OPERATION MANAGEMENT

Unit 1 Prof K.S. Naik

Functional Sub System of Organization

RK A M

NG TI E

Production

FI NA NC E

PERSONNEL

DEFINITION Production and Operation Management
• Is the process • Which combines and transforms • Various resources • Used in the production / operation subsystem • Of the organization • Into value added products/ services • In a controlled manner • As per policies of the organization

Operation/Production Management
• That part of the organization • Which is concerned with the transformation • Of a range of inputs • Into the required outputs ( Products/ Services) • Having the requisite quality level • A set of interrelated management activities • Involved in manufacturing certain products • Called as operation/production management • Same part what is service activities also involved • Is called operations management

Relative Frequency of Decisions

Production Process
INPUTS Materials Labor Capital Energy Information Resources OUTPUTS
Production Functions

Products Services Information Products or Services

Objectives of Production Management

Scope of Operations Management

Operations Management: Historical Background
Year 1776 1832 1910 Concept Wealth of Nations Scientific methods Scientific Management Motion Study Moving Assembly 1930 EOQ Quality Control Hawthrone Studies Contributor Adam Smith Charles Babbage FW Taylor Gilbert Ford and Gantt Harris Shewart Dodge Roming Elton Mayo Details Division of Labor Shop Floor Problem Time and Work Study Motion Study Activity Scheduling Chart Economic Ordering Quantity SQC, Sampling, Inspection Water Motivation

Operations Management: Historical Background
Yearb 1940 Concept Linear Programming Contributor Dantizig Many Researchers Simulation, Waiting, Line Theory, PERT-CPM, Programming Inventory Control, Scheduling, Forecasting, Project Management, MRP Japanese Researchers Deming and Juran SAP, Oracle Details 1950 – Operations Research 60 1970 Computerization

1980 1990

IIT, TQC Automation TQM, Business Process Re-engineering Internet Supply Chain Management (SCM)

Hamma

System Aspect of Production/ Operation Function
OPERATION MANAGEMENT

MATERIALS LABOR EQUIPMENT CAPITAL

Transformation (Conversion Process)

GOODS OR SERVICES

FEEDBACK INFORMATION ENVIRONMENT

Schematic Representation of Production/ Operation Sub system
Forecast Location Layout

Production Design & Analysis, Work Study
MATERIALS LABOR EQPT CAPITAL

I N P U T

PRODUCTION CONTROL

O PRODUCT/ U SERVICES T P MARKET U T

Maintenance Management INVENTORY CONTROL QUALITY CONTROL

Strategic Management
• Defining the organizations philosophy and mission • Establishing long and short range objectives to achieve

the organization mission • Selecting the strategy to be used in achieving the organization objectives • Hierarchy of Strategies
• Mission • Objectives • Corporate Strategies • Business Unit Strategies

• Functional Strategies

Corporate Strategies
• Stable growth strategy • Growth strategy
• • • • •

Concentration as a single product or service Concentric diversification Vertical diversification Horizontal diversification Conglomerate diversification

• Endgame strategies • Retrenchment strategies
• Turnaround strategy • Disinvestment strategy • Liquidation strategy

• Combination Strategy
• Simultaneous strategies • Sequential strategies

Generic Competitive( or Business Unit) Strategies
• Overall cost leadership strategy • Differentiation Strategy • Focus Strategy

Functional Strategies
• Marketing Strategies • Financial Strategies • Personnel Strategies • Production/ Manufacturing Strategies

Production/ Manufacturing Strategies (Function of O.M)
• Achieving highest efficiency at all operational subsystems • Gearing up the operations subsystems to meet delivery commitments • Flexibility in meeting customers demand in terms of change in product

design
• Flexibility in production volume to meet changing customers demand • Satisfying customers demand with world class product quality • To be effective in labor relation and manpower cost control • Effective material utilization and its cost control • Efficient facility utilization and its cost control

Production/ Operations Volume

Types of Production and Operation Pro Systems duc t
Pro du io n ctio /O

Continuous Flow Type Mass Production Type

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Op

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nF

tion

l ex

Ca p ac ity

i bi l

ity

Batch Type

Job Shop Type

Output / Product Variety

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