This document provides an overview of operations management. It discusses key topics such as the three basic functions of organizations, the definition of operations management, types of transformations involved in operations, ways to add value through operations, systems concepts, types of production systems, objectives and decisions in operations management, and the history and scope of the field.

1. UNIT 1 OPERATIONS MANAGEMENT – AN OVERVIEW Roshan K Gnyawali MANAGEMENT OF MACHINES AND MATERIALS (MS-5)

2. THE ORGANIZATION Three Basic Functions Operations Finance Marketing

3. OPERATION MANAGEMENT Operation : The process of changing inputs into outputs (transformation process) and thereby adding value to some entity. Operation Management : The management (design, operation, and improvement) of systems or processes that create goods and/or provide services

4. TRANSFORMATIONS Physical--manufacturing Locational--transportation Exchange--retailing Storage--warehousing Physiological--health care Informational--telecommunications

5. VALUE ADDITION Alter: Steel Industry, Hospital, University Transport: People, Goods, Garbage Store: Cold Storage, Banks, Warehouse Inspect: Hospital, Workshops Value Addition : Difference between the cost of input and the value or price of the output.

6. VALUE ADDITION… Stage of Production Value Added Value of Product Farmer produces and harvests $0.15 $0.15 Wheat transported to mill $0.08 $0.23 Mill produces flour $0.15 $0.38 Flour transported to baker $0.08 $0.46 Baker produces bread $0.54 $1.00 Bread transported to grocery store $0.08 $1.08 Grocery store sells bread $0.21 $1.29 Total Value-Added $1.29

7. SYSTEMS CONCEPT Inputs Land Labor Capital Transformation/ Conversion process Outputs Goods Services Control Feedback Feedback Feedback Value added System : A purposeful collection of people, objects and procedures for operating within an environment.

8. SYSTEMS CONCEPT… INPUT Labor, Material, Land, Capital, Machine, Technology, Management, Method, OUTPUT Service or Goods Pollution, Waste

9. SYSTEMS CONCEPT… Inputs Conversion Outputs XYZ Juice Company Fruits Cleaning Bottle of Juice Metal Sheets Making bottle Water Cutting Energy Mixing Labor Packing Building Labeling Equipment

10. SYSTEMS CONCEPT… XYZ Hospital Inputs Conversion Outputs Doctors, nurses Examination Healthy patients Hospital Surgery Medical Supplies Monitoring Equipment Medication Laboratories Therapy

11. GOODS vs SERVICE Automobile assembly, steel making Home remodeling, retail sales Automobile Repair, fast food Computer repair, restaurant meal Song writing, software development Goods Service Surgery, teaching Automobile assembly, steel making Home remodeling, retail sales Automobile Repair, fast food Automobile assembly, steel making Home remodeling, retail sales Computer repair, restaurant meal Automobile Repair, fast food Automobile assembly, steel making Home remodeling, retail sales Song writing, software development Computer repair, restaurant meal Automobile Repair, fast food Automobile assembly, steel making Home remodeling, retail sales Surgery, teaching Song writing, software development Computer repair, restaurant meal Automobile Repair, fast food Automobile assembly, steel making Home remodeling, retail sales Automobile assembly, steel making Home remodeling, retail sales Automobile Repair, fast food Automobile assembly, steel making Home remodeling, retail sales Computer repair, restaurant meal Automobile Repair, fast food Automobile assembly, steel making Home remodeling, retail sales Song writing, software development Computer repair, restaurant meal Automobile Repair, fast food Automobile assembly, steel making Home remodeling, retail sales Surgery, teaching Song writing, software development Computer repair, restaurant meal Automobile Repair, fast food Automobile assembly, steel making Home remodeling, retail sales

12. GOODS vs SERVICE… Tangible Act

13. GOODS vs SERVICE… Characteristic Goods Service Customer contact Low High Uniformity of input High Low Labor content Low High Uniformity of output High Low Output Tangible Intangible Measurement of productivity Easy Difficult Opportunity to correct problems High Low Inventory Much Little Evaluation Easier Difficult Patentable Usually Not usual Demand Can be Forecasted Variable Location Any Near to User

14. PRODUCTIVITY Productivity = Output/ Input Labor Productivity = Output/ Labor Input Efficiency with which we are converting the inputs into outputs

15. OBJECTIVES IN OM Performance Objectives Efficiency (Productivity) Effectiveness Quality Lead time/ Throughput time Capacity Utilization Flexibility

16. OBJECTIVES IN OM… Cost Objectives Explicit Cost Material Cost, Direct/Indirect Labor Cost, Scrap/Rework Cost, Maintenance Cost Implicit Cost Cost of Inventory, Inspection, Material Handling Cost of stock-out, delayed delivery Downtime Cost Opportunity Cost Goodwill

17. OM DECISIONS What What resources/what amounts When Needed/scheduled/ordered Where Work to be done How Designed Who To do the work

18. OM DECISIONS… Operational (Short-term) Decision Strategic (Long-term) Decisions OM Decisions Periodic Decisions Continual Decisions Selection Design Updating Operating - Controlling

19. OM DECISIONS… Planning Capacity Planning, Location Planning, Layout Planning, Product and Process Planning Forecasting, Aggregate Planning, Scheduling Organizing Staffing, Job Design, Work Measurement, Production Standards Controlling Inventory, Quality, Cost, Maintenance, MRP

20. TYPES OF PRODUCTION SYSTEM Mass Production / Flow Line Production Straight line flow Arranged according to sequence of operations Standardized product ( one plant for one product) No interruption in the production flow Example: Automotive assembly, Cement factory, Paper factory

21. TYPES OF PRODUCTION SYSTEM Batch Production Variety of products with small volume Shared production line Set-up Between batches (Time and cost ) Dimension of the batch depends on the machine Quantity larger than the customer request is produced according to batch size. The unsold quantity is added to stock Example: Textile, Mechanical production, Painting

22. TYPES OF PRODUCTION SYSTEM Job Shop Production No unique product, unique flow and no fixed size Flows are extremely interwoven Labor is often the critical resource Each product has its own TECHNOLOGICAL CYCLE, that defines a route through several types of machines Examples: Mechanical workshops, Vehicle service centres

23. TYPES OF PRODUCTION SYSTEM Unit Production/ Project Form The demand of the product is not repetitive Product fixed and manpower, facility flows CPM/ PERT scheduling tools used Exact requested quantity is produced Example: Boat, Industrial Facility, Plane

24. HISTORY OF OM Industrial revolution (1770’s) Scientific management (1878) Mass production Interchangeable parts Division of labor Human relations movement (1920-60) Decision models (1915, 1960-70’s) Influence of Japanese manufacturers

25. SCOPE OF OM Product Selection and Design Process Selection and Planning Facility Location Layout and Material Handling Capacity planning Scheduling Inventory Control Quality Assurance Work & Job Design Maintenance Cost Control And Many More…

26. DISCUSSION Discuss with suitable examples, the role of the Operations Manager in today’s context. Do you agree that operations management is a multi-disciplinary function? Discuss Identify three disciplines that will contribute in a major way to the development of Production and Operations Management.

27. DISCUSSION… Describe the Operations Management decisions and their classifications. What do you mean by Management Processes? Discuss Planning, Organizing, Controlling and; Motivating and Leading.

28. DISCUSSION Explain the Management Systems concept with the help of an example. What are the major distinctions between a production organization and a service organization? Define a ‘system’. Use this concept in explaining a production system. Briefly indicate the relationship of production systems to operations management.

29. DISCUSSION Why does the ‘proper’ operations strategy keep changing for companies that are world class competitors?

30. End of Unit 1 UNIT 2: Product Selection