Production and Operations

Management
04BB0401

Module 1
Introduction to Production &
Operations Management

Faculty of Management Studies Dr. Gaurav Kumar Badhotiya

gauravkumar.badhotiya@marwadieducation.edu.in
 Content

• What is Production ?
• What is Production Management ?
• Objectives of Production Management.
• What is Operations Management ?
• Objectives of Operations Management.
• Productions V/S Operations.
• Scope of Production & Operations Management
• What is Production system/Process ?
• Types of Production Process
Introduction

• The combination of goods and services are known as product.

Goods Services

Car, Bus, computer medical facilities and clinical tests

Introduction

• FUNCTIONAL SUBSYSTEMS OF ORGANIZATIONS

Definition

• Production/Operations management is the process which combines and

transforms various resources used in the Production/Operations
subsystem of the organization into value added products/services in a
controlled manner as per the policies of the organization.
Production/Operations function

• Production/Operations function, therefore, is that part of an organization

which is concerned with the transformation of a range of inputs into the
required outputs (products/services) having the requisite quality level.
Contd.

• 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.

• the concept of manufacturing products/providing services is called as

production/operations management.
Production

• Production is the process by which raw materials and other inputs are
converted into finished products.

• production is a value addition process..

SYSTEMS CONCEPT OF PRODUCTION
Example
Types of Production

• Production by separation – oil industry

• Production by modification or improvement – heat

treatment

• Production by assembly - automotive

Transformation process in P&OM

• Physical, - Changes in physical characteristics of materials or customers

• Locational – Changes in location of material or customer

• Exchange – Changes in ownership of material or customer

• Physiological, changes in the physiological state of customers

• Psychological, changes in the psychological state of customers

• Informational - Changes in the purpose or form of information

Activity

Write down example products for different type of transformations.

Physical, in manufacturing operations e.g. automobile

Locational, in transportation or warehouse operations; taxi services

Exchange, in retail operations;

Physiological, in health care;

Psychological, in entertainment; or

Informational, in communication, customer’s account

Production Management

• E.S. Buffa defines production management as, “Production

management deals with decision making related to production
processes so that the resulting goods or services are produced
according to specifications, in the amount and by the schedule
demanded and out of minimum cost.”
Objectives of Production Management

• Right Quality

• Right Quantity

• Right Time

• Right Manufacturing Cost

Operations Management

• Operations management is concerned with the design, management, and

improvement of the systems that create the organization‟s goods or services.

• Operations: all the activities required to create and deliver an organization‟s

goods or services to its customers.
Objectives of Operations Management

Customers service

• To provide adequate levels of customer service by providing goods or services

with the right specification, at the right cost and at the right time.

Resources utilization

• To achieve adequate levels of resource utilization (or productivity).

Manufacturing V/S Service

Comparison based on

1. Tangible/Intangible nature of output

2. Consumption of output

3. Nature of work (job)

4. Degree of customer contact

5. Customer participation in conversion

6. Measurement of performance
Manufacturing V/S Service

• Manufacturing is characterized by tangible outputs (products),

• outputs that customers consume overtime,

• jobs that use less labour and more equipment,

• little customer contact,

• no customer participation in the conversion process (in production), and

• sophisticated methods for measuring production activities and resource

consumption as product are made.
Manufacturing V/S Service

• Service is characterized by intangible outputs,

• outputs that customers consumes immediately,

• jobs that use more labor and less equipment,

• direct consumer contact,

• frequent customer participation in the conversion process, and

• elementary methods for measuring conversion activities and resource

consumption.

Some services are equipment based namely rail-road services, telephone

services and some are people based namely tax consultant services, hair styling.
Manufacturing V/S Service

S.no. Comparison basis Manufacturing Service

1 Nature of output tangible outputs intangible outputs

2 Consumption of output consume overtime consumes immediately

3 Nature of work (job) less labour and more more labor and less
equipment equipment
4 Degree of customer little customer contact direct consumer contact
contact
5 Customer participation in no customer participation frequent customer
conversion participation

6 Measurement of sophisticated methods for elementary methods for

performance measuring measuring
Scope of Production & Operations Management

• Production and operations management concern with the conversion of inputs

into outputs, using physical resources, so as to provide the desired utilities to
the customer while meeting the other organizational objectives of
effectiveness, and efficiency.

• It distinguishes itself from other functions such as personnel, marketing,

finance, etc., by its primary concern for „conversion by using physical
resources.‟
Scope of Production & Operations Management

• P&OM covers following activities

 Location of facilities LF

 Plant layouts and material handling PL

 Product design PrD

 Process design Pcd

 Production and planning control PPC

 Quality control QC

 Materials management MrM

MnM
 Maintenance management
1. Location of Facilities

LF

• Location of facilities for operations is a long-term capacity decision which

involves a long term commitment about the geographically static factors that
affect a business organization.

• It is an important strategic level decision-making for an organization.

• It deals with the questions such as „where our main operations should be
based?‟
2. Plant Layout and Material Handling

LF

• Plant layout refers to the physical arrangement of facilities. PL

• It is the configuration of departments, work centres and equipment in the

conversion process.

• The overall objective of the plant layout is to design a physical arrangement

that meets the required output quality and quantity most economically.
3. Product Design
LF

PL
• Product design deals with conversion of ideas into reality.
PrD
• Every business organization have to design, develop and introduce new
products as a survival and growth strategy.

• Developing the new products and launching them in the market is the biggest
challenge faced by the organizations.

• The entire process of need identification to physical manufactures of product

involves three functions: marketing, product development, manufacturing.
4. Process Design

• Process design is a macroscopic decision- LF

making of an overall process route for converting

PL
the raw material into finished goods.
PrD
• These decisions encompass the selection of a
process, choice of technology, process flow Pcd

analysis and layout of the facilities.

5. Production Planning and Control

Production planning and control can be defined as the

LF
process of
PL
• Planning the production in advance,

• Setting the exact route of each item, PrD

• Fixing the starting and finishing dates for each item, Pcd

• To give production orders to shops and PPC

• To follow up the progress of products according to

orders.
6. Quality Control

• Quality Control (QC) may be defined as „a system LF

that is used to maintain a desired level of quality in a

PL
product or service‟.
PrD
• It is a systematic control of various factors that affect
Pcd
the quality of the product.

• Quality control aims at prevention of defects at the PPC

source, relies on effective feed back system and QC

corrective action procedure.

7. Materials Management

• Materials management is that aspect of LF

management function which is primarily PL

concerned with the acquisition, control and PrD

use of materials needed and flow of goods
Pcd
and services connected with the
PPC
production process having some
QC
predetermined objectives.
MrM
7. Maintenance Management

• In modern industry, equipment and machinery LF

are a very important part of the total productive PL

effort. Therefore, their idleness or downtime PrD

becomes are very expensive. Hence, it is very Pcd

important that the plant machinery should be PPC

properly maintained. QC

MrM
• Preventive and corrective maintenance
MnM
Production System

• The 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.
Production System
Types of Production System

• Job Shop Production

• Batch Production

• Mass Production

• Continuous Production
Types of Production System
Job Shop Production

• Job shop production are characterized by manufacturing of one or few

quantity of products designed and produced as per the specification of
customers within prefixed time and cost.

• The distinguishing feature of this is low volume and high variety of products.

• A job shop comprises of general purpose machines arranged into different

departments. Each job demands unique technological requirements, demands
processing on machines in a certain sequence.
Job Shop Production

• Examples

• Aircraft,

• Custom cars,

• Custom clothing,

• Construction equipment

• Special purpose machines.

Characteristics of Job Shop Production

• High variety of products and low volume.

• Use of general purpose machines and facilities.

• Highly skilled operators who can take up each job as a challenge because of
uniqueness.

• 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.
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 utilized.

• Opportunity exists for creative methods and innovative ideas.

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.

Batch Production

• 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 characterized by the manufacture of limited number of products produced

at regular intervals and stocked awaiting sales.
Batch Production

• printers,

• bakeries,

• machine shops,

• and furniture making

Characteristics of Batch Production

• When there is shorter production runs.

• When plant and machinery are flexible.

• 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.

• When manufacturing lead time and cost are lower as compared to job order
production.
Advantages of Batch Production

• Better utilization of plant and machinery.

• Promotes functional specialization.

• 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.

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.

Mass Production

• 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 standardization exists and all outputs follow the same
path.
Example of Mass Production

• automobiles,

• televisions,

• personal computers,

• fast food,

• and most consumer goods

Characteristics of Mass Production

• Standardization of product and process sequence.

• Dedicated special purpose machines having higher production capacities and
output rates.
• Large volume of products.
• Shorter cycle time of production.
• Lower in process inventory.
• Perfectly balanced production lines.
• Flow of materials, components and parts is continuous and without any back
tracking.
• Production planning and control is easy.
• Material handling can be completely automatic.
Advantages of Mass Production

• Higher rate of production with reduced cycle time.

• Higher capacity utilization due to line balancing.

• Less skilled operators are required.

• Low process inventory.

• Manufacturing cost per unit is low.

Limitations of Mass Production

• Breakdown of one machine will stop an entire production line.

• Line layout needs major change with the changes in the product design.

• High investment in production facilities.

• The cycle time is determined by the slowest operation.

Continuous Production

• Production 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.
Continuous Production

• Refined oil,

• treated water,

• paints,

• chemicals,

• and foodstuffs
Characteristics of Continuous Production

• 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.

Advantages of Continuous Production

• Standardization of product and process sequence.

• Higher rate of production with reduced cycle time.

• Higher capacity utilization due to line balancing.

• Manpower is not required for material handling as it is completely automatic.

• Person with limited skills can be used on the production line.

• Unit cost is lower due to high volume of production.

Limitations of Continuous Production

• Flexibility to accommodate and process number of products does not exist.

• Very high investment for setting flow lines.

• Product differentiation is limited.