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Operations Management

Dr. M. Ahsan Akhtar Hasin


Professor,
Industrial and Production Engineering (IPE) Dept.
BUET
Definition

Operations Management (OM) may be defined as the


design, operations and improvement of the
production systems that create the organizations
primary products or services.

Like marketing and finance, it is a function requiring


Line Management Responsibility.
Plant Factory
People Workforce
Parts Materials
Processes Machines, equipment
Different types of transformations/Operaions

Physical Manufacturing operations, or processes

Location Logistical transportation

Storage Warehousing, materials management

Exchange As in retailing

Physiological As in Healthcare

Information as in communication, e.g. EDI,


telecommunication
Business/Operational Processes
A Business Process, or Operation is a series of
activities an organization must perform to produce a
product, or service-
e.g. opening a bank account, selling air tickets,
manufacturing operations, etc,
Or, act as support element of producing product or
service
e.g. recruitment, payroll, marketing processes,
purchasing, etc.).
Manufacturing Vs. Service
Manufacturing - Physical tangible goods, less
involvement/contact with the customers.

Service In tangible offerings to the customers, more


contact with the customers; e.g. hotels, hospitals, etc.
Productivity
It is a measure of how well accompany is using its resources.

Output
Productivi ty
Input

Inputs and outputs of an organization can be measured using


Labor, Capital, Materials and Energy.

Output Goods and Services produced


Pr oductivity
Input Labor Capital Materials Energy

If all inputs and outputs are considered, it is called


Total Productivity.

If all inputs and outputs are not considered, it is called


Partial Productivity.
Example of productivity

Outputs Value Productivity measures


Finished goods $10,000
Work in process $ 2,500
Total output
Other Income $ 1,000 Total Pr oductivity
Total outputs $ 13,500 Total Input
13,500
Inputs Value 0.89 89%
15193
Human $ 3000
Materials $153
Capital $ 10000
Energy $ 540
Other Expenses $ 1500
Total Inputs $ 15,193
Types of Manufacturing Operations / Processes

1. Conversion Operations / processes


e.g. melting iron, mixing ingredients of toothpaste

2. Fabrication Operations / processes


e.g. making a drill/hole in the steel sheet

3. Assembly Operations / Processes


e.g. sewing parts of a shirt, television assembly

4. Testing Operations / Processes


e.g. for quality control, inspection and testing
Types of Process Flow, or
Types of Production Systems
A Process flow structure refers to how a factory
organizes material flow using a flow chart.
a) There are four types of manufacturing systems based on
process flow :
1. Job shop
2. Batch
3. Assembly line
4. Continuous flow

b) There are four types of manufacturing systems based on


customer ordering system :
1. Make-to-order
2. Make-to-stock
3. Assemble-to-order
1 . Job Shop
Different orders from different customers

Each order has its own process flow

Produced in small batches, but there may be many orders


simultaneously under processing.

E.g. machine shop, small furniture manufacturing, etc.

2 . Batch
Similar to job shop, but batch size is larger, and product variation is low

Periodic batch production

In majority of the cases, it is not customer order based


E.g. pharmaceuticals, bank notes
3 . Assembly line
Discrete parts flows from work station to work station at a controlled rate

e.g. television assembly

4 . Continuous Flow

Materials flow continuously without interruption

e.g. petroleum refinery, sugar, chemical production (like cosmetics)


b) There are four types of manufacturing systems
based on customer ordering system

1. Make-to-Order (MTO)
Producer produces only when there is a customer order
Produced according to customer specification
E.g. tailor shop, furniture

2. Make-to-Stock (MTS)
Producer produces in advance, and keeps in stock room for sell
Product design/specification is fixed y the manufacturer
e.g. television, wrist watch, etc.

3. Assemble-to-Order (ATO)
It falls in between MTP and MTS.
Components are produced in advance, but final assembly takes
place after order is received, according to customers
specifications.
An example of a typical process flow chart of a service organization
(Money withdrawal/debit from a bank)
Bank cheque submitted
5 sec
to officer

15 sec Officer logs in computer and


verifies account status

20 sec Officer debits money


from account

25 sec
Officer processes the
cheque and keeps record
Common symbols
Cheque sent to higher officer for
Inspection counter-verification and approval

Operation Money taken from


storage
Transportation
Money given to account
Storage holder
Processed cheque kept in
file