PRODUCTION & OPERATION

MANAGEMENT

UNIT 1
 Objectives of Operations Management

 Customer Service: The primary objective of operations

management, is to utilize the resources of the organization,
to create such products or services that satisfy the needs of
the consumers, by providing “right thing at the right price,
place and time”.

 Resource Utilization: To make the best possible use of the

organization's resources to satisfy the wants of the
consumers, is another important objective of the operations
management.
 In operations management, the formation of goods or
services encompasses conversion of inputs into outputs,
wherein different inputs such as capital, labour, material,
machinery and information are combined and used to create
output, by using the conversion process.

 For this purpose, the organization measures different points

in the process and then compares the same with the set
standards, to ascertain whether corrective action is required
or not.
 Scope of Operations Management

1. Location of Facilities –
 The most important decision with respect to the operations

management is the selection of location, a huge investment is

made by the firm in acquiring the building, arranging and
installing plant and machinery. And if the location is not
suitable, then all of this investment will be called as a sheer
wastage of money, time, and efforts.
 So, while choosing the location for the operations, company’s

expansion plans, diversification plans, the supply of materials,

weather conditions, transportation facility and everything else
which is essential in this regard should be taken into
consideration.
2. Product Design -

 Product design is all about an in-depth analysis of the

customer’s requirements and giving a proper shape to the
idea, which thoroughly fulfils those requirements.

 It is a complete process of identification of needs of the

consumers to the final creation of a product which involves
designing and marketing, product development, and
introduction of the product to the market.
3. Process Design: It is the planning and decision making of
the entire workflow for transforming the raw material into
finished goods, It involves decisions regarding the choice of
technology, process flow analysis, process selection, and so
forth.
4. Plant Layout: As the name signifies, plant layout is the
grouping and arrangement of the personnel, machines,
equipment, storage space, and other facilities, which are
used in the production process, to economically produce the
desired output, both quality wise and quantity wise.
5. Material Handling: Material Handling is all about holding and
treatment of material within and outside the organization. It is
concerned with the movement of material from one godown to
another, from godown to machine and from one process to another,
along with the packing and storing of the product.

6. Material Management: The part of management which deals with

the procurement, use and control of the raw material, which is
required during the process of production. Its aim is to acquire,
transport and store the material in such a way to minimize the
related cost. It tends to find out new sources of supply and develop
a good relationship with the suppliers to ensure an ongoing supply
of material.
7. Quality Control: Quality Control is the systematic process of keeping
an intended level of quality in the goods and services, in which the
organization deals. It attempts to prevent defects and make corrective
actions (if they find any defects during the quality control process), to
ensure that the desired quality is maintained, at reasonable prices.
8. Maintenance Management: Machinery, tools and equipment play a
crucial role in the process of production. So, if they are not available at
the time of need, due to any reason like downtime or breakage etc. then
the entire process will suffer. Hence, it is the responsibility of the
operations manager to keep the plant in good condition, as well as
keeping the machines and other equipment in the right state, so that the
firm can use them in their optimal capacity.
MANUFACTURING
SYSTEM

Unit 1
 Basic Overview

 A system is composed of number of components. These components are

combined together for the accomplishment of some predetermined goals.
 Any manufacturing organization can be termed as a production system to
produce goods and services.
 There are three main components of this system namely inputs,
transformation process and output.
 But , these three components are further divided into sub- systems ,
operations and activities.
 E.g.. Inputs can be men, material and equipment. The transformation
process involves many activities and operations necessary to change input
to output. These operation and activities can be mechanical, chemical,
inspection and control, material handling operations. Output is in the form
of goods and services
 Classification of Goods and Services

 The manufacturing system mainly depends upon the goods and the services
to be produced. This can be classified into a number of categories.
 Products manufactured by an organization can be classified in two ways
namely
1. Purpose of the product i.e. according to definite customer’s order or to keep
in stock to meet the future demand
2. Nature of the production process operations i.e. job, batch , mass and
process.
S.NO Description of Class
A Items produced for stock
B Items produced to order but raw material for it are carried in stock
C Items produced to order but raw material for it are not carried in
stock
D Products produced experimentally
 The production planning for the manufacturing of the product as well as
for procurement of raw materials depends upon the classification of
product.
 For products classified as A planning of production is based on sales
forecasts only as the items are produced for stock only.
 In case of type B items planning is done only for raw material. The stocks
of raw- materials inside the inventory is maintained at some pre-
determined level using inventory control techniques.
 In case of type C items planning is required both of production process as
well as for the procurement of raw material according to the nature and
size of orders.
 In the case of type B and C products, sometimes the customer makes some
future commitments in advance with the enterprise , i.e. some assurance is
given to purchase items monthly or at some specified periods giving max
and min limits of purchase each item.
 In such cases producer can plan the production schedule accordingly .
Such types of product are coded as ‘BA’ and ‘CA’ indicating that the
production is done to stock for duration of contract.
 Manufacturing Systems

Decision
Maker
Control

Conversion
Input Output
Process
 The inputs can be raw materials, components , paperwork etc. whereas the
outputs are completed parts , products , paperwork output , services and scrap.
 The conversion process can be characterized by following activities and
operations:
1. The receipt and storage of raw materials. These are drawn by production
department according to such rules as FIFO, urgency , time required for
delivery etc.
2. Means of transportation , if the system is engaged in high volume standardized
production belt conveyers as means of continuous transportation are often
used whereas in case of chemical plants the transportation is done through
pipes or down the gravity chutes.
3. Inspection of in- process and finished goods.
4. Storage of finished goods.
5. The production management is active throughout by the information and
control functions
 So , the manufacturing system may therefore be viewed as n
interdependent group of sub – systems , each related to its successor, each
performing a different function through yet united with other for
achievement of the overall system objectives.

 Manufacturing system is divided into two types of system.

1. Intermittent system
2. Continuous system
Types of Manufacturing System
 Intermittent System

 In Intermittent manufacturing systems, the goods are manufactured specially

to fulfill orders made by customers rather than for stock. These goods are
produced on a small scale.

 Here the flow of material is intermittent. Intermittent production systems are

those where the production facilities are flexible enough to handle a wide
variety of products and sizes.

 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.
 Examples

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

1. The flow of production is not continuous. It is intermittent.

2. Wide varieties of products are produced.
3. The volume of production is small.
4. General purpose machines are used. These machines can be used to
produce different types of products.
5. The sequence of operation goes on changing as per the design of the
product.
6. The quantity, size, shape, design, etc. of the product depends on the
customer's orders
 Planning and Control Mechanism for Intermittent
System

 Organization of production planning and control operations in intermittent

systems needs estimation of jobs, routing, scheduling, preparation of
manufacturing orders, dispatching and production control.
 Here customer provides the blue print and other specification regarding
the product to be manufactured. Then the organization formulates their
production strategy to suit the needs of the customer.
1. This type of manufacturing system covers specialties of every type and
sub assemblies or parts which are required to manufacture the product.
Due to this there is continuous planning at each fresh order.
2. Due to variety of orders and different lot sizes, the system needs wise and
careful sequencing of operations which makes routing and scheduling
operations elaborate and complex.
3. Proper regulation and close inspection is required at
different stages of production.
4. Storage facilities are to be provided at each operational
stage.

So the job of stock control of raw materials, semi-finished

goods and finished goods should be entrusted to competent
personnel, who can regulate the operations and flow of
material smoothly
 Project production : Project production where a single
assignment of complex nature is undertaken for completion
within the given period and within the estimated
expenditure.
 Job production: Jobbing production where one or few
units of a product are produced to customer’s requirement
within the given date amid within the price fixed prior to
the contract.
 Batch production: Batch production where limited
quantity of each type of product is authorized for
manufacture at a time.
 Job production

 It involves the manufacturing of a single complete unit with the use of a

group of operators and processes as per the customer’s order. This is a
‘special order’ type of production.

 Each job or product is different from the others and no repetition is involved.
The whole job is one operation and work is completed separately on each
job. The product is usually costly and non-standardized. There is absence of
identical jobs and long runs on a single job.

 Jobs are carried out to the customers’ specifications. Thus, job production
consists of “the bringing together of materials, parts and components in order
to assemble and commission a single piece of equipment or product.”
 Under job production, goods are produced to specific customer orders.
Customers do not make demand for exactly the same product on a
continuing basis and, therefore, production becomes intermittent.

 Each Product is a class by itself and constitutes a separate job for

production purposes. Ship building, electric power plant, furnace making,
dams construction, jobbing functions, machine shops, printing press are
common examples of job production.

 Firms engaged in subcontract, work such as tool making, machining,

sheet-metal work and sub-assembly, use job production system.
Characteristics - Job production system

1. The product manufactured is custom-made or non-

standardized.
2. Machines and equipment are waned or assembled at one
place, i.e., fixed position layout is used.
3. A wide range of general purpose machines like grinder,
drill press, sharper, etc., is used.
4. Volume of output is generally small
5. Variable path materials handling equipment are used
Advantages / Disadvantages of Job
Production System:

1. Job production involves comparatively small investment

in machinery and equipment.

2. It is flexible and can be adapted easily to changes in

product design.

3. A fault in one operation does not result into complete

stoppage of the entire process.
Disadvantages - Job production system

 Job shop manufacturing is the most complex system of

production. For instance, in building a ship thousands of
individual parts must be fabricated and assembled.

 A complex schedule of activities is required to ensure

smooth flow of work without any bottlenecks. Many parts
require operation time on the same machines even though
the operations in the manufacturing cycle take place at
different points of time. Optimum machine loading is,
therefore, a very difficult problem.
 Raw materials and work-in-progress inventories are high
due to uneven and irregular flow of work. Therefore, large
storage space is required and material handling costs are
high. 
 Highly skilled machine operators are required for the
efficient performance of setting up and operating tasks.
Work loads are unbalanced. 
 Labor and equipment must be flexible to accommodate the
continuously changing production. There is often inefficient
utilization of labor and plant. Speed of work is slow and
unit costs are high.
 Batch - Production

 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.
 Characteristics – Batch production

1. The products are made and kept in stock until their demand
arises in the market.

2. 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.

3. There is a possibility of large work-in-progress due to many

reasons.

4. There is a need for detailed production planning and control.

 Project production

 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.
Characteristics - Project production

 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.
Continuous production system

 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.
 The production system of a food industry is purely based on
the demand forecast. Here, a large-scale production of food
takes place. It is also a continuous production.

 Similarly, the production and processing system of a fuel

industry is also purely based on, demand forecast. Crude oil
and other raw sources are processed continuously on a large
scale to yield usable form of fuel and compensate global
energy demand.
Characteristics - Continuous production
system

 The flow of production is continuous. It is not intermittent.

 The products are standardized.

 The products are produced on predetermined quality standards.

 The products are produced in anticipation of demand.

 Standardized routing sheets and schedules are prepared.

 Types - Continuous production system

 Mass production flows.

 Process production flows.

 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.

 The goods are produced either with the help of a single

operation or uses a series of operations.
 Characteristics- Mass production

 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.
 Process production flows

 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.
Characteristics
 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
Thanks