PRODUCTION

AND
OPERATION MANAGEMENT
 OUTLINE
Product /service: variety and value

Quality

Reliability

Product, services, operations and

competitive strategies
Production is the creation of goods and
services

Operations management (OM) is the set

of activities that create value in the form
of goods and services by transforming
inputs into outputs
Production Process
Production System
 Production Strategy
A vital function is necessary for generating money
to pay employees, lenders, and stockholders.
Effective production and operations management
can:
lower a firms costs of production.
boost the quality of its goods and services.
allow it to respond dependably to customer demands.
enable it to renew itself by providing new products.
 Productions Type
Mass Production manufacturing products in large
amounts through standardization, mechanization and
specialized skills.
Flexible Production producing smaller batches
using information technology, communication and
cooperation.
Customer-Driven Production evaluating customer
demands to link with manufacturer.
Production Process and Technology
Robots reprogrammable machines capable of performing
routine jobs and manipulating material
Computer-Aided Design and Manufacturing enables engineers
to design parts and buildings on computer screens faster and with
fewer mistakes.
Flexible Manufacturing Systems a production facility that
workers can quickly modify to manufacture different products.
Computer-Integrated Manufacturing integrates robots,
computers and other technologies to help workers design
products, control machines, handle materials, and control the
production function.
Production Location
 Production Manager
Oversee the work of people and machinery to convert
inputs (materials and resources) into finished goods and
services.
 Planning the Production Process
Choose what goods or services to offer customers.
Convert original product ideas into final
specifications.
Design the most efficient facilities to produce those
products.
 Process Layout
Process layout groups machinery and equipment
according to their functions.
Facilitates production of a variety of nonstandard items
in relatively small batches.
 Product Layout
Product layout sets up production equipment along
a product-flow line, and the work in process moves
along this line past workstations.
Efficiently produces large numbers of similar items.
 Fixed-Position Layout
A fixed-position layout places the product in one
spot, and workers, materials, and equipment come
to it.
 Customer-Oriented Layout
Customer-oriented layout arranges facilities to
enhance the interactions between customers and a
service.
Type Of Organizational Structure
1. Functional organization

Functional based structure- department are based on the

performance of specific task or function.
 Type Of Organizational Structure
2. Discipline-based
organization
SCHOOL OF ENGINEERING

MECHANICAL ENGINEERING ELECTRICAL ENGINEERING INDUSTRIAL ENGINEERING

CHEMICAL ENGINEERING ELECTRONIC ENGINEERING

Discipline based structure- department are based on the

disciplines in order to excel in research and other activities.
 Type Of Organizational Structure
3. Product -based
organization

Product based structure self contained divisions concerned

with specifics are established .
Type Of Organizational Structure
4. Region -based organization
PRESIDENT

NORTH AMERICA EUROPE ASIA

LATIN AMERICA AFRICA

Region-based structure- department are based on

geographical location.
 Type Of Organizational Structure
5. Matrix organization Functional Control

Matrix structure combine the benefits

of both products & functional
structures
Project A

PROJECT
BASED Project B
CONTROL

Project C

Some companies consider this

Engineering Design
for short term arrangement for Production Logistics
specific projects and task
 Organizing to Produce Goods and
Services
Essential functions:
1. Marketing generates demand
2. Production/operations creates the product
3. Finance/accounting tracks how well the
organization is doing, pays bills, collects the
money
4. Human Resources provides labor, wage and
salary administration and job evaluation
 The Critical Decisions
1. Design of goods and services
What good or service should we offer?
How should we design these products and
services?

2. Managing quality
How do we define quality?
Who is responsible for quality?
 The Critical Decisions
3. Process and capacity design
What process and what capacity will these
products require?
What equipment and technology is necessary
for these processes?

4. Location strategy
Where should we put the facility?
On what criteria should we base the location
decision?
 The Critical Decisions
5. Layout strategy
How should we arrange the facility?
How large must the facility be to meet our
plan?

6. Human resources and job design

How do we provide a reasonable work
environment?
How much can we expect our employees to
produce?
 The Critical Decisions
7. Supply-chain management
Should we make or buy this component?
Who should be our suppliers and how can we
integrate them into our strategy?

8. Inventory, material requirements planning,

and JIT
How much inventory of each item should we
have?
When do we re-order?
 The Critical Decisions
9. Intermediate and shortterm scheduling
Are we better off keeping people on the payroll
during slowdowns?
Which jobs do we perform next?

10. Maintenance
How do we build reliability into our processes?
Who is responsible for maintenance?
 Characteristics of Goods
Tangible product
Consistent product
definition
Production usually
separate from
consumption
Can be inventoried
Low customer
interaction
Characteristics of Service
Intangible product
Produced and consumed at
same time
Often unique
High customer interaction
Inconsistent product
definition
Often knowledge-based
Frequently dispersed
 Changing Challenges

Traditional Reasons for Current

Approach Change Challenge
Emphasis on Recognition of the Empowered
specialized, employee's total employees;
often manual contribution; knowledge enriched jobs
tasks society
In-house Rapid technological Supply-chain
production; change; increasing partnering; joint
low-bid competitive forces ventures, alliances
purchasing
Large lot Shorter product life Just-In-Time
production cycles; increasing need performance; lean;
to reduce inventory continuous
improvement
 New Trends in OM
Ethics
Global focus
Environmentally sensitive production
Rapid product development
Mass customization
Empowered employees
Supply-chain partnering
Just-in-time performance
 Productivity Challenge
Productivity is the ratio of outputs (goods
and services) divided by the inputs
(resources such as labor and capital)

The objective is to improve

productivity!
Important Note!
Production is a measure of output
only and not a measure of
efficiency