Production and

Operation Management
MBA 3RD SEMESTER

Chapter 1
 Objectives of production Management

• Producing the right kind of goods and services that satisfy

customers’ needs
• Maximizing output of goods and services with minimum
resource inputs
• Ensuring that goods and services produced equivalent to
pre-set quality specifications
• Minimizing throughput time- the time that elapses in the
conversion process- by reducing waste.
• Minimizing cost of producing goods or rendering a
service
 What is Operations Management?
 What is Operations ?
An operation is a transformation process which
changes inputs into outputs which add value for
customers.

 Operations Management is the planning and

organizing of the process of operations including
production of goods and delivery of services.

 Operations Management is the management of the

conversion process which transforms inputs such as
raw material and labor into outputs in the form of
finished goods and services.
TRANSFORMATION PROCESS
Transformation Process
 Competitive Advantage

Competitive advantage is term as the extra

edge that a firm has over their industry peers.

The capability of a firm in managing their

operation can be transform into their
competitive advantage if there can identify and
tap into their intangible resources.
Manufacturing Organization
 Manufacturing and Service
Services: Manufacturers:

• Intangible product • Tangible product

• Product cannot be • Product can be inventoried
inventoried
• High customer contact • Low customer contact
• Short response time • Longer response time
• Labor intensive • Capital intensive
Decision Making in Production
 Strategic Production Planning

Strategic planning involves deciding and developing strategic plans to

achieve strategic objectives (or goals). Top management typically develops the
strategic plans. These decisions or plans are normally long term decisions,
which are having implications for the next five years and above.

The strategic operations planning decisions include:

1. Technology decisions: Choice of appropriate technology, equipment’s,
process choice and degree of automation.
2. Capacity decisions: Amount, timing and type.
3. Facilities decisions: Size, location and specializations
4. Vertical integration: Direction, extent and balance
 Tactical Production Plan

Tactical planning is done at middle management level, which mainly

involves the resource acquisitions and utilizations to achieve the organizational
goals. Tactical plans cover shorter time frames and are associated with less
uncertainty and hence lower risk as compared to strategic planning.

Tactical planning decisions include:

1. Making plans to improve utilization of existing resources.
2. Prepare equipment and manpower planning.
3. Specific technology and tools to enhance production efficiency or
productivity.
4. Prepares work plans for process redesign, methods improvement and job
design.
5. Make or buy decision.
 Operational Level Production Planning
The operational planning decisions are taken at the bottom level of
management and these are routine decisions. These plans are prepared to
establish actions necessary for achieving operational goals. These cover
shorter time frame i.e. within a year. No or very less uncertainty in these plans
and information needed is internal. They are stated in definite quantitative
terms and can be spelt out in terms of time and targets.

production plan is an operational level planning gives the details like:

1. On which machine/machines it is to be processed (sequence of operations)
2. Who should this job – operator details
3. Starting and finish times of each job in each of the workstation or machines
or facilities
4. Quality specifications and inspection and test details.
Types Of Wastes
 Production Function
The key concept in the theory of production is the
production function. The word ‘function’ in mathematics
expresses the relationship between dependent and independent
variables. Or a function shows a cause—and—effect relationship.
The production function shows the technological or engineering
relationship between inputs (independent variables or cause) and
output (dependent variable or effect).
Production Management & Operation Management
 Some new paradigm adopted by
Manufacturing industries

 Lean Manufacturing

 Six Sigma

 Total Quality Management

 Lean Manufacturing
Is about doing more with Less. Less time, Less
inventory, Less space, Less people & money.
3 M’s of Lean
5s’ of Lean
Can u see this?
After 5s’
Six Sigma
3 Types of Variation
 TQM
A management approach to long term success through customer satisfaction.
In TQM effort all members of an organization participate in improving
processes, products, services and culture where they work.

8 Principles of TQM
Product design

Process Design