OPERATIONS MANAGEMENT (BBA)

Module I
Operations Management
Operation
Operation is that part of as organization, which is concerned
with the transformation of a range of input into the required
output having the requisite quality level.
Operations management
It is an area of management concerned with designing and
controlling the process of production and redesigning business
operations in the production of goods or services.
Scope of operations management
1. Location of facilities
2. Plant layout and material handling
3. Product design
4. Process design
5. Production and planning control
6. Quality control
7. Materials management
8. Maintenance management
Objectives of operations management
1. To provide customer service.
2. To effective utilization of resources.
3. To reduce cost of production.
4. To improve product quality.
5. To fix time schedule.
6. Proper utilization of machinery.
7. To facilitate material control.
Recent trends in operations management
1. Global market place
2. Production or operation strategy
3. Total quality management
4. Flexibility
5. Time reduction
6. Technology
7. Work involvement
8. Re-engineering
9. Corporate downsizing
10. Environmental issues
11. Supply chain management
12. Lean production
Module II
Facility planning
Facilities location
It may be defined as selection of suitable location or site or
place where the factory to be installed.
Plant location
It refers to the choice of region and the selection of a particular
site for setting up a business or factory.
Location analysis
It is a technique for discovering assessing and specifying the
optimal placement of an organizations activities and materials.
Factors determining plant location
1. Nearness to raw material
2. Transport facilities
3. Nearness to market
4. Availability of labour
5. Availability of fuel and power
6. Availability of water
7. Climate condition
8. Financial and other aids
9. Land
10. Community attitude
11. Security
12. Housing facilities
13. Government policy
14. Topography
15. Waste disposal
Product design
Product design simply means conversion of ideas into reality. In
order to survive in current globally competitive market business
organization need to design, develop and introduce new
products in the market.
Process design
It means selection of optimum decision route for converting the
raw material into finished goods.
Plant layout
It refers to physical arrangement of production facilities. It is
the confirmation of departments, work centers and
equipment’s in the conversion process.
Objectives of plant layout
1. Facilitate manufacturing process.
2. Maintaining high turnover in process inventory.
3. Minimize material handling and cost.
4. Minimize overall production time.
5. Minimize investment in equipment.
 6. Facilitate the organization structure.
7. Make effective utilization of cubic space.
Principals of plant layout
1. Principle of integration.
2. Principle of minimum distance.
3. Principle of cubic space utilization.
4. Principle of flow.
5. Principles of maximum flexibility.
6. Principle of safety, security and satisfaction.
7. Principle of minimum handling.
Factors influencing plant layout
1. Policies of management
2. Plant location
3. Nature of the product
4. Volume of production
5. Availability of floor price
6. Nature of manufacturing process
7. Repairs and maintenance of equipment and machines
8. Type of machine
9. Climate
Classification of plant layout
1. Product or line layout
It arrange the resources required for a product or service
around the needs of that product or service.
Advantages and disadvantages of product layout
Advantages of product layout Disadvantages of product layout
Removal of obstacle in production Lesser flexibility
Economies in material handling Large investment
Lesser manufacturing time Higher overhead charges
Lesser work in progress Interruption due to breakdown
Economy in inspection Under-utilization of machines
Lesser labour cost Lack of specialization in supervision
Proper use of floor space Difficulty in expanding production

2. Process or functional layout

A process layout is one in which resources which have similar
process or functions are grouped together.
Advantages and disadvantages of process layout
Advantages of process layout Disadvantages of process layout
Maximum utilization of machines. Coverage of more floor area.
Scope for expansion. Higher cost of material handling.
Greater flexibility. Higher labour cost.
Specialization. Longer production time.
Lesser work stoppages Increased inspection cost.
More effective supervision. Difficulties in production planning
and control.

3. Hybrid layout
A combination of product and process layout is called hybrid
layout. It combines the advantages of both type of layout.

4. Group or cellular layout

Group of dissimilar machines are brought together in a work
cell to perform task on a family of products that share common
interest.
Advantages and disadvantages of group layout
Advantages of group layout Disadvantages of group layout
Reduced cost. Not feasible for all situations.
Motivation. Higher cost of material handling.
Greater flexibility.

5. Fixed position layout

In this type of layout major component remains in a fixed
location, other materials, parts, tools, and machinery are
brought into this location.
Advantages and disadvantages of fixed position layout
Advantages of fixed position layout Disadvantages fixed position layout
Material movement is reduced. Highly skilled manpower required.
Capital investment is minimized. Increase the cost of production.
Continuity of operation is ensured. Time consuming
It offers greater flexibility.
Total production cost reduced.

6. Service layout
It is an arrangement f different aspects of manufacturing in an
appropriate manners as to achieve desired production results.

Materials handling
Material handling can be defined as the art and science
involving the movement, packing and storing of substance in
any form.
Objectives of material handling
1. To reduce material handling.
2. To reduce production life cycle.
3. Better control of the flow of information.
4. To ensure safety in the movement of goods.
5. To avoid damage of the goods.
Material handling equipment
1. Overhead cranes and hoists
2. Conveyors
3. Industrial trucks
4. Forklifts
5. Automated guided vehicles
6. Elevators and lifts
Principals of material handling
1. Reduce unnecessary movement by selecting the shortest
path to reach the destination.
2. Reduce congestion by eliminating congestions in material
handling.
3. Use scientific factory layout to minimize overall material
movement.
4. Use standard material handling to easy maintenance of
spheres.
5. Minimize handling it reduces the chance of breakage.
6. Use gravity to transport material.
7. Use mechanized material handling equipment to reduce
dependence of human labour.
Module III
Capacity planning
Capacity
It means the amount of goods that firm is capable of producing
over a specified period of time.
Capacity requirement planning
It is a part of manufacturing requirement planning. It is carried
out after a manufacturing resource planning program has been
run.
Types of capacity
1. Maximum capacity
It is the highest rate of output a process or activity can achieve.
It is also called design capacity.
2. Effective capacity
It is the actual capacity to reflect current conditions and that
could be less than or more than design capacity.
3. Demonstrated capacity
It measure the actual level of output for a process or activity
over a specified period of time.
Process of capacity planning
1. Demand forecasting
2. Capacity decisions
3. Facilities planning
4. Decision and implementation
Importance of capacity planning
1. Ability to meet future demand.
2. Helps in preparing the budgets.
3. Competitive advantage.
4. Reduces complexity in manufacturing operations.
5. It involves long term commitment of funds.
Principles of capacity planning
1. Agree on a common definition for capacity planning.
2. Select a capacity planning process owner.
3. Identify the key resources to be measured.
4. Compare current utilization of maximum capacities.
Maintenance
Maintenance is the process of keeping machine and equipment
in good working condition so that efficiency is retained and its
life is increased.
Maintenance management
The process of maintaining company’s assets and resources
while controlling time and costs, ensuring maximum efficiency
of the manufacturing process.
Types of maintenance
1. Break down maintenance
Under this type of maintenance a machine allows to operate till
it break.
Advantages of break down maintenance
 Low cost investment for maintenance.
 Less staff is required for maintenance.
Disadvantages of break down maintenance
 Increased labour cost.
 Possible process damage from equipment failure.
 Increased cost due to unplanned down time of equipment.
2. Preventive maintenance
This type of maintenance is preventive in nature. It is the
regular and routine maintenance of equipment in order to keep
them running.
Advantages of preventive maintenance
 Cost effective.
 Energy saving.
 Reduced equipment or process failure.
 Increased component life cycle.
Disadvantages of preventive maintenance
 Labour intensive.
 Includes performance of unneeded maintenance.
3. Predictive maintenance
It is time based. It monitor the performance and condition of
equipment during normal operation to reduce the failures.
Advantages of predictive maintenance
 Increased component operation life.
 Allow pre-emptive corrective action.
 Better product quality.
 Improved worker.
 Employment safety.
 Decrease in cost for parts and labour.
Disadvantages of predictive maintenance
 High investment in diagnostic equipment.
 High investment in staff training.
Maintenance planning
Maintenance planning is a process of taking decisions in
advance about maintenance activities.
Reliability centered maintenance (RCM)
It is defined as a process used to determine the maintenance
requirements of any physical assets in its operation context.
Work study
It is a technique which ensure the best possible use of men,
machine, material and energy in carrying out a specific activity.
Method study
Dividing and analyzing a job is called method study. It take a
systematic approach to reducing waste time and effort.
Work measurement
It is a process of analyzing job for the purpose of setting time
standards.
Objectives of work measurement
1. Comparing alternative methods.
2. Manpower requirement planning.
3. Planning and control.
4. Realistic costing
5. Delivery date of goods.
6. Financial incentive schemes.
Types of works
1. Repetitive work
The type of work in which main operation repeats continuously
during the time spent at the job.
2. Non-repetitive work
In this type of work the work cycle is not repetitive.
Techniques of work measurement
1. Time study
2. Synthetic data
3. Work sampling
4. Predetermined motion time study
5. Analytical estimating
Time study
It is a technique to arrive a standard time for performing one
cycle of a repetitive job.
Objectives of time study
1. To determine standard time for operation.
2. To estimate cost of product accurately.
3. To estimate duration for a particular work.
4. To provide information for planning and scheduling.
5. To compare work efficiency of different workers.
6. To determine the optimum number of men and machine.
Motion study
It is the study of the individual human motions that are used in
a job task.
Work sampling
It is a technique in which large number of observations are
made over a period of time one group of machines, process or
workers.
Module IV
Aggregate planning
Aggregate planning
It is a process of developing, analyzing, and maintaining a
preliminary approximate schedule of the overall operations of
an organization.
Factors affecting aggregate planning
1. Demand forecast
2. Inventory investment
3. Work force capacity
4. Financial planning
5. Quality management
6. Organization policy
7. Labour management
Importance of aggregate planning
1. Reduce investment in inventory stocking.
2. Maximum utilization of available production facilities.
3. Achieving financial goals.
4. Provide customer delight by matching demand and reduce
wait time.
5. Minimize changes in production rates.
Master production schedule (MPS)
It is a plan for individual commodities to be produced in each
time period such as production, staffing, inventory etc.
Objectives of MPS
1. Inventory control
2. Setting up due dates
3. Customer services
4. Scheduling
Functions of MPS
1. Transforming plans.
2. Evaluating alternative schedules.
3. Produce capacity requirements.
4. Facilitating information processing.
5. Utilization of available resources.
Benefits of MPS
1. Communication tool
2. Stabilize production
3. Estimate expenses
4. Improve efficiency
5. Effective cost control
6. Aid supply chain
7. Sales forecasting
8. Foresee labour requirement
Material requirement planning (MRP)
MRP is a means for determining the number of parts,
components, and materials needed to produce a product. It is a
system for calculating the materials and components needed to
manufacture a product.
Objectives of MRP
1. Reduction in inventory cost
2. Meeting delivery schedules
3. Improved performance
4. Efficiency of the production system
5. Matching demand and supply
6. Provides timely warnings
7. Inventory control
Elements of MRP
1. MRP information sources
2. Case studies
3. Unavoidable problems
4. MRP objectives
5. MRP methodology
Inputs and Outputs of MRP
Inputs of MRP Outputs of MRP
Master production schedule Planned order schedule
Bill of materials Order rescheduling
Inventory status file Performance reports
Planning reports
Advantages of MRP
1. It reduce investment in inventory.
2. It helps in generating purchase order.
3. It helps in planning, engineering and scheduling.
4. It improve flow of work.
5. It provides exception reporting.
6. It is a tool for re-plan and re-scheduling.
Inventory
Inventory simply refers to the materials in stock. It is a list of
goods, it may raw material, work in progress or finished goods.
Reason for keeping inventories
1. To stabilize production.
2. To take advantage of price discounts.
3. To meet the demand during replenishment.
4. To prevent loss of orders.
5. To keep place with changing market conditions.
Inventory control/Management
Inventory control is a method of stocking adequate number and
kind of stores so that materials are available whenever is
required.
Objectives of inventory control
1. To supply materials in time.
2. To avoid shortage of stock.
3. To meet unforeseen future demand.
4. To minimize the losses.
5. To reduce investment in inventories.
6. To maintain timely record of inventories.
7. To ensure timely action for replenishment.
Benefits of inventory control
1. Improvement in customer relationship.
2. Reduces the risk of losses.
3. Protects from fluctuations in demand.
4. Efficient utilization of working capital.
5. Economy in purchasing.
6. Minimizes administrative work load.
7. Eliminate the possibility of duplicate ordering.
 Techniques of inventory control/ inventory classification
model
1. ABC analysis/ classification
It classifies inventory items into three groups. All inventory
items are rated from A to C. Here the inventory is classified on
the basis of value of unit.
2. FSN analysis
FSN stands for fast moving, slow moving and non-moving items.
The classification is based on pattern of issues from stores and
is useful in controlling obsolescence.
3. VED analysis
VED stands for vital, essential and desirable. This analysis
relates to the classification of maintenance spare parts and
denotes the essentially of stocking spares.
4. HML analysis
The high, medium and low classification follows the same
procedure as is adopted in ABC analysis.
5. SDE analysis
This analysis is based on the availability of items and is very
useful in the context of scarcity of supply.
Opposing views of inventory
Why we want to hold Why we not want hold
inventories? inventories?
Meeting unexpected demands. Costly
Smoothing seasonal demand. Reduce responsiveness.
Cost savings Complexity
Hedging against price increase Limited elimination of business
risk.
Advantages of price discount Additional space
Re-order point
It is the level of inventory which triggers an action to replenish
that particular inventory stock. It is a minimum amount of an
item which a firm holds in stock.
Safety stock
It is an additional quantity of an item held in the inventory to
reduce the risk that the item will be out of stock.
Lead time
It is the amount of time between the start and completion of a
process or the time between ordering something and receiving.
Economic order quantity (EOQ)
The quantity of material to be ordered at one time is called
economic order quantity.
Basic assumptions of EOQ model
1. The rate of demand for the item is constant.
2. Shortages are not allowed.
3. Lead time is zero or constant.
4. Production rate is infinite.
5. The entire quantity is delivered as a single package.

Module V
Quality control
Quality
Quality is defined as measure of excellence of a product.
Quality loop
It is the representation in visual terms of the steps that interact
in the process of creating a quality of product.
Quality planning
It is the activity of determining customer needs and developing
the products and processes required to meet those needs.
Quality characteristics of goods and services
1. Performance
2. Features
3. Fitness to use
4. Value for price paid
5. Reliability
6. Durability
Quality planning tools and techniques
1. Cost benefit analysis
2. Cost of quality
3. Brainstorming
4. Force field analysis
5. Normal group technique
Control
Control is a system for measuring and inspecting a
phenomenon. It suggests when to inspect, how often to inspect
and how much to inspect.
Quality control
It is a systematic control of various factors that affect the
quality of the product. It includes material, tool, machine, type
of labour etc.
Objectives of quality control
1. To decide standard of quality of a product.
2. To take measures to improve standard of quality of a
product.
3. To take various steps to solve any kind of deviations in the
quality of the product during manufacturing.
4. To prevent the poor quality product reaching to customers.
5. To reduction in customer complains.
Advantages of quality control
1. Good quality products improves reputation.
2. Inspection cost reduces.
3. Improvement in manufacturing.
4. Better customer relations.
5. Cost of manufacturing reduces.
6. Quality of product improved, which turns increase in sales.
Methods used to control quality
1. Inspection method
2. Statistical quality control method
1. Inspection method
Inspection is the process of measuring the quality of a product
or services in terms of established standards.
Functions of inspection
 Maintaining inspection equipment in good condition.
 Detection of defects at source to reduce defective work.
 Maintenance of standards of the quality of products.
 Reporting source of manufacturing trouble to management.
 Developing means for conducting inspection at lower cost.
Essential steps for inspection
 Carefully defined the characteristics of items to be inspected.
 To take decision on time and place of conducting inspection.
 Take decision on total number of items to be inspected.
 If sampling is employed, the sampling scheme for the
selection of items from the lots should be selected.
 Specification limits for the acceptance and rejection item
should be formulated.
2. Statistical quality control (SQC)
It can be defined as the use of statistical methods in the
monitoring and maintaining of the quality of products and
services.
Importance/objectives/advantages of SQC
1. It reduces inspection costs.
2. It maintains high standards of quality.
3. It improves the relationship with customers.
4. It ensures standard price.
5. It provides a basis for attainable specification.
6. It point out bottlenecks and trouble spots.
Mean chart/ X-bar chart
A mean control chart is also referred to as an x bar chart. It is
used to monitor changes in the mean of a process.
Range chart/ R chart
It is a type of control chart for variables. R chart monitor the
dispersion or variability of the process.
Seven tools of quality analysis
1. Control chart
2. Pareto chart
3. Ishikawa diagram
4. Histogram
5. Scatter diagram
6. Check sheet
7. Stratification
Control charts
A control chart is a graphical representation between the order
of sampling along x-axis and statistics along y-axis.
Advantages of control chart
 Control the process.
 Optimize technical resources.
 Narrow the heterogeneity.
 Traces differences among operators, supervisors etc.
 Reduces cost of inspection.
 Overhauling and maintenance of machine.
 Leads to detection of inspection errors.
Pareto diagram
Pareto chart is a special type of histogram that can easily be
apply to find and prioritize quality problems, conditions of their
causes in the organization.
Ishikawa diagram
Ishikawa diagram is also called fish bone diagram or cause and
effect diagram. These are casual diagram created by Kaoru
Ishikawa that show the potential cause of a specific event.
Histogram
Histogram is also known as frequency distribution diagram.
These are useful in studying patterns of distribution and in
drawing conclusions about the process based on the pattern.
Scatter diagram
A tool to study the relationship among two variables is known
as scatter diagram.
Check sheets
Check sheets are simple form with certain formats that can aid
the user to record data in a firm systematically.
Stratification
It is defined as the act of sorting data, people and objects into
distinct groups or layers. It is a technique used in combination
with other data analysis tools.
Flow charts
Flow chart presents a diagrammatic picture that indicates a
series of symbols to describe the sequence of steps exist in an
operation or process.
Quality circle
It is a small group of workers who do the same work voluntarily
meeting together regularly by way of resolving problems and
improving production in their organization.
Objectives of quality circle
1. To improve the quality and productivity.
2. To reduce the cost of product.
3. To utilize creative intelligence of employees.
4. To identify and solve work related problems.
5. To motivate people for solving challenging tasks.
6. To improve communication within the organization.
7. To increase employees loyalty.
Characteristics of effective quality circle
1. It is a small primary group of employees
2. Membership is voluntary.
3. Each quality circle is led by area supervisor.
4. Members meet regularly as per agreed schedule.
5. It promote mutual development of members.
6. It gives job satisfaction
7. It contribute self-esteem and self-confidence to members.
Benefits of quality circle
1. Self-development
2. Job satisfaction
3. Reduction of waste
4. Improvement of communication
5. Improvement of quality
6. Improvement of productivity
7. Improve participation
8. Team spirit
9. Problem solving opportunities
Limitations of quality circle
1. Resistance
2. Lack of time
3. Lack of ability
4. Lack of management commitment
5. Non implementation of suggestions
6. Negative attitude
Techniques of quality circle
1. Brain storming
2. Data collection
3. Pareto analysis
4. Scatter diagram
5. Histograms
6. Frequency distribution
7. Cause and effect diagram

(Note: This is just a short note from all the modules. For
exams you need to refer more materials in detail.)