WelcomeWelcome

PRODUCTION AND PRODUCTION AND OPERATIONS’ OPERATIONS’

MANAGEMENTMANAGEMENT

INTRODUCTIONINTRODUCTIONThis course gives you an introduction to, the This course gives you an introduction to, the

functional area of production and functional area of production and operations management as, practiced in operations management as, practiced in manufacturing industries and the services manufacturing industries and the services sector.sector.

It includes :-It includes :- Nature & Scope of Production & Nature & Scope of Production &

Operation Mgmt,Operation Mgmt, Facility location, Facility location, Types of Manufacturing Systems & Types of Manufacturing Systems &

layouts, Layout Planning & Analysis layouts, Layout Planning & Analysis

Material Handling, Material Handling, Production Planning & ControlProduction Planning & Control Capacity PlanningCapacity Planning Aggregate Planning,Aggregate Planning, Work study Work study Method Study Method Study Work Measurement Work Measurement

Etc…Etc…

Production and operations Production and operations managementmanagement (POM) is the management (POM) is the management of an organization’s production system.of an organization’s production system.

A A production systemproduction system takes inputs and takes inputs and converts them into outputs.converts them into outputs.

The The conversion processconversion process is the is the predominant activity of a production predominant activity of a production system.system.

The primary concern of an The primary concern of an operations operations managermanager is the activities of the is the activities of the conversion process.conversion process.

Production managementProduction management Production is the basic activity of all the Production is the basic activity of all the

industrial unit.industrial unit. Production activity is nothing but the step Production activity is nothing but the step

by step conversion of one form of material by step conversion of one form of material in another, either chemically or in another, either chemically or mechanically.mechanically.

Production in the other word, is a Production in the other word, is a transformation system where inputs are transformation system where inputs are converted into outputs. The transformation converted into outputs. The transformation could be physical, location, exchange based, could be physical, location, exchange based, storage based and informational based.storage based and informational based.

Production Management Production Management Production management is concerned with Production management is concerned with

those processes which convert the input into those processes which convert the input into outputs. The input are various resources like outputs. The input are various resources like row material, men, machine, method and the row material, men, machine, method and the output are the goods and the services.output are the goods and the services.

H.A.HardingH.A.Harding Production management deals with decision Production management deals with decision

making related to production processes so making related to production processes so that the resulting goods and services is that the resulting goods and services is produced according to specification in the produced according to specification in the amount and by the schedule demand and at amount and by the schedule demand and at minimum cost.minimum cost.

E.S.BuffaE.S.Buffa

Operational managementOperational management

Operational management is understood as Operational management is understood as the process where by resources or inputs the process where by resources or inputs are converted into more useful products. are converted into more useful products. The term Operational management is more The term Operational management is more frequently used for a system where various frequently used for a system where various inputs are transformed into intangible inputs are transformed into intangible services such as banks, airlines, super services such as banks, airlines, super bazaar, library.bazaar, library.

But the term production management is But the term production management is used for the system where the tangible used for the system where the tangible goods are produced.goods are produced.

NATURE OF POMNATURE OF POM

Production as a SystemProduction as a System Production as an Organization Production as an Organization

FunctionFunction Decision Making in POMDecision Making in POM

Production as a SystemProduction as a SystemProduction as a SystemProduction as a System

InputsInputsInputsInputs OutputsOutputsOutputsOutputsConversionConversionSubsystemSubsystemConversionConversionSubsystemSubsystem

Production SystemProduction System

ControlControlSubsystemSubsystem

ControlControlSubsystemSubsystem

Inputs of a Production Inputs of a Production SystemSystem

External Environment:-Political , Economic, Social, Technological

Market:-Competition, Customer Desires, Product Info.

Primary Resources:-Materials, Personnel, Capital, Utilities

Conversion Conversion SubsystemSubsystem

•Physical (Manufacturing)Physical (Manufacturing)•Location Services Location Services (Transportation)(Transportation)•Exchange Services (Retailing, Exchange Services (Retailing, Wholesaler)Wholesaler)•Storage Services Storage Services (Warehousing)(Warehousing)•Other Private Services Other Private Services (Insurance)(Insurance)•Government services (Banking, Government services (Banking, Railways)Railways)

Outputs of a Production Outputs of a Production SystemSystem

Direct•Products•Services

Indirect•Waste•Pollution

Production as an Production as an Organization FunctionOrganization Function

Production as an Production as an Organization FunctionOrganization Function

Companies cannot compete using Companies cannot compete using marketing, finance, accounting, and marketing, finance, accounting, and engineering alone.engineering alone.

We focus on POM as we think of global We focus on POM as we think of global competitiveness, because that is where competitiveness, because that is where the vast majority of a firm’s workers, the vast majority of a firm’s workers, capital assets, and expenses required.capital assets, and expenses required.

To succeed, a firm must have a strong To succeed, a firm must have a strong coordination teaming with the other coordination teaming with the other organization functions.organization functions.

Decision Making in POMDecision Making in POMDecision Making in POMDecision Making in POM

Strategic Decisions:-Strategic Decisions:-

Decisions of strategic importance and Decisions of strategic importance and

have long-term significance for the have long-term significance for the

organization.organization.Examples include deciding:Examples include deciding:

the design for a new product’s the design for a new product’s production processproduction process

where to locate a new factorywhere to locate a new factorywhether to launch a new-product whether to launch a new-product development plandevelopment plan

Operating Decisions:-Operating Decisions:- These decisions are necessary if These decisions are necessary if

the ongoing production of goods the ongoing production of goods and services is to satisfy market and services is to satisfy market demands and provide profits.demands and provide profits.

Examples include deciding:Examples include deciding: how much finished-goods how much finished-goods

inventory to carryinventory to carry the amount of overtime to use the amount of overtime to use

next weeknext week the details for purchasing raw the details for purchasing raw

material next monthmaterial next month

Control Decisions:-Control Decisions:- These decisions concern the day-to-These decisions concern the day-to-

day activities of workers, quality of day activities of workers, quality of products and services, production products and services, production and overhead costs, and machine and overhead costs, and machine maintenance.maintenance.

Examples include deciding:Examples include deciding: labor cost standards for a new productlabor cost standards for a new product frequency of preventive maintenancefrequency of preventive maintenance new quality control acceptance criterianew quality control acceptance criteria

Scope of POMScope of POMLONG TERM DECISIONSLONG TERM DECISIONS

Product selection and designProduct selection and design Process selection and planningProcess selection and planning Location facilityLocation facility Capacity planningCapacity planning Material Handling facilityMaterial Handling facility

SHORT TERM DECISIONSSHORT TERM DECISIONS Production planningProduction planning Production control Production control Inventory controlInventory control Quality controlQuality control Method studyMethod study Maintenance and replacementMaintenance and replacement Cost reductionCost reduction

Objective of the production Objective of the production managementmanagement

Ultimate objective Manufacturing cost Product Quality Manufacturing schedule

Intermediate objective Machinery and equipment Material Manpower Manufacturing services

Function of the production Function of the production management management

Improving the volume of production Reducing rejection rate Maintaining delivery schedule Controlling ideal machine and manpower Updating processes and the procedure Maintain the accuracy and timeliness of

the MIS Controlling overtime Decreasing machine setup time Efficient training and the team work TQM

Today's Factors Affecting Today's Factors Affecting POMPOM

Today's Factors Affecting Today's Factors Affecting POMPOM

Global Competition Quality, Customer Service, and

Cost Challenges Computers and Advanced

Production Technology Growth of Service Sector Scarcity of Production Resources Issues of Social Responsibility Availability of skilled Employee

RECENT TRENDS IN POMRECENT TRENDS IN POM Global market placeGlobal market place Production and Operational strategyProduction and Operational strategy TQMTQM FlexibilityFlexibility Time ReductionTime Reduction TechnologyTechnology Worker involvementWorker involvement Re EngineeringRe Engineering Environmental issuesEnvironmental issues Supply Chain managementSupply Chain management

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Facility Location

What is facility? Production unit, where goods

and services are produced.What is location?

Place where a facility is located So the major decision is-

WHERE should the facility be located?

Reasons for the Reasons for the Facility Location Decision Facility Location Decision

ArisesArises

Reasons for the Reasons for the Facility Location Decision Facility Location Decision

ArisesArises Changes in the market

Expansion Contraction Geographic shift

Changes in inputs Labor skills and/or costs Materials costs and/or availability Utility costs

Reasons for the Reasons for the Facility Location Decision Facility Location Decision

ArisesArises

Reasons for the Reasons for the Facility Location Decision Facility Location Decision

ArisesArises

Changes in the environment Regulations and laws Attitude of the community

Changes in technology

STEPS INVOLVE INSTEPS INVOLVE IN LOCATION DECISIONS LOCATION DECISIONS

Political, social, economic stability;

Climate; Customer concentrations;

Transportation system availability;Preference of management; . . . . .

Site size/cost; Environmental impact; . . . . .

National DecisionNational DecisionNational DecisionNational Decision

Regional DecisionRegional DecisionRegional DecisionRegional Decision

Community DecisionCommunity DecisionCommunity DecisionCommunity Decision

Site DecisionSite DecisionSite DecisionSite Decision

Regional Location Regional Location DecisionDecision

Attractiveness of region (culture, taxes, climate, etc.)

Labor availability, costs, attitudes towards business/union

Cost and availability of utilities Environmental regulations of state and

town Government incentives Proximity to raw materials & customers Land/construction costs

Community/Locality Decisions

Rural Area or Village Area Advantages (cheaper rate of land,

taxes are negligible, spacious layout, avoidance of danger,)

Disadvantages (lack of transportation, skilled labour, power facility, training facility for labour is not available, facility of banking)

Urban Area or City Area Suburban Area nearer to the Urban

Area

Site Location DecisionsSite Location Decisions Site size and cost Air, rail, highway, waterway

systems Nearness of services/supplies

needed Communication facility Availability of power Possibility of plant expansion

Factors Affecting the Plant Factors Affecting the Plant LocationLocation

Factors Affecting the Plant Factors Affecting the Plant LocationLocation Primary /Economic Factor

Supply of Raw Material Nearness of Market Transportation Facility Labour Supply Availability of Power Supply of Capital

Secondary/Non-economic Factor Natural and Political Training and employment services Personal or Community’s attitude Education system Recreation and cultural attractions Religious and Historical Factor Government subsidies and facility

THANK YOUTHANK YOU

Types of Types of Manufacturing/ProductManufacturing/Product

ion Systemsion Systems

TYPES OF PRODUCTION

INTERMITTENT PRODUCTION

CONTINOUS PRODUCTION

MASS AND FLOW PRODUCTION

PROCESS PRODUCTION

PROJECT PRODUCTION

JOB PRODUCTION

BATCH PRODUCTION

INTERMITTENT(DISCONTINOUSINTERMITTENT(DISCONTINOUS)) PRODUCTIONPRODUCTION Wide range/Variety of products Wide range/Variety of products

is producedis produced

CONTINOUS PRODUCTIONCONTINOUS PRODUCTION Few/one standard products/ Few/one standard products/

productproduct High quantitiesHigh quantities High rate of demandHigh rate of demand

PROJECT PRODUCTION

Major characteristics are…..Major characteristics are….. Single assignment (one product)Single assignment (one product) Complex set of activities- Product orientedComplex set of activities- Product oriented Short life cycleShort life cycle Involvement of different specialized Involvement of different specialized

agenciesagencies Fixed position layout (fixed site)Fixed position layout (fixed site) High cost overrunsHigh cost overruns Scheduling and controlling- difficult, Scheduling and controlling- difficult,

CPM-PERTCPM-PERT Examples- Aircraft, Ships, Roads and Examples- Aircraft, Ships, Roads and

buildingsbuildings

JOB PRODUCTIONMajor characteristics are….

Variety of products Each product with different set of

processing steps Discontinuous flow of materials Customized- Made to order Highly skilled labour Customer satisfaction is higher Examples -Tailor Shop (size, design)

BATCH PRODUCTION

Major characteristics are….…. Manufacturing of a no. of identical Manufacturing of a no. of identical

articles either to meet the specific articles either to meet the specific order or to satisfy the continuous order or to satisfy the continuous demand.demand.

Limited numbers of productsLimited numbers of products Many qualities at regular intervalsMany qualities at regular intervals The customer order size determine The customer order size determine

the batch size.the batch size. Examples- Pharmaceuticals, Paints, Examples- Pharmaceuticals, Paints,

Ready made garmentsReady made garments

Mass and flow production Mass and flow production systemsystem

Major characteristics are…..Major characteristics are….. Same type of product is producedSame type of product is produced Separate line for each productSeparate line for each product Semiskilled or unskilled labourSemiskilled or unskilled labour Relatively permanent set up (same Relatively permanent set up (same

size, shape, quality product)size, shape, quality product) Example-(cars, bikes, FMCG Example-(cars, bikes, FMCG

product)product)

Process ProductionProcess Production

Major characteristics are…..Major characteristics are….. The product must be standardized.The product must be standardized. Work must conform to quality standard.Work must conform to quality standard. Inspection must in line with production.Inspection must in line with production. There must be continuity in the demand.There must be continuity in the demand. High accuracy.High accuracy. Reduced material handling.Reduced material handling. Example-crude oil, gasoline, diesel, Example-crude oil, gasoline, diesel,

petrol etc.petrol etc.

PLANT/ FACILITY PLANT/ FACILITY LAYOUTLAYOUT

An arrangement of personnel, An arrangement of personnel, departments, stores, equipment departments, stores, equipment etc..etc..

It is determined by-It is determined by- Type of productType of product Type of production processType of production process Volume of productionVolume of production

OBJECTIVES OF LAYOUTOBJECTIVES OF LAYOUT1.1. Economy in material handlingEconomy in material handling

2.2. Minimization of delay and Minimization of delay and bottlenecksbottlenecks

3.3. Minimum manufacturing cycle timeMinimum manufacturing cycle time

4.4. Least resistant to the smooth flow Least resistant to the smooth flow

5.5. Efficient utilisation of spaceEfficient utilisation of space

6.6. Safe and proper working conditionsSafe and proper working conditions

7.7. Flexibility to change in product Flexibility to change in product design and expansiondesign and expansion

8.8. Easy and simple plant maintenanceEasy and simple plant maintenance

9.9. Improved productivity and qualityImproved productivity and quality

10.10. Effective controlEffective control

PRINCIPLES OF PLANT LAYOUTPRINCIPLES OF PLANT LAYOUT

1.1. Integration of factorsIntegration of factors

2.2. Minimum movement of men and Minimum movement of men and materialmaterial

3.3. Smooth and continuous flowSmooth and continuous flow

4.4. Effective use of space-vertical Effective use of space-vertical /horizontal/horizontal

5.5. Safe and improved environmentSafe and improved environment

6.6. Maximum flexibilityMaximum flexibility

7.7. Unidirectional flowUnidirectional flow

8.8. Maximum visibility and accessibilityMaximum visibility and accessibility

Factors Influencing Layout

Material (low price, stored properly, easy move) Product (heavy or light, big or small, liquid or

solid) Workers (skilled, unskilled employee) Machinery (types of product, process and

volume) Location ( expansion of plant, size of the site,

mode of transportation, the storage of the product)

Managerial Policies (volume of production, purchasing policies, delivery of goods to customer

TYPES OF LAYOUTSTYPES OF LAYOUTS Process layoutProcess layout

Similar operations at one placeSimilar operations at one place Machines arranged according to their functionsMachines arranged according to their functions

Product layoutProduct layout Operations according to product and in sequenceOperations according to product and in sequence Suitable for continuous productionSuitable for continuous production

Static product or fixed position layoutStatic product or fixed position layout Big/heavy or difficult to move productBig/heavy or difficult to move product Product position is fixed and operations brought to Product position is fixed and operations brought to

itit Combined layoutCombined layout

It is the combination of process and the product It is the combination of process and the product layoutlayout

Cellular Manufacturing layoutCellular Manufacturing layout Machine are grouped into cells and cells function Machine are grouped into cells and cells function

somewhat a product layout with in the large process somewhat a product layout with in the large process layout.layout.

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