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PRODUCTION & OPERATION MANAGEMENTProductA product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.Concept of ProductionProduction is defined as the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user. Thus production is a value addition process. At each stage of processing, there will be value addition.Edwood Buffa defines production as a process by which goods and services are created.Some examples of production are: manufacturing custom-made products like, boilers with a specific capacity, constructing flats, some structural fabrication works for selected customers, etc., and manufacturing standardized products like, car, bus, motor cycle, radio, television, etc.IntroductionProduction/operations management is the process, which combines and transforms various resources used in the production/operations subsystem of the organization into value added product/services in a controlled manner as per the policies of the organization. Therefore, it is that part of an organization, which is concerned with the transformation of a range of inputs into the required (products/services) having the requisite quality level.The set of interrelated management activities, which are involved in manufacturing certain products, is called as production management. If the same concept is extended to services management, then the corresponding set of management activities is called as operations management.Inputs:MenMaterialsMachinesInformationCapitalTransformation Process:Product DesignProduct PlanningProduction ControlMaintenanceOutputs:ProductServicesContinuous:InventoryQualityCostEnvironmentFeedback InformationFig. 1.1 Schematic Production System5Product Service Continuum

Car Mobile Pen Car Rental Meal at Restaurant Tailored ClothingAuto RepairFinancial Consulting Dental CheckupHaircutAccountingTangibleServices are more intangible than goods Pure goods are tangiblesocksPure service are intangiblemedical procedureA mix has tangible and intangible componentsrental carsSearch, Experience, CredenceSearch QualitiesMay be evaluated prior to purchase socksExperience QualitiesRequire trial or consumption before evaluation restaurantsCredence QualitiesDifficult to judge even post-consumptionmedical procedures Perishability & SeprabiltyServices are simultaneously produced and consumed Perishability: Services are more perishable than goodsMarketers must try to even out demandInseparability: Services are more impacted by the interaction between the service provider and the customer than goodsVariability Services are more variable than goodsDue to changing needs, abilities, etc. of the service provider and customerSelf-service and equipment can decrease variabilityTry to reduce bad variability Errors in the system Try to improve good variabilityCustomization for customers unique needsScope of Production and Operations ManagementProduction 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. It distinguishes itself from other functions such as personnel, marketing, finance, etc., by its primary concern for conversion by using physical resources. Following are the activities which are listed under production and operations management functions:1. Location of facilities2. Plant layouts and material handling3. Product design4. Process design5. Production and planning control6. Quality control7. Materials management8. Maintenance management.Production SystemThe production system of an organization is that part, which produces products of an organization. It is that activity whereby resources, flowing within a defined system, are combined and transformed in a controlled manner to add value in accordance with the policies communicated by management. A simplified production system is shown above.The production system has the following characteristics:1. Production is an organized activity, so every production system has an objective.2. The system transforms the various inputs to useful outputs.3. It does not operate in isolation from the other organization system.4. There exists a feedback about the activities, which is essential to control and improve system performance.10Production systems can be classified as Job Shop, Batch, Mass and Continuous Production systems.Production / Operations VolumeOutput / Product VarietyContinuousProductionMass ProductionBatchProductionJob-ShopProductionFig. 1.2 Classification of Production Systemswww.newagepublisher.com

Types of Production System

Intermittent Production SystemIntermittent means something that starts (initiates) and stops (halts) at irregular (unfixed) intervals (time gaps).In the intermittent production system, goods are produced based on customer's orders. These goods are produced on a small scale. The flow of productionis 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.

Following chart highlights the concept of an intermittent production system.

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.

The features of an intermittent production system are depicted below.

Thetypes of intermittent production systeminclude:

Project production flows

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.

Thecharacteristicsor features of project production flows are as follows

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.

Jobbing production flows

In jobbing production flows, company accepts a contract to produce either one or few units of a product strictly as per specifications given by the customer. The product is produced within a given period and at a fixed cost. This cost is fixed at the time of signing the contract.This is the oldest method of production on a very small scale. It is also popularly known as job-shop or Unit production. With this method individual requirements of consumers can be met. Each job order stands alone and may not be repeated. Examples of such jobbing production flows include, services given by repair shops, tailoring shops, manufacturer of special machine tools, etc.The characteristics or features of jobbing production flows are as follows:

The production of items takes place in small lots. Sometimes only one product is produced at one time.The items are manufactured strictly as per customer's specifications.Highly skilledlabouris required to perform specialized jobs.There is disproportionate manufacturing cycle time. For e.g. the time needed to design the product may be more than the manufacturing time.This system has a lot of flexibility of operation, and hence general purpose machines are required.Continued Generally no automation is used in this system, but computer-aided-design (CAD) is used.It deals with low volume and large variety production. It can cater to specific customer Order, or job of one kind at a time.It is known for rapid value addition.Large inventory of materials, tools, parts.Detailed planning is essential for sequencing the requirements of each product, capacities for each work centre and order priorities.

AdvantagesFollowing are the advantages of job shop production:Because of general purpose machines and facilities variety of products can be produced.Operators will become more skilled and competent, as each job gives them learning opportunities.Full potential of operators can be utilised.Opportunity exists for creative methods and innovative ideas.Low risk of loss to the factory adopting this type of production. Due to flexibility, there is no chance of failure of factory due to reduction in demand. It can always get one or the other job orders to keep it going.Requires less money and is easy to start.Less or no management problem because of very small work force.DisadvantagesFollowing are the limitations of job shop production:Higher cost due to frequent set up changes.Higher level of inventory at all levels and hence higher inventory cost.Production planning is complicated.Larger space requirements.For handling different types of jobs, only workers with multiple skills are needed. This increases the labour cost.Low equipment utilization.As the raw materials are purchased in less quantity, the cost of material procurement is more.Batch production flows

Batch production is defined by American Production and Inventory Control Society (APICS) as a form of manufacturing in which the job passes through the functional departments in lots or batches and each lot may have a different routing. It is characterised by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales.

In batch production flows, the production schedule is decided according to specific orders or are based on the demand forecasts. A product is divided into different jobs. All jobs of one batch of production must be completed before starting the next batch of production. Continued..The batch production system is generally adopted in medium size enterprises. Batch production is a stage in between mass production and job-shop production. As in this system, two or more than two types of products are manufactured in lots or batches at regular interval, which justifies its name the batch production system.

Examples of batch production flows include, manufacturing of drugs and pharmaceuticals, medium and heavy machineries, etc.

The characteristics or features of batch production flows are as follows:The products are made and kept in stock until their demand arises in the market.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.There is a possibility of large work-in-progress due to many reasons.There is a need for detailedproduction planningand control.

Continued..A batch production turns into flow production when the rest period vanishes. In flow production, the processing of materials is continuous and progressive.Batch production is bigger in scale than job production, but smaller than that of mass production.Material handling may be automated by robots.A medium size lots (5 to 50) of same items is produced in this system. Lot may be produced once in a while or on regular interval generally to meet the continuous customer demands.Plant capacity generally is higher than demand.It is used when there is shorter production runs.Continued..This System is used when plant and machinery are flexible.It is used when plant and machinery set up is used for the production of item in a batch and change of set up is required for processing the next batch.This system is used when manufacturing lead time and cost are lower as compared to job order production.

AdvantagesFollowing are the advantages of batch production:Better utilisation of plant and machinery.Promotes functional specialisation.Cost per unit is lower as compared to job order production.Lower investment in plant and machinery.Flexibility to accommodate and process number of products.Job satisfaction exists for operators.It is flexible in the sense that it can go from one job to another with almost zero cost. It needs general purpose machine having high production rate.If demand for one product decreases then production rate for another product may be increased, thus the risk of loss is very less.Most suitable for computer-aided-manufacturing (CAM).

DisadvantagesFollowing are the limitations of batch production:Material handling is complex because of irregular and longer flows.Production planning and control is complex.Work in process inventory is higher compared to continuous production. Higher set up costs due to frequent changes in set up.As the raw materials to be purchased are in smaller quantity than in case of mass production, the benefits of discount due to large lot purchasing is not possible.It needs specially designed jigs and fixtures.

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.In this, the production activity continues for 24 hours or on three shifts a day basis. A steel plant, for example, belongs to this type. It is impossible to stop the production process on a short notice without causing a great damage to its blast furnace and related equipment. Other examples include bottling plant, soft drink industry, fertilizer plant, power plant, etc).

Following chart highlights the concept of a continuous production system.

Following are examples on the continuous production system.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.

The features of a continuous production system are depicted below

Thetypes of continuous production systemincludeProcess production flows.

Mass production flowsProcess Production FlowsProduction facilities are arranged as per the sequence of production operations from the first operations to the finished product. The items are made to flow through the sequence of operations through material handling devices such as conveyors, transfer devices, etc.In this type, the plant, its equipment, and layout have been chiefly designed to produce a particular type of product. Flexibility is limited to minor modifications in layout or design of models. Some famous examples are automobiles, engines, house-hold machinery, chemical plants, etc. If the management decides to switch over to a different type of product, it will result in extensive change in tooling, layout, and equipment.FeaturesProcess production, in general, has the following features:It is very highly automated (process automation), and highly capital intensive. Items move from one stage to another automatically in a continuous manner.It has a fixed or hard automation which means there is very less or no flexibility at all. Layout of the plant is such that it can be used for only one type of product. Each machine in the system is assigned a definite nature of work.To avoid problem of material handling, use of cranes, conveyors etc. are made.Work-in-process (WIP) inventory in this system is zero. Dedicated plant and equipment with zero flexibility. Material handling is fully automated. Process follows a predetermined sequence of operations. Component materials cannot be readily identified with final product. Planning and scheduling is a routine action.

AdvantagesFollowing are the advantages of process production:Standardisation of product and process sequence.Higher rate of production with reduced cycle time.Higher capacity utilisation due to line balancing.Manpower is not required for material handling as it is completely automatic.Unit cost is lower due to high volume of production.It gives better quality, large volume but less variety of products. Wastage is minimum. As the raw materials are purchased on a large scale, higher margin of profit can be made onpurchase. Only a few skilled, and many semi-skilled workers are required. This reduces the labor cost substantially.DisadvantagesFollowing are the limitations of process production:Flexibility to accommodate and process number of products does not exist.Very high investment for setting flow lines.Product differentiation is limited.During the period of less demand, heavy losses on invested capital may take place.Because all the machines are dedicated and special purpose type, the system is not changeable to other type of production.Most of the workers handle only a particular operation repetitively, which can make them feel monotonous.As this type of production is on the large scale, it cannot fulfill individual taste.

Mass Production SystemIn this type, a large number of identical items is produced, however, the equipment need not be designed to produce only this type of items. Both plant and equipment are flexible enough to deal with other products needing the same production processes. For example, a highly mechanized press shop that can be utilized to produce different types of components or products of steel metal without the need of major changes.Manufacture of discrete parts or assemblies using a continuous process are called mass production. This production system is justified by very large volume of production. The machines are arranged in a line or product layout. Product and process standardisation exists and all outputs follow the same path.CharacteristicsMass production is used under the following circumstances:1. Standardisation of product and process sequence.2. Dedicated special purpose machines having higher production capacities and output rates.3. Large volume of products.4. Shorter cycle time of production.5. Lower in process inventory.6. Perfectly balanced production lines.7. Flow of materials, components and parts is continuous and without any back tracking.8. Production planning and control is easy.9. Material handling can be completely automatic.LimitationsFollowing are the limitations of mass production:1. Breakdown of one machine will stop an entire production line.2. Line layout needs major change with the changes in the product design.3. High investment in production facilities.4. The cycle time is determined by the slowest operation.AdvantagesFollowing are the advantages of mass production:1. Higher rate of production with reduced cycle time.2. Higher capacity utilisation due to line balancing.3. Less skilled operators are required.4. Low process inventory.5. Manufacturing cost per unit is low.