Arun Mishra

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Introduction to Production and Operations Management Transformation Process Evolution of Operations Management History of Operations Management Trends in Operations Management Productivity Management

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Production/operations management is the process, which combines and transforms various resources used in the production/operations subsystem of the organization into value added product/services in a controlled manner as per the policies of the organization.

. The set of interrelated management activities.  Operations Management is the set of activities that creates value in the form of goods and services by transforming input into output. is called as production Management. which are involved in manufacturing certain products.

INPUT •Material •Machines •Labor •Management •Capital TRANSFORMATION PROCESS OUTPUT •Goods •Services Feedback .


      Physical: as in manufacturing operations Locational: as in transportation operations Exchange: as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication .

Tools. Equipments Desired Output Healthy Individuals Hospital Healthcare (Physiological) Automobile Factory Sheet Metal. Engine Parts Fabrication and Assembly of Cars High Quality of Cars College or University 10+2 or Teachers. Medicines. Class s Rooms Imparting Knowledge Educated Individuals . etc. Graduate Books. Nurses.SOME OF INPUT-TRANSFORMATION – OUTPUT RELATIONSHIPS System Primary Resources Transformation Function Inputs Patients Doctors. Workers.

     Operations Marketing Finance and accounting Human resources Outside suppliers .

enabled mass production . Craft production ◦ process of handcrafting products or services for individual customers  Division of labor ◦ dividing a job into a series of small tasks each performed by a different worker  Interchangeable parts ◦ standardization of parts initially as replacement parts.

Evolution of Operations Management (conti…)   Scientific management Mass production Lean production ◦ systematic analysis of work methods ◦ high-volume production of a standardized product for a mass market ◦ adaptation of mass production prizes quality and flexibility that  .

Era Industrial Revolution Events/Concepts Steam engine Division of labor Interchangeable parts Principles of scientific management Dates 1769 1776 1790 1911 1911 1912 1913 Originator James Watt Adam Smith Eli Whitney Frederick W. Taylor Frank and Lillian Gilbreth Henry Gantt Henry Ford Time and motion studies Scientific Management Activity scheduling chart Moving assembly line .

IBM and others Operations Research Linear programming Digital computer Simulation. CIM . 1970s Originator Elton Mayo Abraham Maslow Frederick Herzberg Douglas McGregor George Dantzig Remington Rand Operations research groups Joseph Orlicky. decision theory. EDI. waiting line theory.Era Human Relations Events/Concepts Hawthorne studies Motivation theories Dates 1930 1940s 1950s 1960s 1947 1951 1950s 1960s. PERT/CPM MRP. EFT.

Joseph Juran Wickham Skinner.Era Events/Concepts Dates Originator 1970s 1980s 1990s 1990s Taiichi Ohno (Toyota) W. Robert Hayes Michael Hammer. Edwards Deming. James Champy JIT (just-in-time) TQM (total quality management) Quality Strategy and Revolution operations Business process reengineering .

ORACLE. Yahoo. Tim Berners-Lee SAP. i2 Technologies. European Union. PeopleSoft Amazon.Era Globalization Events/Concepts WTO. eBay. supply chain management Dates Originator 1990s 2000s 1990s Numerous countries and companies ARPANET. ERP. WWW. and others Internet Revolution E-commerce 2000s . and other trade agreements Internet.

moving production offshore Just-in-time performance Low-bid purchasing Supply chain partners. collaboration.Past Local or national focus Batch (large) shipments Causes Reliable worldwide communication and transportation networks Short product life cycles and cost of capital put pressure on reducing inventory Supply chain competition requires that suppliers be engaged in a focus on the end customer Future Global focus. alliances. outsourcing .

increasingly a knowledge and information society . and international collaboration Affluence and worldwide markets. collaborative designs Mass customization with added emphasis on quality Empowered employees. Internet. rapid international communication. and lean production Job specialization Changing socioculture milieu. alliances. computeraided design.Past Lengthy product development Standardized products Causes Shorter life cycles. increasingly flexible production processes Future Rapid product development. teams.

recycled materials. ISO 14000. pollution . bribery. public and global review of ethics.Past Low-cost focus Causes Environmental issues. remanufacturing High ethical standards and social responsibility expected Ethics not at forefront Businesses operate more openly. opposition to child labor. green manufacturing. increasing disposal costs Future Environmentally sensitive production.

        Global focus Just-in-time performance Supply chain partnering Rapid product development Mass customization Empowered employees Environmentally sensitive production Ethics .

defective output. idling of resources  Reduction in scrap by 1% can increase in productivity by 10%  .Efficiency through which input is converted in output is called productivity  Productivity –output/input  Other way to look at productivity is by the wastage produced  Waste can be unnecessary input.

Productivity is the ratio of outputs (goods and services) divided by the inputs (resources such as labour and capital) The objective is to improve productivity! Important Note! Production is a measure of output only and not a measure of efficiency .

Measures of Productivity .

Labour Productivity Productivity = Units produced Labour-hours used = 1.000 250 = 4 units/labor-hour One resource input  single-factor productivity .

Productivity = Output Labor + Material + Energy + Capital + Miscellaneous  Also known as total factor productivity  Output and inputs are often expressed in dollars Multiple resource inputs  multi-factor productivity .

 Quality may change while the quantity of inputs and outputs remains constant  External elements may cause an increase or decrease in productivity  Precise units of measure may be lacking .

with input decreasing at a faster rate  Achieve breakthroughs   Downsize Retrench .  Become efficient Expand ◦ output increases with little or no increase in input ◦ both output and input grow with output growing more rapidly ◦ output increases while input decreases ◦ output remains the same and input is reduced ◦ both output and input decrease.


Calculate and compare the productivity for all the 3 periods. the output is increased to 400 kg by consuming 400 kg of raw materal. the output is doubled (320 kg) by consuming 420 kg of raw material and for a third period.   A company produces 160 kg of plastic moulded parts of acceptable quality by consuming 200 kg of raw materials for a particular period. For the next period. .

production is 160 kg Productivity = Output/Input = 160/200 = 0..8 or 80% For the second year.During the first year. production is increased by 150% Productivity =Output/Input =400/400 = 1. i. 100% ↑ .e.76 or 76% ↓ For the third period.0. production is increased by 100% Productivity =Output/Input =320/420 = 0.

productivity has decreased from 80% to 76% ◦ For period third. though production has doubled. . From the above illustration it is clear that: ◦ For second period. production is increased by 150% and correspondingly productivity increased from 80% to 100%.

000 Capital input – Rs.000 Other misc.000 Energy input – Rs.000 Material input – Rs. 1. 500   The values are in terms of base year rupee value. 2. 3. 10. input – Rs. Compute various productivity indices. The following information regarding the output produced and inputs consumed for a particular time period for a particular company is given below: ◦ ◦ ◦ ◦ ◦ ◦ Output – Rs. 3.000 Human input – Rs. .

Labour productivity = Output/Human input = 10.000 = 3.000 +500) = 10. input) .000 = 5.000/(3.000/1.000/3.000 = 10. exp.000 = 3.000/3.000 + 3.500 = 1.33 Capital productivity =Output/Capital input =10. =Output/Other misc.33 Material productivity =Output/Material input =10.00 Energy productivity =Output/Energy input =10.000 + 2.000/2. input =10.000/9.000 +1.000/500= 20.00 Total productivity = Total output/Total input = Total output = 10.00 Other misc.053 (Human + Material + Capital + Energy + Other misc.

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