Production and operation management

BBA (505)
ASSIGNMENT
Summer 2016-2017

Saurabh Bhalla (BBA 2)

1405009510
Q1) Write short notes on
a) Production management
b) Objectives of operation management
c) Reverse engineering
d) Production planning control
Ans) a) production management: The domain of production and
operations management is not only limited to the production of
goods and services ,but it also comprises all the activities that are
related to the process of production. The term ‘production’ is
applicable to entities like manufacturing units ,machinery
,equipment ,assembly lines etc. Fundamentally, it is linked to
manufacturing. In the past focus, focus was on management.
Production theories and practices were being used in broad range of
operations and conditions, which have very little or no link with
industries or manufacturing. The outcome of these activities is not
just production of goods, but also supply services like banking, hotel
management, health services, education, transportation ,recreation
and government operations.
b) objectives of operations management: the common objectives of
any organizations are :

 Customer satisfaction: customer satisfaction is vital to the

survival of an organization. The organization researches the
expectation of the customer or service to be rendered and
decides on the product. An organization can survive only if its
products satisfy the customers on the basis of he following
criteria
1. Quality of the product as per acceptable standards
2. Easy maintenance and reliability of the product
3. Functionality of the product as offered by the seller
 Profitability: The pricing of the product should be competitive
to achieve sales. For this, the market price of the products
should be competitive and commensurate with the feature
offered in the product. A god organization produces the right
quality that meets all product specifications, at optimal cost.
 Timelines: The product produced or service rendered may be
qualitative and cost-competitive but if it does not reach the
customers when they require it, the organization loses.
c) Reverse engineering: It means discovering the technological
principles of a device, object, or system through the device
structure, function, and operation analysis. This process was
originally applied only to hardware, but now it is applied to
software, databases and even human DNA. Reverse engineering is
used for many purposes. It is used as a learning tool; as a way to
produce new, compatible products that are cheaper than its present
market rates; for making software operations more effective, etc.
d) Production planning control: Production planning control is done
before production to identify possible difficulties and decide how he
production should be carried out in the most economical manner.
Production planning thus includes evaluation and determination of
production inputs like manpower, machinery materials, equipments
and utilities so as to achieve the desired output. Production planning
control is amalgamated operation of the company, which draws the
maximum advantages from planning.
Q2) What is the purpose of sales forecasting? Explain following
methods of time series analysis for forecasting.
a) Simple average method
b) Moving average method
c) Exponential smoothing
d) Trend projections
Ans) purpose of sales forecasting :
I. It determines the scale of production and its rate
II. It lays a base for variety of budgets like production, labour,
material, etc.
III. It provides inputs on the need for a hike in scope/growth of
plant.
IV. It emphasizes on the need for product research development.
V. It also provides recommendations on the need for alteration in
the methods of production.
VI. It helps in determining pricing policies.
VII. It is helpful in setting the limit of advertising, product
distribution, etc..
Methods of time series:
a) Simple average method : It smoothens random fluctuations.
When the demand for the product is neither growing nor
declining rapidly, and does not show seasonal
characteristics, this method of forecasting can be useful.
However this method of forecasting can be useful. However,
this method also does not take into account seasonal
fluctuations. The formula of calculation is :
𝐹𝑡 =𝐴(𝑡−1) + 𝐴(𝑡−2) + 𝐴(𝑡−3) + …. + 𝐴(𝑡−𝑛 ) /n

b) Moving average method: It is useful to guard against random

fluctuations due to seasonal demand characteristics. Weights
are assigned to each component of the moving average
database, provided that the sum of all weights is exactly
equal to 1.

c) Exponential smoothing method: The drawback of the method

discussed so far is that as each new piece of data is added to
these methods, the oldest observation is dropped and he new
forecast is calculated. Also, in most cases, the most recent
occurrences are a better indicator of the future than the past
ones.
d) Trend projections : This method fits a trend line to the data
points to get trend projections and projects it into the future.
Q3) What do you mean by operation strategy? Discuss various
operation strategies in services.
Ans) operation strategy :
Strategy means a planned methodology to complete a given job.
Operation strategy is a set of decision taken across the organization
to help support the implementation of the competitive business
strategies. The operation strategy links both its long and short term
operational decisions to corporate strategy. Operation strategy is a
process by which key operation decisions are made and should
always be consistent with the overall strategic objectives of the
organization.
Operation strategy in services :
A top-down hierarchical approach in strategy consists of here main
levels of strategy: corporate, business and functional. As per this
model, he corporate goals are passed down to the business followed
by the functional areas.
Strategy at the corporate level sets out the direction of the whole
organization, acknowledging the key stakeholders the organization
has its objective in satisfying. These stakeholders are internal as
well as external.
In large diversified companies the second level of strategy, business
level strategy, is at the strategic business unit level. This strategy
plans how the business unit is to deal with its customers, markets
and competitors and also how this would contribute to the overall
corporative strategy. Growth and profitability targets and return on
investment form part of this level.
Hayes and wheelwright claimed that overall operation’s capability
influences the success of organizations and developed a model to
help identify the strategic role of operations function. The four stage
model progresses from a passive, largely reactive approach to a
proactive approach in stage 4:
Stage 1: Internal neutrality: At this stage, the operations function
attempts to attain a minimum standard. This is considered to be an
obstacle in the delivery of competitive advantage by the other
business functions. It concentrates on avoiding mistakes and thus
tends to be inward looking and is reactive.
Stage 2: External neutrality: In this case the operators function
draws a comparison between the performance of competitor
organizations and that of itself. Benchmarking its performance
against its competitors enables it to identify the ideas to emulate.
Stage 3: Internally supportive: In this stage, operations are broadly
up heir with the best but have aspirations to continue to improve
and be the best in the market. The operation function has developed
appropriate operation processes and resources to excel in areas that
require effective functioning of the company. The source of the
internal supportive element lies in the development of a credible
operations strategy supporting the corporate strategy.
Stage 4: externally supportive: At this level, the operation function
plays a major role in strategy making and forms the foundation for
future competitive success. This may be done by organizing
resources innovatively so that an organization is capable of adapting
to marketing changes. At this stage, a long-term perspective is
adopted and capabilities are developed that so as to enable the
organization to compete in future market conditions. It concerns
redefining the market and its expectations.
Q4) Define materials management and state its importance and its
functions.
Ans: Materials management: It can be defined as controlling,
organizing and managing materials/stock so that it guarantees the
maximum return for a business. It involves determining purchase,
location, storage, account keeping and transportation of stock.
Functions of material management:
Purchasing: The first function of material management is
purchasing. Materials management includes purchasing and
management of products. Goods are offered to the consumer after
they either produce or procured by business enterprises. Materials
management involves purchase mix. It deals with material
acquisition and the ability to forecast the goods available in the
store and to be supplied on request.
Procurement: The next function of material management is
production or procurement. In materials management goods are
produced or acquired by others for the purpose of sale to get
maximum returns for investment. Goods are offered to customers
after they are either produced or procured by business enterprises.
Distribution: The next function of material management is
distribution. The activity of physical movement of goods from one
place to other is known as distribution. Materials management
includes distribution of products through the different channels of
distribution for the purpose of satisfaction of consumer wants.
Warehousing: The other function of materials management is
warehousing. Warehouse refers to the storage place for the
produced good and the activity of storing the goods is known as
warehousing. It is the most important function of the materials
management.
Importance of material management:

 Materials management includes purchasing mix. It deals with

material acquisition and the ability to forecast the goods
available in the store and to be supplied on request.
 The functions are chiefly executed by the store manager and
his duty is to make sure that goods supplied meet the
expectations of the customers.
 The most important role of materials management is to ensure
that the stores and supply manager synchronize the business’s
demand, sales and issues to enable the manager to be alert
when the organization is running short of stock and avoid
making use of its butter stock.
 The importance of materials management function lies in the
fact that the material cost is 60-70%- a significant portion of
the final product cost and hence the significance. This further
emphasizes the important role-materials management
personnel play especially in manufacturing organizations and
very often a member of the senior management.
Q5) What is PERT? Explain the application and advantages of PERT.
Ans) PERT : PERT or project evaluation research task was developed
for the US navy, Polaris missile project in the late 1950s. This was a
massive project involving over 3000 contractors. Because most of
the activities had never been done before, PERT was developed to
handle uncertain time estimates of the various jobs or activities.
Consequently, PERT was developed with the objective of being able
to handle uncertainties.
Application of PERT
PERT is a project evaluateion technique. Events and activities
must be sequenced in the network under a highly logical set of
ground rules, which allow the determination of important critical
and non-critical paths for analysis. PERT can be applied where
the activities are complex and largely sequential in nature. The
application of PERT, however’ is limited due to difficulties in
estimating the duration of various activities. The probabilistic
PERT is not of much use since assigning probabilities to the
project activity time is not easy.
Advantages of PERT :
Pert networking can give advantages if
a) The priority need is to keep the project simple.
b) The front-end activities are detailed and far-end activities
summarized and,
c) It is divided according to agency or department for better
understanding and visibility.
PERT costs: The techniques called PERT-cost attempts to
incorporate a cost dimension into the network analysis. This is
basically an extension of the planning of the time dimension. This
helps in developing a critical path that is optimum considering
both time and cost aspects jointly. For the purpose of planning, it
is supposed to provide a basis for analyzing the actual time and
cost jointly. It also helps in determining the cash flow
requirement during the course of the project.
Experience shows that PERT-cost is so complicated that it loses
out on practical application. In order to control time, work
 packages must be quite small, but great difficulty is experienced
in estimating the cost of each small work package.
Q6) A study was conducted for the evaluation of the existing facilities,
practices of maintenance management and its processes in major
public hospitals in India. The main aim of this study was to establish
and to determine how the management managed medical equipment
lifecycle. The results offered an opportunity to the management to
appraise the maintenance program which was being made by the
facilities maintenance management. The management also sought
improvement for increased efficiency of the
workers and more effective utilization of the resources available. In major
hospitals in India a computer programme was developed to improve facility
maintenance management status. Various interviews were conducted so as to
obtain detailed information concerning maintenance organizations
performances. These interviews were carried out with each organization main
or key person and these were categorized into three respondent groups,
namely, the hospital, consultant and contractor. There was positive response to
the questionnaires from eight hospitals. The results obtained were then
analysed and were displayed in a histogram graph with the help of a Statistical
Package for the Social Sciences (SSPS) program. The research encountered
challenges and these included hospital’s policy and technological resources.
This study aided the

facilities maintenance management in the hospitals to determine the

status of its performance and further, to pin-point areas where they
were lacking in the organization’s service. The maintenance computer
program so developed was based on
the results in order to improve the practices of the existing facilities
maintenance management and its processes in major hospitals in India.
The developed program guides the user on the reasons of the fault,
possible personnel to handle the fault in the medical equipment.

Discussion Questions
1. In hospitals in India why were computer programs developed?
2. How were the interviews conducted in hospitals?
Ans ) 1) The maintenance computer program so developed
was based on the results in order to improve the practices of
the existing facilities maintenance management and its
processes in major hospitals in India.
The developed program guides the user on the reasons of the
fault, possible personnel to handle the fault in the medical
equipment.
2) In major hospitals in India a computer programme was
developed to improve facility maintenance management status.
Various interviews were conducted so as to obtain detailed
information concerning maintenance organizations performances.
These interviews were carried out with each organization main or
key person and these were categorized into three respondent
groups, namely, the hospital, consultant and contractor. There was
positive response to the questionnaires from eight hospitals. The
results obtained were then analysed and were displayed in a
histogram graph with the help of a Statistical Package for the Social
Sciences (SSPS) program. The research encountered challenges and
these included hospital’s policy and technological resources.