Operations Management

Plan of Presentation
 Introduction
 Definition
 Types of production processes
 Different function of operation
management
The Operations System
The operations system transforms inputs into
desired goods and services.

EXTERNAL
FACTORS

INPUTS PROCESS OUTPUTS

FEEDBACK

Material flow
Information Flow
 Definition

“Production Management deals with decision

making related to production process so that
the resulting goods or services are produced
according to specifications in amounts and by
the schedules demanded, and at a minimum
cost.”

- ELWOOD S.
BUFFA
 Production Management, is thus assigned with
the following tasks-
1-Specifying and accumulating the input
resources.i.e, management, men, information,
materials, machine and capital.
2- Designing and installing the assembly or
Conversion process to transform the inputs to
output, and
3- Coordinating and operating the production
process so that the desired good and services
may be produced efficiently and at a minimum
cost.
 Differences between Manufacturers
and Service Organizations

• Services: • Manufacturers:
• Intangible product • Tangible product
• Product cannot be • Product can be
inventoried inventoried
• High customer contact • Low customer contact
• Short response time • Longer response time
• Labor intensive • Capital intensive
 Similarities-Service/Manufacturers

• All use technology

• Both have quality, productivity, & response
issues
• All must forecast demand
• Each will have capacity, layout, and location
issues
• All have customers and suppliers
• All have scheduling and staffing issues
 Process Selection for
production of goods
• Process selection is based on five considerations
– Type of process; range from intermittent to continuous
– Degree of vertical integration
– Flexibility of resources
– Mix between capital & human resources
– Degree of customer contact

 Process types can be:

Project Process- one of a kind (custom designed shoes)
Batch Process- small quantities in groups or batches (baked goods)
Line Process – large volume of standard process (cars)
Continuous Process – operate continually on high volume (oil)
 Underlying Process Relationship
Between Volume and Standardization
 Volume and Process Choice
• Low Volume typically
means
– Project or Batch processes
– Less vertical integration
– More resource flexibility
– Less capital intensity
– Higher skilled labor
– More customer involvement
– More customized products
– Make or assemble to order
strategy
• High Volume typically
means
– Line/continuous
processes
– More vertical integration
– Less resource flexibility
– More capital intensity
– More specialized labor
– Little to no customer
involvement
– Standardized products
– Make to stock strategy
Process Decisions-Vertical Integration
& Make or Buy
• Vertical integration refers to the degree a firm chooses to
do processes itself- raw material to sales
– Backward Integration means moving closer to primary
operations
– Forward Integration means moving closer to customers

• A firm’s Make-or-Buy choices should be based on the

following considerations:
– Strategic impact
– Available capacity
– Expertise
– Quality considerations
– Speed
– Cost (fixed cost + variable cost)make = (fixed cost + Variable cost)buy
• Business are trending toward less backward integration, more
outsourcing
Different Functions
Production Planning
Production Control
Quality Control
Inventory Control
Method Analysis
Plant Layout and Material Handling
Work Measurement
Other Functions
Production Planning
 The function of production planning involves
the decision when, what, how and why to
produce goods.
 In order to overcome these problems
preparation of guiding plans before starting
the production, is called production
planning.
 Routing, estimating ,loading and scheduling
are under planning stage.
Production Control
 Control the production by taking steps to
utilize the various factors of production in an
efficient manner so that the goods are
produced at the lowest possible cost and
according to requirements and satisfaction of
the customers and are supplied to them on
the delivery dates in the ordered quantity.

 Dispatching,expediting,inspection and
evaluation are the basic parameters.
Quality Control
 Steps should be taken to produce the goods
according to the specifications and to
minimize the amount of defective work.

 SQC,different charts are useful

 TQM is a quality improvement process

Inventory Control
® Right quantity, right quality, at the right time
with the minimum investment

® To determine the economic lot size, reorder

levels( maximum, minimum and danger
levels of stock of materials) so that the
problems of over and under stock of
materials may not arise.

® Different analysis of inventory,MRP and cost

analysis are very much important here
Method Analysis

 There may be so many alternatives for

manufacturing a product. As because all
alternatives do not work equally, some may
be more economical than others.

 Method analysis improves the productivity of

the concern and minimizes the cost of
production.
Plant Layout and Material Handling

 plant layout is an arrangement of machine and

equipment in such a manner so as to maintain the
flow of production uninterrupted.

 An efficient plant layout aims at efficient material

handling which in turn reduces wastage of man and
material and helps in reducing the cost of
production.

 Process
 Product
 Combination
 Fixed position
Work Measurement

• By work measurement methods we mean

the level of performance of work by a
worker.
• Time study & motion study
→OT
→NT
→ST
 Others
• Service Operations Management

• Supply Chain Management

• Maintenance management……….