Prof.

Arun Mishra
[email protected]
9893686820

Introduction to Production and Operations Management Transformation Process Evolution of Operations Management History of Operations Management Trends in Operations Management Productivity Management

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.

Operations Management is the set of activities that creates value in the form of goods and services by transforming input into output. The set of interrelated management activities, which are involved in manufacturing certain products, is called as production Management.

INPUT Material Machines Labor Management Capital

TRANSFORMATION PROCESS

OUTPUT Goods Services

Feedback

Physical: as in manufacturing operations Locational: as in transportation operations Exchange: as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication

SOME OF INPUT-TRANSFORMATION OUTPUT RELATIONSHIPS System Primary Resources Transformation Function Inputs
Patients Doctors, Nurses, Medicines, etc.
Tools, Workers, Equipments

Desired Output
Healthy Individuals

Hospital

Healthcare (Physiological)

Automobile Factory

Sheet Metal, Engine Parts

Fabrication and Assembly of Cars

High Quality of Cars

College or University

10+2 or Teachers, Graduate Books, Class s Rooms

Imparting Knowledge

Educated Individuals

Operations Marketing Finance and accounting Human resources Outside suppliers

Craft production
process of handcrafting products or services for individual customers

Division of labor
dividing a job into a series of small tasks each performed by a different worker

Interchangeable parts
standardization of parts initially as replacement parts; enabled mass production

Evolution of Operations Management (conti)

Scientific management Mass production Lean production

systematic analysis of work methods high-volume production of a standardized product for a mass market adaptation of mass production prizes quality and flexibility that

Era
Industrial Revolution

Events/Concepts
Steam engine Division of labor Interchangeable parts Principles of scientific management

Dates
1769 1776 1790 1911 1911 1912 1913

Originator
James Watt Adam Smith Eli Whitney Frederick W. Taylor Frank and Lillian Gilbreth Henry Gantt Henry Ford

Time and motion studies Scientific Management Activity scheduling chart Moving assembly line

Era
Human Relations

Events/Concepts
Hawthorne studies
Motivation theories

Dates
1930 1940s 1950s 1960s 1947 1951
1950s 1960s, 1970s

Originator
Elton Mayo Abraham Maslow Frederick Herzberg Douglas McGregor George Dantzig Remington Rand
Operations research groups Joseph Orlicky, IBM and others

Operations Research

Linear programming Digital computer Simulation, waiting line theory, decision theory, PERT/CPM
MRP, EDI, EFT, CIM

Era

Events/Concepts Dates Originator

JIT (just-in-time) TQM (total quality management) Quality Strategy and Revolution operations Business process reengineering

Era
Globalization

Events/Concepts
WTO, European Union, and other trade agreements Internet, WWW, ERP, supply chain management

Dates Originator
1990s 2000s 1990s Numerous countries and companies ARPANET, Tim Berners-Lee SAP, i2 Technologies, ORACLE, PeopleSoft Amazon, Yahoo, eBay, and others

Internet Revolution

E-commerce

2000s

Past
Local or national focus Batch (large) shipments

Causes
Reliable worldwide communication and transportation networks Short product life cycles and cost of capital put pressure on reducing inventory Supply chain competition requires that suppliers be engaged in a focus on the end customer

Future
Global focus, moving production offshore Just-in-time performance

Low-bid purchasing

Supply chain partners, collaboration, alliances, outsourcing

Past Lengthy product development Standardized products

Causes Shorter life cycles, Internet, rapid international communication, computeraided design, and international collaboration Affluence and worldwide markets; increasingly flexible production processes

Future Rapid product development, alliances, collaborative designs Mass customization with added emphasis on quality Empowered employees, teams, and lean production

Job specialization

Changing socioculture milieu; increasingly a knowledge and information society

Past Low-cost focus

Causes Environmental issues, ISO 14000, increasing disposal costs

Future Environmentally sensitive production, green manufacturing, recycled materials, remanufacturing High ethical standards and social responsibility expected

Ethics not at forefront

Businesses operate more openly; public and global review of ethics; opposition to child labor, bribery, pollution

Global focus Just-in-time performance Supply chain partnering Rapid product development Mass customization Empowered employees Environmentally sensitive production Ethics

Efficiency through which input is converted in output is called productivity Productivity output/input Other way to look at productivity is by the wastage produced Waste can be unnecessary input, defective output, idling of resources Reduction in scrap by 1% can increase in productivity by 10%

Productivity is the ratio of outputs (goods and services) divided by the inputs (resources such as labour and capital)

The objective is to improve productivity! Important Note! Production is a measure of output only and not a measure of efficiency

Measures of Productivity

Labour Productivity
Productivity = Units produced Labour-hours used = 1,000 250 = 4 units/labor-hour

One resource input single-factor productivity

Productivity =

Output Labor + Material + Energy + Capital + Miscellaneous

Also known as total factor productivity Output and inputs are often expressed in dollars
Multiple resource inputs multi-factor productivity

 Quality may change while the quantity of inputs and outputs remains constant
External elements may cause an increase or decrease in productivity

Precise units of measure may be lacking

Become efficient Expand

output increases with little or no increase in input both output and input grow with output growing more rapidly output increases while input decreases output remains the same and input is reduced both output and input decrease, with input decreasing at a faster rate

Achieve breakthroughs

Downsize
Retrench

A company produces 160 kg of plastic moulded parts of acceptable quality by consuming 200 kg of raw materials for a particular period. For the next period, the output is doubled (320 kg) by consuming 420 kg of raw material and for a third period, the output is increased to 400 kg by consuming 400 kg of raw materal. Calculate and compare the productivity for all the 3 periods.

During the first year, production is 160 kg Productivity = Output/Input = 160/200 = 0.8 or 80% For the second year, production is increased by 100% Productivity =Output/Input =320/420 = 0.76 or 76% For the third period, production is increased by 150% Productivity =Output/Input =400/400 = 1.0, i.e., 100%

From the above illustration it is clear that:

The following information regarding the output produced and inputs consumed for a particular time period for a particular company is given below:
Output Rs. 10,000 Human input Rs. 3,000 Material input Rs. 2,000 Capital input Rs. 3,000 Energy input Rs. 1,000 Other misc. input Rs. 500

The values are in terms of base year rupee value. Compute various productivity indices.

Labour productivity

= Output/Human input = 10,000/3,000 = 3.33 Capital productivity =Output/Capital input =10,000/3,000 = 3.33 Material productivity =Output/Material input =10,000/2,000 = 5.00 Energy productivity =Output/Energy input =10,000/1,000 = 10.00 Other misc. exp. =Output/Other misc. input =10,000/500= 20.00 Total productivity = Total output/Total input = Total output = 10,000/(3,000 + 2,000 + 3,000 +1,000 +500) = 10,000/9,500 = 1.053

(Human + Material + Capital + Energy + Other misc. input)