Operations management involves planning, organizing, and controlling the processes that produce and deliver a company's goods and services. It includes activities like managing resources, designing production processes, and ensuring quality. Operations management aims to reduce costs, increase revenue through customer satisfaction, optimize resource usage, and drive innovation. It transforms various inputs like materials, money, and labor into outputs in the form of goods and services.

1. Handy Notes
Operations
Management
Compiled & Prepared By
SOMASHEKAR S M

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Introduction: Operations management is about how organizations produce goods and services.
Everything you wear, eat, sit on, use, read or knock about on the sports field comes to you courtesy
of the operations managers who organized its production. Every book you borrow from the library,
every treatment you receive at the hospital, every service you expect in the shops and every lecture
you attend at university – all have been produced. While the people who supervised their
‘production’ may not always be called operations managers that is what they really are.
Operation is that part of organization, which is concerned with the transformation of range of
inputs into the required output (services) having the requisite quality level.
Management is the process, which combines and transforms various resources used in the
operations subsystem of the organization* into value added services in a controlled manner as per
the policies of the organization.
The set of interrelated activities, which are involved in manufacturing certain products, is called
as “Production Management”. If the same concept is extended to services management, then the
corresponding set of management activities is called as “Operations Management”
Operations Management transforms inputs, such as people, material, and money, to Outputs which
may be goods and / or services.
OR
Definition: Operation Management is the business function responsible for managing the process
of creation of goods and services. It involves Planning, Organizing, Coordinating and Controlling
all the resources needed in the production of goods and services
Production Management is concerned with the production of goods and services.
– It deals with the management of resources (inputs: machines, raw materials, human skills, etc),
– And the distribution of finished goods and services (outputs) to the customers.
(Resources) (Goods/Products & Services)
Fig1.1: Schematic Operations Management
*Organizational subsystems : are smaller group of employees that work together within the
larger organizational system. Examples of subsystems include departments, programs, projects,
INPUT TRANSFORMATION
ON
OUTPUT

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teams, and informal collections of employees that work together to complete certain work
processes.

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Applications of Operations Management
Automobile assembly factory – Operations management uses
machines to efficiently assemble products that satisfy current
customer demands.
Physician (general practitioner) – Operations management uses
knowledge to effectively diagnose conditions in order to treat real and
perceived patient concerns
Management consultant – Operations management uses people to
effectively create the services that will address current and potential client
needs
Disaster relief charity – Operations management uses our and our
partners’ resources to speedily provide the supplies and services that relieve
community suffering

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Advertising agency – Operations management uses our staff’s knowledge
and experience to creatively present ideas that delight clients and address
their real needs

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Importance of operations management;
An effective operation can give four types of advantage to the business:
 Operation management can reduce the cost of products and services being efficient.
 Operations management can increase revenue through increased customer satisfaction in
producing quality goods and services.
 Operations management can reduce the amount of investment (capital employed)
necessary to produce the goods and service by being effective and innovative in the use
of resources.
 Operations management provides the basis for innovation by building a solid base of
operations and knowledge.
Characteristics of operation process:
 Volume of output: The transformation is highly repeatable in high volume operations,
repeatability leads to specialization, specialization leads to customization, customization is
capital intensive and also leads to lower unit cost. Whereas low volume leads to high unit
costs, incorporated by less tasks and low repetition.
 Variety of output: In low variety operations process is well defined an standardized.
Standardized transformation processes are very routinely in nature. It also leads to lower

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unit cost. But, higher variety operations can be highly flexible and complex results in high
unit costs.
 Variation in demand: Low fluctuations in demand results stable transformation process,
which are of highly routine in nature. Demand and output can be predictable during
transformation, eventually results in low unit costs. Whereas high variation in demand
needs to consider change of processes and system which is results in high unit cost.
 Degree of Visibility; Low degree of visibility transformation processes are highly
standardized, employees do not require high level skill, due to utilization of high staff, each
employee got concentrate on limited number of tasks, which results centralization and low
unit cost. High degree of visibility requires skilled customers for variety output.
Role of Operations Management:
In any business enterprise the marketing group generates the demand while the financial group
generates the capital and it is the responsibility of the production group to supply the output. In
order to supply the output the production department of the organization is engaged in two major
set of activities:
i) To convert the available capital into physical resources (Raw materials) required for
production.
ii) To convert the physical resources in to Goods/Products and Services.
Usually purchasing/procuring of raw materials is carried out by separate department (Purchase
department) which works under the financial department. Therefore the major role of any
Production/Operations team is to convert raw materials in to finished goods through the following
set of functions:
 To forecast the demand for the products in coordination with marketing dept, and
determine all the requirements for the production.
 Arrangement of auxiliary inputs i.e., Men (To carry out Maintenance, Store keeping,
Quality control, inspection etc), Materials (Tools), Machines (to carryout manufacturing,
material handling etc), Methods (Processes such as Designing and Manufacturing) etc for
the production.
 To produce goods at minimum possible cost and time with required quality.

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 To utilize the facilities and factors effectively and emphasis on waste management.
 To also take strategic level decisions concerning the design of product and production
system which influences:
o New product identification and design
o Production planning and control
o Process design and planning
o Facilities locations and layout planning
o Design of material handling systems
o Capacity planning
o Inventory control
o Maintenance
Evolution of Operations Management
• Until the 19th
century, the world was mostly rural and agricultural.
• Most of the products were made by highly skilled people called artisans.
• Under the apprenticeship system, an artisan supervised the work of several apprentices during
long training period.
• In the 18th
century, most manufacturing was performed by rural families in their own homes
under the domestic or cottage industry system.
• Merchants supplied families in small towns with raw materials and later found markets for the
finished products.
• The development of steam power and the introduction of labor-saving equipment (or
automation) early in the 18th
century led to the development of the factory system.
• The principle of the factory systems was simple: Assign workers a small set of tasks that they
repeat over and over.
• This reduces the time spent by workers in switching tasks and they become specialized.

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• The result is, improved labor productivity and lower production costs.
• Technological developments in 1850’s transformed factory system into mass-production.
• Factories became larger. They produced huge volumes of identical products.
• Manufacturing costs were reduced because no time was needed for setting machines and people
to produce other types of products.
• As the sizes of the factories increased, management of these operations became a major
problem.
• Frederick Taylor introduced systematic approaches to operations management at the turn of
19th century.
• His intent was to eliminate waste, especially the wasted effort, in order to minimize costs.
• Henry Ford combined the teachings of Taylor with the concepts of labor specialization and
interchangeable parts to design the first moving assembly line in 1913.
• In 1920s and 1930s, a series of studies were conducted at the Hawthorne Works of Western
Electric by Elton Mayo.
• The results showed that psychological factors were as important as scientific job design.
• The Hawthorne Studies stimulated the development of human relations movement.
– By demonstrating that worker motivation is a crucial element in improving productivity.
• As the complexity of operations increased, sophisticated decision-making tools were needed.
• This gave rise to the use of quantitative techniques and statistical tools in Operations
Management.
Operation Management Functions:
The operations function is central to the organization because it produces the goods and services
which are its reason for existing, but it is not the only function. It is, however, one of the three core
functions of any organization. These are:
● The marketing (including sales) function – which is responsible for communicating the
organization’s products and services to its markets in order to generate customer requests for
service;

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● The product/service development function – which is responsible for creating new and
modified products and services in order to generate future customer requests for service.
● The operations function – which is responsible for fulfilling customer requests for service
through the production and delivery of products and services.
In addition, there are the support functions which enable the core functions to operate effectively.
These include, for example:
● The accounting and finance function – which provides the information to help economic
decision-making and manages the financial resources of the organization;
● The human resources function – which recruits and develops the organization’s staff as well
as looking after their welfare.

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Figure 1.2 The relationship between the operations function and other core and support functions
of the organization

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Structure of Organization:
Organization may be defined as a process of establishing the scope and limits of action or assigning
duties and responsibilities to individuals, sections, groups and departments of an enterprise, clearly
demarcating the authority, responsibility and duties of everybody concerned and also providing
channels f communication and coordination for the accomplishment of objectives of the concern.
OR
It may be defined as the process of defining, identifying and grouping of tasks, assigning these
tasks to individuals so that they can play effectively in cooperation and coordination with other
members of enterprise to achieve its goal.
(Manages customers) (Manages Money) (Manages production of (Manages
Information)
Goods and Services)
Fig 1.3 Structure of organization
Organizations can be classified in two broad categories as either Manufacturing or Service.
Manufacturing organizations produce physical, tangible items which can be stored as inventory
before delivery to the customer. Service organizations produce intangible items that cannot be
produced ahead of time. One of the key development in operations is the increasing importance of
service operations as service industries account for an increasing proportion of the output of
industrialized economics.
Functions within Business Organization
President/CEO
Marketing Finance Operations MIS

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A business may be defined as an institution organized and operated to provide goods and services
to the society with the objective of earning profit.
In order to achieve its objectives, a business enterprise performs many functions which may be
broadly grouped under the following headings: Production, Marketing, Finance and Personnel
(Human resource). In big business organizations, there are separate departments to look after
these functional areas. It may be noted that these functions are interdependent and inter-related.
For instance, production department depends upon marketing department to sell its output and
marketing departments depends upon production department for the products of required quality
to satisfy its customers. Thus, there must be proper integration of various functional areas of
business to achieve its objectives. This can be achieved by the management of the enterprise by
effective planning, organization, direction and control. The important functions of a business are
briefly discussed below.
(i) Production or Operations Function: It is concerned with the transformation of inputs like
manpower, materials, machinery, capital, information and energy into specified outputs as
demanded by the society. The production department is entrusted with so many activities such as
production planning and control, quality control, procurement of materials and storage of
materials.
(ii) Marketing Function: It is concerned with distribution of goods and services produced by the
production department. It can perform this function efficiently only if it is able to satisfy the needs
of the customers. For this purpose, the marketing department guides the production department in
product planning and development. It fixes the prices of various products produced by the
business.
(iii) Finance Function: It deals with arrangement of sufficient capital for the smooth running of
business. It also tries to ensure that there is proper utilization of resources. It takes many important
decisions such as sources of finance, investment of funds in productive ventures, and levels of
inventory of various items.
(iv) Personnel Function (HR): This function is concerned with finding suitable employees, giving
them training, fixing their remuneration and motivating them. The quality of human resource
working in the enterprise is a critical factor in the achievement of business objectives. Therefore,
it is necessary that the work force is highly motivated and satisfied with the terms and conditions
of service offered by the enterprise.
Concept of Production:

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Production is defined as, “the step-by-step conversion of one form of material into another form
through chemical or mechanical means to create or enhance the utility of the product to the user.”
It’s a broader term.
E Buffa defines production as, “a process by which goods and services are created”
Some examples of production are: manufacturing custom-made products like, boilers with a
specific capacity, constructing flats, some structural fabrication works for selected customers, etc.,
and manufacturing standardized products like, car, bus, motor cycle, radio, television, etc.
Production Function: Production function is that part of an organization, which is concerned with
the transformation of a range of inputs into the required outputs (products) having the requisite
quality level.
Product: A product may be defined as a commodity or article created to satisfy customer
requirements obtained or produced by the transformation.
Tangible Products: Tangibles are physical products that can be handled and stored before they
are sold to the consumer, such as bread, clothing or a car. The production process and consumption
are not linked. That is, there is little customer involvement in production.
Intangible Products: A service organization will transform inputs into services. Services are
intangible, which means that they cannot be touched. For example, if you attend a training course,
you cannot physically touch it, but you benefit from gaining knowledge and learning new skills.
Services cannot be stored and the customer may actually need to be present when the service is
being delivered.
Manufacturing: Manufacturing is the process of converting raw material into finished product by
various processes, machines and energy. It is a narrow term.
Every type of manufacturing is production but every production is not manufacturing.
Manufacturing can be entirely done by machines, but production must also involve individual
employees.
Production Management: Production management is a process of planning, organizing,
directing and controlling the activities of the production function. It combines and transforms
various resources used in the production subsystem of the organization into value added product
in a controlled manner as per the policies of the organization.
Comparison between Goods/Products and Services

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Characteristic Goods/Products Services
Customer contact Low High
Uniformity of input High Low
Uniformity of output Low High
Labor content High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct errors before delivery to
customers
High Low
Inventory Much Little
Evaluation Easier More difficult
Patentable Usually Not usually
Production System:
The production system of an organization is that part, which produces products of an organization.
It is that activity whereby resources, flowing within a defined system, are combined and
transformed in a controlled manner to add value in accordance with the policies communicated by
management.
A simplified production system as shown below (Fig 1.4).
The production system has the following characteristics:
1. Production is an organized activity, so every production system has an objective.
2. The system transforms the various inputs to useful outputs.
3. It does not operate in isolation from the other organization system.
4. There exists a feedback about the activities, which is essential to control and improve system
performance.
Inputs
 Men
 Machines
 Materials
 Information
 Capital

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Environment Feedback Information
Fig 1.4 Schematic Production system
Classification of Production System
Production systems can be classified as Job Shop, Batch, and Mass Production systems.
Job shop Production:
Transformation Process
 Product design
 Process Planning
 Production control
 Maintenance
Outputs
 Products
 Services
Continuous
 Inventory
 Quality
 Cost
Job Shop
Batch Production
Mass Production
Production Quantity
Production Rate
Labor Skill level
Special Tooling
Process Plant Layout Product
flow

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 Job shop productions are characterized by manufacturing of one or few quantity of
products designed and produced as per the specification of customers (customized)
within prefixed time and cost.
 The distinguishing feature of this is low volume and high variety of products.
Characteristics
 High variety of products and low volume.
 Use of general purpose machines and facilities.
 Highly skilled operators who can take up each job as a challenge because of uniqueness.
 Large inventory of materials, tools, parts.
 Detailed planning is essential for sequencing the requirements of each product,
capacities for each work centre and order priorities.
Advantages
 Because of general purpose machines and facilities variety of products can be produced.
 Operators will become more skilled and competent, as each job gives them learning
opportunities.
 Full potential of operators can be utilized.
 Opportunity exists for creative methods and innovative ideas.
Limitations
 Higher cost due to frequent set up changes.
 Higher level of inventory at all levels and hence higher inventory cost.
 Production planning is complicated.
 Larger space requirements.
Example: space vehicles, aircrafts, machine tools, special tools and equipment and
prototypes of future products.

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Batch Production
 Batch production is defined by American Production and Inventory Control Society (APICS)
“as a form of manufacturing in which the job passes through the functional departments
in lots or batches and each lot may have a different routing*.”
 It is characterized by the manufacture of limited number of products produced at regular
intervals and stocked awaiting sales.
 As in job order production, the batch order production can be of the following three types,
o A batch produced only once
o A batch produced repeatedly at irregular intervals when need arises.
o A batch produced periodically at known intervals to satisfy continuous demands.
*routing: Routing means determination of the path to be followed by each part/component being
transformed from input /raw material into final product.
Characteristics

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Batch production system is used under the following circumstances:
 When there is shorter production runs.
 When plant and machinery are flexible.
 When plant and machinery set up is used for the production of item in a batch and change
of set up is required for processing the next batch.
 When manufacturing lead time and cost are lower as compared to job order production.
Advantages
 Better utilization of plant and machinery.
 Promotes functional specialization.
 Cost per unit is lower as compared to job order production.
 Lower investment in plant and machinery.
 Flexibility to accommodate and process number of products.
 Job satisfaction exists for operators.
Limitations
 Material handling is complex because of irregular and longer flows.
 Production planning and control is complex.
 Work in process inventory is higher compared to continuous production.
 Higher set up costs due to frequent changes in set up.
Examples:
 Turret lathes capable of holding several cutting tools are used rather than engine lathe.
 The machine tools used are combined with specially designed jigs and fixtures which
increase the output rate.
 Batch production plants include machine shops, casing foundries, plastic molding
factories, press working shops and some types of chemical plants.
 Industrial equipment, furniture, textbooks, house hold appliances, lawn movers and
components parts for many assembled consumer products.
Mass Production
 Manufacture of discrete parts or assemblies using a continuous process are called mass
production.
 This production system is justified by very large volume of production. The machines are
arranged in a line or product layout. Product and process standardization exists and all
outputs follow the same path.
 The mass production can be distinguished into two categories:
1. Quantity production
2. Flow production

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Characteristics
 Standardization of product and process sequence.
 Dedicated special purpose machines having higher production capacities and output rates.
 Large volume of products.
 Shorter cycle time of production.
 Lower in process inventory.
 Perfectly balanced production lines.
 Flow of materials, components and parts is continuous and without any back tracking.
 Production planning and control is easy.
 Material handling can be completely automatic.
Advantages
 Higher rate of production with reduced cycle time.
 Higher capacity utilization due to line balancing.
 Less skilled operators are required.
 Low process inventory.
 Manufacturing cost per unit is low.
Limitations
 Breakdown of one machine will stop an entire production line.
 Line layout needs major change with the changes in the product design.
 High investment in production facilities.
 The cycle time is determined by the slowest operation.
Quantity production:
 It involves the mass production of single parts on fairly standard machine tools such as punch
presses, injection molding machines and automatic screw machines.
 The standard machines have been adopted to the production of the particular part by means of
special tools – die sets, molds and form cutting tools, respectively designed for the part.
 The production equipment is devoted full time to satisfy a very large demand rate for the item.
 Examples: Components for assembled products that have high demand rates (automobiles,
household appliances, light bulbs, etc.), hardware items ( screws, nuts & nails) and many plastic
molded products.
Flow production:

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 It suggests the physical flow of the product in oil refineries, continuous chemical process
plants and food processing.
 The term also applies to assembled products. In these cases, the items are made to “flow”
through a sequence of operations by material handling devices (conveyors, moving belts,
transfer devices, etc.)
 Examples: Automated transfer machines for the production of complex discrete parts and
manual assembly lines for the assembly of complex products.
Concept of Productivity: Productivity of a production system is analogous to the efficiency of a
machine. “Productivity is nothing but the reduction in wastages of resources or it is connected with
optimal utilization of inputs(resources) may be men, machines, materials, energy, space, and time
etc for producing goods/services”.
Productivity is defined as a total output per one unit of a total input. In control management,
productivity is a measure of how efficiently a process runs and how effectively it uses resources
Productivity of a production system may be defined as ratio between output & input. Output
means the number of items produced and input means the resources used.
𝑸𝒖𝒂𝒏𝒕𝒊𝒕𝒂𝒕𝒊𝒗𝒆 𝑷𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒗𝒊𝒕𝒚 =
𝑶𝒖𝒕𝒑𝒖𝒕
𝑰𝒏𝒑𝒖𝒕

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Production can be increased by increasing input but productivity may not increase. The total
productivity of an enterprise can be defined as
Ptotal =
Ptotal= Total Productivity
IL = Labor input
IC = Capital input
IR = Raw materials and finished parts components
IH = Other miscellaneous goods and services input
Productivity has the following advantages:
 It emphasizes the efficient utilization of all the factors of production which are scarce
universally.
 It attempts to eliminate wastage.
 It facilitates the comparison of the performance of a company to its competitors or related
firms, in terms of aggregate results and of major components of performance.
 It enables the management to control the performance of the company by identifying the
comparative benefits rising out of the use of different inputs..
Difference between Production and Productivity: The concept of production and productivity
are totally different. Production of any component or service is the volume of the output
irrespective of quality of resources employed to achieve the level of output. Once we include a
term “efficiency” with resources are used we enter the area of “Productivity”. Thus production
may improve without the corresponding improvement in the productivity and vice versa. If the
input remains the same and the production output increases then there is a improvement in
productivity.
Production therefore means the output in terms of money whereas productivity is the efficiency
of the system used for production.
Factors affecting Productivity:
The principle factors influencing productivity rate are;
1. Capital/ Labor ratio: It is a measure of whether enough investment is being made in plant,
machinery, and tools to make effective use of labor working hours.
2. Scarcity of some resources: Resources such as energy, water and materials will create
productivity problems.
3. Work-force changes: Change in work-force effect productivity to a larger extent, because of
the labor turnover.
4. Innovations and technology: This is the major cause of increasing productivity.
5. Regulatory effects: These impose substantial constraints on some firms, which lead to the
change in productivity.
6. Bargaining power: Bargaining power of organized labor for increasing their wages
periodically, excess of output increases which has detrimental effect on productivity.
OT
OT
IL+IC+IR+IH

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7. Managerial factors: Managerial factors are the ways an organization benefits from the unique
planning and managerial skills of its manager.
8. Quality of work life: It is a term that describes the organizational culture, and the extent to
which it motivates and satisfies employees.
Factors that help increase productivity
In order to improve productivity, following factors has to be taken into consideration and need to
be controlled.
 Wastage of materials
 Breakdown of machines
 Waiting related with manpower and machines
 Poor working conditions
 Poor management
 Material handling
Hence considering the above factors, the wastage at each stage of production can be reduced
which ultimately provides the consumers cheaper and better quality products/items.
Productivity measurement:
Productivity is measured quantitatively by following techniques.
1. Material Productivity
𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 =
𝑂𝑢𝑡𝑝𝑢𝑡
𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙 𝐼𝑛𝑝𝑢𝑡
Raw material productivity can be improved by;
 Changes in product design
 Proper training and motivation of workers
 Better mechanical planning and control
 Waste reduction and scrap control
 Carrying out R&D for alternative and cheaper material.
2. Labor Productivity
𝐿𝑎𝑏𝑜𝑟 𝑜𝑟 𝐻𝑢𝑚𝑎𝑛 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 =
𝑂𝑢𝑡𝑝𝑢𝑡
𝐻𝑢𝑚𝑎𝑛 𝐼𝑛𝑝𝑢𝑡
Output and labor can also be measured in terms of their money value
𝐿𝑎𝑏𝑜𝑟 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 =
𝑇𝑜𝑡𝑎𝑙 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑓𝑟𝑜𝑚 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛
𝑒𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒 𝑜𝑛 𝑙𝑎𝑏𝑜𝑢𝑟
The labor productivity can be improved by,

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 Providing training to workers to utilize best methods of production
 Selection of product design and process manufacture so as to ensure most economic use
of labor
 Constant motivation of workers by financial and non financial incentives
 Improving the working conditions in the plant.
3. Capital Productivity:
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 =
𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑖𝑛𝑝𝑢𝑡
It can be improved by,
 By careful make or buy decisions.
 Better utilization of capital resources like land, building and machines
 By adopting modern manufacturing techniques like flexible manufacturing, Lean
manufacturing etc
4. Machine Productivity:
𝑀𝑎𝑐ℎ𝑖𝑛𝑒 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 =
𝑂𝑢𝑡𝑝𝑢𝑡
𝐴𝑐𝑡𝑢𝑎𝑙 𝑚𝑎𝑐ℎ𝑖𝑛𝑒 ℎ𝑜𝑢𝑟𝑠 𝑢𝑠𝑒𝑑
It can be improved by,
 Preventive maintenance
 Utilization of proper machining parameters like speed, feed and depth of cut etc.
 Use of requisite skilled and properly trained labor.
 Method study
5. Energy Productivity;
𝐸𝑛𝑒𝑟𝑔𝑦 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 =
𝑂𝑢𝑡𝑝𝑢𝑡
𝐸𝑛𝑒𝑟𝑔𝑦 𝑖𝑛𝑝𝑢𝑡
Contemporary issues and Development

25. Operations Management
Page 24
1. Globalization of business is inevitable. Companies can no longer ignore the fact that business
is now global.
2. There is renewed interest on the part of businesses in quality and productivity.
3. Downsizing and cutbacks are being used by organizations who are seeking ways to eliminate
unnecessary operations and to cut costs. Many have sold off unprofitable businesses and lay off
workers.
4. Ownership occurs when large institutional investors and foreign firms take ownership
positions in other countries.
5. Ethics and social responsibility is an area in which organizations are taking steps to enhance
the ethical standards of their managers and to avoid legal or public sentiment problems.
6. Work-force diversity has been increased through globalization, an aging population, and an
influx of workers in new careers and occupations. Managers must be more sensitive to the many
different kinds of workers found in the workers now found in the workplace.
As the productivity concerned the following techniques are meant for improve productivity;
1. Corporate objectives: Customers are given the highest priority. Next to them are employees
and owners respectively.
2. Time horizon: Long term sustainability* and viability are considered more important than
short term profit.
3. Production system: Emphasis on automated systems using mechatronics and robotics.
Quality is paramount and things happen as scheduled.
4. Employment schedules: Many organizations support flexible working arrangements.
Whether it is job sharing, flextime, a compressed workweek, or telecommuting, studies show
that flexible arrangements can lead to increased productivity and efficiency, and usually result in
higher employee morale.
5. Materials: Resources are limited. Space is used efficiently while inventories are kept to a bare
minimum.

26. Operations Management
Page 25
6. Financing: More use is made of debt capital (Debt capital refers to funds that are borrowed
and must be repaid at a later date) and less of equity capital (equity capital typically comes from
funds invested by shareholders).
7. Training: Employees are given thorough training. Job rotation, job enlargement and job
enrichment are needed to practice.
8. Worker participation: Workers participate in management via suggestion, feedback, quality
circles etc.