PRODUCTION & OPERATION

MANAGEMENT – Unit 1
BHASKAR ROY
 INPUT PROCESS/ OUTPUT
TRANSFORMATION

PRODUCTION : It is any Process or Procedure developed to

transform a set of inputs like Men, Materials, Machines, Capital,
Energy, Information into a specified set of required outputs like
finished Product or Services in proper quantity and quality, thus
achieving the objectives of an organization.
Factors of Production :
1. Land & other Natural Resources
2. Labour /Human Efforts (L)
3. Capital (C )
4. Management/Enterprise
Therefore, P= f (L, C) - Production is a function (depends on) of
labour & capital
 General Model of Production System
Schematic Diagram
Receiving Processing
INPUTS Storage Operations
Operation

Information &
Control System

Decision Maker

Finished
Shipping
OUTPUT Goods
Operation
Storage
Scope Of Production / Problem Areas

• Location of the Plants, Stores and Office

• Plant Layout and Work Areas
• Scheduling and Allocation of Resources
• Equipment Selection, Maintenance and Replacement
• Inventory Policies
• Process Design and Control
• Work methods
• Quality and Quantity Control
 Types of Production
(a) Intermittent Production, (b) Continuous Production
& ( c) Assembly Lines
Characteristics of Intermittent Production –
• flow of production is intermittent , not continuous
• Volume/quantity produced is generally low to medium
• Wide product Variety can be possible to manufacture
• General purpose/ standard machines are used
• Operation sequences also varies according to requirement
• Generally Process layout is adopted
• Storage facility is generally required at every stage of operation
 (a) Intermittent Production
• a ( i) Job/Unit Production • a (ii) Batch Production
Manufacturing in small or medium size
Manufacturing of Single unit/piece batches (1 to 500)
Examples – Small Tools, standard machines
Ex - Special machine or equipment, Small and equipment, Aero Plane manufacturing
Project , Prototype, Model, Prototype,
Large Engine, Boiler, Processing General purpose Machines are mostly used,
sometimes special purpose are also used
Equipment, Special purpose Material here for manufacturing
Handling equipment, Ship Building etc.
Generally large no of Product variety this
Generally produced once only, generally type of manufacturing unit can produce.
intermittently, sometimes periodically
Items are manufactured with a view of
repetitive order after a time interval
General purpose Machines are mostly
used here for manufacturing Generally small demand in market and unit
price is of medium to high value
Absolutely as per requirement
Generally large value
 (b) Continuous Production Characteristics –
• The volume is generally large
• Goods are produced in anticipation of demand
• Layout of the Plant is generally Product layout type.
• Special Purpose machines are generally used
• Machine capacities are balanced , so that materials are fed at
one end should move on with minimal obstacle
• Fixed path material handling systems are highly used

Suitability of Continuous Production :

• High Demand,
• Standardized Product,
• Proper balancing between different stages of Operation
 (b) Continuous Production
b (i) Mass Production b (ii) Flow/Process Production
• Large no of quantity is produced • This is the production of Steel or
continuously, all identical items, Chemical products , which is
having high demand in market manufactured throughout generally
Ex -Automobile parts, Computer round the clock.
machine parts • Specialized plants are used
• Mostly special purpose machines, • Only similar type of products can be
Tools , equipment are used for manufactured with little modification
producing, handling, Inspecting, in composition.
weighing, packaging large quantity • Ex – Steel Plant, Crude Oil Production,
of products Almost all chemical Plants,
• Unit price is generally low Pharmaceutical products, Cement
• Low flexibility in production, mostly Plant, Cosmetics products
single or very few similar items can
be produced

• With the advancement of FMS

(Flexible manufacturing System),
there occurs a sea change in the
concept of Batch & Mass
production system.
( b) Continuous Production & ( C) Assembly Line
Types of Process Production (c ) Assembly Lines –
• Analytical Process – When
one raw material is broken into Ex - Manufacturing of
different products Automobiles
Ex – Crude Oil is analyzed to
Domestic Gas, Naptha, Petrol,
[Inventor Henry Ford]
Paraffin etc.
• Synthetic Process of Please go through the video of
Production (assembling car manufacturing
process) – It involves mixing of
two or more materials to a single
product
Ex – various types of acids,
perfumes, bonding agents are
synthesized to manufacture soap
 Assembly Line Production System for Car

A no of products combines and

forms one sub-assembly and
then a no of sub-assemblies
ultimately forms one single product.

• Synthetic Type Flow Production • Analytic Type of Flow Production

P1 Output 1
P2 Output
product Output 2
Input
P3 Output 3
P4
Output 4
• A no of Raw material combines and
form one output product • One Raw material is processed and a no
of output products are derived
 Production Management
It deals with decision making related to Production
Ultimate Objectives - To manufacture quality Products &
Services, on Schedule,at the lowest possible cost, with
minimum asset turnover to achive consumer satisfaction.
• Manufacturing Cost
• Product Quality
• Manufacturing Schedule

Intermediate Objectives -
• Aquisition & Utilisation of Machinery & Equipment
• Quantity, Valuation , Storage requirement of Input materials & In-
process materials
• Selection, Placement, Training & Utilisation of Manpower considering
employee turnover rates, safety measurement, Industrial relation etc
• Installation of auxilliary facilities like power, water supply, material
handling etc. which helps in enhancing production
 Inclusion of non-manufacturing servities activities into the
scope of the subject leads to change of name , i.e.,
Production and Operation Management
• Non-production service activities like Transportation, Farming, Banks,
Hospitals, Warehousing etc. are also covered here
• It also deals with various operations/ Production process activities
within a Production System
• Production & Operations both are basically value addition
• For optimising various operations, many Operation Research Techniques
like linear Programming are extensively used.

Production and Operation Management’s contribution -

• Changes ‘Rule of thumb’ to scientific method
• Right selection of person for the job
• Determine correct Relationship between various levels of
Manpower ( management & workers)
• Focussing specialisation of manpower to become more proficient
 Productivity
It is an measure /Index of Efficiency, analogous to Efficiency
• Productivity = Output Units/ Input resources [Pr = O/I] , Input means land,
labour, capital, equipment/machinery etc.
• It is a concept to measure the success of a production system
• It is relative rather than absolute term. It is tangible and quantified
• It is not a measure of Profitability . Profit may go up & down due to various
factors , keeping Productivity same or vice-versa.
• It is also not a measure of Production. Production may go up & down due to
various factors , keeping Productivity same or vice-versa
• Ex – In a cement Plant daily Production is 1400 Tons and there are 140 workers,
average working hours 8 (eight) hours a day.
Then, Labour Productivity = 1400/140 = 10 Tons/worker/day
or, 10/8 = 1.25 Tons/worker/hour - labour-hour Productivity
If , average Labour cost per hour is Rs. 100 , then Labour Cost per ton of
cement = Rs. 100/1.25 = Rs. 80
Similarly , Capital cost per unit of output can be found out
• By measuring Productivity of different organizations of same nature , we can
compare how efficient they are.
 Productivity –
(i) Overall Productivity & (ii) Factoral Productivity
• Overall Productivity – It is the Ratio of cost of output to the cost of input. It
is the aggregate of all the factors of Production
• Factoral Productivity – It is the Productivity of any factor of output
Production , like Labour Productivity, Material Productivity, Capital
Productivity etc. . It can be calculated for any department/production
centre also
• Higher Productivity is the basic business requirement. Management should
aim at continuous improvement of Productivity.
• Productivity may be determined in respect of plants , industries, products,
cost centres / department etc..
• With the same available resources increase in Productivity means increase
in production and improvement in business efficiency .
• By Improvement of Productivity Management (better Profits) , Workers
(higher salary) and Society (reduced product price) all are getting
benefitted.
• Management should aim at constant improvement of higher productivity.
• Productivity of one period can be compared with the productivity of other
period to determine the trend of improvement.
A good management should How to improve Productivity ?
after following contributors By minimizing
of Productivity • Waste of Manpower, Material &
Material
1. Incentive
• Poor working condition
2. Employee Relationship • Outside/external interference
3. Proper cost control • Improper material handling
4. Training By increasing
5. Introduction of new • HR training
Technology • Fast & timely communication
6. Planning & scheduling
• Attitude & morale of workforce
7. Proper design &
standardization of
By Optimizing
Products • Inventory
• Automation
 Productivity & Incentives
• Incentive is that which induces a person to work. Work (study)
must have meaning to the worker (student).
• Incentive is that , what a person feel all around him/her on a wet
Monday morning – Niegel Balschin .
Under a proper Incentive scheme, none dislikes work, rather find
pleasure in working.
• Economy of production is highly related with incentives. It can be
applied on individual or on group.
• Role of Incentive on Productivity - (i) Efficiency / Productivity
increases, (ii) Labour & other cost of production reduces, (iii) It
helps to earn more for workmen, (iv) Products becomes cheaper ,
(v) It ultimately helps the organization to grow
• Incentive is not necessarily monetary always, it can be in terms of
perquisites, promotion etc. etc.
• Incentive has a negative side also. Sometimes it is difficult to
balance among employees. It may tend to wastage , if not properly
guarded.
 Production Planning & Control (PPC)
• Production Planning involves management decisions relating to how much to
produce, what material, parts & tools require, what steps should be followed ,
what will be time limit for each work station . It is a Pre-production activity
based on quantity, delivery date, price, quality etc.
• Factors determining Planning procedures are –(i) Volume of Production-
purchase of input materials, (ii) Nature of Production Process & Operations –
whether manufacturing for stock and sell which involves batch or mass or
continuous type of production
• Planning has two sub-systems – (i) Product Planning & Process Planning
• Production Control involves implementation of production plans or schedules
by coordinating different activities. Here production operations are constantly
evaluated , guided and directed along the plans formulated. It endevours to
give the best possible service with available capacities and to secure lowest
possible cost.
• Production Control means Control on Materials, Tooling, Manufacturing
Capacity, Activities (release order & information), Quantity, Material Handling,
Due Dates (manufacturing schedule) and information. These are elements of
Production control.
• Truly it has three stages, (a)Planning (choosing the best alternative), (b)
Operations (execution as per plan) and ( c) Control (maintaining & improving
the performance by taking appropriate corrective actions).
 PRODUCTION / OPERATION PLANING & CONTROL (PPC)

Production Planning Production Control

1. Estimating – material, machine 1. Dispatching – Process of setting
capacity & material requirement & production activities in motion
cost estimation through the release of work order
and instruction as per previous
2. Routing- determination of plan
sequence of operation for 2. Expediting/ Follow up – Status
production reporting and Monitoring at all
3. Scheduling - Fixing priorities for stages of manufacturing . In case
each job, determining start time & of bottlenecks or hold up
finish time for each operation, start attending & its removal .
date & finish date for each part, Controlling variation or deviation
sub-assembly and final assembly from planned performance level.
4. Loading - Deciding which job to be 3. Inspection – Every parameters of
assigned to which work centre or products and its noting &
machine reporting
4. Evaluating & Corrective action –
Whenever and wherever
required/necessary
OUTSOURCING –MAKE/BUY
why? LACK OF CAPABILITY – QUALITY , QUANTITY
COST
NATURE OF DEMAND

BALANCEING OF OPERATIONS -- UNBALANCING LEADS TO

IDLE INPUT - INVENTORIES

DESPATCH – NOTHING WITHOUT DESPATCH