Introduction to Production & Operations Management

Nature of Production• In an industrial organization, production is the most important

functional area• Production is the process by which inputs are converted into

output• Usually, the term production and manufacturing is used

interchangeably, but both the terms are different in management.

• Manufacturing is used in the case of tangible goods and production includes both tangible gods as well as services.

• Production can be easily understood if we view the manufacturing function from three angles: – Production as a system– Production as an organizational function– Production as a decision making function

PRODUCTION AS A SYSTEM• A system is understood as a whole that functions

with the help of various sub-components. From this angel, production comprises of three sytems:

• PRODUCTION SYSTEM• CONVERSION SUB-SYSTEM• CONTROL SUB-SYSTEM

PRODUCTION AS A SYSTEM

PRODUCTION SYSTEM CONCEPTS

CONCEPT DEFINITION1. Production System A system whose function is to convert

a set of inputs into a set of desired outputs

2. Conversion Sub-System A sub system of the larger production system where inputs are converted into outputs

3. Control sub-system A sub system of the larger production system where a portion of the output is monitored for feedback signals to provide corrective action if required

PRODUCTION AS AN ORGANIZATIONAL FUNCTION

• The core of production system is its conversion sub-system , wherein workers , materials and machines are used to convert inputs into products and services.

• This process of conversion is the heart of production function in an organization where manufacturing is the key process.

PRODUCTION AS DECISION MAKING SYSTEM

• The operations manager in an organization need to take various decisions related to production function.

• They plan , organize, staff, direct and control all the activities in the process of production.

• The decisions taken by operations manager related to production falls into three general level of categories. They are:

PRODUCTION AS DECISION MAKING SYSTEM

1. STRATEGIC DECISIONS These decisions are major ones have strategic

importance in production1. OPERATING DECISIONS These decisions are related to planning

production to meet demand1. CONTROL DECISIONS These decisions relates to planning and

controlling operations

Types of Decisions - Strategic

Strategic Decisions

Production Process Developing long range production plans

Production Technology Selecting and managing production technology

Facility Layout Planning the arrangement of facilities

Allocating resources to strategic alternatives

Planning for the optimal distribution of scarce resources among product lines or business units

Long range capacity Answering ‘how much’ and ‘where’ questions about long range production capacity

Type of Decisions Area of Involvement Nature of Activities

Type of Decisions Area of Involvement Nature of Activities

Operating Decisions

Production planning system Aggregate planning and master production scheduling

Independent demand inventory system

Planning and controlling finished goods inventories

Resource requirement planning system

Planning materials and capacity requirements

Shop floor planning and control at each work center

Short range decisions about what to produce and when to produce

Materials management Managing all facets of material system

Types of Decisions – Operating Decisions

Type of Decisions Area of Involvement Nature of Activities

Control Decisions

Productivity and employees Planning for effective and efficient use of human resources in operations

Total quality control Planning and controlling the quality of products and services

Project planning and control techniques

Planning and controlling projects

Maintenance management and reliability

Planning for maintaining the machines and facilities of production

Types of Decisions – Control Decisions

DISTINCTION BETWEEN PRODUCTION & OPERATIONS MANAGEMENT

• Even though both the terms are used frequently together, there exists at least two distinctions between the two terms. They are:

1. The term production management is used for a system where tangible goods are produced whereas operations management is more frequently used where various inputs are transformed into intangible services.

Viewed from this perspective, operations management will cover services such as banks, airlines, utilities, pollution control agencies, super bazaars, educational institutions, libraries etc. in addition to the manufacturing enterprises

2. The second difference is the evolution of the term as operations management is a term used nowadays. Production management precedes operations management in the historical perspective of the growth of the subject.

RECENT TRENDS IN PRODUCTIONS AND OPERATIONS MANAGEMENT

1. Global market place2. Production/operations strategy3. TQM4. Flexibility5. Time Reduction6. Technology7. Worker involvement8. Re-engineering9. Environmental issues10.Corporate downsizing11.Supply chain management12.Lean production

Product A• Feature 1• Feature 2• Feature 3

Product B• Feature 1• Feature 2• Feature 3