I N T R O D U C T I O N T O O P E RAT I O N S

OPERATION

The process of changing inputs into outputs and

thereby adding value
 PROCESS

ADJUSTMENT
MONITOR

INPUT TRANSFORMATION OUTPUT

COMPARISON

• THE PROCESSES CONSUME RESOURCES

• PROCESS LEADS TO VALUE ADDITION

 AIRLINES

Input Output

Transformation System
 HOSPITAL

Input Output

Transformation System
 BANK

Input Output

Transformation System
 OIL EXPLORATION

Input Output

Transformation System
 CEMENT PLANT

Input Output

Transformation System
 GARMENT PRODUCTION
PLANT
Input Output

Transformation System
 VALUE ADDED PROCESSES

• Alter

• Transport

• Store

• Inspect
 MANAGEMENT PROCESS

PLANNING ORGANISING

• Product • Staffing
• Process • Job and work design
• Facility location • Standards
• Facility layout • Payment system
• Capacity

CONTROLLING

• Quantity
• Quality
• Time
• Inventory cost
• Maintenance
OBJECTIVES IN OPERATIONS MANAGEMENT
Performance objectives
• Efficiency
• Effectiveness
• Quality
• Lead time
• Capacity utilization
• Flexibility

Cost objectives
Visible Invisible
Material inventory
Labour shortage
Rework delayed delivery
Maintenance material handling
Inspection
Down time
 PRODUCT VERSES SERVICES
CHARACTERISTICS PRODUCT SERVICES
NATURE OF TANGIBLE INTANGIBLE
OUTPUT
CONSUMPTION CAN BE STORED IMMEDIATE
NATURE OF WORK LESS LABOUR MORE LABOUR
MORE EQUIPMENT LESS EQUIPMENT
CUSTOMER LOW HIGH
CONTACT
CUSTOMER LOW HIGH
PARTICIPATION
PERFORMANCE SOPHISTICATED ELEMENTRY
MEASUREMENT
LOCATION EASE OF LOCATION OF
MANUFACTURE USERS
PRODUCTION SYSTEMS
 TYPES OF MANUFACTURING SYSTEMS

• Continuous (mass)
• Batch
• Assembly line
• Job shop
• Project
 CONTINUOUS FLOW TECHNOLOGY

• Production of a standard product

• Sequence of operations remains same
• Production volumes are high
• Flexibility is low
 BATCH TECHNOLOGY

• Production of a group of products belonging to

same family like cosmetics, pharmaceuticals
• Common resources are shared by all products
• Sequence of operations varies
 ASSEMBLY LINE TECHNOLOGY

• Similar to continuous production

• Products are made by assembling of
components
• Production rate is high
• Sequence of assembling remains same
 JOB SHOP TECHNOLOGY

• There is no standard product

• Resources are available
• Every time the product is new
• A different sequence is adopted every time as per
requirement of specific product
• Flexibility is high
• Production volumes are low
 PROJECT TECHNOLOGY

• A unique product is created

• The product remains stationary and resources
move as per requirement
 Project Job shop Batch Assembly Continuous
line

Size Variable Small Moderate Large Large

Process No pattern Several Few Rigid Rigid

flow

Speed Variable Slow Moderate Fast Fast

Run length Short Short Moderate Long Long

Rate of Slow Slow Moderate High High

change

Labour High High Variable Low Low

skill high high mixed low variable

CLASSIFICATION OF MANUFACTURING
SYSTEMS

• MTO (Make to order)

• MTS (Make to stock)
• ATO (Assemble to order)
Productivity
Productivity is a measure of effective use of resources, usually expressed as the
ratio of output to input.

Partial Measures

Output / Labor Labour Productivity

Output / Machine Machine Productivity

Output / Energy Energy Productivity

Output / Capital Capital Productivity

Compute the Partial and multifactor productivity measure for each of the weeks shown.
Assume 40 hours a week and an hourly wage of Rs 12. Overhead is 1.5 times the
weekly labour cost. Material cost is Rs 6 per kg.

Week Output (units) Workers Material (Kg)

1 300 6 45

2 338 7 46

3 322 7 46
As part of a study for the Department of Labor Statistics, you are assigned the task of
evaluating the improvement in productivity of small businesses. Data for one of the
small businesses you are to evaluate is shown below. The data are the monthly
average of last year and the monthly average of this year.

Determine the multifactor productivity using the following costs:

• Labor Rs 8 per hour

• Capital 0.83% per month of investment
• Energy Rs 0.60 per unit

Monthly Average
Last Year This Year
Production (Dozen) 1,500 1,500
Labor (Hours) 350 325
Capital Investment 15,000 18,000
Energy (Units) 3,000 2,750
The manager of XYZ Corporation was examining the production data for the last 5 days.

Day 1 2 3 4 5 Total
No of workers 4 4 5 5 5 23
Units produced 200 180 230 220 240 1070

Each unit of product requires 0.5 Kg of steel, which costs Rs 100 per Kg. Each day is of 8
hours and the wages of workers are Rs.50 per hour.

“How much is the overhead “It is 50% of the total wages”,

cost”, the manager asked the the accountant replied.
accountant.
 The manager was presented the data for the next five
days.
Day 6 7 8 9 10 Total
No of workers 6 6 7 6 9 34
Units produced 210 260 260 250 340 1320

The manager was not impressed. “Although the production has gone up, productivity has
come down.”

“We have been able

to bring down the overheads
to 45% of the total wages in
the last 5 days,” the
accountant said. The
production has also gone up,
as you can see from the bar
chart.
 The manager was presented the data for the next five
days.
Day 6 7 8 9 10 Total
No of workers 6 6 7 6 9 34
Units produced 210 260 260 250 340 1320

The manager was not impressed. “Although the production has gone up, productivity has
come down.”

“We have been able

to bring down the overheads
to 45% of the total wages in
the last 5 days,” the
accountant said. The
production has also gone up,
as you can see from the bar
chart.
The manager was not impressed. Although the production has gone up, but productivity has
come down.

Do you agree that productivity

has gone down in the last 5
days?

What was the average productivity

during the first 5 days and last 5
days?
Sources of Waste
Waste form overproduction

Waste of waiting time

Transportation waste

Inventory waste

Processing waste

Waste of motion

Waste from product defects

Thank You