Operations Management

UNIT-1

Introduction

Production and Operations Management (POM) is a core function in every organization that
involves the planning, organizing, directing, and controlling of resources to produce goods and
services efficiently. It ensures the optimal use of resources such as manpower, machinery,
materials, and technology to meet organizational goals. POM is essential for both
manufacturing and service industries.

Meaning of Production and Operations Management

 Production Management refers to the process of managing activities related to the

creation of goods. It involves planning, scheduling, and controlling production
processes to convert raw materials into finished products.
 Operations Management is a broader term that encompasses production as well as
service operations. It includes the design, execution, and improvement of systems that
produce and deliver the firm's primary goods or services.

Together, POM integrates both the transformation of inputs into outputs and the continuous
improvement of processes that enhance efficiency, quality, and customer satisfaction.

Nature of Production and Operations Management

The nature of POM is defined by its core responsibilities and how it supports the organizational
mission. It includes the following features:

1. System-Oriented: POM follows a systems approach where inputs (materials, labor,

capital) are transformed into outputs (goods or services) through a controlled process.
2. Decision-Making Focus: POM involves decision-making in areas such as capacity
planning, inventory control, product design, process selection, facility layout, and
scheduling.
 3. Interdisciplinary Function: It integrates knowledge from engineering, economics,
statistics, behavioral sciences, and IT to solve complex production and operational
challenges.
4. Goal-Oriented: The primary aim is to achieve efficiency, reduce costs, improve
quality, and ensure timely delivery.
5. Dynamic in Nature: POM adapts to changes in technology, market demand,
competition, and customer preferences.
6. Continuous Improvement: Focuses on refining processes, improving productivity,
and embracing quality enhancement techniques such as lean management, Six Sigma,
and Total Quality Management (TQM).
7. Applicable to All Sectors: While traditionally associated with manufacturing, POM
principles apply equally to services like hospitals, banks, airlines, and educational
institutions.

Scope of Production and Operations Management

The scope of POM covers a wide range of activities across the production and service delivery
lifecycle. The key areas include:

1. Product Design and Development

 Involves creating new products or improving existing ones.

 Balances aesthetics, functionality, cost, and feasibility.
 Aligns product features with market needs and operational capabilities.

2. Process Design and Selection

 Determines the best way to produce goods or deliver services.

 Includes selection of technology, equipment, workflow, and process sequence.
 Influences efficiency, cost, and flexibility.

3. Capacity Planning

 Estimating production capacity needed to meet demand.

 Ensures optimal use of resources without under- or over-utilization.
4. Facilities Location and Layout

 Choosing the right location for manufacturing or service facilities.

 Designing physical arrangements of machines, departments, and workspaces for
smooth flow.

5. Production Planning and Control

 Planning the sequence of operations.

 Controlling workflow, resource allocation, and schedule adherence.
 Involves Gantt charts, critical path methods (CPM), and project evaluation review
technique (PERT).

6. Inventory Management

 Managing raw materials, work-in-progress (WIP), and finished goods.

 Uses techniques like EOQ (Economic Order Quantity), JIT (Just-in-Time), and ABC
analysis.

7. Quality Management

 Ensuring product or service meets desired standards.

 Involves quality control, quality assurance, and continuous improvement.
 Adopts tools such as Six Sigma, ISO standards, and Statistical Process Control (SPC).

8. Maintenance Management

 Ensures machines and equipment function effectively.

 Includes preventive, predictive, and corrective maintenance practices.

9. Supply Chain and Logistics

 Managing the flow of materials from suppliers to customers.

 Involves procurement, warehousing, transportation, and distribution.

10. Project Management

 Planning and executing temporary but strategic operations (e.g., setting up a new plant).
  Involves defining objectives, timeframes, budgets, and resource planning.

Topic 2

Difference between production and operations management

Comparison Table

Basis Production Management Operations Management

Managing production of
Definition Managing both goods and services
goods
Scope Limited to manufacturing Broader, includes services
Product efficiency and
Focus End-to-end process optimization
quality
Industry Manufacturing sector Manufacturing and service sectors
Inputs Physical resources Physical and non-physical resources
Outputs Tangible products Products and/or services
Key Tools MRP, quality control TQM, Six Sigma, Lean, ERP
Effective transformation of inputs to
Goal Efficient production
output
Orientation Product-centric Process-centric
Role in Value
Production process Full operations, including logistics
Chain

Topic 3

Work Study — Method Study and Work Measurement

Work study is a key component of operations management aimed at improving efficiency and
productivity by analyzing work methods and time requirements. It is a systematic approach to
studying the way work is performed and identifying opportunities to improve it. Work study
consists of two major components: Method Study and Work Measurement.

1. Meaning of Work Study

Work study is defined as the analysis of work systems with the aim to increase productivity
and efficiency by improving the methods of performing tasks and determining the time
required to perform them. It helps in reducing unnecessary motions, eliminating waste, and
optimizing resource utilization.
Work study is also known as time and motion study, a concept introduced by Frederick W.
Taylor and later developed by Frank and Lillian Gilbreth.

2. Objectives of Work Study

 Increase operational efficiency

 Improve methods of doing work
 Reduce unnecessary motions and delays
 Determine standard time for tasks
 Optimize use of resources (manpower, machines, materials)
 Improve productivity and employee performance

3. Components of Work Study

Work Study is broadly classified into two parts:

A. Method Study

Definition:

Method study is the systematic recording and critical examination of existing and proposed
ways of doing work, to develop and apply easier and more effective methods.

Objectives of Method Study:

 Identify and eliminate inefficient work procedures

 Develop a more economical method of performing a task
 Improve layout of equipment and workplace
 Minimize material handling and movement
 Enhance working conditions and safety

Steps in Method Study:

1. Select the work/process to be studied: Identify a task or process with high cost or
improvement potential that significantly affects productivity.
2. Record all relevant facts using charts: Gather detailed data on the current method
using flow charts and activity records for analysis.
 3. Examine the recorded facts critically: Analyze the process to eliminate delays,
repetitions, and unnecessary motions for better efficiency.
4. Develop improved methods: Propose simpler, quicker, and safer methods using new
tools, layouts, or sequences of operations.
5. Evaluate alternatives: Assess proposed methods for practicality, cost-effectiveness,
and impact on workers and performance.
6. Define the new method clearly: Document the selected method with diagrams or
SOPs to ensure clarity and ease of implementation.
7. Install the new method: Implement the approved method through training,
adjustments, and required workplace modifications.
8. Maintain and follow up for effectiveness: Monitor performance, gather feedback, and
make adjustments to ensure sustainability and improvement.

B. Work Measurement/Time Study

Definition:

Work measurement or time study is the process of establishing a standard time for carrying
out a specified job under given conditions using specific methods.

Objectives of Work Measurement:

 Determine standard time required to complete a job

 Assist in planning and scheduling
 Improve productivity by eliminating time wastage
 Provide basis for wage and incentive schemes

Techniques of Work Measurement/Time Study:

1. Time Study: Involves observing and recording time taken by a qualified worker
under normal working conditions
2. Predetermined Motion Time Systems (PMTS): Uses standard data for basic
motions to estimate time
3. Work Sampling: Observing a job at random intervals to estimate proportion of time
spent on each activity
 4. Analytical Estimating: Expert judgment used when data is not available or task is
new

Steps in Work Measurement:

1. Select the task for which time is to be measured: Choose a repetitive task that
significantly affects productivity or cost and is suitable for time analysis.
2. Observe and record the time taken: Measure and note the time taken by a trained
worker to complete the task under normal conditions.
3. Determine the rating of the worker (performance level): Assess the worker's speed
and efficiency relative to a standard pace to calculate performance rating.
4. Calculate basic time to obtain the basic time for the task.
5. Add allowances (fatigue, personal needs, delays): Include appropriate allowances to
account for personal time, fatigue, and unavoidable delays.
6. Determine standard time for completing each step and the whole process of it.

Applications of Work Measurement:

 Production planning and control

 Capacity estimation
 Budgeting and cost control
 Setting wage incentives and performance benchmarks