Production and Operations

Management (OPTS2001)
Dr. Girish Chandra Dey, PhD
GITAM School of Business,
Visakhapatnam
 Production and Operations
Management
 Unit I: Production and Operations
Management

Production and Operation Functions -
Manufacturing Systems –Differences Between
Manufacturing and Service Operations -
Functions of Production and Operations
Manager.

 Unit II: Production Planning and Control

Steps in PPC - Techniques of Production Planning
and Control
 Production and Operations
Management
 Unit III: Plant Location and Layout Planning
Location of Service Facilities -Location Decision -Types
of Layout – Factors Affecting Plant Location.
 Unit IV: Productivity
Factors Affecting Productivity -Job Design -Process Flow
Charts -Methods Study -Work Measurement
 UNIT-V: Materials Management

Costs Associated with Inventory - Economic Order
Quantity - ABC Analysis – Just in-time Production.
Quality Management: Acceptance Sampling -Control
Charts –Quality Circle.
 Production and Operations
Management
 Reference Book(s):

Aswathapppa & Bhat (2013), Production and Operations
Management, New Delhi: Himalaya Publishing House.

Slack, N, Chambers, S and Johnston, R (2010),
Operations Management, 6th Ed, Prentice Hall, ISBN:
0273731602

Everett E. Adam, Jr. and Ronals J. E. Ebert
(2012),Production and Operations Management: Concepts,
Models and Behavior, New Delhi: Prentice Hall of India.

S.N. Chary (2011), Production and Operations
Management, New Delhi: Tata Mc- Graw Hill Publishing
Co. Ltd.
Unit I: Production and
Operations Management
Introduction
 Operations management defined

Operations management is the activity of managing

the resources which are devoted to the production
and delivery of products and services.

Operations are input–transformation–output
processes

Inputs
Transformation process Outputs
Operations input resources and outputs
Transformed
resources
• Materials
• Information
• Customers

Input Output
Transformation process products and Customers
resources
services

Transforming
resources
• Facilities
Outputs are products and services
• Staff
that add value for customers
They are all operations
They are all operations
Back office operation in a Kitchen unit manufacturing
bank operation

Take-out / restaurant operation

@Slack, N, Chambers, S and Johnston, R (2010)

 The three basic functions of
enterprises
Digital Stock

Pearson Education
Ltd. Lord and Ford Motor
Leverett Company

@Slack, N, Chambers, S and Johnston, R (2010)

Inter-functional relationships between
operations and other functions
Engineering/ Product/service
technical Understanding of the
capabilities and development
function constraints of the function
operations process
Analysis of new
technology options Understanding of
process technology
needs New product and
Accounting service ideas
and finance Provision of Understanding of the
relevant capabilities and
function data
Operations constraints of the
Financial analysis for function operations process
performance and
decisions Market
requirements Marketing
Understanding of human function
resource needs Understanding of Provision of systems for
infrastructural design, planning and control,
and system needs and improvement
Recruitment
development and
training
Human Information
resources technology (IT)
function function

@Slack, N, Chambers, S and Johnston, R (2010)

Operations management in all types of organization

Automobile assembly factory – Operations

management uses machines to efficiently assemble
products that satisfy current customer demands

@Slack, N, Chambers, S and Johnston, R (2010)

 Operations management in all types of organization
(Continued)
Physician (General practitioner)
– Operations management uses
knowledge to effectively diagnose
conditions in order to treat real and
perceived patient concerns

@Slack, N, Chambers, S and Johnston, R (2010)

Operations management in all types of organization
(Continued)
Management consultant – Operations
management uses people to effectively create
the services that will address current and
potential client needs

@Slack, N, Chambers, S and Johnston, R (2010)

Operations management in all types of organization
(Continued)
Disaster relief charity
– Operations management
uses ours and our partners’
resources to speedily
provide the supplies and
services that relieve
community suffering

@Slack, N, Chambers, S and Johnston, R (2010)

 Operations management in all types of organization
(Continued)
Advertising agency – Operations
management uses our staff ’s knowledge and
experience to creatively present ideas that
delight clients and address their real needs

@Slack, N, Chambers, S and Johnston, R (2010)

 Operations management uses…
machines to efficiently assemble products

diagnose to treat real and

knowledge to effectively perceived patient
conditions
concerns

people to effectively create services that will

address current and
potential client needs

ours and our to speedily provide supplies and services

partners’ that relieve community
resources suffering

our staff ’s to creatively present ideas that delight clients

knowledge and and address their real
experience needs

@Slack, N, Chambers, S and Johnston, R (2010)

Most operations produce products and
services Pure products –Outputs
Crude oil production
that are exclusively
Acme Whistles tangible
Aluminium smelting

Specialist machine tool

production Mixture of products and
Prèt a Manger services – Outputs that
Restaurant are a mixture of the
tangible and intangible
IKEA
Information systems provider

Management consultancy
Pure services – Outputs
Mwagusi Safari
that are exclusively
Psychotherapy clinic Lodge
intangible
@Slack, N, Chambers, S and Johnston, R (2010)
A typology of operations and processes
The 4 Vs

Low Volume High

High

High Variety Low

High Variation in demand Low

High Visibility Low

@Slack, N, Chambers, S and Johnston, R (2010)

 A typology of operations and processes
(Continued)
The implications of high and low Volume in operations and
processes
Implications Implications

• Low repetition
• Each staff member Low
performs more
of each task
• Less systemization
• High unit costs
Volume High • High repeatability
• Specialization
• Capital intensive
• Low unit costs

@Slack, N, Chambers, S and Johnston, R (2010)

A typology of operations and processes (Continued)
The implications of high and low Variety in operations and
processes

Implications
Implications
• Flexible • Well defined
• Complex High Variety High
Low • Routine
• Match customer • Standardized
needs
• Regular
• High unit costs
• Low unit costs

@Slack, N, Chambers, S and Johnston, R (2010)

A typology of operations and processes (Continued)

The implications of high and low Variation in operations and

processes

Implications Implications

• Changing • Stable
capacity Variation in
High High
Low • Routine
• Anticipation demand
• Predictable
• Flexibility
• High utilization
• In touch with
demand • Low unit costs
• High unit costs

@Slack, N, Chambers, S and Johnston, R (2010)

A typology of operations and processes
(Continued)
The implications of high and low Visibility in operations and
processes
Implications Implications
• Short waiting • Time lag between
tolerance High Visibility High
Low production and
• Satisfaction consumption
governed by • Standardization
customer perception • Low contact skills
• Customer contact • High staff
skills needed utilization
• Received variety is • Centralization
high
• High unit costs • Low unit costs

@Slack, N, Chambers, S and Johnston, R (2010)

A 4 Vs profile of two operations
Low Volume High

High Variety Low

High Variation Low

High Visibility Low

Mwagusi Safari Formule 1
Lodge Hotel
Important to understand how different operations are
positioned on the 4 Vs.
Is their position where they want to be?
Do they understand the strategic implications?

@Slack, N, Chambers, S and Johnston, R (2010)

Nature of Production

Nature of production can be better
understood if we view manufacturing
function from three angle:
1. Production as a system
2. Production as an organizational function
3. Decision making in production
Production as a System
A Production System Model
Production as an Organizational
Function

The core of a production system is its
conversion sub-system, wherein workers,
materials and machines are used to
convert inputs into products and services.

Every organization, irrespective of its
purpose, has a production function where
departments and personnel play a central
role in achieving the objectives of the
organization.
Decision--Making in Production
Decision
POM Decisions and their Applications
Importance of Production Function
Production Management and
Operations Management
Characteristics of Modern Production
and Operations Function
The business environment is
changing, for example:
• Increased cost-based competition
• Higher quality expectations
• Demands for better service
• More choice and variety
• Rapidly developing technologies
• Frequent new product/service
introduction
• Increased ethical sensitivity
• Environmental impacts are more
transparent
• More legal regulation
• Greater security awareness
Prompting operations responses, for
example:
• Globalization of operations networking
• Information-based technologies
• Internet-based integration of operations
activities
• Supply chain management
• Customer relationship management
• Flexible working patterns
• Mass customization
• Fast time-to-market methods
• Lean process design
• Environmentally sensitive design
• Supplier ‘partnership’ and development
• Failure analysis
• Business recovery planning
Recent Trends in Production/
Operations Management
Manufacturing process types
Process Process
tasks flow

High
Diverse/ Project
Intermittent
complex

Jobbing

Variety
Batch

Mass

Contin-
Low

Repeated/ Continuous uous

divided
Low Volume High

@Slack, N, Chambers, S and Johnston, R (2010)

Project processes

One-off, complex, large scale, high work content

‘products’

Specially made, every one customized

Defined start and finish: time, quality and cost objectives

Many different skills have to be coordinated.

@Slack, N, Chambers, S and Johnston, R (2010)

Jobbing processes

Very small quantities: ‘one-offs’, or only a few required

Specially made. High variety, low repetition. ‘Strangers’ every

one customized

Skill requirements are usually very broad

Skilled jobber, or team, complete whole product.

@Slack, N, Chambers, S and Johnston, R (2010)

Batch Processes

Higher volumes and lower variety than for jobbing

Standard products, repeating demand. But can make

specials

Specialized, narrower skills

Set-ups (changeovers) at each stage of production.

@Slack, N, Chambers, S and Johnston, R (2010)

Mass (line) processes

Higher volumes than batch

Standard, repeat products (‘runners’)

Low and/or narrow skills

No set-ups, or almost instantaneous ones.

@Slack, N, Chambers, S and Johnston, R (2010)

Continuous processes

Extremely high volumes and low variety: often single

product

Standard, repeat products (‘runners’)

Highly capital-intensive and automated

Few changeovers required

Difficult and expensive to start and stop the process.

@Slack, N, Chambers, S and Johnston, R (2010)

 Service process types
Process Process
tasks flow

High
Diverse/ Professional
Intermittent
complex service

Variety Service shop

Mass service
Low

Repeated/ Continuous
divided
Low Volume High

@Slack, N, Chambers, S and Johnston, R (2010)

Professional service

High levels of customer (client) contact.

Clients spend a considerable time in the service process.

High levels of customization with service processes being highly

adaptable.

Contact staff are given high levels of discretion in

servicing customers.

People-based rather than equipment-based.

@Slack, N, Chambers, S and Johnston, R (2010)

Service shops

Medium levels of volumes of customers

Medium, or mixed, levels of customer contact

Medium, or mixed, levels of customization

Medium, or mixed, levels of staff discretion.

@Slack, N, Chambers, S and Johnston, R (2010)

Mass service

High levels of volumes of customers

Low to medium levels of customer contact

Low, or mixed, levels of customization

Low, or mixed, levels of staff discretion.

@Slack, N, Chambers, S and Johnston, R (2010)

Operations in the Service Sector
Distinction between Products
and Services
Primary Characteristics of Services
Production of Goods (Manufacturing)
Versus Service Operations
 Objectives of Production and
Operations Management

The objective of the production management is ‘to
produce goods/services of right quality and quantity at the
right time and right manufacturing cost’.

Objectives of operations management can be categorized
into customer service and resource utilization.

The customer service objective-To provide
agreed/adequate levels of customer service (and hence
customer satisfaction) by providing goods or services with
the right specification, at the right cost and at the right
time.

The resource utilization objective-To achieve
adequate levels of resource utilization e.g., to achieve
agreed levels of utilization of materials, machines and
labour.
Functions of Production and
Operations Manager
1. Location of facilities
2. Plant layouts and material handling
3. Product design
4. Process design
5. Production planning and control
6. Quality control
7. Materials management
8. Maintenance management.
The Challenges Facing Operations
Managers
Any Questions
Class Test (5 marks)
1 (a) Describe relationship between the
operations function and other core and
support functions of the organization.
OR
(b) Describe the dimensions of four Vs of
operations processes and their implications.