PROD 2100 - 2110

Production and Operations

Management

2004-2005
Pierre Semal

Prod 2100/2110 Introduction 0

Rules of the Game
Tutorials
Readings
• Morgan, “Mechanization Takes Command” in “Images of Organizations”,
Sage Press, 1986.
• Meal, “Putting production decisions where they belong”, HBR, 1984.
• Zeithaml, Berry, Parasuraman, “Communication and control processes in the
delivery of service quality”, Journal of marketing, 1988.

Working Sessions:
• Individual
• Computerized
• Classical
Manuals:
• commented transparencies (Culb IAG, web)
• exercise manual (Culb IAG, web)
• readings (Culb IAG)
• personal notes
• Chase and Aquilano, Production and Operations
Management, Irwin (Edt).
• McLain, Thomas and Mazzola, Operations
Management: Production of goods and services, Prentice
Hall (Edt).
Objectives / Exam
... Winnie the Pooh spent the rest of the day by walking and happily humming a new hum, all
about the common sense approach and what The Stranger has been teaching them and the
hum went like this:

Select the problem of the day

Finding one that’s right to do,
You can choose it either way,
You pick it ot it picks you.

Observe it very carefully,

“Where do I start? Where am I going?”
And don’t forget about the bee,
“What’s in the way of doing or knowing?”

Prod 2100/2110 Introduction 1

 Introduction

What is POM ?
What kind of problems are studied in POM ?

1. DEFINITIONS.................................................................................................................................... 3
1.1 PRODUCTION AND OPERATIONS .......................................................................................................... 3
1.2 PRODUCTION SYSTEM ......................................................................................................................... 4
1.3 EXAMPLES OF PRODUCTION SYSTEMS ................................................................................................. 5
1.4 SUMMARY ........................................................................................................................................... 8
2. PROBLEMS STUDIED IN POM ..................................................................................................... 9
2.1 THE MAKOFFEE PRODUCTION SYSTEM................................................................................................. 9
2.2 LIST OF POM QUESTIONS .................................................................................................................. 12
2.3 LIFE CYCLE OF A PRODUCTION SYSTEM ............................................................................................ 13
2.4 TABLE OF CONTENTS ......................................................................................................................... 14
2.5 THE GETUP PRODUCTION SYSTEM ................................................................................................... 15
3. PRODUCTION AND THE OTHER DEPARTMENTS ............................................................... 16

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1. Definitions
The terms production management and operations management are often interchanged. See,
for example, the titles of the above mentioned books.

1.1 Production and Operations

In order to define what is "production management" or "operations management", clear
definitions of the terms “production” and “operations” are needed. Roughly:
“Production” is directly related to the manufacturing of goods (products are produced).
In the world of services, production refers to the service delivery.
“Operations” has to be understood as in: “Military operations” or in “Stock Exchange
operations”. It refers to the daily actions necessary for the production system to work.

• What is production ?
• What is production management ?
• What is operations
• What is operations management ?
Everybody has his/her own perception of what production is.
Let us consider the following kinds of "industries" and try to determine what is produced in
each of them.

Examples of “industry - products”

• Steel Works
Production: steel beams or sheets from iron ore.
• Automobile factory
Production: complete cars from components or from metal sheets ?
• Bakery
The bakery produces breads, cakes, pies. The baker'
s shop exchanges these products. It is
not clear what is really the job.
• Restaurant
The problem is the same here: the kitchen produces meals and these meals are delivered in
the dining room. A restaurant can be a meal factory, a meal delivery system or both.
• Airlines
Here travel units are produced. They can be used to transport goods or people.
• Bank
• University
• Recreation center
In these industries, the goods/services that are produced are very different. Nevertheless, in
each of them, a kind of production system has been designed and installed. Here is a very
general definition of a “production system”:

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1.2 Production System
Definition:

A “Production System” is a system whose function is

to transform an input into a desired output by means
of a process (the production process) and of
resources.

Resources

Input Production Process Output

The definition of a production system is thus based on four main elements: the input, the
resources, the production process and the output.
The examples in the following three pages illustrate what these elements are in different types
of industries.

Why such a broad Definition ?

This definition is so broad that most of the activities of a person can be seen as production
systems. This is the goal we pursue with this definition.
Indeed, the concepts, models and techniques developed in this course first apply to the
industry world and to the classical manufacturing activities. However, most of these concepts,
models and techniques apply to the normal activities of a person too. Looking at these
activities as if they were production processes will show them in a different light.
The example of “preparing coffee” that is given at the end of this section is a perfect example
of such a light.

Prod 2100/2110 Introduction 2

1.3 Examples of Production Systems
Automobile Factory
Input raw material
Output complete cars
Process fabrication, assembly
Resources assembly line, workers
There are different levels of input: raw material such as steel or chestnut wood and semi-final
products such as doors, seats or motors.

Bakery
Input water, flour
Output breads, cakes
Process fabrication
Resources oven, workers
Here is the bakery described, not the shop.

Hospital
Input patients
Output healthy individuals
Process health care
Resources medical doctors, nurses,
medical supplies, equipment
All three examples show processes which correspond to physical transformation of the input.

Prod 2100/2110 Introduction 3

Examples of Production Systems
Department Store
Input shoppers
Output sales to satisfied customers
Process transport, storage,
promotion, information,
exchange
Resources displays, stock of goods, clerks
The input here is not the goods but the shoppers. They undergo the transformation.

Restaurant
Input hungry customers
Output satisfied customers
Process prepare meals,
serve customers in a
comfortable environment
Resources food, chef, waiter,
stove, environment
The process here is twofold: prepare the meal and serve it. Some restaurants focus on the
meal preparation only, some on the service only and some on both.

University
Input students
Output educated individuals
Process imparting knowledge
and skills
Resources teachers, books, classrooms
Other output can be specified for a university. After this course, should you be able to solve all
the basic production problem, should you be able to deal with any new problem related to
production or should you have a diploma that states you followed a course in production
management ?

Prod 2100/2110 Introduction 4

Examples of Production Systems
Here we want to show other dimensions in the service industry. They are production systems
too.

Carrier
Input things
Output things at another place
Process transport
Resources cars, trucks, planes,
sorting devices,
storage areas
Examples are express carriers such as DHL, Federal Express or UPS and classical carriers
such as the mail or the railway organizations.

Warehouse
Input things
Output things at a later time
Process store and preserve
Resources vaults,
storage areas,
storage devices
Think at banks, at movers or at parking lots.

Prod 2100/2110 Introduction 5

1.4 Summary
Let us try to summarize the various forms the four elements of a production system can take.

Resources

Input Production Process Output

Input raw material

people with requests
Output products
service
serviced people
Process types physical
exchange
location
storage
educational
Resources tools
labor
energy

Definition of POM:

Production and Operations Management (POM)

provides:
tools, techniques, concepts, models, ideas,
to: design, dimension, control, improve
production systems

Prod 2100/2110 Introduction 6

2. Problems Studied in POM
In this section we will first look at an example which will allow us to list the kind of problems
studied in POM. Then, we will try to structure these problems.

2.1 The Makoffee production system

Preparing coffee in the morning is a nice example of a production system.

coffee machine
electricity
operator

water, filter, coffee ”Prepare” drinkable coffee

When somebody prepares coffee in the morning, she/he performs different operations and
makes different decisions. Here we will review these operations and decisions and draw a
parallel between the problems the coffee maker faces and those faced by a production
manager in his/her company.
0. When do you make coffee in the morning ?
“Before washing” is convenient because it is ready when you come back from the bathroom.
You must here schedule the production of coffee and the other activities.
scheduling / project management
In a company, you need to organize the different activities (sequence, priority, ...)
1. Get water, coffee, filter and coffee machine.
Where is the coffee machine? Usually, the coffee machine is in the kitchen where you get the
water and drink the coffee. You locate the production system where you get the raw materials
and where you use the finished products.
location
Where are the different ingredients? Usually, the coffee and the filters are together and close
to the coffee machine. The coffee machine is close to the water faucet. You place the different
elements to avoid useless trips and handling.
layout
In a company, where to locate your plant or your shop is a strategic question. The layout is
also critical. It usually follows the material flow.
2. Estimate how much coffee must be prepared.
How many people will drink coffee today and at what time?
You take into account your experience, the day of the week and anything you know.
forecasting
Then, you must decide whether you prepare the coffee for the breakfast or for the whole day.
Your aim is a compromise between work and quality.
lot sizing
You do no want to run out of coffee this morning but you do not want to waste coffee either.
inventory control
The baker faces the same problem when he decides how many loaves of bread to bake in the
morning.

Prod 2100/2110 Introduction 7

3. Prepare the coffee
How do you really prepare coffee? Which operations are needed? In which order ? If it takes a
long time to fill the can with water, you prepare the filter with coffee while the can is filling.
Here, you want to minimize the time needed to prepare the coffee.
process design
You measure each operation in order to check whether your process is still optimal.
If it takes too much time, perhaps you should buy other filters or a new machine ?
productivity measurement
In a company, the production processes are specified with lots of details. They are
permanently controlled and many redesigns take place.
4. drink coffee
You want to check the quality of the products and of the process. By drinking a single cup, you
decide about the quality of the whole pot. You do not want to drink the whole pot before
deciding it'
s a good coffee.
quality control: statistical process control

5. wash and descale the coffee machine

If you do not want the machine to require one hour for one coffee can, you should descale it
from time to time.
maintenance
You should keep your production system in good shape. Keeping a clean environment also
prevents dirt from mixing with the coffee when you prepare it.
quality control : total quality management
Getting the opinion of the customers is another important quality control check.
6. buy filters and coffee
How much coffee and how many filters are required depends on the consumption of coffee.
material requirement planning (MRP)
If you have to drive a long way to buy the raw material, you will buy in big quantities.
If the coffee is very expensive, you will buy quite often small quantities. A compromise must
be found.
lot sizing
You do not want to run out of coffee or of filters. But if the shop is quite often closed, you could
keep some safety stock of raw material..
inventory control
How to choose between different coffee qualities at different prices in different shops which
are accessible at different times?
purchasing

7. buy a new coffee machine ?

You must choose between different options here too. However, the size (or type) of the
machine will first depend on the amount of coffee you drink every day.

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If you can foresee that the people you will invite in the near future are hard coffee drinkers,
you could perhaps already buy a higher capacity machine. Furthermore, this machine can be
used for normal coffee in the morning and for “expresso” in the evening.
forecasting
aggregate/capacity planning
If you need this higher capacity only in a few months, delaying the investment could perhaps
be more profitable.
investment analysis

Prod 2100/2110 Introduction 9

2.2 List of POM Questions
Here is the list of problems/subjects encountered during the description of the Makoffee
production system.

• Scheduling / project mngt. when do you schedule "makoffee"?

• Facility location where is the coffee machine?

• Facility layout where are the components?

• Forecasting how much coffee for today?

• Lot sizing do I prepare coffee for the whole day?

• Inventory control what is the risk of running out of coffee?

• Process design how do I make coffee?

• Work measurement can I improve the time it takes?

• Quality control is the coffee good?

• Maintenance and reliability how often do I clean the coffee machine?

• Material req. planning how many filters do I need and when?

• Lot sizing do I buy them one by one?

• Inventory control what if the shop is closed?

• Purchasing what is the best shop?

• Forecasting will I always drink as much coffee?

• Aggregate planning shall I buy a bigger pot now?

• Investment analysis or do I go on with my small pot?

All these subjects can be organized according to the length of the time horizons to which they
refer.
Decision Horizons
Short Intermediate Long
(hours / days) (weeks / months) (year or years)
Scheduling Measurement Facility location
Forecasting Process review Facility layout
Lot sizing MRP Process design
Inventory control Lot sizing Forecasting
Quality control Inventory control Aggregate planning
Maintenance Purchasing Investment analysis

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2.3 Life Cycle of a Production System
These POM subjects/problems can also be organized according to the life of the product
itself.

Period Decisions
Birth of the system Goals of the firm?
What product or service is offered?
Product design What is the product form?
Process selection How to make the product?
What capacity is needed?
Where should the facility be located?
Design of the system How should the facility be organized?
How long does each job take?
What job will each worker perform?
How will the job be measured?
Startup of the system How do we start the system?
How long will it take to reach the desired
output rate?
How do we manage daily activities?
Control of the system How do we maintain the system?
How can we improve the system?
How do we revise the system if corporate
strategy changes?
Termination How does the system die?
How can the resources be salvaged?

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2.4 Table of Contents
Week from Courses with P. Semal Exercises Exercises Miscella-
Prod2100: Mont03 with M. in groups neous
Prod2110: Créteur or alone
Mont01/Agor13
5 1/2 Introduction + Prob/Stat.
Product & Process 1 revisions
6 8/2 Product & Process 2, 3
7 15/2 half-time
8 22/2 Product & Process 4, 5 Xcell + 22/2, 12.45,
Simulation ?
soft introd.
9 1/3 Strategic Planning
10 8/3 Aggregate Planning
11 15/3 MRP + Lot Sizing Q/A on Aggregate 15/3, 12.45,
P&P + AP planning ?
soft introd.
12 22/3 JIT + MRP CEMS on
Inventory Control 1 24-26th/3
13 29/3 Inventory Control 2, 3 2/4, 12.45, ?
soft introd.
14 5/4 Easter holiday Inventory
control
15 12/4 Easter holiday Inventory
control
16 19/4 Forecasting Methods Inventory
control
17 26/4 Quality Management Q/A on Forecast. 26/4, 12.45,
Inventory methods ?
control soft introd.;
IAG Fellow
18 3/5 Project Management Q/A on
Forecast.
19 10/5 Project
Mngt.
20 17/5

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2.5 The GETUP production system
This example aims at illustrating the theme: project management.

soap, clothes, food

alarm clock, coffee machine
bathroom, kitchen
friend, parents

Student asleep "Morning" Student listening

This is a special kind of production system since only one piece of output is produced at a
time. You cannot automate the process for producing several units of output because of time
constraints. In other words you cannot wash yourself in advance. Such a process is usually
called a project.

Project features
• cannot be automated
This project is of the type: one-of-a-kind. Examples are: building a bridge or a house,
transferring a plant or analyzing a problem.
• can be decomposed into a set of tasks
The project is made of a set of tasks which are rather independent. You need to get up, to
wash, to prepare coffee, to eat breakfast, to dress and finally to go to the auditorium.
• show precedence aspect
Some of the tasks cannot be done at any time. You need to wash before dressing and
prepare coffee before having breakfast. However, you can eat before or after getting dressed.

All you can do is to organize the different tasks in the best possible way.
Project Management Objectives
Here is a rough list of objectives:
• On time
• Quality
• Cost

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3. Production and the other departments
How is the “production function” related to the other functions, such as marketing, finance, etc.
? Such relationships are key questions for a company. In some cases, the cooperation
between the different functions is more important than the individual performance of each
function.
Here we briefly sketch the kind of relationships between the production department and the
other departments. More information will be given in due time.
1. Production and Marketing
Design (R&D) Production

Market Analysis Promote Product

Customers ⇐ Distribution-Sales
At the interface between production and marketing are discussed all the product (production)
specifications and the production characteristics: lead times, flexibility, inventory strategy,
forecasts.
2. Production and Human Resources
• skills
• motivation
• formation
• labor specialization
For example, TQM and JIT require highly motivated, responsible and respected people.
3. Production and Finance
• investments
• cash flows
The large investments required by large scale production plants must be evaluated through a
clear financial plan. Productivity increases obtained at the cost of increased inventories must
also be carefully analyzed.
4. Production and Information Systems
“Do I get the information I need for deciding?” or “how much would it cost me to get this
information on-line?” are the kind of questions to be debated at this interface.
Question: buffer or integrate Production?
All the interfaces call for the following basic question, for which no absolute answer exists.
Two attitudes are possible. Either you keep a tight contact with all these perturbing factors (the
market, mainly) or you build a wall to protect your production unit. In the first case, you will try
to follow the market and the reality at the cost of an under-optimized ever-disturbed production
system. Your priority is then “flexibility”. The danger is a complete disorganized system. In the
other case, the wall allows you to operate in a stable and optimized way. However, the
weakness of the contact with the reality could be extremely dangerous.

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