INTRODUCTION TO

PRODUCTION AND
OPERATION MANAGEMENT
CHAPTER I
LEARNING OBJECTIVES:

• After studying this chapter, you will be able to:

• 1. Discuss the historical evolution of production and operations management
• 2. Explain the concept of production
• 3. Define the nature and scope of operations management
• 4. Understand the objectives of operations management
• 5. Describe manufacturing, systems, and layouts
1.1 HISTORICAL EVOLUTION OF PRODUCTION AND
OPERATIONS MANAGEMENT\
Craftsmanship Era (Before 1800):
• The earliest form of production was
characterized by craftsmanship, where
skilled artisans produced goods individually
or in small workshops.
• Production processes were labor-intensive,
and there was limited standardization.
INDUSTRIAL REVOLUTION (LATE 18TH TO EARLY 19TH
CENTURY):

• The Industrial Revolution marked the transition from agrarian and handcraft-
based economies to industrialized ones.
• Introduction of mechanization and factories led to increased productivity.
• Division of labor and specialization became more prevalent.
SCIENTIFIC MANAGEMENT ERA (LATE 19TH TO EARLY
20TH CENTURY):
• Frederick W. Taylor pioneered scientific management principles to
improve efficiency.
• Emphasis on time and motion studies, standardization, and
specialization.
• Taylor's work laid the foundation for modern production and
operations management.
HUMAN RELATIONS ERA (1920S-1930S):

• Elton Mayo's Hawthorne Studies highlighted the importance of

human factors in productivity.
• Recognition that worker satisfaction and social interactions impact
performance.
• Shift towards a more human-centric approach in management.
POST-WORLD WAR II ERA (1940S-1950S)

• The focus shifted to overall organizational efficiency and effectiveness.

• Application of statistical quality control and operations research techniques.
• Increased emphasis on planning, scheduling, and optimization of production
processes.
COMPUTER AND TECHNOLOGY ERA (1960S-1980S)

• Advancements in computing technologies revolutionized

production and operations management.
• Introduction of Material Requirements Planning (MRP) and later,
Enterprise Resource Planning (ERP) systems.
• Automation of routine tasks and improved data analysis
capabilities.
GLOBALIZATION ERA (1980S-PRESENT):

• Increased globalization led to the need for more complex supply

chain and distribution networks.
• Lean and Just-in-Time (JIT) principles gained prominence, focusing
on minimizing waste and maximizing efficiency.
• Adoption of Total Quality Management (TQM) and Six Sigma
methodologies for continuous improvement.
DIGITAL AND INDUSTRY 4.0 ERA (LATE 20TH CENTURY
TO PRESENT)
• Integration of digital technologies, IoT (Internet of Things), and
data analytics in production processes.
• Emergence of Industry 4.0, characterized by smart factories, cyber-
physical systems, and the use of artificial intelligence.
• Greater emphasis on customization, flexibility, and responsiveness
to customer demands.
Date Contribution Contributor
1776 Specialization of labor in Adam Smith
manufacturing
1799 Interchangeable parts, cost Eli Whitney and others
accounting
1832 Division of labor by skill; Charles Babbage
assignment of job by skill;
basics of time study
1900 Scientific management time Frederic W. Taylor
study and work study
developed; dividing planning
and doing of work
1900 Motion of study of jobs Frank B. Gilbreth
1901 Scheduling technique Henry N. Gantt
for employees, machine
jobs in manufacturing

1915 Economics lot sizes for F.W. Harris

inventory control
1927 Human relations; Elton Mayo
Hawthrone study
1931 Statistical inference W.A. Shewart
applied to product
quality: Quality control
chart
1935 Statistical sampling applied H.F. Dogge & H.G. Roming
to quality control: inspection
sampling plan

1940 Operational research P.M. Blacker and others

application in World War II

1946 Digital computer John Mauchlly and J.P Eckert

1947 Linear programming G.B. Duntzig, Williams and
other

1950 Mathematical programming, A. Charnes, W.W. Cooper and

on-linear and stochastic others
process
1951 Commercial digital computers: Sperry Univac
Large scale computation available

1960 Organization behavior: Continued L. Cummings, L. Porter

study of people at work

1970 Integrating operations into overall W. Skinner, J. Orlicky and G. Erite

strategy and policy, Computer
application to manufacturing,
scheduling and control, Material
Requirement Planning

1980 Quality Productivity application W.E Deming and J. Juran

from Japan:

Robotics, CAD-CAM
1.2 CONCEPT OF PRODUCTION
• Production function is that part of an organization, which is concerned
with the transformation of a range of inputs into the required outputs
(products) having the requisite quality level.
• 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.'
CLASSIFICATION OF PRODUCTION SYSTEM

• Production System: It is a computer program typically used to

provide some form of artificial intelligence, which consists
primarily of a set of rules about behavior.
JOB SHOP PRODUCTION

• Job shop production are characterized by

manufacturing of one or few quantity of products
designed and produced as per the specification of
customers within prefixed time and cost.
CHARACTERISTICS
• The job shop production system is followed when there is:
• High variety of products and low volume.
• Use of general purpose machines and facilities.
• Highly skilled operators who can take up each job as a challenge because of
uniqueness.
• Large inventory of materials, tools, parts.
• Detailed planning is essential for sequencing the requirements of each
product, capacities for each work center and order priorities.
ADVANTAGES

• Because of general purpose machines and facilities variety of products can be

produced.
• Operators will become more skilled and competent, as each job gives them
learning opportunities.
• Full potential of operators can be utilized.
• Opportunity exists for creative methods and innovative ideas.
LIMITATIONS

• Following are the limitations of job shop production:

• Higher cost due to frequent set up changes.
• Higher level of inventory at all levels and hence higher inventory
cost.
• Production planning is complicated.
• Larger space requirements.
CONTINUOUS PRODUCTION

• Production facilities are arranged as per the sequence of

production operations from the first operations to the finished
product. The items are made to flow through the sequence of
operations through material handling devices such as conveyors,
transfer devices, etc.
CHARACTERISTICS

• Dedicated plant and equipment with zero flexibility.

• Material handling is fully automated.
• Process follows a predetermined sequence of operations.
• Component materials cannot be readily identified with final
product.
• Planning and scheduling is a routine action.
ADVANTAGES

• Following are the advantages of continuous production:

• Standardization of product and process sequence.
• Higher rate of production with reduced cycle time.
• Higher capacity utilization due to line balancing.
• Manpower is not required for material handling as it is completely
automatic.
• Person with limited skills can be used on the production line.
• Unit cost is lower due to high volume of production.
LIMITATIONS

• Following are the limitations of continuous production:

• Flexibility to accommodate and process number of products does
not exist.
• Very high investment for setting flow lines.
• Product differentiation is limited.
NATURE AND SCOPE OF OPERATIONS MANAGEMENT

• Operations management is understood as the process whereby

resources or inputs are converted into more useful products.
• Operations management is a field of management that focuses on
designing and controlling the process of production and
redesigning business operations in the production of goods or
services.
TWO POINTS OF DISTINCTION BETWEEN PRODUCTION
MANAGEMENT AND OPERATIONS MANAGEMENT.
• First, the term production management is more used for a system
where tangible goods are produced. Whereas, operations management
is more frequently used where various inputs are transformed into
tangible services.
• The second distinction relates to the evolution of the subject.
• Operation management is the term that is used nowadays. Production
management precedes operations management in the historical growth
of the subject the two distinctions notwithstanding, the terms
production management and operations management are used
interchangeably.
SCOPE OF PRODUCTION AND OPERATION
MANAGEMENT
• The scope of Production and Operations Management (POM) is vast and
encompasses a variety of activities aimed at efficiently and effectively
managing the production of goods and services.
• Origination with the selection of location production management covers
such activities as acquisition of land, constructing building, procuring and
installing machinery, purchasing and storing raw material and converting
them into saleable products. Added to the above are other related topics such
as quality management, maintenance management, production planning and
control, methods improvement and work simplification and other related
areas.
EVOLUTION OF PRODUCTION FUNCTION

• In order to trace the evolution of production function, we

identify six historical developments: the Industrial
Revolution, scientific management, the human relations
movement, operations research, computers and advanced
production technology and the service revolution a brief
explanation of each stage follows.
THE INDUSTRIAL REVOLUTION
The Egyptian Pyramids, the Greek Parthenon, the Great Wall of China and the
aqueducts and the roads of the Roman Empire, dams and anicuts built by chola
kings attest to the ingenuity and industry of the people of ancient times but the
ways the people in the ancient days produced goods were different from the
production methods of today.
Production system prior to the 1700s are often referred to as the cottage
system, because the production of goods took place in homes or cottages,
where craftsman directed apprentices in performing hand work on products.
From the 1770 to the early 1800s series of events took place in England which
together is called the Industrial Revolution. Industrial Revolution resulted in two
major developments: widespread substitution of machine power for human
power and establishment of the factory system.
IMPORTANCE OF PRODUCTION PLANNING AND
CONTROL
• The system of production planning and control serves as the
nervous system of a plant.
• It is a coordinating agency which coordinate the activities of
engineering, purchasing, production, selling and stock control
departments.
• An efficient system of production planning and control helps in
providing better and more economic goods to customers at lower
investment.
IMPORTANCE OF PRODUCTION PLANNING AND
CONTROL
• Better Service to Customers:
• Fewer Rush Orders:
• Better Control of Inventory:
• More Effective Use of Equipment
• Reduced Idle Time:
• Improved Plant Morale:
• Good Public Image
• Lower Capital Requirements
OBJECTIVES OF OPERATIONS MANAGEMENT
• Design of Goods and Services - It is associated with quality and human
resources.
• Quality - The quality or product quality must be maintained during
construction process products (goods or services).
• The Design Process and Capacity - Designing processes and capacities related
to the quality, human resources, inventory, scheduling and maintenance.
• Site Selection - The choice of location associated with supply chain
management.
• Design Layout The design layout is done after the design process and
capacity.
• Human Resources (HR) and Design Work HR factors include safety, health, job
description, work environment and wages.
• Human Resources (HR): It is the set of individuals who
make up the workforce of an organization, business
sector, or economy.
SUPPLY CHAIN MANAGEMENT
• Supply Chain Management Supply chain management is
influenced by site selection and product quality.
• Inventory decisions are influenced by design processes
and capacity, human resources, and design layout.
• Scheduling decisions are influenced by the design
process and capacity, layout and HR.
• Maintenance associated with maintaining the quality or
qualities.
MANUFACTURING SYSTEMS AND LAYOUTS
• Manufacturing is the organized activity devoted to the transformation
of raw materials into marketable goods.
• Manufacturing: It is the production of merchandise for use or sale
using labor and machines, tools, chemical and biological processing, or
formulation.
• The manufacturing system usually employs a series of value-adding
processes to convert raw materials into more useful forms, and
eventually into finished products.
• Manufacturing Systems Management is a discipline built upon a
collection of methodological tools brought together to effect an
integrated or “total” approach to problem-solving in manufacturing
engineering and management, with productivity improvement as its
overall objective.
LAYOUTS
• In manufacturing, layout refers to the arrangement of machines, equipment,
workstations, and storage areas within a facility.
• Process Layout: Also known as functional layout, this type of layout arranges
machines and equipment based on the specific functions or processes they
perform.
• Product Layout: Also known as line layout or flow-line layout, this layout
arranges machines and workstations in a sequence that follows the
production process for a particular product.
• Cellular Layout: In this layout, machines and workstations are grouped into
cells based on the specific products or product families they produce.
• Fixed-Position Layout: This layout is used when the product is too large or too
heavy to move easily.
• Combination Layout: As the name suggests, this layout combines elements of
the other layout types to suit the specific needs of the manufacturing process.
PROCESS LAYOUT
• Process layouts are found primarily in job shops, or firms
that produce customized, low-volume products that may
require different processing requirements and sequences
of operations.
• Process layouts are facility configurations in which in
which operations of a similar nature or function are
grouped together.
• Occasionally are referred to as functional layouts.
• Their purpose is to process goods or provide service that
involve a variety of processing requirements.
MUTHER GRID

• A Muther grid, named after its creator Richard Muther, is

a tool used in industrial engineering and facility planning
to optimize process layouts.
• It helps in determining the best possible arrangement of
departments or workstations within a facility to minimize
transportation costs, distances, or time.
• Each combination (pair), represented by an intersection on the grid, is
assigned a letter indicating the importance of the closeness of the two (A
= absolutely necessary; E = very important; I = important; O = ordinary
importance; U = unimportant; X = undesirable).
ADVANTAGES OF PROCESS LAYOUTS INCLUDE:
• Flexibility: The firm has the ability to handle a variety of processing
requirements.
• Cost: Sometimes, the general-purpose equipment utilized may be less
costly to purchase and less costly and easier to maintain than
specialized equipment.
• Motivation: Employees in this type of layout will probably be able to
perform a variety of tasks on multiple machines, as opposed to the
boredom of performing a repetitive task on an assembly line. A process
layout also allows the employer to use some type of individual incentive
system.
• System Protection: Since there are multiple machines available, process
layouts are not particularly vulnerable to equipment failures.
DISADVANTAGES OF PROCESS LAYOUTS INCLUDE:
• Motivation: The system’s inherent division of labor can result in
dull, repetitive jobs that can prove to be quite stressful. Also,
assembly-line layouts make it very hard to administer individual
incentive plans.
• Flexibility: Product layouts are inflexible and cannot easily respond
to required system changes especially changes in product or
process design.
• System Protection: The system is at risk from equipment
breakdown, absenteeism, and downtime due to preventive
maintenance.
FIXED POSITION LAYOUT

• A fixed-position layout is appropriate for a product that is too

large or too heavy to move. For example, battleships are not
produced on an assembly line.
PRODUCT LAYOUTS

• Product layouts are found in flow shops (repetitive assembly and

process or continuous flow industries).
• Flow shops produce high-volume, highly standardized products
that require highly standardized, repetitive processes.
• In a product layout, resources are arranged sequentially, based on
the routing of the products. In theory, this sequential layout allows
the entire process to be laid out in a straight line, which at times
may be totally dedicated to the production of only one product or
product version.
TWO TYPES OF LINES
• Paced lines can use some sort of conveyor that moves output
along at a continuous rate so that workers can perform operations
on the product as it goes by. For longer operating times, the
workers may have to walk alongside the work as it moves until he
or she is finished and can walk back to the workstation to begin
working on another part (this essentially is how automobile
manufacturing works).
• Unpaced line, workers build up queues between workstations to
allow a variable work pace. However, this type of line does not
work well with large, bulky products because too much storage
space may be required.
ADVANTAGES OF PRODUCT LAYOUT INCLUDE:
• Output: Product layouts can generate a large volume of products
in a short time.
• Cost: Unit cost is low as a result of the high volume. Labor
specialization results in reduced training time and cost. A wider
span of supervision also reduces labor costs. Accounting,
purchasing, and inventory control are routine. Because routing is
fixed, less attention is required.
• Utilization: There is a high degree of labor and equipment
utilization.
DISADVANTAGES OF PRODUCT LAYOUT INCLUDE:

• Motivation: The system’s inherent division of labor can result in dull,

repetitive jobs that can prove to be quite stressful. Also, assembly-line
layouts make it very hard to administer individual incentive plans.
• Flexibility: Product layouts are inflexible and cannot easily respond to
required system changes especially changes in product or process
design.
• System Protection: The system is at risk from equipment breakdown,
absenteeism, and downtime due to preventive maintenance.