What is Operations Management?

The business function responsible for planning, coordinating, and controlling the resources needed to produce a companys products and services It is a management function Organizations core function Every organization has OM function Service or Manufacturing For profit or Not for profit What is Operations Management Role? OM Transforms inputs to outputs Inputs are resources such as People, Material, and Money Outputs are goods and services Functions of Operations Management Relationship between Operations and Other Functions: Three Primary Functions in Business: Finance Production-Marketing Scheduling / Capacity Planning / Purchasing / Quality Control / Facility Location & Layout / Production and Process Design / Job Design / Maintenance / Project Management / Operations Managers Responsibility: (typically) 75% of the Firms Investment 80% of the Firms Personnel 85% of Firms Expenditures for Materials Classification of Operations: 1.Based on Demand Pattern: a) Make-to-Order (e.g. Airplane / Film Developing/) Assembly-to-Order (e.g. Car/ Fast food/) b) Make-to-Stock (e.g. Clothes/ Toys/) Assembly-to-Stock (e.g. Electronic Products/ TV Sets/) 2.Based on Type of Conversion Process: Type of Conversion 1.Project Shop 2.Job Shop (Batch Shop) 3.Assembly Line

 4.Continuous Process Today's Factors Affecting OM: Global Competition Quality, Customer Service, and Cost Challenges Rapid Expansion of Advanced Technologies Continued Growth of the Service Sector Scarcity of Operations Resources Social-Responsibility Issues PRODUCT DESIGN PROCESS: 1. Idea generation 2. Product selection 3. Preliminary product design 4. Prototype construction 5. Testing 6. Final product design 7. Process the new product sales NEW PRODUCT DEVELOPMENT: New product development strategy Idea generation Screening and evaluation Business analysis Development Testing Commercialization Types of design: Functional design: It involves developing the idea into a rough model of the proposed products. The designer makes draft-room sketches of the proposed products. After this, experimental models are prepared which are thoroughly tested to make sure that they are function properly for a certain period of time and under varying condition After this life-test should be conducted to see how long it will function and remain in good condition. It can be conducted within the company itself aesthetic design: It is integrated with the functional design and it means a style for market acceptability.

 It is not sufficient if the functional design of the proposed product is good and economical, it should also be appealing to the customer in its appearance inducing them to buy. Production design and packing design: It pertains to a design which may result in affecting its economics without affecting its functional efficiency. PROCESS PLANNING: INTRODUCTION: -A process is defined as any group of action instrumental to the achievement of the output of an operations system in accordance with a specified measure of effectiveness MEANING: -process planning is concerned with the specification of process required and its sequence -it is concerned with designing and implementing a work system that will produce the desired product in the required quantities -it consist of all the work that are necessary to arrange for the manufacture of a product by the most economical means and in compliance with all the safety regulations -it begins with receipt of the product specification and ends with the final plans for manufacture of the product Procedure for designing a process: Product design Material list Sequence of operations Tool design Layout Control system Steps in process planning: Analyze the product drawings to know what is required Discuss and make recommendations with product engineer on product design changes if any List the basic operations required to produce the part as per the specifications Determine the most practical and economical method of manufacturing and the form or tooling required for each operation Devise the best way to combine the operations and put them in sequence. Product Life Cycle shows the stages that products go through from development to withdrawal from the market

The Stages of the Product Life Cycle: Development Introduction/Launch Growth Maturity Saturation Decline Withdrawal Plant layout identically involves the allocation of space and the arrangement of equipment in such a manner that overall operating costs are minimised James Lundy

Characteristics: 1. Smooth flow of production 2. Maximum utilisation of available space 3. Facilities the movement of men, machine and materials 4. Involves minimum handling 5. Provides better working conditions 6. Flexibility 7. Location of stores 8. Facilitates supervision and control 9. Provision of safety 10. Co-ordination and integration Factors influencing: 1. Nature of product 2. Volume of production 3. Basic managerial policies and decision 4. Nature of plant location shape, size, topography 5. Type of industry process 6. Types of methods of production 7. Nature of machines 8. Climate 9. Nature of materials 10. Type of machine and equipment 11. Human factor and working condition 12. Service center 13. Characteristics of building

Types of plant: 1. PRODUCT / LINE LAYOUT: Arrangement of machines and equipment in a line or sequence Shape U or LINE Suitability: continuous mass production Advantages of product / line: 1. Smooth flow of production 2. Mechanisation of material handling 3. Economy in manufacturing time 4. Saving in material handling costs 5. Lesser work in progress 6. Easy inspection 7. Introduction of production control 8. Maximum utilisation of available space 9. Effective utilisation of available resources 10. Production control greatly simplified Disadvantages: Expensive Inflexible Difficulty in supervision Difficulty in expansion Stoppage of work through breakdown High labour cost absenteeism, repetitive work, health hazards 2.Process / functional: Based on same functions grouped together./ specialised operation assembled together. Ex: welding department Advantages of functional/process: 1. 2. 3. 4. 5. 6. 7. Flexibility Scope for expansion Maximum utilisation of equipment Lower financial investment Better working conditions High output rate Enhances the overall skill of workers

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Disadvantages: 1. Inefficient material handling 2. Dis economy to floor space 3. High inventory investment 4. High cost of supervision 5. Accumulation of workin progress 3.Stationary or fixed or static: Materials at fixed place and job done at fixed position Suitability: industrial machines, hydroelectric turbines, ship-building, locomotive industry, etc.. Advantages: 1. Flexible 2. Lower labour cost 3. Saves time 4. Occupation of lesser floor space Disadvantages: 1. Higher capital investment 2. Unsuitability manufacturing or assembling small products in large quantities 4.Combination/mixed layout: Process and product Suitability: i. Companys Product lot of components and parts ii. Process produced in different types and sizes Cellular layout- high degree of automation, unstable demand. Combined layout: Some companies use a combination of layouts Eg. In soap, manufacturing plant, the machinery manufacturing soap is arranged on the product line principle, but ancillary services such as heating, the manufacturing of glycerin, the power house, the water treatment plant etc. are arranged on a functional basis. The main objective consists of organizing equipment and working areas in the most efficient way, and at the same time satisfactory and safe for the personnel doing the work. Sense of Unity The feeling of being a unit pursuing the same objective. Minimum Movement of people, material and resources. Safety In the movement of materials and personnel work flow.

 Flexibility In designing the plant layout taking into account the changes over short and medium terms in the production process and manufacturing volumes. Factors affecting Plant Layout: The final solution for a Plant Layout has to take into account a balance among the characteristics and considerations of all factors affecting plant layout, in order to get the maximum advantages. The factors affecting plant layout can be grouped into 8 categories: Materials Machinery Labor Material Handling Waiting Time Auxiliary Services The building Future Changes What is plant location? Plant location refers to the choice of region and the selection of a particular site for setting up a business or factory. What is an ideal location? An ideal location is one where the cost of the product is kept to minimum, with a large market share, the least risk and the maximum social gain. It is the place of maximum net advantage or which gives lowest unit cost of production and distribution. For achieving this objective, small-scale entrepreneur can make use of locational analysis for this purpose. SELECTION CRITERIA or FACTORS CONSIDERED IN SELECTING PLANT LOCATION: a) Natural or climatic conditions. b) Availability and nearness to the sources of raw material. c) Transport costs-in obtaining raw material and also distribution or marketing finished products to the ultimate users. d) Access to market: small businesses in retail or wholesale or services should be located within the vicinity of densely populated areas. e) Availability of Infrastructural facilities such as developed industrial sheds or sites, link roads, nearness to railway stations, airports or sea ports, availability of electricity, water, public utilities, civil amenities and means of communication are important, especially for small scale businesses.

f) Availability of skilled and non-skilled labour and technically qualified and trained managers. g) Banking and financial institutions are located nearby. h) Locations with links: to develop industrial areas or business centers result in savings and cost reductions in transport overheads, miscellaneous expenses. i) Strategic considerations of safety and security should be given due importance. j) Government influences: Both positive and negative incentives to motivate an entrepreneur to choose a particular location are made available. Positive includes cheap overhead facilities like electricity, banking transport, tax relief, subsidies and liberalization. Negative incentives are in form of restrictions for setting up industries in urban areas for reasons of pollution control and decentralization of industries. k) Residence of small business entrepreneurs want to set up nearby their homelands CONTINIOUS/FLOW PRODUCTION SYSTEM: It involves a continuous physical flow of materials The items are produced for the stocks and not for specific orders Routing scheduling for the whole process can be standardized FIFO Example; petrochemical, steel ,sugar & fertilizer industries Characteristics of production system: Std products are manufactured Standardized inputs & standardized sequence of operations Division of labor is made more efficient Minimum & constant material handling Minimum flow of work at any point of time Mass production Its only one type of product /a maximum of two or three types are manufactured in large quantities Example,leselectronics Electricals automobiles bicycles & container industries Types of Production: The various types of production: 1.Continuosus production: In this type of production , a large number of identical parts are produced. All the machines are arranged in sequence to produce the goods continuously. Since the machines are arranged in order, the products can be moved from one stage to another stage during manufacturing operation.

2.Batch or intermittent production: Here ,products are produced in batches of small quantity. When one batch of production is completed, the same machines and equipments are used for the production of same or other products in batches. The size of the batch is decided based on the type of product and economical consideration. E.g . Batches of furniture's, textile clothing , baches of machine tools. 3.Job order or project type production : It is the production of single complete unit by one operator or a group of operator, e.g Dam construction, Ship / Air craft .

Capacity is defines as the ceiling on the maximum load a production unit can handle at a given point of time. Capacity is defined as an upper limited on the rate of output Production capacity: Facility planning includes determination of how much long-range production capacity is needed, when additional capacity is needed, where production facilities should be located and the layout and characteristics of the facilities Need for capacity planning: Need for increasing production Introducing new products Technology selection Expansion Importance of capacity planning: Future development of organization Adjusting strategies To reach the goal For quality management Demand forecasting Minimizing the operation cost of final product Utilizing the establishing capacity to the fullest possible extent Minimizing the operating cost through variable factor Initial investment involved Long term commitment of resources

Capacity planning strategies: 1. Long term capacity strategies - develop new product line -expand existing facilities

 - construct or phase out production plants 2. Short term capacity strategies Capacity planning decisions: Assessing existing capacity Forecasting future capacity needs Identifying the alternative ways to modifying the capacity Evaluating financial, economical and technological capacity alternatives Selecting a capacity alternatives most suited to achieve the strategic mission of the firm MAINTENANCE MANAGEMENT: Meaning: It refers to the upkeep and protection of plant, buildings, machinery & other fixed assets. It must be kept at the best operating conditions The equipment will be obsolete over period of time Objectives: To increase the production To increase the productivity To increase the safety to life and limbs of operator To prolong life of the asset To increase the salvage value of the asset To improve cordial relationship To meet delivery promises given to customers Types: Preventive maintenance: PM is the periodical inspection and service activities which are aimed to detect potential failures and perform minor adjustments which will prevent major operating problems in the future. Breakdown maintenance: BM is the repair which is generally done after the equipment has attained down state.It is called as CORRECTIVE maintenance Predictive maintenance: Defined as , Measurement that detect the onset of a degradation mechanism, thereby allowing casual stressors to be eliminated or controlled prior to any significant deterioration in the component physical state Total productive maintenance: Developed by Japanese institute of management Operating personnel To develop an operating system (maintenance free) It involves all departments. Routine maintenance: To keep the production equipment in efficient condition.

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It may cover periodic inspection, cleaning lubrican,overhaul,repair replacement etc It constitutes the bulk of continuous maintenance during the life time of the equipment