Introduction to
Operations Management
What is Operations Management?
• Operations management is an area of management
concerned with overseeing, designing, and controlling the
process of production and redesigning business operations in
the production of goods or services.
Operations management is the process of obtaining and
utilizing resources to produce useful goods and services, so as
to meet the goals of the organization.
Ensure and allocating Produce goods or Assess consumer
financial resources services needs, and sell /
promote goods or
services
Feedback
Inputs Outputs
Workers
Managers Performanc
Goods
e
Operations Services
Equipment
and
Facility
processes
Materials
Land
Energy
Informatio
Lead
n time The time between ordering a good
or service and receiving it.
Feedback and Control
Physical Flow Information Flow
• Measurements taken at various points in the transformation
process for control purposes are called feedback.
• The process of comparing outputs to previously established
standards to determine if corrective action is needed is called
controlling
Inputs
◦ 5 Ms
Man, Methods, Material, Machines, Money
Transformation/conversion process
Cutting, machining, storing, transporting, investing,
analyzing
Output
Goods/services
Value-added The difference between the cost of
inputs and the value or price of outputs.
Automobile factory
Input Output
steel, plastic Car
glass, paint
tools Transformation
equipment process
machines
personnel, buildings
utilities, etc.
Table 1.2
Inputs Processing Outputs
Doctors, nurses Examination Healthy
Hospital Surgery patients
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
Improvement of patients health condition
Production
Production
Management
management deals with
converting raw materials into finished
goods or products.
Production management means planning,
organising, directing and controlling of
production activities.
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 to the user
Difference between Production and Operation
Management
What does
Operations Manger
Do?
Scope of Operations Management
Operations Management includes:
◦ Forecasting
◦ Capacity planning
◦ Scheduling
◦ Managing inventories
◦ Assuring quality
◦ Motivating employees
◦ Deciding where to locate facilities
◦ And more . . .
Forecasting: Weather, landing conditions, seat demands for
flights.
Capacity Planning: How many number of planes in each route?
Scheduling: Scheduling of planes for flights and for routine
maintenance, scheduling of pilots and flights attendants.
Quality: Quality of the services, Safety.
Forecasting: Demands for cars.
Capacity Planning : Number of shifts, level of workforce.
Inventory: Various component, parts.
Scheduling: Scheduling of various types of cars, Scheduling
of workforce.
Quality: Quality of products, services.
Responsibilities of Operations Manager
Planning Organizing
– Capacity
– Degree of centralization
– Location
– Process selection
– Products & services
Staffing
– Make or buy
– Hiring/laying off
– Layout
– Use of Overtime
– Projects
Directing
– Scheduling
Controlling/Improving – Incentive plans
– Inventory – Division of work orders
– Quality – Job assignments
– Costs
– Productivity
Productivity
Productivity is measure of how much
input is required to produce a given
output i.e the ratio of output to input
Productivity is the output of any production
process, per unit of input.
To increase productivity means to produce
more with less.
In factories and corporations, productivity is
a measure of the ability to create goods and
services from a given amount of labour,
capital, materials, land,
resources,knowledge, time or any
Dr Felton Lean
TYPES OF MANUFACTURING
PROCESSES
INTERMITTENT CONTINOUS
JOB BATCH MASS PROCESS
Goods are manufactured specially to fulfill orders made
by customers rather than for stock.
Intermittent production system are those where the
production facilities are flexible enough to handle a
wide variety of products and sizes.
Nature of inputs changes with the change in the design
of the product.
In the intermittent production system, goods are
produced based on customer's orders. These goods are
produced on a small scale. The flow of production is
intermittent (irregular).
Ex:- Furniture, hospitals.
Job production is the production of single complete
unit by one operator or group of operators. E.g.-
Bridge building, dam construction etc.
Whole project is considered as one operation and work
is completed on each product before passing on to the
next.
There is no assurance of continuous demand for
specific items.
Versatile and skilled labour is needed.
High capital investment.
High unit cost of production.
Eg. Furniture, tailor, architecture
Advantages: Disadvantages:
Able to produce unique Labor intensiveness
orders to meet
customers’ individual and high costs
needs. High selling costs
More likely to motivate Not fit for mass
workers (see end
results) production and large
Fairly simple way of demand
production(one a time)
Production schedule can chalked out according to
specific orders or on the basis of demand forecast.
Items are processed in lots or batches unlike job
production.
A batch is not passed to next operation until the work
on the previous operation is complete for the whole
batch and new batch enters the production line, till all
the operation for manufacturing any product are
complete.
Examples: Apparels, food, paints, magazines etc
Advantages: Disadvantages:
Suitable for a wide Higher unit costs for
small batch
range of similar Less motivated
products workers for repetitive
Reducing the need for one operation
skilled workers Careful planning
needed to reduce idle
More standardized machines or worker
products waiting
These are also referred to as Repetitive Manufacturing
Systems.
These are mass production facilities that produce high
volumes of the same products.
The manufacturing happens in Automated, special-purpose
equipments.
Production is done on the basis of sales forecast and stock
position..
Product(s) follow the same path:
Process manufacturing is the production of goods by
combining supplies, ingredients or raw substances
using a formula or recipe.
Examples of process manufacturing goods include
food, beverages, refined oil, gasoline, pharmaceuticals,
chemicals and plastics.
Ex:- Chemical plant, Oil and Gas, Petroleum refineries, Sugar
mills, etc.
Mass production refers to the process of creating large
numbers of similar products efficiently.
When is it used:
– Standardization of product and process sequence
– Dedicated special purpose machines having high
production capacities and output rates
– Large volume of products.
Examples:
Automobiles, Electronics, Appliances etc