PROJECTS AND OPERATIONS

MANAGEMENT

MODULE 3
Dhritiman Chanda
January, 2024
Operations Management

 Operations management refers to the systematic design, direction, and control of processes that transform
inputs into services and products for both internal and external customers.

 It is a systematic approach to address issues in the transformation process that converts inputs into useful,
revenue generating outputs.

 Process: Any activity or group of activities that takes one or more inputs, transforms them, and provides one
or more outputs for its customers.

 External customers A customer who is either an end user or an intermediary (e.g., manufacturers, financial
institutions, or retailers) buying the firm’s finished services or products.

 Internal customers One or more employees or processes that rely on inputs from other employees or
processes to perform their work. external suppliers The businesses or individuals who provide the resources,
services, products, and materials for the firm’s short-term and long-term needs.

 Internal suppliers The employees or processes that supply important information or materials to a firm’s
processes.

 Nested process The concept of a process within a process.

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Scope and Objectives of Operations Management

The scopes of Operation Management run as below:

Facility layout planning: This step involves deciding how best to utilize the space in a factory or office to
optimize workflow.
Workforce planning and management: This includes ensuring that there are enough employees with the right
skills to do the work required and managing employee performance.
Inventory management: This encompasses everything from raw materials to finished products and ensuring that
inventory levels are maintained at an optimum level.
Scheduling: This is creating a production schedule that meets customer demand while maximizing efficiency.
Quality control: Quality control is essential to ensuring that products meet customer expectations and standards.
Transportation and logistics: Operations managers must plan to move goods from suppliers to customers
efficiently.
Maintenance: Regular maintenance is necessary to keep equipment and facilities running smoothly.
Project management: Many operations require project management to ensure that they are completed within time
and budget.

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Types of Production Systems

Intermittent production – Products are made based on a customer’s order

Continuous production – Products are constantly made, based on demand planning

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Job Shop Production

 A job shop is a kind of manufacturing process. It makes small batches of custom goods, i.e., specifically
for one customer. Most of the goods it makes require a specific set-up.

 In most cases, job shops make custom parts for other businesses. In other words, their customers are not
typically consumers, i.e., end users, but rather other companies. When consumers buy things, they neither
sell them on nor use them to make something that they then sell.

 A job shop may be a paint shop or a machine tool shop. Gear manufacturing, jig-boring, honing, grinding,
and fabrication shops, for example, might also be job shops.

 These businesses deal in customization, and relatively small production runs, not volume and
standardization. When the shop releases products, it usually does so in batches. People often refer to the
batches as ‘jobs.’

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Batch Production

 Batch production is usually used for smaller product runs, or to make products with certain changes and
customizations that will be the same for each item within the batch.

 It’s a way of ensuring standard quality, while also enabling customization and variety between batches.

 American Leather, a Dallas-based furniture manufacturer, uses mass customization to produce couches
and chairs to customer specifications within 30 days. The basic frames in the furniture are the same, but
automated cutting machinery precuts the color and type of leather ordered by each customer. Using mass-
production techniques, they are then added to each frame.
 One key distinction is between a batch and a job process. A job process is one-off, whereas a batch process
groups a number of items together and processes them at once.

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Mass Production Process

• Mass production is the manufacturing of the same standardized product lines for a prolonged period of
time. It uses automation or assembly lines to facilitate the high volume production of similar products.

• It is the industrial technique to produce large quantities of similar products in constant flows on
production lines.

• The strategy focuses on low-cost production by using standardized and repetitive processes to
manufacture the same line of products.

 Mass production companies replicate a hierarchical system where workers perform repetitive roles that
are narrowly defined, resulting in standardized, low-cost products.

 Mass production—manufacturing many identical goods at once—was a product of the Industrial

Revolution. Henry Ford's Model-T automobile is a good example of early mass production. Each car
turned out by Ford's factory was identical, right down to its color.

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Flow Production Process

 Flow production is defined as a continuous and uninterrupted production method. The process of flow
production connects a series of workstations into an assembly line.

 The goal of flow production is to increase productivity, reduce costs and minimize waste. It is usually
adapted in mass production of products like cars, electronic goods, or clothes.

 For example, clothing is a mass-market product with continuous demand from customers. Fashion
retailers around the world such as H&M and Zara apply flow production to produce clothes in large
quantities and keep up with demand.

 In a factory, there are machines in close proximity that process an item from one stage to the next. This is
also referred to as an assembly line, or a series of workers or machines that manufacture a succession of
similar goods.

 Flow production is more focused on the type of product being produced, while mass production is more
focused on the quantity of production

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 Mass production is a manufacturing process where a large number of identical products are made on an
assembly line. In this process, products are produced in batches, and each batch goes through the same set
of operations.

 The production line is organized around the product, and workers specialize in a particular task. This
method is efficient and cost-effective for producing large quantities of standardized products.

 Flow production, on the other hand, is a manufacturing process that involves continuous production of a
product. In this method, the production line is organized around the process, and workers are trained to
perform a variety of tasks.

 The production process is continuous, and products flow through the system without interruption. This
method is efficient for producing products that require a high degree of customization or variation.

 Mass production is best suited for creating standardized products in large quantities, while flow
production is better for creating customized products with a high degree of variation

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Forecasting
 A forecast is a prediction of future events used for planning purposes. Planning, in contrast, is the process of
making management decisions on how to deploy resources to best respond to the demand forecasts.

Forecasting Horizons
 Long term forecasting tends to be completed at high levels in the organization. The time frame is generally considered longer than 2
years into the future. Detailed knowledge about the products and markets are required due to the high degree of uncertainty. This is
commonly the case with new products entering the market, emerging new technologies and opening new facilities. Often no historical
data is available.
 Medium term forecasting tends to be several months up to 2 years into the future and is referred to as intermediate term. Both
quantitative and qualitative forecasting may be used in this time frame.
 Short term forecasting is daily up to months in the future. These forecasts are used for operational decision making such as inventory
planning, ordering and scheduling of the workforce. Usually quantitative methods such as time series analysis are used in this time
frame.

Demand Patterns
 Trend – A trend is consistent upward or downward movement of the demand. This may be related to the product’s life cycle.
 Cycle – A cycle is a pattern in the data that tends to last more than one year in duration. Often, they are related to events such as interest
rates, the political climate, consumer confidence or other market factors.
 Seasonal – Many products have a seasonal pattern, generally predictable changes in demand that are recurring every year. Fashion
products and sporting goods are heavily influenced by seasonality.
 Irregular variations – Often demand can be influenced by an event or series of events that are not expected to be repeated in the future.
Examples might include an extreme weather event, a strike at a college campus, or a power outage.

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Forecasting types

Basis ofForecasting
Qualitative Difference Quantitative Qualitative
Quantitative Forecasting

Data Source Historical Expert Opinion

Planning Horizon Short Range Long Range

Delphi Method
Methods
Executive Opinion Statistical
Time Series (G) Non Statistical
Causal Methods(V)
Moving Average Linear Regression
Salesforce Opinion
Weighted Moving Average Multi Linear Regression
Risk
Market Surveys Less Smoothing
Exponential More
Trend Projection
Nature Decomposition
Objective Subjective

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Facility Planning

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Facility Planning Layout

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Facility Location Decisions
If the organization can configure the right location for the manufacturing facility, it will have sufficient
access to the customers, workers, transportation, etc. For commercial success, and competitive advantage
following are the critical factors:
 Customer Proximity: Facility locations are selected closer to the customer as to reduce transportation cost
and decrease time in reaching the customer.
 Business Area: Presence of other similar manufacturing units around makes business area conducive for
facility establishment.
 Availability of Skill Labor: Education, experience and skill of available labor are another important,
which determines facility location.
 Free Trade Zone/Agreement: Free-trade zones promote the establishment of manufacturing facility by
providing incentives in custom duties and levies. On another hand free trade agreement is among countries
providing an incentive to establish business, in particular, country.
 Suppliers: Continuous and quality supply of the raw materials is another critical factor in determining the
location of manufacturing facility.
 Environmental Policy: In current globalized world pollution, control is very important, therefore
understanding of environmental policy for the facility
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