Introduction to Production and Operation Management PDF

Introduction to Production and Operation Management 1.1 Introduction 1.2 Historical Evolution of Production and Operations Management 1.3 Concept of Production 1.4 Production System 1.5 Production Management 1.6 Operating System 1.7 Operations Management 1.8 Managing Global Operations 1.9 Scope of...

Introduction to Production and Operation Management 1.1 Introduction 1.2 Historical Evolution of Production and Operations Management 1.3 Concept of Production 1.4 Production System 1.5 Production Management 1.6 Operating System 1.7 Operations Management 1.8 Managing Global Operations 1.9 Scope of Production and Operation Management  Production is the process, which combines and transforms various resources into value added product/service in a controlled manner Transformation of a range of inputs into the required products or service having the requisite quality level  The set of interrelated management activities, which involves manufacturing certain product, is called Production Management. If the same concept is extended to services management, it is called Operations Management. Production is defined as “the step by step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user. “ Production is a value addition process. Every stage or processing adds value to the product. Production is defined as “a process which goods and services are created.“ The production system of an organization is that part, which produces products of an organization. It is that activity whereby resources, flowing within a defined system, are combined and transformed in a controlled manner to add value in accordance with the policies communicated by management. 1.4 Production System a. Production is an organized activity b. The system transforms the various inputs to useful outputs c. It does not operate in isolation from the other organization system d. There exists a feedback about the activities, which is essential to control and improve system performance.  Job Shop production system Batch production system Mass production system Continuous production system  Intermittent or Job Shop Production System Characterized by manufacturing of one or few quantity products designed and produced as per the specification of customers within prefixed time and cost. Intermittent or Job Shop Production System Distinguishing feature: Low volume and high variety of products Intermittent or Job Shop Production System Comprises of general purpose machines arranged into different departments. Each job demands unique technological requirements, demand processing on machines in a certain sequence. Intermittent or Job Shop Production System CHARACTERISTICS 1. High variety of products and low volume 2. Use of general purpose machines and facilities 3. Highly skilled operators who can take up each job challenge because of uniqueness 4. Large inventory of materials, tools, parts 5. Detailed planning is essential for sequencing the requirement of each product, capacities for each work center and order of priorities Intermittent or Job Shop Production System ADVANTAGES 1. Because of general purpose machines and facilities, variety of products can be produced 2. Operators will become more skills and competent, as each job gives them learning opportunities 3. Full potential of operators can be utilized 4. Opportunity exists for creative methods and innovative ideas Intermittent or Job Shop Production System LIMITATIONS 1. Higher cost due to frequent set-up changes 2. Higher level of inventory at all levels and hence higher inventory cost 3. Production planning is complicated 4. Larger space requirement  Batch Production System Defined as “a form of manufacturing in which the job passes through the functional departments in lots of batches and each lot may have a different routing.”  Batch Production System Characterized by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales.  Batch Production System CHARACTERISTICS 1. When there is shorter production runs 2. When plant and machinery are flexible 3. When plant and machinery set up is used for the production of item in a batch and change of set- up is required for processing the next batch 4. When manufacturing lead time and cost are lower as compared to job order production  Batch Production System ADVANTAGES 1. Better utilization of plant and machinery 2. Promotes functional specialization 3. Cost per unit is lower as compared to job order production 4. Lower investment in plant and machinery 5. Flexibility to accommodate and process number of products 6. Job satisfaction exists for operators  Batch Production System LIMITATIONS 1. Material handling is complex because of irregular and longer flows 2. Production planning and control is complex 3. Work in process inventory is higher compared to continuous production 4. Higher set up costs due to changes in set up  Mass Production System Manufacture of discrete parts or assemblies using continuous process  Mass Production System Justified by a very large volume of production  Mass Production System The machines are arranged in a line or production layout  Mass Production System Product and process standardization exists in all output follow the same path  Mass Production System CHARACTERISTICS 1. Standardization of product and process sequence 2. Dedicated special purpose machines having higher production capabilities and output rates 3. Large volume of production 4. Shorter cycle time of production 5. Lower in process inventory 6. Perfectly balanced production lines 7. Flow of material, components and parts is continuous and without backtracking 8. Production planning and control is easy 9. Material handling can be completely automatic  Mass Production System ADVANTAGES 1. Higher rate of production with reduced cycle time 2. Higher capacity utilisation due to line balancing 3. Less skilled operators are required 4. Low process inventory 5. Manufacturing cost per unit is low  Mass Production System LIMITATIONS 1. Breakdown of one machine will stop an entire production line 2. Layout needs major change with the changes in the product design 3. High investment in production facilities 4. The cycle time is determined by the slowest operation  Continuous Production System Production facilities are arranged as per sequence of production operations from the first operation to the finished product.  Continuous Production System The items are made through the sequence of operations through material handling devices such as conveyors, transfer devices, etc.  Continuous Production System CHARACTERISTICS 1. Dedicated plant and equipment with zero flexibility 2. Material handling is fully automated 3. Process flows are predetermined sequence operations 4. Component materials cannot be readily identified with final product 5. Planning and scheduling is a routine action  Continuous Production System ADVANTAGES 1. Standardization of product and process sequence 2. Higher rate of production with reduced cycle time 3. Higher capacity utilization due to line balancing 4. Manpower is not required for material handling as it is completely automatic 5. Person with limited skills can be used on production line 6. Unit cost is lower due to high volume of production  Continuous Production System LIMITATIONS 1. Flexibility to accommodate and process number of products does not exist 2. Very high investment for setting flow lines 3. Product differentiation is limited 1.5 Production Management  Production Management is a process of :  - Planning  - Organizing  -Directing  -Controlling the activities of the production function  It combines and transforms various resources used in the production subsystem of the organization into value added product in a controlled manner as per the policies of the organization.  1.5.1 Objectives  1. Right Quality  2. Right Quantity  3. Right Time  4. Right Manufacturing Cost Manufacture – derived from two Latin words, manus (hand) and factus (make); made by hand. (Technological definition)  The application of physical and chemical processes to alter geometry, properties, and/or appearance of a given starting material to make parts or products (Technological definition)  Involves assembly of multiple parts to make products (Technological definition)  The process to accomplish manufacturing involve a combination of machinery, tools, power, and labor (Technological definition)  Carried out as a sequence of operations, each operation brings the material closer to the desired final state. (Economical definition)  The transformation of materials into items of greater value by means of one or more processing and/or assembly operations. (Economical definition)  Adds value to the material by changing its shape or properties, or by combining it with other materials that have been similarly altered.  Primary Cultivate and exploit natural resources Industries such as agriculture and mining Secondary Take the output of the primary industries and convert them into consumer and capital goods Industries Includes manufacturing, construction and power utilities Tertiary Constitute the service sector of economy Industries  Products purchased directly by consumers Examples are cars, personal Consumer computers, TV, tires Goods Products purchased by companies to produce goods and/or provide services. Aircraft, medical apparatus, Capital trucks and buses, machine Goods tools, construction equipment PRODUCT QUANTITY AND VARIETY  PRODUCT QUANTITY  Product Quantity  Refers to the number of units produced annually of a particular product type  Low production  1 to 100 units per year  Medium Production  101 to 10,000 units per year  High production  10,001 to millions of unit per year  PRODUCT QUANTITY  often described as Job Shop Production system.  Low quantity of specialized and customized products  Products are typically complex.  PRODUCT QUANTITY  Usual approach is batch production  One product is made, after which manufacturing equipment is changed over to produce one batch and so on.  PRODUCT QUANTITY  With facilities for mass production or continuous production  Characterized by a high demand rate of product.  PRODUCT VARIETY  Product Variety  Refers to different product designs or types that are produced in the plant.  PRODUCT VARIETY  Product Variety  Soft product variety – only small differences among products, can be made on the same production line.  Hard product variety- the products differ substantially with few or no common parts.  PRODUCT VARIETY  Product Variety  Different products have different size and shapes , perform different functions, intended for different market, etc.  PRODUCT QUANTITY AND VARIETY  There is an inverse correlation between product variety and product quantity in terms of plant operations.  If plant’s product variety is high, then production quantity is likely to be low, and vice versa.