You are on page 1of 48

Introduction to Operations

Management

Basic Concept of Production/Transformation
Introduction

Four Functional areas in a Business:- Marketing, Production, Finance and
Personnel.
Production is the basic function around which all other activities revolve like
marketing, storing, personnel, research and development.
Thus, very important that Production function must be managed efficiently and
effectively. So, as to achieve organizational Goals.

Production
• The process by which, raw materials and other inputs
are converted into finished products.
• It involves step by step conversion of one form of
materials into another to increase the utility of products
or services.
Production and operations management (POM) is the management of an
organization’s production system.
A production system takes inputs and converts them into outputs.
The conversion process is the predominant activity of a production system.
The primary concern of an operations manager is the activities of the
conversion process.

Organizational Model
Finance
Sales

HRM

POM
IB

Marketing

Engineering

MIS

Accounting

Importance • High Productivity (Controlling the machine and manpower idle time. making raw materials available in time in sufficient quality of right quantity. ventilation) • Safety and Health (protection of workers from the danger of industrial accidents) • Better Customer Service (quick response to complaint. reducing rejection rate) • Plant Utilities (services such as lighting. stages. after sale services) • Use of latest Technology (Automation) . reducing wastage) • Higher Quality (meet the quality specifications) • Reduction of Wastage (reasons. replacement during guarantee period. corrective decisions) • Shorter Manufacturing Lead Time (by reducing machine setup time. quality products. repair and maintenance facility.

Historical Background • • • • The Industrial Revolution Scientific Management The Human Relations Movement Operations Research .

. invented by James Watt in 1764. largely replaced human and water power for factories.The Industrial Revolution • The industrial revolution developed in England in the 1700s. • Adam Smith’s The Wealth of Nations in 1776 quoted the economic benefits of the specialization of labor. • Thus the late-1700s factories had not only machine power but also ways of planning and controlling the tasks of workers. • The steam engine.

• The industrial revolution spread from England to other European countries and to the United Sates. • The first great industry in the U. • By the mid-1800s.S. • In the 1800s the development of electricity further advanced the revolution. was the textile industry. the old cottage system of production had been replaced by the factory system. .

. His shop system employed these steps: – Each worker’s skill. – Incentive pay systems were initiated. strength. and learning ability were determined.Scientific Management • Frederick Taylor is known as the father of scientific management. work methods. and routing sequences were used to organize the shop. – Stopwatch studies were conducted to precisely set standard output per worker on each task. – Material specifications. – Supervisors were carefully selected and trained.

Ford Motor Company’s operation embodied the key elements of scientific management: – identical product designs – mass production – low manufacturing costs – automatic assembly lines – specialization of labour .• In the 1920s.

• From the work of behavioralists came a gradual change in the way managers thought about and treated workers. .Human Relations • In the 1927-1932 period. • Researchers and managers alike were recognizing that psychological and sociological factors affected production. researchers in the Hawthorne Studies realized that human factors were affecting production.

S. GDP is from services. . • There is a huge trade surplus in services. workforce is employed in services. • Today.S.The Service Revolution • The creation of services organizations accelerated sharply after World War II. • About two-thirds of U. • Thus there is a growing need for service operations management. more than two-thirds of the U.

Customer Service. and Cost Challenges • Computers and Advanced Production Technology • Growth of Service Sector • Scarcity of Production Resources • Issues of Social Responsibility .Factors Affecting POM • Global Competition • Quality.

Types Of Transformation Systems Continuous or Flow Production Intermittent Production Mass Production Project Production Process Production Job Production Batch Production .

• They are not produced on customer's orders. .Continuous Production System • Continuous means something that operates constantly without any irregularities or frequent halts (Stops). the inputs and outputs are homogeneous along with the production process and sequence. goods are produced constantly as per demand forecast. • Here. • In the continuous production system. • Goods are produced on a large scale for stocking and selling.

.

. • Identical products are produced.Features • Volume of output is large. • Special purpose automatic machines are used. • Fixed path material handling equipment is used due to the predetermined sequence of operations. • Machines and equipments are arranged according to Product layout Pattern.

.Following chart highlights the concept of a continuous production system.

Crude oil and other raw sources are processed continuously on a large scale to yield usable form of fuel.• The Production system of a food industry is purely based on the demand forecast. demand forecast. a large-scale production of food takes place. the production and processing system of a fuel industry is also purely based on. Here. . • Similarly.

• Cost of materials handling are minimized. • Quality of output is kept uniform. . • Any delay at any stage is automatically detected.Merits • As the processing of material is continuous there is no waiting period as each work is passed to the next stage immediately.

• If there is fault in one operation.Demerits • Very rigid. . the entire process is disturbed.

Suitability • Best suited to the organizations which intend to produce a limited variety of products on a large scale. .

Continuous Production is of the following types .

. • The goods are produced either with the help of a single operation or uses a series of operations.Mass Production Flows Here. company produces different types of products on a large-scale and stock them in warehouses until they are demanded in the market.

.

.

. a single product is produced and stocked in warehouses until it is demanded in the market.Process Production Flows Here.

The full production system is designed to produce only one specific type of item . The production planning and scheduling can be decided well in advance. There is very less work-in-progress because material flow is continuous. Conveyors and automatic transfer machines are used to move the materials from one stage to another. Low-skilled labour and skilled technicians are required.Features • • • • • There is a highly automated system for handling materials.

Types • Analytical Process of Production • Synthetic Process of Production • Assembling Process of Production .

Analytical Process of Production Raw Material is broken into different products Finished Product Raw Material Ammonical Liquor Finished Product Coal Coaltar Finished Product .

acids and perfumes .Synthetic Process of Production • Mixing of two or more materials to manufacture a product.Castic Soda. Soap Raw Material Finished Product Raw material.

Assembling Process of Production • Two or more components are combined to manufacture a finished product. TV . Raw Material Parts Finished Product Automobiles.

Intermittent Production System • Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed) intervals (time gaps). It keeps changing according to the design and size of the product. • Therefore. this system is very flexible. The design of these products goes on changing. the flow of production is not continuous. large varieties of products are produced. • The flow of production is intermittent (irregular). • These products are of different sizes. • In the intermittent production system. • These goods are produced on a small scale. • In other words. In this system. . goods are produced based on customer's orders.

.

.Following chart highlights the concept of an intermittent production system.

The goldsmith makes goods (ornaments) on a small-scale basis as per his customer's requirements. . ornaments are not done on a continuous basis. Here. Here.• The work of a goldsmith is purely based on the frequency of his customer's orders. The clothes are stitched for every customer independently by the tailor as per one's measurement and size. • Similarly. stitching is not done on a continuous basis. Goods (stitched clothes) are made on a limited scale and is proportional to the number of orders received from customers. the work of a tailor is also based on the number of orders he gets from his customers.

• General purpose machines are used. • The quantity. • The sequence of operation goes on changing as per the design of the product. shape. design. • Wide varieties of products are produced. These machines can be used to produce different types of products. It is intermittent. etc. of the product depends on the customer's orders .The characteristics of an intermittent production system are listed as follows: • The flow of production is not continuous. size. • The volume of production is small.

Types .

in project production flows.Project production flows Here. . The order must be completed within a given period of time and at an estimated cost. complex order or contract. company accepts a single.

.

Generally. Many agencies are involved in the project. Each agency performs specialized jobs. proper inspection is required at each stage of production. coordination between agencies is important because all jobs are interrelated. Here. Delays take place in completion of projects due to its complexity and massiveness. As routing and scheduling changes with fresh orders. it slows down when the project is near its completion phase.Features • • • • The requirement of resources is not same (it varies). .

Job Production Flows Here. This cost is fixed at the time of signing the contract . The product is produced within a given period and at a fixed cost. company accepts a contract to produce either one or few units of a product strictly as per specifications given by the customer. in job production flows.

.

g. The items are manufactured strictly as per customer's specifications. Highly skilled labour is required to perform specialized jobs.Features • • • • The production of items takes place in small lots. e. the time needed to design the product may be more than the manufacturing time. There is disproportionate manufacturing cycle time. Sometimes only one product is produced at one time. .

the production schedule is decided according to specific orders or are based on the demand forecasts. A product is divided into different jobs. All jobs of one batch of production must be completed before starting the next batch of production.Batch Production Flows • In batch production flows. • Here. . the production of items takes place in lots or batches.

.

There is a need for detailed production planning and control.Features • • • • The products are made and kept in stock until their demand arises in the market. which can do many different jobs quickly are installed. There is a possibility of large work-in-progress due to many reasons. . This is because large varieties of items are to be produced. General purpose machines and handling equipments.

Difference .