MANAGEMENT OF MACHINES AND MATERIALS (MS-5)

UNIT 1
OPERATIONS MANAGEMENT AN OVERVIEW

Roshan K Gnyawali

THE ORGANIZATION
Three Basic Functions

Operations

Marketing

Finance

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

TRANSFORMATIONS

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

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.

VALUE ADDITION
Stage of Production
Farmer produces and harvests Wheat transported to mill Mill produces flour Flour transported to baker Baker produces bread Bread transported to grocery store Grocery store sells bread Total Value-Added

Value Added
$0.15 $0.08 $0.15 $0.08 $0.54 $0.08 $0.21 $1.29

Value of Product
$0.15 $0.23 $0.38 $0.46 $1.00 $1.08 $1.29

SYSTEMS CONCEPT
Value added
Inputs Land Labor Capital
Feedback

Transformation/ Conversion process

Feedback

Outputs Goods Services

Feedback

Control

System: A purposeful collection of people, objects and procedures for operating within an environment.

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

SYSTEMS CONCEPT
XYZ Juice Company

Inputs
Fruits Metal Sheets Water Energy Labor Building Equipment

Conversion Outputs
Cleaning Bottle of Juice Making bottle Cutting Mixing Packing Labeling

SYSTEMS CONCEPT
XYZ Hospital

Inputs
Doctors, nurses Hospital Medical Supplies Equipment Laboratories

Conversion
Examination Surgery Monitoring Medication Therapy

Outputs
Healthy patients

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

GOODS vs SERVICE

Tangible

Act

GOODS vs SERVICE
Characteristic
Customer contact Uniformity of input

Goods
Low High

Service
High Low

Labor content
Uniformity of output Output Measurement of productivity Opportunity to correct problems Inventory Evaluation Patentable Demand Location

Low
High Tangible Easy High Much Easier Usually Can be Forecasted Any

High
Low Intangible Difficult Low Little Difficult Not usual Variable Near to User

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

OBJECTIVES IN OM
1.

Performance Objectives
a) b)

c)
d) e) f)

Efficiency (Productivity) Effectiveness Quality Lead time/ Throughput time Capacity Utilization Flexibility

OBJECTIVES IN OM
2.

Cost Objectives
a)

Explicit Cost

Material Cost, Direct/Indirect Labor Cost, Scrap/Rework Cost, Maintenance Cost Cost of Inventory, Inspection, Material Handling Cost of stock-out, delayed delivery Downtime Cost Opportunity Cost Goodwill

b)

Implicit Cost

OM DECISIONS
What

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

OM DECISIONS
OM Decisions

Periodic Decisions

Continual Decisions

Selection

Design

Updating

Operating - Controlling

Strategic (Long-term) Decisions

Operational (Short-term) Decision

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 Quality, Cost, Maintenance, MRP

Controlling
Inventory,

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

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

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

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

HISTORY OF OM
Industrial revolution (1770s) Scientific management (1878)

Mass

production Interchangeable parts Division of labor

Human relations movement (1920-60) Decision models (1915, 1960-70s) Influence of Japanese manufacturers

SCOPE OF OM
Product

Selection and

Scheduling
Inventory

Design Process Selection and Planning Facility Location Layout and Material Handling Capacity planning

Control Quality Assurance Work & Job Design Maintenance Cost Control

And Many More

DISCUSSION
Discuss with suitable examples, the role of the Operations Manager in todays 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.

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

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.

DISCUSSION

Why does the proper operations strategy keep changing for companies that are world class competitors?

End of Unit 1

UNIT 2: Product Selection