BMT1009

Production and Operations

Management
Unit-I

Dr. I.S.Stephan Thangaiah

M.E.,MBA.,Ph.D.,BLP-IIMC

Professor, VIT Business School

VIT University
Vellore 632014

611C

Cabin: SJT

BMT1009 Production and Operations Management

Module-1: Introduction to Production and Operations Management:
Definition, scope and objectives of POM, Important decision areas in
operations management, Recent trends in operations management,
Difference between manufacturing and service operations, productivity
measures. [3]
Module-2: Process Selection: An overview of major process decisions,
Process types, Advantages and limitations of job shop process, batch
process, assembly process, continuous process characteristics. [4]
Module-3: Facility Location: Introduction, steps in location selection
and factors affecting- selection of region, community and site
selection, Factor rating method, Break-even Method, Load-distance
Method, Practical Problems/ sums related to locational analysis. [4]

BMT1009 POM, VITBS

BMT1009 Production and Operations Management

Module-4: Facility Layout: Introduction, Factors affecting facility
layout, objectives of a good layout, types of layout -product, process,
fixed position, cellular, combined layouts. [4]
Module-5: Methods Study, Work Study and Time Study: Methods
Study- Concept, Principles of Motion Economy, flow Process Chart
Work Study- Concepts, Scope and Applications, Work Study and
Production Improvement,
Time Study Stopwatch Study, Allowance, Activity Sampling. [4]
Module-6: Production Planning and Forecasting: Purpose, aggregate
planning and strategies, dependent and independent demand, Bill of
material, MRP, Forecasting methods-Qualitative, Quantitative, Forecast
errors. [4]

BMT1009 POM, VITBS

BMT1009 Production and Operations Management

Module-7: Inventory Management: Concept, need for inventory,
types of inventory, EOQ, reorder point, classification of stock, ABC
Analysis. [4]
Module-8: Quality control: Concept cost of quality, quality planning,
SQC, management of quality in organizations, quality standards, quality
circles, A brief introduction to Lean, TQM and ISO quality systems. [3]
Team Projects: Related to Production/ Operations functions and
Assessment on a continuous basis with a minimum of 3 reviews.

BMT1009 POM, VITBS

Business System
A business system is that group of strategically
relevant and distinct activities that a company
performs to create, sell and service what it makes.

Research
&
Development

Sourcing

Operations

Sales
& Distribution

Servicing

Value can be created at any point in the business

system.
BMT1009 POM, VITBS

Value
Value means worth in the mind of customer
Value can be achieved either by providing
comparable benefit at a lower price or providing
superior benefits

Value is defined as the difference between

total benefit received (both functional and
emotional) and total cost incurred (including
purchase price, life cycle cost, and acquisition
cost) by the consumer

BMT1009 POM, VITBS

Operations Function
The operations function consists of all
activities
related to producing goods or
providing services.
The four
primary functional areas of a
firm are:
Marketing
Production
Finance
Human resources

BMT1009 POM, VITBS

Production/ Operations Management

Production/ Operations management is the process
which combines and transforms various resources
used in the Production/ Operations subsystem of
the organization into value added products/
services in a controlled manner as per the policies
of the organization.
Production/ Operations function, therefore, is that
part of an organization which is concerned with
the transformation of a range of inputs into the
required outputs (products/ services) having the
requisite level.
BMT1009 POM, VITBS

Operation as Transformation Process

BMT1009 POM, VITBS

Specific Operations Objectives

1. Achieving highest efficiency at all operational subsystems
2. Gearing up the operations subsystems to meet delivery
commitments
3. Flexibility in meeting customers demand in terms of change
in product design
4. Flexibility in production volume to meet changing customers
demand
5. Satisfying customers demand with world class product quality
6. To be effective in labour relation and manpower cost control
7. Efficient material utilization and its cost control
8. Efficient facility utilization and its cost control

BMT1009 POM, VITBS

Scope of POM
Product and service design
Process selection
Selection and management of technology
Design of work system
Location planning
Facilities planning and
Quality improvement
Interrelated activities are:

Forecasting
Capacity planning
Scheduling
Managing inventories
Assuring quality
Motivating employees

BMT1009 POM, VITBS

Operations Management and Decision Making

Operations management professionals make a number of
key decisions that affect the entire organization.
These include the following:
What: What resources will be needed, and in what amounts?
When: When will each resource be needed? When should the
work be scheduled? When should materials and other supplies be
ordered? When is corrective action needed?
Where: Where will the work be done?
How: How will the product or service be designed? How will the
work be done (organization, methods, equipment)? How will
resources be allocated?
Who: Who will do the work?

BMT1009 POM, VITBS

Recent Trends in Operations Management

Operations management is primarily concerned with three
kinds of technology and all three can have a major impact on
costs, productivity and competitiveness.
Product and service technology refers to the discovery and
development of new products and services
Process technology refers to methods, procedures and equipment
used to produce goods and provide services.
Information technology refers to the science and use of
computers and other electronic equipment to store, process and send
information. IT is heavily ingrained in todays business operations.
Advances in information technology and global competition have had
a major influence on todays operations management.

BMT1009 POM, VITBS

Impact of E-Business on Operations Management

1. Better customer relations
2. More efficient processes
3. Lower cost of materials
4. Information Technology (IT) synergy
5. Better and faster decision making
6. New forms of organization
7. Expanded supply chain
8. Higher customer expectations
9. New ways of doing business
10. Globalization

BMT1009 POM, VITBS

Key issues for Todays Business Operations

1. Economic conditions
2. Innovating
3. Quality problems
4. Risk management
5. Competing in a global economy
6. Environmental concerns
7. Ethical conduct

BMT1009 POM, VITBS

Classification of manufacturing and service operations

Basis

Classifications

Examples

Types of output

Types of flow

Types of specification
under service type

Products
Consumer good like furnitures, TV, etc

Producer goods like lathe, washing m/c etc

Services
Transportation, health, entertainment, banking services,

education system, etc

Job shop/ Projects Construction of bridge, dam, road, etc

Batch Process
Hospital, auto repair, machine shop, furniture company
Assembly/ Flow shop High volume mobile factory, automotive factory, etc
Continuous Process Telephone company, power corporation, oil refinery and

chemical plant

Customized
Medical care, legal services
Standardized
Insurance, wholesale stores

BMT1009 POM, VITBS

Service Jobs

Professional services financial, health care, legal

Mass services utilities water supply, internet, communications
Service shops tailoring, appliance repair, car wash, auto repair
Government police, fire, medicare
Education schools, universities
Food service restaurants, fast foods, bakeries, catering
Retailing and wholesaling
Shipping and delivery truck, railroad, boat, air
Services within organizations payroll, accounting, IT, maintenance
Travel and resorts travel desks, hotels, resorts
Residential services lawn care, painting, general repair, interior
design

BMT1009 POM, VITBS

Typical differences between production of goods

and provision of services
Characteristics

Goods

Services

Output

Tangible

Intangible

Customer contact

Low

High

Labour content

Low

High

Uniformity of input

High

Low

Measurement of productivity

Easy

Difficult

Opportunity to correct problems High

Low

before delivery

Inventory

Much

Little

Wages

Narrow range Wide range

Patentable

Usually

Not usually

BMT1009 POM, VITBS

Productivity
Productivity is a relationship between the output
(products/services) and the input (resources consumed in
providing them) of a business system. There are several
strategies for improving the productivity which are:
1.Increased output for the same input
2.Decreased input for the same output
3.Proportionate increase in the output is more than the
proportionate increase in the input
4.Proportionate decrease in the input is more than the
proportionate increase in the output
5.Simultaneous increase in the output with decrease in the
input
BMT1009 POM, VITBS

Computing Productivity
1. Productivity
2. Productivity growth
3. Machine productivity
4. Labour productivity
5. Energy productivity
6. Multifactor productivity

BMT1009 POM, VITBS

Computing Productivity (Contd.)

BMT1009 POM, VITBS

Computing Productivity (Contd.)

BMT1009 POM, VITBS

Computing Productivity (Contd.)

BMT1009 POM, VITBS

Computing Productivity (Contd.)

BMT1009 POM, VITBS

Computing Productivity (Contd.)

BMT1009 POM, VITBS

Computing Productivity (Contd.)

BMT1009 POM, VITBS

Factors that affect productivity

Standardizing processes and procedures
Design of workspaces
Quality differences
Use of the internet
Searching misplaced items
Scrap rate
New workers
Safety
Shortage of technical workforce
Layoffs
Incentive plans

BMT1009 POM, VITBS

Production/ Manufacturing strategies

Production/ operations function of an organization aims to
provide product/services to its customers by using a
combination of the following strategies to fill market gaps
1.Timely delivery of products/ services
2.Flexibility in meeting customers demand in terms of change
in product design or change in production volume
3.Quality of
specification

products/

services

to

meet

customers

4.Cost effectiveness in terms of low price for its product/

services relative to that of its competitors

BMT1009 POM, VITBS

World Class Manufacturing

1. Products with high quality
2. Products at competitive price
3. Products with several enhanced features
4. Products in a wider variety
5. Products delivered with shorter lead times
6. Products delivered on time
7. Flexibility in fulfilling products demand

BMT1009 POM, VITBS

Thank You and All the

Very Best!