Production Application of resources such as people and

machinery to convert materials into finished goods and

services.
Production and operations management Managing
people and machinery in converting materials and
resources into finished goods and services.
 Productivity = Output/
Input
Productivity is a Measure of Performance
Individual -- Group -- Organization -- Nation
3
Productivity is a measure of the efficiency
of production.
Productivity is a ratio of what is produced
to what is required to produce it.
Productivity comes from the word
“Product” & “Activity” when a product is
put into activity or processes it results
into Productivity.
Productivity = Output
Input
For any type
of organization,
Productivity is simply the ratio
between the amount
produced and amounts of
 RESOURCES OF AN
ORGANIZATION
• Whether Public or Private; The resources
that are available to them are:
• Land & Buildings
• Materials
• Plant, Machines & Equipment
• Energy
• People
• Money
• Productivity is the most
important long term resource
• Not only for the success of the
organizations & individuals
but also for national
economic & social
development
• It is also a measure of the
efficiency of the Managers
 PRODUCTIVITY IS ALSO...

• EFFICIENCY
(Doing things right)
+
• EFFECTIVENESS
(Doing the right things)
“Do the right thing and do it right now”
WHY PRODUCTIVITY IS
IMPORTANT
Higher standard of
living

Higher GDP
per capita

Higher
Higher
Investment
Productivit
y
 Managing Productivity
• Productivity
– An economic measure of efficiency that
summarizes the value of outputs relative
to the value of the resources used to
produce them.
For the productivity improvement ILO has proposed different
productivity techniques, they are
1.Focusing on reducing added inefficient time in the
total work content by including work-study,
methods study, and work measurement, techniques.
2.Product and process improvement are the areas
where major cost savings can be generated.
3.New product development cycle time reduction is
identified as most important requirement for
improvement.
4.Reducing poor design and frequent design changes
5.Reducing Waste of materials
6. Reducing incorrect quality standards.
7.Reducing poor planning of work
8.Reducing inadequate material handling
9.Reducing frequent stoppage in
production.
10.Reducing poor workmanship.
PRODUCTION:
Production process consists of activities
that are required in transforming an
input set (human resources, raw
materials, energy, money, information,
etc.) to valuable outputs with the help of
processors.
 Production system may be defined as,
 "The methods, procedure or arrangement

which includes all functions required to

accumulate (gather) the inputs, process or
reprocess the inputs, and deliver the
marketable output (goods)."Production
system utilizes materials, funds,
infrastructure, and labour to produce the
required output in form of goods.
 A production system converts
inputs into outputs with the help of
processors
  A generalized production system

can be represented as:-

 INPUT PROCESSOR OUTPUT
(goods/services)
The types of production system are grouped
under two categories viz.,
 1.Intermittent production system, and
 2.Continuous production system.
 Intermittent means something that
starts (initiates) and stops (halts)
at irregular (unfixed) intervals
(time gaps).
 In the intermittent production system, goods are
produced based on customer's orders. These
goods are produced on a small scale. The flow of
production is intermittent (irregular). In other
words, the flow of production is not continuous.
In this system, large varieties of products are
produced. These products are of different sizes.
The design of these products goes on changing.
It keeps changing according to the design and
size of the product. Therefore, this system is very
flexible.
Continuous means something that operates
constantly without any irregularities or
frequent halts.
 In the continuous production system, goods
are produced constantly as per demand
forecast. Goods are produced on a large scale
for stocking and selling. They are not
produced on customer's orders. Here, the
inputs and outputs are standardized along
with the production process and sequence.
 Here, company produces different types of
products on a large-scale and stock them in
warehouses until they are demanded in
the market.
 The goods are produced either with the help

of a single operation or uses a series of

operations.
 E.g. of mass production is the production of

toothpastes, soaps, pens, etc.

 There is a continuous flow of production.
However, this depends on the demand in the
market.
 Here, there is limited work-in-progress.
 Supervision is easy because only few instructions
are necessary.
 The material handling is done mostly by
machines, i.e. conveyors and automatic transfer
machines.
 The flow of materials is continuous. There is little
or no queuing at any stage of production.
 Here, a single product is produced and
stocked in warehouses until it is demanded in
the market. The flexibility of these plants is
almost zero because only one product can be
produced.
 Examples of these plants include, steel,

cement, paper, sugar, etc.

 There is a highly mechanized system for handling
materials. Conveyors and automatic transfer
machines are used to move the materials from
one stage to another.
 Low-skilled labour and skilled technicians are
required.
 There is very less work-in-progress because
material flow is continuous.
 The production planning and scheduling can be
decided well in advance.
 The full production system is designed to
produce only one specific type of item.
 Project production flows,
 Jobbing production flows, and
 Batch production flows.
 Here, in project production flows, company
accepts a single, complex order or contract.
The order must be completed within a given
period of time and at an estimated cost.
 Examples of project production flows mainly

include, construction of airports, dams,

roads, buildings, shipbuilding, etc.
 The requirement of resources is not same (it varies).
Generally, the resource requirement at the beginning
is low. Then in mid of production, the requirement
increases. Finally, it slows down when the project is
near its completion phase.
 Many agencies are involved in the project. Each
agency performs specialized jobs. Here, coordination
between agencies is important because all jobs are
interrelated.
 Delays take place in completion of projects due to its
complexity and massiveness.
 As routing and scheduling changes with fresh orders,
proper inspection is required at each stage of
production.
 Here, in jobbing production flows, company
accepts a contract to produce either one or
few units of a product strictly as per
specifications given by the customer. The
product is produced within a given period
and at a fixed cost. This cost is fixed at the
time of signing the contract.
 Examples of such jobbing production flows
include, services given by repair shops,
tailoring shops, manufacturer of special
machine tools, etc.
 The production of items takes place in small
lots. Sometimes only one product is produced
at one time.
 The items are manufactured strictly as per
customer's specifications.
 Highly skilled labour is required to perform
specialized jobs.
 There is disproportionate manufacturing
cycle time. For e.g. the time needed to design
the product may be more than the
manufacturing time.
 In batch production flows, the production
schedule is decided according to specific
orders or are based on the demand forecasts.
Here, the production of items takes place in
lots or batches. A product is divided into
different jobs. All jobs of one batch of
production must be completed before
starting the next batch of production.
 Examples of batch production flows include,
manufacturing of drugs and pharmaceuticals,
medium and heavy machineries, etc.
 The products are made and kept in stock
until their demand arises in the market.
 General purpose machines and handling

equipments, which can do many different

jobs quickly are installed. This is because
large varieties of items are to be produced.
 There is a possibility of large work-in-

progress due to many reasons.

 There is a need for detailed production

planning and control.
 The components or functions of production
management are as follows:
 1.Selection of Product and Design,
 2.Selection of Production Process,
 3.Selecting Right Production Capacity,
 4.Production Planning,
 5.Production Control,
 6.Quality and Cost Control,
 7.Inventory Control, and
 8.Maintenance and Replacement of Machines
Production management first selects the right
product for production. Then it selects the right
design for the product. Care must be taken while
selecting the product and design because the
survival and success of the company depend on
it. The product must be selected only after
detailed evaluation of all the other alternative
products. After selecting the right product, the
right design must be selected. The design must
be according to the customers' requirements. It
must give the customers maximum value at the
lowest cost.


Production management must select the right

production process. They must decide about
the type of technology, machines, material
handling system, etc.



Production management must select the right

production capacity to match the demand for
the product. This is because more or less
capacity will create problems. The production
manager must plan the capacity for both short
and long term's production. He must use
break-even analysis for capacity planning.

Production management includes production
planning. Here, the production manager decides
about the routing and scheduling.
 Routing means deciding the path of work and

the sequence of operations. The main objective

of routing is to find out the best and most
economical sequence of operations to be
followed in the manufacturing process. Routing
ensures a smooth flow of work.
 Scheduling means to decide when to start and

when to complete a particular production

activity.


Production management also includes

production control. The manager has to
monitor and control the production. He has
to find out whether the actual production is
done as per plans or not. He has to compare
actual production with the plans and finds
out the deviations. He then takes necessary
steps to correct these deviations.


Production management also includes quality

and cost control. Quality and Cost Control are
given a lot of importance in today's
competitive world. Customers all over the
world want good-quality products at cheapest
prices. To satisfy this demand of consumers,
the production manager must continuously
improve the quality of his products. Along
with this, he must also take essential steps to
reduce the cost of his products.
Production management also includes inventory
control. The production manager must monitor the
level of inventories. There must be neither over
stocking nor under stocking of inventories.
If there is an overstocking, then the working
capital will be blocked, and the materials may be
spoiled, wasted or misused.
If there is an understocking, then production will
not take place as per schedule, and deliveries will
be affected.


Production management ensures proper

maintenance and replacement of machines
and equipments. The production manager
must have an efficient system for continuous
inspection (routine checks), cleaning, oiling,
maintenance and replacement of machines,
equipments, spare parts, etc. This prevents
breakdown of machines and avoids
production halts.
 Product development means the overall
process of strategy ,organization, concept of
generation ,product and marketing plan
creation and evaluation and
commercialization of a new product.
Set
Set of
of tangible
tangible
and
and intangible
intangible
attributes
attributes
May
Maybebe aa good,
good,
service,
service, place,
place,
person,
person, or
oridea
idea

Want-satisfaction
Want-satisfaction
in
inthe
the form
form
of
ofbenefits
benefits
Really
Really Significantly
Significantly
innovative
innovative different
different

Imitative
Imitative
Product can be developed in one of the
three methods:
1.By Imitation
2.By Improvement Or Adaptation
3.By Innovation or Invention
 Product development by imitation consists
of marketing another product similar to
one in the market.
 Product development by adaptation refers

to developing an improved product for an

already existing market. Product
improvement consists of modification
and improvement in the existing
quality,size,form or design of the existing
product, so that it may appear almost like
a new product.
 Product development by invention
concerns itself with the development of
entirely a new product resulting into an
increase in the product line .
 Idea Generation
 Idea screening
 Concept Testing
 Business analysis
 Product development
 Test marketing
 Commercialization
 Products are basically classified as consumer
products and Industrial products.
 Consumer Goods are the products which are

directly used by end consumers without any

further processing .For eg,
soap,toothpaste,book,pen, etc.
 Consumer Products are further classified into

two: Convenience goods and shopping goods.

Plant Location

It refers to the choice of region and selection of a

particular site for setting up a business or a factory.
But the choice is made only after considering cost
and benefits of different alternative sites.
Plant location must be selected properly by
entrepreneurs while planning to set up their
business units. While taking such a decision, they
must consider some important factors.

78
 Law and order situation
 Availability of infrastructure facilities
 Good industrial relations
 Availability of skilled workforce
 Social infrastructure
 Nearness to market
 Investor friendly attitude
 Nearness to supporting industries
 Must meet safety requirements
 Miscellaneous factors

79
 • Political, social and legal policies – Plans, Regulations,
incentives, taxes
 • Availability and Cost of land
 • Availability of labour and skills
 • Availability of raw material
 • Proximity to the market
 • Infrastructure availability – Telecom, power, transport, roads,
ports
 Employee Factors
 • Availability of amenities – Power, water, land, Transport,
schools, recreation, housing
 • Safety requirements
 • Suitability of land and climate • Society – Values, systems,
aspirations and needs
 Product design is conceptualization of an
idea about a product and transformation of
the idea into a reality. To transform the idea
into reality a specification about the product
is prepared.
 Functionality: The product must function
properly for intended purpose. Reliability: The
product must perform properly for the
designated period of time.
 Productivity: The product must be produced
with a required quantity and quality at a defined
and feasible cost.
 Quality: The product must satisfy customer’s
stated and unstated needs
.
  Standardization: The product should be
designed in such a fashion so that most of the
components are standardized and easily
available in the market.
  Maintainability: The product must perform

for a designated period with a minimum and

defined maintenance. Adequate provision for
maintenance should be kept in the product.
  Cost effectiveness: The product must be

cost effective. The must be manufactured in

the most cost effective environment.
Plant Layout is the physical arrangement of equipment
and facilities within a Plant. Optimizing the Layout of a
Plant can improve productivity, safety and quality of
Products. Un-necessary efforts of materials handling
can be avoided when the Plant Layout is optimized.
Physical arrangement of equipment and facilities
within a plant to ensure a smooth flow of work,
material, people and information.

84
1.Smooth flow of production
2.Maximum utilization of available space
3.Minimum Handling
4.Better working conditions
5.Flexibility
6.Provision of safety
 Economy in materials handling
 Ensuring optimum use of men,

materials, equipment
 Better inventory control
 Flexibility
 Good work flow
 Safety
1.Principle of Integration
2.Principle of minimum distance
3.Principle of cubic space utilization
4.Principle of flow
5.Principle of maximum flexibility
6.Principle of safety, security and
satisfaction
7.Principle of minimum handling
Product layouts are used to achieve a smooth and
rapid flow of large volumes of products or customers
through a system.
A job is divided into a series of standardized tasks,
permitting specialization of both labor and
equipment. Production line according to the
processing sequence of the product.
• High volume production and Short distances

89
 Used when the operations system must handle a
wide variety of products in relatively small volumes
(i.e., flexibility is necessary)Designed to facilitate
processing items or providing services that present a
variety of processing requirements. The layouts
include departments or other functional groupings in
which similar kinds of activities are performed.
 All machines performing a particular process are
grouped together in a processing department
 A manufacturing example of a process layout is the
machine shop, which has separate departments for
milling, grinding, drilling, and so on.
90
In fixed-position layouts, the materials or
major components remain in a fixed
position, and workers, materials, and
equipment are moved as needed.
Fixed-position layout is used when product
is very bulky, heavy or fragile .Ship building
,locomotive manufacturing, aircraft
manufacturing, etc,use fixed position
layout.
 Instead of functional centers there are groups
of machines/short lines
Facilities are clubbed /grouped together into
cells to use the concepts,principle,and
approaches.
In layout ,the facilities are grouped into cells
which are able to perform similar type of
operations for a group of products.
A mixed layout is a combination of process and
product layout .mixed layout is generally used
when the company's product contains a lot of
components and parts and when the product
requires to be produced in in different types
and sizes. For eg,manufacturing of soap.
 One of the most important activities of Materials
Management is Purchasing. Purchasing ensures the
following:
 • RIGHT MATERIALS are purchased, at
 • RIGHT PRICE, from
 • RIGHT SUPPLIERS, at
 • RIGHT TIME, & delivered to the
 • RIGHT PLACE.
1.Right Quality
2.Right quantity
3.Right Price
4.Right Time
5.Right Place
6.Right Source