Operation Management anna university MBA 2 nd semester

Second semester OM notes

1. Operations management UNIT 1

2. Meaning Operations management involves planning, organizing, and supervising processes, and make necessary improvements for higher profitability.  Historical background Operations management was previously called production management, clearly showing its origins in manufacturing. Historically, it all began with the division of production, starting as early as the times of ancient craftsmen, but spreading more widely only by adding the concept of  interchangeability of parts  in the eighteenth century, ultimately sparking the  industrial revolution .

3. Still, it was not until Henry Ford took a twist on manufacturing with his famous assembly line concept, otherwise known as “bring work to men,” that the management of production for improving productivity became a hot topic. From the 1950’s and 1960’s, it formed a separate discipline, besides bringing other concepts, such as Taylorism, production planning, or inventory control, to life.

4. Required skills The skills required to perform such work are as diverse as the function itself. The most important skills are: Organizational abilities.  Organizing processes in an organization requires a set of skills from planning and prioritizing through execution to monitoring. These abilities together help the manager achieve productivity and efficiency. Analytic capabilities/understanding of process.  The capability to understand processes in your area often includes a broad understanding of other functions, too. An attention to detail is often helpful to go deeper in the analysis. Coordination of processes.  Once processes are analyzed and understood, they can be optimized for maximum efficiency. Quick decision-making is a real advantage here, as well as a clear focus problem-solving.

5. People skills.  Flaws in the interactions with employees or member of senior management can seriously harm productivity, so an operation manager has to have people skills to properly navigate the fine lines with their colleagues. Furthermore, clear communication of the tasks and goals serves as great motivation and to give a purpose for everyone. Creativity.  Again, problem-solving skills are essential for a creative approach if things don’t go in the right direction. When they do, creativity helps find new ways to improve corporate performance. Tech-savviness.  In order to understand and design processes in a time when operations are getting increasingly technology-dependent, affinity for technology is a skill that can’t be underestimated.

6. Nature of Operation Management Dynamic-  Operations management is dynamic in nature. It keeps on changing as per market trends and demands. Transformational Process – Operation management is the management of activities concerned with the conversion of raw materials into finished products. Continuous Process – Operation management is a continuous process. It is employed by organizations for managing its activities as long as they continue their operations.     

7. Administration – Operation management administers and controls all activities of the organization. It ensures that all activities are going efficiently and there is no underutilization or mis-utilization of any resource. Nature of Production/Operations The nature of production or operations can be better understood by viewing the manufacturing function as : (I) Production/operations as a system, (ii) Production/operations as an organizational function (iii) Production/operations as a conversion or transformation process and (iv) Production/operations as a means of creating utility.

8. Importance of Operations Management

9. Helps in achievement of objectives:  Operations management has   an effective role in the achievement of pre-determined objectives of an organization. Improves Employee productivity:  Operation management improves the productivity of employees. Enhance Goodwill : Operation management helps in improving the goodwill and presence of the organization. Optimum utilization of resources : Operation management focuses on optimum utilization of all resources of the organization. Motivates  Employees :  Operation management helps in motivating the employees towards their roles.

10. Historical DEVELOPMENT Operations management was previously called production management, clearly showing its origins in manufacturing. Historically, it all began with the division of production, starting as early as the times of ancient craftsmen, but spreading more widely only by adding the concept of  interchangeability of parts  in the eighteenth century, ultimately sparking the  industrial revolution .

11. Still, it was not until Henry Ford took a twist on manufacturing with his famous assembly line concept, otherwise known as “bring work to men,” that the management of production for improving productivity became a hot topic. From the 1950’s and 1960’s, it formed a separate discipline, besides bringing other concepts, such as Taylorism, production planning, or inventory control, to life.

12. Historical DEVELOPMENT As the economies in the developed world were gradually shifting to be service-based, all the corporate functions, including product management, started to integrate them. The service side also began its approach by applying product management principles to the planning and organizing of processes, to the point where it made more sense to call it operations management.

13. RECENT TRENDS IN OPERATIONS MANAGEMENT The ever-shrinking product lifecycles, the new trends on the labour market, the environmental concerns, and the digitalization of the processes require innovative approaches to operations management. Some of the trends that have a significant impact on the discipline today are : .

14. Business Process Reengineering (BPR) It’s  a radical approach   to designing core processes: take everything that you used before, discard it, and then start again from scratch. With  Business Process Reengineering , you can foster innovation and improve any selected measures dramatically. If you want to do it well, focus on how you can add more value to the customer. Lean and agile manufacturing Established by the Toyota Corporation, the term lean manufacturing has become a mainstream trend in the industry, and it is used interchangeable with  Just-In-Time production . The concept behind is a constant improvement of processes in order to reduce waste and inventory, and maximize the output of high-quality, low-cost products and services.

15. Six Sigma Improving processes using a data-driven approach is an innovation of Motorola from mid-1980. It’s still among the trends of impact because it is a quality-improvement and cost-reducing method that focuses on customer satisfaction.   Reconfigurable manufacturing system (RMS) Another possible method for reacting to quick changes in the market is RMS, a production system that can be used with different functionalities within a product family.

16. Employee involvement A recent trend that impacts the human resources management activities in operations is the  increasing involvement of employees in the planning processes . Sustainability Due to the ever constraining environmental regulations,   businesses must operate under pressure  to reduce their harmful impact while still being able to grow . Behavioural operations management This trending research area studies the impact of human behaviour, especially non-rational decision-making, on the discipline.  

17. Finance-  Finance plays a main function in  operations management . Operation – The function of operation management is basically concerned with  planning , organizing,  directing  and controlling of daily routine operations of an organization. Strategy – The strategy formulation is also the main function of operation management . Product Design –  It is the duty of operations manager to design the product according to the market trends and demands. Product Design –  It is the duty of operations manager to design the product according to the market trends and demands.

18. Transformation Processes in Operations Management The transformation process in  operations management   is all about converting inputs into outputs. This can be done either through manufacturing or service processes. The inputs for the transformation process in operations management are typically raw materials, while the outputs are finished products. There are several steps involved in the transformation process in operations management:  Inputs are received from suppliers.  Materials are stored until they are needed.  Production planning determines the order in which materials will be processed. 

19. Workers convert materials into finished products.  Products are inspected and tested to ensure quality.  Finished products are shipped to customers. Materials are moved to production areas. 

20. Types of Transformation Processes in Operations Management

21. Definition of Goods Goods refer to the tangible consumable products, articles, commodities that are offered by the companies to the customers in exchange for money. They are the items that have physical characteristics, i.e. shape, appearance, size, weight, etc Example : Books, pen, bottles, bags, etc. Definition of Services Services are the intangible economic product that is provided by a person on the other person’s demand. It is an activity carried out for someone else. They can only be delivered at a particular moment .

22. BASIS FOR COMPARISON GOODS SERVICES Meaning Goods are the material items that can be seen, touched or felt and are ready for sale to the customers. Services are amenities, facilities, benefits or help provided by other people. Nature Tangible Intangible Transfer of ownership Yes No Evaluation Very simple and easy Complicated Return Goods can be returned. Services cannot be returned back once they are provided. Comparison Chart

23. Separable Yes, goods can be separated from the seller. No, services cannot be separated from the service provider. Variability Identical Diversified Storage Goods can be stored for use in future or multiple use. Services cannot be stored. Production and Consumption There is a time lag between production and consumption of goods. Production and Consumption of services occurs simultaneously.

24. Content: Goods Vs Services Comparison Chart Definition Key Differences Conclusion SYSTEM IN OPERATION MANAGEMENT: A system is group of interrelated items in which no item studied in isolation will act in the same way as it would in the system.

25. 12 common management challenges Here are some of the most common challenges managers face and how to overcome them: Decreased performance levels Being understaffed Lack of communication Poor teamwork Pressure to perform Absence of structure Time management Inadequate support Skepticism Difficult employees Transition from coworker to manager Weak workplace culture

26. 5 Types of Operations Strategies Businesses employ different types of operations strategies based on their specific market needs. 1.  Core competency strategies : Core competency operations strategies revolve around the main strengths of a company’s business model. 2.  Corporate strategies : This type of operations strategy adheres to a company’s mission statement and aligns itself to a larger corporate strategy. 3.  Competitive strategies : Companies using this type of strategy develop their operations processes in order to distinguish their product or service from competitors. 4.  Product or service strategies : This type of operations strategy revolves around the quality control of existing products or services as well as the development of new products and services. 5.  Customer-driven strategies : Organizations using customer-driven strategies make operations decisions based on the customer experience.

27. O perational framework An operational framework is a guide to a company's policies, goals, standards, procedures and training.

28. Supply chain management Supply chain management is the handling of the entire production flow of a good or service — starting from the raw components all the way to delivering the final product to the consumer. 

29. UNIT II FORCASTING,CAPACITY AND FACILITY DESIGN MEANING OF DEMAND FORCASTING : Demand forecasting  is a process of predicting the demand for an organisation’s products or services in a specified time period in the future. Demand forecasting is helpful for both new as well as existing organizations in the market.

30. Concept of Demand Forecasting In order to mitigate risks, it is of paramount importance for organisations to determine the future prospects of their products and services in the market. This knowledge of the future demand for a product or service in the market is gained through the process of demand forecasting. Demand forecasting  can be defined as a process of predicting the future demand for an organisation’s goods or services. It is also referred to as  sales forecasting  as it involves anticipating the future sales figures of an organisation. Demand Forecasting Definition Demand forecasting is an estimate of sales during a specified future period based on proposed  marketing plan  and a set of particular uncontrollable and competitive forces.Cundiff and Still

31. Components of Demand Forecasting Let us discuss the basis  components of demand forecasting  in detail: Level of forecasting Time period involved Nature of products

32. Level of forecasting Demand forecasting can be done at the firm level, industry level, or economy level. At the firm level, the demand is forecasted for the products and services of an individual organisation in the future. Time period involved On the basis of the duration, demand is forecasted in the short run and long term, which is explained as follows: Short-term forecasting:  It involves anticipating demand for a period not exceeding one year. It is focused on the shortterm decisions Long-term forecasting:  It involves predicting demand for a period of 5-7 years and may extend for a period of 10 to 20 years.

33. Nature of products Products can be categorised into consumer goods or capital goods on the basis of their nature. Demand forecasting differs for these two types of products, which is discussed as follows: Consumer goods:  The goods that are meant for final consumption by end users are called consumer goods. Capital goods:  These goods are required to produce consumer goods; for example, raw material.

34. Importance of Demand Forecasting: Importance of Demand forecasting  are: Producing the desired output Assessing the probable demand Forecasting sales figures Better control Controlling inventory Assessing manpower requirement Ensuring stability Planning import and export policies

35. Producing the desired output: Demand forecasting enables an organisation to produce the pre-determined output. It also helps the organisation to arrange for the various factors of production Assessing the probable demand: Demand forecasting enables an organisation to assess the possible demand for its products and services in a given period and plan production accordingly. In this way, demand forecasting avoids dependence on merely making assumptions for demand. Forecasting sales figures: Sales forecasting refers to the estimation of sales figures of an organisation for a given period. Demand forecasting helps in predicting the sales figures by considering historical sales data and current trends in the market.

36. Better control: In order to have better control on business activities, it is important to have a proper understanding of cost budgets, profit analysis, which can be achieved through demand forecasting. Controlling inventory: As discussed earlier, demand forecasting helps in estimating the future demand for an organisation’s products or services. This, in turn, helps the organisation to accurately assess its requirement for raw material, semi-finished goods, spare parts, etc. Assessing manpower requirement: Demand forecasting helps inaccurate estimation of the manpower required to produce the desired output, thereby avoiding the situations of under-employment or over-employment..

37. Ensuring stability: Demand forecasting helps an organisation to stabilise their operations by initiating the development of suitable business policies to meet cyclical and seasonal fluctuations of an economy. Planning import and export policies: At the macro level, demand forecasting serves as an effective tool for the government in determining the import and export policies for the nation. It helps in assessing whether import is required to meet the possible deficit in domestic supply

38. Factors Influencing Demand Forecasting There are a number of factors that affect the process of demand forecasting. Figure lists down various factors influencing demand forecasting: Prevailing Economic Conditions Existing conditions of the Industry Existing Condition of an Organization Prevailing Market Conditions Psychological Conditions Competitive Conditions Import – Export policies

39. Prevailing Economic Conditions Demand forecasting can be affected by the changing price levels, national and per capita income, consumption pattern of consumers, saving and investment practices, employment level, etc. of an economy. Existing conditions of the Industry The assessment of demand for an organisation’s products and services is also affected by the overall conditions of the industry in which the organisation operates. Existing Condition of an Organization Apart from industry conditions, the internal state of an organisation also affects demand forecasting. Within the organisation, demand forecasting is affected by various factors, such as plant capacity, product quality, product price, advertising and distribution policies, financial policies, etc.

40. Prevailing Market Conditions in market conditions, such as change in the prices of goods; change in consumers’ expectations, tastes and preferences; change in the prices of related goods; and change in the income level of consumers also influence the demand for an organisation’s products and services. Psychological Conditions Psychological factors, such as changes in consumer attitude, habits, fashion, lifestyle, perception, cultural and religious beliefs, etc. affect demand forecast of an organisation to a large extent. Competitive Conditions A market consists of several organisations offering similar products. This gives rise to competition in the market, which affects demand forecasted by organisations. Import – Export policies The demand for export-import goods gets directly affected by changes in factors, such as import and export control, terms and conditions of import and export, import/export policies, import/export conditions, etc.

41. Steps in Demand Forecasting: To achieve the desired results, it is important that demand forecasting is done systematically. Demand forecasting involves a number of steps, which are shown in Figure: Specifying the objective Determining the time perspective Selecting the method for forecasting Collecting and analysing data Interpreting outcomes

42. Specifying the objective The purpose of demand forecasting needs to be specified before starting the process. The objective can be specified on the following basis: Short-term or long-term demand for a product Industry demand or demand specific to an organisation Whole market demand or demand specific to a market segment Determining the time perspective Depending on the objective, the demand can be forecasted for a short period (2-3 years) or long period (beyond 10 years).  

43. Selecting the method for forecasting There are various methods of demand forecasting, which have been discussed later in the chapter. However, not all methods are suitable for all types of demand forecasting. Collecting and analysing data After selecting the demand forecasting method, the data needs to be collected. Data can be gathered either from primary sources or secondary sources or both. Interpreting outcomes After the data is analysed, it is used to estimate demand for the predetermined years. Generally, the results obtained are in the form of equations, which need to be presented in a comprehensible format.

44. Limitations of Demand Forecasting Limitations of Demand Forecasting are: Lack of historical sales data Unrealistic assumptions Cost incurred Change in fashion Lack of expertise Psychological factors

45. Lack of historical sales data Past sales figures may not always be available with an organisation. For example, in case of a new commodity, there is unavailability of historical sales data. In such cases, new data is required to be collected for demand forecasting, which can be cumbersome and challenging for an organisation. Unrealistic assumptions Demand forecasting is based on various assumptions, which may not always be consistent with the present market conditions. In such a case, relying on these assumptions may produce incorrect forecasts for the future. Cost incurred Demand forecasting incurs different costs for an organisation, such as implementation cost, labour cost, and administrative cost. These costs may be very high depending on the complexity of the forecasting method selected and the resources utilised. Owing to limited means, it becomes difficult for new startups and small-scale organisations to perform demand forecasting. Change in fashion Consumers’ tastes and preferences continue to change with a change in fashion. This limits the use of demand forecasting as it is generally based on historical trend analysis.

46. Lack of expertise Demand forecasting requires effective skills, knowledge and experience of personnel making forecasts. In the absence of trained experts, demand forecasting becomes a challenge for an organisation. This is because if the responsibility of demand forecasting is assigned to untrained personnel, it could bring huge losses to the organisation. Psychological factors Consumers usually prefer a particular type of product over others. However, factors, such as fear of war and changes in economic policy, could affect consumers’ psychology. In such cases, the outcomes of forecasting may no longer remain relevant for the time period.

47. Meaning of Quality Quality is what we should aim for if we want to have returning customers and a strong brand as a company. Quality means to me a pursuit of perfection .  Meaning of Quantity Quantity is a standard of measurement to determine the amount or number of items present. Qualitative Forecasting Qualitative forecasting can help a company make predictions about their financial standing based on opinions in the company. 

48. Q ualitative forecasting methods Delphi method The Delphi method involves questioning a panel of experts individually to collect their opinions. Jury of executive opinion This approach relies on judgments from experts in sales, finance, purchasing, administration or production teams. Market research Market research evaluates the success of a company's services or products by introducing them to potential customers and recording details about how they react. Consumer surveys Consumer surveys ask customers of a business about their experience as a consumer. Sales force polling Sales force polling involves speaking with sales staff who work closely with customers and might have thorough information about their satisfaction and experiences with the company.

49. Quantitative forecasting Quantitative forecasting is a data-based mathematical process that sales teams use to understand performance and predict future revenue based on historical data and patterns. Naive Forecast The naive method is a straightforward technique that assumes you will continue to perform as you have in the past. Seasonal Forecasting Seasonal forecasting, also called seasonal indexing, uses historical seasonal data to predict what the same future seasons would look like. Seasonal Forecasting Seasonal forecasting, also called seasonal indexing, uses historical seasonal data to predict what the same future seasons would look like.

50. Historical Growth Rate The historical growth rate is used to understand your business’ growth rate over time by comparing a specific metric, like revenue totals or closed deals.   Linear Regression Linear regression is the most detailed forecast on this list, as it requires in-depth analysis.

51. Capacity Planning Types of capacity planning Capacity planning determines the production capacity needed by an organisation to meet changing demands for its products or services. The purpose of capacity planning is to ensure that the necessary resources are available when they are needed. Capacity planning is a process that helps operations managers determine the capacity of their resources and plan for future growth.

52. Benefits of Project Capacity Planning Improved resource utilisation :  By understanding the resources required to complete a project, organisations can better utilise their resources and avoid over- or under-utilisation . Increased efficiency:  Capacity planning can help identify potential bottlenecks and capacity constraints within the organisation , leading to increased efficiency. Better project planning:  With capacity planning, organisations can better plan for future projects by understanding the resources and time required to complete the project.

53. Sales and operations planning (S&OP) It is an integrated business management process through which the executive/leadership team continually achieves focus, alignment, and synchronization among all organization functions.

54. Material Requirements Planning (MRP) Material Requirements Planning (MRP) is a standard supply planning system to help businesses, primarily product-based manufacturers, understand inventory requirements while balancing supply and demand. Businesses use MRP systems, which are subsets of supply chain management systems, to efficiently manage inventory, schedule production and deliver the right product—on time and at optimal cost. https://youtu.be/eoLSZh35_LY MRP important MRP gives businesses visibility into the inventory requirements needed to meet demand, helping your business optimize inventory levels and production schedules. Without this insight, companies have limited visibility and responsiveness, which can lead to: Ordering too much inventory, which increases carrying costs and ties up more cash in inventory overhead that could be used elsewhere.

55. MRP 2 which stands for Manufacturing Resource Planning, is an advanced version of Material Requirements Planning (MRP) in the field of operations management. MRP2 expands the scope of MRP beyond material planning and incorporates other resources like labor, machinery, and financials to optimize production processes. Here is an overview of MRP2 and its key components: Material Planning: MRP2 helps in determining the material requirements for production based on the master production schedule, taking into account factors such as lead times, safety stock, and order quantities. It considers the availability of raw materials, components, and sub-assemblies, ensuring that they are procured in a timely manner to meet production demands.

56. Capacity Planning: MRP2 considers the availability and utilization of resources, including labor, machines, equipment, and facilities. By integrating capacity data, it ensures that production schedules align with the available resources, preventing overloading or underutilization of capacity. Capacity planning helps optimize production efficiency, minimize bottlenecks, and balance workloads. Production Scheduling: MRP2 generates detailed production schedules based on the material and capacity plans. It determines the start and end dates for each production order, considering the availability of resources, lead times, and priorities. The schedules provide a structured plan for executing production activities, enabling efficient coordination and utilization of resources. Shop Floor Control: MRP2 facilitates real-time monitoring and control of production operations on the shop floor. It tracks the progress of each production order, updates inventory levels, and provides visibility into work-in-progress. Shop floor control allows supervisors to manage production activities, handle exceptions or delays, and make necessary adjustments to ensure timely completion of orders.

57. Financial Integration: MRP2 integrates financial aspects into the production planning process. It considers cost factors such as material costs, labor costs, overhead expenses, and inventory carrying costs. By analyzing the financial implications of production decisions, MRP2 helps in optimizing costs, improving profitability, and making informed business decisions. Demand Management: MRP2 incorporates demand forecasting and management to ensure that production plans align with customer demand. By analyzing historical data and market trends, it helps in predicting future demand and adjusting production schedules accordingly. This minimizes stockouts, reduces excess inventory, and enhances customer satisfaction. Data Integration: MRP2 relies on accurate and up-to-date data from various departments within the organization, such as sales, procurement, inventory, and production. It integrates this data to provide a holistic view of operations, enabling effective planning and decision-making. Data integration enhances coordination and collaboration among different functions, fostering a more streamlined and efficient production process.

58. Overall, MRP2 plays a crucial role in optimizing production planning and control, resource utilization, and cost management within manufacturing organizations. By integrating material, capacity, and financial planning, it helps organizations achieve greater operational efficiency, improved customer service, and increased profitability.

59. Enterprise Resource Planning (ERP) It is a management system that integrates various aspects of a business's operations, including manufacturing, supply chain, finance, human resources, and customer relationship management. ERP in operation management refers to the use of ERP software and practices to optimize and streamline operations within an organization. Here are some key areas where ERP plays a significant role in operation management: Resource Planning: ERP systems help organizations plan and allocate their resources effectively. This includes managing inventory levels, production capacity, and scheduling resources such as labor and equipment to meet customer demands efficiently. Supply Chain Management: ERP systems enable organizations to manage their supply chain more effectively by integrating various functions such as procurement, inventory management, and logistics. It allows real-time visibility into the supply chain, optimizing inventory levels, improving supplier collaboration, and reducing lead times. Production Planning and Control: ERP systems provide tools for production planning, capacity management, and scheduling. It helps in coordinating activities across different departments, monitoring production progress, and ensuring timely delivery of products or services. Quality Management: ERP systems can incorporate quality management modules to track and manage quality-related processes. This includes managing quality control, inspection, and corrective actions, ensuring adherence to standards and regulations, and facilitating continuous improvement efforts.

60. Maintenance and Asset Management: ERP systems can include modules for managing equipment maintenance and asset lifecycles. This helps in scheduling preventive maintenance, tracking repairs and maintenance activities, managing spare parts inventory, and optimizing asset utilization. Data Analysis and Reporting: ERP systems gather data from various operational processes, providing organizations with a comprehensive view of their operations. This data can be used for analysis and reporting, enabling informed decision-making and identifying areas for improvement. Integration and Collaboration: ERP systems facilitate integration between different departments and functions within an organization. This promotes collaboration, information sharing, and process standardization, leading to improved efficiency and coordination. By implementing an ERP system in operation management, organizations can achieve several benefits, including streamlined processes, improved productivity, better resource utilization, reduced costs, enhanced customer service, and increased overall operational efficiency. However, successful implementation requires careful planning, strong change management strategies, and alignment with organizational goals and objectives.

61. Facility location It is a critical decision in operations management that involves determining the optimal location for a facility, such as a manufacturing plant, distribution center, or service facility. The location of a facility can significantly impact its overall performance and success. When making facility location decisions, several factors need to be considered: Proximity to customers: It is essential to locate the facility close to the target market or customer base to reduce transportation costs and provide faster delivery times. Understanding customer demand patterns and distribution channels is crucial for choosing the right location. Access to suppliers: Facilities should be located in proximity to suppliers to minimize transportation costs, reduce lead times, and ensure a smooth supply chain. This consideration is particularly important for industries with high dependence on raw materials or just-in-time inventory management. Labor availability and cost: The availability of skilled labor and its cost are important factors. Facilities should be located in areas where there is an adequate supply of qualified workers and where labor costs are competitive. Labor market conditions, including wage rates, skills, and workforce demographics, should be analyzed.

62. Risk and resilience: Assessing risks and vulnerabilities is crucial to ensure business continuity. Factors like natural disasters, political stability, security concerns, and proximity to critical infrastructure should be evaluated to mitigate potential risks and enhance the resilience of the facility. Cost considerations : Various cost factors, including real estate costs, construction costs, taxes, utilities, and operational expenses, should be evaluated. Analyzing the total cost of ownership, including both fixed and variable costs, is essential to make informed decisions. Competitive factors: Analyzing the location decisions of competitors and understanding their strategies can provide insights into competitive advantages or disadvantages. Choosing a location that offers a competitive edge, such as access to unique resources or skilled labor, can be advantageous. Infrastructure and transportation: Adequate infrastructure, such as transportation networks, utilities, and telecommunication services, is crucial. Access to highways, railroads, airports, and ports can significantly impact the flow of inputs and outputs. Proximity to major transportation routes and hubs can reduce transportation costs and improve responsiveness. Legal and regulatory factors: Different regions or countries have varying legal and regulatory environments. Factors such as tax policies, zoning restrictions, environmental regulations, and government incentives can influence facility location decisions. It is important to understand and comply with applicable laws and regulations.

63. To make an informed facility location decision, operations managers often employ quantitative techniques like location analysis models, which involve mathematical optimization and simulation. These models consider multiple factors simultaneously to identify the best location based on predefined objectives or criteria, such as cost minimization, service level maximization, or market share capture. It is important to note that facility location decisions are strategic and have long-term implications. Once a facility is established, relocating can be costly and disruptive. Therefore, careful analysis and consideration of the factors mentioned above are crucial to ensure the success and efficiency of the facility in the long run.

64. Theories Operations management is a field that focuses on the efficient and effective management of business operations, processes, and resources. There are several theories and concepts that have been developed to help organizations improve their operational performance. Here are some prominent theories in operations management: Scientific Management: Scientific management, developed by Frederick Taylor, emphasizes the scientific analysis of work processes to increase efficiency. It involves breaking down tasks into smaller, standardized elements and optimizing workflows to enhance productivity. Lean Manufacturing: Lean manufacturing, derived from the Toyota Production System, aims to eliminate waste and improve overall efficiency. It emphasizes continuous improvement, just-in-time production, and a focus on value-added activities. Total Quality Management (TQM): TQM is a management approach that focuses on achieving customer satisfaction through continuous improvement and involving all members of an organization. It emphasizes quality control, employee empowerment, and a customer-centric mindset. Six Sigma: Six Sigma is a data-driven methodology that aims to minimize defects and variation in processes. It utilizes statistical analysis and measurement techniques to improve quality, reduce costs, and increase customer satisfaction. Theory of Constraints (TOC): TOC is a management philosophy that identifies the most critical limiting factor (the constraint) that hinders the organization's ability to achieve its goals. It emphasizes identifying and resolving constraints to improve overall system performance.

65. Business Process Reengineering (BPR): BPR involves the radical redesign of business processes to achieve significant improvements in performance, efficiency, and customer satisfaction. It focuses on eliminating non-value-added activities and streamlining workflows. Supply Chain Management (SCM): SCM involves the coordination and integration of various activities and processes within the supply chain to optimize the flow of goods, services, and information. It emphasizes collaboration, efficiency, and responsiveness. Just-in-Time (JIT): JIT is an inventory management approach that aims to minimize inventory levels by receiving materials and producing goods just in time for customer demand. It reduces waste, inventory costs, and lead times. Capacity Planning: Capacity planning involves determining the optimal capacity level of resources (e.g., facilities, equipment, labor) to meet current and future demand effectively. It ensures that an organization has the right resources available at the right time. These are just a few examples of theories and concepts in operations management. Each theory has its own principles and techniques, and organizations may choose to adopt and adapt them based on their specific needs and circumstances

66. Location models in operations management It refer to mathematical models and techniques used to determine the optimal location for facilities, such as factories, warehouses, distribution centers, or service centers, within a supply chain network. These models help organizations make strategic decisions regarding the placement of facilities to minimize costs, maximize efficiency, and meet customer demand effectively. Here are some commonly used location models in operations management: Center of Gravity Model: This model determines the location that minimizes the total transportation costs within a supply chain network. It calculates the center of gravity based on the coordinates and volumes of demand points and supply points. Factor Rating Model: The factor rating model involves assigning scores to various location factors, such as labor costs, transportation costs, proximity to suppliers and customers, availability of resources, and government regulations. These scores are weighted based on their importance, and potential locations are evaluated based on the total score to select the optimal location. Network Optimization Models: These models consider the entire supply chain network, including suppliers, production facilities, distribution centers, and customer locations. They optimize the location decisions by considering factors such as transportation costs, capacity constraints, service levels, and demand variability.

67. Integer Programming Models: Integer programming models formulate location decisions as optimization problems with constraints. These models consider factors such as fixed costs, transportation costs, production capacities, and demand volumes. The objective is to minimize the total costs or maximize the overall profitability. Heuristic and Simulation Models: Heuristic models use rules of thumb or approximation algorithms to find reasonably good solutions to location problems. Simulation models involve creating a virtual environment to simulate different location scenarios and evaluate their performance based on predefined metrics. Geographic Information System (GIS) Models: GIS-based models incorporate geographical data to analyze various location factors. These models consider spatial relationships, accessibility, demographic information, and other geographic attributes to determine optimal facility locations. These location models help organizations in making informed decisions by considering multiple factors and quantitatively evaluating the trade-offs associated with different location choices. By optimizing facility placement, companies can enhance their supply chain efficiency, reduce costs, and improve customer service levels.

68. There are four main types of facility layouts: process, product, fixed-position, and cellular.

69. Figure 2. An Example of a Product Facility Layout. Source: Adapted from Operations Management, 9th edition, by Gaither/Frazier.

70. Figure 1. An Example of a Process Facility Layout. Source: Adapted from Operations Management, 9th edition, by Gaither/Frazier.

71. Figure 3. An Example of a Fixed-Position Facility Layout. Source: Adapted from Operations Management, 9th edition, by Gaither/Frazier.

72. The definition of product design describes the process of imagining, creating, and iterating products that solve users’ problems or address specific needs in a given market.

73. Factors Influencing Product Design

74. Approaches to Production and Operation Management   The  Approaches to Production and Operation Management  is the management of conversion of input to desired output. The responsible executive for managing that conversion process is designated as production/operation manager or works manager. 

75. Definition of Work Study: “Work study is a generic term for those techniques, particularly method study and work measurement, which are used in all its context and which lead systematically to the investigation of all the factors, which effect the efficiency and economy of the situation being reviewed in order to effect improvement.” Objectives of Work Study: The following are the objectives of work study: 1. Increased efficiency, 2. Better product quality, 3. To choose the fastest method to do a job, 4. To improve the working process, 5. Less fatigue to operators and workers, 6. Effective labour control,

76. 7. Effective utilisation of resources, 8. To decide equipment requirements, 9. To pay fair wages, 10. To aid in calculating exact delivery, 11. To formulate realistic labour budgeting, and 12. To decide the required manpower to do a job.

77. Meaning and Definition of Work Measurement: Work measurement is concerned with the determination of the amount of time required to perform a unit of work. Definition of Work Measurement: “The application of techniques designed to establish the time for a qualified worker to carry out a specified job at a defined level of performance” .  Objectives of Work Measurement: 1. To compare the times of performance by alternative methods. 2. To enable realistic schedule of work to be prepared. 3. To arrive at a realistic and fair incentive scheme. 4. To analyses the activities for doing a job with the view to reduce or eliminate unnecessary jobs. 5. To minimize the human effort. 6. To assist in the organization of labour by daily comparing the actual time with that of target tim

78. productivity Definition: The productivity of a production process can be defined as the efficiency with which goods and services are produced. Productivity is typically measured by comparing an aggregate output with a single input or comparing an aggregate input with an aggregate output, over time. The four key elements of productivity for an individual are: Strategy, or the capacity for planning Focus Productive choosing, or the capacity for selecting the most crucial tasks and making the right decisions; and Consistency; or, the capacity for working at a constant pace and incorporating all of the aforementioned into your tasks.

79. Factors That Boost Productivity in Operations Management/Methods to Improve Productivity There are a number of factors that help boost productivity in operations management. 1. Training When you think of training, think of the return on investment (ROI). You might have to spend money and time to offer additional training to employees, but you’ll make that money back and then some with employees that can work more efficiently. 2. Team Goals Work can be pretty uninspiring when there are no defined goals to reach. Ensure the entire team is aware of the goals, and make those goals realistic. 3. Working Conditions Make the workspace comfortable and inviting for employees. That could mean choosing an office with plentiful windows, adding in standing desks, or outfitting a break room with tons of amenities like coffee, snacks, and comfy sofas. 4. Support If an employee is struggling with something, listening to their problems and providing swift guidance and understanding can make all the difference.

80. 5. Fair Wages and Benefits Knowing they are being paid fairly for their work and they can enjoy free healthcare or plentiful vacation time will motivate employees to give their all at work. 6. Technology Technology can improve productivity immensely. It can be used to improve team communications through collaborative tools, like a project management app, track inventory, and automate monotonous tasks so the team can focus on more pressing issues.

81. UNIT IV Material management MEANING It is a core function of supply chain management, involving the planning and execution of supply chains to meet the material requirements of a company or organization. The objectives of material management are sometimes referred to as the ‘Five Rs of Materials Management:’ The  right  material At the  right  time In the  right  amount And of the quality that is: At the  right  price From the  right  sources

82. Types of Material Management The work undertaken by materials management experts can be broken down into five different types, as follows: 1. Material Requirements Planning 2. Purchasing 3. Inventory Control 4. Material Supply Management 5. Quality Control Material Planning Material planning is the scientific method of planning and determining the requirements of consumables, raw materials, spare parts and other miscellaneous materials essential for the production plan implementation. Material Planning Factors There are two major factors influencing the material planning, they are: 1. Macro factors: These include factors such as business cycles, import and export p [policies, price trends, credit policy and other global factors.

83. What is Material Planning? Material planning is the scientific method of planning and determining the requirements of consumables, raw materials, spare parts and other miscellaneous materials essential for the production plan implementation 2. Micro factors: These factors include the internal organization factors such as production plan, investments, corporate policies, inventory holding. Other essential factors such as the time of procurement, working capital, acceptable inventory levels, delegation of power seasonality also influence the material planning.

84. Budgetary Control Meaning Budgetary control is known as setting up a particular budget by management to know the variation between the company’s actual performance and budgeted performance. It also helps managers utilize these budgets to monitor and control various costs within a particular accounting period. Budgetary Control Types There are various types of control an organization can implement

85. Purchasing management  Purchasing management is the administration of the process of buying materials required for a company to function and produce its product.  Important Roles in Purchasing A company's purchasing department plays an important role in supply chain management decisions. Purchasing is typically responsible for selecting suppliers N egotiating and Administering long-term contracts M onitoring supplier performance placing orders to suppliers Developing a responsive supplier base, and M aintaining good supplier relations.

86. Objectives of Purchasing The basic objective of the purchasing function is to ensure continuity of supply of raw materials, sub-contracted items and spare parts and to reduce the ultimate cost of the finished goods. To avail the materials, suppliers and equipment's at the minimum possible costs: These are the inputs in the manufacturing operations. The minimization of the input cost increases the productivity and resultantly the profitability of the operations. To ensure the continuous flow of production:  through continuous supply of raw materials, components, tools etc. with repair and maintenance service. To increase the asset turnover:  The investment in the inventories should be kept minimum in relation to the volume of sales. This will increase the turnover of the assets and thus the profitability of the company. To develop an alternative source of supply:  Exploration of alternative sources of supply of materials increases the bargaining ability of the buyer, minimization of cost of materials and increases the ability to meet the emergencies. To establish and maintain the good relations with the suppliers:  Maintenance of good relations with the supplier helps in evolving a favorable image in the business circles.

87. To achieve maximum integration with other department of the company:  The purchase function is related with  production department  for specifications and flow of material,  engineering department  for the purchase of tools, equipment's and machines. To train and develop the personnel:  Purchasing department is manned with varied types of personnel. The company should try to build the imaginative employee force through training and development. Efficient record keeping and management reporting:  Paper processing is inherent in the purchase function. Such paper processing should be standardized so that record keeping can be facilitated.

88. Meaning Of Vendor A vendor, also known as a supplier, is  an individual or company that sells goods or services to someone else in the economic production chain . Vendor ratings Vendor ratings are  a process in which suppliers are assigned status or a title depending on several parameters .   F ew key qualities  Value for your investment (ROI) Quality. Delivery. Service. Commitment to growth and feedback. Partnership mindset. Complaint history. Financial and operational stability.

89. Value analysis (VA) It is a tool to enhance cost efficiency by evaluating the functionality of a product or a process about its cost. It helps identify and eliminate unnecessary costs incurred while making a product or conducting a business function.

90. Store management Store management is all the processes involved in running your store, including building your team, sourcing and managing inventory, driving sales, creating store policies and procedures, leading by example, and marketing your business.

91. Classification of Materials Classification is the systematic division, grouping, or categorization of materials or items based on some common characteristic. Classification of materials can be performed on different bases (e.g., nature, manufacturing process, value, and purpose). To identify materials that are purchased and stored for commercial purposes, they should be properly classified. The department in charge of storage should closely study and monitor the materials, ensuring their safe custody, meticulous handling, and protection from damage, fire, pilferage, and spoilage. A broad classification of materials is shown below, based on their nature, use, and service. Raw Materials Consumable Stores Machinery and Plant Factory and Office Equipment Inflammable Stores Chemicals

92. Coding of material management

93. Inventory It is  the goods or materials a business intends to sell to customers for profit . 

94. UNIT – V Scheduling And Project Management Project management is the process of leading the work of a team to achieve all project goals within the given constraints. 

95. Project scheduling It is the process of aligning project tasks to fit a deadline. Since tasks may overlap or require completion before starting on another, it's essential to schedule tasks in an optimal order to complete them in a timely manner. For example, a video game company may want to create an advertising campaign before the holiday season arrives. To launch this campaign, they might conduct market research, test their latest products and develop plans for different marketing channels. Each of these tasks has its own timeline and steps. By creating a project schedule, the company can improve the ability of the team to finish each task in a timely manner to meet its holiday deadline. Tasks9 project scheduling techniques Here are nine techniques you can use to help you create efficient project schedules:

96. 1.  Project Evaluation and Review Technique (PERT)  : PERT is appropriate technique which is used for the projects where the time required or needed to complete different activities are not known. PERT is majorly applied for scheduling, organization and integration of different tasks within a project. It provides the blueprint of project and is efficient technique for project evaluation . 2.  Critical Path Method (CPM)  : CPM is a technique which is used for the projects where the time needed for completion of project is already known. It is majorly used for determining the approximate time within which a project can be completed. Critical path is the largest path in project management which always provide minimum time taken for completion of project

97. S.No . PERT CPM 1. PERT is that technique of project management which is used to manage uncertain (i.e., time is not known) activities of any project. CPM is that technique of project management which is used to manage only certain (i.e., time is known) activities of any project. 2. It is event oriented technique which means that network is constructed on the basis of event. It is activity oriented technique which means that network is constructed on the basis of activities. 3. It is a probability model. It is a deterministic model. 4. It majorly focuses on time as meeting time target or estimation of percent completion is more important. It majorly focuses on Time-cost trade off as minimizing cost is more important.

98. 5. It is appropriate for high precision time estimation. It is appropriate for reasonable time estimation. 6. It has Non-repetitive nature of job. It has repetitive nature of job. 7. There is no chance of crashing as there is no certainty of time. There may be crashing because of certain time boundation. 8. It doesn’t use any dummy activities. It uses dummy activities for representing sequence of activities. 9. It is suitable for projects which required research and development. It is suitable for construction projects.

99. Scheduling Work Centers The work center is a physical location where specific tasks or activities are carried out in business. It is a physical or logical production area that schedules and routes production operations. The objectives of workcenter scheduling are to (1) Meet due dates (2) Minimize lead time (3) Minimize setup time or cost (4) Minimize work-in-process inventory and (5) Maximize machine or labor utilization. N ature of work centers A work center usually represents a specific shop or factory location. A work center can consist of a single machine with an operator who performs a specific task, such as sanding, drilling, or pressing. I t can also represent a specialized shop, such as a paint shop consisting of a facility and a crew of employees.

100. Priority Rules and Techniques FCFS (First-come-first-served) SPT (Shortest-processing-time) EDD (Earliest-due-date) LPT (Longest-processing-time) PCO (Preferred-customer-order) Shop Floor Management planning and control is the process of using methods and tools to track, schedule, and report the status of work-in-progress (WIP) manufacturing from your floor-level, giving you a clear channel of communication between your operators and managers on the production line.

101. Shop Floor Layout

102. Shop Floor Control A system of computers and/or controllers tools used to schedule, dispatch and track the progress of work orders through manufacturing based on defined routings .

103. Flow Scheduling In project management, a flow chart is  a visual aid to understand the methodology you're using to manage the project . The diagram shows the interdependent and parallel processes over the course of the project's life cycle.

104. Johnson's algorithm Johnson's algorithm  is a way to find the  shortest paths  between  all pairs of vertices  in an  edge-weighted   directed graph . The first three stages of Johnson's algorithm are depicted in the illustration below.

105. Johnson’s rule: A procedure that minimizes makespan when scheduling a group of jobs on two workstations. Step 1. Find the shortest processing time among the jobs not yet scheduled. If two or more jobs are tied, choose one job arbitrarily.Step 2. If the shortest processing time is on workstation 1, schedule the corresponding job as early as possible. If the shortest processing time is on workstation 2, schedule the corresponding job as late as possible. Step 3. Eliminate the last job scheduled from further consideration. Repeat steps 1 and 2 until all jobs have been scheduled.

106. Gantt chart A Gantt chart is a project management tool that allows project managers to create a project schedule. It has two main parts, a task list on the left side and a bar chart timeline on the right. The Gantt diagram was created by Henry Gantt in the early 20th century to improve project planning, scheduling and tracking by illustrating completed work compared to planned work. Important of Gantt chart A Gantt chart is a visualization that helps in scheduling, managing, and monitoring specific tasks and resources in a project. It consists of a list of tasks and bars depicting each task's progress. The horizontal bars of different lengths represent the project timeline, which can include task sequences, duration, and the start and end dates for each task It's the most widely used chart in project management. Gantt charts are used in heavy industries for projects like building dams, bridges, and highways, as well as software development and building out of other goods and services .

107. Personnel scheduling in service Personnel scheduling is the central factor with which you ensure the smooth running of processes within your company.