SAVIOUR PUBLICATIONS PRODUCTION AND

OPERATIONS MANAGEMENT

UNIT I- CONSISTS OF SCOPE, IMPORTANCE, DIFFERENCT OF PRODUCTION AND OPERATIONS MANAGEMENT. DIFFERENCE BETWEEN PRODUCTION AND OPERATIONS MANAGEMENT. WORKING OF A TRANSFORMATION SYSTEM. TYPES OF TRANSFORMATION DIFFERENCE BETWEEN CONTINUOUS AND INTERMITTENT PRODUCTION Scope of POM (Production and Operations Management):1. Product Design- refers to the designing and development of a new product/service. 2. Process Design- refers to the way the product/service would be designed. 3. Location of Plants- location of a plant is of utmost importance as because the success of the plant depends heavily on it. 4. Plant Layout & Material Handling- once the location has been decided, the layout of the plant is decided to ensure minimum time, productive & positive work environment and maximum profit. 5. Production Planning & Control- once the production starts, its full proof planning and control takes place. 6. Material Management- inventory control is again an important aspect of Operations Management. Efficient purchasing leads to quality & cost effective product in right time enhancing Return on Investment (ROI). 7. Quality Control- no product is eligible for sale if it is of bad quality. It is the highest priority section. If this fails, no matter however efficient other things are, there cannot be sale. 8. Maintenance Management- after everything has been setup, consistency is again an essential component for smooth, regular & uninterrupted production, failing which no plant can sustain. Importance of Production and Operations management (POM) to the business firm or why it has become an integral part of business education: 1. Achieving the firm's objectives: POM helps the business firm to achieve all its objectives. It produces products and services, which satisfy the customers needs and wants. This in turn helps increase the sales and profit. 2. Minimises cost of production: POM helps to minimise the cost of production. It tries to maximise the output and minimise the inputs. This helps the firm to reduce costs and ensure efficiency.

3. Helps to introduce new products: POM helps to introduce new products/services in the market. It conducts (R&D) Research and development. This helps the firm to develop newer and better quality products/services. These products are successful in the market because they provide full satisfaction to the customers. 4. Supports other managerial areas: POM supports other functional areas in an organisation, such as marketing, finance, and the human resource department. The marketing department helps selling products, and consequently the finance department gets more funds due to increase in sales. The H.R department would have the best human resources due to the excellent performance of other departments. 5. Expansion of the firm: POM helps the firm to expand and grow. This is because it tries to improve quality and reduce costs. This helps the firm to earn higher profits, and these profits help the firm to rise. 6. Optimum utilisation of resources: POM facilitates optimum utilisation of resources such as material, manpower, machines, etc. So, the firm can meet its capacity utilisation objective. This will bring higher returns to the organisation. 7. Reputation and Goodwill: POM helps the firm to satisfy its customers. This increases the firms reputation & goodwill. A good image helps the firm to expand and achieve competitive edge in to-days increasing competitive scenario. 8. Helps to face cut-throat competition: POM help the firms to face stiff competition in the market. This is because POM produces products and services of right quantity, right quality, right price and at the right time. These products are delivered to the customers as per their requirements, thereby having an upper-hand in the market. Importance of POM to customers and society: 9. Higher standard of living: POM conducts continuous research and development (R&D). So they produce new and better varieties of products. People use these products and enjoy a higher standard of living. 10. Generates employment: Production activities create many different job opportunities in the country, either directly or indirectly. Direct employment is generated in the production area, and indirect employment is generated in the supporting areas such as marketing, finance, customer support, etc. 11. High quality and low price- POM improves the quality of the products because of research and development. Because of large-scale production the cost is reduced. So, consumer prices also reduce. 12. Creates utility: Production creates Form Utility. Consumers can get form utility in the shape, size and designs of the product. Production also creates time utility, because goods are made available according to the need of the customer. 13. Boosts economy: Production management ensures optimum utilisation of resources. This leads to rapid economic growth and well-being of the nation. 14. Better customer service: As mentioned in above points it helps in reducing cost and improving quality, it automatically improves the customer service. 15. Enhances Investments: Because of production, other sectors also expand. Ancillary industries are formed consequently. The service sector such as banking, telecom, insurance, transport etc. also expand. This spread effect offers more job opportunities and boosts economy.

DIFFERENCE BETWEEN PRODUCTION AND OPERATIONS

Production and Operations Management is the management of an o rganisations production system Production usually deals with the goods, but when it comes to services, operations management is involved. Now days, production has become a broader concept which includes services as well, since the non-manufacturing sector is being involved in the same the term production management is gradually being replaced by operations management. Operations management is concerned with the supervision, controlling, and inspecting the resources used for producing goods and services and the production process. Production management on the other hand focuses specifically on the production of goods and services and is concentrated upon transforming input from output. Production vs. Operations Management 1. Output: Production management deals with manufacturing of products like (washing machines, television, etc) while operations management cover both products and services. 2. Usage of Output: Products like washing machines/television are utilised over a period of time whereas services need to be consumed immediately. 3. Classification of work: To produce products like washing-machines/television more of capital equipment and less labour is required while services require more labour and lesser capital equipment. 4. Customer Contact: There is no participation of customer during production because goods are produced in plants located away from the market and nearer to the raw material source, whereas for services a constant contact with customer is required as in case of service customers are the inputs and served customers are the output. 5. Scope: The scope of production management is narrow as compared to operations management. Operations management includes production and services as well. 6. Demand: In case of production management demand is made on weekly, monthly, yearly basis. E.g. ordering for raw materials. Whereas in case of operations management it is made on hourly or daily basis. E.g. Hotel service. 7. Process: Production management has to undergo a long and complex process through machines etc. Whereas in case of Operations management it is more oriented towards service, therefore no lengthy process is followed. 8. Focus: While operations management is focused upon administration, planning and execution of operations involved in production of goods and services and trying to minimise the resources and at the same time increasing output, production management is more concerned with input/output and transforming raw materials in the shape of desired finished product.

(B) Transformation is the process of changing inputs to outputs. It changes in the

physical characteristics, location, and ownership of the materials. It Changes the form of material or the psychological state of customers.

1. In a manufacturing organisation like steel plant, inputs are materials like iron ore, coke, lime stone, labour, machines, capital and outputs are steel sections like rods, bars, sheets, etc 2. In service organisations like banks, inputs are customers and outputs are serviced customers. Productivity is measured by Output/Input. Higher would be the ratio higher is the productivity.

Working of a transformation system Working of the transformation system in a Bank:In case of a Banking system, the inputs would be the customers, staffs, capital, management, machines, materials, information. Now, these inputs are transformed to outputs that are goods and services. How does it work? A customer comes to the bank to deposit the money. The bank extracts all the required information from the customers. The staff members direct the customers to submit the required documents and then process them. All the processing is done in computers; all necessary details are stored therein. Huge amount of capital is required to form an infrastructure, and working capital. Materials used in a Bank are papers, pen, and all sorts of stationery. Management is above all which manages everything stated above. If all things are not organised it would be a real mess. After the customers purpose is satisfied, it becomes a served customer, which is the output. A customer can come to deposit money or to borrow. The bank adds value to the deposited money by paying interest to the customer, and receives interest on the borrowed money. One major transformation the bank does is to convert the savings money into investment. Working of a Transformations process in an automobile assembly plant In an automobile assembly plant all the input materials such as tires, gears, body, engine, seats etc are brought under one roof. Once all the materials are gathered, the

standard procedure is followed to assemble all the parts to make it in usable form or creating form utility by making into a car and thus adding value to it. When the assembly work is carried out transformation takes place as the inputs are transformed into a car, thus adding value to the same. Here the labours are less in comparison to the manufacturing unit as it provides service of assembling the manufactured parts. Machines required are heavy in this case because assembling a car is not as easy as assembling a mobile phone. Raw materials have already been stated above (the manufactured parts such as the engine, gear box, body, seats etc.) Here the input is the customer who comes with the objective to get its parts assembled and the output is a served customer when he/she is satisfied with the work done or when the car is made. Management is done by highly educated and trained staffs as the work involved is critical.

TYPES OF TRANSFORMATION:Transformation- The process by which, raw materials and other inputs are converted into finished products
Types of Transformation

CONTINUOUS

INTERMITTENT

MASS

PROCESS

PROJECT

JOB

BATCH

1. Continuous production system- goods are produced constantly as per demand forecast. Goods are produced on a large scale for stocking and selling Here, the inputs and outputs are homogeneous along with the production process and sequence. E.g :The Production system of a food industry is purely based on the demand forecast. Here, a large-scale production of food takes place. Similarly, the production and processing system of a fuel industry is also purely based on, demand forecast. Crude oil and other forms are processed continuously on a large scale to yield the desirable form of fuel. (i)Mass Production Flows-Here, company produces different types of products on a large-scale and stocks them in warehouses until they are demanded in the market. E.g.-toothpaste, soaps, pen etc. Depends on market demand. Easy supervision possible.

Little queuing. (ii)Process Production Flows- Here, a single product is produced and stocked in warehouses until it is demanded in the market. E.g.- Steel, cement, paper. There is a highly automated system for handling materials Unskilled labour is required. There is very less work-in-progress because material flow is continuous. The full production system is designed to produce only one specific type of item. 2. Intermittent Production System-Intermittent means something that starts and stops at irregular intervals (time gaps).In the intermittent production system, goods are produced based on customer's orders. These goods are produced on a small scale. The flow of production is intermittent (irregular). In this system, large varieties of products are produced. These products are of different sizes. The designs of these products are not similar. E.g. - gold smith, tailor(The work of a tailor is also based on the number of orders he gets from his customers). (i)Project production flows Here, in project production flows, company accepts a single, complex order or contract. The order must be completed within a given period of time and at an estimated cost. E.g. Airport, dams, roads, bridges. (ii) Job Productions flow In job production flows, company accepts a contract to produce either one or few units of a product strictly as per specifications given by the customer. E.g.- repair, tailor. (iii) Batch Production Flows In batch production flows, the production schedule is decided according to specific orders or is based on the demand forecasts. It is a technique where the product has to pass a series of process. Unless the preceding process is not finished, the next cannot be started. E.g. In bakeries, unless the dough is prepared, it cannot be baked. 10. Difference between Continuous and Intermittent Production System Basis 1. Product Type Continuous Similar type of product is manufactured in large quantity Product layout is best suited. Unskilled labour is required as the production is a routine work. Intermittent Different types of product is manufactured in small quantities Process Layout is suited. Highly skilled labour is required as the product manufactured is not same. Large quantity is Small quantity is

2. Layout Type 3. Labour Type

4. Order Type

ordered. Heavy machineries are required as it is set up according to the product layout. 6. Maintenance high Type maintenance service is required as the breakdown of a single machine, interrupts the whole production line. 7. Capital Less capital is Blockage blocked as the inventory required is of same type and the production is continuous. 8. Production Simple. As Method everything is in line. 5. Machine Type

ordered. Not as heavy machineries are required compared to Continuous Production Here, breakdown of a single machine does not harm the entire production process. Low service is required. More Capital is blocked as the type of inventory differs.

Complicated, as more of manual work is involved.

THE BOOK FOR PRODUCTION AND OPERATIONS MANAGEMENT IS AVAILABLE AT 1. JANAKPURI- EDUCATION BOOK DEPOT- OPPOSITE MAHARAJA SURAJMAL COLLEGE 2. JANAKPURI- JAIN BOOK DEPOT- NEAR IITM IN GANDHI MARKET. 3. ROHINI- SATIJA BOOK DEPOT- NEAR ROHINI EAST METRO 4. KALKAJI- BHATIA BOOK DEPOT- OPPOSITE DESHBANDHU COLLEGE 5. LAXMI NAGAR- PANDEY BOOK DEPOT- NEAR LAXMI NAGAR METRO STATION. FOR MORE INFORMATION PLEASE GO TO:-

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