1. INTRODUCTION
Production/operations management is the process, which combines and transforms various resources used in the production/operations subsystem of the organization into value added product/services in a controlled manner as per the policies of the organization.
Therefore, it is that part of an organization, which is concerned with the transformation of a range of inputs into the required (products/services) having the requisite quality level.

2. production management
production management are the set of interrelated management activities, which are involved in manufacturing certain products.
If the same concept is extended to services management, then the corresponding set of management activities is called as.

3. CONCEPT OF PRODUCTION
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.
Production is defined as “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.” Thus production is a value addition process. At each stage of processing, there will be value addition.
Edwood Buffa defines production as ‘a process by which goods and services are created’.

4. Production and operations strategy

5. Operations strategy approaches
Market based approach: this approach bases decisions regarding the markets and the customers within those markets that the organisation intends to target.
Customer needs
Competitive factors
Market Position
Competitor Actions

6. The market based decision will also be shaped by the actions of competitors.
The organisation’s market position is one in which its performance enables it to attract customers to its products or services in a more successful manner than its competitors.
The next step is to translate the market position into a list of criteria or objectives which defines what kind of performance is required in order to successfully compete in the markets chosen.

7. Resource Based Approach
This approach works from the inside out of the firm, rather than the outside in perspective of the market based approach.
Here an assessment of the operations resources and processes leads to a view of the operations capability.

8. Operations resources are categorised into transformed and transforming resources. Transforming resources are the facilities and staff that do the work on the transformed resources that deliver the goods and services to customers.
Resources
(infrastructure decisions)
Operations Capability
Performance objectives
Processes
(structural decisions)

9. Transformed resources can be classified into materials and customers and information.
Capability of the organisation may be its intangible resources such as brand loyalty, supplier relationships, technological skills, design skills and detailed understanding of customer markets.
These capabilities are more likely to be developed over time through experience and process learning.
Processes are the way in which the firm operates its resources. Processes may follow formal rules laiddown in company documentation (SOPs).

10. Reconciling the two approaches (MBV & RBV)
Not all companies pursue strategy in accordance with a pure MBV or RBV and competitiveness is not just a matter of simply improving performance along specific competitive dimensions, but incorporates the development of capabilities that provide specific operating advantages.
Thus resource and process decisions are not only concerned with implementing a chosen competitive strategy but are required to provide the platform for the development of new capabilities that are difficult for competitors to replicate

11. . Resources (infrastructural decisions Customer needs
Competitive factors
Market Position
Operations capability
Performance objectives
Processes (structural decisions)
Competitor Actions

12. External competitive internal performance factors indicators High quality Quality Fast delivery Speed Reliable delivery Dependability Wide product/service range Flexibility (mix) Low price cost

13. 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. A simplified production system is shown below

15. The production system characteristics:
Production is an organized activity, so every production system has an objective.
The system transforms the various inputs to useful outputs.
It does not operate in isolation from the other organization system.
There exists a feedback about the activities, which is essential to control and improve system performance.

16. Types of Production Systems

17. 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.

18. Characteristics High variety of products and low volume.
Use of general purpose machines and facilities.
Highly skilled operators who can take up each job as a challenge because of uniqueness.
Large inventory of materials, tools, parts.
Detailed planning is essential for sequencing the requirements of each product, capacities for each work centre and order priorities.

19. Advantages
Because of general purpose machines and facilities variety of products can be produced.
Operators will become more skilled and competent, as each job gives them learning opportunities.
Full potential of operators can be utilised. 4. Opportunity exists for creative methods and innovative ideas.

20. Limitations Higher cost due to frequent set up changes.
Higher level of inventory at all levels and hence higher inventory cost.
Production planning is complicated. 4. Larger space requirements

21. 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.

22. Characteristics
Batch production system is used under the following circumstances:
When there is shorter production runs.
When plant and machinery are flexible.
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. When manufacturing lead time and cost are lower as compared to job order production.

23. Advantages Better utilisation of plant and machinery.
Promotes functional specialisation.
Cost per unit is lower as compared to job order production.
Lower investment in plant and machinery.
Flexibility to accommodate and process number of products.
Job satisfaction exists for operators.

24. limitations
Material handling is complex because of irregular and longer flows.
Production planning and control is complex.
Work in process inventory is higher compared to continuous production.
Higher set up costs due to frequent changes in set up.

25. 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.

26. Characteristics
Mass production is used under the following circumstances:
Standardisation of product and process sequence.
Dedicated special purpose machines having higher production capacities and output rates.
Large volume of products.
Shorter cycle time of production.
Lower in process inventory.
Perfectly balanced production lines.
Flow of materials, components and parts is continuous and without any back tracking.
Production planning and control is easy.
Material handling can be completely automatic.

27. advantages Higher rate of production with reduced cycle time.
Higher capacity utilisation due to line balancing.
Less skilled operators are required.
Low process inventory.
Manufacturing cost per unit is low.

28. limitations
Breakdown of one machine will stop an entire production line.
Line layout needs major change with the changes in the product design.
High investment in production facilities.
The cycle time is determined by the slowest operation.

29. 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.

30. Characteristics
Continuous production is used under the following circumstances:
Dedicated plant and equipment with zero flexibility.
Material handling is fully automated.
Process follows a predetermined sequence of operations.
Component materials cannot be readily identified with final product.
Planning and scheduling is a routine action.

31. Advantages Standardisation of product and process sequence.
Higher rate of production with reduced cycle time.
Higher capacity utilisation due to line balancing.
Manpower is not required for material handling as it is completely automatic.
Person with limited skills can be used on the production line.
Unit cost is lower due to high volume of production.

32. limitations
Flexibility to accommodate and process number of products does not exist.
Very high investment for setting flow lines.
Product differentiation is limited.

33. Remember!
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.”

34. Objectives of Production Management
The objective of the production management is ‘to produce goods services of right quality and quantity at the right time and right manufacturing cost’.
Never ever prevent customers from spending their money.

35. Key performance objectives
RIGHT QUALITY - The quality of product is established based upon the customers needs. The right quality is not necessarily best quality. It is determined by the cost of the product and the technical characteristics as suited to the specific requirements.
RIGHT QUANTITY - The manufacturing organization should produce the products in right number. If they are produced in excess of demand the capital will block up in the form of inventory and if the quantity is produced in short of demand, leads to shortage of products.

36. RIGHT TIME - Timeliness of delivery is one of the important parameter to judge the effectiveness of production department. So, the production department has to make the optimal utilization of input resources to achieve its objective.
RIGHT MANUFACTURING COST - Manufacturing costs are established before the product is actually manufactured. Hence, all attempts should be made to produce the products at pre-established cost, so as to reduce the variation between actual and the standard (pre-established) cost.

37. OPERATING SYSTEM
Operating system converts inputs in order to provide outputs which are required by a customer. It converts physical resources into outputs, the function of which is to satisfy customer wants i.e., to provide some utility for the customer. In some of the organization the product is a physical good (hotels) while in others it is a service (hospitals). Bus and taxi services, tailors, hospital and builders are the examples of an operating system.

38. 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.”

39. Concept of Operations
An operation is defined in terms of the mission it serves for the organization, technology it employs and the human and managerial processes it involves. Operations in an organization can be categorised into manufacturing operations and service operations.
Manufacturing operations is a conversion process that includes manufacturing yields a tangible output: a product, whereas, a conversion process that includes service yields an intangible output: a deed, a performance, an effort.

40. Manufacturing Operations and Service Operations
Tangible/Intangible nature of output
Consumption of output
Nature of work (job)
Degree of customer contact
Customer participation in conversion
Measurement of performance.
Manufacturing is characterised by tangible outputs (products), outputs that customers consume overtime, jobs that use less labour and more equipment, little customer contact, no customer participation in the conversion process (in production), and sophisticated methods for measuring production activities and resource consumption as product are made.
Service is characterised by intangible outputs, outputs that customers consumes immediately, jobs that use more labour and less equipment, direct consumer contact, frequent customer participation in the conversion process, and elementary methods for measuring conversion activities and resource consumption. Some services are equipment based namely rail-road services, telephone services and some are people based namely tax consultant services, hair styling.

41. OPERATIONS MANAGEMENT
A Framework for Managing Operations

42. Managing operations can be enclosed in a frame of general management function (planning, organising, leading and controlling). Operation managers are concerned with planning, organizing, and controlling the activities which affect human behaviour through models.

43. PLANNING Activities that establishes a course of action and guide future decision-making is planning. The operations manager defines the objectives for the operations subsystem of the organization, and the policies, and procedures for achieving the objectives. This stage includes clarifying the role and focus of operations in the organization’s overall strategy. It also involves product planning, facility designing and using the conversion process.
ORGANIZING Activities that establishes a structure of tasks and authority. Operation managers establish a structure of roles and the flow of information within the operations subsystem. They determine the activities required to achieve the goals and assign authority and responsibility for carrying them out.

44. CONTROLLING - Activities that assure the actual performance in accordance with planned performance. To ensure that the plans for the operations subsystems are accomplished, the operations manager must exercise control by measuring actual outputs and comparing them to planned operations management. Controlling costs, quality, and schedules are the important functions here.
BEHAVIOUR - Operation managers are concerned with how their efforts to plan, organize, and control affect human behaviour. They also want to know how the behaviour of subordinates can affect management’s planning, organizing, and controlling actions. Their interest lies in decision-making behaviour.

45. FUNCTIONS OF PRODUCTION AND OPERATIONS MANAGEMENT
Following are the activities which are listed under production and operations management functions:
Location of facilities
Plant layouts and material handling
Product design
Process design
Production and planning control
Quality control
Materials management
Maintenance management.

46. PLANT LOCATION AND LAYOUT
Plant location or the facilities location problem is an important strategic level decision making for an organisation. One of the key features of a conversion process (manufacturing system) is the efficiency with which the products (services) are transferred to the customers. This fact will include the determination of where to place the plant or facility.
The selection of location is a key-decision as large investment is made in building plant and machinery. It is not advisable or not possible to change the location very often. So an improper location of plant may lead to waste of all the investments made in building and machinery, equipment.
Before a location for a plant is selected, long range forecasts should be made anticipating future needs of the company. The plant location should be based on the company’s expansion plan and policy, diversification plan for the products, changing market conditions, the changing sources of raw materials and many other factors that influence the choice of the location decision. The purpose of the location study is to find an optimum location one that will result in the greatest advantage to the organization.

47. FACTORS INFLUENCING PLANT LOCATION/FACILITY LOCATION
Facility location is the process of determining a geographic site for a firm’s operations. Managers of both service and manufacturing organizations must weigh many factors when assessing the desirability of a particular site, including proximity to customers and suppliers, labour costs, and transportation costs.
Location conditions are complex and each comprises a different Characteristic of a tangible (i.e. Freight rates, production costs) and non-tangible (i.e. reliability, Frequency security, quality) nature.

48. Locational factors
General locational factors which include controllable and uncontrollable factors for all type of organisations.
Specific locational factors specifically required for manufacturing and service organisations.
Location factors can be further divided into two categories:
Dominant factors are those derived from competitive priorities (cost, quality, time, and flexibility) and have a particularly strong impact on sales or costs.
Secondary factors also are important, but management may downplay or even ignore some of them if other factors are more important.

49. General Locational Factors
CONTROLLABLE FACTORS
Proximity to markets
Supply of materials
Transportation facilities
Infrastructure availability
Labour and wages
External economies
Capital

50. UNCONTROLLABLE FACTORS
Government policy
Climate conditions
Supporting industries and services
Community and labour attitudes
Community Infrastructure

51. Specific Locational Factors for Manufacturing Organisation
Favourable labour climate
Proximity to markets
Quality of life
Proximity to suppliers and resources
Utilities, taxes, and real estate costs

52. Specific Locational Factors for Service Organisation
PROXIMITY TO CUSTOMERS
TRANSPORTATION COSTS AND PROXIMITY TO MARKETS
LOCATION OF COMPETITORS

53. SECONDARY FACTORS - services
Retailers also must consider the level of retail activity, residential density, traffic flow, and site visibility. Retail activity in the area is important, as shoppers often decide on impulse to go shopping or to eat in a restaurant. Traffic flows and visibility are important because businesses’ customers arrive in cars. Visibility involves distance from the street and size of nearby buildings and signs. High residential density ensures nighttime and weekend business when the population in the area fits the firm’s competitive priorities and target market segment.

54. LOCATION THEORIES ALFRED WEBER’S THEORY OF THE LOCATION OF INDUSTRIES.
Alfred Weber (1868–1958), with the publication of Theory of the Location of Industries in 1909, put forth the first developed general theory of industrial location. His model took into account several spatial factors for finding the optimal location and minimal cost for manufacturing plants.

55. The point for locating an industry that minimizes costs of transportation and labour requires analysis of three factors:
The point of optimal transportation based on the costs of distance to the ‘material index’—the ratio of weight to intermediate products (raw materials) to finished product.
The labour distortion, in which more favourable sources of lower cost of labour may justify greater transport distances.
Agglomeration and degglomerating.

56. Agglomeration or concentration
Agglomeration or concentration of firms in a locale occurs when there is sufficient demand for support services for the company and labour force, including new investments in schools and hospitals. Also supporting companies, such as facilities that build and service machines and financial services, prefer closer contact with their customers.

57. Degglommeration
Degglommeration occurs when companies and services leave because of over concentration of industries or of the wrong types of industries, or shortages of labour, capital, affordable land, etc. Weber also examined factors leading to the diversification of an industry in the horizontal relations between processes within the plant.

58. LOCATION MODELS
Various models are available which help to identify the ideal location. Some of the popular models are:
1. Factor rating method
2. Weighted factor rating method
3. Load-distance method
4. Centre of gravity method
5. Break even analysis

59. Factor Rating Method
The process of selecting a new facility location involves a series of following steps:
1. Identify the important location factors.
2. Rate each factor according to its relative importance, i.e., higher the ratings is indicative of prominent factor.
3. Assign each location according to the merits of the location for each factor.
4. Calculate the rating for each location by multiplying factor assigned to each location with basic factors considered.
5. Find the sum of product calculated for each factor and select best location having highest total score.