An Introduction to Operations Management

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OPERATIONS
MANAGEMENT
MODULE 1
Ms. RIZAET A. RAHIM

2. OPERATIONS
MANAGEMENT MODULE 101
1. Introduction to Operations Management:
2. Evolution of OM
3. Production-systems concept, Transformation
process,
4. Difference between products and services,
5. 5P’s and 9M’s of OM,
6. Operations as service.
7. Craft, Mass and Lean Production.
8. Operations strategy:
9. Operations strategy in manufacturing,
10.Operations strategy in services Process Analysis
11.Types of process
12.Process Flowcharting,
13.process performance metrics

3. MAJOR FUNCTIONS OF AN ORGANIZATION

4. An organization consists mainly of four functional subsystems,
 marketing,
production,
finance and
human resource management
All the subsystems of an organization are mutually interlinked. A complete integration of all the
functions /subsystems of an organization are absolutely essential for the effective functioning and
achievement of desired results.
The concern of any organization today is the pursuit of creating more value for the customer. This value
end focus provides the competitive advantage that has become of necessity today. 09 Production and
operation management provides the means to explore and implement initiatives on how to avoid waste,
how to create value and how the organization can differentiate itself from its competitors.

5. PRODUCTION AND OPERATION MANAGEMENT IS THE SCIENCE-COMBINATION
OF TECHNIQUES AND SYSTEMS – THAT GUARANTEE PRODUCTION OF GOODS
AND SERVICES OF THE RIGHT QUALITY, IN THE RIGHT QUANTITIES AND AT
RIGHT TIME WITH THE MINIMUM COST WITHIN SHORTEST POSSIBLE TIME.
In the words of Mr. E.L. Brech:
“Production and Operation
Management is the process of
effective planning and
regulating the operations of
that section of an enterprise
which is responsible for the
actual transformation of
materials into finished
products”

7. EVOLUTION …….
Replaced
traditional craft
methods
Substituted machine
power for labour
INDUSTRIAL
REVOLUTION
Discover
worker’s
physical limits
through
measurement,an
analysis and
observation
SCIENTIFIC
MANAGEMENT
Factors other than
money contribute
to worker
productivity.
HUMAN
RELATIONS
MOVEMENT
Techniques
designed to achieve
high volume
production using co
ordinated material
flows.continous
development
NEW
DEVELOPMENTS
Provided the tool
necessary to
support the
widespread use of
management
science’s
quantitative
techniques
COMPUTER
AGE
1700s 1900s 1930-
1960
1970s 1980s

8. DIFFERENCE BETWEEN OPERATIONS AND
PRODUCTION
In the transformation process, the inputs change the form into an output, by
adding value to the entity. The output may be a product or service.
If it is a product centric that is known as production,
If it is a service centric then that is known as operation .

9. DIFFERENCE BETWEEN PRODUCTS AND SERVICES

10. IMPORTANCE OF PRODUCTIVITY:
Effectiveness of production and operation system may be viewed as the
efficiency with which inputs are converted into outputs. The conversion
efficiency can be gauged by ratio of the output to the inputs and is commonly
known as
productivity of the system.
Productivity is the ratio of input facilities to the output of goods and services.
Output
Productivity = --------------
Input
Goods or services
= -----------------------------------------------------------------------------------
Capital, manpower, materials, machines and land and building

11. Labour productivity Index/Measure = Output in unit /Man hours worked
Management productivity Index/Measure = Output /Total cost of management
Machine productivity Index/Measure = Total output /Machine hours worked
Land productivity Index/Measure = Total output /Area of Land used
Partial Measure = Output / Labour or
Output /Capital or
Output/ Materials or
Output /Energy

12. FIVE P’s OF PRODUCTION
MANAGEMENT

13. The division of production management functions in to 5 p’s (product, plant, programme, processes and people)
will provide useful conceptual framework for the various activities performed by production or operations manager.
The Five P’s:
1. The Product:
Product is the link between production and marketing.
As per the product policy of the organization an agreement is reached between the various functions on the
following aspects of the product,
1. Performance
2. Quality and reliability
3. Aesthetics and ergonomics
4. Quantity and selling price
5. Delivery schedule
2. The Plant:
The plant accounts for major investment (fixed assets).The plant should match the needs of the product; market,
the worker and the organization.
The plant is concerned with;
1. Design and layout of building and offices
2. Reliability, perfect, maintenance of equipment’s
3. Safety of operations
4. The financial constraint

14. 3. The Process:
There are always number of alternative methods of creating a product. But it is required to select the one best
method, which attains the objectives.
In deciding about the process it is necessary to examine the following factors:
1. Available capacity
2. Manpower skills available
3. Type of production
4. Layout of plant
5. Safety
6. Maintenance required
7. Manufacturing costs
4. The Programme:
The programme here refers to the timetable of production.
1. Purchasing
2. Transforming
3. Maintenance
4. Cash
5. Storage and transport

15. 5. The People:
Production depends upon people. The people vary in their attitudes, skill and expectations from the work.
Thus, to make best use of available human resource, it is required to have a good match between people
and jobs which may lead to job satisfaction.
The production manager should be involved in issues like:
1. Wages/salary administration
2. Conditions of work/safety
3. Motivation
4. Training of employees
Thus, production management encompasses these 5 Ps.The areas of 5 Ps are overlapping.

16. NINE M’s OF PRODUCTION
MANAGEMENT

17. MINUTES
MEASUREMENT
MOTIVATION

19. A “Production System” is a system whose function is to transform an
input into a desired output by means of a process (the production
process) and of resources. The definition of a production system is thus
based on four main elements: the input, the resources, the production
process and the output.
The outputs of a production system are normally called products. These
products may be:
(a)Tangible goods (b)Intangible services (c)combination of (a) and (b)
(Steels,chemicals etc.) (Teaching,health care etc.) (fast food,tailoring etc.)
Diagram of a production system

21. CLASSIFICATION OF PRODUCTION SYSTEM
The production system can be classified on the basis of the following:
TYPE OF PRODUCTION – Job shop production, Batch production, Mass
production
SIZE OF THE PLANT – Large size plant (eg. Oil refinery), Medium size plant, Small
size plant (eg. Printing press)
TYPE OF PRODUCT- Complex to manufacture (Aircraft) and simple to
manufacture (Soap)
PHYSICAL FLOW OF MATERIAL – Automated flow, Semi-automated flow and
Manual flow
NATURE OF ORDER/DEMAND PATTERN – Stable demand, Unstable demand
VARIETY OF JOBS – More variety (eg. Automobiles/electronic goods), One variety
(eg. Oil refinery)

40. Craft production is the process of manufacturing by hand with or without the aid of tools. The
term
Craft production refers to a manufacturing technique applied in the hobbies of handicraft but
was also the common method of manufacture in the pre industrialized world, such as in the
production of pottery.

41. 4. Production System
A production system is a collection of people, equipment, and procedures organized to perform the manufacturing
operations of a company (or other organization)
4.1. Components of a production system:
There are two components for a production system such as:
1. Facilities – the factory and equipment in the facility and the way the facility is organized (plant layout)
2. Manufacturing support systems – the set of procedures used by a company to manage production and to solve
technical and logistics problems in ordering materials, moving work through the factory, and ensuring that products
meet quality standards

42. Manufacturing systems include the logical groupings of equipment and workers in the factory. A
combination of a group of workers and machines are termed as Production line
Manual work systems - a worker performing one or more tasks without the aid of powered tools, but
sometimes using hand tools. For example, filing work carried out in the central workshop

43. Worker-machine systems - a worker operating powered equipment. For example, turning done on a work piece
using a Lathe.

44. Automated systems - a process performed by a machine without direct participation of a human For example,
turning done on a work piece using a CNC machine.

46. Process Analysis
• Process Analysis
• Process Flowcharting
• Types of Processes
• Process Performance Metrics

47. Process Analysis Terms
• Process: Is any part of an organization that takes inputs and
transforms them into outputs.
• Cycle Time: Is the average successive time between completions of
successive units.
• Utilization: Is the ratio of the time that a resource is actually activated
relative to the time that it is available for use.

48. Process Flowcharting
• Process flowcharting is the use of a diagram to present the major
elements of a process. The basic elements can include tasks or
operations, flows of materials or customers, decision points, and
storage areas or queues.
• It is an ideal methodology by which to begin analyzing a process.

49. Flowchart Symbols
Tasks or operations Examples: Giving an admission ticket to
a customer, installing a engine in a car,
etc.
Decision Points Examples: How much change should be
given to a customer, which wrench
should be used, etc.

50. Flowchart Symbols (Continued)
Storage areas or queues Examples: Sheds, lines of people waiting
for a service, etc.
Flows of materials or
customers
Examples: Customers moving to the a
seat, mechanic getting a tool, etc.

53. Example: Flowchart of Student Going to
School
Yes
No
Goof off
Go to school
today? Walk to classDrive to school

54. Multistage Process
Stage 1 Stage 2 Stage 3

55. Multistage Process with Buffer
Stage 1 Stage 2
Buffer

56. Other Types of Processes
• Make-to-order
• Only activated in response to an actual order.
• Both work-in-process and finished goods inventory kept to a minimum.
• Make-to-stock
• Process activated to meet expected or forecast demand.
• Customer orders are served from target stocking level.

57. Process Performance Metrics
• Operation time = Setup time
Run time
Set up time can be defined as the amount of time taken to change a machine from the last part
of a production lot to the first good part of the next production lot.
• Throughput time = Average time for a unit to move through the system
• Velocity = Throughput time
Value-added time (the processing time associated with production.)

58. Process Performance Metrics (Continued)
• Cycle time = Average time between completion of units
• Throughput rate = 1 .
Cycle time
• Efficiency = Actual output
Standard Output
• Productivity = Output
Input
• Utilization = Time Activated
Time Available

59. Cycle Time Example
• Suppose you had to produce 600 units in 80 hours to meet the
demand requirements of a product. What is the cycle time to meet this
demand requirement?
• Answer: There are 4,800 minutes (60 minutes/hour x 80 hours) in 80
hours. So the average time between completions would have to be:
Cycle time = 4,800/600 units = 8 minutes.