(Syllabus)Production Management: Introduction to Production Management, Objectives of Production Management, Function of Production Management, Scope of Production Management, Classification of Production, Relationship of production with other functional areas

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Dr. Mohit Sahu>POM
Production and Operation
Management
Dr. Mohit Sahu
Ph.D; M.Tech; B.E.
Email: drmohitksahu@gmail.com

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Dr. Mohit Sahu>POM
Unit I: Production Management
Unit II: Facility Design and Location
Unit III: Capacity Planning
Unit IV: Work Study and Method Study
Unit V: Industrial Safety and Safety Management
Subject Outline
> Subject Outline

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Unit I
Production Management
> Unit I (Production Management)

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Contents
• Introduction
• Objectives
• Functions
• Scope
• Classification of Production
• Relationship of production with other functional areas
> Unit I (Production Management)

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• 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.
• Therefore; it is that part of an organization; which is concerned with the transformation
of a range of inputs into the required (products/services) having the requisite quality
level.
• The set of interrelated management 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.
Introduction
> Unit I (Production Management)

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• 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.
• Production is defined as “the step-by-step conversion of one form of material
into another form through chemical or mechanical process to create or enhance
the utility of the product to the user.” Thus production is a value addition
process. At each stage of processing; there will be value addition.
Concept of Production
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• 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.
Production System
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• Characteristics of Production System :
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.
Production System..
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• 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.
• E.S. Buffa defines production management as; “Production management deals with
decision making related to production processes so that the resulting goods or services
are produced according to specifications; in the amount and by the schedule demanded
and out of minimum cost.”
Production Management
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• The objective of the production management is ‘to produce goods services of right
quality and quantity at the right time and right manufacturing cost’.
RIGHT QUALITY
• The quality of product is established based upon the customers needs. The right quality
is not necessarily best quality. It is determined by the cost of the product and the
technical characteristics as suited to the specific requirements.
RIGHT QUANTITY
• The manufacturing organization should produce the products in right number. If they
are produced in excess of demand the capital will block up in the form of inventory and
if the quantity is produced in short of demand; leads to shortage of products.
Objectives
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RIGHT TIME
• Timeliness of delivery is one of the important parameter to judge the effectiveness of
production department. So; the production department has to make the optimal
utilization of input resources to achieve its objective.
RIGHT MANUFACTURING COST
• Manufacturing costs are established before the product is actually manufactured.
Hence; all attempts should be made to produce the products at pre-established cost; so
as to reduce the variation between actual and the standard (pre-established) cost.
Objectives..
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• The activities of production department of an organization are grouped into two broad
categories.
• The activities which convert the available capital into physical resources required for production
• The activities that convert the physical resources into saleable goods and services.
• In carrying out the above activities; the production department must fulfill the following
activities.
(i) Production of goods at the right time and in sufficient quantity to meet the demand
(ii) Production of goods at minimum possible cost.
(iii) Production of goods of acceptable quality.
Functions
> Unit I (Production Management)

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The functions of production personnel are:
(a) Forecasting the demand for the products and using the forecast to determine the requirements of
various factors of production.
(b) Arranging for the procurement of required factors of production.
(c) Arranging for the services such as maintenance; store keeping material handling; inspection and quality
control etc. which would be required to attain the targeted level of production.
(d) Effectively Utilization of the factors of production and service facilities available to produce the product.
Functions..
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• The scope of production management can be considered from the point of view of both strategic
decisions influencing the production system and the operation level.
A. Strategic decisions
• The strategic level decisions are mainly concerned with the design of product and production
system. These decisions involve decisions which have long terms implications.
1. New Product Identification and Design
• The success of an organization depends upon the product that it offers to the customer.
• These exists a demands for the products if the product has good market acceptability. The products
should be designed in such way as to meet the expectations of customers.
• The tools like value analysis should be applied at the design stage to avoid unnecessary cost
building up into the product.
Scope
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2. Process Design and Planning
• This involves the appropriate technology for convention of raw materials into products.
• The choice of technology depends upon several factors such as demand, investment capability
labour availably degree of automation required. This is followed by selection of the process of
convention and determining the workstations and the flow of work.
• At this stage macro level process planning is done
3. Facilities Location and Layout Planning
• The facilities location is a strategic decision and facilities once located will not be altered in near
feature so due considerations should be given to all the factors that affect the location.
The intermediate objectives are stated as:
• Plant layout deals with physical arrangement of plants are machineries within the selected site. The
layout should be such that it should allow for smooth movement of men and material with minimum
back tracking. The type of the layout is dependent on production type, volume of demands etc.
Scope..
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4. Design of Material Handling System
• As per the principle of Material handling, the handling should be kept at minimum, though it is not
possible to avoid handling.
• The selection of particular flow pattern and material handling equipment is dependent on the
distance between the work stations, intensity of flow or traffic and size, shape and a line of materials
to be handled
5. Capacity Planning
• This decision is concerned with the procurement of fixed assets like plant and machineries.
• The decision regarding the size of the plant, output etc. are decided at this stage
• The capacity planning activity is again a function of volume of demand.
Scope..
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B. Operational Level Decisions
The operational level decisions are short term decisions. These are mainly concerned with planning
and control of production activities. The operational level decisions are:
1. Production planning
• It is concerned with determining ·the future course of action regarding production to achieve the
organization objectives.
2. Production control
• It is a management technique which aims to see that the activities are carried out as ·per the plan.
• Production control activity is output and to take corrective action if there is a deviation between
actual and standard.
• The other activities include Inventory control, maintenance and replacement cost reduction and cost
control and work system design.
Scope..
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• All production systems, when ,viewed at the most abstract level, might be said to be "transformation
processes"-processes that transform resources· into useful goods and services.
• When viewed as a process, a production system may be further characterized by flows (channels of
movement) in the process: both the physical flow of materials, Work in the intermediate. stages of
manufacture (work in process), and finished goods; and the flow of information and the inevitable paperwork
that carry and accompany the physical flow.
• The types of production system are grouped under two categories viz.
I. Intermittent production system :Intermittent means something that starts (initiates) and stops (halts) at
irregular (unfixed) intervals (time gaps).
• Job Shop production and Batch production Comes under Intermittent production system .
II. Continuous production system: Continuous means something that operates constantly without any
irregularities or frequent halts.
• Mass Production and Flow Production comes under Continuous production system.
Types of Production System
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• Production systems can be classified as Job Shop, Batch, Mass and Flow / Continuous Production
systems.
CLASSIFICATION OF PRODUCTION SYSTEMS
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1. JOB SHOP PRODUCTION
• Job shop production are characterized by manufacturing of one or few quantity of products
designed and produced as per the specification of customers within prefixed time and cost.
• The distinguishing feature of this is low volume and high variety of products. A job shop
comprises of general purpose machines arranged into different departments.
• Each job demands unique technological requirements, demands processing on machines in a
certain sequence.
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Classification of production systems..

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Characteristics
The Job-shop production system is followed when there is:
1. High variety of products and low volume.
2. Use of general purpose machines and facilities.
3. Highly skilled operators who can take up each job as a challenge because of uniqueness.
4. Large inventory of materials, tools, parts.
5. Detailed planning is essential for sequencing the requirements of each product, capacities for
each work center and order priorities.
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Classification of production systems..

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Advantages
• Following are the advantages of job shop production:
1. Because of general purpose machines and facilities variety of products can be produced.
2. Operators will become more skilled and competent, as each job gives them learning opportunities.
3. Full potential of operators can be utilized.
4. Opportunity exists for creative methods and innovative ideas.
Limitations
• Following are the limitations of job shop production:
1. Higher cost due to frequent set up changes.
2. Higher level of inventory at all levels and hence higher inventory cost.
3. Production planning is complicated.
4. Larger space requirements.
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Classification of production systems..

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2. 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.
Characteristics
• Batch production system is used under the following circumstances:
1. When there is shorter production runs.
2. When plant and machinery are flexible.
3. 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.
4. When manufacturing lead time and cost are lower as compared to job order production.
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Advantages
Following are the advantages of batch production:
1. Better utilization of plant and machinery.
2. Promotes functional specialization.
3. Cost per unit is lower as compared to job order production.
4. Lower investment in plant and machinery.
5. Flexibility to accommodate and process number of products.
6. Job satisfaction exists for operators.
Limitations
Following are the limitations of batch production:
1. Material handling is complex because of irregular and longer flows.
2. Production planning and control is complex.
3. Work in process inventory is higher compared to continuous production.
4. Higher set up costs due to frequent changes in set up
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Classification of production systems..

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3. 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.
Characteristics
Mass production is used under the following circumstances:
1. Standardization of product and process sequence.
2. Dedicated special purpose machines having higher production capacities and output rates.
3. Large volume of products.
4. Shorter cycle time of production.
5. Lower in process inventory.
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6. Perfectly balanced production lines.
7. Flow of materials, components and parts is continuous and without any back tracking.
8. Production planning and control is easy.
9. Material handling can be completely automatic.
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Advantages
Following are the advantages of mass production:
1. Higher rate of production with reduced cycle time.
2. Higher capacity utilization due to line balancing.
3. Less skilled operators are required.
4. Low process inventory.
5. Manufacturing cost per unit is low.
Limitations
Following are the limitations of mass production:
1. Breakdown of one machine will stop an entire production line.
2. Line layout needs major change with the changes in the product design.
3. High investment in production facilities.
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Classification of production systems..

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4. FLOW / CONTINUOUS PRODUCTION
• Production facilities are arranged as per the sequence of production operations from the first
operations to the finished product.
• The items are made to flow through the sequence of operations through material handling devices
such as conveyors, transfer devices, etc.
Characteristics
Continuous production is used under the following circumstances:
1. Dedicated plant and equipment with zero flexibility.
2. Material handling is fully automated.
3. Process follows a predetermined sequence of operations.
4. Component materials cannot be readily identified with final product.
5. Planning and scheduling is a routine action.
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Advantages
Following are the advantages of continuous production:
1. Standardization of product and process sequence.
2. Higher rate of production with reduced cycle time.
3. Higher capacity utilization due to line balancing.
4. Manpower is not required for material handling as it is completely automatic.
5. Person with limited skills can be used on the production line.
6. Unit cost is lower due to high volume of production.
Limitations
Following are the limitations of continuous production:
1. Flexibility to accommodate and process number of products does not exist.
2. Very high investment for setting flow lines.
3. Product differentiation is limited.
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Classification of production systems..

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• If we consider the total organization as a system, those all the functional departments will be the
subsystems.
• The functional subsystems· are finance, marketing, production and personnel.
• The production subsystem is considered here from the broader perspective and it includes
engineering (design) Materials, maintenance, transformation and quality functions.
RELATIONSHIP OF PRODUCTION WITH OTHER
FUNCTIONAL AREAS
> Unit I (Production Management)
Fig. Functional subsystems of an organization

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Objectives of various functional subsystems Production
• To manufacture goods/services of right quality and quantity at predetermined time and re-established cost to
satisfy the needs of the customer.
Marketing
• To satisfy the needs of the customer by the companies goods and services.
• This includes the identification of the customer needs, demand estimations, distribution channels and
advertising.
Finance
• To meet both long term and short term financial requirements of various activities of the business.
• Long term financial requirements are mainly to create fixed assets like plant and machinery, land and
buildings etc. The short term finance requirements are towards the working capital requirements.
Personnel (Human Resource Development)
• To meet the manpower requirements of the organization and to match the person and the jobs.
• This includes the functions such as recruitment, training etc.
Relationship of production with other functional areas..
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• Most of the time production and marketing objectives are in conflict.
• Marketing department wants variety and they want all the products of the company should be on
the production line (and or ready stock) so that they are able to achieve maximum sales through
satisfying varied needs of the customer.
• The manufacturing efficiency is maximum when there is a minimum variety and same product is
manufactured continuously. Thus cost per unit will be minimum in care of mass production.
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Relationship of production with other functional areas..

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• The marketing department has to depend upon production regarding the goods/services delivery dates,
stock position, technical specifications, production schedule.
• The production department requires the information regarding the acceptability of the product,
feedback on performance, demand for the product, modification of the products to suite customer
requirements etc.
> Unit I (Production Management)
Fig. Production interface with marketing
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• The wheels of production departments will be set rolling only if the finance is provided.
• The production department has to invest in physical facilities, required raw materials and component
parts, have to pay wages and salaries and for the utilities.
• Thus the finance departments has to make provision for both long term and shout requirement of
funds to keep the production running without any difficulties.
• The production department has to furnish the detailed financial requirements as per the plan so that
the finance department will release the funds as when planned.
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• The success of the production programme depends upon the quality and skills of the work force.
• Thus personnel department has its role about the organization.
• The responsibility of matching the right job to the right percent lies with personal department.
• The personnel department has to keep record of development of workers, their training needs etc.
• Thus a skilled and dedicated work force will help to achieve production objectives.
Relationship of production with other functional areas..