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Production and Operation management (POM) is the management of an organization’s production

Production System takes inputs and converts them into outputs

The conversion process is the predominant activity of production system.

The primary concern of an operations manager is activities of the conversion.

OPERATION MANAGEMENT TOPICS

 Scheduling
 Aggregate planning
 Inventory
 Forecasting
 Strategy
 Quality
 Quality Tools
 Flows and Waiting Line
Production Concept Production

is defined as “the step-by-step conversion of one form of material into another form through chemical
or mechanical process to create or enhance the utility of the product to the user.” Thus production is a
value addition process. At each stage of processing, there will be value addition. Edwood Buffa defines
production as „a process by which goods and services are created‟.Some examples of production are:
manufacturing custom-made products like, boilers with a specific capacity, constructing flats, some
structural fabrication works for selected customers, etc., and manufacturing standardized products like,
car, bus, motor cycle, radio, television, etc.

Production System

The production system of an organization is that part, which produces products of an organization. It is
that activity whereby resources, flowing within a defined system, are combined and transformed in a
controlled manner to add value in accordance with the policies communicated by management. A
simplified production system is shown above.

The production system has the following characteristics:

1. Production is an organized activity, so every production system has an objective.

2. The system transforms the various inputs to useful outputs.

3. It does not operate in isolation from the other organization system.

4. There exists a feedback about the activities, which is essential to control and improve system
performance. Production Management E.S. Buffa defines production management as, “Production
management deals with decision making related to production processes so that the resulting goods or
services are produced according to specifications, in the amount and by the schedule demanded and out
of minimum cost.”

Objectives of Production Management

The objective of the production management is „to produce goods services of right quality and quantity
at the right time and right manufacturing cost‟

Right Quality

Right Quantity

Right Time

Right Manufacturing Cost

Right Quality – product established based upon the customers’ needs. The right quality is not necessarily
best quality. It is determined by the cost of the product and technical characteristics as suited to the
specific requirement.

Right quantity – manufacturing organization should produce the product in the right number. If they are
produced in excess of demand the capital will block up in the form of inventory and if quantity is
produced in short of demand, leads to shortage of products.

Right time – Timeliness of delivery is one the important parameter.

Right Manufacturing cost– manufacturing cost are established before the product is actually
manufactured.

Operating System

Operating system converts inputs in order to provide outputs which are required by a customer. It
converts physical resources into outputs, the function of which is to satisfy customer wants i.e., to
provide some utility for the customer. In some of the organization the product is a physical good (hotels)
while in others it is a service (hospitals). Bus and taxi services, tailors, hospital and builders are the
examples of an operating system.

Everett E. Adam & Ronald J. Ebert define operating system as, “An operating system ( function) of an
organization is the part of an organization that produces the organization’s physical goods and services.”
Ray Wild defines operating system as, “An operating system is a configuration of resources combined for
the provision of goods or services.”

Concept of Operation

An operation is defined in terms of the mission it serves for the organization, technology it employs and
the human and managerial processes it involves. Operations in an organization can be categorized into
manufacturing operations and service operations. Manufacturing operations is a conversion process
that includes manufacturing yields a tangible output: a product, whereas, a conversion process that
includes service yields an intangible output: a deed, a performance, an effort.
Distribution between Manufacturing Operations and Service Operations

Following characteristics can be considered for distinguishing manufacturing operations with 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

Elements of Production Management and Operation Management

Operation manager are concerned:

PLANNING - An activity that establishes a course of action and guide future decision- making is planning.
The operations manager defines the objectives for the operations subsystem of the organization, and
the policies, and procedures for achieving the objectives. This stage includes clarifying the role and focus
of operations in the organizations overall strategy. It also involves product planning, facility designing
and using the conversion process.

ORGANIZING - Activities that establishes a structure of tasks and authority. Operation managers
establish a structure of roles and the flow of information within the operations subsystem. They
determine the activities required to achieve the goals and assign authority and responsibility for carrying
them out.

CONTROLLING - Activities that assure the actual performance in accordance with planned performance.
To ensure that the plans for the operations subsystems are accomplished, the operations manager must
exercise control by measuring actual outputs and comparing them to planned operations management.
Controlling costs, quality, and schedules are the important functions here.

BEHAVIOUR - 21 Operation manager are concerned with how their efforts to plan, organize, and control
affect human behavior, they also want to know how the behavior of subordinates can affect
management planning, organizing, and controlling actions. Their interest lies in decision-making
behavior. MODEL - As operation managers plan, organize, and control the conversion process, they
encounter many problems and must make many decisions. They can simplify their difficulties using
models like aggregate planning models for examining how best to use existing capacity in short-term,
break even analysis to identify break even volumes, linear programming and computer simulation for
capacity utilization, decision tree analysis for long-term capacity problem of facility expansion, simple
median model for determining best locations of facilities etc.
Objective of Operation Management - Objectives of operations management can be categorized into
customer service and resource utilization.

Customer Service - The first objective of operating systems is the customer service to the satisfaction of
customer wants. Therefore, customer service is a key objective of operations management. The
operating system must provide something to a specification which

Scope of Production and Operations Management - Production and operations management concern
with the conversion of inputs into outputs, using physical resources, so as to provide the desired utilities
to the customer while meeting the other organizational objectives of effectiveness, efficiency and
adoptability. It distinguishes itself from other functions such as personnel, marketing, finance, etc., by its
primary concern for „conversion by using physical resources.

‟ Following are the activities which are listed under production and operations management functions:
1. Location of facilities

2. Plant layouts and material handling 24

3. Product design

4. Process design

5. Production and planning control

6. Quality control

7. Materials management

8. Maintenance management.

LOCATION OF FACILITIES - Location of facilities for operations is a long-term capacity decision which
involves a long term commitment about the geographically static factors that affect a business
organization. It is an important strategic level decision- making for an organization. It deals with the
questions such as „where our main operations should be based?‟

PLANT LAYOUT AND MATERIAL HANDLING - Plant layout refers to the physical arrangement of facilities.
It is the configuration of departments, work centers and equipment in the conversion process. The
overall objective of the plant layout is to design a physical arrangement that meets the required output
quality and quantity most economically.

According to James Moore, “Plant layout is a plan of an optimum arrangement of facilities including
personnel, operating equipment, storage space, material handling equipments and all other supporting
services along with the design of best structure to contain all these facilities”. „

Material Handling‟ refers to the „moving of materials from the store room to the machine and from one
machine to the next during the process of manufacture‟. It is also defined as the „art and science of
moving, packing and storing of products in any form‟. It is a specialized activity for a modern
manufacturing concern, with 50 to 75% of the cost of production.
PRODUCT DESIGN - Product design deals with conversion of ideas into reality. Every business
organization has to design, develop and introduce new products as a survival and growth strategy.
Developing the new products and launching them in the market is the biggest challenge faced by the
organizations.

PROCESS DESIGN - Process design is a macroscopic decision-making of an overall process route for
converting the raw material into finished goods. These decisions encompass the selection of a process,
choice of technology, process flow analysis and layout of the facilities.

PRODUCTION PLANNING AND CONTROL - Production planning and control can be defined as the process
of planning the production in advance, setting the exact route of each item, fixing the starting and
finishing dates for each item, to give production orders to shops and to follow up the progress of
products according to orders. Planning is deciding in advance what to do, how to do it, when to do it and
who is to do it.

Planning - bridges the gap from where we are, to where we want to go.

Routing - may be defined as the selection of path which each part of the product will follow, which being
transformed from raw material to finished products. Scheduling determines the programmed for the
operations.

Scheduling- may be defined as „the fixation of time and date for each operation‟ as well as it determines
the sequence of operations to be followed.

Dispatching - is concerned with the starting the processes. It gives necessary authority so as to start a
particular work, which has already been planned under „Routing‟ and „Scheduling‟.

QUALITY CONTROL Quality Control (QC)- may be defined as „a system that is used to maintain a desired
level of quality in a product or service‟. It is a systematic control of various factors that affect the quality
of the product. Quality control aims at prevention of defects at the source, relies on effective feedback
system and corrective action procedure.

Quality control - can also be defined as „that industrial management technique by means of which
product of uniform acceptable quality is manufactured‟. It is the entire collection of activities which
ensures that the operation will produce the optimum quality products at minimum cost.

The main objectives of quality control are:

To improve the companies income by making the production more Acceptable to the customer’s
example by providing long life, greater usefulness, maintainability, etc.

• To reduce companies cost through reduction of losses due to defects.

• To achieve interchangeability of manufacture in large scale production.

• To produce optimal quality at reduced price.

• To ensure satisfaction of customers with productions or services or high quality level, to build
customer goodwill, confidence and reputation of manufacturer.

• To make inspection prompt to ensure quality control.

MATERIAL MANAGEMENT - Materials management is that aspect of management function which is

The main objectives of materials management are:

• To minimize material cost.

• To purchase, receive, transport and store materials efficiently and to reduce the related cost.

• To cut down costs through simplification, standardization, value analysis, import substitution, etc.

• To trace new sources of supply and to develop cordial relations with them in order to ensure
continuous supply at reasonable rates.

• To reduce investment tied in the inventories for use in other productive purposes and to develop high
inventory turnover ratios.

MAINTENANCE MANAGEMENT - In modern industry, equipment and machinery are a very important
part of the total productive effort. Therefore, their idleness or downtime becomes are very expensive.
Hence, it is very important that the plant machinery should be properly maintained.

The main objectives of maintenance management are:

1. To achieve minimum breakdown and to keep the plant in good working condition at the lowest
possible cost.

2. To keep the machines and other facilities in such a condition that permits them to be used at their
optimal capacity without interruption.

3. To ensure the availability of the machines, buildings and services required by other sections of the
factory for the performance of their functions at optimal return on investment.

NATURE AND SCOPE OF OPERATIONS MANAGEMENT Operation mgt. is often used along with
production mgt. in literature on the subject. Operation mgt. is understood as the process whereby
resources or inputs are converted into useful products .

Operation / Production difference between the terms.

1. Term production management is more used for a system where tangible goods are produced. Term
operation mgt will cover such service organization as banks, airlines, utilities, pollution control agencies
super bazaars, educational institutions, libraries, consultancy firm and police departments, in addition,
of course, to manufacturing enterprises.

2. Distinction relates to the evolution of the subject. OM used now a day’s. PM precedes operation mgt
in the historical growth of the subject the two distinctions, notwithstanding, the term PM and OM are
used interchangeably.

SCOPE OF PRODUCTION AND OPERATION MGT. - Commencing w/ the selection of location production
mgt covers such activities as acquisition of land, construction building, procuring, and installing
machinery, purchasing and sorting raw materials and converting them into saleable products. Related
topics such quality management , maintenance mgt, production planning and control, methods
improvement and work simplification and other related areas.

EVOLUTION OF PRODUCTION FUNCTION SIX HISTORICAL DEVELOPMENTS:

The industrial Revolution

Scientific management

Human Relation Movement

Operation Research

Computers and advanced production technology S

ervice Revolution

STRATEGIES OF OPERATION MANAGEMENT

1. Design of goods and services- associated w/ quality and human resources.

2. Quality – product quality must be maintained during construction process products.

3. Design Process and capacity – related to the quality, human resources, inventory, scheduling and
maintenance.

4. Site selection- choice of location associated w/ supply chain mgt.

5. Design layout – is done after design process and capacity.

6. Human resource (HR) and design work – HR factors include safety, health, job description, work
environment and wages.

7. Supply chain mgt – is influenced by site selection and product quality

8. Inventory – decision are influenced by design processes and capacity human resources, and design
layout.

9. Scheduling – decision are influenced by the design process and capacity, layout and HR
10.Maintenance – associated w/ maintaining the quality or qualities.

MANUFACTURING SYSTEM AND LAYOUT

1. Manufacturing system- Devoted to the transformation of raw materials into marketable goods.
Employs series of value-adding processes to convert raw materials into more useful forms, and
eventually into finished product.
Backbone of the national economy.
Discipline built upon a collection methodological tools brought together to effect an integrated
or total approach to problem-solving in manufacturing engineering and management with
productivity improvement as its overall objectives.
2. Layouts - Configuring the plant site with line, building, major facilities, work area, aisles, and
other pertinent features such department boundaries
3. Process Layout – are found primarily in job shops or firm that produce customized