Production and operations management

Unit 1 MBA (G) RAHUL SAINI PURNIMA

Basic Production process Plant location Material handling Purchase management Capacity planning Method study Quality mgt/control charts

INTRODUCTION OF MANAGEMENT
MANAGEMENT IS THE ART AND SCIENCE OF PLANNING ,DIRECTING AND CONTROLLING HUMAN EFFORT SO THAT THE ESTABLISHED OBJECTIVES OF AN ENTERPRISE MAY BE ATTAINED IN ACCORDANCE WITH ACCEPTED POLICIES.

CONCEPT OF PRODUCTION
PRODUCTION IS DEFINED AS the step by step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product of the user ACCORDING TO EDWOOD BUFFA a process by which goods and services are created.

Objectives of production management

To produce quality goods To increase productivity To reduce waste Customer satisfaction Profitability Optimum utilization of resources Deliver the product in time to the right place

SCHEMATIC PRODUCTION SYSTEM

INPUTS: TRANSFORMATION PROCESS:

MEN
MATERIAL MACHINES MONEY METHOD

PRODUCT DESIGN
PROCESS PLANNING PRODUCTIONCONTROL MAINTENENCE

OUTPUT:
PRODUCTS SERVICES

CONTINUOUS:
INVENTORY QUALITY

environment

COST

Feedback information

CLASSIFICATION OF PRODUCTION SYSTEM

Continuous
Production Operation volume

production Mass production

Batch production
Job-shop production

Output/product variety

PRODUCTION PROCESS SYSTEM

INPUT
INFORMATION TRANSFORMATION MANAGEMENT MATERIAL&LAND LABOUR, CAPITAL TECHNOLOGY SERVICE PROCESS ORGANIZATION TRANSFORMATION

GOODS

Types of production process

Process production Mass n flow production Batch production Jobbing production Project production

 Process prodn: it is a system where a similar product is produced continuously in large qty yr after yr.e.g. steel inputs, cement, sugar etc capital intensive, special purpose machinery, some specialist to perform.D cost of prodn is almost constant becoz in this system the variety of input n output r not many. unskilled labor is reqd. As far as the mgt is concerned , they have to decide for d prodn process n when the complete prodn line is dedicated to product then decision in regard to volume is to b made. It is good for product whose dd is high n continuous .

 Mass prodn /flow prodn: max 2 or 3 types of product r manufactured in large qty. capital intensive. It involves special and general purpose machinery. similar type of product can b produced on the basis of common input materials n infrastructure req. e.g. automobiles , iron n steel parts. cost of prodn is more or less constant provided other variables such as input material cost, wages remain same.(un)skilled labor is reqd Jobbing prodn :it involves prodn of 1 or more products whose volume is small.e.g.machine tools manufactures etc small volume ,cost of prodn is high, it requires highly skill ,experienced manpower.

Batch prodn : it is related with variety of products in diff volumes . Here the products r produced in lots n in planned qty.items r produced in batches n a new batch is undertaken for prodn only when d prodn of all items of batch r complete, materialhandling n storage is immense, mgt bears heavy cost. Skilled and unskilled labor is reqd. skilled one is to run the machinery and unskilled to do packaging n material handling etc e.g. paint manufacturing co.car doors manufacturing co. Project prodn:. It involves various set of activities to make a particular product. And the product is immobile (cannot be moved). it is a prodn of a single complete unit by one operator or group of operators . The product is provided to customer at a single delivery.eg bridge construction, construction of building etc. general purpose machinery is reqd. a high level of coordination is reqd.

OPERATION MANAGEMENT
Operation management may be defined as the design ,operation ,and improvement of the production system that the firms products or services. Concerned with the operations performed during the production process system. It is called as the core activity of the management. It is often used with the production management in literature. It is defined as the process where by resources or inputs are converted into more useful products.

 Operation management is more frequently used where various inputs are transformed into tangible services. Operation management covers the services like banks, airlines, pollution control, consultancies firms, and hospitals. Operation management includes the activities such as managing purchase , invetory control , storage, logistics, measurement and analysis of internal process.

FIVE PS OF OPERATION MANAGEMENT

PEOPLE ( Are the direct and indirect work force ) PLANTS (includes factories where production is carried out) PARTS (includes materials which go into the system) PROCESS (includes equipment and steps by which production is accomplished.) PLANNING AND CONTROL SYSTEM (procedures and information to operate system )

GENERAL MODEL FOR MANAGING OPERATIONS

PLANNING PLANNING CONVERSION SYTEM OPERATIONS STRATEGY FORECASTING PRODUCT AND PROCESS CHOICES

ORGANISING: ORGANISING FOR CONVERSION JOB DESIGN,PRODUCTION/OPERATIONS STANDARDS,WORK MEASUREMENT CONVERSION MODELS BEHAVIOUR PROJECT MANAGEMENT

SCHEDULING CONVERSION SYSTEM:

OPERATIONS SCHEDULING SCHEDULING SYSTEM AND AGGREGATE PLANNING

CONTROLLING MATERIAL CONTROL INVENTORY CONTROL MANAGING FOR WORLD-CLASS COMPETITION MANAGING FOR QUALITY

Scope of production and operation management

Location Of facilities Maintenance management

Plant layout & Material handling

Material control

Production/ Operation management

Product design

Quality control Production Planning and control

Process design

SCOPE OF PRODUCTION AND OPERATION MANAGEMENT

(A) Product selection and design
1.Choosing the right product by keeping the objective of the organization. 2. Design of the product must be attractive, aesthetic and functional. 3.Product design must be made in such way to face competitor. 4.Unnecessary cost must be eliminated.

(B) Process selection and planning

1.Selection of the process involves taking decision as technology, machines and equipments. 2.First thing is that we have to optimize the output from the given process. 3.Planning includes the stages of the process and automation and mechanization 4. Alternatives , evaluation and judging factors must be there.

(C) Facilities location

1. 2. 3. 1. 2. 3. 4. 5. Includes where we can locate our operation. In this wrong decision may prove disastrous. Location should be in way that the cost of transportation is minimized. Arrangement of machines and plant facilities. Over-lapping and no interruption should be there Sequence of machines How to handle the material and in which manner so that the cost of material handling is minimized. Factor of flexibility should be there to adapt changes.

(D) Facilities layout and material handling

(F) Capacity planning

1. 2. 3. Estimating the capacity of manpower , man , machines. Capacity refers to a level of output of the conversion process over a period of time. The Transformation process.

OPERATIONS: A TRANSFORMATION PROCESS

INPUT
feedback

input performance Workers Managers Equipment Material Land Energy Operations And processes

output

Goods Goods services services

EXAMPLE: FOOD PROCESSOR

INPUT
Raw material Metal sheets Water Energy Labor

PROCESSING
Cleaning Making cans

OUTPUT
Canned vegetable

Cutting
Cooking Packing labeling

Building
equipment

Consumer feedback

EXAMPLE: HOSPITAL
INPUT
Doctors, nurses Hospital Medical supplies Equipment laboratories

PROCESSING
Examination Surgery

OUTPUT
Healthy Patients

Monitoring
Medication Therapy

Improvement of patients health condition

Location Analysis Techniques

Location factor rating

Center-of-gravity
Load-distance Transportation model
Supplement 7-23

Location Factor Rating

The location factor rating technique may be used
when many sites are available, Each site has some appealing characteristics. Involves giving rating to each factor based on its importance Identify important factors Rate each factor according to its relative importance Rate each location according to its merits on each factor Compute the product of ratings for each factor Compute the Sum of the product of ratings Which ever has highest rating i.e sutiable.

The steps in using the technique are:

Location Factor Rating: Example

SCORES (0 TO 100) LOCATION FACTOR Labor pool and climate Proximity to suppliers Wage rates Community environment Proximity to customers Shipping modes Air service WEIGHT .30 .20 .15 .15 .10 .05 .05 Site 1 80 100 60 75 65 85 50 Site 2 65 91 95 80 90 92 65 Site 3 90 75 72 80 95 65 90

Weighted Score for Labor pool and climate for Site 1 = (0.30)(80) = 24

Supplement 7-25

Location Factor Rating: Example (cont.)

WEIGHTED SCORES
Site 1 24.00 20.00 9.00 11.25 6.50 4.25 2.50 77.50 Site 2 19.50 18.20 14.25 12.00 9.00 4.60 3.25 80.80 Site 3 27.00 15.00 10.80 12.00 9.50 3.25 4.50 82.05
Site 3 has the highest factor rating

Supplement 7-26

The center-of-gravity technique

Used when multiple suppliers or customer bases exist at different geographic locations, and It is economically sensible to locate centrally to service all of them. For locating a facility, such as a warehouse, at the center of movement in a geographic area, based on weight and distance.

Center-of-Gravity Technique
Based on weight and distance traveled; establishes grid-map of area Identify coordinates and weights shipped for each location

Supplement 7-28

Grid-Map Coordinates
y 2 (x2, y2), W2

i=1 x=

xiWi y= Wi

i=1

yiWi

y2 1 (x1, y1), W1

i=1

i=1

Wi

y1

y3

3 (x3, y3), W3

where, x, y = coordinates of new facility at center of gravity xi, yi = coordinates of existing facility i Wi = annual weight shipped from facility i

x1
Supplement 7-29

x2

x3

Center-of-Gravity Technique: Example

y 700

C
600 500

B (105)

(135)

x y Wt

A 200 200 75

B 100 500 105

C 250 600 135

D 500 300 60

Miles

400 300 200 100 0

D A (75) (60)

100 200 300 400 500 600 700 x Miles

Supplement 7-30

Center-of-Gravity Technique: Example (cont.)

x=
i=1 n

xW i i W i

(200)(75) + (100)(105) + (250)(135) + (500)(60) = = 238 75 + 105 + 135 + 60

i=1 n

y=

i=1

yW i i W i
n

(200)(75) + (500)(105) + (600)(135) + (300)(60) = = 444 75 + 105 + 135 + 60

i=1

Supplement 7-31

Center-of-Gravity Technique: Example (cont.)

y 700

C
600 500

B (105)

(135)

x y Wt

A 200 200 75

B 100 500 105

C 250 600 135

D 500 300 60

400 300 200 100 0

Center of gravity (238, 444) D (60)

Miles

(75)

100 200 300 400 500 600 700 x Miles

Supplement 7-32

Load-Distance Technique
In this method, a single centralized site location is not found; rather, a number of different site locations are evaluated for distance and load.
For example, three different sites can be evaluated as possible locations for optimal location among four different suppliers.

Load-Distance Technique
Compute (Load x Distance) for each site Choose site with lowest (Load x Distance) Distance can be actual or straight-line

Supplement 7-34

Load-Distance Calculations
LD =
where, LD = li di di = = = load-distance value load expressed as a weight, number of trips or units being shipped from proposed site and location i distance between proposed site and location i (xi - x)2 + (yi - y)2

ld
i

i=1

where, (x,y) = coordinates of proposed site (xi , yi) = coordinates of existing facility
Supplement 7-35

Load-Distance: Example
Potential Sites A D Site X Y X 200 500 1 360 Y 200 300 180 Wt 75 60 2 420 450 3 250 Compute distance from each site to each supplier 400 Site 1 dA = dB = (xA - x1)2 + (yA - y1)2 = (200-360)2 + (200-180)2 = 161.2 (100-360)2 + (500-180)2 = 412.3 Suppliers B C 100 250 500 600 105 135

(xB - x1)2 + (yB - y1)2 =

dC = 434.2
Supplement 7-36

dD = 184.4

Load-Distance: Example (cont.)

Site 2 dA = 333 dB = 323.9 dC = 226.7 dD = 170 dD = 269.3 Site 3 dA = 206.2 dB = 180.3 dC = 200
Compute load-distance

LD =

ld
i

i=1

Site 1 = (75)(161.2) + (105)(412.3) + (135)(434.2) + (60)(434.4) = 125,063 Site 2 = (75)(333) + (105)(323.9) + (135)(226.7) + (60)(170) = 99,789 Site 3 = (75)(206.2) + (105)(180.3) + (135)(200) + (60)(269.3) = 77,555*

* Choose site 3
Supplement 7-37