The Systems View of Operations Management. 9. The Process View of . BI also offers programmes at Bachelor, Masters, Executive MBA and PhD levels. Download Production and Operations Management Notes for MBA Pdf. Students can Download 2nd Sem Production and Operations. This book contains the course content for Production and Operation Management . First Edition Printed by. Universal Training Solutions Private Limited.
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4. Production & Operations Management: By Chary, S.N.(TMH) Production/ Operation management is the process which combines and transforms various. August Operations Management. This work is licensed under a Creative Commons-ShareAlike International License. Original source: InTech. chapter operations management: core functions: marketing function ( communicating) product/service development function (creating) operations function .
Other operational issues include the management of inventory levels, including work-in-process levels and raw materials acquisition; quality control; materials handling; and maintenance policies. Operations management entails studying the use of raw materials and ensuring minimal waste occurs. Operations managers utilize numerous formulas, such as the economic order quantity formula to determine when and how large of an inventory order to process and how much inventory to hold on hand.
The combination of understanding and coordinating the work of a company are central to becoming a successful operations manager. Special Considerations A critical function of operations management relates to the management of inventory through the supply chain.
To be an effective operations management professional, one must be able to understand the processes that are essential to what a company does and get them to flow and work together seamlessly.
The coordination involved in setting up business processes in an efficient way requires a solid understanding of logistics. An operations management professional understands local and global trends, customer demand and the available resources for production. Operations management approaches the acquisition of materials and the use of labor in a timely, cost-effective manner to deliver customer expectations.
Approaches to Aggregate Planning 1. Top down approach 10Student HandNotes R. Fixed capacity 2. Adjustable capacity 3. Design capacity 4. System capacity 5. Potential capacity 6. Immediate capacity 7. Effective capacity 8. Normal capacity or rated capacity 9. Assessing existing capacity 2. Forecasting future capacity needs 3. Identifying alternative ways to modify capacity 4.
Evaluating financial, economical and technological capacity alternativesSelecting a capacity alternative most suited to achieve the strategic mission of the firm. Capacityplanning involves capacity decisions that must merge consumer demands with human, materialand financial resources of the organization4 Types of Capacity Planning are: A technique to determine the labour and equipment capacities needed to meet the objectives.
To schedule end items to be completed promptly and when promised to customers. To avoid overloading or underloading the production facility so that production capacity is efficiently utilized and low production costs result.
Functions of MPS: Work from an aggregate production plan 2. Schedule common modules when possible 3. Load facilities realistically 4. Release orders on a timely basis 5. Monitor inventory levels closely 6.
Reschedule as required 13Student HandNotes R. Demand management b. Lot-sizing c. Number of products to be scheduled product-mix.
Materials Requirements planning MRP-1 or mrp: Computer based information system forordering and scheduling of dependent demand inventories. Objectives of MRP1. To improve customer service by meeting delivery schedules promised and shortening deliverylead times. To reduce inventory costs by reducing inventory levels. To improve plant operating efficiency by better use of productive resources. Three main purposes of a basic MRP system are to: One of the three primary inputs in MRP, specifies what endproducts are to be produced, in what quantities and when.
Bill of Materials file: Provides the information regarding all the materials, parts and subassemblies that go into the end product. Inventory Status file: Gives complete and up-to-date information on the on-hand inventories,gross requirements, scheduled receipts and planned order releases for the item. Secondary inputs of MRP system: Broad-based resource co-ordination systeminvolving other areas of a firm in the planning process, such as marketing, finance and the humanresource.
A software package developed for optimum use of resources of an enterprise in a planned manner. It integrates the entire enterprise starting form the supplier to the customer, covering, logistics, financial and human resources. Features of ERP1. Accommodating variety2. Integrated Management Information3. Seamless integration4.
Supply chain management5. Resource management6. Integrated data modelScope of ERP a. Financials b. Logistics c. Human resources d. This is mainly due to the need for reducingcosts especially when the sales are sluggish in the sub-merging markets. Unit-3Product Design: Concerned with form and function of a product.
It refers to the arrangement ofelements or parts that collectively form a product. Process Design: Concerned with the overall sequence of operations required to achieve thedesign specification of the product. Production Design: Concept of designing products from the point of view of producibility.
Objectives of Product Design i The overall objective is profit generation in the long run. Factors Influencing Product Design i. Customer requirements ii. Convenience of the operator or user iii. Trade off between function and form 15Student HandNotes R. Operation Management iv. Types of materials used v. Work methods and equipments vi. Product qualityviii. Process capability ix. Effect on existing products x. PackagingApproaches to Product Design i. Designing for Quality a.
Designing for robustness or robust design b. Designing for production i. Modular design ii. Designing for automation c. Designing for reliability v. Designing for Ergonomics vi. Designing for environmental protection vii. Designing for recyclingviii. Designing of disassembly DFD ix. Designing for mass customisation Delayed differentiation and modular designs are two tactics used to make masscustomisation possible.
Concerned with the improvement of design and specifications at various stages of product planning and development.
Operation Management iv The resistance of consumer protection forums to badly designed and manufacturing products. Environmental IssuesProduct Pollution Designer should anticipate environmental trends and design products that are clean enough forfuture environmental standards. Process Pollution Product designer must avoid the process that causing pollution from solvents, combustibleproducts, wastes etc.
What is a Process? A process is a sequence of activities that is intended to achieve some result, for example, tocreate added value for the customersProcess planning: Concerned with planning the conversion processes needed to convert the rawmaterial into finished products. Process design: Concerned with the overall sequences of operations required to achieve theproduct specificationsOperations design: Concerned with the design of the individual manufacturing operation. Process SelectionProcess selection refers to the way production of goods or services is organised.
Three primary questions to be addressed before deciding on process selection are: Key aspects in process strategy include: Make or download decisions ii. Capital intensity and iii. Three types of service operations are: In quasi manufacturing physical goods are more dominant then service associated with the product. Here the stress is on cost of production, technology, products, product quality and prompt delivery.
It may be either a standardized or customized product. Here there is a high involvement of customer the physical goods may not be that must sufficient. Services can be either customized or standardized. Here the service is performed on customer. Service here is customized physical goods may or may not significant. Operation ManagementTwo types of quasi-manufacturing operations are: Scheduling Multiple ResourcesIn some service organization it is necessary to coordinate the uses of more than one resource.
The complexity of scheduling the resources increases with multiple resources used by the servicesystems. Cyclical Schedule or Rotating ScheduleCyclical or rotating schedule rotates employees through a series of workdays or working hours.
Taylor, Frank and Lillian Gilbreth. Exercising control over the output in respect of a job by setting standards for performance. Steps in method study 20Student HandNotes R. Operation Management1. Select- select the work to be studied. Record-record all the relevant facts of the present method of direct observation. Examine-examine the facts critically in sequence, using special critical examination sheet.
Develop-develop the best method i.
Install-install that method as standard practice6. Maintain- maintain the standard practice by regular routine check. Motion StudyMotion study is the science of eliminating wastefulness resulting from using unnecessary; ill-directed and inefficient motion. The aim of motion study is to find and perpetuate the scheme ofleast waste methods of labour. Micro motion study provides a valuable technique for making minute analysis of thoseoperations that are short in cycle, contain rapid movements and involve high production over along period of time.
Examples of Therbligs 1. Search Sr Inspect I 2. Select St Assemble A 3. Grasp G Disassemble DA 4. Transport empty TE Use U 5. Transport loaded TL Unavoidable delay UD 6. Hold H Avoidable delay AD 7. Release load RL Plan Pn 8. Position P Rest for overcoming fatigue R 9. Pre-position PP Effective use of the operator b. Arrangement of the workplace c. Tools and equipmentQualified Worker"A qualified worker is one who is accepted as having the necessary physical attributes,possessing the required intelligence and education and having acquired the necessary skill andknowledge to carry out the work in hand to satisfactory standards of safety, quantity and quality"Techniques of Work MeasurementThe main techniques used to measure work are: Steps in Work MeasurementWork measurement involves seven steps.
Break the job into elements 2. Record the observed time for each element by means of either time study, synthesis or analytical estimating. Operation Management 3. Establish elemental time values by extending observed time into normal time for each element by applying a rating factor. Assess relaxation allowance for personal needs and physical and mental fatigue involved in carrying out each element. Add the relaxation allowance time to the normal time for each element to arrive at the work content.
Determine the frequency of occurrences of each element in the job, multiply the work content of each element by its frequency i. Add contingency allowance if any to arrive at the standard time to do the job. The amount of goods and services produced with resources used.
Output in a given period divided by labors hours used in the period. Operation Management 1. Lower prices for materials and 7. Elimination of buck-passing equipment 8. Reduced materials obsolescence 2. Faster inventory turnover 9. Improved supplier relationships and 3. Continuity of supply better records, and information 4. Reduced lead time Better interdepartmental cooperation 5. Reduced transportation costs BPR seeks to help companies radically restructure their organizations by focusing on the ground-up design of their business processes.
Lean systems is a systemic method for the elimination of waste " Muda " within a manufacturing or service process. Lean also takes into account waste created through overburden " Muri " and waste created through unevenness in work loads " Mura ". The term lean manufacturing was coined in the book The Machine that Changed the World. Six Sigma an approach to quality developed at Motorola between : Six Sigma refers to control limits placed at six 6 standard deviations from the mean of a normal distribution , this became very famous after Jack Welch of General Electric launched a company-wide initiative in to adopt this set of methods to all manufacturing, service and administrative processes.
More recently, Six Sigma has included DMAIC for improving processes and DFSS for designing new products and new processes Reconfigurable Manufacturing Systems : a production system designed at the outset for rapid change in its structure, as well as its hardware and software components, in order to quickly adjust its production capacity and functionality within a part family in response to sudden market changes or intrinsic system change.
Production systems[ edit ] In a job shop machines are grouped by technological similarities regarding transformation processes, therefore a single shop can work very different products in this picture four colors. Also notice that in this drawing each shop contains a single machine. Flexible Manufacturing System: in the middle there are two rails for the shuttle to move pallets between machining centers there are also FMS which use AGVs , in front of each machining center there is a buffer and in left we have a shelf for storing pallets.
Usually in the back there is a similar system for managing the set of tools required for different machining operations. A production system comprises both the technological elements machines and tools and organizational behavior division of labor and information flow.
An individual production system is usually analyzed in the literature referring to a single business, therefore it's usually improper to include in a given production system the operations necessary to process goods that are obtained by downloading or the operations carried by the customer on the sold products, the reason being simply that since businesses need to design their own production systems this then becomes the focus of analysis, modeling and decision making also called "configuring" a production system.
A first possible distinction in production systems technological classification is between continuous process production and discrete part production manufacturing. Process production means that the product undergoes physical-chemical transformations and lacks assembly operations, therefore the original raw materials can't easily be obtained from the final product, examples include: paper , cement , nylon and petroleum products.
Part production ex:cars and ovens comprises both fabrication systems and assembly systems. According to this classification different kinds of systems will have different customer order decoupling points CODP , meaning that work in progress WIP cycle stock levels are practically nonexistent regarding operations located after the CODP except for WIP due to queues.
See Order fulfillment The concept of production systems can be expanded to the service sector world keeping in mind that services have some fundamental differences in respect to material goods: intangibility, client always present during transformation processes, no stocks for "finished goods". Services can be classified according to a service process matrix:  degree of labor intensity volume vs degree of customization variety.
With a high degree of labor intensity there are Mass Services e. The systems described above are ideal types : real systems may present themselves as hybrids of those categories. Most products require, from a supply chain perspective, both process production and part production. Metrics: efficiency and effectiveness[ edit ] Operations strategy concerns policies and plans of use of the firm productive resources with the aim of supporting long term competitive strategy.
Metrics in operations management can be broadly classified into efficiency metrics and effectiveness metrics.
Effectiveness metrics involve: Price actually fixed by marketing, but lower bounded by production cost : download price, use costs, maintenance costs, upgrade costs, disposal costs Quality : specification and compliance Time : productive lead time , information lead time, punctuality Flexibility : mix, volume, gamma Stock availability Ecological Soundness: biological and environmental impacts of the system under study.
A more recent approach, introduced by Terry Hill,  involves distinguishing competitive variables in order winner and order qualifiers when defining operations strategy. Order winners are variables which permit differentiating the company from competitors, while order qualifiers are prerequisites for engaging in a transaction. This view can be seen as a unifying approach between operations management and marketing see segmentation and positioning.
Cycle times can be modeled through manufacturing engineering if the individual operations are heavily automated, if the manual component is the prevalent one, methods used include: time and motion study , predetermined motion time systems and work sampling.
An ABC cumulated curve. Typically one curve is constructed for revenue consumption and another for inventory stock. ABC analysis is a method for analyzing inventory based on Pareto distribution , it posits that since revenue from items on inventory will be power law distributed then it makes sense to manage items differently based on their position on a revenue-inventory level matrix, 3 classes are constructed A, B and C from cumulative item revenues, so in a matrix each item will have a letter A, B or C assigned for revenue and inventory.
This method posits that items away from the diagonal should be managed differently: items in the upper part are subject to risk of obsolescence, items in the lower part are subject to risk of stockout. Throughput is a variable which quantifies the number of parts produced in the unit of time. Although estimating throughput for a single process maybe fairly simple, doing so for an entire production system involves an additional difficulty due to the presence of queues which can come from: machine breakdowns , processing time variability, scraps, setups, maintenance time, lack of orders, lack of materials, strikes , bad coordination between resources, mix variability, plus all these inefficiencies tend to compound depending on the nature of the production system.
One important example of how system throughput is tied to system design are bottlenecks : in job shops bottlenecks are typically dynamic and dependent on scheduling while on transfer lines it makes sense to speak of "the bottleneck" since it can be univocally associated with a specific station on the line. This leads to the problem of how to define capacity measures, that is an estimation of the maximum output of a given production system, and capacity utilization.
Overall equipment effectiveness OEE is defined as the product between system availability, cycle time efficiency and quality rate. OEE is typically used as key performance indicator KPI in conjunction with the lean manufacturing approach. Configuration and management[ edit ] Designing the configuration of production systems involves both technological and organizational variables.
Choices in production technology involve: dimensioning capacity , fractioning capacity, capacity location, outsourcing processes, process technology, automation of operations, trade-off between volume and variety see Hayes-Wheelwright matrix. Choices in the organizational area involve: defining worker skills and responsibilities , team coordination, worker incentives and information flow. Regarding production planning , there is a basic distinction between the push approach and the pull approach, with the later including the singular approach of just in time.
Pull means that the production system authorizes production based on inventory level; push means that production occurs based on demand forecasted or present, that is download orders. An individual production system can be both push and pull; for example activities before the CODP may work under a pull system, while activities after the CODP may work under a push system.
Classic EOQ model: trade-off between ordering cost blue and holding cost red. Total cost green admits a global optimum.
Regarding the traditional pull approach to inventory control , a number of techniques have been developed based on the work of Ford W. Harris  , which came to be known as the economic order quantity EOQ model. This model marks the beginning of inventory theory , which includes the Wagner-Within procedure , the newsvendor model , base stock model and the Fixed Time Period model.
These models usually involve the calculation of cycle stocks and buffer stocks , the latter usually modeled as a function of demand variability.
The economic production quantity  EPQ differs from the EOQ model only in that it assumes a constant fill rate for the part being produced, instead of the instantaneous refilling of the EOQ model.
A typical MRPII construct: general planning top concerned with forecasts, capacity planning and inventory levels, programming middle concerned with calculation of workloads , rough-cut capacity planning, MPS, capacity requirements planning , traditional MRP planning, control bottom concerned with scheduling.
Joseph Orlickly and others at IBM developed a push approach to inventory control and production planning, now known as material requirements planning MRP , which takes as input both the master production schedule MPS and the bill of materials BOM and gives as output a schedule for the materials components needed in the production process. MRP therefore is a planning tool to manage download orders and production orders also called jobs. The MPS can be seen as a kind of aggregate planning for production coming in two fundamentally opposing varieties: plans which try to chase demand and level plans which try to keep uniform capacity utilization.
Many models have been proposed to solve MPS problems: Analytical models e. Magee Boodman model Exact optimization algorithmic models e.