1. business and industrial
2. manufacturing

CLAUDETTE P.BENNETT
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Operation is that part of an organization, which is concerned with the
transformation of a range of inputs into services having the required
quality level.
Management is the process, which combines and transforms various
resources used in the operations of the organization into value added
services in a controlled manner as per the policies of the organization
Operations Management, according to Joseph G .Monks is the process
whereby resources, flowing within a defined system, are combined and
transformed by a controlled manner to add value in accordance with
policies communicated by management.
Management activities which are involved in manufacturing certain
products, is called production management and if it is services then the
management s is called as operations management.
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Prior to 1900
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Cottage industry produced custom-made goods.
Watt’s steam engine in 1785.
Whitney’s standardized gun parts in 1801.
Industrial Revolution began at mid-century.
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Scientific Management (Frederick W. Taylor)
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Other Management Pioneers
◦ Systematic approach to increasing worker productivity through time study,
standardization of work, and incentives.
◦ Viewed workers as an interchangeable asset.
◦ Frank and Lillian Gilbreth
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Motion study and industrial psychology
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Scheduling and the Gantt chart
◦ Henry L. Gantt
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Moving Assembly Line (1913)
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Hawthorne Studies
◦ Labor specialization reduced assembly time.
◦ Yielded unexpected results in the productivity of Western Electric plant workers after
changes in their production environment.
◦ Led to recognition of the importance of work design and employee motivation.
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Operations Research (Management Science)
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OM Emerges as a Field
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The Marriage of OM and IT
◦ Outgrowth of WWII needs for logistics control and weapons-systems
design.
◦ Seeks to obtain mathematically optimal (quantitative) solutions to complex
problems.
◦ 1950–1960, OM moved beyond industrial engineering and operations
research to the view of the production operation as a system.
◦ Integrated solutions approaches
 Business process reengineering
 Supply chain management
 Systems integration (SAP)
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Operations Management in Services
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Integration of Manufacturing and Services
◦ OM concepts can apply to both manufacturing and service operations.
◦ Conducting world class operations requires compatible manufacturing and
service operations.
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The primary goals of the organizations are
related market opportunities. Economy and
efficiency of conversion operations are the
secondary goals.
After assessing the potential within an industry
to its competitors. In doing so, priorities are
established among the following four
characteristics:
◦ Quality (product performance), Cost efficiency (low
product price), Dependability (reliable, timely delivery of
orders to customers), Flexibility (responding rapidly
with new products or changes in volume).
1. Strategic (long-range)
 Needs of customers (capacity planning)
2. Tactical (medium-range)
 Efficient scheduling of resources
3. Operational planning and control (short-range)
 Immediate tasks and activities
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The operation system includes both
manufacturing sector as well as service sector,
but when you use the word PM, you should be
careful to note that it refers to the manufacturing
sector but not the service sector.
An operation was defined in terms of the mission
for the organization, technology it employs and
the human and managerial processes it involves.
Operations in an organization can be categorized
into Manufacturing Operations and Service
operations.
Operations Management concern with the conversion of inputs into
outputs, using physical resources, so as to provide the desired
utilities to the customer while meeting the other organizational
objectives of effectiveness, efficiency and adoptability.
It distinguishes itself from other functions such as personnel,
marketing, finance, etc. by its primary concern for ‘conversion by
using physical resources’.
Production and Operations Management functions:
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Location of facilities.
Plant layouts and Material Handling.
Product Design.
Process Design.
Production and Planning Control.
Quality Control.
Materials Management.
Maintenance Management.
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Operational Management’s function focuses
on adding value through the transformational
process of converting inputs into outputs.
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Physical: manufacturing
Locational: transportation
Exchange: retailing
Storage: warehousing
Physiological: health care
Informational: telecommunications
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Production is defined as ‘the step-by-step conversion
of one form of material into another form.
Production function is ‘the part of an organization,
which is concerned with the transformation of a
range of inputs into the required outputs (products)
having the requisite quality level’.
Production management is ‘a process of planning,
organizing, directing and 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’.
Effective production and operations management can:
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Lower a firm’s costs of production.
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Boost the quality of its goods and services.
3.
Allow it to respond dependably to customer
demands.
4.
Enable it to renew itself by providing new products.
A production function can be expressed in a functional
form as the right side of Q= f (X1,X2,X3,…..Xn) where:
Q=quantity of output X1,X2,X3,…..Xn=quantities of
factor inputs (such as capital, labor, land or raw
materials).
The production managers have the prime
responsibility oversee the work of people and
machinery to convert inputs (materials and
resources) into finished goods and services.
• Four main tasks:
1. Planning the Production Process
2. Begins by choosing what goods or services to
offer customers.
3. Convert original product ideas into final
specifications.
4. Design the most efficient facilities to produce
those products.
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The objective of the production management is ‘to
produce goods and services of Right Quality and
Quantity at the Right time and Right manufacturing
cost’.
1. Right Quality: The quality of product is established
based upon the customers need.
2. Right Quantity: The manufacturing organization
should produce the products in right number.
Right Time: Timeliness of delivery is one of the
important parameter to judge the effectiveness of
production department.
Right Manufacturing Cost: Manufacturing costs are
established before the product is actually
manufactured.
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Job-Shop Production: manufacturing one or few quantity of
products designed and produced as per the specification of
customers within prefixed time and cost.
Batch Production: job pass through the functional departments in
lots or batches and each lot may have a different routing.
Mass Production: Manufacture of discrete parts or assemblies
using a continuous process are called Mass Production. This
production system is justified by very large volume.
Continuous Production: Production facilities are arranged as per
the sequence of production operations from the first operations
to the finished product. The items are made to flow through the
sequence of operations through material handling devices such
as conveyors, transfer devices, etc.
Managing Operations involves planning,
organizing, and controlling the activities, which
affect human behavior through models.
◦ Planning is the activity that establishes a course of
action and guide future decision-making.
◦ Organizing is the activities that establish a structure of
tasks and authority.
◦ Controlling is the activities that assure the actual
performance in accordance with planned performance.
Controlling costs, quality, and schedules are the
important functions here.
 1. Behavior: Operations managers are concerned with the
activities, which affect human behavior through models.
 2. Models: Models represents schematic representation of
the situation, which will be used as a tool for decisionmaking. Following are some of the models used.
Objectives of Operations Management can be categorized
into Customer Service and Resource Utilization.
◦ Customer Service - the satisfaction of customer wants.
◦ Resource Utilization - to utilize resources for the
satisfaction of customer wants effectively.
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Operations management is concerned essentially with the
utilization of resources, i.e. obtaining maximum effect
from resources or minimizing their loss, under utilization
or waste. Operations management is concerned with the
achievement of both satisfactory customer service and
resource utilization
The operations managers have the prime responsibility for
processing inputs into outputs. They must bring together
under production plan that effectively uses the materials,
capacity and knowledge available in the production facility.
Strategic planning is the process of thinking through the current mission of
the organization and the current environmental conditions facing it, then
setting forth a guide for tomorrow’s decisions and results.
Strategic planning is built on fundamental concepts: that current decisions
are based on future conditions and results.
 Strategic Planning for Production and Operations: - In the production or
operations function, strategic planning is the broad, overall planning
that precedes the more detailed operational planning.
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Strategic Planning Approaches for Production/Operations:- There are
many approaches to strategic planning. The key point is that operations
strategies must be consistent with the overall strategies of the firm.
Strategic Planning—Forced Choice Model: - This model forcing
management to develop strategic options for operations
A Strategic Planning Operations Model: - Concept is that manufacturing
strategy tries to link the policy decisions associated with operations to
the marketplace, the environment, and the company’s overall goals.
Productivity is defined in terms of utilization of resources, like material and
labor. Productivity is closely inked with quality, technology and profitability.
Hence, there is a strong stress on productivity improvement in competitive
business environment.
Productivity can be improved by (a) controlling inputs, (b) improving
process so that the same input yields higher output, and (c) by improvement
of technology. These aspects are discussed in more detail in the lesson on
Productivity Management.
Productivity Analysis:  Trend analysis: Studying productivity changes for the firm over a period
of time.
 2. Horizontal analysis: Studying productivity in comparison with other
firms of same size and
 engaged in similar business.
 3. Vertical analysis: Studying productivity in comparison with other
industries and other firms
 of different sizes in the same industry.
 4. Budgetary analysis: Setting up a norm for productivity for a future
period as budget, based
 on studies as above, and planning strategies to achieve it.
Reasons for changes in productivity.
 Capital/labor ratio: It is a measure of whether enough investment is being made in
plant, machinery, and tools to make effective use of labor hours.
 Scarcity of some resources: Resources such as energy, water and number of
metals will create productivity problems.
 Work-force changes: Change in work-force effect productivity to a larger extent,
because of the labor turnover.
 Innovations and technology: This is the major cause of increasing productivity.
 Regulatory effects: These impose substantial constraints on some firms, which
lead to change in productivity.
 Bargaining power: Bargaining power of organized labor to command wage
increases excess of output increases has had a detrimental effect on productivity.
 Managerial factors: Managerial factors are the ways an organization benefits from
the unique planning and managerial skills of its manager.
 Quality of work life: It is a term that describes the organizational culture, and the
extent to which it motivates and satisfies employees.
International dimension of productivity: to remain competitive in the business.
1. Moving to a new and more advanced products, and
2. Employing better and more flexible system.
Higher Standard of Living
–Ability to increase productivity
–Lower cost of goods and services
Better Quality Goods and Services
–Competition increases quality Improved Working
Conditions
–Better job design and employee participation
1. Define Operations management. Explain the key concepts of
Operations management
2. Distinguish between manufacturing and service operation with
example.
3. What is strategic planning? Explain the role of models in strategic
planning.
4. Define the term operations management. Briefly explain the strategic
role of operations.
5. Briefly explain how service producers differ from goods producers in
important aspects of their operations.
8. State the important objectives of production management.
9. Define the term productive system.
10. Explain the concept of productivity.
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3.
4.
5.
Everett, E. Adam, Jr.Ronald J.Ebert, Production and
Operations Management, Prentice-Hall of India
Private Limited, 5th Edition, 1994.
R. Pannerselvam, Production and Operations
Management, Prentice-Hall of India Private Limited,
9th print, 2004.
Joseph, G. Monks, Theory and Problems of
Operations Management, Tata McGraw-Hill
Publishing Company Limited, 2nd Edition, 2004.
Joseph, G. Monks, Operations Management,
McGraw-Hill International Edition, 3rd Edition.
S. Anil Kumar, N. Suresh, Production and Operations
Management, New Age International (P) Limited
Publishers, 2nd Edition, 2008.