UNIT 13: OPERATIONS /PRODUCTION

MANAGEMENT
13.1 The importance and functions of operations
management.
LEARNING OBJECTIVES
Explains the concept of "Operations".
Defines "The Operations Management”
Explain the importance of operations management
List the functions of operations management
Explains each function of operations management in brief.
The concept of "Operations"
Operational Activities
All the activities carried out relevant to the conversation of inputs (resources) into
output (goods or service) within the production process is referred to as operations
activities.
Operations activities are carried out in goods producing businesses as well as in
service producing businesses.

Tangible Goods Intangible Goods

Sandles, Milk Powder, Soft drinks Medical Service, Transportation Service,
Insurance Service
Defines "The Operations Management”
The group of managerial activities relevant to the planning, organizing, leading and
controlling of the operation activities to attain the aims and objectives of an
organization is the Operations Management.

Accordingly, the operations management can be referred to as a complex

management process which comprises of leading and regulating the functions such as
production engineering, production planning, purchase of materials, production
control and research development.

While the operations management contributes of the fulfillment of the aims and
objectives of an organization, the basic function of operations management is to
produce high quality goods and services using resources (inputs)
The importance of Operations
Management
The ability to produce high quality goods and services.

The ability to improve efficiency and effectiveness of the operational process.

The ability of reduce productions cost and improve profit

The ability to face the competition successfully in the global environment.

The ability to introduce goods and services with novelty.

The ability to contribute towards the sustainable development of the organization as well as the
country through fulfilling the social responsibilities.
Conversion Process
Transformation of inputs into outputs is known as conversion process.

INPUTS CONVERSION OUTPUTS

LAND
LABOUR PRODUCTION PROCEDURES
CAPITAL PRODUCTION METHOD
ENTREPRENUER OCCUPYING REQUIRED GOODS &
SHIP RESOURCES SERVICES
INFORMATION TECHNOLOGICAL
KNOWLEDGE KNOWLEDGE
Added Value
The value of the final product increases by adding a value to the resources at the
conversion process and this value is referred to as added value.
Examples :
In apparel production the value of apparels will be increased having them been passed
through the stages. Such as cutting of materials. sewing, ironing and packing etc.

 Added value is the difference between the price at which goods or services are sold
and the cost of raw materials (Inputs)
 Added value when build a house
INPUTS CONVERSION OUTPUTS

LAND DIGGING
BRICK,SAND BRICK LAYING
WOODS,TILE ROOFING NEW HOUSE
FRAMES, GLASS PLUMTING
TILLING

Rs. 6 million 3 million Rs. 11 million

Profit = Total Revenue – Total Cost Added Value = Revenue – Cost of Raw materials(Inputs)

Profit = 11 – 9 = 2 million Added Value = 11 – 6 = 5 million

 The Functions of Operations Management
PRODUCTION
SECTION

Production Production Purchasing Production

R&D
Engineering Planning Materials Control

Inspecting if the goals

Making decisions on The activities Collecting
Obtaining the right established in
the production relevant to information
materials in required accordance with
process, required determining of the regarding existing
quantity, at required production engineering
plant and machinery, requirements such as product, production
time and at minimum and production
production schedule, required plants, process, new
Cost planning, are being
required materials, machinery, materials, production planning
reached and if not,
deciding of required labor etc. by a firm and developing them
determining necessary
quantity of materials for its production remedial actions for
and their quality process them.

Preparing short term Machinery control,

and long term Stock control, quality
production plans control, cost control
Activity
Focus on the title you have received between the following two titles.

 Service producing business

 Goods producing business
Identify five businesses, relevant to the title that you have received.

Among those businesses, identify the operation activities carried out by one through a discussion.

Show in a diagram, the input output process of the business that you have identified.

Explain how the operations management is important for the fulfillment of the aims
of the business that you have selected
UNIT 13: OPERATIONS /PRODUCTION
MANAGEMENT
13.2 Production Methods
LEARINING OBJECTIVES
Defines the “Production Methods”.
Classifies Productions Methods.
Explains each Production Method.
Shows favorable and unfavorable characteristics of each production method.
Shows the production method used for an existing product
Lists the facts to be considered when selecting a production method.
Suggests a suitable production method for a given product.
Shows the necessity of an operational layout plan.
Explains the types of operational layout plans.
Production Methods
Example
Sewing outfits for brides Production of bakery product Production of soft drinks

produce a similar production

produce continually
Produce after receiving an batch and again another similar
order production batch.
The production of large
Produce only one item at a
amount of one kind of product
time the production of similar items
on a continued basis
take place at one time
Production Methods
BATCH FLOW
JOB PRODUCTION
PRODUCTION PRODUCTION
• The production for a
• The production of similar
specific order of a customer • The production of large
items take place at one time.
in which one item is amount of one kind of
• While the production is
produced from the product on a continued
carried out in a continuous
beginning to the end based basis, with an unbroken
process; the material, labour,
on the current demand. flow based on the future
the number of units, types and
Demand.
working hours can be
Examples:
different from batch to batch
 Sewing outfits for a bride Examples:
through they are similar in
 Making a cake for a  Production of soft drinks
nature mostly.
birthday party  Production of motor
Examples:
 Designing an architect vehicles
 Production of bakery items.
planning for the need of a
 Sewing the uniforms for pre-
person.
school students.
Characteristics of Job Production
Favorable Characteristics
• Producing on the need and want of a customer
• High level consumer satisfaction can be maintained
• No risk since production is done to an order
Unfavorable Characteristics
• Cost is higher
• Always skilled and trained employees are needed
• Special multi use equipment and tools are required.
• Production is not done mainly focusing on the
market.
Characteristics of Batch Production
Favorable Characteristics
• The finish of the product can be modified from one
batch to another.
• Receiving discounts since a large amount of
materials are purchased.
• Unit cost is less, compared to job production.
Unfavorable Characteristics
• Cost is high as machines and equipment have to be
readjusted from one batch to another.
• Unit cost is high relative to flow production.
• Reduction in economies of large scale.
Characteristics of Flow Production
Favorable Characteristics
• Unit cost falls due to economies of large scale
advantages
• Mostly the flow production can be controlled by few
employees.
• New technology can be used easily.
Unfavorable Characteristics
• Financial difficulties since Requiring a large
investment
• Difficulty in making any changes as production
occur on serial orders as decided earlier.
• Has to face market risk.
Differences in Production Methods
Criteria Job Production Batch Production Flow Production

Volume of output Very low Medium quantity Very high

Product range Varied Only few Only one

Flexibility of Very high Normal Very low

production process

Make to order or For an order Make to order For stock wise.

for stock and for stock wise
Factors to be considered in selecting a
production method
1. Nature of the product
2. Market size
3. Technology used and equipment required
4. Cost incurred
5. Purchasing pattern (always?/occasionally?)
6. Convenience in obtaining resources
 OPERATIONAL LAYOUT
PLANNING
After deciding the appropriate production method, the next step is to design a production process that
is more efficient and effective.

Planning of physical facilities such as workstation centers, materials, machinery and equipment,
supporting services etc. for an efficient production procedure is known as operational layout planning.
Example :
When preparing a layout planning of a place where outfits for bride are
sewed, the layout is planned by deciding the locations such as a work station
for taking measurements, a workstation for cutting clothes, a workstation for
machines to be installed and a workstation to check if outfits fit on etc.
Importance of a operational layout planning

Growth in efficiency in the use of materials and machinery

Maximum use of the available space
The cost in making use of materials can be reduced.
Barriers while handling materials and employees are reduced.
Reduction in industrial accidents.
Easy communication, coordination and supervision
Improved employees’ morale
Time can be managed well
Types of Operational layout planning
Process Layout
Preparing the layout to
conduct all the activities to
complete one stage of a
production process
at one place.
Example :
Planning the layout of a
furniture factory
Product Layout Cellular Layout Fixed Position Layout
Preparing the layout to Preparing the layout by Preparing the layout to
flow the total production fixing similar and scalene conduct the production by
process from one machinery in separate cells bringing inputs such as
workstation to another to flow the functions of materials, labour, power
in linear way is known as production in a production and tools etc.to the place
product layout. process is known as itself where the production
cellular layout. takes place is known
Example: as fixed position layout.
Planning the layout of a Example:
firm producing motor Planning the layout of an Example:
vehicles. apparel factory Construction of buildings
ACTIVITY
List out products that have been produced through each production method
separately.
Give reasons for using the production method which you have received for those
products.
List out favorable and unfavorable characteristics of the production method which
you have received.
Define what an operational layout planning is and explain the necessity of
operational layout planning and the ways of categorizing layout planning.