OPERATION MANAGEMENT
DR. AMITA CHOURASIYA
Operations management is the activity of managing the
resources which are devoted to the production and delivery of
products and services.
Operations management includes all the activities necessary for
the fulfillment of customer requests.
Operations are processes that take in a set of input resources
which are used to transform something, or are transformed
themselves, into outputs of products and services.
The operations function is central to the organization because it
produces the goods and services which are its reason for existing
THREE CORE FUNCTIONS
1. Marketing (including sales) function – which is responsible
for communicating the organization’s products and services to
its markets in order to generate customer requests for service;
2. Product/service development function – which is
responsible for creating new and modified products and
services in order to generate future customer requests for
service;
3. Operations function – which is responsible for fulfilling
customer requests for service throughout the production and
delivery of products and services.
Support functions which enable the core functions to operate
effectively. These include, for example:
1. Accounting and finance function – which provides the
information to help economic decision making and manages
the financial resources of the organization;
2. Human resources function – which recruits and develops
the organization’s staff as well as looking after their welfare.
THE ACTIVITIES OF CORE FUNCTIONS
IN SOME ORGANIZATIONS
Core Functional Fast Food Chain Furniture
activities manufacture
Marketing and sales Advertise on TV , Advertise in
Devise promotional magazines
materials Determine pricing
policy
Sell to stores
Product/service Design hamburgers, Design new
development pizzas, etc, Design furniture
decor for Coordinate with
Restaurants fashionable colors
Operations Make burgers, pizzas Make components
etc. Serve customers Assemble furniture
Clear away Maintain
equipment
Transformation process model
Model that describes operations in terms of their input resources,
transforming processes and outputs of goods and services.
which is used to describe the nature of operations.
Input resources
The transforming and transformed resources that form the input to
operations.
Transformed resources
The resources that are treated, transformed or converted in a process, usually a mixture
of materials, information, and customers
1. Materials – operations that process materials could do so to transform their
physical properties (shape or composition, for example).Other operations process
materials to change their location(parcel delivery companies.
2. Information – operations that process information could do so to transform
their informational properties (that is, the purpose or form of the information);
accountants do this. Some change the possession of the information, for example,
market research companies sell information. Some store the information, for
example, archives and libraries. Finally, some operations, such as telecommunication
companies, change the location of the information.
3. Customers – operations that process customers might change their
physical properties
in a similar way to materials processors, for example, hairdressers or cosmetic
surgeons. Airlines, mass rapid transport systems, and bus companies transform the
location of their customers, while hospitals transform their physiological state. Some
are concerned with transforming their psychological state, for example, most
entertainment services such as music, theatre, television, radio, and theme parks.,
Transforming resources
The resources that act upon the transformed resources are usually
classified as facilities(the buildings, equipment, and plant of an
operation) and staff (the people who operate, maintain, and
manage the operation). Facilities and Staff.
OPERATIONS OPERATIONS INPUT OPERATIONS PROCESS OPERATIONS
OUTPUT
TYPES OF DECISIONS
Strategic Decision
1. A high level of overview of the organization
2. Long Term Plan (typically 5 years
3. Forward-looking
Tactical Decision
1. Tactics used to achieve strategic
2.Short term plan (typically 1 year or less)
3. Include specific goals, budget, resources
Operational Decision
1. Plan for day-to-day running activity in the organization
2. Controlled via daily/ weekly/ monthly reports
WHY IS OPERATIONS MANAGEMENT
SO IMPORTANT?
Operations can have a significant impact on strategic success
Operations management can reduce costs
Operations management can increase revenue
Operations management can reduce the need for investment
Operations management can enhance innovation
THE ACTIVITIES OF OPERATIONS
MANAGEMENT
Understanding the operation’s strategic objectives.
Developing an operations strategy for the
organization.
Designing the operation’s products, services and
processes.
Planning and controlling the operation.
Improving the performance of the operation.
The broad responsibilities of operations
management.
CLASSIFICATION OF PRODUCTION SYSTEM
JOB SHOP PRODUCTION
Characteristics
The Job-shop production system is followed when there are:
1. High variety of products and low volume.
2. Use of general-purpose machines and facilities.
3. Highly skilled operators who can take up each job as a challenge
because of their uniqueness.
4. Large inventory of materials, tools, and parts.
5. Detailed planning is essential for sequencing the requirements of
each product, capacities
for each work center and order priorities.
BATCH PRODUCTION
Characteristics
A batch production system is used under the following
circumstances:
1. When there are shorter production runs.
2. When plant and machinery are flexible.
3. When plant and machinery set up is used for the production of
item in a batch and a change of set up is required for processing
the next batch.
4. When manufacturing lead time and cost are lower as compared
to job order production
MASS PRODUCTION
Characteristics
Mass production is used under the following circumstances:
1. Standardization of product and process sequence.
2. Dedicated special-purpose machines have higher production capacities and output
rates.
3. Large volume of products.
4. Shorter cycle time of production.
5. Lower in-process inventory.
6. Perfectly balanced production lines.
7. The flow of materials, components, and parts is continuous and without any
backtracking.
8. Production planning and control is easy.
9. Material handling can be completely automatic.
CONTINUOUS PRODUCTION
Characteristics
Continuous production is used under the following circumstances:
1. Dedicated plant and equipment with zero flexibility.
2. Material handling is fully automated.
3. The process follows a predetermined sequence of operations.
4. Component materials cannot be readily identified with the final
product.
5. Planning and scheduling is a routine action.
THE DISTINCTION BETWEEN MANUFACTURING
OPERATIONS AND SERVICE OPERATIONS
The following characteristics can be considered for distinguishing
manufacturing operations from
service operations:
1. Tangible/Intangible nature of output
2. Consumption of output
3. Nature of work (job)
4. Degree of customer contact
5. Customer participation in conversion
6. Measurement of performance.
Manufacturing is characterized by tangible outputs (products), outputs
that customers consume overtime, jobs that use less labor and more
equipment, little customer contact, no customer participation in the
conversion process (in production), and sophisticated methods for
measuring production activities and resource consumption as the
product are made.
Service is characterized by intangible outputs, outputs that customers
consume immediately, jobs that use more labor and less equipment,
direct consumer contact, frequent customer participation in the
conversion process, and elementary methods for measuring conversion
activities and resource consumption. Some services are equipment
namely rail-road services, and telephone services, and some are people-
based namely tax consultant services, and hair styling.
SCOPE OF PRODUCTION AND OPERATIONS
MANAGEMENT
1. Location of facilities
2. Plant layouts and material handling
3. Product design
4. Process design
5. Production and planning control
6. Quality control
7. Materials management
8. Maintenance management
HAWTHORNE EFFECT
