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UNIT – 1

INTRODUCTION TO PRODUCTION AND OPERATIONS

MANAGEMENT

Introduction

Production is the creation of goods and services. The production activity is nothing
but the step by step conversion of one form of material into another either chemically
or mechanically. This is done in factories which have manufacturing processes. The
basic inputs of production process are men, machines, plant, services and methods.
The finished products of one manufacturing process may not become finished product
for consumption it may become the raw material for other manufacturing process.
Production involves the step by step conversion of one form of materials into another
through processing to create or enhance the utility of the products or services.

Meaning of Production

Production refers to the use of any process which is designed to transform a set of
input elements into set an output elements.

It involves the step by step conversion of one form of material into another to create
or enhance the utility of the products or services.

Definition of Production

According to Elwood Butta, “Production is a process by which goods or services are

created.”

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 2 of 25

Ways of Production

 Production by disintegration i.e., by separating the contents the

desiredproduct is produced. Ex: Crude oil, fuel oils etc.,

 Production by Integration i.e., production by assembling various

components of the products to get desired product. Ex: 2 wheelers,
4wheelers etc.,

 Production by services i.e., production is based on chemical and

mechanical properties of materials without physical change. Ex:
heat treatment of metals etc.,

Classification by Production

1) Job shop production – It refers to the manufacturing facility that

produces several different products in smaller batches. They are

manufactured by one or few quantity of products designed and
produced as per the specification of the customers within prefixed
time and cost.

2) Batch production – It refers to the manufacturing process in

which components or goods are produced in groups and not in

continuous stream. A limited number of products are produced at
regular intervals.

3) Mass production – Under this, the manufacturing or processing

of uniform products in large quantities takes place. It is either a

wholly automated process or a series of short or repetitive
procedures.

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 3 of 25

4) Continuous production -it is a method used to manufacture,

produce or process materials without interruption.

Production management
Meaning
It means planning, organizing, directing and controlling of production
activities. It deals with decision making regarding the quality, quantity,
cost etc. It applies management principles for production. It deals with
converting raw materials into finished goods or products.
Definition

According to H.A.Harding, “Production management is concerned with

those processes which convert the inputs into outputs. The inputs are
various resources like raw materials, men, machines, methods etc., and
outputs are goods and services”

According to A.W.Field, “Production management is the process of

planning and regulating the operations of that part of an enterprise which
is responsible for actual transformation of materials into finished
products.”
Objectives of Production Management

1. Produce goods at right quality, right quantity, right

time and at minimum cost

2. Optimum utilization of resources and available

production capacity.

3. Produce required quantities at a required quality.

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
 Page 4 of 25

4. Ensure maximum capacity utilization.

5. Flexible working conditions.

6. Minimum raw material, labour cost and maintenance cost.
7. Minimum storage, material handling and inspection.
8. Improve productivity of all inputs.

Scope of Operations Management

Production and operations management are concerned with the conversion of

inputs into outputs, using physical resources, so as to provide the desired utilities to
the customer while meeting the other organizational objectives of effectiveness,
efficiency and adoptability. It distinguishes itself from other functions such as
personnel, marketing, finance, etc., by its primary concern for “conversion by using
physical resources.‟ Following are the activities which are listed under production
and operations management functions:

1. Location of facilities

2. Plant layouts and material handling

3. Product design

4. Process design

5. Production and planning control

6. Quality control

7. Materials management

1. Location of facilities

Location of facilities for operations is a long-term capacity decision which

involves a long term commitment about the geographically static factors that affect a
business organization.
COLLEGE NAME: HICAS
SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 5 of 25

It is an important strategic level decision-making for an organization.

The selection of location is a key-decision as large investment is made in building

plant and machinery.

An improper location of plant may lead to the waste of all the investments made in
the plant and machinery equipment.

Hence, location of plant should be based on the company‟s expansion plan and
policy, diversification plan for the products, changing sources of raw materials and
many other factors.

The purpose of the location study is to find the optimal location that will result in
the greatest advantage to the organization.

2. Plant layout and material handling

Plant layout refers to the physical arrangement of facilities. It is the configuration

of departments, work centers’ and equipment in the conversion process.
The overall objective of the plant layout is to design a physical arrangement that
meets the required output quality and quantity most economically.

According to James Moore, “Plant layout is a plan of an optimum arrangement of

facilities including personnel, operating equipment, storage space, material handling
equipments and all other supporting services along with the design of best structure to
contain all these facilities”.

Material Handling‟ refers to the moving of materials from the store room to the
machine and from one machine to the next during the process of manufacture‟. It is
also defined as the art and science of moving, packing and storing of products in any
form‟.
Material handling devices increases the output, improves quality, speeds up the

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 6 of 25

deliveries and decreases the cost of production. Hence, material handling is a prime
consideration in the designing new plant and several existing plants.

3. Product design

Product design deals with conversion of ideas into reality. Every business
organization has to design, develop and introduce new products as a survival and
growth strategy.
Developing the new products and launching them in the market is the biggest
challenge faced by the organizations.
The entire process of need identification to physical manufactures of product
involves three functions: marketing, product development, and manufacturing.
Product development translates the needs of customers given by marketing into
technical specifications and designing the various features into the product to these
specifications. Manufacturing has the responsibility of selecting the processes by
which the product can be manufactured.
Product design and development provides link between marketing, customer needs
and expectations and the activities required to manufacture the product.

4. Process design

Process design is a decision-making of an overall process route for converting the

raw material into finished goods.

These decisions encompass the selection of a process, choice of technology, process

flow analysis and layout of the facilities.

Hence, the important decisions in process design are to analyze the work flow for
converting raw material into finished product and to select the workstation for each
included in the workflow.

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 7 of 25

5. Production planning and control

Production planning and control can be defined as the process of planning the
production in advance, setting the exact route of each item, fixing the
Starting and finishing dates for each item, to give production orders to shops and to
follow up the progress of products according to orders.

The principle of production planning and control lies in the statement „First Plan
Your Work and then Work on Your Plan‟. Main functions of production planning and
control includes planning, routing, scheduling, dispatching and follow-up.

6. Quality control

Quality Control (QC) may be defined as a system that is used to maintain a desired
level of quality in a product or service‟. It is a systematic control of various factors
that affect the quality of the product. Quality control aims at prevention of defects at
the source, relies on effective feedback system and corrective action procedure.

The main objectives of quality control are:

 To improve the company’s income by making the production acceptable to the

customers i.e. by providing long life, greater usefulness, maintainability, etc.

 To reduce companies cost through reduction of losses due to defects.

 To achieve inter changeability of manufacture in large scale production.

 To produce optimal quality at reduced price.

 To ensure satisfaction of customers with productions or services or high quality

level, to build customer goodwill, confidence and reputation of manufacturer.

 To make inspection prompt to ensure quality control.

 To check the variation during manufacturing.

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 8 of 25

7. Materials management

Materials management is that aspect of management function which is primarily

concerned with the acquisition, control and use of materials needed and flow of goods
and services connected with the production process having some predetermined
objectives in view.

The main objectives of materials management are:

 To minimize material cost.

 To purchase, receive, transport and store materials efficiently and to

reduce the related cost.

 To cut down costs through simplification, standardization, value

analysis, import substitution, etc.

 To trace new sources of supply and to develop cordial relations with them
in order to ensure continuous supply at reasonable rates.

 To reduce investment tied in the inventories for use in other productive

purposes and to develop high inventory turnover ratios.

Nature / Importance of Production Management

1. Accomplishment of firm's objectives: Production management helps the

business firm to achieve all its objectives. It produces products, which satisfy
the customers' needs and wants. So, the firm will increase its sales. This will
help it to achieve its objectives.

2. Enhances reputation, goodwill and image: Production management helps the

firm to satisfy its customers. This increases the firms reputation, goodwill and

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 9 of 25

image. A good image helps the firm to expand and grow.

3. Helps to introduce new products: Production management helps to introduce

new products in the market. It conducts Research and Development (R&D).

This helps the firm to develop newer and better quality products. These
products are successful in the market because they and they give full
satisfaction to the customers.

4. Supports other functional areas: Production management supports other

functional areas in an organization, such as marketing, finance, and personnel.

The marketing department will find it easier to sell good- quality products, and
the finance department will get more funds due to increase in sales.

It will also get more loans and share capital for expansion and modernization.
The personnel department will be able to manage the human resources
effectively due to the better performance of the production department.

5. Helps to face competition: Production management helps the firm to face

competition in the market. This is because production management produces

products of right quantity, right quality, right price and at the right time. These
products are delivered to the customers as per their requirements

6. Optimum utilization of resources: Production management facilitates

optimum utilization of resources such as manpower, machines, etc. So, the firm
can meet its capacity utilization objective. This will bring higher returns to the
organization.

7. Minimizes cost of production: Production management helps to minimize the

cost of production. It tries to maximize the output and minimize the inputs.
This helps the firm to achieve its cost reduction and efficiency objective.

8. Expansion of the firm: Production management helps the firm to expand and
COLLEGE NAME: HICAS
SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 10 of 25

grow. This is because it tries to improve quality and reduce costs. This helps
the firm to earn higher profits. These profits help the firm to expand and grow.

The importance of Production Management:

1. Higher standard of living: Production management conducts continuous

research and development (R&D). Based on the research conducted an

industrial concern will produce new and better varieties of products. People use
these products and enjoy a higher standard of living.

2. Generates employment: Production activities create many different job

opportunities in the country, either directly or indirectly. Direct employment is

generated in the production area, and indirect employment is generated in the
supporting areas such as marketing, finance, customer support, etc

3. Spread effect: Because of production, other sectors also expand. Companies

making spare parts will expand. The service sector such as banking, transport,
communication, insurance, BPO, etc. also expand. This spread effect offers
more job opportunities and boosts economy.

4. Creates utility: Production creates Form Utility. Consumers can get form utility

in the shape, size and designs of the product. Production also creates time
utility, because goods are available whenever consumers need it.

5. Boosts economy: Production management ensures optimum utilization of

resources and effective production of goods and services. This leads to speedy
economic growth and well-being of the nation.

Five P’s of Production Management

The division of production management functions in to 5 p‟s (product, plant,

COLLEGE NAME: HICAS
SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 11 of 25

programme, processes and people) will provide useful conceptual framework for the
various activities performed by production or operations manager.

The Five P’s:

1. The Product:

Product is the link between production and marketing. It is not enough that a
customer requires product but the organization must be capable of producing the
product.

As per the product policy of the organization, an agreement is reached between the
various functions on the following aspects of the product

1. Performance
2. Quality and reliability
3. Aesthetics and ergonomics
4. Quantity and selling price
5. Delivery schedule.

To arrive at the above, the external and the internal factors which affect the various
aspects such as market needs, existing culture and legal constraints and the
environmental demands should be given due consideration. Thus the major policy
decisions regarding variety of product mix is going to affect the producing system.

2. The Plant:

The plant accounts for major investment (fixed assets). The plant should match the
needs of the product market, the worker and the organization. The plant is concerned
with:

1. Design and layout of building and offices.

COLLEGE NAME: HICAS
SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 12 of 25

2. Reliability, perfect, maintenance of equipment.

3. Safety of operations.
4. The financial constraint.

Plant layout deals with physical arrangement of plants and machineries within the
selected site. The layout should be such that it should allow for smooth movement of
men and materials with minimum back tracking. The type of the layout is dependent
on production type, volume of demand, etc.

3. The Process:

There is always number of alternative methods of creating a product. It is

required to select the one best method, which attains the objectives.

In deciding about the process, it is necessary to examine the following factors:

1. Available capacity
2. Manpower skills available
3. Type of production
4. Layout of plant
5. Safety
6. Maintenance required
7. Manufacturing costs

4. The Programme:

The programme here refers to the timetable of production. Thus, the

programme prepares schedules for:
1. Purchasing
2. Transforming
3. Maintenance

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SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 13 of 25

4. Cash
5. Storage and transport

5. The People:

Production depends upon people. The people vary in their attitudes, skill and
expectations from the work. Thus, to make the best use of available human resource,
it is required to have a good match between people and jobs which may lead to job
satisfaction.
The production manager should be involved in issues like:

1. Wages/salary administration.

2. Conditions of work/safety.

3. Motivation.

4. Training of employees.

Meaning of Operation Management

It refers to the process of design, execution and control of operations that

convert resources into desired goods and services.

It is the activity where the resource flow within a defined system are
transformed in a controller manner with policies / desired by the management.

Objectives of Operation management

 Improve productivity by better utilization of resources like men,

material, method etc.,

 Have less/ no defects.

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 Utilize plants and machinery effectively and effectively.

 Improve material handling equipments.

 Have proper control on raw materials, semi-finished goods and

finished goods.

 Achieve proper cash management.

 Enhance production staff with respect to their salary, wages etc.,.

Scope of Operations Management

1) Product selection and design: The product selection makes a system

efficient or inefficient. So it is very important to select right product keeping

over all objectives in mind.

2) Process selection and planning: Selection of process involves taking

decisions about technology, machines and equipment

3) Location facilities: It is the most important facility as it looks for long term

decisions; a wrong decision can makes it pay a lot. The operation management
helps to select that particular location where distribution, production cost and
location cost is less.

4) Layout and material handling facilities: Layout means positioning of

machinery. The machine should be so arranged that the flow of production

remains smooth. There should be a proper choice of material handling
equipments.

5) Capacity planning: Capacity refers to a level of output of the conversion

process over a period of time. Industry creates challenging problems in capacity

planning, requiring in the long run, expansion and contraction of major
facilitates in the conversion process. Some tools helps in capacity planning are
marginal costing, linear programming etc.
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Importance of Operation Management

1) Towards customers: Customers are the most affected by any business. The

objectives of the operation management always depend on the customers

preferences and their requirements.

2) Towards suppliers: Operations will have a major impact on suppliers, both on

how they prosper themselves, and on how effective they are at supplying the
operation.

3) Towards share holders: Better the operation is at producing goods and

services, the more likely the whole business is to prosper and shareholders will
be one of the major beneficiaries of this.

4) Towards employees: Similarly employees will be generally better off if the

company is prosperous. It includes the general working conditions which are

determined by the way the operation is designed.

5) Towards society: Although often having no direct economic connection with

the company individuals and groups in society at large can be impacted by the
way its operation managers behave.

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SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
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Production and Operation management

Meaning

It refers to the management of the conversion process which converts land,

labour, capital and management inputs into desired output goods and services.

The conversion is done by using physical resources to meet the organizational

objectives. It is the transformation of production and operation inputs and outputs to
be distributed to meet the customers' needs.

Need for Production and Operation management

i) Produce right quality of product: The quality of product is established based

upon the customers’ needs. The right quality is not necessarily best quality. It is
determined by the cost of the product and the technical features suited to the
specific requirements.

ii) Right quantity: The manufacturing organization should produce the products in

right number. If they are produced in excess of demand the capital will block up
in the form of inventory and if the quantity produced in short of demand, leads to
shortage of products.

iii) Right time: Timely delivery is one of the important parameter to judge the

effectiveness of production department has to make the optimal utilization of

input resources to achieve its objective.

iv) Right manufacturing cost: Manufacturing costs are established before the

product is actually manufactured. Hence all attempts should be made to produce

the products at pre-established cost, so as to reduce the variation between actual

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 17 of 25

and standard cost.

Objectives of Production and Operation management

 To attain maximum output with lowest cost.

 To control pollution and wastage.

 To ensure optimum capacity and resources utilization.

 To ensure quality of products.

 To suggest changes in machinery and equipment.

 To ensure timely delivery of output.

 To maintain inventory.

Elements of Production and Operation management

i) Planning: Activities that establish a course of action and guide future decision

making is planning. It includes clarifying the role and focus of operation in the
organization, product planning, facility designing, conversion process etc.,

i) Organizing: Activities that establish a structure of tasks and authority.

Operation managers establish a structure of roles and flow of information
within the operation subsystem.

ii) Controlling: The operation manager must exercise control by measuring actual

outputs and comparing them to planned operations management.

iv) Behavior: Operations managers are concerned with how their efforts to plan,

organize, and control affect human behavior.

v) Model: The Operation Manager can prepare break even models and linear
programming to solve the organizational related problems.

Scope of Production and Operation management

COLLEGE NAME: HICAS
SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
Page 18 of 25

1) Location of facilities: Selection of appropriate location must ensure the

availability of power supply, water supply, road conditions, nearness of raw
materials, skilled labors etc.

2) Plant layout and job design: Preparation of plant layout for the establishment
of machines in the required sequence. A job design must be prepared to organize
machines, tasks into a unit of work to achieve certain objectives.

3) Materials handling: It is the process of ensuring the movement of raw

materials and semi finished goods inside the factory.

4) Product design: Designing the product and conceiving the idea about its
production. Product design considers the product size, weight, color etc.

5) Process design: It is the complete description of specific steps in the production

process. This determines the production process which is most relevant.

6) Production and planning control: It means coordination of series of functions

according to a plan which will economically utilizes the plant facilities and
regulates orderly movement of goods.

7) Quality control: It is a staff function concerned with the prevention of defects

in manufacturing so that, items may be made right way and ensure the quality
standard.

8) Inventory management: It is the process of maintaining proper records of

raw materials semi finished goods and finished goods.

9) Maintenance management: It is the process of formulating the corrective

measures to stay in track with planned quality, time schedule and predetermined
cost schedules.

10) Automation: It is the technique of operating or controlling a productive process

by electronic device and reducing human intervention to the minimum.

COLLEGE NAME: HICAS
SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
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Functions of Production and Operation Management

1) Creation of goods and services: The foundation of every production and

operation department is creation of goods or services. Traditionally,

Production and operations department includes the physical assembling of goods

and also contains many customer care services to satisfy the needs of customers.

2) Profit: The main function of production and operations department is to produce

a product or service that creates profit and revenue to the company.

3) Evaluation: Every production and operation department must function as self-

evaluating entity that monitors the quality, quantity, and cost of goods produced.

4) Tasks: It includes forecasting, scheduling, purchasing, design, maintenance,

people management, flow analysis, reporting, assembly and testing.

5) Fulfillment: It ensures timely delivery of the output from production to

customers.

6) Analysis: Standard analysis function in a production and operation department

include critical path analysis, stock control analysis, utilization analysis, capacity
analysis and just-in-time analysis of inputs, break- even analysis and metric
analysis.

Reasons for Production and Operation Management

 Helps in understanding the role played by the people in producing goods &
services.

 Helps in getting a clear picture about the factory.

 Helps in selecting a career.

 It has strategic use to the executives.

 Helps to understand how important it is to Nation

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Page 20 of 25

Plant location:

Meaning of Plant location

It refers to the area where the plant will operate to produce goods and services. It is
the function of determining where plant should be located for maximum operating
economy and efficiency.

A good location may help in reducing the cost of production and

distribution to a considerable extent.

Definition of Plant location

According to R.C.Davis,” Plant location is the function of determining where the

plant should be located for maximum operating economy and effectiveness.”

According to Bethel Smiths & Atwater, “Plant location is that spot where,
inconsideration of the business as a whole the total cost of production and delivering
goods to all the consumers is the lowest.”
Needs for the selection of the plant location

 New plant.

 When the old plant undergoes expansion, decentralization and

diversification to meet increased demands for its product.

 When the existing plant should be relocated due to an expansion.

 When the existing factory is not in a position to obtain renewal of lease.

 When a new branch is to be opened for increasing the volume of

production or distribution or both

 Social or economic reasons such as inadequate labour supply,

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Page 21 of 25

transportation difficulties etc.,

 On the expiry of lease and the landlord does not renew the lease.

Factors affecting the selection of plant location

1. With in the country or outside

The first step in the plant location is to decide whether the facility should be
located domestically or internationally. If the management decides on the foreign
location, the next step would be to decide upon a particular country for location.

2. Selecting the region

The selection of a particular region out of the many natural regions of a country is
the second step in the plant location. The following factors influence such
selection

 Availability of raw materials – The plant should be located as close as

possible to the source of raw materials. Nearness to the raw materials reduces
the cost of transportation, proper supply of materials etc.,

 Nearness to the market - It is essential that the factory be located near the
market as it helps in providing prompt services to customers, after sales
services, replacement orders may be executed without delay etc.,

 Adequate power supply- Power is essential to move the weaves of an

industry. Coal, electricity, oil and natural gas are resources of power. Industries
using electricity have to be located at the place where electric power is
available regularly.

 Transport facilities– Places or regions with well developed means of

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SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
 Page 25 of 25

transport attract industries. Transport facilities are essential for bringing raw
materials and employees to the factory and also for carrying finished products
from the factory to the markets.

 Suitability of climate – Climate also bears an influence on plant location.

Certain industries require a particular climate. However, in the present day,
with the advancement of science and technology, artificial climatic conditions
can be created.
 Government policy – In the name of Balanced regional development effects
the location of an industry in number of ways. It influences the licensing
policy, institutional finance, government subsidies etc.,

 Competition between states –Different states in India competes with one

another to attract new industries. Various states offer investment subsidies and
sales tax exemptions to new units. There are various incentives as well

3. Selection of the locality or community

Selecting a particular locality or community in a region is the next step in the plant
location. A selection of the community in a chosen region depends upon the
following factors.

 Availability of Labor – Labor is an important factor of production. There

should be adequate supply of labor at a reasonable wages rate. This is essential
for the smooth functioning of any enterprise.

 Civic amenities for workers – Civic amenities such as schools, colleges, clubs
etc., are a must for the workers. The owners of the industrial units have
provided these facilities for the benefits of the employers.

 Finance and research facilities – Adequate capital is essential for the

COLLEGE NAME: HICAS
SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
 Page 25 of 25
successful working of any organization. A place where there is scope for raising
capital and to adapt with changing technology attracts new industries.

 Existence of Complementary and supplementary industry– The presence of

the complementary and supplementary factories are important. It helps securing
the materials, labour, gaining reputation etc.,

 State assistance–The extent and nature of state assistance in monetary and non-
monetary terms to the industrial units located or to be located decide the extent
of attraction of new units to the locality.

 Local taxes and insurance - Taxes like sales, property should beconsidered as
they vary from place to place. Similarly the insurance cost also should be

considered thoroughly examined before setting up a unit.

 Availability of water – Certain factories require large quantities of water for

manufacturing purposes. Eg: fertilizers, leather tanneries etc., these units must
be located in such a places where adequate water supply is available.

 Fire fighting facilities – Industrial units are exposed to fire hazards. Incase of a
fire outbreak, adequate facilities must be available to put out the same otherwise
the damage caused could be extensive.
 Personal factors – Entrepreneurs are not always guided by pure economic
consideration in choosing a location. Personal likes and dislikes also play an
important role.

4. Selection of exact site

The choice of the exact site in a particular locality depends on the fore
factors.

 Suitability of the land – Not all industries can be established on all that types
COLLEGE NAME: HICAS
SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
 Page 25 of 25
of the lands. It depends on the type of the land available and which is suitable to
start the industrial concern.

 Availability and cost of the land – The price of the land differs from place to
place and region to region. The cost of the land in less in rural side compared to
the urban side.

 Waste disposal – The waste let out by an industrial concern should be treated so
that it will not harm others. The waste treatment in the urban becomes difficult
because of the space available.
 Type of soil/ground- Before deciding upon a site, the subsoil
condition should be tested to determine whether the soil or ground

can bear the load, of a super structure.

 Transportation facilities – The site should be connected to all the

facilities available to the transportation ways which helps in easy
movement of labour, material, customers, suppliers etc.,

Objectives of Operations Management

I.Ultimate Objectives
1. Right quality
2. Right quantity
3. Right time
4. Pre-established cost (between the actual costs and the standard be kept
at minimum)
II.Intermediate objectives
1. Machinery and equipment
2. Materials
3. Manpower

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
 Page 25 of 25
4. Manufacturing services
(Eg.Filing,Packing,Labelling,Storage)

Operation Strategy and Competitiveness

 It means that operations resources must be selected, deployed and
managed in the most effective manner using the right technology,
workforce, systems and procedures to meet the strategic goals of the
organization.
The Role of Operations Strategy
 Provide a plan that makes best use of resources which;
 Specifies the policies and plans for using organizational resources
 Supports Business Strategy

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
 Page 25 of 25
Business/Functional Strategy

To Develop a Business Strategy

• Factors and strategic decisions:
– What business in the company in (mission)
– Analyze and understand the market (environmental scanning)
– Identify the company strengths (core competencies)
Operations Strategy
1. Corporate Strategy
2. Product Plans
3. Competitive Priorities
4. Positioning/Operations Strategy
Corporate Strategy
Mission
Relating the Organization’s Efforts to its Long Term Future.
– What Business are we in?
– Who are Our Customers?
– What are our Concepts and Beliefs?
– How Do We Measure Performance
COLLEGE NAME: HICAS
SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
 Page 25 of 25
– Growth?
– Profits?
– Market Share?
– Innovation?
Product Plans
Strategic Product Line Related Choices to Leverage Company’s Distinct
Competencies
 The market(s) served
-Low End
-high End
-Both
 Scope of Product Line
-Wide
-Narrow
-Availability
Product Life Cycles

Competitive Priorities

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
 Page 25 of 25

Positioning Trade off

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
 Page 25 of 25
Operations Strategy in Manufacturing

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT
 Page 25 of 25

Developing a Manufacturing Strategy

COLLEGE NAME: HICAS

SUBJECT HANDLER: ASSISTANT PROFESSOR K.JANCY,B.E,MBA.,
SUBJECT NAME : OPERATIONS MANAGEMENT