PRODUCTION AND OPERATION MANAGEMENT SUBIMITTED TO : SUBIMITTED BY: SUNIL KAKKAR ANUBHAV BHATNAGAR PGDM II SEM

INTRODUCTION Production function is that part of an organization, which is concerned with the transformation of a range of inputs into the required outputs (products) having the requisite quality level. “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.” Edwood Buffa defines production as ‘a process by which goods and services are created’.

Some examples of production are: manufacturing custom-made products like, boilers with a specific capacity, constructing flats, some structural fabrication works for selected customers, etc., and manufacturing standardized products like, car, bus, motor cycle, radio, television, etc.

PRODUCTION SYSTEM The production system of an organization is that part, which produces products of an organization. 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.

OBEJECTIVE OF PRODUCTION Producing the right kind of goods and services that satisfy customers’ needs (effectiveness objective). Maximizing output of goods and services with minimum resource inputs (efficiency objective). Ensuring that goods and services produced conform to pre-set quality specifications (quality objective). Minimizing throughput-time- the time that elapses in the conversion process- by reducing delays, waiting time and idle time (lead time objective). Maximizing utilization of manpower, machines, etc. (Capacity utilization objective).

Classification of Production System Production systems can be classified as Job Shop, Batch, Mass and Continuous Production System. JOB SHOP PRODUCTION Job shop production are characterised by manufacturing of one or few quantity of products designed and produced as per the specification of customers within prefixed time and cost. The distinguishing feature of this is low volume and high variety of products. A job shop comprises of general purpose machines arranged into different departments. Each job demands unique technological requirements, demands processing on machines in a certain sequence

Characteristics 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.

BATCH PRODUCTION Batch production is defined by American Production and Inventory Control Society (APICS) “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 characterised by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales.

Characteristics 1When there is shorter production runs. 2. When plant and machinery are flexible. 3. When 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. When manufacturing lead time and cost are lower as compared to job order production.

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 product layout. Product and process standardisation exists and all outputs follow the same path.

Characteristics Standardisation 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. 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.

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 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

PRODUCTION MANAGEMENT Production management is a process of planning, organizing, directing and controlling the activities of the production function. It combines and transforms various resources used in the production subsystem of the organization into value added product in a controlled manner as per the policies of the organization

E.S. Buffa defines production management as, “Production management deals with decision making related to production processes so that the resulting goods or services are produced according to specifications, in the amount and by the schedule demanded and out of minimum cost.”

OPERATING SYSTEM Everett E. Adam & Ronald J. Ebert define operating system as, “An operating system ( function) of an organization is the part of an organization that produces the organization’s physical goods and services.” Ray Wild defines operating system as, “An operating system is a configuration of resources combined for the provision of goods or services.”

BENEFITS DERIVED FROM EFFICIENT PRODUCTION MANAGEMENT 1 Consumer benefits from improved industrial Productivity, increased use value in the product. Products are available to him at right place, at right price, at right time, in desired quantity and of desired quality. (ii) Investors: They get increased security for their investments, adequate market returns, and creditability and good image in the society. (iii) Employee gets adequate Wages, Job security, improved working conditions and increased Personal and Job satisfaction. (iv) Suppliers: Will get confidence in management and their bills can be realized with out any delay

SCOPE OF PRODUCTION MANAGEMENT: Product: Manufacturing system often produces standardized products in large volumes. The plant and machinery have a finite capacity. The facilities constitute fixed costs, which are allocated to the products produced. Variable costs, such as, labour cost and materials costs. While manufacturing the product use value and economic values are added to the product. Hence the product is a store of values added during manufacture. Because the input costs and output costs are measurable, the productivity can be measured with certain degree of accuracy. Product can be transported to the markets and stored physically until it is sold.

Service: Service system present more uncertainty with respect to capacity and costs. Services are produced and consumed in the presence of the customer. We cannot store the service physically. Because of this the service organizations, such as Hotels, Hospitals, Transport Organizations and many other service organizations the capacity must be sufficiently or consciously managed to accommodate a highly variable demand. Sometimes services like legal practice and medical practice involve Professional or intellectual judgments, which cannot be easily standardized. Because of this the calculation of cost and productivity is difficult.

Project: Project system does not produce standardized products. The Plant, Machinery, Men and Materials are often brought to project site and the project is completed. The project is of big size and remains in the site itself after completion. As the costs can be calculated and allocated to the project with considerable accuracy, Productivity can be measured. Once the project is completed, all the resources are removed from site.

CRITERIA OF PERFORMANCE: Three aims of performance of the Production and Operations Management system may be identified. They are, (a) Effectiveness, (b) Customer satisfaction, (c) Efficiency. The case of Efficiency is productive utilization of resources is clear. Whether the organization is in ‘private sector’ or in the ‘public sector’, is a ‘manufacturing or ‘non-manufacturing’ organization or a ‘profit’ or a ‘non-profit’ organization, the optimal utilization of resource inputs is always a desired objective.