MME 401

PRODUCTION AND OPERATIONS

MANAGEMENT

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 INTRODUCTION
Introduction to Production and Operations Management (P.O.M)
Definitions & History of P.O.M
Conceptual model & Business functions
Production system
Types of production activities
Job-Shop
Batch
Mass
Continuous
Production consumption cycle
Functions of production and operations management.

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 DEFINITIONS
Operations Management deals with processes that
produce goods and services that people use every day.

Processes, are the fundamental activities that

organizations use to do work and achieve their goals.

A Process is any activity or group of activities that takes

one or more inputs, transforms and add value to them,
and provides one or more outputs for its customers
Production:
Activities that create goods.
Operations:
Activities that are used to produce goods or furnish
services to customers.
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 DEFINITIONS OF P.O.M
Defined as the management of an organizations production system,
which converts inputs into the products / services
Other Definitions of POM:
DL Waller - POM is the effective planning, organizing and control of all the
resources and activities necessary to produce goods / services demanded by the
market.

J G Monks - POM is that activity whereby resources, flowing within a defined

system are combined and transformed in a controlled manner to add value in
accordance with policies communicated by management.

Objective of POM: To produce goods / services of right quality and

quantity at the right time and right manufacturing cost.

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 CONCEPTUAL MODEL OF A FACTORY

(a) Production system - Factory

as a processing pipeline where the
physical manufacturing activities
are performed

Production Production
System Support Activities

(b) Information-processing activities that support manufacturing as a

ring that surrounds the factory

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 BUSINESS FUNCTIONS
Marketing, which determines the products and services the firm has the
capability to produce

Finance, which manages the cash flows and capital investment requirements
that are created by the operations function

Accounting, which prepares financial and cost accounting information that

aids operations managers in designing and operating production systems

Human resources, which hires and trains employees to match process needs,
location decisions , and planned production levels

Management information systems, which develops information systems and

decision support systems for operations managers.

Operations, which designs and operates processes to give the firm a

sustainable competitive advantage

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 PRODUCTS AND SERVICES
If you drop it on your foot, it wont hurt you. Product/ service?

Products: Space shuttles, airplanes, tires, paper, textiles, etc

Services: Hospitals, Schools, courier services, Movie theatres, Credit cards.

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HISTORICAL SUMMARY OF PRODUCTION
& OPERATIONS MANAGEMENT
HISTORICAL SUMMARY OF PRODUCTION
& OPERATIONS MANAGEMENT
 PRODUCTION SYSTEM

It is that activity whereby resources, flowing within a defined system, are

combined and transformed in a controlled manner to add value in accordance
with the policies communicated by management.
 CONCEPT OF PRODUCTION

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 PRODUCTION SYSTEM
The production system has the following characteristics:

1. Production is an organized activity, so every production

system has an objective.

2. The system transforms the various inputs to useful

outputs.

3. It does not operate in separation from the other

organization system.

4. There exists a feedback about the activities, which is

essential to control and improve system performance.
 CLASSIFICATION OF PRODUCTION SYSTEMS
Production systems can be classified as Job Shop, Batch, Mass
and Continuous Production systems.

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 JOB SHOP PRODUCTION
Job shop production are characterized by manufacturing of one or few
quantity of products to meet specific customer order / requirements. Job
is undertaken only once no repeat order, wide variety of end products.
Job is undertaken intermittently when need arises. Work centres are
arranged around particular type of work.
Characteristics :
The Job-shop production system is followed when there is:
1. High variety of products and low volume.
2. Use of general purpose machines and facilities.
3. Highly skilled operators who can take up each job as a challenge
because of uniqueness.
4. Large inventory of materials, tools, parts.
5. Detailed planning is essential for sequencing the requirements of each
product,capacities for each work centre and order priorities.
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 JOB SHOP PRODUCTION

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 JOB SHOP PRODUCTION
Advantages:
1. Because of general purpose machines and facilities variety of products can be
produced.
2. Operators will become more skilled and competent, as each job gives them learning
opportunities.
3. Full potential of operators can be utilized.
4. Opportunity exists for creative methods and innovative ideas.

Limitations:
1. Higher cost due to frequent set up changes.
2. Higher level of inventory at all levels and hence higher inventory cost.
3. Production planning is complicated.
4. Larger space requirements.
 BATCH PRODUCTION
Batch production is as a form of manufacturing in which the
job passes through the functional departments in lots or
batches and each lot may have a different routing. It is
characterized by the manufacture of limited number of
products produced at regular intervals and stocked awaiting
sales.
Characteristics:
1. Shorter production runs.
2. Plant and machinery are flexible.
3. Plant and machinery set up is used for the production of
item in a batch and change of set up is required for
processing the next batch.
4. Manufacturing lead time and cost are lower as compared
to job order production.
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 BATCH PRODUCTION

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 BATCH PRODUCTION
Advantages:
1. Better utilization of plant and machinery.
2. Promotes functional specialization.
3. Cost per unit is lower as compared to job order production.
4. Lower investment in plant and machinery.
5. Flexibility to accommodate and process number of products.

Limitations:
1. Material handling is complex because of irregular and longer flows.
2. Production planning and control is complex.
3. Work in process inventory is higher compared to continuous production.
4. Higher set up costs due to frequent changes in set up.
 MASS PRODUCTION
Manufacture of discrete parts or assemblies using a continuous
process are called mass production. This production system is
justified by very large volume of production. The machines are
arranged in a line or production layout. Product and process
standardization exists and all outputs follow the same path.
Characteristics:
1. Standardization of product and process sequence.
2. Dedicated special purpose machines having higher production
capacities and output rates.
3. Large volume of products.
4. Shorter cycle time of production.
5. Lower in process inventory.
6. Perfectly balanced production lines.
 MASS PRODUCTION
7. Flow of materials, components and parts is continuous and without any
back tracking.
8. Production planning and control is easy.
9. Material handling can be completely automatic.

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 MASS PRODUCTION
Advantages:
1. Higher rate of production with reduced cycle time.
2. Higher capacity utilization due to line balancing.
3. Less skilled operators are required.
4. Low process inventory.
5. Manufacturing cost per unit is low.

Limitations:
1. Breakdown of one machine will stop an entire production line.
2. Line layout needs major change with the changes in the product
design.
3. High investment in production facilities.
4. The cycle time is determined by the slowest operation.
 CONTINUOUS PRODUCTION

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 CONTINUOUS PRODUCTION
Production facilities are arranged as per the sequence of
production operations from the first operations to the finished
product. The items are made to flow through the sequence of
operations through material handling devices such as
conveyors, transfer devices, etc.

Characteristics:

1. Dedicated plant and equipment with zero flexibility.

2. Material handling is fully automated.
3. Process follows a predetermined sequence of operations.
4. Component materials cannot be readily identified with final
product.
5. Planning and scheduling is a routine action.
 CONTINUOUS PRODUCTION
Advantages:
1. Standardization of product and process sequence.
2. Higher rate of production with reduced cycle time.
3. Higher capacity utilization due to line balancing.
4. Manpower is not required for material handling as it is completely automatic.
5. Person with limited skills can be used on the production line.
6. Unit cost is lower due to high volume of production.
Limitations:
1. Flexibility to accommodate and process number of products does not exist.

2. Very high investment for setting flow lines.

3. Product differentiation is limited.
 SUMMARY OF TYPES OF PRODUCTION
Characteristics Job Order Batch Production Continuous / Mass
(intermittent) Production
Production
Product Unique / Non-standard Standard / Identical Standard / Identical
Examples General Engg. Shipping, Refinery, Automobile
M/c Tool Mfg. Packaging, Book Mfg., Household
Printing, Cloth Mfg. appliances
Order Quantity Small (one) Large Large
Type of Equipment General purpose General Purpose Special Purpose
& Machinery used designed for high
production rates
Plant layout Process Product Product
Material handling Mobile type Mobile and Permanent Installation
Equipment Permanent type (Conveyor)
employed Installation type
In-process inventory High Low Very Low
Workers skill level High Low Very Low
required

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 SUMMARY OF TYPES OF PRODUCTION
Characteristics Job Order Batch Production Continuous /
(intermittent) Mass Production
Production
Job Instructions Many and detailed Few Very few
Production Pre-planning Complex Relatively easy Complex and
detailed but once
Production Control Complex Easy Very easy
Degree of flexibility in High Some Very little
Scheduling
Production Cycle time Long Short Very short
Unit Cost of production High Relatively low Low

Supervision and expediting High Little Very little

effort required
Maintenance Required Routine Preventive Predictive
Maintenance Maintenance Maintenance
Initial Investment required Not high High Very high

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TEN FUNCTIONS OF PRODUCTION CYCLE
1. Materials
2. Methods
3. Machines and equipments
4. Routing
5. Estimating
6. Loading and scheduling
7. Dispatching
8. Expediting
9. Inspection
10.Evaluating
FUNCTIONS OF PRODUCTION CYCLE
 TEN FUNCTIONS OF PRODUCTION CYCLE
1. Materials :
Raw materials, as well as standard finished parts and semi finished
products, must be available when required, to ensure that each production
operation will start on time. Duties include the specification of materials
(both with respect to dimension and quality), quantities and availability,
delay dates, standardization and reduction of variety, procurement and
inspection. This function also covers the procurement of semi finished
products from subcontractors.

2. Methods :
The purpose of this function is to analyze possible methods of manufacture
and to try to define the best method compatible with a given set of
circumstances and facilities. This analysis covers both the general study and
selection of production processes for the manufacture of components or
assemblies and the detailed development and specifications of methods of
application.
 TEN FUNCTIONS OF PRODUCTION CYCLE
3. Machines and Equipments :
Selection of suitable machinery for the process desired, designing the
maintenance policy and design of layout of machines are taken care of by
the production maintenance department.
Tool management, as well as problems both of design and economy of jigs
and fixtures, constitutes some of the major duties of production and
operations management.

4. Routing :
Routing prescribes the flow of work in the plant and is related to
considerations of layout, of temporary storage locations for raw materials
and components, and of materials handling systems. Routing is a
fundamental production function on which all subsequent planning is based.
 TEN FUNCTIONS OF PRODUCTION CYCLE
5. Estimating:
To fix up the production targets and delivery dates and to keep the
production costs at minimum, production management department does
through estimation of production times and production costs. In competitive
situation this will help the management to decide what should be done in
arresting the costs at desired levels.

6. Loading and Scheduling :

Machines have to be loaded according to their capability of performing the
given task and according to their capacity. Machine loading is carried out in
conjunction with routing, to ensure smooth work flow, and with estimating,
to ensure that the prescribed method, feeds and speeds are best utilized.
Scheduling is perhaps the toughest job for a production manager because it
determines the utilization of equipment and manpower and hence the
efficiency of the plant.
 TEN FUNCTIONS OF PRODUCTION CYCLE
7. Dispatching:
This function is concerned with the execution of the planning functions.
Dispatching is the routine of setting productive activities in motion, through release
of orders and instructions and in accordance with previously planned times and
sequences as embodied in route sheets and loading schedules.
Dispatching authorizes the start of production operations by releasing materials,
components, tools, fixtures and instruction sheets to the operator and ensures that
material movement is carried out according to the planned routing sheets and to
schedules.

8. Expediting: (follow-up) (progress)

This control tool is the executive arm that keeps a close watch on the program of the
work. Dispatching initiates the execution of production plans, whereas expediting
maintains them and sees them through to their successful completion. This function
has to keep close liaison with scheduling, in order to provide efficient feedback and
prompt review of targets and schedules.
 TEN FUNCTIONS OF PRODUCTION CYCLE
9. Inspection:
Inspection is generally concerned with inspection activities during
production, separate quality control department does the quality inspection,
which is not under the control of production management. Its findings and
criticisms are of supreme importance both in the execution of current plans
and in the planning stage of future undertakings, when the limitations of
processes, methods and manpower are known.

10. Evaluating : (Feedback)

Evaluation function provides the feedback mechanism on a longer term
basis so that past experience can be evaluated with the view to improving
utilization of methods and facilities. In this function wider aspects of
production management can be studied using modern tools of operations
research.
PRODUCTION CONSUMPTION CYCLE
 PRODUCTION CONSUMPTION CYCLE
1. The sales department studies the reception of production in the market
and consumer reactions to new modifications and design. Market
research is also carried out regarding proposed new products.

2. The collected data are analyzed by the sales department, which prepares
a sales forecast with a breakdown of products and models as a function
of time periods. The detailed forecast is submitted to management.

3. A production budget is prepared by the financial department, in

consultation with the manufacturing department. The proposed budget
and the sales forecasts are closely scrutinized by management, and a
decision is taken regarding the annual or semiannual quantity to be
produced.

4. The engineering department is instructed to prepare drawings, parts lists,

and specifications, or to check and modify existing ones. The
manufacturing budget is the adjusted accordingly.
 PRODUCTION CONSUMPTION CYCLE
5. The manager or head of the department is responsible for manufacturing is
authorized to start the production, and instructions are issued to the
production planning and control department, specifying quantities, delivery
schedules etc.

6. The technical information is obtained from engineering department

(including drawings, parts lists, specifications, standards etc. ) and passed on
to the planning section.

7. One of the first function of the production planning and control department
is to be well informed about availability of materials and expected delivery
dates of materials already ordered. Production planning is carried out and
detailed schedules are prepared.

8. The inventory levels are checked to determine the orders for procurement of
materials and standard parts that have to be issued. Parts and assemblies that
are subcontracted are also ordered by the purchasing department.
 PRODUCTION CONSUMPTION CYCLE
9. The purchased materials and parts are inspected prior to acceptance and are
stored until instructions are obtained to release them to the shops.

10. The production planning section supplies complete data on methods,

machine loading, and utilization, as well as production schedules, to the
control section for dispatching.

11. The control section releases orders for materials, tools, fixtures, etc.

12. Orders are issued to the shop.

13. Detailed production orders are dispatched to the shop by the production
control section, specifying what, how, when, and where operations should
be performed. The control functions are carried out throughout the
manufacturing period, and progress is constantly compared with the
planned schedules so that suitable modifications may be considered and
incorporated when required.
 PRODUCTION CONSUMPTION CYCLE
14. Inspection orders are released. The purpose of quality control during the
production processes is to ensure that the specifications as laid down are
conformed with. Final inspection of the parts is carried out before the
product leaves the shop and moves to the finished parts or products store.

15. Evaluation of the production operations is the main pillar of the control
function and has to be carried out both during and after these operations.
Inspection reports are one fact of evaluation, and they form the basis for
corrective actions in the processes or methods, and sometimes even for
modifications in the specifications of raw materials.

16. The production planning and control department reports on the progress of
the work to the head of the department. These reports are also studied by
the financial control department. The control section also evaluates data
obtained from the shops about operation times, idle time of men and
machines, cause and effects of breakdowns, trends in the fluctuation of
outputs etc.
 PRODUCTION CONSUMPTION CYCLE
17. Management receives interim and final reports from the head of the
department.

18. Management also receives a report from the financial department,

after which the final evaluation can be made.

19. The finished product is transformed (after inspection) to stock.

20. Finally product is sold to the customer, who, after comparing the
product characteristics with those of its competitors and with his
expectations, is ready to contribute his views and reactions to market
researchers.