Production and Operations Management
Module-1
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Prof. Vijay Bhatu 03-02-2026
Introduction
• Production/operations management is the process, which
combines and transforms various resources used in the
production/operations subsystem of the organization into value
added product/services in a controlled manner as per the policies
of the organization.
• Therefore, it is that part of an organization, which is concerned
with the transformation of a range of inputs into the required
(products/services) having the requisite quality level.
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Prof. Vijay Bhatu 03-02-2026
Definition of production and operation
• The set of interrelated management activities, which are involved in
manufacturing certain products, is called as production management.
• If the same concept is extended to services management, then the
corresponding set of management activities is called as operations
management.
• A set of principles which deal with decision making, planning,
designing, controlling and scheduling the production process in order
to produce goods or deliver services according to given qualitative and
quantitative specification at a minimum cost within the specified
demand schedule”
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Prof. Vijay Bhatu 03-02-2026
Goods or Services???
• Goods are physical items that include raw materials, parts,
subassemblies, and final products.
▫ Automobile
▫ Computer
▫ Oven
▫ Shampoo
• Services are activities that provide some combination of time, location,
form or psychological value.
▫ Air travel
▫ Education
▫ Haircut
▫ Legal counsel
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Prof. Vijay Bhatu 03-02-2026
Differences between Service and Goods
Dimension Goods Services
Physical, tangible items you can see, touch, store, and Intangible, cannot be seen or touched, exist only when
Tangibility
count. delivered.
Customer
Very low. The product is usually made first, then
involvement in Very high. The customer often participates in the delivery.
purchased.
production
Uniformity of
Inputs are standardized and consistent. Inputs vary widely.
input
Uniformity of High uniformity; products are identical or nearly
Low uniformity; every service interaction can differ.
output identical.
Measurement Easier to measure using units produced per time or Harder to measure because outcomes are subjective and
of productivity cost per unit. experience-based.
Production Production occurs before consumption; stored and
Produced and consumed simultaneously; cannot be stored.
and delivery transported.
Quality Difficult to evaluate before delivery; quality depends on
Easier to test and inspect before delivery.
assurance human performance.
Evaluation of Objective and measurable (size, weight, durability, Subjective; depends on customer perception and
work defects). satisfaction.
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Prof. Vijay Bhatu 03-02-2026
The Heritage of Operations Management
Era Events/Concepts Dates Originator
Steam engine 1769 James Watt
Industrial
Division of labor 1776 Adam Smith
Revolution
Interchangeable parts 1790 Eli Whitney
Principles of scientific
1911 Frederick W. Taylor
management
Scientific
Management Activity scheduling chart 1912 Henry Gantt
Moving assembly line 1913 Henry Ford
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Prof. Vijay Bhatu 03-02-2026
Con…
Era Events/Concepts Dates Originator
Hawthorne studies 1930 Elton Mayo
Human Relations Motivation theories 1940s Abraham Maslow
1950s Frederick Herzberg
Linear programming 1947 George Dantzig
Digital computer 1951 Remington Rand
Operations Simulation, waiting
line theory, decision Operations research
Research 1950s
groups
theory, PERT/CPM
1960s, Joseph Orlicky, IBM
MRP, EDI, EFT, CIM
1970s and others
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Prof. Vijay Bhatu 03-02-2026
Con…
Era Events/Concepts Dates Originator
JIT (just-in-time) 1970s Taiichi Ohno (Toyota)
TQM (total quality W. Edwards Deming,
management) ISO 9000 Joseph Juran
1980s IOS, Europe
Quality
Revolution Strategy and Wickham Skinner,
1980s
operations Robert Hayes
Business process Michael Hammer,
1990s
reengineering James Champy
Six Sigma 1990s GE, Motorola
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Prof. Vijay Bhatu 03-02-2026
Con…
Era Events/Concepts Dates Originator
Internet, WWW, ERP, 1990s ARPANET, ORACLE
supply chain management
Internet
Revolution E-commerce 2000s Amazon, Yahoo,
eBay, Google, and
others
WTO, European Union, 1990s Numerous countries
and other trade 2000s and companies
agreements, global
Globalization supply chains,
outsourcing, BPO,
Services Science
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Prof. Vijay Bhatu 03-02-2026
Nature of POM
• Concerned with the management of the use of equipment and
resources. It advocates the maximum utilization of the resources.
• Involves decision making, planning, designing all the aspects
related to production including men, machines and all other
factors of production
• Primary objective: profit maximization , Minimum expenditure
and maximum output
• Scheduling: one of the most critical aspects
• Quantity and Quality equally important
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Prof. Vijay Bhatu
Production System Model
Inputs Transformation/ Outputs
• Men Conversion • Goods
• Material • Services
• Machines
Process
• Information • Product design
• Capital • Process Planning
• Product Control
• Maintenance
• Production
Measurement
and Feedback
Measurement Measurement
and Feedback Control and Feedback
• Inventory
• Quality
• Cost
03-02-2026
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Prof. Vijay Bhatu 03-02-2026
Scope of production and operation management
Plant Layout
Facility Product Process
and Material
Location Design Design
Handling
Production
Quality Material Maintenance
and Planning
Control Management Management
Control
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Prof. Vijay Bhatu 03-02-2026
Scope of production and operation management
• Facility Location: Location of facilities for operations is a long-term
capacity decision which involves a long term commitment about the
geographically static factors that affect a business organization. It is an
important strategic level decision-making for an organization. It deals with
the questions such as ‘where our main operations should be based?’
• The selection of location is a key-decision as large investment is made in
building plant and machinery.
• An improper location of plant may lead to waste of all the investments made
in plant and machinery equipments.
• Hence, location of plant should be based on the company’s expansion plan
and policy diversification plan for the products, changing sources of raw
materials and many other factors.
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Prof. Vijay Bhatu 03-02-2026
Scope of production and operation management
• Plant Layout and Material Handling: Plant layout refers to the physical
arrangement of facilities. It is the configuration of departments, work centres and
equipment in the conversion process.
• 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 also defined as the ‘art and science of moving, packing and storing of products
in any form’.
• This cost can be reduced by proper section, operation and maintenance of material
handling devices.
• Material handling devices increases the output, improves quality, speeds up the
deliveries and decreases the cost of production.
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Prof. Vijay Bhatu 03-02-2026
Scope of production and operation management
• Product Design: Product design deals with conversion of ideas into reality.
• Every business organization have to design, develop and introduce new
products as a survival and growth strategy.
• Developing the new products and launching them in the market is the biggest
challenge faced by the organizations.
• The entire process of need identification to physical manufactures of product
involves three functions: marketing, product development, manufacturing.
• Product development translates the needs of customers given by marketing
into technical specifications and designing the various features into the
product to these specifications.
• Manufacturing has the responsibility of selecting the processes by which the
product can be manufactured.
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Prof. Vijay Bhatu 03-02-2026
Scope of production and operation management
• Process Design: Process design is a macroscopic decision-
making of an overall process route for converting the raw material
into finished goods.
• These decisions encompass the selection of a process, choice of
technology, process flow analysis and layout of the facilities.
• Hence, the important decisions in process design are to analyze
the workflow for converting raw material into finished product
and to select the workstation for each included in the workflow.
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Prof. Vijay Bhatu 03-02-2026
Scope of production and operation management
• Production Planning and Control: Production planning and
control can be defined as the process of planning the production
in advance, setting the exact route of each item, fixing the starting
and finishing dates for each item, to give production orders to
shops and to follow up the progress of products according to
orders.
• The principle of production planning and control lies in the
statement ‘First Plan Your Work and then Work on Your Plan’.
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Prof. Vijay Bhatu 03-02-2026
Scope of production and operation management
• 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’.
• It is a systematic control of various factors that affect the quality
of the product.
• Quality control aims at prevention of defects at the source, relies
on effective feed back 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.
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Prof. Vijay Bhatu 03-02-2026
Scope of production and operation management
• Materials Management: Materials management is that aspect
of management function which is primarily concerned with the
acquisition, control and use of materials needed and flow of goods
and services connected with the production process having some
predetermined objectives in view.
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Prof. Vijay Bhatu 03-02-2026
Scope of production and operation management
• Maintenance Management: In modern industry, equipment
and machinery are a very important part of the total productive
effort.
• Therefore, their idleness or downtime becomes are very
expensive. Hence, it is very important that the plant machinery
should be properly maintained.
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Prof. Vijay Bhatu 03-02-2026
Supply Chain
Suppliers’ Direct Final
Producer Distributor
suppliers suppliers Customers
Supply Chain – a sequence of activities and organizations involved in producing and
delivering a good or service
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Prof. Vijay Bhatu 03-02-2026
Difference between manufacturing and services
BASIS FOR COMPARISON MANUFACTURING OPERATIONS SERVICE OPERATIONS
Meaning Manufacturing operations refers to the Service operations implies the processes that
specific processes, in which a firm engages involve the provision of services to the clients
itself, to add value to products, for selling it to and business users, as per their demand.
the customers.
Measurement of Productivity Easily measured Cannot be measured
Form of output Tangible and standardized but can also be Intangible and customized
customized.
Input and Output Always uniform May or may not be uniform
Location Close to the supply of input. Close to the market, so that client's reach is easy.
Capital cost Capital cost is high in operations but can Training cost is high but can operate with low
achieve economies of scale. capital costs.
Labor Unskilled or technically skilled manpower is Skilled and experienced manpower is employed
employed
Lead time Long Comparatively shorter
Quality standards Implemented easily Difficult to implement
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Prof. Vijay Bhatu 03-02-2026
Productivity Measurement
• Productivity: a common measure of how well a country,
industry or business unit is using its resources.
• Productivity = Output/ Inputs
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Prof. Vijay Bhatu 03-02-2026
Characteristics of POM
• Manufacturing as Competitive Advantage
▫ TQM, JIT, Time Based Competition
• Service Orientation
▫ Intangible and Perishable nature, constant interaction with customers,
small volume of production to serve local market, need to locate facilities to
serve local market
• Disappearance of Smokestacks
▫ Term used by Alvin Toffler in his book Power Shift
▫ Protective labor legislations, environmental movement, emergence of
knowledge based organizations
• Small has Become Beautiful
▫ E. F. Schumacher opposed giant organizations and increased specialization
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Prof. Vijay Bhatu 03-02-2026
Benefits of POM
• Increased Customer Satisfaction
• Increased Profitability
• Reduction in Cost of Production
• Increase in Product Quality
• Results in Competitive Advantage for a Company
• Improvement in Employee Morale and Satisfaction
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Prof. Vijay Bhatu 03-02-2026
Challenges of POM
• Coordinating the relationship between mutually supportive but
separate organizations
• Optimizing global supplier, production and distribution network
• Increased co-production of goods and services
• Managing customer touch points
• Raising senior management awareness of operations as a
significant competitive weapon
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Prof. Vijay Bhatu 03-02-2026
Product Design - Introduction
• Product Design
▫ The arrangement of elements that collectively form goods or services
▫ Is concerned with the form and function of the product
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Prof. Vijay Bhatu 03-02-2026
Importance of Product Design
• Detailed characteristics established
• Each characteristic directly affects how the product can be produced
• The way of production determines production system, heart of
production and operation strategy
• Good product design improves marketability
• Product differentiation
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Prof. Vijay Bhatu 03-02-2026
Factors influencing Product Design
• Customer Requirement
• Convenience of the user
• Trade of between form and function
• Types of material used
• Work methods and equipment
• Cost/price ratio
• Product Quality
• Process Capability
• Effect on existing products
• Packaging
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Prof. Vijay Bhatu 03-02-2026
Characteristics of Good Product Design
• Function or performance
• Appearance or aesthetics
• Reliability (length of time product can be used without failure)
• Maintainability
• Availability
• Producibility
• Simplification
• Standardization
• Safety
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Prof. Vijay Bhatu 03-02-2026
Product Development Process
• Phase 0: Planning
▫ Project Mission Statement, target market, business goals, key
assumptions and constraints
• Phase 1: Concept Development
▫ Alternative descriptions of form, functions and features,
specification, analysis of competitive products, economic
justifications
• Phase 2: System-level design
▫ Definition of the product architecture, subsystems and components,
refine design
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Prof. Vijay Bhatu 03-02-2026
Con…
• Phase 3: Design Detail
▫ Complete specification, identification of standard parts from
suppliers
• Phase 4: Testing and Refinement
▫ Construction and evaluation of multiple pre-production versions of
the product, testing prototypes
• Phase 5: Production Ramp-up
▫ Product is made using the intended production system
▫ Objective is to train the workforce and workout problems
▫ Sometime supplied to preferred customers
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Prof. Vijay Bhatu 03-02-2026
Thank You