MB202 POM Unit 1 Gurdeepak Dec 2011

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    1-1

    Operations Management

    MB 202Production and Operations Management

    Unit 1

    Operations Management

    Operations Management: Concepts, Product, ProcessSlide 1 of Unit 1MB-202 POM ~Gurdeepak 2011~

    William J. Stevenson

    8th edition

    Gurdeepak Singh

    GJIMTMohali

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    1-2

    Unit1

    Operations Management

    Outline the importance of

    production and operations

    management.

    Process Selection

    -

    1 5

    Operations Management: Concepts, Product, ProcessSlide 2 of Unit 1MB-202 POM ~Gurdeepak 2011~

    OM Concepts and Functions

    Product Design and Development

    Product Development process and

    Techniques

    2

    3

    4

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    Production is the creation of goods and services

    OperationsOperations managementmanagement (OM)(OM) isis thethe setset ofofactivitiesactivities thatthat createscreates valuevalue inin thethe formform ofof goodsgoodsandand servicesservices byby transformingtransforming inputsinputs intointo outputsoutputs

    What Is Operations Management?What Is Operations Management?

    Operations Management: Concepts, Product, ProcessSlide 3 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    Operations ManagementOperations Management

    The management of systems or processes

    that create goods and/or provide services

    Organization

    Operations Management: Concepts, Product, ProcessSlide 4 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Finance Operations Marketing

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    ValueValue--AddedAdded

    The difference between the cost of inputsand the value or price of outputs.

    InputsOut uts

    Value added

    Operations Management: Concepts, Product, ProcessSlide 5 of Unit 1MB-202 POM ~Gurdeepak 2011~

    anLabor

    Capital

    Conversion

    process

    GoodsServices

    Control

    Feedback

    FeedbackFeedback

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    Steel production

    Automobile fabrication

    Home remodeling

    Retail sales

    Auto Repair

    Appliance repair

    Maid Service

    Manual car wash

    Teaching

    Lawn mowing

    GoodsGoods--service Continuumservice Continuum

    Operations Management: Concepts, Product, ProcessSlide 6 of Unit 1MB-202 POM ~Gurdeepak 2011~

    High percentage goods

    Low percentage service

    Low percentage goods

    High percentage service

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    Examples of Production SystemsExamples of Production Systems

    S ystem In p u ts C o n versio n O u tp u t(desired)

    Hospital PatientsMD s, NursesMedical SuppliesEquipment

    Health Care HealthyIndividuals

    Operations Management: Concepts, Product, ProcessSlide 7 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Restaur ant Hungry CustomersFood, ChefServersAtmosphere

    Prepare FoodServe Food

    SatisfiedCustomers

    AutomobileP lant

    Sheet SteelEng ine P arts

    Tools, Equ ipm entWorkers

    Fabricationand A ssem bly

    of Cars

    High Q ualityAutomobiles

    University High School GradsTeache rs, BooksClassroom

    Transferringof Knowledgeand Skills

    EducatedIndividuals

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    Manufacturing or Service?Manufacturing or Service?

    Tangible Act

    Operations Management: Concepts, Product, ProcessSlide 9 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    What about McDonalds?What about McDonalds?

    Service or Manufacturing?

    Operations Management: Concepts, Product, ProcessSlide 10 of Unit 1MB-202 POM ~Gurdeepak 2011~

    products

    Why then would we consider McDonalds aservice business?

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    Manufacturing vs ServiceManufacturing vs Service

    Characteristic Manufacturing Service

    Output

    Customer contact

    Uniformity of input

    Tangible

    Low

    High

    Intangible

    High

    Low

    Operations Management: Concepts, Product, ProcessSlide 11 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Labor contentUniformity of output

    Measurement of productivity

    Opportunity to correct

    Low

    High

    Easy

    High

    High

    Low

    Difficult

    Lowquality problems

    High

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    Operations Management includes:

    Forecasting

    Capacity planning

    Scheduling

    Scope of Operations ManagementScope of Operations Management

    Operations Management: Concepts, Product, ProcessSlide 12 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Assuring quality

    Motivating employees

    Deciding where to locate facilities And more . . .

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    The operations function

    Consists of all activities directly related to

    producing goods or providing services

    Operations Management: Concepts, Product, ProcessSlide 13 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    Types of OperationsTypes of Operations

    Operations Examples

    Goods Producing Farming, mining, construction,manufacturing, power generation

    Storage/Transportation Warehousing, trucking, mailservice, moving, taxis, buses,

    Operations Management: Concepts, Product, ProcessSlide 14 of Unit 1MB-202 POM ~Gurdeepak 2011~

    hotels, airlinesExchange Retailing, wholesaling, banking,renting, leasing, library, loans

    Entertainment Films, radio and television,

    concerts, recordingCommunication Newspapers, radio and television

    newscasts, telephone, satellites

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    TIPIf you do not understandsomething,

    ask me!

    Operations Management: Concepts, Product, ProcessSlide 15 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    Responsibilities of Operations ManagementResponsibilities of Operations Management

    Products & services

    Planning Capacity

    Location

    Make or buy

    Organizing Degree of centralization

    Process selectionStaffing Hiring/laying off

    Operations Management: Concepts, Product, ProcessSlide 16 of Unit 1MB-202 POM ~Gurdeepak 2011~

    ayou Projects

    Scheduling

    Controlling/Improving

    Inventory Quality

    Use of OvertimeDirecting Incentive plans

    Issuance of work orders

    Job assignments

    Costs

    Productivity

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    Key Decisions of Operations ManagersKey Decisions of Operations Managers

    What

    What resources/what amounts

    When

    Needed/scheduled/ordered

    Operations Management: Concepts, Product, ProcessSlide 17 of Unit 1MB-202 POM ~Gurdeepak 2011~

    WhereWork to be done

    How

    Designed

    Who

    To do the work

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    Decision MakingDecision Making

    System Design capacity

    location arrangement of departments

    roduct and service lannin

    Operations Management: Concepts, Product, ProcessSlide 19 of Unit 1MB-202 POM ~Gurdeepak 2011~

    acquisition and placement ofequipment

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    Decision MakingDecision Making

    System operation personnel

    inventory scheduling

    ro ect

    Operations Management: Concepts, Product, ProcessSlide 20 of Unit 1MB-202 POM ~Gurdeepak 2011~

    management quality assurance

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    Decision MakingDecision Making

    Models

    Quantitative approaches

    Analysis of trade-offs

    S stems a roach

    Operations Management: Concepts, Product, ProcessSlide 21 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    ModelsModels

    A model is an abstraction of reality.

    Physical Schematic

    Mathematical

    Operations Management: Concepts, Product, ProcessSlide 22 of Unit 1MB-202 POM ~Gurdeepak 2011~

    What are the pros and cons of models?

    1 23

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    TIPIf you do not understandsomething,

    ask me!

    Operations Management: Concepts, Product, ProcessSlide 23 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    Quantitative ApproachesQuantitative Approaches

    Linear programming

    Queuing Techniques Inventory models

    Operations Management: Concepts, Product, ProcessSlide 24 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Project models

    Statistical models

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    Operations InterfacesOperations Interfaces

    IndustrialEngineering

    MaintenanceDistribution

    Operations Management: Concepts, Product, ProcessSlide 25 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Public

    Relations

    Accounting

    Operations

    Personnel

    Purchasing

    MIS

    Legal

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    1-26Historical Evolution of OperationsHistorical Evolution of Operations

    ManagementManagement

    Industrial revolution (1770s)

    Scientific management (1911) Mass production

    Interchan eable arts

    Operations Management: Concepts, Product, ProcessSlide 26 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Division of labor

    Human relations movement (1920-60)

    Decision models (1915, 1960-70s) Influence of Japanese manufacturers

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    Suppliers

    SuppliersDirect

    Suppliers Producer DistributorFinal

    Consumer

    Simple Product Supply ChainSimple Product Supply Chain

    Operations Management: Concepts, Product, ProcessSlide 27 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Supply Chain: A sequence of activitiesAnd organizations involved in producing

    And delivering a good or service

    1-28

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    Stage of Production Value

    Added

    Value of

    ProductFarmer produces and harvests wheat 1.80 1.80

    Wheat transported to mill 1.00 2.80

    A Supply Chain for BreadA Supply Chain for Bread

    Operations Management: Concepts, Product, ProcessSlide 28 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Mill produces flour 1.90 4.70

    Flour transported to baker 1.00 5.70

    Baker produces bread 6.70 12.40

    Bread transported to grocery store 1.00 13.40Grocery store displays and sells bread 2.60 16.00

    Total Value-Added 16.00

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    Stage of Production Value

    Added

    Value of

    ProductFarmer produces and harvests wheat 1.80 1.80

    Wheat transported to mill 1.00 2.80

    A Supply Chain for BreadA Supply Chain for Bread

    Operations Management: Concepts, Product, ProcessSlide 29 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Mill produces flour 1.90 4.70

    Flour transported to baker 1.00 5.70

    Baker produces bread 6.70 12.40

    Bread transported to grocery store 1.00 13.40Grocery store displays and sells bread 2.60 16.00

    Total Value-Added 16.00

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    Stage of Production Value

    Added

    Value of

    ProductFarmer produces and harvests wheat 1.80 1.80

    Wheat transported to mill 1.00 2.80

    A Supply Chain for BreadA Supply Chain for Bread

    Operations Management: Concepts, Product, ProcessSlide 30 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Mill produces flour 1.90 4.70

    Flour transported to baker 1.00 5.70

    Baker produces bread 6.70 12.40

    Bread transported to grocery store 1.00 13.40Grocery store displays and sells bread 2.60 16.00

    Total Value-Added 16.00

    1-31

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    TIPIf you do not understandsomething,

    ask me!

    Operations Management: Concepts, Product, ProcessSlide 31 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    UNIT1

    Operations Management: Concepts, Product, ProcessSlide 32 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Service Design

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    Major factors in design strategy

    Cost

    Quality

    Time-to-market

    Product and Service DesignProduct and Service Design

    Operations Management: Concepts, Product, ProcessSlide 33 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Customer satisfaction Competitive advantage

    Product and service design or redesign should beclosely tied to an organizations strategy

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    Translate customer wants and needs into productand service requirements

    Refine existing products and services Develop new products and services

    Formulate ualit oals

    Product or Service Design ActivitiesProduct or Service Design Activities

    Operations Management: Concepts, Product, ProcessSlide 34 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Formulate cost targets Construct and test prototypes

    Document specifications

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    Objectives of Product and Service DesignObjectives of Product and Service Design

    Main focus

    Customer satisfaction

    Secondary focus Function of product/service

    Operations Management: Concepts, Product, ProcessSlide 35 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Quality

    Appearance

    Ease of production/assembly

    Ease of maintenance/service

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    StandardizationStandardization

    Standardization

    Extent to which there is an absence of variety

    in a product, service or process

    Standardized products are immediately

    Operations Management: Concepts, Product, ProcessSlide 36 of Unit 1MB-202 POM ~Gurdeepak 2011~

    available to customers

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    Mass customization:

    A strategy of producing standardized goods

    or services, but incorporating some degree

    of customization

    Mass CustomizationMass Customization

    Operations Management: Concepts, Product, ProcessSlide 37 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Delayed differentiation Modular design

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    P d t D iP d t D i

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    Product DesignProduct Design

    Product Life Cycles

    Robust Design

    Concurrent Engineering

    Operations Management: Concepts, Product, ProcessSlide 39 of Unit 1MB-202 POM ~Gurdeepak 2011~

    ompu er- e es gn

    Modular Design

    1-40

    Lif C l f P d t S iLif C l f P d t S i

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    Life Cycles of Products or ServicesLife Cycles of Products or Services

    Maturity

    Saturation

    Operations Management: Concepts, Product, ProcessSlide 40 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Time

    Introduction

    Growth

    Deman

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    R b t D iR b t D i

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    Robust Design: Design that results in

    products or services that can function over

    a broad range of conditions

    Robust DesignRobust Design

    Operations Management: Concepts, Product, ProcessSlide 41 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    Concurrent EngineeringConcurrent Engineering

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    Concurrent EngineeringConcurrent Engineering

    Concurrent engineering

    is the bringing together

    of engineering design and

    Operations Management: Concepts, Product, ProcessSlide 42 of Unit 1MB-202 POM ~Gurdeepak 2011~

    manufacturing personnelearly in the design phase.

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    ComputerComputer Aided DesignAided Design

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    ComputerComputer--Aided DesignAided Design

    Computer-Aided Design (CAD) is productdesign using computer graphics.

    increases productivity of designers, 3 to 10times

    Operations Management: Concepts, Product, ProcessSlide 43 of Unit 1MB-202 POM ~Gurdeepak 2011~

    creates a database for manufacturinginformation on product specifications

    provides possibility of engineering and cost

    analysis on proposed designs

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    Modular DesignModular Design

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    Modular DesignModular Design

    Modular design is a form of standardization inwhich component parts are subdivided into

    modules that are easily replaced orinterchanged. It allows:

    Operations Management: Concepts, Product, ProcessSlide 44 of Unit 1MB-202 POM ~Gurdeepak 2011~

    easier repair and replacement

    simplification of manufacturing and assembly

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    TIPIf you do not understand

    something,

    ask me!

    Operations Management: Concepts, Product, ProcessSlide 45 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    Phases in Product Development ProcessPhases in Product Development Process

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    Phases in Product Development ProcessPhases in Product Development Process

    1. Idea generation

    2. Feasibility analysis

    3. Product specifications

    4. Process specifications

    Operations Management: Concepts, Product, ProcessSlide 46 of Unit 1MB-202 POM ~Gurdeepak 2011~

    5. Prototype development

    6. Design review

    7. Market test

    8. Product introduction9. Follow-up evaluation

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    Operations Management: Concepts, Product, ProcessSlide 47 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    Idea GenerationIdea Generation

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    Idea GenerationIdea Generation

    Supply chain based

    Operations Management: Concepts, Product, ProcessSlide 48 of Unit 1MB-202 POM ~Gurdeepak 2011~

    IdeasCompetitor based

    Research based

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    Reverse EngineeringReverse Engineering

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    Reverse EngineeringReverse Engineering

    Reverse engineering is the

    dismantling and inspectingof a competitors product to discover

    Operations Management: Concepts, Product, ProcessSlide 49 of Unit 1MB-202 POM ~Gurdeepak 2011~

    product mprovements.

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    ManufacturabilityManufacturability

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    ManufacturabilityManufacturability

    Manufacturability is the ease of fabrication

    and/or assembly which is important for:

    Cost

    Operations Management: Concepts, Product, ProcessSlide 51 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Quality

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    RecyclingRecycling

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    Recycling: recovering materials for future use

    Recycling reasons

    Cost savings

    Environment concerns

    RecyclingRecycling

    Operations Management: Concepts, Product, ProcessSlide 53 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Environment regulations

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    Service DesignService Design

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    Service DesignService Design

    Service is an act

    Service delivery system

    Facilities

    Processes

    Operations Management: Concepts, Product, ProcessSlide 54 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Skills Many services are bundled with products

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    Service DesignService Design

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    Service DesignService Design

    Service design involves

    The physical resources needed

    The goods that are purchased or consumed by

    the customer

    Operations Management: Concepts, Product, ProcessSlide 55 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Explicit services Implicit services

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    Humor in Product DesignHumor in Product Design

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    As Marketinginterpreted it.

    As the customerwanted it.

    Humor in Product DesignHumor in Product Design

    Operations Management: Concepts, Product, ProcessSlide 56 of Unit 1MB-202 POM ~Gurdeepak 2011~

    As Engineeringdesigned it.

    1984-1994 T/Maker Co.

    As Operationsmade it.

    1984-1994 T/Maker Co.

    1984-1994 T/Maker Co. 1984-1994 T/Maker Co.

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    TIPIf you do not understand

    something,

    ask me!

    Operations Management: Concepts, Product, ProcessSlide 57 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    UNIT1

    Operations Management: Concepts, Product, ProcessSlide 58 of Unit 1MB-202 POM ~Gurdeepak 2011~

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    IntroductionIntroduction

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    Process selection

    Deciding on the way production of goods or

    services will be organized

    Major implications

    Operations Management: Concepts, Product, ProcessSlide 59 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Capacity planning Layout of facilities

    Equipment

    Design of work systems

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    Process StrategyProcess Strategy

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    Key aspects of process strategy

    Capital intensive equipment/labor

    Process flexibility

    Ad ust to chan es

    Operations Management: Concepts, Product, ProcessSlide 61 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Design

    Volume

    technology

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    Process SelectionProcess Selection

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    Variety

    How much

    Flexibility What degree

    Job Shop

    Batch

    Repetitive

    Operations Management: Concepts, Product, ProcessSlide 62 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Volume Expected output

    Continuous

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    Process TypesProcess Types

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    Job shop

    Small scale

    Batch

    Moderate volume

    Operations Management: Concepts, Product, ProcessSlide 63 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Repetitive/assembly line High volumes of standardized goods or services

    Continuous Very high volumes of non-discrete goods

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    ProductProduct Process MatrixProcess Matrix

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    Process Type

    Job Shop Appliance repairEmergency

    room

    Notfeasible

    Batch Commercialbakery

    Operations Management: Concepts, Product, ProcessSlide 64 of Unit 1MB-202 POM ~Gurdeepak 2011~

    assroom

    LectureRepetitive Automotive

    assembly

    Automaticcarwash

    Continuous(flow)

    Notfeasible

    Oil refineryWater purification

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    ProductProduct Process MatrixProcess Matrix

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    Dimension Job Shop Batch Repetitive Continuous

    Job variety Very High Moderate Low Very low

    Processflexibility

    Very High Moderate Low Very low

    Operations Management: Concepts, Product, ProcessSlide 65 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Unit cost Very High Moderate Low Very low

    Volume ofoutput

    Very Low Low High Very high

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    AutomationAutomation

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    Computer-aided design andmanufacturing systems (CAD/CAM)

    Numerically controlled (NC) machines

    Robot

    Operations Management: Concepts, Product, ProcessSlide 67 of Unit 1MB-202 POM ~Gurdeepak 2011~

    Manufacturing cell Flexible manufacturing systems(FMS)

    Computer-integrated manufacturing (CIM)

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    Operations Management: Concepts, Product, ProcessSlide 68 of Unit 1MB-202 POM ~Gurdeepak 2011~