CHAPTER 1

• Production/Operations Management - is the process, which combines and transforms various resources used in the production/operations subsystem of the organization into value added product/services in a controlled manner as per the policies of the organization.
• Production/Operations Management - part of an organization, which is concerned with the transformation of a range of inputs into the required (product/service) having the requisite quality level.
• PRODUCTION MANAGEMENT - The set of interrelated management activities, which are involved in manufacturing certain products
• OPERATIONS MANAGEMENT - If the same concept is extended to services management, then the corresponding set of management activities
• Introduction to Production and Operations Management

  A) nature of production and operations

  B) difference between operations and production management

  C) difference between goods and services

  D) responsibilities of operations manager

  E) history of production and operations management

  
• four distinct views

  A) as a system

  B) as an organisational function

  C) as a conversion or transformation process

  D) as means of utility

  
• Production/Operations as a System also known as "systems concept of production"
• system - is defined as the collection of interrelated entities.
• system - The systems approach views any organisation or entity as an arrangement of interrelated parts that interact in ways that can be specified and to some extent predicted.
• Production - is viewed as a system which converts a set of inputs into a set of desired outputs.
• A production system has the following elements or parts:

  A) inputs

  B) conversion process and tranformation process

  C) outputs

  D) transportation subsytem

  E) communication subsytem

  F) control or decision making subsytem

  
• To create goods and services, all organisations, whether manufacturing goods or providing services, perform three basic functions. They are:

  marketing

  production/operations

  finance/accounting
• Marketing - which generates the demand or takes customers’ orders for a product or service.
• Production/Operations - which creates the product (goods or services).
• Finance/Accounting - which keeps track of how well the organisation is performing, and takes care of cash inflow and cash outflow.
• Production/operations managers need to build and maintain strong relationships both intra-organizational and inter-organizational.
• Inter-organisational - relationship exists between production/ operations department and supplier
• intra-organisational - relationship calls for cross-functional coordination.
• Cross functional coordination - is essential for effective production/operations management.
• conversion or transformation sub-system - is the core of a production system because it consists of processes or activities wherein workers, materials, machines and equipment are used to convert inputs into outputs
• Any conversion process consists of several small activities referred to as "operations" which are some steps in the overall process of producing a product or service that leads to the final output.
• utility - is the power of satisfying human needs. During the process of converting the raw materials into finished goods, various types of utilities are created while adding value to the outputs.
• types of utilities?

  form utility

  place utility

  time utility

  possession utility

  service utility

  knowledge utility
• Form utility - which is created by changing the size, shape, form, weight, colour, smell of inputs in order to make the outputs more useful to the customers. For example, iron ore is changed to steel, wood is changed to furniture, etc.
• Place utility - which is created by changing the places of inputs or transporting the inputs from the source of their availability to the place of their use to be converted into outputs. For example the iron ore and coal are transported from the mines to the steel plant to be used in the conversion process.
• Time utility - which is created by storage or preservation of raw materials or finished goods which are in abundance sometime, so that the same can be used at a later time when they become scarce due to higher demand exceeding the quantity available.
• Possession utility - which is created by transferring the possession or ownership of an item from one person to another person. For example, when a firm purchases materials from a supplier, the possession utility of the materials will increase when they are delivered to the buying firm.
• Knowledge utility - which is created by imparting knowledge to a person. For example, a sales presentation or an advertisement about some product communicates some information about the product to the customer, thereby imparting knowledge.
• Production Management - refers to the application of management principles to the production function in a productive system such as a factory or a manufacturing plant.
• Objectives of Production Management?

  right quality

  right quantity

  right time

  right manufacturing cost
• Right Quality – the quality of product is established base upon the customers’ needs. The right quality is not necessarily best quality. It is determined by the cost of the product and the technical characteristics as suited to the specific requirements.
• Right Quantity – the manufacturing organization should produce the products in right number. If they produced in excess of demand the capital will block up in the form of inventory and if the quantity is produced in short demand, leads to shortage of products.
• Right Time – timeliness of delivery is one of the important parameter to judge the effectiveness of production department. So, the production department has to make the optimal utilization of input resources to achieve its objective.
• Right Manufacturing Cost – manufacturing costs are established before the product is actually manufactured. Hence, all attempts should be made to produce the products are pre-established cost, so as to reduce the variation between actual and the standard (pre-established) cost.
• Operations Management - refers to a set of activities that creates value in the form of goods and/ or services by transforming inputs into outputs.
• Operations management - designs and operates productive systems or operating systems such as banks, hospitals, hotels, government agencies and manufacturing plants
• Operations management - includes activities such as organising work, selecting processes, arranging layouts, locating facilities, designing jobs, measuring performance, controlling quality, scheduling work, managing inventory and planning production.
• objectives of Production Management?

  The Customer Service Objective

  The Resource Utilization Objective
• The Customer Service Objective - To provide agreed/adequate levels of customer service (and hence customer satisfaction) by providing goods or services with the right specification, at the right cost at the right time.
• The Resource Utilization Objective - To achieve adequate levels of resource utilization (or productivity) e.g., to achieve agreed levels of utilization of materials, machines and labour.