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UNIT – 1

INTRODUCTION TO PRODUCTION AND OPERATIONS
MANAGEMENT

Introduction - Meaning & Definition – Classification - Objectives and Scope of Production
and operation Management -Automation: Introduction – Meaning and Definition – Need –
Types - Advantages and Disadvantages

Introduction
Production is the creation of goods and services
...
This is done
in factories which have manufacturing processes
...
The finished products of one manufacturing process may not
become finished product for consumption it may become the raw material for other manufacturing
process
...


Meaning of Production
Production refers to the use of any process which is designed to transform a set of input elements
into set an output elements
...


Definition of Production
According to Elwood

Butta, “Production is a process by which goods or services are created
...
e
...

Ex: Crude oil, fuel oils etc
...
e
...
Ex: 2 wheelers, 4wheelers etc
...
e
...
Ex: heat treatment of metals etc
...
Job shop production – It refers to the manufacturing facility that produces several different

products in smaller batches
...

b
...
A limited number of products are
produced at regular intervals
...
Mass production – Under this, the manufacturing or processing of uniform products in large
quantities takes place
...

d
...


Production management
Meaning
It refers to the job of coordinating and controlling the activities required for making a product,
which involves control of schedule, cost, and performance, quality and waste requirements
...
It deals with
decision making regarding the quality, quantity, cost etc
...
It deals with converting raw materials into finished goods or products
...
A
...
The inputs are various resources like raw materials, men, machines,
methods etc
...
W
...
”

Objectives of Production Management
1
...

2
...

3
...

4
...

5
...

7
...


Flexible working conditions
...

Minimum storage, material handling and inspection
...


Scope of Production Management
Production and operations management are concerned with the conversion of inputs into
outputs, using physical resources, so as to provide the desired utilities to the customer while meeting

the other organizational objectives of effectiveness, efficiency and adoptability
...
, by its primary concern for
‘conversion by using physical resources
...

2
...

4
...

6
...


Location of facilities
Plant layouts and material handling
Product design
Process design
Production and planning control
Quality control
Materials management

1
...
It is an
important strategic level decision-making for an organization
...
An improper location of plant may lead to the waste of all the investments made in the
plant and machinery equipment
...
The purpose of the location study is to find the optimal location that will
result in the greatest advantage to the organization
...
Plant layout and material handling
Plant layout refers to the physical arrangement of facilities
...
The overall objective of the plant layout is to
design a physical arrangement that meets the required output quality and quantity most
economically
...

‘Material Handling’ refers to the ‘moving of materials from the store room to the machine and
from one machine to the next during the process of manufacture’
...
It is a specialized activity for a
modern manufacturing concern, with 50 to 75% of the cost of production
...
Material handling
devices increases the output, improves quality, speeds up the deliveries and decreases the cost of
production
...

3
...
Every business organization has to

design, develop and introduce new products as a survival and growth strategy
...
The
entire process of need identification to physical manufactures of product involves three functions:
marketing, product development, and manufacturing
...
Manufacturing has the responsibility of selecting the processes
by which the product can be manufactured
...

4
...
These decisions encompass the selection of a process, choice of
technology, process flow analysis and layout of the facilities
...

5
...

The principle of production planning and control lies in the statement ‘First Plan Your Work
and then Work on Your Plan’
...

Planning is deciding in advance what to do, how to do it, when to do it and who has to do it
...
It makes it possible for things
to occur which would not otherwise happen
...
Routing determines the most
advantageous path to be followed from department to department and machine to machine till raw
material gets its final shape
...
Scheduling may be defined as ‘the
fixation of time and date for each operation’ as well as it determines the sequence of operations to
be followed
...
It gives necessary authority so as to
start a particular work, which has already been planned under ‘Routing’ and ‘Scheduling’
...

The function of follow-up is to report daily the progress of work in each shop in a prescribed
Performa and to investigate the causes of deviations from the planned performance
...
Quality control
Quality Control (QC) may be defined as ‘a system that is used to maintain a desired level of

quality in a product or service’
...
Quality control aims at prevention of defects at the source, relies on effective feedback
system and corrective action procedure
...
It is the entire collection of activities which
ensures that the operation will produce the optimum quality products at minimum cost
...
e
...


•

To reduce companies cost through reduction of losses due to defects
...


•

To produce optimal quality at reduced price
...


•

To make inspection prompt to ensure quality control
...


7
...

The main objectives of materials management are:
•

To minimise material cost
...


•

To cut down costs through simplification, standardisation, value analysis, import
substitution, etc
...


•

To reduce investment tied in the inventories for use in other productive purposes and to
develop high inventory turnover ratios
...
Accomplishment of firm's objectives: Production management helps the business firm to
achieve all its objectives
...

So, the firm will increase its sales
...

2
...
This increases the firms reputation, goodwill and image
...

3
...
It conducts Research and Development (R&D)
...
These products are successful in the market because they
and they give full satisfaction to the customers
...
Supports other functional areas: Production management supports other functional areas
in an organization, such as marketing, finance, and personnel
...
It will also get more loans and share capital for expansion and
modernization
...

5
...
This is because production management produces products of right quantity,
right quality, right price and at the right time
...
Optimum utilisation of resources: Production management facilitates optimum utilisation
of resources such as manpower, machines, etc
...
This will bring higher returns to the organisation
...
Minimises cost of production: Production management helps to minimise the cost of
production
...
This helps the firm to achieve its cost reduction and efficiency
objective
...
Expansion of the firm: Production management helps the firm to expand and grow
...
This helps the firm to earn higher
profits
...


The importance of Production Management to customers and society:
1
...
Based on the research conducted an industrial concern will produce
new and better varieties of products
...

2
...
Direct employment is generated in the production area,
and indirect employment is generated in the supporting areas such as marketing, finance,
customer support, etc
3
...
Companies making spare
parts will expand
...
also expand
...

4
...
Consumers can get form utility in the
shape, size and designs of the product
...

5
...
This leads to speedy economic growth and wellbeing of the nation
...


The Five P’s:
1
...
It is not enough that a customer requires
product but the organisation must be capable of producing the product
...

2
...

4
...


Performance
Quality and reliability
Aesthetics and ergonomics
Quantity and selling price
Delivery schedule
...
Thus the major policy decisions regarding variety of product mix is going to
affect the producing system
...
The Plant:
The plant accounts for major investment (fixed assets)
...

The plant is concerned with:
1
...

3
...


Design and layout of building and offices
...

Safety of operations
...


Plant layout deals with physical arrangement of plants and machineries within the selected site
...
The type of the layout is dependent on production type, volume of demand,
etc
...
The Process:
There is always number of alternative methods of creating a product
...

In deciding about the process, it is necessary to examine the following factors:
1
...

3
...

5
...

7
...
The Programme:
The programme here refers to the timetable of production
...
Purchasing
2
...
Maintenance
4
...
Storage and transport
5
...
The people vary in their attitudes, skill and expectations from the
work
...

The production manager should be involved in issues like:
1
...


2
...


3
...


4
...


Meaning of Operation Management
It refers to the process of design, execution and control of operations that convert resources into
desired goods and services
...


Objectives of Operation management
•

Improve productivity by better utilization of resources like men, material, method etc
...


•

Utilize plants and machinery effectively and effectively
...

Have proper control on raw materials, semi-finished goods and finished goods
...


•

Enhance production staff with respect to their salary, wages etc
...
So it is very important to select right product keeping over all objectives in

mind
...
The operation management helps to select that
particular location where distribution, production cost and location cost is less
...
The
machine should be so arranged that the flow of production remains smooth
...

5) Capacity planning: Capacity refers to a level of output of the conversion process over a
period of time
...
Some
tools helps in capacity planning are marginal costing, linear programming etc
...
The objectives of
the operation management always depend on the customer’s preferences and their
requirements
...

3) Towards share holders: Better the operation is at producing goods and services, the more
likely the whole business is to prosper and shareholders will be one of the major
beneficiaries of this
...
It includes the general working conditions which are determined by the way the
operation is designed
...


Production and Operation management
Meaning
It refers to the management of the conversion process which converts land, labour, capital and
management inputs into desired output goods and services
...
It is
the transformation of production and operation inputs and outputs to be distributed to meet the
customers' needs
...
The right quality is not necessarily best quality
...

ii) Right quantity: The manufacturing organization should produce the products in right
number
...

iii) Right time: Timely delivery is one of the important parameter to judge the effectiveness of
production department has to make the optimal utilization of input resources to achieve its
objective
...
Hence all attempts should be made to produce the products at pre-established
cost, so as to reduce the variation between actual and standard cost
...


•

To control pollution and wastage
...


•

To ensure quality of products
...


•

To ensure timely delivery of output
...


Elements of Production and Operation management
i)

Planning: Activities that establish a course of action and guide future decision making is
planning
...
,

ii)

Organizing: Activities that establish a structure of tasks and authority
...


iii)

Controlling: The operation manager must exercise control by measuring actual outputs and
comparing them to planned operations management
...

v)

Model: The Operation Manager can prepare break even models and linear programming to
solve the organizational related problems
...


2)

Plant layout and job design: Preparation of plant layout for the establishment of machines in
the required sequence
...


3)

Materials handling: It is the process of ensuring the movement of raw materials and semi
finished goods inside the factory
...
Product
design considers the product size, weight, color etc
...
This
determines the production process which is most relevant
...


7)

Quality control: It is a staff function concerned with the prevention of defects in
manufacturing so that, items may be made right way and ensure the quality standard
...


9)

Maintenance management: It is the process of formulating the corrective measures to stay in
track with planned quality, time schedule and predetermined cost schedules
...


Functions of Production and Operation Management
1) Creation of goods and services: The foundation of every production and operation
department is creation of goods or services
...

2) Profit: The main function of production and operations department is to produce a product or
service that creates profit and revenue to the company
...

4) Tasks: It includes forecasting, scheduling, purchasing, design, maintenance, people
management, flow analysis, reporting, assembly and testing
...

6) Analysis: Standard analysis function in a production and operation department include critical
path analysis, stock control analysis, utilization analysis, capacity analysis and just-in-time
analysis of inputs, break- even analysis and metric analysis
...


•

Helps in getting a clear picture about the factory
...


•

It has strategic use to the executives
...
It includes right from simple sensing devices to robots and other sophisticated equipment
...


Definition
According to M
...
Arousan,” Automation is a substitution of mechanical, hydraulic, electrical
and electronic devices for human organs of decisions and efforts”
According to Ruddlerl Read, “Automation is nothing more than the extension of principles of
mechanisation to the integration of machines one with another in such a manner as to have the
group operate as an individual processing and controlling units
...


•

Facilitates better quality of work by reducing errors created by manual work
...


•

Increases the goodwill and reputation of the firm because automation adds to the prestige
and status of the firm
...


ii)

Improved quality: The quality of goods produced is better when there is automation of
goods passes through definite process till it comes out as finished goods
...
When the
goods are produced in a bulk cost per unit will be low
...

iv) Ensures high safety: Since labor does not intervene in production working on machines
which all otherwise dangerous can be avoided
...

v)

Complex decision: Automation helps to take complex decisions with ease
...

vii) Lesser accidents: In automation accidents are very less as the machine will perform its jobs
as per instructions
...

ix) Less rework: When there are no defects, then there will be less or no rework
...
Since there is no intervention of labor
involved the goods passes from one process to another, smoothly and quickly
...
the goods pass through definite process till it comes out as finished goods
...

3) Consistency and uniformity in quality: The products produced are identical in nature
...

4) Reduction in cost per unit of output: Automation results in reduced total cost per unit of
output
...

5) Lesser industrial accidents: Automation eliminates the use of labor force
...

6) Better production control: The speed of production increases the productivity
...
The machines are arranged in such a
sequence that raw materials pass from one process to another without human intervention
...

7) Ensures high safety: Since labor does not intervene in production working on machines
which all otherwise dangerous can be avoided
...

8) Reduces labor problem: Goods are produced without the involvement of men hence labor
problems are eliminated
...


Heavy capital investments: Automation involves heavy capital investment
...
increases tremendously
...


Displacement of labor: Replacement of workers by machines affects the morale of workers
...


Benefit of employee suggestion lost: Labor being displaced the benefits of suggestion from
employee is lost
...


High cost of depreciation: Since automation eliminates labor, machines are used instead of
labor
...
Therefore depreciation is high in automation
...


Not suitable for small firm: Since heavy investments are required in the automated plants,
it is not suitable for small industries
...
are very high

6
...
If increased production
does not find a ready market, the pieces will fall and results will be disastrous
...


Unemployment problem: automation poses certain peculiar problems for developing
countries
...


Types of Automation
a
...
Eg: computerized numerical controlled mills
...
Industrial Robots– It also helps in higher quality parts, reduced cycle times and increases
savings
...
They can be suitable to work
in an environment which may be dangerous to humans
...
,
c
...
It produces similar products and parts but maintains
flexibility to change parts or processes
...
Computer aided manufacturing (CAM)– It uses computers in different functions of
production planning and control
...

e
...
It includes CAM, knowledge base applications for self service etc
...
Run book automation– They define a set of items along with work flows through GUI
...

g
...
They provide a rich set of features for designing and managing policies
...
IT-Workload automation– They allow the processing of job scheduling for improvement and
automate recurring tasks
...
,
i
...
It helps in
bringing the high demand for automated tools to provision, change and manage vast number of
components
...


Artificial Neural Network (ANN)–It is also called as neural network
...
It consists of inter connected group of artificial neurons and information for
computation
...
Distributed Control system (DCS)– It is the control system for manufacturing and
processing any kind of system in which the controller elements are not central in location but
distributed throughout the system
...

c
...
It is to have effective operation and control machine,
feedback from the machine for making operational decisions
...
Supervisory control and data acquisition (SCADA)– It refers to the industrial control
system, computer systems that monitor and control industrial, infrastructure and other facility
based processes
...


Programmable logic controller (PLC)– It is a digital computer used for automation of
electro mechanical processes like control of machinery, light fixtures, amusement rides etc
...
,
f
...
It is used for process control, data acquisition, remote equipment monitoring, and
machine vision and motion control
...


Instrumentation– It is defined as the art and science of measurement and controlling of
process variables within a production or manufacturing area
...
,

h
...
It is the position or velocity of machines
which are controlled using some types of devices like linear actuator, electric motor etc
...

i
...


PRODUCTION AND OPERATIONS MANAGEMENT II SEMESTER BBA | 15



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