Production and Operation

Management

Presented By Binod Chand

Course Contents
Learning Outcomes
• After completing the course, the student shall be able to:
• Understand the production and operations management functions and objectives in manufacturing and
• Service organization
• Understand the importance of productivity and production system
• Understand the aspects of product and service design decisions
• Describe aggregate operation planning and planning techniques
• Analyze the contemporary operations and manufacturing organizational approaches and supply-chain
management activities
• Describe the inventory, inventory cost and inventory systems
• Describe the key aspects of location and layout decisions and its strategic importance
• Understand the TQM and its philosophical elements
Syllabus
• Unit 1: Introduction and Background
• 1.1 Concept and evolution of Production and Operations Management
• 1.2 Objectives and functions of Production and Operations Management
• 1.3 Concept of production function
• 1.4 Productivity: Concept, types and measurement of productivity; Factors affecting productivity
• 1.5 Productivity and competitiveness
• 1.6 Production system: concept and types
• Unit 2: Product and Service Design
• 2.1 Concept of product and service
• 2.2 Product development process
• 2.3 Concept of product and service design
• 2.4 Difference between product and service design
• 2.5 Manufacturing and service process technology
2.6 Emerging issues in product and service design
Unit 3: Location and Layout Decision
3.1 Concept and need of location decisions
3.2 Factors affecting location decision of service and manufacturing organizations
3.3 Techniques of location decisions: qualitative and quantitative analysis
3.4 Behavioral impact of facility location
3.5 Concept of layout decision
3.6 Types of layouts: office, product, process, cellular and fixed position layout
3.7 Factors affecting layout decision
Unit 4: Production Planning
4.1 Concept of production planning
4.2 Concept of aggregate planning and aggregate operations planning
4.3 Aggregate planning techniques
4.4 Capacity: concepts, determination of level of capacity and capacity constraints
4.5 Supply Chain Management: concept of supply chain and supply chain management, supply chain
Design strategy
Unit 5: Inventory Management
5.1 Concept and types of inventories
5.2 Cost associated with inventory
5.3 Dependent and independent demand
5.4 Inventory systems; continuous and periodical
5.5 Basic EOQ model (with and without discount)
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5.6 Material requirement planning: objectives, elements, structure, advantages and disadvantages.
Unit 6: Total Quality Management
6.1 Concept of quality and Total Quality Management (TQM)
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6.2 Historical evolution, principles and philosophical elements of TQM
6.3 Costs of quality: concept and types of quality cost
6.4 Quality control: concept, objectives, traditional quality control and statistical quality control 6.5 Control charts
and control charts for attributes
6.6 Quality Management System: ISO 9000 series; ISO 9001:2000 standard and ISO certification of
Nepal
Unit 7: Queuing Theory
7.1 Introduction and objectives of Queuing Theory
7.2 Queuing system and its components
7.3 Types of queuing/service system, rules of managing Queue
Basic Text Books:
Kachru, U. (2010). Production and operations management. Excel Books, New Delhi.
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Sthapit, A. B. and others (2007). Production and operations management. Asmita Publication, Kathmandu.
Reference Books:
Adams, Everett E. Jr. and Ronald, J. E. (1992). Production and operations management. New Delhi:
Prentice Hall of India Ltd.
Krajewski L. J. & Malhotra M. K. (2022). Operations management: Process and supply chains. Pearson
Education Inc.
Muchlemann, A.. Oakland, J. and Lockyer, K. (1998). Production and operations management. New Delhi:
Macmillan India Ltd.
Stevenson, W.j. (2017). Operations management. Tata McGraw Hill Education Private Limited.
Concept of POM
 Production and operation management is the one field of management.
 It focuses on the Planning implementing and controlling the processes and resource to efficiently produce goods and
deliver services.
 It manages to convert the inputs(Raw material, labor, capital, equipment and energy) to output(Finished product).
 POM aims to Planning and forecasting, Optimum utilization or Allocation, Quality control, inventory management
, Process improvements, Production capacity planning, Technology integration, Supply chain management.

Evolution of POM
 Industrial Revolution 18th to 19th century in Britain.
 Handcraft-based economy To mass production economy.
 Frederick Taylor Publishes A Piece Rate System, Scientific management 19th century.
 Henry ford revolutionized mass production , Assembly line 20th century
 The first linear programming problem was solved in 1947 by George Dantzig
 1980’s Total Quality Management Emerged

REF. SYLLABUS
OBJECTIVE OF POM
 EFFICIENCY OPTIMUM UTILIZATION
 CUSTOMER CENTRIC
 QUALITY ASSURANCE
 COST MINIMIZATION
 TIMELINESS IMPROVED DELIVERY SERVICE
 INVENTORY AND SUPPLY CHAIN MANAGEMENT
(FOR MORE REFER 4TH POINT OF CONCEPT)

REF. SYLLABUS
FUNCTIONS OF POM
 PRODUCT DESIGN
 PROCESS DESIGN
 PLANNING(CAPACITY) AND FORECASTING
 QUALITY MANAGEMENT
 MONITORING AND CONTROL
 INVENTORY AND SUPPLY CHAIN MANAGEMENT
 COST MANAGEMENT
 MAINTENANCE AND ASSETS MANAGEMENT
 WORKFORCE MANAGEMENT
REF. SYLLABUS
 Input Labor,capital,land technology Etc.
CONCEPT OF PRODUCTION FUNCTION
Output Goods and Service
 It is a fundamental concept of economics and production theory.
 The production function is mathematical equation that explains the relationship between quantity of
input (Factors of production) used and quantity of output(Goods or services) produced.
 It represents the technological or engineering relationship between the quantities of inputs (factors of
production) and the resulting output.
The general form of a production function is often expressed as:
Q=f(L,K,M,…)
where:
Q is the quantity of output,
L is the quantity of labor,
K is the quantity of capital,
M represents other inputs.

REF. SYLLABUS
Diminishing Marginal returns
The function is usually assumed to exhibit diminishing marginal returns, meaning that as the
quantity of one input is increased while keeping other inputs constant, the additional output
produced per additional unit of input will eventually decrease.
RETURNS TO SCALE
Returns to scale refer to the change in output resulting from a proportional change in all inputs
(both variable and fixed). It explores how output changes when all inputs are increased or
decreased by a certain proportion.
Increasing Returns to Scale:
Output grows more than proportionally to an increase in all inputs.
Example: If inputs double, output more than doubles.
Constant Returns to Scale:
Output grows proportionally to an increase in all inputs.
Example: If inputs double, output exactly doubles.
Decreasing Returns to Scale:
Output grows less than proportionally to an increase in all inputs.
Example: If inputs double, output increases by less than double.

REF. SYLLABUS
Cobb-Douglas production function
The Cobb-Douglas production function is a mathematical model used in economics to
describe how inputs like labor and capital contribute to overall output. It is represented a
�=�⋅��⋅��Q=A⋅Lα⋅Kβ, where �Q is output, �A is total factor productivity, �L is
labor, and �K is capitalQ=A⋅Lα⋅Kβ
link

https://chat.openai.com/c/f40faa3b-d4f6-4af8-aec9-2591b27ea6ba

REF. SYLLABUS
Productivity
Productivity generally refers to the measure of efficiency in completing tasks and achieving goals.
Higher productivity implies getting more output with the same or less output. Productivity is
dependent upon how resources are utilized to achieve goals. It measured amount of output
produced per unit of input. Productivity is crucial factor for competitiveness.
TYPES OF PRODUCTIVIT
Labor productivity: This is the most commonly used measure of productivity, and it is simply the ratio of output to
labor input. It is a measure of how much output is produced by each worker. Labor productivity can be measured in a
variety of ways, such as units produced per hour or per worker.

Capital productivity: This is a measure of how efficiently capital is being used to produce output. It is the ratio of
output to capital input. Capital productivity can be measured in a variety of ways, such as units produced per dollar
of capital investment.

Material productivity: This is a measure of how efficiently materials are being used to produce output. It is the ratio
of output to material input. Material productivity can be measured in a variety of ways, such as units produced per
pound of material used.

Total factor productivity (TFP): This is a measure of how efficiently all inputs are being used to produce output. It
is a comprehensive measure of productivity that takes into account labor, capital, and materials. TFP can be measured
in a variety of ways, such as the growth rate of output per unit of input.
PRODUCTIVITY MEASUREMENT
Productivity measurement is like keeping tracks on how efficiently we're accomplishing tasks and achieving goals,
ensuring a constant assessment of our effectiveness and resource utilization. It is the process of quantifying the
efficiency with which inputs are transformed into outputs. Productivity measurement compares an organization's
performance to internal benchmarks, industry standards, or best practices. It helps identify areas for improvement and
track progress over time. Productivity measurement provides valuable insights for strategic decision-making. It helps
organizations identify opportunities to improve efficiency, reduce costs, and enhance their competitive position .
Factors affecting Productivity
Technology: The use of technology can help to improve productivity by automating tasks, reducing errors, and
improving communication.
Skills and training: Employees with the right skills and training are more productive than those who do not.
Motivation: Employees who are motivated to work are more likely to be productive.
Work environment: The physical and social environment in which employees work can have a significant
impact on their productivity.
Management: Effective management can help to improve productivity by setting clear goals, providing
feedback, and creating a positive work environment.

REF. SYLLABUS
Factors affecting Productivity
Legal and regulatory compliance, entwined with government policies, provides the
foundational framework within which businesses operate. Adherence to laws and regulations,
coupled with alignment with government policies, ensures a stable environment for productivity
by minimizing legal risks and guiding strategic decision-making.

Leadership style: The leadership style of a manager can also affect productivity. Autocratic
managers who micromanage their employees are likely to reduce productivity, while democratic
managers who empower their employees are more likely to boost productivity.

Employee benefits are instrumental in cultivating job satisfaction. Comprehensive benefits,

including health coverage and retirement plans, not only contribute to employees' well-being but
also convey a sense of value from the employer. When employees feel supported through these
benefits, it enhances their job satisfaction, fostering a positive workplace culture and
ultimately boosting productivity.

.REF. SYLLABUS
Productivity VS COMPETITIVENESS
Generally, productivity is about doing things well, while competitiveness is about doing things
better than others.

Productivity is a measurement of how efficiently resources are used to produce output.

Competitiveness is the ability of an organization to produce goods or services that are more
attractive to buyers than those of its competitors.

Higher productivity often leads to increased output and profitability with the same or fewer
resources. on the other hand, higher competitiveness leads to a stronger market position and
sustained business success.

Factors including technological advancement, skills and training, proper infrastructure and
management practices can impact productivity while Competitiveness is achieved through
beyond these practices like innovation, quality improvements, cost efficiency, marketing and
customer satisfaction.
.REF. SYLLABUS
PRODUCTION SYSTEM: CONCEPT
A production system is a collection of interconnected resources and processes that transforms
input into outputs. Production systems can be found in a wide variety of industries, including
manufacturing, construction, healthcare, and service industries.
Input Raw material labour, capital, information Etc.

KEY COMPONENTS OF PRODUCTION SYSTEM Processes Technology, Workflow, Quality control

Output Finished goods or services, Waste(byproduct)

Facilities Factory or plant , Warehousing

Management Planning, Control, Coordination

Workflow: The sequence of steps or stages involved in the production process.

Quality Control: Measures to ensure the produced goods or services meet established standards.
The goal of a production system is to produce goods or services that meet the needs and wants of
customers while also achieving the organization's objectives.

.REF. SYLLABUS
TYPES OF PRODUCTION SYSTEM
Generally, productivity is about doing things well, while competitiveness is about doing things
better than others.

Productivity is a measurement of how efficiently resources are used to produce output.

Competitiveness is the ability of an organization to produce goods or services that are more
attractive to buyers than those of its competitors.

Higher productivity often leads to increased output and profitability with the same or fewer
resources. on the other hand, higher competitiveness leads to a stronger market position and
sustained business success.

Factors including technological advancement, skills and training, proper infrastructure and
management practices can impact productivity while Competitiveness is achieved through
beyond these practices like innovation, quality improvements, cost efficiency, marketing and
customer satisfaction.
.REF. SYLLABUS
TYPES OF PRODUCTION
JOB SHOP PRODUCTION
Job shop production is characterized by the production of the small quantities or even one time one
customized product is produced. For example custom machine shops such as aerospace,
automotive(Parts & module), or medical industries, Print shops(Business cards) and prototyping
services.

BATCH PRODUCTION
Batch Production involves production of limited number of identical product at a time. Each batch passes through
the series of operation before moving to the next stage. The more specialized product produces in compare to job
shop production. Batch Production combines both , aspects of job shop and mass production offering more
flexibility than mass production. Bakery products, Printed material(Books, Magazines) and cosmetics are the
examples of bath production.

MASS PRODUCTION
Mass production is characterized by the large-scale production of standardized products. It involves high volume,
low variety. These Products are produced on assembly line using highly specialized machinery with repetitive
process. Mass production is typically found in industries such as automotive manufacturing, appliance
manufacturing, and textile manufacturing.
CONTINUOUS PRODUCTION
Continuous production is also known as process production which involves non-stop producing large
volumes of products at a consistent rate. It is commonly used in industries such as chemical, oil
refining, pharmaceuticals, and food processing. Continuous Production system often incorporates high
degree of automation, Quality control and maintenance.

LEAN PRODUCTION
Lean production, also known as just-in-time production that emphasize in minimizing the cost by
eliminating wastage and optimizing the processes to achieve the highest possible quality and
efficiency. It is based on the idea of creating more value for the customer with less wastage. The
production is based upon the requirement of the products so that the cost such as holding cost does not
incurs and ultimately optimizing the inventory levels.
CELLUR PRODUCTION
Cellular manufacturing involves grouping machines, equipment, and workers into cells to perform specific tasks or
operations. Each cell is responsible for a particular set of products or processes, allowing for specialization and
focused expertise as well as flexibility. The product moves from one cell to the next, each station completing part
of the manufacturing process. Since most of the machines are automatic, simple changes can be made very rapidly.
UNIT-4 PRODUCT AND SERVICE DESIGN
Concept of Product and Service
A product is a tangible item that is manufactured or produced through a series of processes. It can be something you
can touch, feel, and see.A service is an intangible offering that involves a deed, a performance, or an effort that
cannot be physically possessed. Services are often characterized by their perishability, variability, inseparability, and
lack of ownership. "product" is often used as an umbrella term that encompasses both goods and services. This
approach is rooted in the recognition that both goods and services are offerings created to meet the needs and wants
of consumers. So, to clarify, all goods are products, but not all products are goods.
Product Development Process
Idea Generation:
Concept Development and Screening:
Business Analysis
Product Development:
Testing and Iteration
Commercialization:
Post-Launch Evaluation
Product Maintenance and Improvement:
PRODUCT DEVELOPMENT PROCESS.
IDEA GENERATION
The process typically begins with the generation of ideas. This stage involves brainstorming sessions,
market research, and collaboration among team members to identify innovative ideas. This can come
from various sources, such as customer feedback, employee suggestions,technological advancements,
or emerging trends in the industry.

CONCEPT DEVELOPMENT AND SCREENING

The most promising ideas are then developed into product concepts. They involve taking your initial ideas and
refining them into concrete concepts that can be evaluated for feasibility and market potential. These concepts are
evaluated based on factors such as technical feasibility, cost estimates, and alignment with the company's overall
strategy. Screening helps narrow down the options. It ensures that you are investing your time and resources in the
right product ideas.

BUSINESS ANALYSIS
A detailed examination of Potential product viability and profitability is done in this phase. Factors including
Market demand, competitive landscape, Pricing strategy Production costs, Regulatory and compliance issues, Risk
analysis resource availability are analyzed. The goal is to make informed decisions about whether to proceed with
developing a particular product concept based on its economic viability and alignment with business goals.
PRODUCT DEVELOPMENT PROCESS.
PROTYPE DEVELOPMENT
The stage It’s where the theoretical concepts and ideas from the earlier stages are brought to life in a
tangible form .The A preliminary version of a product is created for testing and validation. This
involves translating the selected concept into a tangible or digital prototype, selecting materials for
physical products, and developing early versions for software.

TESTING AND ITERATION

The products are tested for functionality, usability, and performance, User experience to identify any issues, gather
feedback and make iterative refinement to enhance the prototype. Bug tracking and debugging are conducted to
address any technical issues, and documentation which serves as a record of the prototype's specifications, design
elements, and the changes made during the refinement process.

COMMERCIALIZATION
After a product passes through testing phase it’s ready for full-scale production and marketing. This involves
developing marketing strategies, setting distribution channels, and preparing for the product launch. Moreover,
Various launching and promoting events and customer support system is provided in this stage. Pricing strategy
involving determination of optimal price for the product based on market research, competitor analysis, and
production costs.
PRODUCT DEVELOPMENT PROCESS.
Post-Launch Evaluation
The product performance in the market is being evaluated in this phase. Feedback is gathered from
customers or stakeholder’s for further improvements. Moreover, Sales revenue analysis, Market share
and competition, customer retention and loyalty operation performance and financially performance is
carefully evaluated in this stage.

Product Maintenance and Improvement

Product maintenance and improvement involve ongoing activities to enhance a product's performance and
address issues post-launch. These activities includes issue resolution, updated and enhancement, feedback
integration, quality assurance, monitoring and analytics, compliance maintaining, adoption of security measures,
user training , support and performance optimization. This is crucial for keeping a product competitive.
CONCEPT OF PRODUCT AND SERVICE DESIGN
Let’s understand the difference between creating product and creating product design
Creating product is a broader concept that encompasses entire process such as sourcing material, production process,
quality control and logistics. on the other hand, Creating product design is the subset of the overall creating a product
which is about creating appearance, functionality and user experience of the product.
In my words, Product design is the process of creating a detailed blueprint that defines the appearance, features,
functions, manufacturing procedures, resource requirements, and user interaction mechanisms of a product. It
involves making critical decisions about how the product will look, work, and be produced, ensuring alignment with
user needs and preferences
Unit 6: Total Quality Management
6.1 Concept of quality and Total Quality Management (TQM)
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6.2 Historical evolution, principles and philosophical elements of TQM
6.3 Costs of quality: concept and types of quality cost
6.4 Quality control: Concept, objectives, traditional quality control and statistical quality control
6.5 Control charts and control charts for attributes
6.6 Quality Management System: ISO 9000 series; ISO 9001:2000 standard and ISO certification of
Nepal
Unit 6: Total Quality Management
6.1 Concept of quality and Total Quality Management (TQM)
Quality refers to the degree of excellence or superiority of the product and service. It can be attributed as the
exceeding customer expectation. Quality is not a technical function but a systematic process that extend to all
business Phases and department for example Manufacturing, Designing, development operation and Human
resources Etc.

Total Quality Management on the other hand refers to a management approach which creates culture of continuous
improvement and excellence. TQM revolves around unwavering commitment to meeting and exceeding customer
expectation. Leadership role, Vision and employment involvement are crucial factors of TQM.
The key element of TQM involves Customer-centric, Total employment involvement, optimization and
improvement of process and integrated as every aspect of organization were intertwined.

6.2 Historical evolution, principles and philosophical elements of TQM

Historical evolution
Walter A Snewhart’s (Statistical Process Control) :- 1930’s Which involves using statistical method to monitor and
control manufacturing processes to produce goods of consistent quality. He introduced four continuous steps
Plan, Do, Study and Act.
W.
Edwards Deming taught statistical methods for quality control to Japanese engineers and executives in the 1950s,
which led to the origin of TQM
Joseph M. Juran taught the concepts of controlling quality and managerial breakthrough. Juran’s contributions to
TQM include the Juran Trilogy (Quality Planning, Quality Control, and Quality Improvement), the Pareto
Principle, and the Cost of Quality .
Fredrick W. Taylor(Central idea is managers to determine the best for the worker to do a job) and Henry ford
introduced scientific management and standardized processes to improve quality and efficiency.
Snewhart's control charts and concepts of variation management became fundamental to TQM.
Post world war quality movement in Japan, Training in industries by American expertise Deming and Juran,
Leading significant improvement in product quality and processes.
The Japanese developed their own quality management methodologies such as “Kaizen” which refers Continuous
improvement.
Japanese companies such as Toyota adopted quality principles in all aspect of their operation, Giving rise to total
Quality control. As a result American and European countries faces competition with Japan, adopted TQM
principles.
The International Organization for Standardization (ISO) introduced the ISO 9000 series of standards, providing a
framework for quality management systems.
Many organizations worldwide adopted ISO 9000 certification as a demonstration of their commitment to quality.
Six Sigma:
Origin: Six Sigma originated at Motorola and was later popularized by companies like General Electric. It is a data-driven
methodology focused on reducing variation and defects.
Key Concepts:
Define, Measure, Analyze, Improve, Control (DMAIC): A structured problem-solving approach.
Statistical Tools: Using statistical methods to analyze and improve processes.
Process Capability: Ensuring processes operate within defined specifications.
Root Cause Analysis: Identifying and addressing the root causes of problems.
Defect Reduction: Aimed at achieving near-perfect processes with a very low defect rate.
Integration of Lean and Six Sigma:
Lean Six Sigma: Combines the waste reduction and efficiency focus of Lean with the statistical analysis and defect
reduction focus of Six Sigma.
Benefits: By integrating Lean and Six Sigma, organizations can achieve a synergistic effect, addressing both speed and
quality in their processes.
DMAIC Methodology:
Define: Clearly articulate the problem, project goals, and customer requirements.
Measure: Collect relevant data to quantify the current state of the process.
Analyze: Use statistical analysis and tools to identify root causes of problems and inefficiencies.
Improve: Develop and implement solutions to address identified issues.
Control: Establish control measures to ensure sustained improvements and prevent regression.
6.1 Principles of Total Quality Management(TQM)
Principles of Total Quality Management(TQM) prescribe the standards or criteria that the organization or the
process should follow or meet to ensure quality.
Customer Focus:
Prescribe understanding and meeting customer needs and expectations.
Establish mechanisms for gathering and analyzing customer feedback regularly.
Continuous Improvement:
Commit to ongoing enhancement of processes, products, and services.
Encourage regular reviews and adjustments to organizational procedures.
Employee Involvement:
Actively engage all employees in quality improvement initiatives.
Establish platforms for communication and idea sharing among staff members.
Process-Centered Approach:
Identify, understand, and manage interrelated processes.
Implement a systematic approach to improve process efficiency and effectiveness.
Data-Driven Decision Making:
Utilize relevant data and statistical methods for informed decision-making.
Establish a culture where decisions are based on objective analysis.
Strategic Approach to Improvement:
Align quality improvement efforts with overall organizational goals.
Integrate quality initiatives into the strategic planning process.
Unit 6: Total Quality Management
6.2 Philosophical Elements of TQM
These elements seeks an understanding of the fundamental ideas and perspective that shape how TQM is
implemented and practiced within the organization.
 Customer-Centric
 Continuous Improvement
 Data driven decision making
 Employee Engagement & Supplier Partnership
 Process-Oriented Approach
Focus is on improving processes, not just individual outcomes. Identifying and optimizing processes ensures
consistent quality throughout the system.
 Ethics and integrity
 Leadership & Vision
 Total Involvement
 Long-term Perspective
This element underscores the idea that achieving and sustaining high-quality products, services, and processes is
an ongoing journey that requires persistent effort and commitment over an extended period. Proactively, building
a sustainable foundation for quality and excellence that endures over time.
 Benchmarking : It involves systematic process of comparing and evaluating the performance, practices, and
processes of an organization against those of industry leaders or competitors to identify areas for improvement
and implement best practices to enhance overall performance
Communication and Collaboration:
Foster open communication channels across all organizational levels.
Encourage collaboration and teamwork to collectively address quality issues.
Leadership Involvement:
Actively involve top leadership in promoting and sustaining a culture of quality.
Leaders should visibly champion and support TQM principles.
Supplier Relationships:
Develop strong relationships with suppliers based on mutual trust and cooperation.
Involve suppliers in the quality improvement process for a seamless supply chain.
Training and Development:
Provide continuous training to employees at all levels.
Foster a learning culture that enables employees to acquire and apply new skills.

6.3 Costs of quality: concept and types of quality cost

Costs of quality
Cost of quality refers to the total cost incurred by an organization to ensure the quality is the expected level of the
product. For investing in quality can have associated costs. Failing to meet quality standards can lead to increased costs
associated with defects, rework, scrap, warranty claims, and customer complaints. The types of cost are given below.
Prevention Cost
Expenses incurred to prevent defects and errors from happening at the beginning of the
process. They include costs of quality planning, training, design, process improvement,
etc
Appraisal Cost
Costs associated with evaluating, assessing, and inspecting products or services to
ensure they meet quality standards. It encompasses Inspection and testing activities,
equipment inspection/calibration, supplier audits, and the costs of testing materials.
Internal Failure Cost
These are the costs of defects or errors that are detected and corrected before the
products or services are delivered to the customers. They include costs of rework, scrap,
waste, failure analysis, etc.
External Failure Cost
These are the costs of defects or errors that are detected and corrected after the products
or services are delivered to the customers. They include costs of warranty, repair,
replacement, recall, customer complaints, loss of reputation, etc.

Quality Control
Quality control (QC) is a process by which a business seeks to ensure that its products or
services meet the quality standards or customer requirements. It involves testing,
correcting, and improving products or services. Quality control can help increase
customer satisfaction, efficiency, and profits for a business
Objective of Quality Control Objective of Quality Control
 Error Prevention and rectification  Product Reliability and durability
 Efficient Process optimization  Reducing Rework And Scrap
 Customer satisfaction enhancement  Sustaining consistency
 Eliminate non-conformities  Boost product Performance
 Minimization of Variation  Continuous improvement
 Optimize resource utilization  Compliance Regulatory requirements

Traditional Quality Control

Traditional Quality control refers to the historical methodologies and practices used by organization to ensure
quality of the product or services. The goal of traditional quality control is to identify and correct defects or
deviations from established standards, ensuring that the final products or services meet the desired level of quality.
KEY CHARACTERSTICS OF TQC
1) Reactive Approach: Traditional QC focuses on inspecting finished products to identify defects. This means
that problems are often caught after they have already occurred, which can lead to waste and rework.
2) Post-Production Inspection: Traditional QC typically involves the inspection of products after they have been
manufactured. The emphasis is on identifying defects or deviations from standards in the finished goods.
3) Batch Sampling: Instead of inspecting every individual item, traditional QC may involve sampling a batch of
products for inspection. This sampling method is used to make assessments about the entire production run.
4) Standardization of Processes: TQC often involves the establishment and adherence to standardized processes
and procedures. The goal is to maintain consistency in production methods to achieve consistent product quality.
Reliance on human inspection: Traditional QC often relies on human inspectors to identify defects. This can be
time-consuming and subjective, and it can lead to inconsistencies in quality.
It is based on the company’s own standards and specifications, and it focuses on short-term goals and objectives.
Traditional quality control is often isolated from other processes and departments, and it relies on the authority and
expertise of quality inspectors. Some of the problems with traditional quality control are that it is inefficient,
unrealistic, and does not consider the customer’s needs and expectations.
Ultimately, Both rely on established standards or specifications to define quality requirements.
Techniques of Quality Control
Techniques of Quality Control Various techniques of quality control have been developed including: Just in time,
Quality at the source, Total quality management, Quality circles, Zero defect production, and Statistical quality
control.
Statistical Quality Control (SQC)
SQC can be divided into 3 broad categories
1. Descriptive Statistics: Describes characteristics and relationships
2. Statistical Process Control (SPC): Ensure proper functioning of process
3. Acceptance Sampling: Randomly inspecting a sample of goods and deciding whether to accept the entire lot
based on the result.
Descriptive statistics involve summarizing historical data using measures like mean and standard deviation to
understand its characteristics. In contrast, Statistical Process Control (SPC) is a real-time monitoring approach that
uses control charts to identify and control variations within a process as it happens. While descriptive statistics provide
a retrospective overview, SPC focuses on ensuring ongoing processes operate within defined limits, particularly in
manufacturing and other industries where maintaining consistent quality is crucial.
Statistical Process Control
Statistical process control (SPC) is the application of statistical techniques to determine whether the output of a
process conforms to the product or service design. It aims at achieving good quality during manufacture or service
through prevention rather than detection. It is concerned with controlling the process that makes the product
because if the process is good then the product will automatically be good.
Unit 3: Location and Layout Decision
3.1 Concept and need of location decisions
3.2 Factors affecting location decision of service and manufacturing organizations
3.3 Techniques of location decisions: qualitative and quantitative analysis
3.4 Behavioral impact of facility location
3.5 Concept of layout decision
3.6 Types of layouts: office, product, process, cellular and fixed position layout
3.7 Factors affecting layout decision
Unit 3: Location and Layout Decision
3.1 Concept of Location Decision
Location decision refers to the process of choosing the optimal geographic location for an activity, like
establishing a business, building a facility, or even planning a public infrastructure project. also known as facility
location or site selection, is a strategic decision in operations management that involves finding an ideal
geographical region to install a facility or manufacturing plants, distribution centers, retail outlets, and offices. It’s
a critical decision area that can significantly impact an organization’s profitability, cost, and success.
Need of location decisions
Market and Customer Proximity
Being closer to target markets can reduce delivery times and costs, offering quicker service and potentially lower
prices. Proximity to suppliers allows for more frequent deliveries and reduces inventory needs, improving cash
flow and responsiveness. Closer interactions with customers enable businesses to gather valuable insights about
their preferences and needs. Balancing the benefits of proximity with cost factors like rent, land prices, and
potential infrastructure limitations.
Need of location decisions Need of location decisions
 Cost Considerations  Competitive advantage
 Attract and retain talent  Long term Planning
 Infrastructure and accessibility  Tax incentive
 Regulatory compliance  Environmental impact
 Supply chain optimization  Risk mitigation(Political Instability
 Market expansion and  Future Growth Potential
3.2 Factors affecting location decision of service and manufacturing organizations
Service Organization Manufacturing organization
 Proximity to Customer and market  Proximity to Raw Materials and suppliers
 Convenient Transportation Facilities  Transportation infrastructure
 Skilled workforce with soft skills  Skilled workforce with Hard/Technical skills
 Efficiency in delivery services  Land and building availability
 Visibility and accessibility  Space Requirement
 Cost consideration  Cost consideration
 Technological Factors  Technological Factors
 Tax incentive  Tax incentive
 Market competition  Sustainability
 Demographics and Lifestyle  Environmental adaptability
 Risk Management and Disaster Preparedness  Risk Management and Disaster Preparedness
 Safety standards  Safety standards
 Language proficiency  Distribution network
 3.5 Concept of Workstations, Spaces, Material, Budget, Layout refers to the arrangement or
Layout decisions technology, Human resources, Plant, organization of elements within a
Storage areas, Budget and regulation. given space.
Layout decision refers to the strategic planning and arrangement of physical facilities, equipment, machinery, and
resources within a workspace to optimize efficiency, productivity, and overall performance. It is a strategic choice
in operations management that involves deciding on the best physical arrangement of all resources within a
facility. These resources might include a desk, a work center, a cabinet, a person, an entire office, or even a
department.
Types of Layout
Process Layout (Functional Layout):
Process layout refers to the arrangement of different work areas or departments within a workspace to
enhance workflow and efficiency. Each department or work center focuses on a specific type of
activity. Leading to expertise and efficiency in that specific area. Process layout is specifically suitable
where variety of custom Product made such furniture, jewelry and Customized vechiles.
Product layout(Line Layout):
In a product layout, operations are arranged in a line according to the sequence of operations for the
product. Unlike the flexibility of a process layout, a product layout is designed for mass production of
standardized goods, where the production processes are linear and streamlined to achieve high
efficiency and productivity. This layout is also known as an assembly line layout.
 Office Layout
Office layout refers to the physical arrangement of the workspace, furniture, equipment, and
personnel within an office environment. The design of an office layout can have a significant impact
on employee productivity, collaboration, communication, and overall well-being.It's not just about
arranging desks and rooms—it influences how people work together.
Cellular Layout
Cellular layout, also known as group technology layout, involves grouping machines or workstations in
close proximity to form cells. Each cell is designed to handle a specific type of product or a set of
similar operations. Cellular layouts are particularly suitable for environments with a high mix of
products and variable production volumes. Such as Aircraft, Medical device, Electronics
Fixed Position Layout
A fixed-position layout is a type of production layout where the product or project remains stationary,
and the resources, equipment, and personnel are brought to the product or project site. This layout is
particularly suitable for large-scale projects or products that are too large, heavy, or impractical to
move during the production process. Such as Producing Ships, Trains, aero plane
3.7 Factors affecting layout decision
Types of production Process
The nature of the production process, whether it's job shop, batch production, or continuous flow, influences the
layout decision. Different processes may require different layouts for optimal efficiency. A good layout should
match the natural flow of operations, reducing unnecessary movement and improving efficiency, which ultimately
enhances productivity and reduces errors or delays.

Product Characteristics
Nature and volume of Products
The physical attributes of the product, such as size, shape, and weight, play a role in determining the layout. For
example, products with large dimensions may require more space. The volume and variety of production, along
with the assembly process and packaging requirements, guide the layout design.

Cost of Moving Materials

Cost factors, including construction costs, operating costs, and transportation costs, should be considered. A cost-
effective layout balances efficiency with affordability. The aim is to create an efficient layout that meets the
organization's needs while staying within budget, managing both initial and ongoing costs effectively.
3.7 Factors affecting layout decision
Workforce Dynamics
The human resource or workforce is a crucial factor in layout decisions. The layout must be designed to optimize the efficiency and productivity
of the employees. Imagine a skilled team in a furniture workshop. To optimize their work, the layout decision might arrange workstations
logically, reducing how much they need to move around. Tools and materials could be placed in a sequence, cutting down the time needed for
each task. The layout could also encourage easy communication among the team, helping them work together smoothly. This setup ensures
that tasks like cutting, shaping, and assembling furniture can be done efficiently with minimal disruptions for the skilled workforce.

Regulatory Compliance and Environmental factors

Layout decisions need to follow rules like building codes and safety regulations. Adhering to these rules affects how we
set up workspaces and handle waste. Not following them can lead to fines and delays, so it's important to consider them
early. Also, for a better environment, we aim to use less energy and water, arrange workspaces for natural light, and create
layouts that produce less waste. Sustainable layouts not only help the environment but also make a business more
appealing to investors and customers.
3.7 Factors affecting layout decision

Safety Measures
A good layout decision makes the workplace safe and efficient. By organizing things
smartly, we lower the chance of accidents. Hazardous stuff is kept away, and
emergency exits are placed for quick evacuations. This not only keeps everyone safe
but also makes work smoother and more productive. It reduces downtime, helps
workers feel less tired, and ensures they do well. Safety measures in the layout not only
follow the rules but also show the company cares about its workers. A safe workplace
is appealing, boosts the company's image, and avoids expensive legal troubles .

Space Utilization: Minimizing wasted space, maximizing utilization of available area.

Safety & Ergonomics: Maintaining worker safety, minimizing ergonomic(Repetitive strain injuries risks, ensuring
accessibility.
Flexibility & Adaptability: Ability to accommodate future changes in product lines, production volume, or
technology.
Inventory Management: Control over inventory levels, minimizing storage requirements, facilitating picking and
packing.
Maintenance & Repair: Accessibility for equipment maintenance and repair, minimizing downtime.
Lighting & Ventilation: Providing adequate lighting, ventilation, and temperature control for worker comfort and
productivity.
3.7 Factors affecting layout decision 3.7 Factors affecting layout decision
Nature of the product Human factor and working conditions
Basic managerial policies and decisions Safety measure
Volume of production Type of industry process
Climate Characteristics of the building
Flexibility Possibility of future expansion
Nature of machines Safety requirements
Nature of plant location Space utilization
Availability of amenities Transport facilities
Availability of labour Building factor
Machinery factor Line layout
Market proximity Climate Conditions
Minimum Movement Material
3.3 Techniques of location decisions: qualitative and quantitative analysis
Techniques refers the strategies, approach, analysis and consideration for the decision making. access,
infrastructure, and labor availability. Businesses often use techniques such as cost-benefit analysis, evaluating the
regulatory environment, assessing risk, and considering government incentives. The goal is to find a location that
aligns with the company's strategy, minimizing costs, maximizing market reach, and ensuring long-term viability.

#Incomplete TASK
3.4 Behavioral impact of facility location
Behavior impact of facility location refers influence of Facility Choices on Stakeholder Behavior. These choices
are related to its location, design, layout, and amenities/convenience and stakeholder’s such as Customer,
employee, supplier or even entire community
Customer Behavior:
The layout of a facility, including the arrangement of aisles and displays, can influence the flow of customers.
Well-designed layouts can encourage exploration and increase the likelihood of impulse purchases. For example, a
retail store that is located in a convenient location with easy parking and a pleasant atmosphere is more likely to
attract and retain customers.
Employee Behavior:
Location, layout, and amenities of a facility can influence employee morale, productivity, and retention. For
example, a location with easy access to public transportation may lead to higher employee satisfaction and lower
turnover rates.
Supplier Behavior:
The location and infrastructure of a facility can influence the efficiency and cost of doing business with
suppliers. For example, a manufacturing plant that is located near its suppliers can reduce transportation costs and
lead times.
Facility decision encompasses wide range of aspects including layout ,design, location,
convenience ETC
SOME WAYS in which facility decisions can influence behavior
 Accessibility and Convenience:
 Safety and Security:
 Design and Layout:
 #REFER TO THE LAYOUT AND LOCATION POINTS
Unit 2: Product and Service Design
2.1 Concept of product and service
2.2 Product development process
2.3 Concept of product and service design
2.4 Difference between product and service design
2.5 Manufacturing and service process technology
2.6 Emerging issues in product and service design
Unit 4: Production Planning
4.1 Concept of production planning
4.2 Concept of aggregate planning and aggregate operations
planning
4.3 Aggregate planning techniques
4.4 Capacity: concepts, Determination of level of capacity and
capacity constraints
4.5 Supply Chain Management: concept of supply chain and
supply chain management, supply chain
Unit 4: Production Planning
4.1 Concept of production planning
The concept of production planning is to develop a strategy for making the company’s products and services in the
most efficient and effective way, serving as the roadmap for turning raw materials into finished goods or
delivering services. It's the intricate dance between understanding customer needs, managing resources,
minimizing costs, ensure efficient use of time and capacity and orchestrating/Organizing a smooth production
process.

As Per textbook area of emphasis about the concept of production planning revolves around,
the importance of strategic decision-making, efficient resource utilization, careful balancing of
production outputs and capacity, and seamless integration of activities across different levels of
the organization in the realm of production planning.
Further more, This coordination encompasses activities from assessing raw materials to
designing production processes, managing technology utilization, and ensuring regular
maintenance. The interconnectedness of these functions highlights that production planning is
not a standalone process but an integral part of the broader operations management
framework.
To be continued…
Just as the nervous system in the human body coordinates and regulates different functions,
production planning guides steps in transforming raw materials into final products.
Aggregate Planning
Aggregate Production Planning (APP)
is a strategic process in Production
and Operations Management that
involves developing, analyzing, and
maintaining preliminary schedules for
the overall production activities of an
organization. The core objective of
APP is to align production capacity
with anticipated demand, optimizing
the use of resources to meet business
goals efficiently. Aggregate planning
is the process of creating a
preliminary, high-level plan to address
Aggregate Operation Planning
It's about turning that rough plan into
detailed actions. This includes
specifying exactly what to produce
when, assigning tasks to workers, and
ensuring you have the right resources
like machinery and materials in place
over a somewhat longer time frame.
Ensuring that you have all the
necessary resources, like machinery
and materials, lined up and ready to
go. Unlike aggregate planning, which
looks at the bigger picture over the
next few months, aggregate operations
Aggregate Planning Techniques
Chase Demand Strategy:
In this strategy, production and staffing levels are adjusted to match the fluctuating demand. It involves producing exactly what
is needed to meet customer orders, avoiding excess inventory. This approach requires a flexible workforce and production
system. Examples: Hiring temporary workers, overtime, subcontracting.
Level Production Strategy:
This strategy aims to maintain a constant production rate regardless of changes in demand. Inventory levels are used to absorb
variations in demand. It provides a more stable workforce but may result in higher holding costs. Examples: Building inventory
during low demand periods
Mixed Strategy:
A combination of both chase demand and level production strategies. During periods of high demand, the company might adopt
a chase strategy, and during periods of low demand, it might use a level production strategy.
Linear Programming Models:
Mathematical optimization models, such as linear programming, help find the optimal production plan that minimizes costs and
meets production constraints. These models consider factors like production rates, workforce levels, and inventory costs.
Simulation Models:
Simulation involves creating a model of the production process and testing different scenarios to identify the most effective
plan. It allows organizations to assess the impact of various decisions on production efficiency. It is a computational technique
used to analyze the behavior of a system over time.
Heuristic Approaches:
Heuristics are rule-of-thumb(Heuristics are informal and practical rules that guide decision-making.) approaches that simplify
complex problems. One common heuristic is the "cut-and-try" approach, where different production plans are implemented and
adjusted until an acceptable solution is found.
Subcontracting and Outsourcing:
Organizations may use subcontracting or outsourcing to handle variations in demand. This allows them to scale production up
or down by utilizing external suppliers during peak or low-demand periods.
Backordering:
Allowing backorders during periods of high demand can be a strategy. Customers receive goods at a later date, and this helps
in maintaining lower inventory levels.
Concept Of Capacity Planning
Capacity planning is a strategic
endeavor that involves forecasting
future demand, assessing current
production capabilities, and aligning
resources to efficiently meet customer
needs. It encompasses decisions about
workforce management, facility
adjustments, and the adoption of
technology to optimize production
efficiency. The goal is to strike a
balance, ensuring that organizations
neither underutilize nor overburden
their resources, ultimately
Determination(Steps) of Level of Capacity

Define the Scope/area

Defining the scope is the foundational

step in the capacity determination
process. It involves clearly outlining
the boundaries of what is being
assessed. For example, the scope
could be focused on assessing the
capacity of a specific production line
within a manufacturing facility,
evaluating the storage capacity and
efficiency of a warehouse, analyzing
the capacity and effectiveness of a
Determination(Steps) of Level of Capacity

Set a Time Frame:

Determine the specific time

period you want to assess,
whether it's daily, weekly,
monthly, or annually.
Capacity can vary over
different timeframes.
Determination(Steps) of Level of Capacity

Gather Data

Collect data on the actual

performance of the system
or resource over the defined
time frame. This data may
include production rates,
processing times, equipment
availability, and demand
Determination(Steps) of Level of Capacity

Calculate Current Capacity

Calculate the current capacity of the
system based on the collected data.
This can be done using various
metrics depending on the context,
such as:
Production Capacity: The maximum
number of units a machine or
production line can produce in a given
time period. Service Capacity: The
maximum number of customers or
services a facility can handle.
Human Resource Capacity: The
Determination(Steps) of Level of Capacity

Compare Capacity to Demand

Compare the calculated

capacity to the actual or
forecasted demand for your
product or service. Identify
whether your capacity
meets, exceeds, or falls short
Determination(Steps) of Level of Capacity

Identify capacity constraints:

Capacity constraints are areas where

your system or resource is unable to
meet demand or perform optimally,
Look for bottlenecks, delays, or
limitations that hinder capacity.
Common capacity constraints include:
Equipment breakdowns or downtime
Lack of skilled labor
Inefficient processes
Inventory shortages
Determination(Steps) of Level of Capacity

Investigate the root causes of capacity constraints

. This may involve conducting process

analysis, using tools like value stream
mapping, or employing data analytics
to identify patterns and trends.
Determination(Steps) of Level of Capacity

Develop Improvement Strategies:

Once you've identified capacity

constraints and their causes, develop
strategies to address them. These
strategies may involve: Investing in
new equipment or technology Hiring
and training additional staff
Streamlining processes Reducing
waste Expanding facilities or storage
space Implementing better demand
Determination(Steps) of Level of Capacity

Monitor and Adjust:

Continuously monitor your

capacity and demand, making
adjustments as necessary to
ensure your operations remain
efficient and responsive to
changing conditions.
Determination(Steps) of Level of Capacity

Regularly Review and Update:

Capacity planning is an
ongoing process. Regularly
review and update your
capacity assessments and
constraints analysis to adapt
to changing market
conditions and business