04136125_1: Production and Operations

Management
Dr. Md. Ashraf Hossain (Professor, FBA; and Director of IQAC, EU)

Textbook: Readings:
❖Operations Management by Stevenson, W.
J. (Latest Edition), The McGraw-Hill Co.
❖Operations Management by R. Dan Reid &
Nada R. S. 2010~ ..Ed.© Wiley.
❖ Operations Management By Slack et. al.
DAVIS - AQUILANO – CHASE © The McGraw-Hill Co., Inc. (2007~), Pearson, etc.
In OPM 501 course the prime emphasis will be given on Basic Concepts,
Theories, Historical development, Forecasting, Capacity Planning, Job
Design and Work Measurement, Location and Layout, Logistics,
Scheduling, Inventory, Supply Chain, Project, Production and
Productivity, Efficiency, Quality and TQM, etc.

Chapter-I: Introduction to “Production and

Operations Management”
❖Underpinning Production System and Business Operations
from the viewpoints of: Concepts and theories, Historical
development, Current issues of Operations Management (OM),
and Look at OM from national and international perspectives.
 What is Operations Management (OM)?
OM is about the way organisations produce goods and services
Back office operation Kitchen unit Retail operation Take-out / restaurant
in a bank manufacturing operation operation

All are operations Source: Slack et al (2007) Pearson

Concept of Operations Management
-The best way to start understanding the nature of ‘operations’
is to look around you;
-Everything see around you has been processed by an
operation;
- Every service you consumed today (e.g. radio station, bus
service, lecture, etc.) has also been produced by an operation;
- Operations Managers create everything you buy, sit on, wear,
eat, and throw away.
Production System?: A production system is defined as a
user of resources to transform inputs into some desired outputs

Operations as a Transformation Process

Transformation OUTPUT
INPUT
process

Material Goods
Machines or
Labor Services
Management
Capital
 What is a Service and What is a Good?
• “If you drop it on your foot, it won’t hurt you.”
(Good or service?)

• “Services never include goods and goods never

include services.” (True or false?)
❖Core Services / Defined
Core services are basic things that customers want
from products they purchase
❖Value-Added Services / Defined
Value-added services differentiate the organization
from competitors and build relationships that bind
customers to the firm in a positive way
 Physical Goods Services
Tangible Intangible
Homogeneous Heterogeneous
Production and distribution Production and distribution
separated from and consumption
consumption simultaneous processes
A thing An activity or process
Core value produced in Core value produced in
factory buyer-seller interactions
Customers do not Customers participate in
(normally) participate in the production
production process
Can be kept in stock Cannot be kept in stock
Transfer of Ownership No transfer of ownership
 Transformation Processes
• Physical (manufacturing)
• Locational (transport/storage)
• Exchange (retail)
• Physiological (healthcare)
• Psychological (entertainment)
• Informational (communications)
 The Activities of
Operations Management
INPUT TRANSFORMED
RESOURCES

• MATERIALS
• INFORMATION
• CUSTOMERS

GOODS
INPUT Transformation OUTPUT AND
SERVICES
• FACILITIES
• STAFF

INPUT
TRANSFORMING
RESOURCES
 The Operations Function
• Operations is a transformation process
• Operations is a basic function
• Operations is the technical core
Operations as a Basic Function
OPERATIONS

MARKETING FINANCE
OM in the Organization Chart

Finance Operations Marketing

Plant Operations Director

Manager Manager

Manufacturing, Production control,

Quality assurance, Engineering,
Purchasing, Maintenance, etc
Operations Management at IKEA
Design a store layout
which gives smooth
Design elegant products Ensure that the jobs of
and effective flow
which can be flat-packed all staff encourage their
efficiently contribution to business
success

Site stores of an Continually examine and

appropriate size in the improve operations
most effective practice
locations

Maintain cleanliness Monitor and enhance

and safety of storage quality of service to
area customers
Arrange for fast
replenishment of
products
Some inter-functional relationships between
the operations function and other core and
support functions
Engineering/ Understanding of the Product/service
capabilities and
technical constraints of the development
function operations process function
Analysis of new Understanding of
technology options process technology New product and
Provision needs service ideas
of relevant Understanding of the
Accounting data capabilities and
and finance constraints of the
function operations process
Operations Market
Financial analysis
for performance
function requirements
and decisions Marketing
Understanding of function
human resource needs Understanding Provision of systems for
of design, planning and
Recruitment infrastructural
development control, and
and system improvement
and training needs

Human Information
Resources Technology
function (IT) function
 Operations Management
• Restricted sense
– Planning organising and controlling production process
and management of interface with support functions
• Broader sense
– Relevant to every sphere of organisational activity…..
• Operations Management regarded as one of key functions of
enterprise, such as Finance, Marketing, HRM, Logistics and
sometimes, Procurement & Purchasing Management……
• Operations is not just concerned with what goes on at the
point of production…, but is also directly concerned with
supplying the materials, the location and layout of facilities,
the programming of operations and the motivation of
employees.
12
 Historical Development of OM
• JIT and TQC

• Manufacturing Strategy Paradigm

• Service Quality and Productivity

• Total Quality Management and Quality Certification

• Business Process Reengineering

• Supply Chain Management

• Electronic Commerce
 Current Issues in OM
• Effectively consolidating the operations resulting from
mergers
• Developing flexible supply chains to enable mass cust
omization of products and services
• Managing global supplier, production and distribution
networks
• Increased “commoditization” of suppliers
• Achieving the “Service Factory”
• Enhancing value added services
• Making efficient use of Internet technology
• Achieving good service from service firms
Coverage of OPM 501:
Operations (?): Basic function of Production, Finance and
Marketing (Planning, Capacity, EOQ, Breakeven, Profit, etc.),
Forecasting (?) - Process of predicting a future event.
Capacity Planning - What capacity? How much? When?
Work Measurement (?)- Why use work measurement?
Location (?) - Where should a plant or service facility be
located ? Factors affecting location decisions (?)
Layout (?)- Configuration of work-centres and equipment with
emphasis on movement of work through the system.
Logistics (?): It’s not just ‘trucks and sheds’ but…..
Scheduling (?): Backbone for performance of the
organizations.
Inventory (?): Is stock or store of goods,
Supply Chain (?): A sequence of organizations, their facilities,
functions and activities in producing and delivering a product or
service.
Quality and TQM (?): To ensure long term company success.