Productions & Operations Management

UNIT -

An overview Definition of production and

operations management Production cycle Classification of operations Responsibilities of operations manager Product design New product development Plant Location Layout Planning

Lecture Plan
S.N. Unit 1. 2. 3. 1st Lecture N. 1. 2. 3. Content An overview: Definition of production & operations management. Slide N. 4-7 Production cycle, Production as an heart 8-14 of an organization Classification of operations, features and 15-18 objectives of production management. Responsibilities of operations manager. Product design New product development Plant location Layout planning(Cont.) Layout planning(Cont.) Layout planning 19-22 23-28 29-37 38-44 45-49 50-58 59-65
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4. 5. 6. 7. 8. 9. 10.

4. 5. 6. 7. 8. 9. 10.

An Overview
Meaning of Production:Production may be

defined as the conversion of inputsmen,machines,materials,money,methods and management(6 ms) into output through a transformation process.Output may be goods produced or service rendered.

Definition of Production Management

Production Management is the process of

effectively planning and regulating that part of an enterprise which is responsible for the actual transformation of material into finished products.(E.F.L.Brech) PM is concerned with those processes which convert the inputs into the outputs. The inputs are various resources like raw materials,men,methods etc and the outputs are goods and services.(H.A.Harding)
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Operation Management
Operations management is the management of an

organizations productive resources or its production system. A production system takes inputs and converts them into outputs. The conversion process is the predominant activity of a production system. The primary concern of an operations manager is the activities of the conversion process.

Production as a system/Production Cycle

Production System Inputs Conversion Subsystem
Control Subsystem

Outputs

Inputs of an production System

External
Legal, Economic, Social, Technological

Market
Competition, Customer Desires, Product Info.

Primary Resources
Materials, Personnel, Capital, Utilities

Conversion Subsystem
Physical (Manufacturing) Location Services (Transportation) Exchange Services (Retailing) Storage Services (Warehousing) Other Private Services (Insurance) Government Services (Federal)

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Outputs
Direct
Products Services

Indirect
Waste Pollution Technological Advances

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Production as heart of an organization

Finance Sales HRM QA

Prod
Marketing MIS

Engineering

Accounting

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Production as heart of an organization

Production is a primary business function along with marketing and finance,HR and other fields of management. Moreover ,production has a major impact on the quality of the goods and cost of production. In this respect production is a visible face of the company and thus central function of an organization and thus production as the heart of any

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Classification of Operations
Technology selection and management Capacity management Scheduling/Timing/Time allocation System Maintenance

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Features of Production Management

PM is the process of making decisions. Decisions are made regarding transformation

of inputs into outputs. Inputs may take the form of men,material,machines,methods etc. Outputs are products,which may include both goods and services. Quality,quantity and cost are main causes of concern for a production manager.
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Objectives of Production Management

Primary objectives

Quality Quantity Cost/Price Time Secondary objectives Men Machines Materials Services Techniques
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Responsibilities of Operations/Production Manager

Production Planning: Factors to be considered in

production planning are - Inputs factors - Identification of alternatives - Analysis of demand - Formulating demand schedule for factors of production Production control Plant layout and location Product design and development Quality control Inventory control and material handling Analysis & selection of methods of production

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Problems of Production Management

Problem of location of the plant Problem of plant layout Problem of product designing Problem of production control Problem of inventory control Problem of quality control Problem of labor control Problem of cost control and improvement

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Scope/Function of production management

Formulation of production system:

- Design of tools and drawings. - Designing development and installation of equipment. - The selection and operation of the size of the firm. - The selection of overall plans. - Location plans. - Plant layouts. - Materials handling systems etc. Activities relating to analysis and control of production - Production planning - Production control

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Product Design
Design: Design in its broadest sense includes

the whole development of the product through all the preliminary stages until actual manufacturing begins.(C.S.Deverell) Design means determination of shape, standard and pattern of the product.

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Benefits of product design

Attract new customers with an improved ,

larger product line. Retain current customers through continuous product improvement. Identify alternate designs. Determine and reduce product limitations.

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Classification of Product Design

Customized product design:Product are

design to satisfy individual customer needs. The emphasis in this type of design is on the quality and on time delivery,rather than on cost e.g.industrial product like boilers and turbines. Standard product design: Produced in large batch sizes and importance is given to cost control e.g. consumer durable products.

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Factors determining the design of a product

Marketing Research and development Process engineering Product engg. Operations Legal environment Finance Purchasing

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Characteristics of a good design

Reparability Modular Design Redesigning capability Miniaturization : Make it smaller and lighter in

weight. Design by computers(CAD,CAM) Drawings and specifications Warranties Reliability Maintainability

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Product Development
Product development is specialized activity,

which may result in creation of new products or modifications in the production process to produce the same product. Product Development can be divided into two main categories 1.Introduction of new product. 2.Improvement of existing products.

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Typical Phases of Product Development

Planning Concept Development System-Level Design Design Detail Testing and Refinement Production Ramp-Up

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Phases of Product Development

Phase 0 - Planning Proceeds project approval and project launch Considers corporate strategy, assessment of

technology developments, and market objectives Output is project mission statement

Target market Business goals Key assumptions Constraints

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Phases of Product Development

Phase 1 Concept Development
Identify target market needs Generate and evaluate alternative product concepts Select concepts to further develop and test

Concept:
Description of the form, function, and features of a

product Accompanied by a set of specifications, an analysis of competitive products, and an economic justification of the project
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Phases of Product Development

Phase 2 System-Level Design Break the product into sub-systems and

components Define final assembly process Output of this phase includes:

Engineering drawings Subsystem functional specifications Preliminary process flow of the final assembly

process

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Phases of Product Development

Phase 3 Design Detail
Complete engineering drawings, part detail tolerances,

material specifications, and purchased components Complete process plans Design tooling Output of this phase includes:
Final engineering drawings for part and associated tooling Purchased parts specifications Process plans for fabrication and assembly of product

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Phases of Product Development

Phase 4 Testing and Refinement
Constructions and evaluation of multiple preproduction

versions of the product

Prototypes, design intent, first production event, pre-production run Early prototypes are often made with the same material but may not

utilize final production processes Testing is completed to ensure product will work as designed and satisfy customer needs

Output of this phase includes:

Final product and process design Fully defined and efficient production process Product that customers will buy

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Phases of Product Development

Phase 5 Production Ramp-Up Product is made in the intended production system Final training of workforce Gain production process efficiencies Fill the distribution pipeline with product

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Plant Location
Plant location refers to the area or a place

where the plant will operate to produce the goods and services. The main object of an entrepreneur that the production unit at a place where the cost of production is the lowest and factors of production are easily available.

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Issues in Plant Location

Proximity to Customers Business Climate Total Costs Infrastructure Quality of Labor Suppliers Other Facilities

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Factors affecting location Decisions

Input related factors

- Raw materials - Human resources - Capital - Technology Output related factors - Marketing - Economic impacts - Non economic impacts Others factors - Climate - Political stability - Govt. regulation
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Objectives/Needs of Location Decisions

To expand the existing facility To add new location while retaining existing

one e.g. retail operations to maintain the market share. Shut down at one location and move to another. To reduce the cost of production.

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Two refineries sites (A and B) are assigned the following range of point values and respective points, where the more points the better for the site location. Sites
Major factors for site location

Plant Location Methodology: Factor Rating Method Example

A B

Fuels in region Power availability and reliability Labor climate Living conditions Transportation Water supply Climate Supplies Tax policies and laws

Pt. 0Range to 330

12 3 0 to 200 0 to 100 15 0 to 100 0 0 to 50 54 0 to 10 24 0 to 50 45 0 to 60 34 0 to 20 8 45 Total pts. 528

15 6 10 0 63 96 55 14 Best 4 Site is B 50 558 42

Plant Location Methodology: Transportation Method of Linear Programming Transportation method of linear programming seeks to minimize costs of shipping n units to m destinations or its seeks to maximize profit of shipping n units to m destinations.

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Definition of Plant Layout

It may be defined as a technique of locating

machines,processes and plant services within the factory so as to achieve,the right quantity and quality of output at the lowest possible cost of manufacturing. Layout: the configuration of departments, work centers, and equipment, with particular emphasis on movement of work (customers or materials) through the system

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Importance of Layout Decisions

Requires substantial investments of money

and effort Involves long-term commitments Has significant impact on cost and efficiency of short-term operations

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The Need for Layout Decisions

Inefficient operations
For Example:

High Cost Bottlenecks

Changes in the design of products or services

Accidents
The introduction of new products or services

Safety hazards
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Changes in environmental or other legal requirements

The Need for Layout Design (Contd)

Changes in volume of output or mix of products Morale problems Changes in methods and equipment

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Basic Layout Types

Product/Line layouts Process/Functional layouts Fixed-Position layout Combination layouts

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Product/Line Layout
Raw materials or customer
Material and/or labor Station 1 Material and/or labor Station Station 22 Material and/or labor Station Station 33 Material and/or labor Station Station 44
Finished item

Used for Repetitive or Continuous Processing

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Advantages of Product Layout

High rate of output Low unit cost Labor specialization Low material handling cost High utilization of labor and equipment Established routing and scheduling Routing accounting and purchasing

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Disadvantages of Product Layout Creates dull, repetitive jobs

Poorly skilled workers may not maintain equipment or quality of output Fairly inflexible to changes in volume Highly susceptible to shutdowns Needs preventive maintenance Individual incentive plans are impractical

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A U-Shaped Production Line

In

4 5

Workers

6
Out

10

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Process/Functional Layout
Plant is grouped according to functions e.g.

drilling section,moulding section and packaging section etc. This type of layout is most appropriate for intermittent.

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Process Layout
Process Layout (functional)
Dept. A Dept. B Dept. C Dept. D Dept. E Dept. F

Used for Intermittent processing Job Shop or Batch

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Functional Layout
222 444

Mill

Drill
1111 222 2

22 22 2

222 111 444

3 33 33 33 33

222

Grind

3333

111

33 33 33

111333

Assembly
111 444

4 44 44

Lathes 333

Heat treat

111 Gear cutting

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Advantages of Process Layouts

Can handle a variety of processing requirements Not particularly vulnerable to equipment failures Equipment used is less costly Possible to use individual incentive plans

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Disadvantages of Process Layouts In-process inventory costs can be

high Challenging routing and scheduling Equipment utilization rates are low Material handling slow and inefficient Complexities often reduce span of supervision Special attention for each product or customer Accounting and purchasing are more
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Cellular Layouts
Cellular Production

Layout in which machines are grouped into a cell that can process items that have similar processing requirements The grouping into part families of items with similar design or manufacturing characteristics

Group Technology

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Cellular Manufacturing Layout

-1111 Lathe Mill Drill Heat Gear -1111 treat cut

222222222

Mill

Drill

3333333333 Lathe Mill

Heat Grind- 3333 treat Drill Gear - 4444 cut

44444444444444

Mill

Assembly
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Heat Grind- 2222 treat

Functional vs. Cellular Layouts

Dimension
Number of moves between many departments Travel distances Travel paths Job waiting times Throughput time longer variable greater higher

Functional
few shorter fixed shorter lower lower lower lower higher

Cellular

Amount of work in process higher Supervision difficulty Scheduling complexity Equipment utilization higher higher lower

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Other Service Layouts

Warehouse and storage layouts Retail layouts Office layouts

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References
Chary- Production & operations mgt(TMH) Morton-Production & operations mgt(Vikas) Haleem-Production & operations mgt(Galgotia

books) Bedi Kanishka-Production & operations mgt(oxford university press) www.google.com McGraw-Hill/Irwin INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA
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