OPERATIONS MANAGEMENT

SYLLABUS

UNIT I :

Operations Management – Meaning – Importance – historical

contributions – System view of OM - Operation strategy and

competitiveness - Functions of OM – types of production

systems.
UNIT II :

Product design and process selection – Evaluation and

Selection of appropriate Production and Operations
technology. Product Design and process selection. Types of
layout – analysis and selection of layout – Product and / or
Process layout, Cellular, Lean and Agile manufacturing
systems – Computer Integrated Manufacturing Systems -
Assembly line balancing.
UNIT III :
Production planning and control – meaning – functions –
aggregate planning – master production schedule (MPS) –
Material requirement planning (MRP) – Bill of Material
(BOM) – Capacity requirement planning (CRP) –
Techniques – problems in MRP and CRP – an introduction
to MRP II and ERP – Business Process Re-engineering -
Total Productive Maintenance (TPM)
UNIT IV :

Materials management – functions – material planning and

budgeting – Value Analysis - purchase functions and
procedure - inventory control – types of inventory – safety
stock – order point – service level – inventory control
systems – perpetual – periodic JIT – KANBAN.
UNIT V :

Total Quality Management Concept - Statistical Quality

Control for Acceptance Sampling and Process Control –
Concepts of O.C.C. Curve – Use of the O.C. Curve –
Concept of Type I and Type II error – Quality movement –
Quality circles –– ISO Quality Certifications and types –
Quality assurance – Six Sigma concept.
Questions :

40% of the questions shall be problems

60% of the questions shall be theory based.

 References :
 1. Production and Operations Management – Everest E Adam & Ebert – PHI
– publication forth edition.
 2. Operations Management (Theory and Problems ) – Joseph G Monks –
McGraw Hill Intl.
 3. Production and Operations Management – S N Chary – TMH
Publications
 4. Production and Operations Management – Pannerselvam, PHI

 5. Lee J. Krajewski and Larry P. Ritzman, “Operations Management:

Process and value Chains”, 7th Edition, PHI, 2007
 6. Hunawalla and Patil – production and Operations Management,
Himalaya.
 7. Modern Production and operations management – E.S Buffa.

 8. Lee J. Krajewski and Larry P. Ritzman, “ Operations Management:

Strategy and Analysis”, Addison Wesley.
 9. Chase, Aquilano & Jacobs “Production and Operations
Management”,Tata McGraw Hill.
 p e r a ti on s
c ti o n & O
Produ m en t
Mana ge
• Production: Application of resources such as people and machinery
to convert materials into finished goods and services.
• Production and Operations Management: Managing people and
machinery in converting materials and resources into finished goods
and services.
PRODUCTION AND OPERATIONS
 WHAT IS OPERATIONS
MANAGEMENT?

“ Operation Management is the set of

activities that create goods and
services through the transformation
of inputs into outputs.”
(Slack, 2001)

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OPERATIONS MANAGEMENT CONCEPTS
 Quality: goods and services that are reliable and perform
correctly.
 Quality allows customers to receive the performance that they expect.
 Efficiency: the amount of input to produce a given output.
 Less input required lowers cost and waste.
 Responsiveness to customers: actions taken to respond to
customer needs.
 Firm can react quickly and correctly to customer needs as they arise.
IMPORTANCE OF OM

A.  To the business firm:

 Accomplishment of firm's objectives
 Reputation, Goodwill and Image
 Helps to introduce new products
 Supports other functional areas
 Helps to face competition
 Optimum utilisation of resources
 Minimises cost of production
 Expansion of the firm
IMPORTANCE OF OM

B. To the Customer & Society

 Higher standard of living 

 Generates employment

 Improves quality and reduces cost 

 Spread effect

 Creates utility

 Boosts economy 
MAJOR HISTORICAL DEVELOPMENTS

Industrial Revolution Late 1700s

Scientific Management Early 1900s
Human Relations Movement 1930s to 1960s
Management Science Mid-1900s
Computer Age 1970s
Just-In-Time Systems 1980s
Total Quality Management (TQM) 1980s
Reengineering 1980s
Flexibility 1990s
Time-based Competition 1990s
Supply Chain Management 1990s
Global Competition 1990s
Environmental Issues 1990s
Electronic Commerce Late 1990s – Early 21st Century

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INDUSTRIAL REVOLUTION
LATE 1700S
 Replaced traditional craft methods
 Substituted machine power for labor

 Major contributions:
 James Watt (1764): steam engine
 Adam Smith (1776): division of labor
 Eli Whitney (1790): interchangeable parts

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SCIENTIFIC MANAGEMENT
EARLY 1900S
 Separated ‘planning’ from ‘doing’
 Management’s job was to discover worker’s physical
limits through measurement, analysis & observation
 Major contributors:
 Fredrick Taylor:
stopwatch time studies
 Henry Ford: moving assembly line

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HUMAN RELATIONS MOVEMENT
1930S TO 1960S
 Recognition that factors other than money contribute to
worker productivity
 Major contributions:
 Understanding of the Hawthorn effect:
Study of Western Electric plant in Hawthorn, Illinois intended to
study impact of environmental factors (light & heat) on
productivity, but found workers responded to management’s
attention regardless of environmental changes
 Job enlargement
 Job enrichment

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MANAGEMENT SCIENCE
MID-1900S
 Developed new quantitative techniques for common OM
problems:
 Major contributions include: inventory modeling, linear
programming, project management, forecasting, statistical
sampling, & quality control techniques
 Played a large role in supporting American military
operations during World War II

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COMPUTER AGE
1970S
 Provided the tool necessary to support the
widespread use of Management Science’s
quantitative techniques – the ability to process
huge amounts of data quickly & relatively
cheaply.

 Major contributions include the development of

Material Requirements Planning (MRP) systems
for production control

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DEVELOPMENTS: 1980S
JAPANESE INFLUENCE

 Just-In-Time (JIT):
 Techniques designed to achieve high-volume production
using coordinated material flows, continuous
improvement, & elimination of waste
 Total Quality Management (TQM):
 Techniques designed to achieve high levels of product
quality through shared responsibility & by eliminating the
root causes of product defects
 Business Process Reengineering:
 ‘Clean sheet’ redesign of work processes to increase
efficiency, improve quality & reduce costs

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DEVELOPMENTS: 1990S
 Flexibility:
 Offer a greater variety of product choices on a mass
scale (mass customization)
 Time-based competition:
 Developing new product designs & delivering
customer orders more quickly than competitors
 Supply Chain Management
 Cooperating with suppliers & customers to reduce
overall costs of the supply chain & increase
responsiveness to customers

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DEVELOPMENTS: 1990S

 Global competition:
 Internationaltrade agreements open new markets for
expansion & lower barriers to the entry of foreign competitors
(e.g.: NAFTA & GATT)
 Creates the need for decision-making tools for facility
location, compliance with with local regulations, tailoring
product offerings to local tastes, managing distribution
networks, …
 Environmental issues:
 Pressure from consumers & regulators to reduce, reuse &
recycle solid wastes & discharges to air & water
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ELECTRONIC COMMERCE
 Internet
& related technologies enable new
methods of business transactions:
 E-tailing creates a new outlet for retail goods &
services with global access and 24-7 availability
 Internet provides a cheap network for coordinating
supply chain management information
 Developing influence of broadband & wireless

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INFORMATION FLOWS
TO & FROM OPERATIONS

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FUNCTIONS OF OM
 Selection of Product and Design,
 Selection of Production Process,
 Selecting Right Production Capacity,
 Production Planning,
 Routing 
 Scheduling 

 Production Control,
 Quality and Cost Control,
 Inventory Control
 Overstocking
 under stocking

 Maintenance and Replacement of Machines

OM AND COMPETITIVENESS

Identifying consumer wants and/or needs is a basic input in

an organization’s decision making process, and central to
competitiveness.

Pricing is usually a key factor in consumer buying decisions.

Advertising and promotion are ways organizations can inform

potential customers about features of their products or
services, and attract buyers.
This requires a good operations strategy.

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STRATEGY

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http://www.baskent.edu.tr/~kilter 30
OPERATIONS STRATEGY AND
COMPETITIVENESS
The degree to which a firm can produce goods and services that meet the test of
international markets while simultaneously maintaining or expanding the wealth of
its shareholders.

Competing on Cost: Eliminate all waste

 Invest in:
 Updated facilities & equipment
 Streamlining operations
 Training & development
Competing on Quality
 Please the customer
 Understand customer attitudes toward and expectations of quality

Competing on Speed
 Fast moves
 Fast adaptations
 Tight linkages
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 PRODUCTION SYSTEMS

The methods, procedure or arrangement which

includes all functions required to accumulate
(gather) the inputs, process or reprocess the inputs,
and deliver the marketable output (goods)."
MAIN COMPONENTS 

 Input
 Conversion process
 Output
TYPES
They are broadly classified into three categories:

 Job shop production

 Batch production

 Mass production 
Job Production:
 production on a very small scale
 This method individual requirements of
consumers can be met.
 job shop production offers a great deal of
operational flexibility
 It is also popularly known as ‘job-shop or Unit’
production

Examples:
 Tailors shop;
 cycle and vehicles repair shops,
 Job typing shops,
 small Workshops.
Characteristics:
1. A large number of general purpose machines are required.
2. A large number of workers conversant 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. A large inventory of materials, parts and tools will be required.
6. The machines and equipment setting will have to be adjusted
and re­adjusted to the manufacturing requirements.
7. The movement of materials through the process is intermittent.
Batch production:

the batch production system is implemented in

the organizations that are medium-sizes.
the production of two or more product kinds
takes place
Their production is done in batches at standard
time interval.

Examples:
 TyreProduction Shops,
 Readymade dress companies,
 Cosmetic manufacturing companies…etc.
 The batch production method possesses the following
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.
(iii) Mass or flow production:

Mass Production:

 Here same type of product is produced to meet the demand

of an assembly line or the market.

 This system needs good planning for material, process,

maintenance of machines and instruction to operators.

 Purchases of materials in bulk quantities is advisable.

Flow Production:

 In flow production, the plant and equipment is designed for a

specified product.

 Hence if the demand falls for the product or ceases, the plant
cannot be used for manufacturing other products. It is to be
scraped.
THE EXAMPLES

 Mass Production Shops: Components of industrial products,

 Flow Production: Cement Factory, Sugar factory, Oil

refineries…etc.,
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
standardized.
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.