Operations Management

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production managment- sanjaykanagala 1 OPERATIONS OPERATIONS MANAGEMENT MANAGEMENT

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Transcript of Operations Management

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OPERATIONS OPERATIONS MANAGEMENTMANAGEMENT

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INTRODUCTION

OM is the area concerned with the efficiency and effectiveness of the operation in support and development of the firm's strategic goals

OM include the design and operations of systems to provide goods and services

OM is the planning, scheduling, and control of the activities that transform inputs (raw materials and labor) into outputs (finished goods and services).

term operations management conjure up views of manufacturing environments, many of these concepts have been applied in service settings, with some of them actually developed specifically for service organizations.

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HISTORY

18th century, agriculture was the predominant industry in every country.

The advent of the steam engine and Eli Whitney's concept of standardized parts paved the way for the Industrial Revolution with its large manufacturing facilities powered by steam or water

The introduction of Taylor's method of scientific management and Henry Ford's moving assembly line brought the world into an age where management was predominantly centered around the production of goods.

late 1950s and early 1960s scholars moved from writing about industrial engineering and operations research into writing about production management

Production management had itself become a professional field as well as an academic discipline

services are such a pervasive part of our life that the term operations management is used almost exclusively.

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HISTORY - CONTRIBUTIONS

INDIVIDUAL EFFICIENCYF.w. Taylor studied the simple output to

time relationship for manual laborThis is precursor for “TIME-STUDY”Frank Gilbert, and his wife Lillian Gilbert

examined the motion of the limbs of the workers (legs,hands,eyes)

This formed precursor for “MOTION-STUDY”

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HISTORY - CONTRIBUTIONS

COLLECTIVE EFFICIENCYPrevious focus on controlling the work-

output of manual laborers or machineFocused on individual efficiencyIntroduced Gantt chart for schedulingIn 1930 inventory model for efficiency in

use of materials

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HISTORY - CONTRIBUTIONS

QUALITY Previous quantitative aspects, now it is in qualitative aspects Quality which is an important customer service objective came to

recognized for scientific analysis Included the effectiveness addition to efficiency In 1931, walter shewart came up with his theory regarding control

charts for quality/process control. These charts suggests a simple graphical methodology monitor characteristics of output and how to control it.

1935, H.F. Dodge And H.G Romig exercise control over quality by applying statically principles acceptance/rejection “acceptance sampling”

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HISTORY - CONTRIBUTIONS

EFFECTIVENESS AS A FUNCTION OF INTERNAL CLIMATE

Hawthorne experiment draws the effectiveness by increasing efficiency

Explained through angle of human psychology Till now ruled by taylors theory of evaluation of

task and thus the specialization in one task which found much use in Henry ford assembly line.

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HISTORY - CONTRIBUTIONS

Advent of operations research techniquesWorld war-ii a bog boost for scientific

techniquesAllied force work stasticians engineers

and other professionals.

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Operations management is also an academic field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing or service firm and their operations.

concepts derived from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions.

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WHAT DO OPERATIONS MANAGERS DO?

Strategic Level

(Long term)

Tactical level

(Medium term)

Operational level(Lower level)

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STRATEGIC LEVEL (LONG TERM),

Responsible for or associated with making decisions about product development (what shall we make?)

Process and layout decisions (how shall we make it?),

Site location (where will we make it?), And capacity (how much do we need?).

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TACTICAL LEVEL (INTERMEDIATE TERM),

hand in deciding employee levels (how many workers do we need and when do we need them?),

inventory levels (when should we have materials delivered and should we use a chase strategy or a level strategy?),

capacity (how many shifts do we need? Do we need to work overtime or subcontract some work?).

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OPERATIONAL LEVEL, (LOWER-LEVEL) (daily/weekly/monthly) planning and control.

Operations managers and their subordinates must make decisions regarding scheduling (what should we process and when should we process it?),

sequencing (in what order should we process the orders?),

loading (what order to we put on what machine?), and work assignments (to whom do we assign individual machines or processes?).

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REQUIREMENTS OF OPERATIONS MANAGER

operations manager must have knowledge of advanced operations technology and technical knowledge relevant to his/her industry,

interpersonal skills and knowledge of other functional areas within the firm.

Operations managers must also have the ability to communicate effectively, to motivate other people, manage projects, and work on multidisciplinary teams.

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SCOPE OF OPERATIONS MANAGEMENT

SUPPLY CHAINS —management of all aspects of

providing goods to a consumer from extraction of raw materials to end-of-life disposal.

OPERATIONS MANAGEMENT/MARKETING INTERFACE

—determining what customers' value prior to product development.

OPERATIONS MANAGEMENT/FINANCE INTERFACE

—Capital equipment and inventories comprise a sizable portion of many firms' assets.

SERVICE OPERATIONS—Coping with inherent service

characteristics such as simultaneous delivery/consumption, performance measurements, etc.

OPERATIONS STRATEGY—Consistent and aligned with

firm's other functional strategies.

PROCESS DESIGN AND IMPROVEMENTS

—Managing the innovation process.

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MANUFACTURING SYSTEM

INPUT OUT PUTCONVERSION PROCESS

CONTROL

DECISION MAKER

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TYPES OF MANUFACTURING SYSTEM

INTERMITTENT SYSTEMJob productionBatch productionCONTINUOUS SYSTEMMass productionProcess production

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INTERMITTENT SYSTEM

Most products are produced in small quantities Machines and equipment are laid out by

process Work loads are generally unbalance Highly skilled operators are required for

efficient use of machines and equipment In-process inventory is large Flexible to suit production varietiesExamples Machines shops, hospitals, general office

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JOB PRODUCTION

Entire project is taken as a single operation Work is to be completed on each product

before processing the next item Versatile and skilled labor is needed High capital investment Control operation are relatively simple High unit cost of productionExampleShip building, dam construction, bridge building

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Batch production

Unique product production Highly skilled employee Production planning is not based on sales forecast but

one hat to estimate or evaluate the requirements on the basis of general business conditions, past information and future sales promotion programme.

Once the orders are received, production scheduling operations begin.

EXAMPLEElectronic instruments, machine tools, printing press

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Problems with intermittent system

Demand can be discontinuous All operational stages may not be balanced Elaborate sequencing and scheduling is require. Needs high investment Planning, routing and scheduling changes with fresh

orders Storage is necessary at each stage of production

process Can adjust to new situations and specifications Inspection is not in line with production Items are manufactured according to orders

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CONTINUOUS SYSTEM

There must be continuity of demand Product must be standardized Material should be per specifications and delivered in

time All operational stages in the process must be balanced Work must conform to quality standards Appropriate plant and equipment must be provided Maintenance must be by anticipation and not by

default Inspection must in line with production

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MASS PRODUCTION

Produce large quantities and much emphasis is not given to consumers orders.

Production for stock not to orderSystem can produce only one type of

product at one time.

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PROCESS PRODUCTION

Analogous to mass production with more stress on automation in production process.

Volume of production is highProducts where demand is continuous

and high.EXAMPLEPetroleum products, brand of medicines

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Distinction between manufacturing system and service

Followed by tables

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POINT OF DISTINCTION

SERVICE GOODS

•Entity•Storage•Quality

•Producer

•Labor intensity

•life

IntangibleNot possibleVaries with time and personInseparable from serviceTends to be highshort

TangiblePossibleMore standardizedCan be separableLower

longer

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POINT OF DISTINCTION

SERVICES GOODS

•Production•Customer involment•Physical presence of the customer•Physical surrounding•Standardization•Facility location

SpontaneousHigh

Essential

Very importantOnly some routine serviceClose to customer

Time-spreadCan be low

May not be necessary

May not be soPossible all over

Near supply

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POINT OF DISTINCTIO

N

SERVICES GOODS

•Facility design

•Product design•Process design•Scheduling

•Production planning

Accommodate physical and psychological needsEnvironment plays a vital roleImmediate effect on customerAs per customer interestSmoothing results in losses

To enhance production

Only physical productCustomer not involvedCompletion dates

possible

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POINT OF DISTINCTION

SERVICES GOODS

•Inventory•Quality control

•Quality objective•Worker skill•Time standard•Capacity planning•Wage payment•Type of technology

PersonnelVaried quality standardsZero defectionInteractionLooseFluctuating

Time-basedGenerally soft

Raw materialFixed

Zero defectTechnicalTightAverage

Unit-basedGenerally hard

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Role of production and operation manager

Produce the products and services in the quantities needed, available when needed and at a controlled cost and quality.

The deal with forecasting and scheduling systems and a variety of controls to ensure that the systems are continuing to function properly

Decisions seem to seek balance Must try to see relationships and integrate the

results.

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Functions and responsibilities

Product selection and design

Process selection and planning

Facilities location Capacity planning Production planning Productions controls Quality control Method analysis Proper inventory controls

Plant layout and material handling

Work measurement Maintenance and

replacement Cost reduction and cost

control Other functions Engineering economics,

stores and warehouse mgt., Maximizing labor efficiency, Price analysis - wage,

incentives to workers Standardization and storage

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PRODUCTIONPRODUCTION PLANNING & CONTROL PLANNING & CONTROL

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PRODUCTION PLANNING CONTROL

Organization and planning of the manufacturing process.

Co-ordinates supply and movement of materials and labor

Ensures economic and balanced utilization of machines and equipment

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STAGES OF PRODUCTION PLANNING

Factory planning Building, machines &

equipments, Plant layout &

location Process planning

Input processing output

operation planning Selection of work

centre Designing of tools

required

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SCHEDULINGROUTING LOADING

PRESCRIBE THE SEQUENCE OF OPERATIONS REQUIRED TO

TRANSFORM INPUTSINTO DESIRED

OUTPUT

WHEN AND WHEREEACH OPERATION

OF THE PRODUCTIONPROCESS IS TO BE

PERFORMED

STUDIES RELATION SHIP

BETWEEN LOAD &

CAPACITY OF WORK CENTERSIN THE SYSTEM

PRODUCTION PLANNING CATEGORIES

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GANTT CHART

It is one of the techniques in schedulingRepresented in the form of chartsCharts portrays planned production and

actual performance over a period It is a regulatory chart divided by parallel

horizontal and vertical lines

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Types of Gantt chart

MACHINE RECORD CHARTS (available machines and the time at

which various jobs are planned)

ORDER CHARTS (start and completion of work)

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GANTT CHART FORMATlabour time Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

A 2 mo.                    

B 2 mo.                    

C 2 mo.                    

D 2 mo.                    

E 2 mo.                    

F 2 mo.                    

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Gant chart cont…

The horizontal axis of the Gantt chart is a time scale, expressed either in absolute time or in relative time referenced to the beginning of the project.

The time resolution depends on the project - the time unit typically is in weeks or months.

Rows of bars in the chart show the beginning and ending dates of the individual tasks in the project.

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MAINTENANCE MANAGEMENT

An activity to keep equipment, or other assets that a manufacturing firm possess, in working condition.

OBJECTIVES To minimize long-run maintenance costs To minimize the instance of breakdown of

machines and facilities To provide a safe working environment To provide reliable conditions for equipment

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MAINTENANCE ADMINISTRATION

Work must be scheduledInventories of spare parts maintainedPrescribed quality standards metLabor standards establishedIn case of breakdowns or shutdowns of

plants, sometimes, outside contract maintenance work is resorted.

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CLASSIFICATION OF MAINTENANCE FUNCTIONS

The availability of plant can be defined as

A = availability of a plant Tup = the cumulative time of operation in the nominal working stateTdown = the cumulative down time.

(to improve the value of (A) one has to minimize the down time)

A = Tup / TUP + Tdown

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Types of maintenance policies

PREVENTIVE MAINTENANCE

CORRECTIVE MAINTENANCE

DESIGN-OUT MAINTENCE

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PREVENTIVE MAINTENANCE

Which is carried out at predetermined intervals and is intended to reduce the likelihood of an equipment’s condition falling below a required level of acceptability.

It can be time based / condition – based

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PREVENTIVE MAINTENANCE

TIME BASED IS EFFECTIVE The failure of any item of

an equipment is time-dependent.

Item is expected to wear out within the life of the equipment

The total costs of replacement of the item are substantially lesser than those of failure replacement repair.

CONDITION BASED IS EFFECTIVE

In response to a significant deterioration in a unit as indicated by a change in monitored parameter of the unit condition or performance.

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Advantages

Reduction of the total down-time and consequent reduction in production losses

Reduction n the number of major repairs, and consequently reduced maintenance expenses.

Reduction in the number of rejects and an improvement in product quality.

Reduction in the inventory of spare parts. Reduction in the number of accidents in the

plant. Reduction in the unplanned or crisis

management in maintenance.

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Advantages cont…..

Scheduled down-time of production.Replacement parts and supplies.Instruments i.e., in the case of condition

monitoring.Wages of preventive maintenance

technicians and staff.Minor costs such as those of record-

keeping.

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CORRECTIVE MAINTENANCE

Also know as breakdown maintenance which is carried out when equipment fails, or falls below an acceptable condition, while in operation.

Repair time depends upon the type of complexity of the equipment, management methods and engineering techniques and above all the skill of the crafts people.

Difficult to forecast the level and nature of corrective maintenance load.

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DESIGN-OUT MAINTENCE

Aims at minimizing the effect of failure and at eliminating the cause of maintenance.

Requires engineering action rather than maintenance action.

Tries to pin point the mistakes of the design of the equipment.

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MAINTENANCE COSTS

Maintenance is considered as the operation of pool of resources men, spares, equipment) directed towards controlling the plant availability.

UNAVAILABILITY COSTS Loss of in-service material Production loss while in repair Waiting for repair. Undergoing preventive maintenanceRESOURCE COSTS Corrective maintenance labor Preventive maintenance labor Maintenance equipment tools Spares usage and holding costs

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MAINTENANCE PLAN

Classification and identification of equipment

Collection of information like failure characteristics of equipment, repair characteristics, consequences of failure, safety regulations

Organization of maintenance resource like administrative structure, working planning system

SELECTION OF POLICY FIXED-TIME REPAIR POLICY (low cost equipment) CONDITION-BASED POLICY (complex, high cost equipment) DESIGN-OUT

MAINTENANCE (all high cost maintenance items) CORRECTIVE

MAINTENANCE POLICY (no preventive actions are

effective.)

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MAINTENANCE CONTROL

3 AREAS OF CONTROL Work control(men,spares,equipment, work load) Plant condition control(diagnose basic causes) Maintenance cost control

Identification of the high –cost areas of plant. Monitoring the trend of maintenance effectiveness (

failures in labor utilization, machines)

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MEASURING MAINTENANCE PERFORMANCE

Define the operational goals Establish priorities for the improvement

of maintenance techniques.Raise the morale of the maintenance

department, which in our country, is being traditionally treated as a subsidiary department.

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Management models in maintenance

Work studyOperational research techniquesLogical fault finding

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WORK STUDY

Select the jobDefine the objectiveRecord all the relevant factsExamine critically all the activities

(why,how,what,where,when,who.)Develop the best methodInstall the improved method and

maintain it.

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Operations research techniques

EXPECTED VALUE THEORY SIMULATION MODELS(The above theories widely applied for estimating

break down costs and selecting appropriate maintenance policies.)

WAITING LINE THEORY (establishing repair crew size, the number of facilities)

RELIABILITY THEORY (failure rates of equipment and components)

REPLACEMENT THEORY (determine replacement strategies for equipment)

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LOGICAL FAULT FINDING

Location of detection time as well as ratification time.

6 stage procedure generally followed Analysis of the symptoms of the fault Inspection of equipment Faulty stage location Removal of fault Repair and replacement Performance testing information

documentation.

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INDUSTRIAL SAFTY

The application of human biological science in conjunction with engineering science to the worker and working environment, so as to obtain maximum satisfaction for the worker which at the same time enhances productivity

--- ILO

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SECURITY MEASURES

The quantity of equipment and machines to be installed inside the factory buildings

The risk of installing the equipment and machines in an open space

The extent of costly plant and equipment involved which require special security

The extent security required from the point of view of insurance and other statutory regulations

The organization for the security department and the deployment of people in strategic positions

The rotation of security personnel at different positions Provision of necessary equipment to security staff for protection

and communication. Definition of clear-cut measures for security at different points in

the factory Periodic review of security measures

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Causes of accidents

MECHANICAL FACTORSInadequately guardedUnguardedUnsafe design or constructionHazardously arranged (overloading)

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ENVIRONMENTAL FACTORS

Illumination Ventilation Temperature Noise Fumes and dust Speed of work Hours of work Spread-over of the work period Work load

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HUMAN-MECHANICAL factors

INDIVIDUAL FACTORS

Age Marriage Schooling Health Length of service Work performance

PSYCHOLOGICAL FACTORS

Attitude towards the job

Interest and difficulties

Machine habits Attention or lack of it fatigue

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PERSONALITY FACTORS Intellectual level Emotional maturity Adjustment Anxiety level

SOCIOLOGICAL FACTORS Size of the employee’s

family Number of dependents Financial position Social status Interpersonal

relationships Home environment

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Thanq