.ANSHUL PANDEY UIM 36
Productivity Measurements Techniques
There are broadly three types of productivity measurements
and these are explained below:
1. Single-Factor Productivity Measurement.
2. Multi-Factor Productivity Measurement.
3. Total (Composite) Factor Productivity Measures.

Single-Factor Productivity Measurement
Single-Factor Productivity is a measure of output against

specific input. Single-Factor or Partial productivity is
concerned with efficiency of one class of input. On
individual basis, output is compared with any one of the
input factor and this is called as Partial Productivity or
Single-Factor Productivity.
Single Factor productivity or partial productivity indices
are of following types:
1. Labor productivity
2. Material productivity
3. Machine Productivity
4. Capital productivity
Labour Productivity
Labor productivity is a single factor productivity measure. It is

the ratio of output to labor input (units of output per labor
hour).

Material Productivity
Material productivity is the ratio of output to materials input.

Capital Productivity
• For any production set-up, facilities of machines, tools, land
etc. are required which are assets of organization. Capital is
needed for such assets.
• Capital productivity depends on how effectively assets are
utilized.

Example

Machine Productivity
• Production system converts raw material into finished product

through mechanical or chemical process with the help of machines
and equipment's.
• Machine productivity depends upon availability of raw material,
power, skill of workers, machine layout etc.

Example

Multi-Factor Productivity Measurement
• Multi-Factor Productivity takes into account other factors that affect

overall business productivity. Multifactor productivity (MFP) is a
measure of economic performance that compares the amount of output
to the amount of combined inputs used to produce that output.
• A multifactor productivity ratio compares production output over
labor, materials, energy, overhead etc.

Example

Example

Total Factor Productivity
• The Total Factor Productivity model developed by John W. Kendrick in 1951, he
has taken only labor and capital as only two input factors.
• TFP is a measure of the output of an industry or economy relative to the size of all
of its primary factor inputs. When the growth of a nation’s economic output over
time is compared with the growth of its labor force and its capital stock (inputs) it is
usually found that the former exceeds the latter. This is due to the growth of TFP,
that is, the ability to combine the factors (labor and capital) more effectively over
time. This can be due to changes in qualities (more appropriate skills or embedded
technologies) or to better methods of organization.

Example
A manufacturing company’s data for output produced and inputs consumed for a particular time period are
given below.
Output = Rs 2000
Human Input=Rs 600
Material Input=Rs 400
Capital Input=Rs 600
Energy= Rs 200
Other Expense= Rs 100
Solution:
If the company purchases all its materials and services, inclusive of energy, machinery, and equipment (on
lease), and other services, i.e., marketing, advertising, information processing, consulting etc., then,
net output = 2,000 – (400 + 600 + 200 + 100)
= 2,000 – 1,300
= Rs. 700.

Total Productivity Model
Total Productivity Model was developed by David J. Sumanth in 1979
considered five items as inputs. The Total Productivity Model (TPM) is based
on a total productivity measure and a set of five partial productivity measures.
5 input factors for the measurement of the productivity are

1)Human
2)Material
3)Capital
4)Energy
5)Other expenses (taxes, transport, office etc.)
This model can be applied in any manufacturing or service organization.
Example
A manufacturing company’s data for output produced and inputs consumed for a particular time
period are given below.
Output = Rs 2000
Human Input=Rs 600
Material Input=Rs 400
Capital Input=Rs 600
Energy= Rs 200
Other Expense= Rs 100
Solution:

Work study
Meaning:
work study is a tool or technique of management involving
the analytical study of a job or operation.

Work study
Definition:
According to ILO(International Labor Organization) work study is “A term used to
embrace the techniques of method study and work measurement which are employed to
ensure the best possible use of human and material resources in carrying out a specified
activity.”
Work study is normally used in an attempt to increase output from a given quantity of
resources with little or no further capital investment. This is achieved by systematically
analyzing existing operations, processes and work methods.

Objectives
I. To analyze the work in order to achieve work simplification
and thereby improving productivity of the system.
II. To have optimum utilization of resources i.e., 4 Ms.
III. To evaluate the work content through work measurement.
IV. To set time standards for various jobs
V. It eliminates wasteful elements;
VI. To sets standard of performance;
VII. To utilize plant and human more effectively;

Work Study Procedure
1. Select the job or process to be studied.
2. Record from direct observation everything that happens in order to obtain data for analysis.
3. Examine the recorded facts critically and challenge everything that is done, considering in turn: the purpose of the
activity, the place where it is performed; the sequence in which the elements are performed; the person who is doing it;
the means by which it is done.
4. Develop the most economic methods, taking into account all the circumstances.
5. Measure the amount of work involved in the method used and calculate a “standard time” for doing it.
6. Define the new method and the related time.
7. Install the new method and time as agreed standard practice.
8. Maintain the new standard practice by proper control procedures.

Method study
Method study (often called motion study, method analysis or methods engineering) is
the systematic recording and critical examination of existing and proposed ways of
doing work in order to develop and apply easier and more effective methods and to
reduce costs. It is used to improve processes and procedures. Method study is a
systematic method of analyzing the method of doing a job including human movements
involved in it. So it is the process of analyzing the methods involved in work flow to
increase productivity.

Method Study Procedure

Recording Techniques
Method study uses formal techniques to record the sequence of activities, the
time relationship between different activities, the movement of materials and
the movement of staff. The recording techniques must be critically drafted, as
the triumph of method study largely depends upon this particular step. The
recording techniques should be designed with a view to simplify the work and
standardize the recording process.

Recording Techniques

Charts Used In Methods Study
This is the most popular method of recording the facts. The activities
comprising the jobs are recorded using method study symbols. A great
care is to be taken in preparing the charts so that the information it
shows is easily understood and recognized. The following information
should be given in the chart. These charts are used to measure the
movement of operator or work (i.e., in motion study).
• Adequate description of the activities.

• Whether the charting is for present or proposed method.
• Specific reference to when the activities will begin and end.
• Time and distance scales used wherever necessary.
• The date of charting and the name of the person who does charting.

Two-Handed Process Chart

Micro Motion Study
• Technique of recording and analyzing the
timing of basic elements of an operation
• Developing best possible pattern of movement;

operator performing @ minimum effort and
fatigue, for repeated operations
• Consists of taking motion pictures of the

operation with a clock in the picture (or with a
video camera running at a known speed)

Macro Motion & Micro Motion
Macro motion study is one which can be measured through ‘stop watch’
and micro motion study is one which cannot be measured through stop
watch.
The macro motion study is a research method that breaks a job down into
tasks and movements and the micro motion study is a method that
defines a unit movement as several body motions.

Micro Motion Chart

Diagrams Used In Method Study
The flow process chart shows the sequence and nature of movement
but it does not clearly show the path of movements. In the paths of
movements, there are often undesirable features such as congestion,
back tracking and unnecessary long movements. To record these
unnecessary features, representation of the working area in the form of
flow diagrams, string diagrams can be made:
• To study the different layout plans and thereby; select the most
optimal layout.
• To study traffic and frequency over different routes of the plant.
• Identification of back tracking and obstacles during movements.

FLOW DIAGRAM
Flow diagram is a drawing, of the working area, showing the

location of the various activities identified by their numbered
symbols and are associated with particular flow process chart
either man type or machine type.The routes followed in transport
are shown by joining the symbols in sequence by a line which
represents as nearly as possible the path or movement of the
subject concerned.

STRING DIAGRAM
The string diagram is a scale layout drawing on which,

length of a string is used to record the extent as well as
the pattern of movement of a worker working within a
limited area during a certain period of time. String
diagram is one of the useful and simplest techniques of
method study. It can be defined as a scale model on
which a thread is used to trace the path or movements of
man and materials during a specified sequence of
events.
It can also be stated that string diagram in a special form
of flow diagram.

Symbols Used in Method Study
Graphical method of recording was originated by

Gilberth, in order to make the presentation of the facts
clearly without any ambiguity and to enable to grasp
them quickly and clearly. It is useful to use symbols
instead of written description.

Method Study Symbols

Example

Operation
An operation occurs when an object is intentionally changed in one or more of its
characteristics (physical or chemical). This indicates the main steps in a process,
method or procedure.
Examples of operation are:
• Turning, drilling, milling, etc.

• A chemical reaction.
• Welding, brazing and riveting.
• Lifting, loading, unloading.
• Getting instructions from supervisor.

Inspection
An inspection occurs when an object is examined and compared
with standard for quality and quantity.
The inspection examples are:
• Visual observations for finish.

• Count of quantity of incoming material.
• Checking the dimensions.

Transportation
A transport indicates the movement of workers, materials or
equipment from one place to another.
Example:
• Movement of materials from one work station to another.
• Workers travelling to bring tools.

Delay : Delay (Temporary Storage)
A delay occurs when the immediate performance of the next
planned thing does not take place.
Example:
• Work waiting between consecutive operations.
• Workers waiting at tool cribs.
• Operators waiting for instructions from supervisor.

Storage
Storage occurs when the object is kept in an authorized custody and is
protected against unauthorized removal. For example, materials kept in
stores to be distributed to various work.

Combined Activities
Indicates a controlled storage in which material is received into or issued
from a store under some form of authorization; or an item is retained for
reference purposes.

Work Measurement
Work measurement is concerned with the determination of the
amount of time required to perform a unit of work. Work
measurement is very important for promoting productivity of an
organization. It enables management to compare alternate methods
and also to do initial staffing. Since it is concerned with the
measurement of time it is also called ‘Time Study’.

Objectives of Work
Measurement
a) To compare the times of performance by alternative
methods.
b) To enable realistic schedule of work to be prepared.
c) To arrive at a realistic and fair incentive scheme.
d) To minimize the human effort.
e) To assist in the organization of labor by daily comparing
the actual time with that of target time.

Work Measurement Procedure

Techniques of Work Measurement
• Time Study
• Activity Sampling
• Pre-determined Motion Time System
• Analytical Estimating

Time study
Time Study consists of recording times and rates of work for

elements of a specified job carried out under specified conditions
to obtain the time necessary to carry out a job at a defined level of
performance.
In this technique the job to be studied is timed with a stopwatch,

rated, and the Basic Time calculated.

Activity Sampling
Activity sampling is a technique in which a large number of

instantaneous observations are made over a period of time of a
group of machines, processes or workers. Each observation
records what is happening at that instant and the percentage of
observations recorded for a particular activity or delay is a
measure of the percentage of time during which the activity or
delay occurs.

Predetermined Motion Time System
A predetermined motion time system is a work measurement

technique whereby times established for basic human motions
(classified according to the nature of the motion and the
conditions under which it is made) are used to build up the time
for a job at a defined level of performance.

Analytical Estimating
This technique introduces work measurement concepts into estimating. In

analytical estimating the estimator is trained in elemental breakdown, and in
the concept of standard performance. The estimate is prepared by first
breaking the work content of the job into elements, and then utilising the
experience of the estimator (normally a craftsman) the time for each element
of work is estimated – at standard performance. These estimated basic minutes
are totalled to give a total job time, in basic minutes.

Production Technology
Production technology includes any machinery that makes creating a
tangible physical product possible for a business. To the small business,
this means a workshop at the very least, with more elaborate operations
making use of machines and assembly lines.

Manufacturing Process
A manufacturing process is the way a business will establish how
it will produce its products for its customers. Types of
Manufacturing Processes are as follows
• Repetitive Manufacturing
• Discrete Manufacturing
• Job Shop Manufacturing
• Process Manufacturing (Continuous)
• Process Manufacturing (Batch)

Repetitive Manufacturing
When it comes to the traditional concept of a production line. This is where the same
products, or those similar in nature, are being produced one right after the other.
Repetitive manufacturing is a form of mass production that relies on making high
numbers of identical units in a continuous flow. This type of manufacturing is suited for
a number of applications and is used in factories all over the world.

Discrete Manufacturing
Discrete manufacturing is the production of distinct items. Discrete manufacturing is an
industry term for the manufacturing of finished products that are distinct items capable
of being easily counted, touched or seen. What is meant by discrete manufacturing is
that the object being created is a distinct unit. You can divide non-distinct products, like
oil, into any size you want. You cannot divide a teapot into two halves because it is a
distinct unit.Examples of discrete manufacturing are vehicles, aircraft, smartphones etc.

Job Shop Manufacturing
A job shop is a type of manufacturing process in which small batches of a variety of

custom products are made. In the job shop process flow, most of the products produced
require a unique set-up and sequencing of process steps. examples of job shops include
a wide range of businesses—a machine tool shop, a machining center, a paint shop, a
commercial printing shop, and other manufacturers that make custom products in small
lot sizes.

Process Manufacturing (Continuous)
Continuous process manufacturing is quite similar to repetitive and will often run around
the clock. The continuous flow process involves moving one work unit at a time
between each step of the process — with no breaks in time, sequence, substance, or
extent. For example Oil refining, Chemicals, Power stations etc.

Process Manufacturing (Batch)
Batch manufacturing is a style of manufacturing which compiles the different
components of a product through step by step processes.
This basically means that the raw materials move through the production line in
batches, so that there is a pause between each step as a batch moves through.
For decades, pharmaceutical firms have manufactured their products in batches. In
batch manufacturing, a “batch” is a specific quantity of a drug produced through a
multi-step process.

Plant location
Plant location refers to the choice of region and the selection of a
particular site for setting up a business or factory.

Factors Affecting Plant Location

Plant layout
Plant layout refers to the arrangement of physical
facilities such as machinery, equipment, furniture etc.
with in the factory building in such a manner so as to
have quickest flow of material at the lowest cost and with
the least amount of handling in processing the product
from the receipt of material to the shipment of the
finished product.
According to Riggs, “The overall objective of plant

layout is to design a physical arrangement that most
economically meets the required output – quantity and
quality.”
Types of Plant layout
Plant layout differs from plant to plant, from location to location and
from industry to industry. But the basic principles governing plant layout
are more or less same. From the point of view of plant layout, we can
classify business or unit into three categories:
1. Manufacturing units
2. Traders
3. Service Establishments

Manufacturing units
In case of manufacturing unit, plant layout may be of four types:

(a) Product or line layout
(b) Process or functional layout
(c) Fixed position or location layout
(d) Combined or group layout

Product or line layout
Under this, machines and equipment's are arranged in one line
depending upon the sequence of operations required for the product. The
materials move form one workstation to another sequentially without
any backtracking or deviation. Under this, machines are grouped in one
sequence. Therefore materials are fed into the first machine and finished
goods travel automatically from machine to machine, the output of one
machine becoming input of the next.

Process layout
In this type of layout machines of a similar type are arranged together at
one place. E.g. Machines performing drilling operations are arranged in
the drilling department, machines performing casting operations be
grouped in the casting department. Therefore the machines are installed
in the plants, which follow the process layout.

Fixed Position or Location Layout
In this type of layout, the major product being produced is fixed
at one location. Equipment labour and components are moved to
that location. All facilities are brought and arranged around one
work center.

Combined layout
In manufacturing concerns where several products are produced in
repeated numbers with no likelihood of continuous production, combined
layout is followed. Generally, a combination of the product and process
layout or other combination are found, in practice.

2. Traders
When two outlets carry almost same merchandise, customers usually buy
in the one that is more appealing to them. Thus, customers are attracted
and kept by good layout i.e. good lighting, attractive colours, good
ventilation, air conditioning, modern design and arrangement and even
music. All of these things mean customer convenience, customer appeal
and greater business volume.
There are three kinds of layouts in retail operations today.
1. Self service or modified self service layout
2. Full service layout
3. Special layouts

The self-service layouts
The self-service layouts, cuts down on sales clerk’s time and allow
customers to select merchandise for themselves. Customers should be led
through the store in a way that will expose them to as much display area
as possible, e.g. Grocery Stores or department stores.

Full service layout
Certain specialty enterprises sell to fewer numbers of customers or

higher priced product, e.g. Apparel, office machines, sporting goods,
jewelry, furniture and appliances are all examples of products that
require time and personal attention to be sold. These full service layouts
provide area and equipment necessary in such cases.

Special Layout
Some layouts depend strictly on the type of special store to be set up, e.g.
TV repair shop, soft ice cream stores are all examples of business
requiring special design. Thus, good retail layout should be the one,
which saves rent, time and labour.

3. Services centers and establishment
Services establishments such as hotels, restaurants, must give due attention to client
convenience, quality of service, efficiency in delivering services and pleasing office
ambience. In today’s environment, the clients look for ease in approaching different
departments of a service organization and hence the layout should be designed in a
fashion, which allows clients quick and convenient access to the facilities offered by a
service establishment.


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Operations Management

DR.ANSHUL PANDEY UIM PRYAGRAJ 1

1. To understand the role of Operations in overall Business

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The traditional view of manufacturing management began in eighteenth century

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Date Contribution Contributor

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In a manufacturing organization production is

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Environment Feedback Information

Production and Operations Management

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• Dynamic- Operations management is dynamic in nature. It

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• Results in Value Addition: Production management is a key tool available

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• Increase Productivity: Operation management played an

• Improve Customer Satisfaction: Customer satisfaction is necessary for every business to

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A relation between output

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Definition It is defined as the act of it is defined as the rate at

Use It is the actual process of It is the utilization of

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Single-Factor Productivity is a measure of output against

Labor productivity is a single factor productivity measure. It is

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• Production system converts raw material into finished product

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• Multi-Factor Productivity takes into account other factors that affect

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5 input factors for the measurement of the productivity are

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