MBA 206

Production management deals with decision making related to

production processes so that the resulting goods or services are
produced according to specifications, in the amount and by the
schedule demanded and out of minimum cost.
Production management is a process of planning, organizing,
directing and controlling the activities of the production function. It
combines and transforms various resources used in the production
subsystem of the organization into value added product in a
controlled manner as per the policies of the organization
Objectives of Production Management

• RIGHT QUALITY
• RIGHT QUANTITY
• RIGHT TIME
• RIGHT MANUFACTURING COST
SCOPE OF PRODUCTION AND OPERATIONS
MANAGEMENT

• Production and operations management concern with the

conversion of inputs into outputs, using physical resources,
so as to provide the desired utilities to the customer while
meeting the other organizational objectives of effectiveness,
efficiency and adoptability.
1. Location of facilities 2. Plant layouts and material handling
3. Product design 4. Process design 5. Production and planning control
6. Quality control 7. Materials management
8. Maintenance management.
Plant location

• Plant location refers to the process of selecting a

suitable location for a manufacturing or production
facility. The objective of plant location is to determine
the most appropriate location that will optimize the
efficiency and effectiveness of the production process,
while minimizing costs and maximizing profits.
The main objectives of plant location

• Proximity to raw materials

• Access to labour
• Access to markets
• Availability of utilities and infrastructure
• Government incentives
• Environmental considerations
Importance of location
• Access to customers
• Access to suppliers
• Cost of operations
• Competition
• Regulatory environment
• Workforce availability
 Choice and selection of Plant Location
• Selection of a location is on pure economic considerations will ensure an
easy and regular supply of raw material, labour, efficient plant layout to
reduce cost of production. Once a mistake is made in locating a plant, it
becomes extremely difficult and costly to correct it.
1. Country selection (With in the country or outside)
The first step in locating a plant is to decide whether
the plant is located domestically of internationally. Due
to globalization the issue of home or foreign is gaining
more relevance. The choice of particular country
depends on such factors like political stability, export
& import quotas, currency, and exchange rates
 Choice and selection of Plant Location
2.Selection of the region
a) Availability of raw material
As a manufacturing unit is engaged in conversion of raw materials in to
finished products, it is very essential that it should be located in a place
where the supply of raw materials is maximum.
The main advantage is
• It reduces in cost of transportation
• Maintain the regular and proper supply of raw material.
• Saving in the cost of storage of material
Example: - Nizam sugar plant is located in Nizambad district where we find
sugarcane is cultivated more in this district. Sugarcane is a raw material for sugar
factory
 Choice and selection of Plant Location
• b) Nearness to the market : Since goods are produced for sale, it is very essential that a plant should be located near
to the market.
The main advantage is
• It Reduces in cost of transportation of finished goods to the market
• Availability of render prompt services to the consumer.
• Example: Auto-servicing and repairing units

• c) Availability of power :

Power is essential to move the wheels of an industry. Industries using

electricity have to be located where the supply of power is available
more

Example:- Steel industries are located near to power industries

 Choice and selection of Plant Location

• d) Transportation facilities
Transport facilities are very important for bringing raw material to the
factory. Transport facilities are very important for carrying finished
goods to the market. A place which is well connected by rail, road, air
and water transport facilities is suitable for plant location.
 Choice and selection of Plant Location
• e) Suitability of climate

There are certain industries which mainly depends on nature

for production.

Example: Humid climate for Cotton textiles and Jute. Based on

climate which also affects the labour efficiency 
Choice and selection of Plant Location
• f) Government policy:
Government policies like licensing policy Freight rate
policy establishing a unit in the public sector in remote areas
Institutional finance and government subsidies
g) Competition between states : Various states offer
investments, subsidies and sales tax exemptions to new units.
The incentives may not be big but help to large scale
industries but not for small and medium scale industries .
Selection of the locality or community
• Availability of labour Labour
• Finance facilities
• c) Civic amenities for workers:
• d) Availability of water & fire
• e) Local taxes and restrictions
Selection of the site
• Soil, size and topography
For the industries based on agriculture require fertile soil to
locate a plant. The area of the land should be such as to
accommodate not only the existing purpose but offer for scope
for future expansion also. The topography of the place
deserves consideration to some extent. A hilly rocky and rough
terrain is unsuitable for plant location
Selection of the site
• Disposal of waste
• The problem of the disposal of waste is common to
many industries, particularly chemical, sugar, steel and
leather industries. The site selected for location of the
plant should have provision for the disposal of waste
 Locating foreign operations facilities
• Locating foreign operations facilities can be a complex process that
requires careful consideration of a variety of factors. Some of the key
steps involved in the process include:
• a) Conduct market research: The first step in locating
foreign operations facilities is to conduct market research
to identify potential markets and customers. This can
involve analysing market trends, consumer behavior, and
local regulations.
 Locating foreign operations facilities
• b) Define the selection criteria: Once potential markets have
been identified, the next step is to define the criteria that will be
used to evaluate potential locations. This could include factors
such as political stability, labor costs, infrastructure, tax laws,
and cultural differences.