2. DEFINITION OF 'OPERATIONS MANAGEMENT'
Operations management refers to the
administration of business practices to create the
highest level of efficiency possible within an
Operations management is concerned with
converting materials and labour into goods and
services as efficiently as possible to maximize the
profit of an organization.
4. HISTORY OF OPERATION MANAGEMENT:-
The history of production and operation systems began
around 5000 B.C. when Sumerian priests developed the
ancient system of recording inventories, loans, taxes,
and business transactions. The next major historical
application of operation systems occurred in 4000 B.C.
In 1883, Frederick W. Taylor introduced
the stopwatch method for accurately measuring the time
to perform each single task of a complicated job.
The idea of the production line has been used multiple
times in history prior to Henry Ford: the Venetian
Arsenal (1104), Smith pin manufacturing in the Wealth of
Nations (1776) or Brunel's Portsmouth Block
Mills (1802). Ransom Olds was the first to manufacture
cars using the assembly line system
5. PHASES OF OPERATION MANAGEMENT:-
Empiricism (learning from experience)
Analysis (scientific management)
Synthesis (development of mathematical problem
Isolated Systems with Single Objective (use
of Integrated and Intelligent Systems, and WWW)
Integrated Complex Systems with Multiple
Objectives (development of ecologically sound
systems, environmentally sustainable systems,
considering individual preferences)
6. OPERATIONS MANAGEMENT
Operation system is either manufacturing sector or
The input requirements and the transformation
process, in which part of the value addition takes
place to get the required quantity of the product or
services with the targeted quality within the
specified time period, is carried out in a most
Operation Management Plan coordinates and
controls all the activities in the operation system to
achieve the stated objectives.
7. UNDERSTANDING THE OPERATION
The operation system includes both manufacturing
sector as well as service sector, but when you use
the word PM, you should be careful to note that it
refers to the manufacturing sector but not the
Suppose, you are designing a layout for the
hospital you should say that you are applying
Operations Management Technique not the
Production Management Technique.
8. NATURE / SCOPE / INTRODUCTION :
Know the production & operation function as
process of value addition.
Recognize the distinction between product &
Understand all organizations as conversion system
whether in manufacturing or service sectors.
Identify problems of decision making in operations
Distinguish functions & requirements of different
Facilities required for production & operation.
9. PRODUCTION AND OPERATION FUNCTION
Profit(produce a product or service that creates
profit and revenue for the company)
Evaluation(self-evaluating entity that monitors the
quality, quantity, and cost of goods produced)
Tasks(include forecasting, scheduling, purchasing,
design, maintenance, people management, flow
analysis, reporting, assembly and testing)
10. STRATEGIC IMPORTANCE OF THE
• Effective production and operations management can:
• Lower a firm’s costs of production.
• Boost the quality of its goods and services.
• Allow it to respond dependably to customer demands.
• Enable it to renew itself by providing new products.
11. TOP-DOWN APPROACH TO OM STRATEGY
Operations Strategy Decisions
Needs of customers
Efficient scheduling of
and control (short-range)
Immediate tasks and
12. PRODUCTION PROCESSES
• Synthetic production system Combines a number of raw
materials or parts or transforms raw materials to produce
• Example: Dell’s assembly line
• Continuous production process Generates finished products
over a lengthy period of time.
• Example: Steel industry
• Intermittent production process Generates products in short
production runs, shutting down machines frequently or
changing their configurations to produce different products.
• Example: Most services
13. THE JOB OF PRODUCTION MANAGERS
• OVERSEE THE WORK OF PEOPLE AND MACHINERY TO
CONVERT INPUTS (MATERIALS AND RESOURCES) INTO
FINISHED GOODS AND SERVICES.
• FOUR MAIN TASKS:
14. PLANNING THE PRODUCTION PROCESS
• Begins by choosing what goods or services to offer
• Convert original product ideas into final specifications.
• Design the most efficient facilities to produce those
15. SELECTING THE MOST APPROPRIATE SITE
Systematic Layout Planning
All space allocation should be in adjacent basis and
on priority basis.
16. IMPLEMENTING THE PRODUCTION PLAN
Make, Buy, or Lease Decision
• Choosing whether to manufacture a needed product or
component in house, purchase it from an outside
supplier, or lease it.
• Factors in the decision include cost, availability of
reliable outside suppliers, and the need for
Selection of Suppliers
• Based on comparison of quality, prices, dependability of
delivery, and services offered by competing companies.
17. Inventory Control
• Perpetual inventory Systems continuously monitor the
amounts and locations of stocks.
• Management philosophy aimed at improving profits and
return on investment by minimizing costs and eliminating
waste through cut- ting inventory on hand.
Materials Requirement Planning
• Computer-based production planning system by which a
firm can ensure that it has needed parts and materials
available at the right time and place in the correct amounts.
18. CONTROLLING THE PRODUCTION PROCESS
• Production control Creates a well-defined set of
procedures for coordinating people, materials, and
machinery to provide maximum production efficiency.
• Determining the amount of resources (including raw
materials and other components) an organization needs
to produce a certain output.
• Determining the sequence of work throughout the
facility and specifying who will perform each aspect of
the work at what location.
19. OM’S CONTRIBUTIONS TO SOCIETY
Higher Standard of Living
Ability to increase productivity
Lower cost of goods and services
Better Quality Goods and Services
Competition increases quality
Improved Working Conditions
Better job design and employee participation
20. TOTAL QUALITY MANAGEMENT:-
Quality is important in all functional areas of an
Quality is now much more than the technical
requirements for manufactured goods.
Service quality (customer relationships)
is equally important.