Production and Operations Management NEP KUD Module I

Production and operations management module 1 KUD NEP

1. Production & Operations Management V SEM NEP

2. Unit I Introduction to Production and Operations Management Introduction -Meaning of Production and Operations, differences between Production and Operations Management, Scope of Production Management, Production System. Types of Production, Benefits of Production Management, Responsibility of a Production Manager, Decisions of Production Management. Operations management: Concept and Functions

3. INTRODUCTION In simple words, production function refers to the functional relationship between the quantity of a good produced (output) and factors of production (inputs). “The production function is purely a technical relation which connects factor inputs and output.” Production function Defined as “the relation between a firm’s physical production (output) and the material factors of production (inputs ).”

4. Q = f (L, C, N) Where Q = Quantity of output L = Labour C = Capital N = Land.

5. Definitions “The production function is a technical or engineering relation between input and output. As long as the natural laws of technology remain unchanged, the production function remains unchanged.” Prof. L.R. Klein “Production function is the relationship between inputs of productive services per unit of time and outputs of product per unit of time.” Prof. George J. Stigler “The relationship between inputs and outputs is summarized in what is called the production function. This is a technological relation showing for a given state of technological knowledge how much can be produced with given amounts of inputs.” Prof. Richard J. Lipsey

6. Features of Production Function 1. Substitutability The factors of production or inputs are substitutes of one another which make it possible to vary the total output by changing the quantity of one or a few inputs, while the quantities of all other inputs are held constant. It is the substitutability of the factors of production that gives rise to the laws of variable proportions. 2. Complementarity The factors of production are also complementary to one another, that is, the two or more inputs are to be used together as nothing will be produced if the quantity of either of the inputs used in the production process is zero. 3. Specificity It reveals that the inputs are specific to the production of a particular product. Machines and equipment’s, specialized workers and raw materials are a few examples of the specificity of factors of production.

7. Production involves time; hence, the way the inputs are combined is determined to a large extent by the time period under consideration. The greater the time period, the greater the freedom the producer has to vary the quantities of various inputs used in the production process. In the production function, variation in total output by varying the quantities of all inputs is possible only in the long run whereas the variation in total output by varying the quantity of single input may be possible even in the short run.

8. Production management Production Management  refers to the application of management  principles to the  production  function in a factory. In other words,  production management involves application of planning, organizing, directing and controlling the  production  process.

9. Components of Production Process Inputs: Men Materials Machines Information Capital Transformation Process: Product Design Process Planning Production Control Maintenance Outputs: Products Services Continuous: Inventory Quality Cost

10. Definitions In the words of Mr , E.L. Brech : “Production Management is the process of effective planning and regulating the operations of that section of an enterprise which is responsible for the actual transformation of materials into finished products.” This definition limits the scope of production management to those activities of an enterprise which are associated with the transformation process of inputs into outputs. & the definition does not include the human factors involved in a production process. It lays stress on materialistic features only.

11. Production Management deals with decision-making related to production process. So that the resulting goods and services are produced in accordance with the quantitative specifications and demand schedule with minimum cost. According to this definition design and control of the production system are two main functions of production management.

12. (iii) Production Management is a set of general principles for production economies, facility design, job design, schedule design, quality control, inventory control, work study and cost and budgetary control. This definition explains the main areas of an enterprise where the principles of production management can be applied. This definition clearly points out that production management is not a set of techniques. It is evident from above definitions that production planning and its control are the main characteristics of production management. In the case of poor planning and control of production activities the organization may not be able to attain its objectives and may result in loss of customer’s confidence and retardation in the progress of the establishment.

13. Objectives of production management Right quality Right quantity Right time Right manufacturing cost

14. Functions of production management Selection of product and design Production planning Production control Quality and cost control Inventory control

15. Benefits of production management Benefits to the consumers Benefits to the investors Benefits to the employees Benefits to the suppliers Benefits to the nation

16. Limitations of production management Breakdown of one machine may affect the entire production line. Product differentiation is limited Higher cost due to frequent setup changes Production planning is complicated

17. Functions of Production Management Design and development of production process. Production planning and control. Implementation of the plan and related activities to produce the desired output. Administration and co-ordination of the activities of various components and departments responsible for producing the necessary goods and services.

18. Scope of Production Management The scope of production management is indeed vast. Commencing with the selection of location, acquisition of land, constructing building, procuring and installing machinery, purchasing and storing raw materials and converting them into saleable products. Added to the above are other related topics such as quality management, maintenance management, production planning and control, methods improvement and work simplification and other related areas.

19. Production decisions 1. Strategic decisions 2. Tactical decisions 3. Operational decisions

20. Strategic decisions Strategic decisions are major choices of actions and influence whole or a major part of business enterprise. They contribute directly to the achievement of common goals of the enterprise. They have long-term implications on the business en­terprise. They may involve major departures from practices and procedures being followed earlier. Generally, strategic decision is unstructured and thus, a manager has to apply his business judge­ment , evaluation and intuition into the definition of the problem. These decisions are based on partial knowledge of the environmental factors which are uncertain and dynamic. Such decisions are taken at the higher level of management.

21. Tactical decisions These decisions relate to the implementation of strategic decisions. They are directed towards developing divi­sional plans, structuring workflows, establishing distribution chan­nels, acquisition of resources such as men, materials and money. These decisions are taken at the middle level of management.

22. Operational decisions These decisions relate to day-to-day operations of the enterprise. They have a short-term horizon as they are taken repetitively. These decisions are based on facts regarding the events and do not require much of business judgment. Operational decisions are taken at lower levels of management. As the information is needed for helping the manager to take rational, well informed decisions, information systems need to fo­cus on the process of managerial decision making.

23. Operations Management The study of set of activities comprising supervision, planning and designing of business operations in the field of manufacturing of goods and services is termed as operations management. The purpose of operations management is to make certain that the operations of a business are efficient and effective and result in minimum of wastage. Operations management tries to cut down resources involved in operations while at the same time making operations more effective and productive. In fact operations management is more concerned on processes than people or products. Operations management in a nutshell is using physical resources in an optimum manner, converting input into output, so as to supply to the market the desired and finished product.

24. Operations vs Production Management Both production management and operations management play an important role in an organization in increasing the efficiency and productivity. While operations management is focused upon administration, planning and execution of operations involved in production of goods and services and trying to minimize the resources at the same time increasing output. Production management is more concerned with input/output and churning out products in the shape of desired finished product.

25. Production system – types Types of Production system is grouped under two categories : Intermittent Production System Continuous Production System

26. Intermittent Production Flows Intermittent means something that starts (initiates) and stops (halts) at irregular (unfixed) intervals (time gaps) In the intermittent production system, goods are produced based on customer's orders These goods are produced on a small scale The flow of production is not continuous In this system, large varieties of products are produced. These products are of different sizes The design of these products goes on changing according to the design and size of the product. Therefore, this system is very flexible.

27. Examples on the intermittent production system The work of a goldsmith is purely based on the frequency of his customer's orders. The goldsmith makes goods (ornaments) on a small-scale basis as per his customer's requirements. Here, ornaments are not done on a continuous basis. Similarly, the work of a tailor is also based on the number of orders he gets from his customers. The clothes are stitched for every customer independently by the tailor as per one's measurement and size. Goods (stitched clothes) are made on a limited scale and is proportional to the number of orders received from customers. Here, stitching is not done on a continuous basis.

28. Continuous Production System Continuous means something that operates constantly without any irregularities or frequent halts. In the continuous production system, goods are produced constantly as per demand forecast. Goods are produced on a large scale for stocking and selling. They are not produced on customer's orders. Here, the inputs and outputs are standardized along with the production process and sequence.

29. Examples on the continuous production system The production system of a food industry is purely based on the demand forecast. Here, a large-scale production of food takes place. It is also a continuous production. The production and processing system of a fuel industry is also purely based on, demand forecast. CRUDE OIL and other raw sources are processed continuously on a large scale to yield usable form of fuel and compensate global energy demand.

30. Operations management Operations management is the administration of business structure, practices, and processes to enhance efficiency and maximize profit. It refers to the management of functions that a business needs to run effectively day-to-day, including: Overseeing multiple departments and providing goals.

31. Objectives of operations management , 1. Efficiency and Productivity One of the primary objectives of operations management is to achieve efficiency and productivity within an organization’s processes. This involves finding ways to minimize waste, reduce costs, and maximize output. Operations managers strive to streamline operations by optimizing workflows, eliminating bottlenecks, and improving resource allocation. By enhancing efficiency and productivity, organizations can increase their competitiveness, deliver products and services in a timely manner, and achieve higher levels of customer satisfaction.

32. Objectives of operations management , 2 . Quality Management Maintaining and improving product or service quality is another vital objective of operations management. Quality management involves implementing processes and systems to ensure that products and services consistently meet or exceed customer expectations. Operations managers work to develop and enforce quality standards, conduct inspections and tests, and implement continuous improvement initiatives such as Six Sigma or Total Quality Management (TQM). By focusing on quality, organizations can enhance their reputation, build customer loyalty, and gain a competitive edge in the market.

33. Objectives of operations management , 3 . Cost Control and Cost Reduction Controlling costs is a critical objective of operations management, as it directly impacts an organization’s profitability. Operations managers analyze cost structures, identify areas of inefficiency or waste, and implement strategies to reduce costs without compromising quality. They may explore options such as lean manufacturing, just-in-time inventory management, or outsourcing to optimize cost-effectiveness. By effectively managing costs, organizations can improve their financial performance and allocate resources more efficiently.

34. 4. Supply Chain Management In today’s interconnected business landscape, effective supply chain management has become a key objective of operations management. Operations managers oversee the coordination and integration of activities across the entire supply chain, from raw material sourcing to final product delivery. They focus on optimizing inventory levels, managing supplier relationships, ensuring timely transportation, and minimizing supply chain risks. Effective supply chain management helps organizations achieve operational resilience, reduce lead times, and enhance overall customer satisfaction.

35. 5 . Innovation and Continuous Improvement Operations management is also concerned with fostering a culture of innovation and continuous improvement within an organization. Operations managers encourage employees to identify and implement process improvements, explore new technologies, and seek innovative solutions to challenges. By embracing a culture of continuous improvement, organizations can adapt to changing market demands, stay ahead of competitors, and drive long-term growth and sustainability .

36. 6 . Strategic Alignment Operations management aims to align operational strategies with the overall strategic objectives of the organization. Operations managers work closely with top management to understand the organization’s goals and develop operational plans that support those goals. They ensure that operational decisions are aligned with the organization’s mission, vision, and values. Strategic alignment enables organizations to focus their resources effectively, seize opportunities, and respond proactively to market dynamics .

37. 7 . Customer Satisfaction Ultimately, operations management seeks to deliver products and services that meet or exceed customer expectations. Operations managers continuously monitor customer feedback, analyze customer preferences, and align operational processes to enhance customer satisfaction. They strive to improve product quality, delivery speed, responsiveness, and overall customer experience. By prioritizing customer satisfaction, organizations can foster customer loyalty, gain a positive reputation, and drive sustainable growth.

38. Differences between Production and Operations Management

39. Role of Production Manager As a  production manager , will be involved with the planning, coordination and control of  manufacturing processes. And will make sure goods and services are produced efficiently and that the correct amount is produced at the right cost and level of quality. Role and Responsibilities oversee the production process, drawing up a production schedule ensure that the production is cost effective decide what resources are required draft a timescale for the job estimate costs and set the quality standards monitor the production processes and adjust schedules as needed be responsible for the selection and maintenance of equipment monitor product standards and implement quality-control programmes liaise among different departments, e.g. suppliers, managers work with managers to implement the company's policies and goals ensure that health and safety guidelines are followed supervise and motivate a team of workers review worker performance Identify training needs.

40. Role of operations manager An  operations manager  is a senior  role  which involves overseeing the production of goods and/or provision of services. It's an  operations manager's  job to make sure an organization is running as well as it possibly can, with a smooth efficient service that meets the expectations and needs of customers and clients.

41. Role of operations manager Evaluating, designing, and implementing business processes Managing logistical processes and supply chain Overseeing production, distribution, and quality assurance Managing and analyzing financial budgets Making strategic decisions and engaging with other senior staff members on business strategy  Supervising employees Supporting HR with recruitment initiatives Building relationships with stakeholders and suppliers

42. Concept of OM Operations management anticipates the capacity requirements by way of forecasting. Then, it plans for capacity, facility, resource aggregation, resource management, and other necessary operation management functions to layout a system that the organization can use for achieving these targets.