MODULE 1

OPERATIONS MANAGEMENT
 OPERATIONS
•Operations is concerned with the transformation of
inputs into the required output or services
•Operations can be seen as the whole set of
activities associated with production of goods and
services.
 FEATURES OF OPERATIONS
✓operations add value
✓technology-the application of knowledge:
✓comparing goods and services:
✓operations and teamwork:
 MEANING OF OPERATIONS MANAGEMENT
•OM is concerned with the efficient and effective
transformation of inputs int desired outputs.
•The group of interrelated activities starting from
product design & development ; converting raw
materials into finished goods or creating services
and ending with proper distribution of these
products and services to end customers.
 Definition of operations management
• “operation management as the management of
organizations productive resources or to production
system which converts inputs into organizations
products or services”
Norman and Greg
•“operation management as the design, operation and
improvement of the production system that create
the firms products or services”
Richard .B.Chase
 Operations management as a system

INPUT
1.Technology
2.Energy TRANSFORMATION
3.Material (CONVERSION) GOODS
4.Labour PROCESS &SERVICES
5.Capital
6.information

FEEDBACK (INFORMATION)-CONTROL OVER PROCESS INPUT

&TECHNOLOGY
 MEANING OF OPERATIONS MANAGEMENT
•OM is concerned with the efficient and effective
transformation of inputs int desired outputs.
 OBJECTIVES OF OPERATIONS MANAGEMENT

A.CUSTOMER SERVICE
1.Reduce cost of production
2.Improve product quality
3.Fix time schedule
 B.RESOURCES UTILISATION
1.Utilisation of machinery and equipment
2.Material control
3.Manpower utilization
4.Manufacturing services
 SCOPE OF OPERATIONS MANAGEMENT
1.Facilities location
2.Product selection and design
3.Process design
4.Plant layout(Grouping and arrangement of the
personnel, machines ,equipment, storage space and other
facilities used in production process)
5.Capacity planning
6.Material management
7.Quality control
8.Maintenance management
 OPERATIONS MANAGEMENT FUNCTIONS
1.Design function
➢ product design and development
➢Process design
➢Quality management
➢Location and layout facilities
➢Capacity planning
2.Operational control functions
➢Forecasting
➢Production planning and control
➢Supply chain management
➢Maintenance management
3.Long term functions
➢Long term decisions are made once every 5 to ten years
➢Ex: decision regarding the location of new plant
4.Short term functions
➢Short term decisions are made in fixed cycles of one year
➢Ex: aggregrate production planning, master production
scheduling
 Steps of Operations management decisions

COMPREHENSION CONCEPTION INVESTIGATION

IMPLEMENTATION SELECTION DELIBERATION

TYPES OF DECISIONS IN OM

WHAT? WHEN? WHERE?

HOW? WHO?
 DECISION AREAS OF OPERATIONS MANAGEMENT
1.LOCATION DECISIONS
2.PRODUCTION DECISIONS
3.DISTRIBUTION DECISIONS
4.INVENTORY DECISIONS
 APPROACHES TO DECISION MAKING IN OM
A.Models
➢ model is an abstraction of reality
➢ simplied representation of something
TYPES OF MODELS
1.PHYSICAL MODELS
✓ Look like real life counter parts
✓More visual correspondence with reality
✓Ex;miniature of cars,trucks,
2.SCHEMATIC MODELS
✓More abstract than physical counterparts
✓Less resemblance to physical reality
✓Ex: graphs,charts,blue prints,pictures
3.MATHEMATICAL MODELS
✓Most abstract type of models
✓Donot look like their real life counterparts
✓Ex:numbers,formulas ,symbols
Approaches to decision making in om
B. Quantitative Approaches
1.LINEAR PROGRAMMING
✓ mathematical technique
✓Used for optimum allocation of scarce resources
✓Ex:2x+3y=z
2.QUEUING TECHNIQUE
✓ analysing situations in which waiting lines form
3.INVENTORY MODELS
✓ To control inventories
4.PROJECT MODELS
✓PERT &CPM is useful for planning , coordinating ,controlling large scale projects
5.FORECASTING TECHNIQUE
 FUNCTIONS OF OPERATIONAL MANAGER
1.Production planning
2.Production control
3.Method analysis
4.Quality control
5.Work measurement
• Measuring the performance by worker
•It includes time study and motion study
6.Inventory control(ex: ABC )
7.Estimating
• Fix production targets and delivery dates
8.Scheduling
• timetable for various production activities, when to start
and when to finish
9.Loading
Assignment of the amount if work to a concerned
machine or worker.
11.Inspection and evaluation
12.Plant layout
 HISTORICAL EVOLUTiON OF OM
1.The industrial revolution
2.Scientific management
3.Human relation movement
4.Management science
5.Computer age
6.Just in Time(JIT)
7.Total quality management
8.Supply chain management
9.Evniromental issues
10.Electronic commerce
 1.THE INDUSTRIAL REVOLUTION
• Development of steam engine -James watt
• Division of labour –Adam smith
• Development of interchangeable parts-Eli whitney

2.SCIENTIFIC MANAGEMENT
• Frederick W Taylor
• To increase workers productivity and organizational output
• Piece rate incentives
• Separation of management and labour
• Stop watch studies
3.HUMAN RELATION MOVEMENT
• Hawthorne studies
• Social and psychological factors
• Informal relations
• Employee allowed to participate in decision making
• Management shows interest in employee welfare
• Treat employees with dignity and respect
4.MANAGEMENT SCIENCE
• Developing quantitative techniques for solving operational problems
• Ex:linear programming
5.Computer age
• Data processing, forcasting ,scheduling &inventory management easier
• Development of MRP was developed for control and scheduling
6.JUST IN TIME(JIT)
• Developed by Toyota
• Strategy of inventory management
• Refers to purchasing or producing only what is needed,when it is needed
,in just the quantity needed
• Purchase of material in such a way that materials are delivered just before
their use
• Zero inventory system
• Objective:inventory reduction
7.TOTAL QUALITY MANAGEMENT (TQM)
• TQM is an intergrated organizational effort to improve quality of every level
• TQM is adopted to meet the quality expectation of the customers
8.SUPPLY CHAIN MANAGEMENT(SCM)
• Managing the flow of materials and information from suppliers and buyers
of raw materials all way to the final customers
• Objective: everyone in the chain work together to reduce overall cost and
improve quality and service delivery
9.ENVIROMENTAL ISSUES
• Need to reduce waste ,recycle and reuse products and parts
• Development of international organizational for standardization(ISO)
10.ELECTRONIC COMMERCE
• Use of internet for conducting business activities
• B2B
• B2C
• C2C
OM
production management
production management deals with converting raw materials
into finished goods or products

Definition of production management

Production management is a process of planning
,organizing ,directing and controlling the activities
of the production function
PRODUCTION MANAGEMENT OPERATIONS MANAGEMENT
Administration of the range of Part of management concerned with the
activities belonging to the creation of production and delivery of goods and
products services
Subset of operations management Superset of production management
Narrow scope Broader scope
Manufacturing of tangible goods production of tangible and intangible
output(services)
Found in enterprises where production Found in all types of organisations
is undertaken ex:Banks, hospitals, production
companies,agencies,eductional etc
Objective is to product right quality Objective is to utilize resources to the
goods in right quantity at right time extend possible so as to satisfy customer
and right price wants.
PRODUCTION MANAGEMENT OPERATIONS MANAGEMENT
Production manger has to make Operations manager looks the product
decisions regarding the design ,quality design ,quality ,quantity
,quantity and cost of the products ,process,location
manufactured ,manpower,maintenance,logistics,inven
tory management etc
 Objectives of production management

1.Right quality
2.Right quality
3.Timeliness
4.Low manufacturing cost
 module 2
Facilities planning
Plant
Plant is a place where men ,material ,money, machinery etc are
brought together for manufacturing products
Plant location
• Plant location refers to the choice of region and the selection of
a particular site for setting up a business or factory.
• choice is made only after considering cost and benefits of
different alternative sites.
• strategic decision that cannot be changed once taken.
• ideal location is one where the cost of the product is kept to
minimum, with a large market share, the least risk and the
maximum social gain
Location Analysis
Location analysis is a dynamic process where entrepreneur analyses and
compares the appropriateness or otherwise of alternative sites with the aim of
selecting the best site for a given enterprise. It consists
(a) Demographic Analysis: It involves study of
• population in the area in terms of total population (in no.),
• age composition
• per capita income
• educational level
• occupational structure
(b) Trade Area Analysis:
It is an analysis of the geographic area that provides continued clientele to
the firm.
(c) Competitive Analysis:
It helps to judge the nature, location, size and quality of
competition in a given trade area.
(d) Traffic analysis:
To have a rough idea about the number of potential customers
passing by the proposed site during the working hours of the
shop, the traffic analysis aims at judging the alternative sites in
terms of pedestrian and vehicular traffic passing a site.
(e)Site economics:
Alternative sites are evaluated in terms of
establishment costs and operational costs under this.
 FACTORS DETERMINING PLANT LOCATION
1.Nearness to raw materials 7.Communication facilities
2.Nearness to markets 8.Cilmatic conditions
3.Availability of workforce 9.Government policy
4.Availability of fuel and 10.Characteristics of the land
power
11.Water disposal
5.Availability of water
6.Transportation facility 12.Community attitude
13.Security
14.Personal perferences
15.Cultural facilities
Steps In facility location study

Stage 2 Stage 3
Stage 1 Area
Community
Selection Site selection
selection
 Steps in facility location study
Stage 1 Area selection
Initial planning stage in selecting the region or general area in
which the plant or facility should be located.
1.location of markets
2.location of materials
3.Transporation facilities
4.Labour supply
a.Ample supply
b.Type of skill possessed by manpower
c.regional wage differentials
d.location of other plants and warehouses
 Stage 2:community selection
1.managerial perferences
2.Community facilities
3.Community attitudes
4.community,government and taxation
5.Financial inducements
6.Profile of present industry
 Stage 3 :site selection
1.Size of site
2.Topography
3.Utilities
4.Waste disposal
5.Transporation facilities
6.Land costs
a.city
b.suburb
c.country
 Errors in facility location analysis
1.Inadequate labour reservoir
2.Careless in checking site
3. Lack of distribution outlets
4.Failure to predict local impacts of new plants
5.Lack of supporting facilities
6.Failure to anticipate growth
7.Miscalculation of labour cost
8.Misinformation on utility costs
9.Underestimation of importance of taxes
10.Failure to identify critical cost
11.Choosing a community in which living conditions are substandard
 Product Design and development
Product design and development is a sum total of all
the activities commencing the identification of the
customers needs and transforming it into a feasible
product
Ways of select product
1.Imitation
2.Adaptation or improvement
3.Product innovation
 STEPS IN PRODUCT DEVELOPMENT

1.Idea 3.Business or
.
2.Screening financial
generation analysis

6.Commercialisa 4.Development
tion 5.Testing of product
 PRODUCT DESIGN
• Crucial stage of product development
• Process of planning the product’s specifications
• Deals with its form and function
STEPS IN PRODUCT DESIGN

3.PRELIMINARY 4.FINAL
1.IDEA 2.PRODUCT
DESIGN AND
DEVELOPMENT SCREENING DESIGN
TESTING
 FACTORS TO BE CONSIDERED IN PRODUCT DESIGN
1.Requirements of customers
2.Design for manufacture
3.Material requirements
4.Work ,method and equipment
5.Product life
cycle(introduction,growth,maturity&decline)
6.Concurrent engineering
7.Remanufacturing
ACTIVITIES CONNEC TED WITH THE FACTORY LAYOUT
1.OFFICE AREA
Administrative department is to be accommodated
2.Plant area
Production& service department is to be accommodated
3.Technical services
receiving department,stock room,storeroom ,tool
room,inspection department,power house,boiler room etc
4.Personal services
parking area,canteen ,lunchroom,recreation room ,rest
room
 1.Single storey building (ex:transporation)
merits
• Cost of construction is less
• Reduce maintenance cost resulting from vibration of machinery
• Space for elevators ,stair case can be utilised for other services
• Truss construction ensure uninterrupted operating space.
Demerits
• Building is located in city ,high cost of land is to be paid
• High cost of transportation to move workers from city to village
2.MULTI STOREY BUILDING(ex:hotels,shopping
complex,educational institutions etc)
MERITS
• Suited where availability of land is less and costly
• Lower cost of heating and ventilation
Demerits
• Lot of floor space is wasted for elevators, stair ways etc
• Supervision is difficult
• Cost of construction is increases as the number of floor
increases
• Material handling is complicated and difficult
• Floor load bearing capacity is limited
 3.SPECIAL TYPE BUILDING
EX:Aircraft industry
 Process selection
•Process selection refers to the way an
organization chooses to produce its goods and
services
•Process is a way to convert rawmeterials
into finished product ,which is designed
by a customer.
 Factors affecting process selection

1.TYPES OF RAW 2.TYPES OF

3.PLANT LAYOUT
MATERIAL MACHINES

5.CAPABILITY IN 6.USE OF
4.TYPES OF INVESTMENT IN
MANUFACTURING TECHNOLOGY
MACHINES