Introduction to Operation Management.ppt
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Introduction to Operations
Management
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Basic Concept of Production/Transformation
Introduction
Four Functional areas in a Business:- Marketing, Production, Finance and
Personnel. Production is the basic function around which all other activities revolve like
marketing, storing, personnel, research and development.
Thus, very important that Production function must be managed efficiently and
effectively. So, as to achieve organizational Goals.
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Production
The process by which, raw materials and other inputs
are converted into finished products.
It involves step by step conversion of one form of
materials into another to increase the utility of products
or services.
Production and operations management (POM) is the management of an
organizations production system.
A production system takes inputs and converts them into outputs.
The conversion process is the predominant activity of a production system.
The primary concern of an operations manager is the activities of the
conversion process.
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Organizational Model
POM
Marketing
MISEngineering
HRM
IB
Accounting
SalesFinance
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Importance
High Productivity (Controlling the machine and manpoweridle time, reducing wastage) Higher Quality (meet the quality specifications)
Reduction of Wastage (reasons, stages, corrective decisions)
Shorter Manufacturing Lead Time (by reducing machinesetup time, making raw materials available in time in sufficient quality ofright quantity, reducing rejection rate)
Plant Utilities (services such as lighting, ventilation)
Safety and Health (protection of workers from the danger ofindustrial accidents)
Better Customer Service (quick response to complaint,replacement during guarantee period, repair and maintenancefacility, quality products, after sale services)
Use of latest Technology (Automation)
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Historical Background
The Industrial Revolution
Scientific Management
The Human Relations Movement Operations Research
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The Industrial Revolution
The industrial revolution developed in England in
the 1700s.
The steam engine, invented by James Watt in
1764, largely replaced human and water powerfor factories.
Adam Smiths The Wealth of Nationsin 1776
quoted the economic benefits of the specialization
of labor.
Thus the late-1700s factories had not only
machine power but also ways of planning and
controlling the tasks of workers.
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The industrial revolution spread from England toother European countries and to the UnitedSates.
The first great industry in the U.S. was the textileindustry.
In the 1800s the development of electricityfurther advanced the revolution.
By the mid-1800s, the old cottage system ofproduction had been replaced by the factorysystem.
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Scientific Management
Frederick Taylor is known as the father ofscientific management. His shop systememployed these steps: Each workers skill, strength, and learning ability were
determined.
Stopwatch studies were conducted to precisely setstandard output per worker on each task.
Material specifications, work methods, and routing
sequences were used to organize the shop. Supervisors were carefully selected and trained.
Incentive pay systems were initiated.
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The Service Revolution
The creation of services organizations acceleratedsharply after World War II.
Today, more than two-thirds of the U.S. workforce
is employed in services. About two-thirds of U.S. GDP is from services.
There is a huge trade surplus in services.
Thus there is a growing need for service
operations management.
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Factors Affecting POM
Global Competition
Quality, Customer Service, and Cost
Challenges
Computers and Advanced Production
Technology
Growth of Service Sector Scarcity of Production Resources
Issues of Social Responsibility
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Continuous Production System
Continuous means something that operates constantly
without any irregularities or frequent halts (Stops).
In the continuous production system, goods are
produced constantly as per demand forecast. Goods are produced on a large scale for stocking and
selling.
They are not produced on customer's orders. Here, the inputs and outputs are homogeneous along
with the production process and sequence.
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Features
Volume of output is large.
Identical products are produced.
Machines and equipments are arrangedaccording to Product layout Pattern.
Special purpose automatic machines areused.
Fixed path material handling equipment isused due to the predetermined sequence ofoperations.
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Following chart highlights the concept of a
continuous production system.
http://lh6.googleusercontent.com/-O-xQb35tWmI/T0OJInP0s0I/AAAAAAAAF4M/fBsJSd7W7yw/s640/Continuous-Production-System.png -
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The Production system of a food industry is purelybased on the demand forecast. Here, a large-scaleproduction of food takes place.
Similarly, the production and processing system of afuel industry is also purely based on, demandforecast. Crude oil and other raw sources are
processed continuously on a large scale to yieldusable form of fuel.
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Merits
As the processing of material is
continuous there is no waiting period as
each work is passed to the next stage
immediately.
Cost of materials handling are minimized.
Quality of output is kept uniform.
Any delay at any stage is automatically
detected.
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Demerits
Very rigid.
If there is fault in one operation, the entire
process is disturbed.
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Suitability
Best suited to the organizations which
intend to produce a limited variety of
products on a large scale.
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Continuous Production is of the following types
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Process Production Flows
Here, a single product is produced and stocked in warehouses until it is
demanded in the market.
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Features
There is a highly automated system for handlingmaterials. Conveyors and automatic transfer machines areused to move the materials from one stage to another.
Low-skilled labour and skilled technicians are required.
There is very less work-in-progress because material flow iscontinuous.
The production planning and scheduling can be decided wellin advance.
The full production system is designed to produce only onespecific type of item
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Types
Analytical Process of Production
Synthetic Process of Production
Assembling Process of Production
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Analytical Process of Production
Raw Material is broken into different products
Raw Material
Coal
Finished Product
Finished Product
Finished Product
Ammonical Liquor
Coaltar
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Synthetic Process of Production
Mixing of two or more materials to
manufacture a product.
Finished ProductRaw Material
Soap
Raw material- Castic Soda, acids and perfumes
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Assembling Process of Production
Two or more components are combined to
manufacture a finished product.
Finished Product
Raw Material Parts
Automobiles, TV
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Intermittent Production System
Intermittent means something that starts (initiates) and stops (halts) atirregular (unfixed) intervals (time gaps).
In the intermittent production system, goods are produced based oncustomer's orders.
These goods are produced on a small scale.
The flow of production is intermittent (irregular).
In other words, the flow of production is not continuous. In this system,
large varieties of products are produced.
These products are of different sizes. The design of these products goeson changing. It keeps changing according to the design and size of theproduct.
Therefore, this system is very flexible.
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Following chart highlights the concept of an intermittent
production system.
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The work of a goldsmith is purely based on the frequency ofhis customer's orders. The goldsmith makes goods
(ornaments) on a small-scale basis as per his customer'srequirements. Here, ornaments are not done on acontinuous basis.
Similarly, the work of a tailor is also based on the number oforders he gets from his customers. The clothes are stitchedfor every customer independently by the tailor as per one'smeasurement and size. Goods (stitched clothes) are made
on a limited scale and is proportional to the number of ordersreceived from customers. Here, stitching is not done on acontinuous basis.
f
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The characteristics of an intermittent production
system are listed as follows:
The flow of production is not continuous. It isintermittent.
Wide varieties of products are produced.
The volume of production is small.
General purpose machines are used. Thesemachines can be used to produce different typesof products.
The sequence of operation goes on changing as
per the design of the product. The quantity, size, shape, design, etc. of the
product depends on the customer's orders
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Types
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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.
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Features
The requirement of resources is not same (it varies).Generally, it slows down when the project is near itscompletion phase.
Many agencies are involved in the project. Eachagency performs specialized jobs. Here, coordination
between agencies is important because all jobs areinterrelated.
Delays take place in completion of projects due to itscomplexity and massiveness.
As routing and scheduling changes with fresh orders,
proper inspection is required at each stage ofproduction.
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Job Production Flows
Here, 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.
The product is produced within a given
period and at a fixed cost. This cost is
fixed at the time of signing the contract
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Features
The production of items takes place in smalllots. Sometimes only one product is producedat one time.
The items are manufactured strictly as per
customer's specifications. Highly skilled labour is required to perform
specialized jobs.
There is disproportionate manufacturing cycle
time. e.g. the time needed to design theproduct may be more than the manufacturingtime.
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Batch Production Flows
In batch production flows, the productionschedule is decided according to specificorders or are based on the
demand forecasts. Here, the production of items takes place
in lots or batches. A product is divided intodifferent jobs. All jobs of one batch ofproduction must be completed beforestarting the next batch of production.
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Features
The products are made and kept in stock untiltheir demand arises in the market.
General purpose machines and handlingequipments, which can do many different jobsquickly are installed. This is because largevarieties of items are to be produced.
There is a possibility of large work-in-progressdue to many reasons.
There is a need for detailed productionplanning and control.
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Difference