Production and Operations Management

In the name of Allah Almightythe most Mercifuland the most BeneficentOPERATIONS AND PRODUCTION MANAGEMENT

SPRING Semester 2015MBA IV CEvery Wednesday 1730-2030 hrsVenue nc-4

Credit Hours: 3Contact Hours: 48

InstructorCaptain Munawwar Ahmad PN Visiting facultyE-Mail:munawwar1965@gmail.comContact number:0301-5299895Department of Management Sciences Bahria University Islamabad1

This course develops the major themes and strategies of Operations and Production Management within both manufacturing and service organizations. The primary objective is to familiarize students with basic concepts, techniques, methods and applications of operations management. Topics include operations strategy, process choice, capacity management, quality management, inventory management, supply chain management, and new product & process development. Some of the latest manufacturing philosophies, such as World Class Manufacturing (WCM), lean manufacturing, mass customization and agile manufacturing will also be discussed.

Course Description

2Role of Operations Management in forecasting and design of goods & services.Explain how to plan capacity, design processes and decide about the location of production activities and layout of your warehouse & storage.Concept of a manufactured product or service product in the context of delivery system design.Principal issues that concern the operations manager, e.g. capacity management.Importance of winning competitive advantage through Operations Management.

Course Objectives3Learning OutcomesA broad understanding of the role of OPM within organizations and an understanding of some of the operational concepts, techniques and methods which affect the provision of a service or the manufacture of a product.Learn the value of addressing management problems in a structured manner.A combination of interpretative and analytical skills that can be applied in a variety of operations.Identify different supply chain strategies and issues & opportunities in supply chain.Inventory models and techniques of material requirement planning and enterprise resource planningScheduling techniques and quality management tools & techniques 4Teaching ApproachesA variety of teaching approaches will be utilized including lectures, case studies, presentations, self readings, quizzes and assignments. The method employed for the course is substantially interactive. Lecture will be delivered using power point presentations and discussions.Students will be required to do essential readings for each lecture before hand, which will be intimated for each week in the class.

5Recommended BooksOperations Management Slack, N., Chambers, S. and Johnston, R. (2006). Fifth edition, Pearson Education: HarlowProduction and Operations Management - 6

MiscellaneousDiscipline Needs no emphasis 5 minute rule (if late, better not to enter the class)Attendance Minimum 80%ExaminationsMidterm week-9:25 MarksFinal exam week-18:40 MarksQuiz 3 (2 prior midterm exam and one after midterm exam) :5 Marks eachAssignments 2 (one prior midterm and one after midterm):15 Marks Class participation:5 Marks

78Chapter 1Operations and ProductionManagement (OPM):An Introduction

OPM Chapter 1#9OverviewIntroductionHistorical Milestones in OPMFactors Affecting OPM TodayDifferent Ways of Studying OPMWrap-Up: What World-Class Producers DoOPM Chapter 1#10IntroductionOperations and Production Management (OPM) is the management of an organizations production system.A production system takes inputs and converts them into outputs.The conversion process is the predominant activity of a production system.The primary concern of an operations manager is the activities of the conversion process.OPM Chapter 1#11Organizational ModelOPM MarketingMISEngineeringHRMQA AccountingSalesFinanceOPM Chapter 1#

Organization Chart-Major Elements

OPM Chapter 1#13Entry-Level Jobs in OPMPurchasing planner/buyerProduction (or operations) supervisorQuality specialistProduction (or operations) scheduler/controllerProduction (or operations) analystInventory analystOPM Chapter 1#14Historical Milestones in OPMThe Industrial RevolutionPost-Civil War PeriodScientific ManagementHuman Relations and BehaviorismOperations ResearchThe Service Revolution 1700s Cottage Industry.... Machine power for human power.... factory system which resulted in greater productivity. 1790 Eli Whitney invented concept of interchangeable parts. Forced consistent production of parts. Variation evil. 1865 -1900 Joint stock companies formed changing capital structure of companies. Expansion into West created demand for products, development of rail lines provided quick, cheap transportation of goods. Also influx of labor from farm to urban centers. Early 1900s Frederick Taylor developed the concept of Shop System. Henry Ford put concepts into practice with assembly lines that used modern scientific management concepts: Standardized product design, mass production for low manufacturing. costs, mechanized the lines, specialization of labor, and interchangeable parts.1927-32 Hawthorne studies at Western Electric plant demonstrated human factors also impacted production. World War II required enormous quantities of supplies, people, etc. Operations Research teams formed to develop models to manage the complex logistics. Linear programming, PERT/CPM, forecasting developed/refined.Accelerated after WW-II, 2/3s workforce in service and 2/3s GDP generated by service industry. OPM Chapter 1#15The Industrial RevolutionThe industrial revolution developed in England in the 1700s.The steam engine, invented by James Watt in 1764, largely replaced human and water power for factories.Adam Smiths The Wealth of Nations in 1776 touted the economic benefits of the specialization of labor.Thus the late-1700s factories had not only machine power but also ways of planning and controlling the tasks of workers.

OPM Chapter 1#16The Industrial RevolutionThe industrial revolution spread from England to other European countries and to the United Sates.In 1790 an American, Eli Whitney, developed the concept of interchangeable parts.The first great industry in the U.S. was the textile industry.In the 1800s the development of the gasoline engine and electricity further advanced the revolution.By the mid-1800s, the old cottage system of production had been replaced by the factory systemOPM Chapter 1#17Post-Civil War PeriodDuring the post-Civil War period great expansion of production capacity occurred.By post-Civil War the following developments set the stage for the great production explosion of the 20th century:increased capital and production capacitythe expanded urban workforcenew Western U.S. marketsan effective national transportation systemOPM Chapter 1#18Scientific ManagementFrederick Taylor is known as the father of scientific management. His shop system employed these steps:Each workers skill, strength, and learning ability were determined.Stopwatch studies were conducted to precisely set standard output per worker on each task.Material specifications, work methods, and routing sequences were used to organize the shop.Supervisors were carefully selected and trained.Incentive pay systems were initiated.OPM Chapter 1#19Scientific ManagementIn the 1920s, Ford Motor Companys operation embodied the key elements of scientific management:standardized product designsmass productionlow manufacturing costsmechanized assembly linesspecialization of laborinterchangeable parts

OPM Chapter 1#20Human Relationsand BehavioralismIn the 1927-1932 period, researchers in the Hawthorne Studies realized that human factors were affecting production.Researchers and managers alike were recognizing that psychological and sociological factors affected production.From the work of behavioralists came a gradual change in the way managers thought about and treated workers.

OPM Chapter 1#21Operations ResearchDuring World War II, enormous quantities of resources (personnel, supplies, equipment, ) had to be deployed.Military operations research (OR) teams were formed to deal with the complexity of the deployment.After the war, operations researchers found their way back to universities, industry, government, and consulting firms.OR helps operations managers make decisions when problems are complex and wrong decisions are costly.OPM Chapter 1#22The Service RevolutionThe creation of services organizations accelerated sharply after World War II.Today, more than two-thirds of the U.S. workforce is employed in services.About two-thirds of U.S. GDP is from services.There is a huge trade surplus in services.Investment per office worker now exceeds the investment per factory worker.Thus there is a growing need for service operations management.OPM Chapter 1#23Today's Factors Affecting OPMGlobal CompetitionU.S. Quality, Customer Service, and Cost ChallengesComputers and Advanced Production TechnologyGrowth of Indian Service SectorScarcity of Production ResourcesIssues of Social ResponsibilityOPM Chapter 1#24Different Ways to Study OPMProduction as a SystemProduction as an Organization FunctionDecision Making in OPM Table 1.5 discusses the concepts, Figure 1.2 shows the model of inputs, conversion, and outputs, and Table 1.6 shows the diversity of production systems. Table 1.7 shows various jobs available in OPM. Highly paid, active market right now. More companies recognize strategic importance of OPM. E.G.. Assets management..... inventory. Millions of $ tied up that could be applied to NPI, process improvement, R&D.Strategic ... what kind of product, process, and facility... location.. LONG-TERM Operating .... Planning production to meet demand Control .... Day-to-day activity of workers, product, processOPM Chapter 1#25Production as a SystemInputsOutputsConversionSubsystemProduction SystemControlSubsystemOPM Chapter 1#26Inputs of a Production SystemExternalLegal, Economic, Social, TechnologicalMarketCompetition, Customer Desires, Product Info.Primary ResourcesMaterials, Personnel, Capital, UtilitiesOPM Chapter 1#27Conversion SubsystemPhysical (Manufacturing)Locational Services (Transportation)Exchange Services (Retailing)Storage Services (Warehousing)Other Private Services (Insurance)Government Services (Federal, State, Local)

OPM Chapter 1#28Outputs of a Production SystemDirectProductsServicesIndirectWastePollutionTechnological AdvancesOPM Chapter 1#29Production as an Organization FunctionCompanies cannot compete using marketing, finance, accounting, and engineering alone.We focus on OPM as we think of global competitiveness, because that is where the vast majority of a firms workers, capital assets, and expenses reside.To succeed, a firm must have a strong operations function teaming with the other organization functions.OPM Chapter 1#30Decision Making in OPMStrategic DecisionsOperating DecisionsControl Decisions

OPM Chapter 1#31Strategic DecisionsThese decisions are of strategic importance and have long-term significance for the organization.Examples include deciding:the design for a new products production processwhere to locate a new factorywhether to launch a new-product development plan

OPM Chapter 1#32Operating DecisionsThese decisions are necessary if the ongoing production of goods and services is to satisfy market demands and provide profits.Examples include deciding:how much finished-goods inventory to carrythe amount of overtime to use next weekthe details for purchasing raw material next monthOPM Chapter 1#33Control DecisionsThese decisions concern the day-to-day activities of workers, quality of products and services, production and overhead costs, and machine maintenance.Examples include deciding:labor cost standards for a new productfrequency of preventive maintenancenew quality control acceptance criteriaOPM Chapter 1#34What Controls the Operations System?Information about the outputs, the conversions, and the inputs is fed back to management.This information is matched with managements expectationsWhen there is a difference, management must take corrective action to maintain control of the systemOPM Chapter 1#35Wrap-Up: World Class PracticeOPM important in any organizationGlobal competition forces rapid evolution of OPM Decision based framework focus of courseStrategic, Operating, and ControlOPM Chapter 1#