MMIM, Maharishi

Markandeshwar
( Deemed to be University)
Production and
Mullana

Operation
Management- UNIT 1
Presented
by:
Dr. Komal
Bhardwaj
 Product
Product means want satisfying capacity of an
element.
If a product should have want satisfaction capacity
in a market for the consumers otherwise the
marketing procedure will be meaningless.
The production function of a business is concerned
with creation of either a product or a service
required to satisfy a consumer need in the market.
So production management is a separate branch
of management which deals with the production of
goods and services for the effective utilisation of
consumers in the market.
 Production Function
Any process which involves conversion of raw
material into finished product for satisfaction of
human wants is called as production.
Production function can be effective when it satisfy:
The consumer demand relating to quality, quantity
and price
Permit the production activity in an economical
manner so that return in investment can be possible.
It may be concluded that production function not
only limited to conversion of input to output but
also deals with transportation, storage,
preservation and quality assurance for the
consumers in the market.
 Production Management
Production management is the process of effectively
coordinating and controlling the factors of production
such as man, machine, material, money and
management in order to get satisfaction out of the
product.
Production management is the process of transforming
the input into output by creating various utility which
can add value to those created output.
Production management is called upon to develop and
establish relationship between market demand and
production capability of an enterprise. It ensures
accomplishment of twin organisational objectives of
production and satisfaction. Both these objectives can
be fulfilled with planning, organising, directing, and
controlling and inventory management.
 Types of Utility
 Form Utility: When the input is changed in size, weight,
colour, shape and form while converting into output for the
benefit of the customers in the market it has form utility.
 Place Utility: When the input is changed from the place of its
availability to the place of their use to be converted into
output through transportation is known as place utility.
 Time Utility: When either the input or the output is preserved
for storage purpose in order to be utilised when there is a
scarcity of that product to be utilised by the consumers.
 Service Utility: When some utility is created by rendering
some service to the customer either directly or indirectly for a
definite time period it is called as service utility of the
product.( Doctors for the patient , lawyers for the clients,
teachers for the students)
 Knowledge Utility: When some information is communicated
to the customer by imparting some knowledge about the
product through presentation or advertisement.
(Advertisement for a product or service)
Production System
 Scope of Production
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. Deciding
upon the machines, equipment and necessary devices that
leads to desired production. Storage of material and
handling it in most effective way to avoid the wastage.
 PRODUCT DESIGN - It refers to designing the product with
regards to its production. Product design deals with
conversion of ideas into reality. Every business organization
have to design, develop and introduce new products as a
survival and growth strategy.
 Continue………
 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. The
principle of production planning and control lies in
the statement ‘First Plan Your Work and then Work
 Continue………

 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 feed back system and corrective action
procedure.
 MATERIALS MANAGEMENT - Managing the
inventories of raw material, semi-finished and
finished goods such that there is no excessive
money may block.
 MAINTENANCE MANAGEMENT - Analysis the
deviations and formulating the corrective measures
to stay in track with planned quality, time-schedule
Nature Of Production Management
Production management assists in planning,
organizing, directing and controlling all the
production activities. It is a part of general
management .
It is an inter-subjective approach . Contribution
made by several subjects like, economics,
operational research, mathematics, statistics,
human psychology, engineering, etc. have aided
production management to develop a diverse and
distinct approach of management.
Production management is not only confined to
production of goods, it also includes management
of service sector where no tangible goods are
produced, but services are provided which are
intangible.
 Importance of Production Management
 Higher standard of living: Production management conducts
continuous research and development (R&D). So they produce new
and better varieties of products. People use these products and
enjoy a higher standard of living.
 Generates employment: Production activities create many
different job opportunities in the country, either directly or
indirectly. Direct employment is generated in the production area,
and indirect employment is generated in the supporting areas such
as marketing, finance, customer support, etc.
 Improves quality and reduces cost: Production management
improves the quality of the products because of research and
development. Because of large-scale production, there are
economies of large scale. This brings down the cost of production.
So, consumer prices also reduce.
 Boosts economy: Production management ensures optimum
utilisation of resources and effective production of goods and
services. This leads to speedy economic growth and wellbeing of
the nation
 Continue………
Accomplishment of firm's objectives: Production
management helps the business firm to achieve all its
objectives. It produces products, which satisfy the
customers' needs and wants. So, the firm will increase
its sales. This will help it to achieve its objectives.
Reputation, Goodwill and Image: Production
management helps the firm to satisfy its customers.
This increases the firms reputation, goodwill and
image. A good image helps the firm to expand and
grow.
Helps to introduce new products: Production
management helps to introduce new products in the
market. It conducts Research and development (R&D).
This helps the firm to develop newer and better quality
products. These products are successful in the market
because they give full satisfaction to the customers
 Production as a Functional Area of
Management
Production system is the application of management
functions in production process through planning,
organising, directing and controlling managerial
functions in the process of converting input into desired
output in an efficient and effective manner.
Production system includes all those operations by
which the input can be converted into output for a
desired product or a service.
The service may be tangible or intangible it is the
system which generates consumer satisfaction.
Hence according to some authors production system is
otherwise known as operation system so as production
management can be referred as operations
management.
PRODUCTION PLANNING AND CONTROL

It 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.
The main functions of production planning and
control includes:
 Planning
 Routing
 Scheduling
 Dispatching
 Follow-up.
 Planning: It 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. It makes it
possible for things to occur which would not otherwise happen.
 Routing – It is the selection of path where each part of the
product will follow, which being transformed from raw material
to finished products i.e., from department to department and
machine to machine till raw material gets its final shape.
 Scheduling - It determines the programme 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 – It is concerned with the starting the processes.
Dispatching is release of orders and instruction for the starting
of production for any item in acceptance with the route sheet
and schedule charts‘.
 Follow-up- The function is to report the daily progress of work
in each shop in a prescribed proforma and to investigate the
causes of deviations from the planned performance.
 Types of production system

Job production:
Job shop is appropriate for manufactures of small batches of
many different products, each of which is custom designed
and requires its own unique set of processing steps or routing
through production process. A process technology suitable
for a variety of custom designed products in some volume.
Under this method peculiar, special or non-standardized
products are produced in accordance with the orders
received from the customers varying in size and nature, it
requires separate job for production.
The machines and equipment‘s are adjusted in such a
manner so as to suit the requirements of a particular job.
Ship building, dam construction, bridge building, book
printing are some of the examples of job production.
Characteristics
1. A large number of general purpose machines
are required.
2. A large number of workers with different jobs
will have to be employed.
3. There can be some variations in production.
4. Some flexibility in financing is required
because of variations in work load.
5. The machines and equipment setting will
have to be adjusted and readjusted to the
manufacturing requirements.
6. The movement of materials through the
process is intermittent.
Advantages
Can meet customer needs exactly
Motivated staff/job satisfaction
Specialist work adds value
Flexibility to produce whats required
Low stock holding costs - little work in
progress
High quality work - focus on 1 item
Disadvantages
Small scale production - no EOS
Higher unit costs of production - labour
intensive and specialist staff
Skilled labour is more expensive, harder to
recruit, large investment in training needed
Slow production process
Costs are difficult to estimate - labour is
charged per hour, specialist equipment needed
and materials are specialist
Batch production
 Refers to repetitive production which is known in
advance. It is that form of production where identical
products are produced in batches on the basis of demand
of customers‘ or of expected demand for products.
 This method, instead of making one single product as in
case of job production, a batch or group of products are
produced at one time. It should be remembered here
that one batch of products may not resemble with the
next batch.
 Under this production the work is divided into operations
and one operation is done at a time. After completing the
work on one operation it is passed on to the second
operation and so on till the product is completed.
 This method is generally adopted in case of biscuit and
confectionery medicines, tinned food and hardware‘s like
nuts and bolts etc.
Characteristics

1. The work is of repetitive nature.

2. There is a functional layout of various
manufacturing processes.
3. One operation is carried out on whole batch
and then is passed on to the next operation
and so on.
4. Same type of machines is arranged at one
place.
5. It is generally chosen where trade is seasonal
or there is a need to produce great variety of
goods.
Advantages of Batch Production
Can produce larger quantities than job
Possible EOS depending on batch size - lower
unit costs (bulk discounts)
Standardised products
Specialist staff and equipment used at each
stage but less is needed for highly skilled staff
Some flexibility - batches can be made to
custom orders
Some customer choice
Stocks of finished to semi-finished goods can be
held to meet unexpected orders
Disadvantages of Batch Production
Small batches means higher unit costs
Less variety of work so worker
productivity/motivation/job satisfaction
impacted
Possible time delays between batches
Downtime reduces output comapred to flow
production
Stock holding costs impact cash outflows
Storage space needed - costs to maintain
Limited variety compared to job
MASS OR FLOW
PRODUCTION
 This method involves a continuous production of
standardized products on a large scale. Under this method,
production remains continuous for future demand.
 Standardized products are produced under this method by
using standardized materials and equipment.
 There is a continuous or uninterrupted flow of production
obtained by arranging the machines in a proper sequence
of operations.
 Process layout is best suited method for mass production
units.
car assembly plant
bottling plant
bicycle production line
Characteristics
1.The units flow from one operation point to
another throughout the whole process.
2. There will be one type of machine for each
process.
3. The products, tools, materials and methods
are standardised.
4. Production is done in anticipation of demand.
5. Production volume is usually high.
6. Machine set ups remain unchanged for a
considerable long period.
7. Any fault in flow of production is immediately
corrected otherwise it will stop the whole
production process.
Suitability of flow/mass production
1. There must be continuity in demand for the
product.
2. The products, materials and equipments must
be standardised because the flow of line is
inflexible.
3. The operations should be well defined.
4. It should be possible to maintain certain
quality standards.
5. It should be possible to find time taken at
each operation so that flow of work is
standardised.
6. The process of stages of production should be
Advantages of Flow/Mass Production
EOS can be incurred with lower unit costs
Division of labour and specialisation can be
applied
Standardised products can be produced quickly
for a mass market with a low cost per unit per
item
Large quantities produced quickly
Little downtime - maximum production
Use of machinary and robots (CAPITAL
INTENSIVE PRODUCTION) - no need for training,
labour, skills
Disadvantages of Flow/Mass Production
 High set up costs with expensive automated systems
 It may need large raw materials and stock
 Reduced demand affects the whole business’ survival
 Downtime, breakdowns and stoppages in the production
line halts everything
 Lack of flexibility - harder to produce a variety
 Long set up time to ensure processes are completed in
the right order
 Reduces choice with the mass produced standardised
goods
 Long lead time in setting up flow production systems
 Changing the products have large downtime
 Repetitive work reduces worker motivation, increase unit
costs and raise absenteeism
CONTINUOUS PRODUCTION
SYSTEM
Continuous means something that operates
constantly without any irregularities or
frequent halts.
In the continuous production system, goods
are produced constantly as per demand
forecast. Goods are produced on a large scale
for stocking and selling. They are not produced
on customer's orders.
Here, the inputs and outputs are standardized
along with the production process and
sequence.
Examples
Characteristics
1. The flow of production is continuous.
It is not intermittent.
2. The products are standardized.
3. The products are produced on
predetermined quality standards.
4. The products are produced in
anticipation of demand.
5. Standardized routing sheets and
schedules are prepared.
INTERMITTENT PRODUCTION SYSTEM
Intermittent means something that starts
(initiates) and stops (halts) at irregular (unfixed)
intervals (time gaps).
In the intermittent production system, goods are
produced based on customer's orders. These
goods are produced on a small scale. The flow
of production is intermittent (irregular).
These products are of different sizes. The design
of these products goes on changing. It keeps
changing according to the design and size of the
product. Therefore, this system is very flexible.
Example
Characteristics
1. The flow of production is not continuous.
It is intermittent.
2. Wide varieties of products are produced.
3. The volume of production is small.
4. General purpose machines are used.
These machines can be used to produce
different types of products.
5. The sequence of operation goes on
changing as per the design of the product.
6. The quantity, size, shape, design, etc. of
the product depends on the customer's
orders.
Aggregate Production
Planning
Aggregate planning links long-range strategic
planning and short-range scheduling of the
production process. It ensures deployment of right
resources, at right time and right price. Aggregate
planning is also based on the company's ethics,
policies and commitment to society.
It estimates the need of materials and labour for
the required output planned for medium range.
This is dependent on the accuracy of medium
range forecasts.
Aggregate planning is an operational activity for
production process, so that management can
procure the required resources.
 Need for Aggregate Planning
 Minimize the overheads and maximize the profits.
 Full utilization of facilities and minimize overloading and
under loading.
 Make sure enough capacity available to satisfy expected
demand.
 Plan for orderly and systematic change of production
capacity to meet the peaks and valleys of expected
customer demand.
 Get the most output for the amount of resources available.
 Facility desired level of service to the customer.
 Minimize investment in inventory.
 Minimize Production setups.
 Minimize changes in manpower requirements.
Factors Affecting Aggregate Planning

Complete information is required about

available production facility and raw
materials.
A solid demand forecast covering the
medium-range period
Financial planning surrounding the
production cost which includes raw
material, labor, inventory planning, etc.
Organization policy around labor
management, quality management, etc.
Inputs Required
An aggregate demand forecast for the relevant
period
Evaluation of all the available means to
manage capacity planning like sub-contracting,
outsourcing, etc.
Existing operational status of workforce
(number, skill set, etc.), inventory level and
production efficiency
Aggregate planning will ensure that
organization can plan for workforce level,
inventory level and production rate in line with
its strategic goal and objective.
 Aggregate Planning Strategies
1. Level Strategy: As the name suggests, level strategy
looks to maintain a steady production rate and workforce
level. In this strategy, organization requires a robust
forecast demand as to increase or decrease production in
anticipation of lower or higher customer demand.
Advantage of level strategy is steady workforce.
Disadvantage of level strategy is high inventory and
increase back logs.
2. Chase Strategy: As the name suggests, chase strategy
looks to dynamically match demand with production.
Advantage of chase strategy is lower inventory levels and
back logs. Disadvantage is lower productivity, quality and
depressed work force.
3. Hybrid Strategy: As the name suggests, hybrid
strategy looks to balance between level strategies and
chase strategies.
 Aggregate Production Planning
Costs
Basic Production Costs
Production rate-change costs
Inventory holding costs
Backlog costs
Steps involved in Aggregate Planning
Demand Forecasting
Determine Capacity
Identify Department and Policies
Determine Costs
Develop alternative plans
Evaluation
 Capacity Planning

Meaning of Capacity
Capacity is defined as the ability to achieve, store
or produce.
For an organization, capacity would be the ability
of a given system to produce output within the
specific time period.
In operations, management capacity is referred as
an amount of the input resources available to
produce relative output over period of time.
Capacity= Number of machines and/or workers *
Number of shifts * Utilization* Efficiency
 Capacity Planning
Capacity planning is the process of
determining the production capacity needed
by an organization to meet changing
demands for its products.
Capacity planning is essential to determine
the optimum utilization of resource and plays
an important role decision-making process,
for example, extension of existing operations,
modification to product lines, starting new
products, etc.
The ultimate goal of capacity planning is to
meet the current and future level of the
requirement at a minimal wastage.
Strategic Capacity Planning
A technique used to identify and measure overall
capacity of production is referred to as strategic
capacity planning. Strategic capacity planning is
utilized for capital intensive resource like plant,
machinery, labor etc.
Strategic capacity planning is essential as it helps
the organization in meeting the future
requirements of the organization. Planning
ensures that operating cost are maintained at a
minimum possible level without affecting the
quality. It ensures the organization remain
competitive and can achieve the long-term growth
plan.
Importance of Capacity Planning

Impact the ability to meet future Demands.

Affect Operating Costs.
Involve long term commitment.
Affect competitiveness
Affect ease of management.
Impact long term planning
Types of Capacity Planning
Design Capacity: It refers to the maximum
output mentioned by the design engineer
of the equipment in ideal working
conditions.
Production Capacity: maximum possible
output of machinery in normal working
conditions.
Sustainable Capacity: maximum level of
output in realistic working conditions.
Effective capacity: Optimum output with
predefined product mix, plant maintenance
and defined tolerances, job and workers
Practical
 Determinants of Effective Capacity
Facilities: Design Location, Layout and
Environment
Product and Service Factor: Product Mix,
Design
Process Factors: Quality and Quantity
Human Factors: Job content, Job Design,
Training, Motivation and Compensation
Operational Factors: Scheduling, Material
Management, Quality Assurance, Maintenance
Policy, Equipment Breakdowns
External Factors: Product Standards, Safety
Regulations, Union and Pollution Control
Standards.
Volume Production
 PROCESS PLANNING
Process planning is the long-term selection of
the transformation process and technology.
Processes are to be planned in the light of
the required but limited resources as per the
nature of the products to be produced.
Process planning consists of two major
aspects, namely
Process design
Production task design
Process design: It is related to the job
manufacturing sequence of different operations at
different work stations to manufacture the product
with the desired specifications.
 Technology Required
 Material Required
 Available layout and Space available
 Nature of Product
 Quantities to be produced

Production and task design: In this, the design of

individual tasks is to be provided to facilitate
smooth production of a product, with the concern
for not only technical feasibility but also ease of
the operator. Here, man-machine charts are made
to establish the relation between the two in the
process.
 Basic Principles of Process Design
Suitability: Process design should be suitable
for the organization. All processes should be
treated equally and the entire system should
be considered while using any or combination
of two or more processes.
Cumulative in effect: Related with customer
satisfaction as well as on competitive
advantage.
Attention by management: Management
must pay particular attention to the
interfaces between processes.
 Process Design Strategy
Process structure,
Customer involvement,
Vertical integration
Resource and process flexibility,
Capital intensity,
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