OPERATIONS

MANAGEMENT

production managment- 1
sanjaykanagala
INTRODUCTION
 OM is the area concerned with the efficiency and effectiveness of
the operation in support and development of the firm's strategic
goals

 OM include the design and operations of systems to provide

goods and services

 OM is the planning, scheduling, and control of the activities that

transform inputs (raw materials and labor) into outputs (finished
goods and services).

 term operations management conjure up views of manufacturing

environments, many of these concepts have been applied in
service settings, with some of them actually developed
specifically for service organizations.

production managment-sanjaykanagala 2
HISTORY
 18th century, agriculture was  late 1950s and early 1960s
the predominant industry in scholars moved from
every country. writing about industrial
 The advent of the steam engineering and operations
engine and Eli Whitney's research into writing about
concept of standardized parts production management
paved the way for the
Industrial Revolution with its  Production management
large manufacturing facilities had itself become a
powered by steam or water professional field as well
 The introduction of Taylor's as an academic discipline
method of scientific  services are such a
management and Henry Ford's pervasive part of our life
moving assembly line brought that the term operations
the world into an age where
management was management is used
predominantly centered almost exclusively.
around the production of
goods.

production managment-sanjaykanagala 3
HISTORY - CONTRIBUTIONS

INDIVIDUAL EFFICIENCY
 F.w. Taylor studied the simple output to
time relationship for manual labor
 This is precursor for “TIME-STUDY”
 Frank Gilbert, and his wife Lillian Gilbert
examined the motion of the limbs of the
workers (legs,hands,eyes)
 This formed precursor for “MOTION-STUDY”

production managment-sanjaykanagala 4
HISTORY - CONTRIBUTIONS

COLLECTIVE EFFICIENCY
 Previous focus on controlling the work-
output of manual laborers or machine
 Focused on individual efficiency
 Introduced Gantt chart for scheduling
 In 1930 inventory model for efficiency in
use of materials

production managment-sanjaykanagala 5
HISTORY - CONTRIBUTIONS

QUALITY
 Previous quantitative aspects, now it is in qualitative aspects
 Quality which is an important customer service objective came to
recognized for scientific analysis
 Included the effectiveness addition to efficiency
 In 1931, walter shewart came up with his theory regarding control
charts for quality/process control. These charts suggests a
simple graphical methodology monitor characteristics of output
and how to control it.
 1935, H.F. Dodge And H.G Romig exercise control over quality
by applying statically principles acceptance/rejection “acceptance
sampling”

production managment-sanjaykanagala 6
HISTORY - CONTRIBUTIONS

EFFECTIVENESS AS A FUNCTION OF
INTERNAL CLIMATE
 Hawthorne experiment draws the
effectiveness by increasing efficiency
 Explained through angle of human psychology
 Till now ruled by taylors theory of evaluation of
task and thus the specialization in one task
which found much use in Henry ford assembly
line.

production managment-sanjaykanagala 7
HISTORY - CONTRIBUTIONS

Advent of operations research techniques

 World war-ii a bog boost for scientific
techniques
 Allied force work stasticians engineers
and other professionals.

production managment-sanjaykanagala 8
 Operations management is also an academic
field of study that focuses on the effective
planning, scheduling, use, and control of a
manufacturing or service firm and their
operations.
 concepts derived from design engineering,
industrial engineering, management
information systems, quality management,
production management, inventory
management, accounting, and other functions.
production managment-sanjaykanagala 9
WHAT DO OPERATIONS
MANAGERS DO?

Strategic
Level
(Long term)

Tactical
level
(Medium term)

Operational level
(Lower level)

production managment- 10
sanjaykanagala
STRATEGIC LEVEL (LONG TERM),

 Responsible for or associated with

making decisions about product
development (what shall we make?)
 Process and layout decisions (how shall
we make it?),
 Site location (where will we make it?),
 And capacity (how much do we need?).

production managment-sanjaykanagala 11
TACTICAL LEVEL
(INTERMEDIATE TERM),

 hand in deciding employee levels (how

many workers do we need and when do
we need them?),
 inventory levels (when should we have
materials delivered and should we use a
chase strategy or a level strategy?),
 capacity (how many shifts do we need?
Do we need to work overtime or
subcontract some work?).

production managment-sanjaykanagala 12
OPERATIONAL LEVEL, (LOWER-LEVEL)
(daily/weekly/monthly) planning and control.

 Operations managers and their subordinates

must make decisions regarding scheduling
(what should we process and when should we
process it?),
 sequencing (in what order should we process
the orders?),
 loading (what order to we put on what
machine?), and work assignments (to whom
do we assign individual machines or
processes?).
production managment-sanjaykanagala 13
REQUIREMENTS OF
OPERATIONS MANAGER
 operations manager must have
knowledge of advanced operations
technology and technical knowledge
relevant to his/her industry,
 interpersonal skills and knowledge of
other functional areas within the firm.
 Operations managers must also have
the ability to communicate effectively, to
motivate other people, manage projects,
and work on multidisciplinary teams.

production managment-sanjaykanagala 14
SCOPE OF
OPERATIONS MANAGEMENT
 SUPPLY CHAINS  SERVICE OPERATIONS
—management of all aspects of —Coping with inherent service
providing goods to a characteristics such as
consumer from extraction of simultaneous
raw materials to end-of-life
disposal. delivery/consumption,
performance measurements,
 OPERATIONS
MANAGEMENT/MARKETING etc.
INTERFACE  OPERATIONS STRATEGY
 —determining what —Consistent and aligned with
customers' value prior to firm's other functional
product development. strategies.
 OPERATIONS  PROCESS DESIGN AND
MANAGEMENT/FINANCE
INTERFACE IMPROVEMENTS
 —Capital equipment and —Managing the innovation
inventories comprise a sizable process.
portion of many firms' assets.

production managment-sanjaykanagala 15
MANUFACTURING SYSTEM

DECISION MAKER

CONTROL

OUT PUT
INPUT CONVERSION PROCESS

production managment-sanjaykanagala 16
 TYPES OF
MANUFACTURING SYSTEM
INTERMITTENT SYSTEM
 Job production
 Batch production

CONTINUOUS SYSTEM
 Mass production
 Process production

production managment-sanjaykanagala 17
INTERMITTENT SYSTEM
 Most products are produced in small quantities
 Machines and equipment are laid out by
process
 Work loads are generally unbalance
 Highly skilled operators are required for
efficient use of machines and equipment
 In-process inventory is large
 Flexible to suit production varieties
Examples
 Machines shops, hospitals, general office

production managment-sanjaykanagala 18
JOB PRODUCTION
 Entire project is taken as a single operation
 Work is to be completed on each product
before processing the next item
 Versatile and skilled labor is needed
 High capital investment
 Control operation are relatively simple
 High unit cost of production
Example
Ship building, dam construction, bridge building

production managment-sanjaykanagala 19
Batch production
 Unique product production
 Highly skilled employee
 Production planning is not based on sales forecast but
one hat to estimate or evaluate the requirements on
the basis of general business conditions, past
information and future sales promotion programme.
 Once the orders are received, production scheduling
operations begin.
EXAMPLE
Electronic instruments, machine tools, printing press

production managment-sanjaykanagala 20
Problems with intermittent system

 Demand can be discontinuous

 All operational stages may not be balanced
 Elaborate sequencing and scheduling is require.
 Needs high investment
 Planning, routing and scheduling changes with fresh
orders
 Storage is necessary at each stage of production
process
 Can adjust to new situations and specifications
 Inspection is not in line with production
 Items are manufactured according to orders

production managment-sanjaykanagala 21
CONTINUOUS SYSTEM
 There must be continuity of demand
 Product must be standardized
 Material should be per specifications and delivered in
time
 All operational stages in the process must be balanced
 Work must conform to quality standards
 Appropriate plant and equipment must be provided
 Maintenance must be by anticipation and not by
default
 Inspection must in line with production

production managment-sanjaykanagala 22
MASS PRODUCTION

 Produce large quantities and much

emphasis is not given to consumers
orders.
 Production for stock not to order
 System can produce only one type of
product at one time.

production managment-sanjaykanagala 23
PROCESS PRODUCTION

 Analogous to mass production with more

stress on automation in production
process.
 Volume of production is high
 Products where demand is continuous
and high.
EXAMPLE
Petroleum products, brand of medicines
production managment-sanjaykanagala 24
Distinction between
manufacturing system and service
 Followed by tables

production managment-sanjaykanagala 25
 POINT OF SERVICE GOODS
DISTINCTION
•Entity
•Storage Intangible Tangible
•Quality Not possible Possible
Varies with time More
•Producer and person standardized
Inseparable from Can be
•Labor intensity service separable
Tends to be high Lower
•life short
longer

production managment- 26
sanjaykanagala
 POINT OF SERVICES GOODS
DISTINCTION
•Production Spontaneous Time-spread
•Customer High Can be low
involment
•Physical Essential May not be
presence of necessary
the customer
•Physical
Very important May not be so
surrounding
Only some routine Possible all over
•Standardizati
on service
•Facility Close to customer Near supply
location
production managment- 27
sanjaykanagala
 POINT OF SERVICES GOODS
DISTINCTIO
N
•Facility Accommodate physical To enhance
design and psychological production
needs
•Product Environment plays a Only physical
design vital role product
•Process Immediate effect on Customer not
design customer involved
•Scheduling As per customer Completion dates
interest
•Production Smoothing results in possible
planning losses
production managment- 28
sanjaykanagala
 POINT OF SERVICES GOODS
DISTINCTION
•Inventory Personnel Raw material
•Quality control Varied quality Fixed
standards
•Quality objective Zero defection Zero defect
•Worker skill Interaction Technical
•Time standard Loose Tight
•Capacity Fluctuating Average
planning
•Wage payment Time-based Unit-based
•Type of Generally soft Generally hard
technology

production managment- 29
sanjaykanagala
Role of production and operation
manager
 Produce the products and services in the
quantities needed, available when needed and
at a controlled cost and quality.
 The deal with forecasting and scheduling
systems and a variety of controls to ensure
that the systems are continuing to function
properly
 Decisions seem to seek balance
 Must try to see relationships and integrate the
results.

production managment-sanjaykanagala 30
Functions and responsibilities
 Product selection and  Plant layout and material
design handling
 Work measurement
 Process selection and  Maintenance and
planning replacement
 Facilities location  Cost reduction and cost
 Capacity planning control
 Other functions
 Production planning  Engineering economics,
 Productions controls stores and warehouse mgt.,
 Quality control  Maximizing labor efficiency,
 Method analysis  Price analysis - wage,
incentives to workers
 Proper inventory  Standardization and storage
controls
production managment-sanjaykanagala 31
 PRODUCTION
PLANNING & CONTROL

production managment- 32
sanjaykanagala
PRODUCTION PLANNING CONTROL

 Organization
and planning of the
manufacturing process.
 Co-ordinatessupply and movement of
materials and labor

 Ensures economic and balanced

utilization of machines and equipment

production managment-sanjaykanagala 33
 STAGES OF
PRODUCTION PLANNING
 Factory planning  operation planning
 Building,  Selection of work
 machines & centre
equipments,  Designing of tools
 Plant layout & required
location
 Process planning
 Input
 processing
 output

production managment-sanjaykanagala 34
 PRODUCTION PLANNING CATEGORIES

ROUTING SCHEDULING LOADING

PRESCRIBE THE STUDIES

SEQUENCE OF WHEN AND WHERE RELATION SHIP
OPERATIONS EACH OPERATION BETWEEN
REQUIRED TO OF THE PRODUCTION LOAD &
TRANSFORM INPUTS PROCESS IS TO BE CAPACITY OF
INTO DESIRED PERFORMED WORK CENTERS
OUTPUT IN THE SYSTEM

production managment- 35
sanjaykanagala
GANTT CHART

 It is one of the techniques in scheduling

 Represented in the form of charts
 Charts portrays planned production and
actual performance over a period
 It is a regulatory chart divided by parallel
horizontal and vertical lines

production managment-sanjaykanagala 36
Types of Gantt chart

 MACHINE RECORD CHARTS

(available machines and the time at
which various jobs are planned)

 ORDER CHARTS
(start and completion of work)

production managment-sanjaykanagala 37
 GANTT CHART FORMAT
labour time Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

A 2 mo.

B 2 mo.

C 2 mo.

D 2 mo.

E 2 mo.

F 2 mo.

production managment- 38
sanjaykanagala
Gant chart cont…

 The horizontal axis of the Gantt chart is

a time scale, expressed either in
absolute time or in relative time
referenced to the beginning of the
project.
 The time resolution depends on the
project - the time unit typically is in
weeks or months.
 Rows of bars in the chart show the
beginning and ending dates of the
individual tasks in the project.
production managment-sanjaykanagala 39
MAINTENANCE MANAGEMENT

 An activity to keep equipment, or other assets

that a manufacturing firm possess, in working
condition.
OBJECTIVES
 To minimize long-run maintenance costs
 To minimize the instance of breakdown of
machines and facilities
 To provide a safe working environment
 To provide reliable conditions for equipment

production managment-sanjaykanagala 40
MAINTENANCE ADMINISTRATION

 Work must be scheduled

 Inventories of spare parts maintained
 Prescribed quality standards met
 Labor standards established
 In case of breakdowns or shutdowns of
plants, sometimes, outside contract
maintenance work is resorted.

production managment-sanjaykanagala 41
CLASSIFICATION OF
MAINTENANCE FUNCTIONS

 The availability of plant can be defined as

A = Tup / TUP + Tdown

A = availability of a plant
Tup = the cumulative time of operation in
the nominal working state
Tdown = the cumulative down time.

(to improve the value of (A) one has to minimize the

down time)
production managment-sanjaykanagala 42
Types of maintenance policies

 PREVENTIVE MAINTENANCE

 CORRECTIVE MAINTENANCE

 DESIGN-OUT MAINTENCE

production managment-sanjaykanagala 43
PREVENTIVE MAINTENANCE

 Which is carried out at predetermined

intervals and is intended to reduce the
likelihood of an equipment’s condition
falling below a required level of
acceptability.

 It can be time based / condition – based

production managment-sanjaykanagala 44
PREVENTIVE MAINTENANCE
TIME BASED IS EFFECTIVE CONDITION BASED IS
 The failure of any item of EFFECTIVE
an equipment is time-  In response to a
dependent. significant deterioration
 Item is expected to wear in a unit as indicated by
out within the life of the a change in monitored
equipment parameter of the unit
 The total costs of condition or performance.
replacement of the item
are substantially lesser
than those of failure
replacement repair.

production managment-sanjaykanagala 45
Advantages
 Reduction of the total down-time and
consequent reduction in production losses
 Reduction n the number of major repairs, and
consequently reduced maintenance expenses.
 Reduction in the number of rejects and an
improvement in product quality.
 Reduction in the inventory of spare parts.
 Reduction in the number of accidents in the
plant.
 Reduction in the unplanned or crisis
management in maintenance.

production managment-sanjaykanagala 46
Advantages cont…..

 Scheduled down-time of production.

 Replacement parts and supplies.
 Instruments i.e., in the case of condition
monitoring.
 Wages of preventive maintenance
technicians and staff.
 Minor costs such as those of record-
keeping.
production managment-sanjaykanagala 47
CORRECTIVE MAINTENANCE
 Also know as breakdown maintenance which
is carried out when equipment fails, or falls
below an acceptable condition, while in
operation.
 Repair time depends upon the type of
complexity of the equipment, management
methods and engineering techniques and
above all the skill of the crafts people.
 Difficult to forecast the level and nature of
corrective maintenance load.

production managment-sanjaykanagala 48
DESIGN-OUT MAINTENCE

 Aims at minimizing the effect of failure

and at eliminating the cause of
maintenance.
 Requires engineering action rather than
maintenance action.
 Tries to pin point the mistakes of the
design of the equipment.

production managment-sanjaykanagala 49
MAINTENANCE COSTS
Maintenance is considered as the operation of pool of
resources men, spares, equipment) directed towards
controlling the plant availability.
UNAVAILABILITY COSTS
 Loss of in-service material
 Production loss while in repair
 Waiting for repair.
 Undergoing preventive maintenance
RESOURCE COSTS
 Corrective maintenance labor
 Preventive maintenance labor
 Maintenance equipment tools
 Spares usage and holding costs

production managment-sanjaykanagala 50
 MAINTENANCE PLAN
 Classification and SELECTION OF POLICY
identification of  FIXED-TIME REPAIR POLICY
equipment (low cost equipment)
 Collection of information  CONDITION-BASED POLICY
like failure (complex, high cost equipment)
characteristics of  DESIGN-OUT
equipment, repair MAINTENANCE
characteristics,
consequences of failure, (all high cost maintenance items)
 CORRECTIVE
safety regulations
MAINTENANCE POLICY
 Organization of
maintenance resource (no preventive actions are
effective.)
like administrative
structure, working
planning system
production managment-sanjaykanagala 51
 MAINTENANCE CONTROL

3 AREAS OF CONTROL
 Work control
(men,spares,equipment, work load)
 Plant condition control

(diagnose basic causes)

 Maintenance cost control
 Identification of the high –cost areas of plant.
 Monitoring the trend of maintenance effectiveness (
failures in labor utilization, machines)

production managment-sanjaykanagala 52
MEASURING
MAINTENANCE PERFORMANCE

 Define the operational goals

 Establish priorities for the improvement
of maintenance techniques.
 Raise the morale of the maintenance
department, which in our country, is
being traditionally treated as a subsidiary
department.

production managment-sanjaykanagala 53
Management models in
maintenance
 Work study
 Operational research techniques
 Logical fault finding

production managment-sanjaykanagala 54
 WORK STUDY
 Select the job
 Define the objective
 Record all the relevant facts
 Examine critically all the activities
(why,how,what,where,when,who.)
 Develop the best method
 Install the improved method and
maintain it.

production managment-sanjaykanagala 55
Operations research techniques
 EXPECTED VALUE THEORY
 SIMULATION MODELS
(The above theories widely applied for estimating
break down costs and selecting appropriate
maintenance policies.)
 WAITING LINE THEORY (establishing repair
crew size, the number of facilities)
 RELIABILITY THEORY (failure rates of
equipment and components)
 REPLACEMENT THEORY (determine
replacement strategies for equipment)

production managment-sanjaykanagala 56
 LOGICAL FAULT FINDING
 Location of detection time as well as
ratification time.
6 stage procedure generally followed
 Analysis of the symptoms of the fault
 Inspection of equipment
 Faulty stage location
 Removal of fault
 Repair and replacement
 Performance testing information
documentation.

production managment-sanjaykanagala 57
 INDUSTRIAL SAFTY

 The application of human biological

science in conjunction with engineering
science to the worker and working
environment, so as to obtain maximum
satisfaction for the worker which at the
same time enhances productivity
--- ILO

production managment-sanjaykanagala 58
SECURITY MEASURES
 The quantity of equipment and machines to be installed inside the
factory buildings
 The risk of installing the equipment and machines in an open
space
 The extent of costly plant and equipment involved which require
special security
 The extent security required from the point of view of insurance
and other statutory regulations
 The organization for the security department and the deployment
of people in strategic positions
 The rotation of security personnel at different positions
 Provision of necessary equipment to security staff for protection
and communication.
 Definition of clear-cut measures for security at different points in
the factory
 Periodic review of security measures

production managment-sanjaykanagala 59
Causes of accidents

MECHANICAL FACTORS
 Inadequately guarded
 Unguarded
 Unsafe design or construction
 Hazardously arranged (overloading)

production managment-sanjaykanagala 60
ENVIRONMENTAL FACTORS

 Illumination
 Ventilation
 Temperature
 Noise
 Fumes and dust
 Speed of work
 Hours of work
 Spread-over of the work period
 Work load

production managment-sanjaykanagala 61
HUMAN-MECHANICAL factors
INDIVIDUAL FACTORS PSYCHOLOGICAL FACTORS
 Age  Attitude towards the
 Marriage job
 Schooling  Interest and

 Health difficulties
 Machine habits
 Lengthof service
 Attention or lack of it
 Work performance
 fatigue

production managment-sanjaykanagala 62
PERSONALITY FACTORS SOCIOLOGICAL FACTORS
 Intellectual level  Size of the employee’s
 Emotional maturity family
 Adjustment
 Number of dependents
 Anxiety level
 Financial position
 Social status
 Interpersonal
relationships
 Home environment

production managment-sanjaykanagala 63
Thanq

production managment- 64
sanjaykanagala