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Introduction to
operations management.
Operations management
Production( Manufacturing) is nothing but
conversion of input into output.
Since, Service organizations also have this
feature of converting input into output the
term production is replaced by
“operations”.
That means the term operations includes
both service as well manufacturing
organizations.
Operations can be defined :
“As the process of changing input into
output thereby adding value to some
entity”
Value is added to entity by one of the
following ways:
1. Alteration
2. Transportation
3. Storage
4. Inspection.
Operations Management Can be defined:
As planning, organizing and controlling of
operations functions.
Objectives/Importance of operations management:
1. Effectiveness objective:
Producing right kind of goods and services that
satisfy needs of the customers
2. Efficiency objective:(Productivity objective)
Producing maximum output of goods and
services with minimum input resource
3. Quality objective:
To make sure that goods and services produced
are according to predetermined quality
specifications
6. Cost objective:
Minimizing cost of producing goods or rendering
services
FUNCTIONS OF OPERATIONS
MANAGEMENT:
1. Product selection and design
It must be done after detailed evaluation of
alternatives available.
Technique like value engineering can be used in
creating alternate design
Wrong selection and poor design may the lead
the organization to be ineffective and non-
compititive.
2. Process Selection and planning:
Process selection includes decisions concerning
choice of
Technology
Equipment
Machinery
Materials handling system etc.
Process planning includes details of resources
required and their sequence
3. Plant (facilities) location:
It takes into consideration factors like
Availability of raw material
Manpower
Transportation and marketing facilities
Availability of resources like water supply,
electricity
Government policy
Nature of the product produced
Accessibility to the customers in case of service
organization.
4. Plant layout and materials handling:
Plant layout is concerned with relative location
of one department with other
It should facilitate material flow and processing
in shortest distance and time.
Good plant layout and minimum material
handling are said to be two sides of a coin.
It improves co-ordination and eliminates delays
and congestion
Layout integrates factors of production
5. Capacity Planning:
It is concerned with determination and
acquisition of resources after taking into
consideration demand of the product
Excess capacity results into under utilization of
resources
Inadequate capacity leads to over utilization of
the resources
Break even analysis is a valuable tool for
capacity selection.
6. Production planning and control:
It includes
Production schedule
Sequence of operation
Machines assignment
Job assignment
And controlling involves keeping track of
happenings and taking corrective actions
in case of variations
7. Inventory control
It deals with optimal inventory to ensure
its availability at minimum capital lock up
Inventory includes raw materials,
components, spare parts, tools, finished
goods etc.
Material requirement planning (MRP) and
Just in Time (JIT) are the latest
techniques that helps for reduction of
inventory.
8. Quality Assurance and Control:
Goods and services produced by the company
should confirm the standards set at minimum
cost.
Total quality assurance system includes aspects
such as:
Setting of quality standards
Inspection of purchased and subcontracted parts
Control of quality during manufacturing
And inspection of finished goods including
performance testing.
9. Work study and job designing:
Work study is also called as time and motion
study
It is concerned with improvement and
maximization of productivity in the existing and
new jobs.
Frank B. Gilbreth is considered the founder
father of work study.
Two principal components of work study
are:
1.Method study
2. Work measurement.
Method study:
Is defined as systematic recording and critical
examination of the existing and proposed ways
of doing the work
It helps in applying easier and more effective
methods and reducing the cost.
When method study is applied
production methods yield the following
benefits:
1. Improved work environment
2. Improved facility layout
3. Better utilization of facilities
4. Greater safety
5. Lesser materials handling
6. Lower work in progress
Work measurement:
It is defined as application of techniques
designed to establish the time for a qualified
worker to carryout a specific job under specific
conditions and definite level of performance.
Work measurement have many uses such as :
1. Manpower planning
2. Production scheduling
3. Cost estimating
4. Cost reduction and control
5. Measuring employees progress.
10. Maintenance and replacement:
It includes selection of optimal preventive
policy to ensure higher equipment availability
at minimum repair and maintenance cost.
Preventive maintenance includes:
1. Inspection
2. Planned lubrication
3. Periodic cleaning and upkeep
4. Planned replacement of parts
5. Monitoring the conditions
6. Calibration of instruments and machines etc.
11. Cost control and cost reduction.
Product
Scope & Functions selection and
of operations Cost control design
Process
management & Cost
selection
reduction
planning
Maintenanc
e and
replacement Plant Location
operations
Work study management
and job Plant layout
design
Quality
assurance Capacity
and control Utilization
Production
Inventory planning
control and control
Evolution Of Manufacturing System and
factory system.
Before Industrial Revolution:
Goods were produced using craft production
Highly skilled workers using simple, flexible tools
produced goods according customers
specification
Because product was made by skilled craftsmen
production was slow and costly
There was no economies of scale
Many small companies emerged each with its
own set of standards.
The industrial Revolution:
It changed the face of production substituting
human by machines.
Invention of steam engine played a significant
role in industrial revolution since, it provided a
source of power to operate machines in
factories.
Coal and iron provided material for generating
power and machinery
Development of standard gauging system which
reduced the need of custom made goods.
Factories began to grow rapidly
Evolution of operation management
Year Contribution Contributor
1776 Division of labour Adam Smith
1800 Standardized parts Whitney
1883 Specialization as Charles Babbage
advantage of division of
labour
1881 Scientific management F. W. Taylor
1917 Work study Frank B. Gilbreth
1913 Coordinated assembly Henry Ford
line
1913 Gantt Charts Henry Gantt
1913 Emerson Efficiency Harrington Emerson
plan
1914 Economic lot size F.W. Harris
1924 Statistical quality Walter Shewhart
control
1931 Sampling Inspection F.H. Dodge, H.G.
Homings, &
W. Shewhart
1937 Work sampling L.H.C. Tippett
1940-1980 Till present day numerous developments
have been there.
Adam smith(1776):
He was Scottish economist.
He was the person who initiated the thought of
managing the production activities
He is said to be the originator of concept of
production management.
He advocated “division of labour” through his
book titled ‘The wealth of nations’.
He gave three major benefits of division
of labour.
1. Workmen performing work in repetition attain
higher skills.
2. Time can be saved while changing one activity
to another
3. Improvement can be made in production
methods when workmen are made to
specialize on certain task
2. Charles Babbage (1883)
He was English Mathematician
He agreed with Adam smiths theory of division
of labour.
He suggested specialization as yet another
advantage of division of labour
And advanced the concept of specialization as
next logical stage to the division of labour.
He demonstrated the world benefits of
specialization by giving example of pin industry
and its seven operations.
Drawing, straightening, pointing, twisting,
cutting heads, heading, and tinning to highlight
gains.
3. Whitney (1800)
Showed that machine tools could make
standardized parts to exact specification
This parts can be used for other purposes also.
4. F.W. Taylor (1881):
He was known as ‘father of scientific
management.’
In 1881 as chief Engineer of Midvale steel, he
studied how tasks were performed.
He disagreed with the managements approach
to allow the workers to do their own task,
decide their own methods and get themselves
trained on the job.
He advocated four duties of
management.
1. Development of science for each element of
man’s work
2. Selection of best worker for each particular
task and then training and developing the
workman
3. Striving for cooperation between workers and
management to obtain both maximum
production and higher worker wages.
4. Division of work between workers and
management.
These four duties developed into great
expansions which are:
Method study and work measurement
Training, selection and placement & industrial
relations
Today management takes the function of
planning and control while supervisors and
workmen are left to the execution of the plan.
His direct contribution also includes
Principles of ‘functional organization’ and
‘Taylor’s differential piece rate method’.
Taylor also did remarkable work of direct
advantage to production management:
a) The Task under study should be analyzed part
by part, each part being called as element.
b) Each element should be examined and those
which do not form a part of work cycle should
be dropped
c) Element should be timed accurately using stop
watch
d) A small allowance of time should be added to
the time of each element to compensate for the
unforeseen contingencies.
5. Frank B. Gilbreth:
He is the founder father of “work study”
He was assisted by his wife Lilian Gilbreth.
He envisioned motion study as a part of work
analysis.
He emphasized the importance of relationship
between operator’s output and his physical
effort.
He devised a system of classifying motion into
seventeen basic divisions which he called as
“Therbligs”
Lilian who was psychologist pioneered the
concept of human factor in the industry.
Gilbreth has introduced the concept of micro
motion camera studies as a substitute to stop
watch studies to measure the time of short
cycles of job.
6. Henry ford (1913):
He created Ford Motor Company in1903
He was the person who first used conveyorised
assembly line.
Unfinished products moved by the conveyor
and passed from one work station to another
He gave to the world the concept of mass
production
7. Henry Gantt (1913):
He used visual diagrammatic tool which is
known as “Gantt Chart”
It is used for production schedule and machine
load schedules.
It is still in practice
8. Harrington Emerson (1913):
He evolved “Emerson’s Efficiency Plan”
To emphasize labour efficiency as a basis for
basis for payment of wages
9. F.W. Harris (1914):
He was the first to develop economic lot size
model (EOQ)
At present Wilson’s Economic lot size formula is
being used.
9. Walter Shewhart (1914):
He pioneered the concept of statistical quality
control.
He introduced the concept of control charts for
monitoring quality of production process.
10. F.H. Dodge, H.G. Roming & W.
Shewhart (1931):
Developed the concept of sampling inspection.