Production and Operation Management Prepared by Prof. T. K. JANA. Dean, School of Engineering Haldia Institute of Technology

Production Management Operation Management is a systematic procedure to be followed to achieve the end objectives in the most optimized manner. Production Management: A set of inputs to be converted to some end products by value addition in the most optimized manner. Example: Production of a car or its components Service Management: Inputs are utilized to provide services to the customer. Example: A restaurant, hotel, hospital, bank etc.

Production Management Management is all about designing, implementing, and maintaining a system that channelizes the endeavors to achieve the end objectives in the best possible way. Management is intangible but its success can be felt by measuring a number of attributes.

Closed loop control of Management Systems

Productivity: No. of items produced per unit time Various Attributes Productivity: No. of items produced per unit time Efficiency: “doing the thing right" Effectiveness: “doing the right thing" Flexibility: Ability to adapt changes Reliability: Guaranteed performance Quality: Fitness for use Lead time: Time span between conceiving an idea and realization of the item.

Manufacturing vs Production It is misnomer to consider that both are interchangeable. Manufacturing is a collection of interrelated activities such as design and documentation, material selection, planning, production, quality and marketing of goods. Production is a subset of manufacturing.

Types of Production Systems A production system can be defined as a transformation system in which a saleable product or service is created by working upon a set of inputs. Inputs are usually in the form of men, machine, money, materials etc. Production systems are usually classified on the basis of the following: Type of product Type of production line Rate of production Equipments used

Types of Production Systems They are broadly classified into three categories: Job shop production or Tailor made Batch production Mass production  The new trend of production is called “Mass Customization”

There is hardly any likelihood of getting repeat order. Job shop production In this system, only a specific product is made (usually only once) to satisfy a specific need of the customer. There is hardly any likelihood of getting repeat order. Example: A heavy duty crane, Missile, ship, Special aircraft etc. Characteristics: Usually gigantic in size The work is regarded as a project

Use of general purpose machines are justified Job shop production Use of general purpose machines are justified Planning and control system should be flexible Skilled man power is required to satisfy the different requirements of work Schedule is difficult to prepare In process inventory is high Fixed position layout is followed Very high lead time

Batch production Batch production relies on manufacturing of different product variants (models) in batch mode. Once a particular model in a batch is produced, set ups are changed to deal with next models. Example: Different models of Maruti. E.g. Alto 800, Wagon R, Swift, Dezire etc. Characteristics: High flexibility in operation is required Computerized machines and equipment are recommended

Process layout is followed Batch production Process layout is followed Planning and control system should be flexible Labor should be skilled enough to work upon different product batches In process inventory is usually high owing to the type of layout and material handling policies adopted Productivity is rather low owing to high set up time Moderate lead time

Example: Nuts, bolts, washers, Bearings etc. Mass production Mass production system deals with manufacturing of a single product in large quantities without any provision for variation. Example: Nuts, bolts, washers, Bearings etc. Characteristics: A single product is manufactured with no variation Use of special purpose machines and high productive machines such as Capstan & Turret lathe, single spindle automatics, transfer lines etc. are recommended Product layout is followed Planning and control system is easier to implement

Mass Production Skilled labor is not required Less In process inventory Productivity is very high No flexibility Less scrap and rejection Change over time is negligibly small Lead time is very less

Flow Production Flow Production is a subset of mass production where a raw material passes through different machine stations sequentially so as to convert it to a finished component or product. Example: An assembly line used in automotive industries

Different Production Systems Production systems are also classified based on business strategy. Make to Stock (MTS) Assembly to Stock (ATS) Make to Order (MTO) Engineer to Order (ETO) A new addition in the recent times is E. Configure to Order (CTO)

Managerial Decisions Strategic planning is a process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. Generally, strategic planning deals with the overall business rather than just an unit or issue. Strategic planning would answer at least any one of following three key questions: What do we do? Business types For whom do we do it? The potential customer How do we excel? The means to success

Generally, top level management is responsible for such decisions. Strategic Decisions Key features: Generally, top level management is responsible for such decisions. These decisions are for long-term goals Financial involvement are extremely high Strategic decision is unstructured and therefore one has to apply his business judgment, evaluation and intuition into the process. Such decisions are highly dynamic and uncertain

Tactical Decisions Tactical decisions deals with the implementation of strategic decisions. These are directed towards developing sectional plans, structuring workflows, establishing distribution channels, mobilizing resources such as men, materials and money. 

Tactical Decisions Key features: Middle level management takes such decisions These decisions are for mid range goals Financial involvement are reasonably high These decisions are made section wise Duration of such decisions are usually one year

Operational Decisions Operational planning relates to day-to-day operations of the enterprise. It describes milestones, criteria for success and explains how, or what portion of a strategic plan will be put into operation during a given operational period.

Operational Planning Key features: These planning spans over short-term horizon, e. g day by day These decisions are based on facts regarding the events and do not require much of business judgment. Operational decisions are taken at lower levels of management. Financial involvement is not very high

Life-Cycle of a Product When any new product is introduced in the market, it is told that the product takes its birth. Then the product passes through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix.

Life-Cycle of a Product

Island of PPC PPC Forecasting Finance Inventory Industrial Engineering Quality Control Routing Forecasting Inventory Planning Dispatching Process planning & Scheduling

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