Operations management transforms inputs like people, materials, and money into outputs like goods and services. Production management specifically deals with producing goods and services by managing resources and distributing finished products. Over time, operations management has evolved from individual artisans to large factories using specialized labor and automation. Frederick Taylor introduced scientific management approaches to minimize costs. Later studies showed the importance of psychological factors in worker motivation. Today, operations management utilizes quantitative models, statistics, information technology, and computer systems to efficiently manage complex operations.

1. Production V/s Operations Management
Definitions
• Operations Management transforms inputs, such
as people, material, and money, to Outputs which
Production V/s Operations
may be goods and / or services.
Management • Production Management is concerned with the
Presented By: production of goods and services.
Anupam Kumar – It deals with the management of resources (inputs:
Reader machines, raw materials, human skills, etc),
SMS Varanasi – AND the distribution of finished goods and services
(outputs) to the customers.
Goods V/s Services Operations Function
Goods (Products) Services • Operations function is much broader than the
• Tangible product • Intangible product Production function or the activities which
• These Product can be • These Products cannot occur in a factory.
inventoried be inventoried – Products must be developed,
• Low customer contact • High customer contact – Materials must be purchased,
• Longer response time • Short response time – Facilities must be maintained,
• Capital intensive • Labor intensive – Products must be distributed, and so on.
Evolution of Operations Management Evolution of Operations Management
• Until the 19th century, the world was mostly • In the 18th century, most manufacturing was
performed by rural families in their own homes
rural and agricultural. under the domestic or cottage industry system.
• Merchants supplied families in small towns with raw
• Most of the products were made by highly materials and later found markets for the finished
skilled people called artisans. products.
• The development of steam power and the
• Under the apprenticeship system, an artisan introduction of labor-saving equipment (or
automation) early in the 18th century led to the
supervised the work of several apprentices development of the factory system.
during long training period.
Anupam Kumar 1

2. Production V/s Operations Management
Evolution of Operations Management Evolution of Operations Management
• The principle of the factory systems was simple: • Manufacturing costs were reduced because no time was
• Assign workers a small set of tasks that they repeat over and needed for setting machines and people to produce other
types of products.
over.
• This reduces the time spent by workers in switching tasks and
• As the sizes of the factories increased, management of these
they become specialized. operations became a major problem.
• The result is improved labor productivity and lower
production costs. • Frederick Taylor introduced systematic approaches to
• Technological developments in 1850s transformed factory operations management at the turn of 19th century.
system into mass-production.
• Factories became larger. They produced huge volumes of • His intent was to eliminate waste, especially the wasted
identical products. effort, in order to minimize costs.
Evolution of Operations Management Evolution of Operations Management
• Henry Ford combined the teachings of Taylor with the • The Hawthorne Studies stimulated the development
concepts of labor specialization and interchangeable parts to of human relations movement.
design the first moving assembly line in 1913. – By demonstrating that worker motivation is a crucial
element in improving productivity.
• In 1920s and 1930s, a series of studies were conducted at the
Hawthorne Works of Western Electric by Elton Mayo. • As the complexity of operations increased,
sophisticated decision-making tools were needed.
• The results showed that psychological factors were as
important as scientific job design.
• This gave rise to the use of quantitative techniques
and statistical tools in Operations Management.
Quantitative Models & Statistical
Evolution of Operations Management
Techniques
• Statistical Quality Control • The 1950s was the beginning of the information
– Uses statistics in the control of product quality by technology era.
controlling the processes by which products are made.
• Economic Order Quantity
– Used for finding the least cost inventory ordering • The discovery of transistor by Shockley led to the
• Gantt charts ability process data and information at continuously
– For sequencing operations decreasing costs.
• Critical Path Method
– For finding optimum completion time of operations. • Monitoring inventories of hundreds of units or
• Linear programming managing a large project without a computerized
– A management tool for optimum resource allocation given system is now unimaginable.
some restrictions of the resources.
Anupam Kumar 2

3. Production V/s Operations Management
Evolution of Operations Management
• In the late 1950s and early 1960s scholars
began to write books dealing specifically with
To Types of Production
the problems faced by operations managers.
Processes…
• These books also contained information
regarding the application of quantitative
models to operations management.
Anupam Kumar 3