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Prof. Arun Mishraarunjimishra@gmail.com

9893686820

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Introduction to Production and OperationsManagement

Transformation Process

Evolution of Operations Management History of Operations Management

Trends in Operations Management

Productivity Management

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Production/operations management is theprocess,

which combines and transforms variousresources

used in the production/operations subsystemof the organization into

value added product/services in a

controlled manner as per the policies of theorganization.

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INPUT

Material

Machines

Labor

ManagementCapital

TRANSFORMATION

PROCESS

OUTPUT

Goods

Services

Feedback

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Physical: as in manufacturing operations Locational: as in transportation

operations

Exchange: as in retail operations Physiological: as in health care

Psychological: as in entertainment

Informational: as in communication

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10+2 or

Graduate

s

Teachers,

Books, Class

Rooms

Imparting

Knowledge

Educated

Individuals

SOME OF INPUT-TRANSFORMATION OUTPUT

RELATIONSHIPS

System Primary

Inputs

Resources Transformation

Function

Desired

Output

Hospital

Automobile

Factory

College or

University

Patients Doctors,

Nurses,

Medicines,

etc.

Healthcare

(Physiological)

Healthy

Individuals

Sheet

Metal,

Engine

Parts

Tools,

Workers,

Equipments

Fabrication and

Assembly of

Cars

High

Quality of

Cars

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Operations Marketing Finance and

accounting Human

resources Outside

suppliers

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Craft production process of handcrafting products or services for

individual customers

Division of labor dividing a job into a series of small tasks each

performed by a different worker

Interchangeable parts standardization of parts initially as replacement

parts; enabled mass production

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Scientific management systematic analysis of work methods

Mass production high-volume production of a

standardized product for a mass market

Lean production adaptation of mass production that

prizes quality and flexibility

Evolution of Operations Management(conti)

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Era Events/Concepts Dates Originator

Industrial

Revolution

Steam engine 1769 James Watt

Division of labor 1776 Adam Smith

Interchangeable parts 1790 Eli Whitney

ScientificManagement

Principles of scientific

management1911 Frederick W. Taylor

Time and motion studies 1911Frank and LillianGilbreth

Activity scheduling chart 1912 Henry GanttMoving assembly line 1913 Henry Ford

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Era Events/Concepts Dates Originator

HumanRelations

Hawthorne studies 1930 Elton Mayo

Motivation theories

1940s Abraham Maslow

1950s Frederick Herzberg

1960s Douglas McGregor

Operations

Research

Linear programming 1947 George Dantzig

Digital computer 1951 Remington Rand

Simulation, waiting

line theory, decision

theory, PERT/CPM

1950sOperations researchgroups

MRP, EDI, EFT, CIM1960s,1970s

Joseph Orlicky, IBM

and others

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Era Events/ConceptsDates Originator

Quality

Revolution

JIT (just-in-time) 1970s Taiichi Ohno (Toyota)

TQM (total quality

management) 1980sW. Edwards Deming,

Joseph JuranStrategy and

operations1990s

Wickham Skinner,

Robert HayesBusiness process

reengineering

1990sMichael Hammer,

James Champy

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Era Events/Concepts Dates OriginatorGlobalization WTO, European Union,

and other tradeagreements

1990s

2000s

Numerous countries

and companies

InternetRevolution

Internet, WWW, ERP,supply chainmanagement

1990s ARPANET, TimBerners-Lee SAP,

i2 Technologies,

ORACLE,

PeopleSoftE-commerce 2000s Amazon, Yahoo,

eBay, and others

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Past Causes Future

Local or

nat ional

focus

Reliable wo rldw ide

commun icat ion and

transpo r tat ion n etwo rks

Global focus ,

mov ing

product ion

of fshore

Batch (large)

sh ipments

Shor t produ ct l i fe cycles

and cos t of capi tal put

pressure on reduc ing

inventory

Just- in- t ime

per formance

Low-bid

purchasing

Supply chain compet it ion

requires that su ppl iers be

engaged in a focus o n the

end customer

Supply ch ain

partners,

co l laborat ion,

al l iances,

outsourc ing

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Past Causes Future

Lengthy

produc t

development

Shorter l i fe cycles,

Internet, rapid internat ional

commun icat ion , computer -

aided design , and

internat ional col laborat ion

Rapid produc t

development ,

al l iances,

col laborat ive

designs

Standardized

products

Af f luence and wor ldw ide

markets; inc reasing ly

f lex ib le produ ct ion

processes

Mass

customizat ion

with added

emphasis on

qual i ty

Job

special izat ion

Changing socioc ul ture

mi l ieu; increasingly aknowledge and informat ion

society

Empowered

employees,teams , and lean

product ion

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Past Causes Future

Low-cost

focus

Enviro nm ental issu es, ISO

14000, increasing dis po sal

costs

Environmenta l ly

sensi t ive

produ ct ion, green

manufactur ing,

recycled

mater ials,

remanufactur ing

Ethics not

at forefron t

Bus inesses o perate more

openly; publ ic and glob al

review of eth ics; opp osi t ion

to chi ld labor, br ibery,

pol lu t ion

High ethical

standards and

socia l

responsib i l i ty

expected

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Global focus Just-in-time performance Supply chain partnering Rapid product development

Mass customization Empowered employees Environmentally sensitive production Ethics

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Efficiency through which input is

converted in output is called productivity Productivity output/input Other way to look at productivity is by

the wastage produced Waste can be unnecessary input,defective output, idling of resources

Reduction in scrap by 1% can increase in

productivity by 10%

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Productivity is the ratio of outputs (goods andservices) divided by the inputs (resources such

as labour and capital)

The objective is to improve productivity!

Important Note!Production is a measure of output onlyand not a measure of efficiency

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Measures of Productivity

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Productivity =Units produced

Labour-hours used

= = 4 units/labor-hour

1,000

250

Labour Productivity

One resource input single-factor productivity

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Output

Labor + Material + Energy +Capital + Miscellaneous

Productivity =

Also known as total factor productivity

Output and inputs are often expressed indollars

Multiple resource inputs multi-factor productivity

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Qualitymay change while the quantityof inputs and outputs remains

constantExternal elements may cause an

increase or decrease in productivity

Precise units of measure may belacking

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Become efficient

output increases with little or no increase in input Expand

both output and input grow with output growingmore rapidly

Achieve breakthroughs output increases while input decreases

Downsize output remains the same and input is reduced

Retrench

both output and input decrease, with inputdecreasing at a faster rate

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A company produces 160 kg of plasticmoulded parts of acceptable quality byconsuming 200 kg of raw materials for aparticular period.

For the next period, the output is doubled(320 kg) by consuming 420 kg of rawmaterial and for a third period, the output isincreased to 400 kg by consuming 400 kg ofraw materal.

Calculate and compare the productivity for allthe 3 periods.

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During the first year, production is 160 kgProductivity = Output/Input = 160/200

= 0.8 or 80%For the second year, production is increased by100%Productivity =Output/Input =320/420

= 0.76 or 76% For the third period, production is increased by150%Productivity =Output/Input =400/400

= 1.0, i.e., 100%

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From the above illustration it is clearthat:

For second period, though production has

doubled, productivity has decreased from80% to 76%

For period third, production is increasedby 150% and correspondingly productivityincreased from 80% to 100%.

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The following information regarding the output

produced and inputs consumed for a particulartime period for a particular company is givenbelow:

Output Rs. 10,000 Human input Rs. 3,000 Material input Rs. 2,000 Capital input Rs. 3,000 Energy input Rs. 1,000 Other misc. input Rs. 500

The values are in terms of base year rupee value.

Compute various productivity indices.

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Labour productivity = Output/Human input= 10,000/3,000 = 3.33

Capital productivity =Output/Capital input=10,000/3,000 = 3.33

Material productivity =Output/Material input=10,000/2,000 = 5.00

Energy productivity =Output/Energy input=10,000/1,000 = 10.00

Other misc. exp. =Output/Other misc. input=10,000/500= 20.00

Total productivity = Total output/Total input

= Total output(Human + Material + Capital + Energy + Other misc. input)

= 10,000/(3,000 + 2,000 + 3,000 +1,000 +500)= 10,000/9,500 = 1.053

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