Production and Operations Management

Prepared By,Mr. Nishant AgrawalProduction and Operations ManagementChapter 1

Session OutlineProduct Vs ServiceConcept of ProductionScope of POMTransformation ProcessProduct Design & Product ProcessHistory of POMIssues in POM

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.Concept of Production

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.4

Operations ManagementOperations managementis an area ofmanagementconcerned with designing, and controlling the process ofproductionand redesigningbusiness operationsin the production ofgoodsorservices.

Scope of POM POM 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. 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 management

Operations as a

Transformation Process

INPUT

Material

Machines

Labor

Management

Capital

TRANSFORMATIONPROCESS

OUTPUT

Goods

Services

Feedback

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Quality of inputs monitoredQuality of outputs monitoredRandom Disturbance

Transformation ProcessFor getting desired output , quality of inputs has to be monitored.The quality of actual output obtained also has continually compared with the desired output. Feedback mechanisms are required to monitor the performance of the transformation process. Random disturbance are unexpected and sometimes not planned for. They are mostly due to external environment.

Transformation Process of Service Industry (MBA Institute)

Transformation Process of Manufacturing Company

Transformation Process of Restaurant

Historical Summary of Operational ManagementDateContributionContributor1776Specialization of labour in manufacturingAdam Smith1799Interchangeable parts, cost accountingEli Whitney and others1832Division of labour by skill; assignment of jobs by skill; basics of time studyCharles Babbage1900Scientific management time study and work study developed; dividing planning and doing of workFrederick W. Taylor1900Motion of study of jobsFrank B. Gilbreth1901Scheduling techniques for employees, machines jobs in manufacturingHenry L. Gantt1915Economic lot sizes for inventory controlF. W. Harris

DateContributionContributor1927Human relations; the Hawthorne studiesElton Mayo1931Statistical inference applied to product quality: quality control charts W. A. Shewart1935Statistical sampling applied to quality control: inspection sampling plansH. F. Dodge andH. G. Roming1940Operations research applications in World War IIP. M. Blacker andOthers.1946Digital ComputerJohn Mauchlly andJ. P. Eckert1947Linear ProgrammingG. B. Dantzig, William & others.1950Mathematical programming, on-linear and stochastic processesA. Charnes, W. W. Cooper & others1951Commercial digital computer: large-scale computations available.Sperry Univac

DateContributionContributor1960Organizational behaviour: continued study of people at workL. Cummings, L. Porter1970Integrating operations into overall strategy and policy, Computer applications to manufacturing, Scheduling and control, Material requirement planning (MRP)W. Skinner J. Orlicky and G. Wright1980Quality and productivity applications from Japan: robotics, CAD-CAMW. E. Deming andJ. Juran

Steps in the production process from point of view of Entrepreneur

Product Design

Reverse EngineeringIt is process of carefully dismantling an existing product step by step in order to understand the unique concept. It helps in designing new products, which are better than competitors. Manufacturability It implies designing a product in such a way that its manufacturing can be done easily. While designing a new product, the manufacturing capabilities of the organization have to be kept in mind. StandardizationIt refer less variety in design of product. It has benefit such as lower resulted cost due to use of existing parts and easy availability of components for replacement.

Robust DesignIt means designing a product that is operational in varying environmental conditions. Ex. Compare Car with Jeep Concurrent EngineeringIt is product design approach in which design team includes personnel from the marketing department , engineering , production, material, finance etc. It saves a lot of time and effort. Computer aided design (CAD)It is software which helps the designer to make 3 D design of product on computer.

Product Design / Process

Production 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 Systems

Continuous ProcessAs name suggest it is continues in nature. Set up time : Long (Once it started they continue for a long duration)Product produced by such process are highly standardized with almost no variety and measure on continues basis. Ex. Urea chemical plant, steel , plastic, sugar, textile etc.Semi-continuous Process These are assembly process, which are repetitive in nature. Produce High volume of output with little variety. Ex. Automobile , electronics etc. Required highly specialized machine, semi skilled workers and result in low cost per unit.

Intermittent Process It stop at regular intervals of time because product requires processing on variety of machines. Product produced different variety of machines , thus production process slow in comparison to others process.

Batch ProcessAs 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.Ex. In a bakery, a batch of salted biscuits may be made in oven, followed by batch of chocolate, followed by a batch of bread and so on. Equipment used is the same in all the cases with the same processing steps but cleaning and adjustments of the equipment may be required after each production run. Job ShopIt can handle larger variety of products with low volume that the batch process.Process may be so difficult from each other. Highly skilled operators who can take up each job as a challenge because of uniqueness.Large inventory of materials, tools, parts.

Following are the advantages of job shop production:1. Because of general purpose machines and facilities variety of products can be produced.2. Operators will become more skilled and competent, as each job gives them learning opportunities.3. Full potential of operators can be utilised.4. Opportunity exists for creative methods and innovative ideas.

Following are the limitations of job shop production:1. Higher cost due to frequent set up changes.2. Higher level of inventory at all levels and hence higher inventory cost.3. Production planning is complicated.4. Larger space requirements.

Following are the advantages of batch production:1. Better utilisation of plant and machinery.2. Promotes functional specialisation.3. Cost per unit is lower as compared to job order production.4. Lower investment in plant and machinery.5. Flexibility to accommodate and process number of products.6. Job satisfaction exists for operators.

Following are the limitations of batch production:1. Material handling is complex because of irregular and longer flows.2. Production planning and control is complex.3.Work in process inventory is higher compared to continuous production.4. Higher set up costs due to frequent changes in set up.Following are the advantages of mass production:1. Higher rate of production with reduced cycle time.2. Higher capacity utilisation due to line balancing.3. Low process inventory.Following 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. The cycle time is determined by the slowest operation.

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Mass ProductionThis production system is justified by very large volume of production. The machines are arranged in a line or product layout. Less skilled operators are required. Manufacturing cost per unit is low and High investment in production facilities.

Mass 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.

Continuous production is used under the following circumstances:1. Dedicated plant and equipment with zero flexibility.2. Material handling is fully automated.3. Process follows a predetermined sequence of operations.4. Component materials cannot be readily identified with final product.5. Planning and scheduling is a routine action.

Following are the advantages of continuous production:1. Standardisation of product and process sequence.2. Higher rate of production with reduced cycle time.3. Higher capacity utilisation due to line balancing.4. Manpower is not required for material handling as it is completely automatic.5. Person with limited skills can be used on the production line.6. Unit cost is lower due to high volume of production.Following are the limitations of continuous production:1. Flexibility to accommodate and process number of products does not exist.2. Very high investment for setting flow lines.3. Product differentiation is limited.

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Duties and Responsibility in Manufacturing OrganizationsLocation of facilitiesPlant layouts and material handlingProduct designProcess designProduction and planning controlQuality controlMaterials managementHealth and SafetySupply Chain ManagementBudgeting and CapitalStaff selection and training

Major issues in Operations ManagementCompeting PracticesSustainabilityManaging customer touch pointsOptimizing global supplier & distribution networksIncreased co-production of goods and servicesSocial Responsibility

Assignments1) Operations management is a transformation process. Support this statement with examples if you agree with it.ORWhat is Transformation Process: Explain the transformation ProcessORDefine operations management. Describe input-transformation output relationship in an automobile factory, a restaurant, hospital, and a College2) What do you understand by the term operations Management?ORDefine production & operations management and explain functions/Activities of operations managementORWhat are the major issues in OM that faced in India?

3) Explain the types of manufacturing process in brief.ORExplain batch production and mass production along with its advantages and disadvantages.ORDiscuss the types of processes. What are the merits and demerits of each? Give an example of each.ORSuggest suitable method of production for below categories and whyAutomobile & Computers

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