Production & Operations Management

• Production and operations management is a process that combines and transforms various resources.
• It's used in the production/operations subsystem of an organization into value-added product/services in a controlled manner.

Operation Management Topics:

• Scheduling
• Aggregate planning
• Inventory
• Forecasting
• Strategy
• Quality
• Quality tools
• Flows and Waiting Lines

Differences Between Production and Operations

• Production involves manufacturing a tangible product, while operations handles services.
• Production is used in a narrow sense, but operations is used in a broad sense
• Production applies to manufacturing organizations, like industries, while operations applies to non-manufacturing organizations, such as banks, insurance, agriculture, transportation, and warehousing.
• Production includes closing stock at the end of an accounting year; operations has nothing like closing stocks.
• Demand for products is regular, but demands for services fluctuate over time.

Evolution of Production and Operations Management

• For over two centuries, operations and production management are an important factor in a country's economic growth.
• Manufacturing management's traditional view began in the eighteenth century when Adam Smith recognized the economic benefits.
• Breaking jobs down into subtasks and recognizing workers to specialized tasks in which they would become highly skilled and efficient was recommended.
• In the early twentieth century, F.W. Taylor implemented Smith's work.

Historical Summary of Operational Management

• 1776: Adam Smith specialized labor in manufacturing.
• 1799: Eli Whitney, and others, introduced interchangeable parts and cost accounting.
• 1832: Charles Babbage divided labor by skill, assigning jobs by skill, and covering basics of time study.
• 1900: Frederick W. Taylor developed scientific management time study and work study for dividing planning and doing of work.
• 1900: Frank B. Gilbreth studied motion of jobs
• 1901: Henry L. Gantt created scheduling techniques for employees and machines jobs in manufacturing.
• 1915: F. W. Harris developed economic lot sizes for inventory control.
• 1927: Elton Mayo covered human relations with the Hawthorne studies
• 1931: Statistical inference applied to product quality by W. A. Shewart with quality control charts
• 1935: H. F. Dodge and H. G. Roming statistically sampled applied to quality control with inspection sampling plans
• 1940: P. M. Blacker and Others covered operations research applications in World War II
• 1946: John Mauchlly and J. P. Eckert created the Digital Computer
• 1947: G. B. Dantzig, William & others developed Linear Programming
• 1950: A. Charnes, W. W. Cooper & others implemented mathematical programming, on-linear and stochastic processes
• 1951: Sperry Univac created the commercial digital computer: large-scale computations available.
• 1960: L. Cummings, L. Porter covered organizational behavior: continued study of people at work
• 1970: W. Skinner J. Orlicky and G. Wright integrated operations into overall strategy and policy, along with computer applications to manufacturing, Scheduling and control, plus Material requirement planning (MRP).
• 1980: W. E. Deming and J. Juran added quality and productivity applications from Japan w/ robotics, CAD-CAM

Production Concept

• Production is the step-by-step conversion of material from one form into another via chemical or mechanical processes to create or enhance the utility of the product to the user.
• According to Edwood Buffa, production is a process by which goods and services are created.
• Examples of production include: manufacturing customized products like boilers with specific capacity, constructing flats, and standardized products like cars and buses.

Production System

• The production system is part of any organization.
• It is where resources flow, are combined, and converted in a controlled manner to increase value in accordance with the policies communicated by management
• Every production system has an objective.
• The system: transforms inputs into outputs, there is feedback which is essential.

Production Management

• Production management deals with decision-making related to production processes, resulting in goods or services produced according to specifications, in the demanded amount, and by the schedule.

Objectives of Production Management

• The objective is to provide goods services of right quality and quantity at the right time and right manufacturing cost.
  • Right Quality
  • Right Quantity
  • Right Time
  • Right Manufacturing Cost

Operating System

• This conversion is to satisfy customer wants and provide the customer utility.
• It operates in terms of the mission, technology, human, and managerial processes involved.
• Operations can be categorized into manufacturing and service operations.

Distribution Differences Between Manufacturing and Service Operations

• Nature of output (Tangible/Intangible)
• Consumption of output
• Nature of work (job)
• Degree of customer contact
• Customer participation in conversion
• Measurement of performance

Elements of Production Management

• Planning makes a course of action and future decision-making.
• Organizing establishes a structure of tasks and authority.
• Controlling assures actual performance to the expected performance.
• Behavior takes into account how efforts to plan, organize, and control affect human behavior.

Objective of operation management

• Has the objectives of operations management can be categorized into customer service and resource utilization.
• Customer service is to satisfy customer wants and a key objective of operations management
• The operating system must provide something to a specification which can satisfy the customer in terms of cost and timing

Scope of Production and Operations Management

• Conversion of inputs into outputs using physical resources, to provide the desired utilities to the customer.

Aspects

• Location of facilities
• Plant layouts and material handling
• Product design
• Process design
• Production and planning control
• Quality control
• Materials management
• Maintenance management

Aspects Explained

• Location of facilities: involves a long-term commitment about the geographically static factors that affect a business organization.
• Plant layout: refers to the physical arrangement of facilities.
• Product design: deals with conversion of ideas into reality and organization's survival.
• Process design: macroscopic decision-making about a process, converting raw material into finished goods, choice of technology, process flow analysis, and layout of facilities

Planning and Control

• Planning sets the production in advance
• Setting the exact route of each item
• Fixing the starting and finishing dates for each item
• Giving production orders to shops
• Follow up the progress of products according to orders

Other Controls

• Quality Control maintains a desired level of quality in a product or service, as a systematic control of various factors that affect product quality, to prevent defects.
• Material Management: concern for resources, acquisition, control and use of materials needed, along with flow of goods and services connected with the production
• Maintenance Management: with equipment and machinery ensures idleness or downtime becomes very expensive

Phases of Production and Operation

• Location selection
• Land acquisition
• Construction of building
• Procuring and installing machinery
• Purchasing and sorting raw materials and converting them to saleable products

Historical Developments

• Industrial Revolution
• Scientific management
• Human Relation Movement
• Operation Research
• Computers and advanced production technology
• Service Revolution

Strategies of Operation Management

• Design of goods and services
• Quality
• Design Process and capacity
• Site selection
• Design layout
• Human resources and design work
• Supply chain management
• Inventory
• Scheduling
• Maintenance

Factors of Production

• Land: includes overall natural resources.
• Labor: includes human capital and technology.
• Capital: Includes wages, fund, equipment, payment of interest, and present value of investment owners return.
• Entrepreneurship: includes ownership capital, profit, organizer, innovator, the willingness to take risks, producer and distributors, and return to entrepreneurship.