Intro To OM

Operations Management
Overview
Introduction Historical Milestones in OM Factors Affecting OM Today Different Ways of Studying OM Wrap-Up: What World-Class Producers Do
Introduction
Operations management is the management of an organizations productive resources or its production system. A production system takes inputs and converts them into outputs. The conversion process is the predominant activity of a production system. The primary concern of an operations manager is the activities of the conversion process.
Organizational Model
Finance Sales HRM
OM
Marketing MIS QA
Engineering
Accounting
Entry-Level Jobs in OM
Purchasing planner/buyer Production (or operations) supervisor Production (or operations) scheduler/controller Production (or operations) analyst Inventory analyst Quality specialist
Historical Milestones in OM
The Industrial Revolution Post-Civil War Period Scientific Management Human Relations and Behaviorism Operations Research The Service Revolution
The Industrial Revolution

The industrial revolution developed in England in the 1700s. The steam engine, invented by James Watt in 1764, largely replaced human and water power for factories. Adam Smiths The Wealth of Nations in 1776 touted (pushed) the economic benefits of the specialization of labor. Thus the late-1700s factories had not only machine power but also ways of planning and controlling the tasks of workers.
The Industrial Revolution

The industrial revolution spread from England to other European countries and to the United Sates. In 1790 an American, Eli Whitney, developed the concept of interchangeable parts. The first great industry in the US was the textile industry. In the 1800s the development of the gasoline engine and electricity further advanced the revolution. By the mid-1800s, the old cottage system of production had been replaced by the factory system. . . . more
Post-Civil War Period

During the post-Civil War period great expansion of production capacity occurred. By post-Civil War the following developments set the stage for the great production explosion of the 20th century:
increased capital and production capacity the expanded urban workforce new Western US markets an effective national transportation system
Scientific Management
Frederick Taylor is known as the father of scientific management. His shop system employed these steps: Each workers skill, strength, and learning ability were determined. Stopwatch studies were conducted to precisely set standard output per worker on each task. Material specifications, work methods, and routing sequences were used to organize the shop. Supervisors were carefully selected and trained. Incentive pay systems were initiated.
Scientific Management
In the 1920s, Ford Motor Companys operation embodied the key elements of scientific management:
standardized product designs mass production low manufacturing costs mechanized assembly lines specialization of labor interchangeable parts
Human Relations and Behavioralism

In the 1927-1932 period, researchers in the Hawthorne Studies realized that human factors were affecting production. Researchers and managers alike were recognizing that psychological and sociological factors affected production. From the work of behavioralists came a gradual change in the way managers thought about and treated workers.
Operations Research
During World War II, enormous quantities of resources (personnel, supplies, equipment, ) had to be deployed. Military operations research (OR) teams were formed to deal with the complexity of the deployment. After the war, operations researchers found their way back to universities, industry, government, and consulting firms. OR helps operations managers make decisions when problems are complex and wrong decisions are costly.
The Service Revolution

The creation of services organizations accelerated sharply after World War II. There is a huge trade surplus in services. Investment per office worker now exceeds the investment per factory worker. Thus there is a growing need for service operations management.
Era of Quality
ISO 9000 series ISO 14000
The Computer Revolution

Explosive growth of computer and communication technologies Easy access to information and the availability of more information Advances in software applications such as Enterprise Resource Planning (ERP) software Widespread use of email More and more firms becoming involved in E-Business using the Internet Result: faster, better decisions over greater distances
Today's Factors Affecting OM

Global Competition Quality, Customer Service, and Cost Challenges Rapid Expansion of Advanced Technologies Continued Growth of the Service Sector Scarcity of Operations Resources Social-Responsibility Issues
Production System
Inputs of an Operations System

External
Legal, Economic, Social, Technological
Market
Competition, Customer Desires, Product Info.
Primary Resources
Materials, Personnel, Capital, Utilities
Conversion Subsystem
Physical (Manufacturing) Locational Services (Transportation) Exchange Services (Retailing) Storage Services (Warehousing) Other Private Services (Insurance) Government Services (Federal)
Outputs of an Operations System

Direct
Products Services
Indirect
Waste Pollution Technological Advances
Decision Making
Strategic Decisions Operating Decisions Control Decisions
Strategic Decisions
These decisions are of strategic importance and have long-term significance for the organization. Examples include deciding:
the design for a new products production process where to locate a new factory whether to launch a new-product development plan
Operating Decisions
These decisions are necessary if the ongoing production of goods and services is to satisfy market demands and provide profits. Examples include deciding:
how much finished-goods inventory to carry the amount of overtime to use next week the details for purchasing raw material next month
Control Decisions
These decisions concern the day-to-day activities of workers, quality of products and services, production and overhead costs, and machine maintenance. Examples include deciding:
labor cost standards for a new product frequency of preventive maintenance new quality control acceptance criteria
What Controls the Operations System?

Information about the outputs, the conversions, and the inputs is fed back to management. This information is matched with managements expectations When there is a difference, management must take corrective action to maintain control of the system
Wrap-Up: World Class Practice

OM important in any organization Global competition forces rapid evolution of OM Decision based framework focus of course
Strategic, Operating, and Control
Objectives of productions Management

Customer satisfaction profitability Timeliness
Scope
Product selection and development Process selection Facilities location layout planning Material handling Manufacturing system Production planning and production control
Productivity
Productivity = output Input Alternatively it can be expressed as a percentage Productivity = output Input * 100
Productivity indicates
Level of utilization of man, machines and materials Efficiency in the methods of working Effectiveness of plan Material handling efficiency Appropriation of technology or production process Maintenance policy Working condition of workmen Fixing wages, proper compensation and incentives schemes for the employees Level of quality control and quality assurance
TYPES OF PRODUCTION SYSTEMS
PRODUCTION
A production process consists of activities that are required in transforming an input set (human resources, raw materials, energy, money,information, etc.) to valuable outputs with the help of processors.
PRODUCTION SYSTEM
A production system converts inputs into outputs with the help of processors A generalised production system can be represented as:INPUT
PROCESSOR
OUTPUT
(goods/services)
TYPES OF PRODUCTION SYSTEMS

Classification on the basis of output Three bases considered1.Variety 2.Uniformity 3.Volume per output type o Two types a)continuous b)intermittent
LOW VARIETY CONTINUOUS FLOW PRODUCTION MASS PRODUCTION
HIGH INTERMITTENT BATCH PRODUCTION JOB ORDER PROJECTS
HIGH UNIFORMITY HIGH VPOT
LOW LOW
DIFFERENCE BETWEEN CONTINUOUS AND INTERMITTENT SYSTEMS ON THE BASIS OF MACHINERY
CONTINUOUS
1.SPECIFIC MACHINERY
INTERMITTENT
1.GENERALISED MACHINERY
2.PERMANENT MACHINE SETUP 3.DUPLICATION OF MACHINES
2.FREQUENT CHANGES IN MACHINE SETUP 3.LESS MACHINES REQUIRED
ON THE BASIS OF MATERIAL HANDLING AND LABOUR USE
CONTINUOUS
1.UNSKILLED AS WELL AS SMALL TEAM OF SPECIALISED LABOUR FORCE 2.MECHANIZED MATERIAL HANDLING 3.MATERIAL HANDLING COST IS LESS 4.INVESTMENT IN INVENTORY IS HIGHER
INTERMITTENT
1.HIGHLY SKILLED LABOUR FORCE
2.NOT FEASIBLE TO EMPLOY MECHANIZED HANDLING 3.MATERIAL HANDLING COST IS HIGHER 4.NEED FOR INVENTORY IS MINIMISED
ON THE BASIS OF OUTPUT PRODUCEDCONTINUOUS INTERMITTENT
1.FEW STANDARD PRODUCTS IN LARGE QUANTITIES
1.WIDE RANGE OF PRODUCTS IN SMALL QUANTITIES
2.OUTPUT ON THE BASIS OF ANTICIPATION OF DEMAND
2.OUTPUT ACCORDING TO ORDER RECEIVED
DIFFERENCES ON THE BASIS OF MAINTENANCE AND CONTROL EMPLOYED

CONTINUOUS INTERMITTENT
1.ABSENCE OF MAINTENNCE MAY INTERRUPT WHOLE PROCESS 2.CONTROLLING IS SIMPLER
1.NO DANGER OF STOPPAGE OF WHOLE LINE
2.CONTROLLING IS COMPLEX
TYPES OF CONTINUOUS PRODUCTION SYSTEM

1.FLOW TYPE
Output cannot be segregated into different units High degree of uniformity Output cannot be measured directly Example-power plant
2.MASS PRODUCTION Straight line flow of materials Output of one stge normally becomes input for another Output visible in form of identical units Standardised output produced in large quantities PROBLEMS
1. Balancing of production lines 2. Machine maintenance 3. Raw materials supply Example sugar production
TYPES OF INTERMITTENT PRODUCTION SYSTEMS

1.BATCH PRODUCTION SYSTEM Variety of products are made in small quantities Various products compete for share of machines Outputs are aggregated in form of batches Batches may comprise of similar or dissimilar outputs PROBLEMS 1. Machine-job allocation problem 2. Determination of economic batch quantity 3. Scheduling and sequencing of operations Example electrical goods
2.JOB-ORDER PRODUCTION SYSTEM Does not has its own standard product but accepts whatever customer orders come in Output identifiable in terms of specific job order Material flow is very complex PROBLEMS 1.Determination of the sequence of processing Example tailor shop
3.PROJECT PRODUCTION SYSTEM Project is a temporary endeavour having a defined beginning and end ;undertaken to meet unique goals and objectives Project is non repetitive This type of production system uses resources on different projects Product remains fixed and manpower and facilities put work on it PERT/CPM can be used for planning and control in this case Example- Ship production

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Operations Management

The Industrial Revolution

The Industrial Revolution

Post-Civil War Period

Human Relations and Behavioralism

The Service Revolution

The Computer Revolution

Today's Factors Affecting OM

Inputs of an Operations System

Outputs of an Operations System

What Controls the Operations System?

Wrap-Up: World Class Practice

Objectives of productions Management

TYPES OF PRODUCTION SYSTEMS

TYPES OF PRODUCTION SYSTEMS

LOW VARIETY CONTINUOUS FLOW PRODUCTION MASS PRODUCTION

HIGH INTERMITTENT BATCH PRODUCTION JOB ORDER PROJECTS

HIGH UNIFORMITY HIGH VPOT

DIFFERENCE BETWEEN CONTINUOUS AND INTERMITTENT SYSTEMS ON THE BASIS OF MACHINERY

2.PERMANENT MACHINE SETUP 3.DUPLICATION OF MACHINES

2.FREQUENT CHANGES IN MACHINE SETUP 3.LESS MACHINES REQUIRED

ON THE BASIS OF MATERIAL HANDLING AND LABOUR USE

ON THE BASIS OF OUTPUT PRODUCEDCONTINUOUS INTERMITTENT

1.FEW STANDARD PRODUCTS IN LARGE QUANTITIES

1.WIDE RANGE OF PRODUCTS IN SMALL QUANTITIES

2.OUTPUT ON THE BASIS OF ANTICIPATION OF DEMAND

2.OUTPUT ACCORDING TO ORDER RECEIVED

DIFFERENCES ON THE BASIS OF MAINTENANCE AND CONTROL EMPLOYED

1.ABSENCE OF MAINTENNCE MAY INTERRUPT WHOLE PROCESS 2.CONTROLLING IS SIMPLER

1.NO DANGER OF STOPPAGE OF WHOLE LINE

TYPES OF CONTINUOUS PRODUCTION SYSTEM

TYPES OF INTERMITTENT PRODUCTION SYSTEMS

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