Operations Management: True or False

• Industrial production is the economic sector's output, encompassing manufacturing, mining, electricity, gas, steam, and air conditioning.
• Industrial production measures manufacturing raw materials into finished products.
• Primarily measures total output of the industrial sector, especially manufacturing.
• It involves transforming raw materials through extraction, processing, assembly, and packaging.
• It gauges changes in factory, mine, and utility output, and capacity utilization reflecting their industrial capacity usage.
• It makes up a small portion of GDP, but closely follows interest rates and consumer demand
• It also is useful for forecasting GDP and economic performance.
• Banks use it to measure inflation, as high production can cause uncontrolled consumption and inflation.
• It is important because it forms a major part of the economy, along with agriculture and the service sector.
• Analyzing it helps track the industrial sector's output changes over the years.
• Manufacturing provides jobs for thousands of people.
• Increased industrial output indicates a stronger economy and sectors placing orders for durable goods.
• Despite being a portion of total output, it indicates GDP growth and economic performance, sensitive to consumer demand and interest rates.
• It allowed for mass production, improving living standards, playing a key role in global economic development.
• Most innovations and technological advancements originate in the manufacturing sector.

Factors of Production

• Inputs are needed by companies to develop goods and services so they can earn profits.
• Land is a key production factor, especially for industries like real estate. Technology companies depend less on land.
• Labor includes factory workers, managers, salespeople, and engineers.
• Compensation depends on skills; higher skills get paid more.
• Innovation, automation, and technology reduce the need for human labor.
• Capital includes cash, manufacturing plants, machinery, tools, and equipment.
• Capital availability impacts corporations' ability to invest and produce.
• Entrepreneurship is the factor of visionaries and innovators, who combine all factors to create products or services.
• Economists consider it integral to production.
• Entrepreneurial success relies on a business plan that outlines company operations, objectives, resource acquisition, personnel hiring, and financing.

Production/Operations Management

• It combines various organizational resources into value-added products/services under controlled policies.
• It transforms inputs into desired outputs (products/services) that meet quality standards.
• Production creates finished goods/services using land, labor, capital, entrepreneurship, and knowledge.
• Production management involves manufacturing-related activities.
• Operations management describes all activities managers do to help their firms create goods and services.
• Resources are the inputs of the production system and these include:
• Manpower involves direct and indirect labor.
• Machines and equipment are used in production and non-production activities.
• Materials are direct and indirect materials used in production.
• Methods, power, packaging, plants, and buildings are also important.
• Overseeing the production process involves managing people and machinery to convert materials/resources into finished goods/services.

Taylor's Principles of Production Management

• Development of science aims to improve the understanding of production.
• Scientific selection, placement, and training of workers enhances performance
• Division of labor separates work into smaller tasks and separates its thinking element from the producing element for greater efficiency.
• Standardization reduces time, labor, and production costs.
• Time and motion studies determine standard work and worker fatigue.
• Differential wage systems reward high production volume, motivating workers.
• Cooperation between labor and management fosters mutual respect
• Management by exception focuses top managers on handling only major deviations from standard production.
• Allotting a specific task to each person increases the production rate.

Production Management

• Transforms inputs (men, materials, capital) into finished products/services.

Five Recognized Factors of Production

• Men (labor or human efforts).
• Materials (organic or nature provided, inorganic or semi-manufactured).
• Machines (equipment, devices, jigs, tools, etc.).
• Mega structures (factory building, generator, etc.).
• Methods (technique, acquired know-how, guide sheet, etc.).

Scope of Industrial Production Management

• Focuses on land acquisition, building construction, machinery procurement/installation, and raw material conversion.
• It involves activities from plant location to product packing.
• Automation addresses labor wages, operator shortages, and human errors.
• Critical Managerial Decisions include:
• Selecting plant locations to minimize production/distribution costs
• Defining plant layout for desired material workflow at maximum speed and minimum cost

Production Planning and Control

• It considers the determination and regulation of production process and has different functions routing, scheduling dispatching, progress control, etc.
• Production research and development entails investigation into sciences to acquire new knowledge and understanding.
• Applies research explores the facts and information for the practical and actual problems in mind and thus aims in achieving immediate results to practical and actual problems
• Development comes after applied research and involves design and fabrication of new or modified products and then testing them to find the usability and applicability.
• Takes resources like raw materials, labor, capital, and equipment, and turns them into finished goods or services
• Involves factors of production to produce goods and services.

Steps include:

• Production Planning; thorough planning where the purpose and the goals of production is defined as well as how to achieve this are figured out.
• Production Routing; procurement of the necessary resources begins. The raw materials might need processing, finishing and to be checked for quality and distribution. These activities are also part of the routing step.
• Production Scheduling; timing of the job for production process and should have a start date and an end date.
• Production Dispatching; this stage marks the start of production from the provision of items, maintenance of records to the monitoring of planned workflows.
• Production Control; The stage where issues that took the production off track are identified and helps managers come up with plans to remedy those issues for the next production cycle

Production System

• The conceptual framework of a simplified production system where the inputs and outputs are connected through a series of operations or processes, storage and inspections.
• Includes inventory goal, the production goal, and the market goals.
• Business problems on which a plant or industrial undertaking unit has to take decisions are as follows:
• Resource allocation problems such as loading, routing and scheduling of men, materials and machines. Use quantitative tools such as linear programming methods.
• Queuing problems such as when to decide about material handling equipment required.
• The decision required on inventory problem is as regards the optimum level of stocks of raw inventories or finished products for an industrial unit to hold at a time.
• The plant or industrial unit has to decide the selling price of the products and the amount which it has to pay for materials and labor
• Investment problems involve decisions such as the amount of money to be spent on a new plant building and facilities, or to decide whether the machineries are to be purchased as new, or acquired as slightly used

Productivity

• The ratio between output and input such as land and building, equipment and machinery, material, labor, etc..

Factors Include:

• Product design
• Machinery and equipment
• The skill of the worker
• Production volume
• The trained and experienced worker can do the same job in a much shorter time and with far greater effectiveness that needs to be motivated to be productive

Types of Productivity Measures

• Labor productivity such as resource inputs are aggregated in terms of labor hours is relatively free of changes caused by wage rates and labor mix
• Direct labor productivity; The resource inputs are aggregated in terms of direct labor costs and reflects the effect of both wage rates and changes in the labor mix
• Capital productivity involves inputs being the charges during the period to depreciation or the inputs may be the book value of capital investment.
• All items of direct cost associated with resources used are aggregated on a monetary value basis.
• In this formulation the only resource considered is the amount of energy consumed.
• In this formulation, the numerators are usually weight of product; the denominators are the weight of raw material consumed. include the Statement of the objectives of the organization, list of the units of output of the organization, etc.

Determine Takt Time

• Is the rate at which operation, processes, parts, components, and must be run to meet the production goal

Fundamental Principles of the World Class Manufacturing

• Involvement of people as the key to change
• Understanding that it is new way of working
• Understanding that accident prevention is key
• Ensuring the customer's voice is heard throughout the organization
• Leadership ensuring respect for standards set via personal example and advocacy
• Ensuring that prescribed methods are applied with consistency and rigor
• Non-acceptance of forms of loss
• Ensuring visibility of faults
• Eliminating the cause and not just treating the effect

Assess your knowledge of operations management with this true or false quiz. Explore the concepts of capital goods, economic expansion, factors of production, and the scope of operations management. Test your understanding of business plans, resource transformation, and labor roles.