CONTENT PAGE NO

1. TOPIC 1 1-3
2. TOPIC 2 4-6
3. TOPIC 3 7-8
4. TOPIC 4 9-11
5. TOPIC 5 12-15
  Topic 1
It is often said that Operation Management is a
transformation process. Do you agree with this statement? Support
your answer with reasons.
A transformation process is any activity or group of activities that takes
one or more inputs, transforms and adds value to them, and provides outputs
for customers or clients. Where the inputs are raw materials, it is relatively
easy to identify the transformation involved, as when milk is transformed into
cheese and butter. Where the inputs are information or people, the nature of
the transformation may be less obvious. For example, a hospital transforms ill
patients (the input) into healthy patients (the output).

 Type of inputs
i. Materials
ii. Information (e.g. Consultancy firms and accountancy firms)
iii. Customers (e.g. Hairdressing, Hospitals)

 Transformation processes include

i. changes in the physical characteristics of materials or customers
ii. changes in the location of materials, information or customers
iii. changes in the ownership of materials or information
iv. storage or accommodation of materials, information or customers
v. changes in the purpose or form of information
vi. changes in the physiological or psychological state of customers

 One useful way of categorising different types of transformation is into

i. manufacture – the physical creation of products (for example cars)
ii. transport – the movement of materials or customers (for example a taxi
service)
iii. supply – change in ownership of goods (for example in retailing)
iv. service – the treatment of customers or the storage of materials (for
example hospital wards, warehouses).
  The basic transformation model

INPUT PROCESS OUTPUT

FEEDBACK

 Nature of outputs

1. Tangibility
2. Transportability
3. Storability (can be stored) 
4. Customer contact
5. Simultaneity
6. Quality
 Feedback 

This used to control the operation system by adjusting the input and
transformation process that are used to achieve desired output.

 The Role of Operations Management in the Organization

Operations are one of the three strategic functions of any organization.

This means that it is a vital part of accomplishing the organization’s strategy
and ensuring its long-term survival. The other two areas of strategic
importance to the organization are marketing and finance. The operations
strategy should support the overall organization strategy. Many companies
prepare a 5-year pro-forma to assist in their operation planning. The pro forma
uses information from past and current financial statements in an effort to
predict future events such as sales, and capital investments.
 Strategic Versus Tactical Operations Decisions

Operations decisions include decisions that are strategic in nature,

meaning that they have long-term consequences and often involve a great deal
of expense and resource commitments. Strategic operations decisions include
the following:

 facility location decisions,

 the type of technologies that the organization will use,
 determining how labor and equipment are organized,
 how much long-term capacity the organization will provide to meet
customer demand.

Tactical operations decisions have short to medium term impact on the

organization, often involve less commitment of resources, and can be changed
more easily than strategic decisions. The following are some tactical decisions:

 workforce scheduling,
 establishing quality assurance procedures,
 contracting with vendors,
 managing inventory.
Strategic and tactical operations decisions determine how well the
organization can accomplish its goals. They also provide opportunities for the
organization to achieve unique competitive advantages that attract and keep
customers.
  Topic 2
Outline the factors that should be considered in locating the
nuclear power generating plant. List these factors in order of
priorities.
A comprehensive site selection process presents a formidable task to the
decision makers. The selection & evaluation of sites of nuclear power plants
throughout the world have become increasingly difficult in recent years as
pressure from various societal segment has resulted in strict consideration of
the institutional environment, safety, socio-economic & engineering factors
affecting the siting ,construction  and operation of such facilities. The following
are some of the factors influencing the location of a plants particularly thermal
& nuclear power plants.

 ECONOMICS FACTORS
i. RAW MATERIALS & SUPPLIES
The accessibilities to vendors/suppliers of raw materials, parts supplies,
tools, equipments etc are very important. If raw material is bulk viz
transformed into various productions, by – products, then location near raw
material come from a variety of location, the plants/facility may be situated so
as to minimize total transportation costs as the thermal and nuclear power
plants need water, nuclear fuels, heavy equipment such as coolant, turbine,
reactor etc. 
ii. TRANSPORTATION FACILITY
Adequate transport facilities are essential for the economics operation
of a production system. For companies that produce or buy heavy bulky and
low value per ton commodities water transportation could be an important
factor in locating plants along river banks. Sometimes the thermal and nuclear
power plants may need some equipment or raw materials which are not
present. So it must be located at a place from where the transportation is easy
& cheap. Thus, the site should be accessible by road and rail preferably. The
dependability and character of the available transport carries, frequency of
service & freight and terminal facilities is also important.
iii. MANPOWER SUPPLY 
The availability of skilled manpower, the prevailing wage pattern, living
costs and the industrial relations situation influence location. Therefore, the
supply of trained labour should be adequate so as to avoid the costs which
would be incurred to import the skilled manpower.
iv. INFRASTRUCTURE
This factor refers to the availability and reliability of power, water, fuel,
and communication facilities in addition to transportation facility.
v. ACCESS TO MARKETS 
There has to be some customer/market for the products/service. The
market growth potential and the location of competitors also influence the
location. As the nuclear and thermal power plants are energy demanding firms,
the location where energy is relatively inexpensive, will be preferred.
vii.LEGISLATION & TAXATION
Factors such as financial and other incentives for new industries in
backward areas or no-industry centers, exemption from certain state and local
taxes, octroi etc are important.
 
 NON – ECONOMICS FACTORS
i. COMMUNITY ATTITUDES
Most communities usually welcome setting up of new industry since it
would provide opportunities to the local people directly or indirectly. But in
case of polluting, or dirty industries, they would try their utmost to locate
them as far away as possible. Something because of prevailing law and order
situation, companies have been forced to relocate their units. The attitude of
people as well as the state government has an impact on industrial location.
The thermal and nuclear plants take water from river or sea for cooling and
discharge the thermal effluents into river and ocean surface which elevate the
water temperature and residual chlorine that leads to health problems.   
ii. WASTE DISPOSAL
The facilities required for the disposal of process waste including solid,
liquid and gaseous effluents need to be considered. The plants should be
positioned so that prevailing wind carry any fumes away from populated areas
and so that waste may be disposed off properly and at reasonable expense. If
the waste products of a nuclear plant are not disposed safely then it may
cause, lethal disease like cancer or even death.
iii. SITE SIZE
The plot of land must be large enough to hold the proposed plants,
parking and access facilities and provide room for future expansion. There
should be enough space for implanting any plant in future and for the
treatment of wastes generated in thermal and nuclear power plants. As power
plants employs newly discovered nuclear fuel which may give rise to a new
wasted product which could need a different set up for their treatment before
disposal.
iv. ECOLOGY & POLLUTION
These days there is a great deal of awareness towards maintenance of
natural ecology balance. There are quite a few agencies propagating the
concepts to make the society at large more conscious of the danger of certain
avoidable action. It is essential to conduct detailed studies for potential impact
of nuclear power plant operation of the ecology and environment. Many
electric generating facilities have been located along the banks of rivers so as
to strategically utilize readily available cooling water for plant condenser
needs. It is important to plan for effluent disposal so as to minimize pollution
whether it is in the air, water or soil. As the hot effluents of thermal and
nuclear plants increase the temperature of water bodies which cause serious
threats to marine population. 

 CONCLUSION
Location decision is the process of selecting a site for a firm’s operation.
It is influenced by a set of economic processes. A thermal or nuclear plant is
associated with energy. They might cause serious threats to the environment,
so their location decision is very important from social and political point of
view apart from economic feasibility.
  Topic 3
Suppose a directive comes from manufacturing facilities from
the Controller, strongly suggesting35% across-the-whole reduction
in inventory level. The plant manger asked you to help explain the
need for inventory in manufacturing. What points would you name
in favour of inventories?

A typical manufacturer will identify three types of inventory: raw

materials, work in process and finished goods. Raw materials are the basic
"inputs" of production -- steel, wood, plastic, chemicals and anything else that
gets turned into the final product. Work in process represents goods that still
require work before they are ready for sale to customers. Finished goods are
those that have been all the way through the production process and are
awaiting sale.

Inventory is a necessary evil that every organization would have to

maintain for various purposes. Optimum inventory management is the goal of
every inventory planner. Over inventory or under inventory both cause
financial impact and health of the business as well as effect business
opportunities.

 Reasons why organizations maintain Raw Material Inventory

i. Meet variation in Production Demand

Production plan changes in response to the sales, estimates, orders and

stocking patterns. Accordingly the demand for raw material supply for
production varies with the product plan in terms of specific SKU as well as
batch quantities. Holding inventories at a nearby warehouse helps issue the
required quantity and item to production just in time.

ii. Cater to Cyclical and Seasonal Demand

Market demand and supplies are seasonal depending upon various

factors like seasons; festivals etc and past sales data help companies to
anticipate a huge surge of demand in the market well in advance. Accordingly
they stock up raw materials and hold inventories to be able to increase
production and rush supplies to the market to meet the increased demand.
 iii. Economies of Scale in Procurement

Buying raw materials in larger lot and holding inventory is found to be

cheaper for the company than buying frequent small lots. In such cases one
buys in bulk and holds inventories at the plant warehouse.

iv. Take advantage of Price Increase and Quantity Discounts

If there is a price increase expected few months down the line due to
changes in demand and supply in the national or international market, impact
of taxes and budgets etc, the company’s tend to buy raw materials in advance
and hold stocks as a hedge against increased costs. Companies resort to buying
in bulk and holding raw material inventories to take advantage of the quantity
discounts offered by the supplier. In such cases the savings on account of the
discount enjoyed would be substantially higher that of inventory carrying cost.

v. Reduce Transit Cost and Transit Times

In case of raw materials being imported from a foreign country or from a

far away vendor within the country, one can save a lot in terms of
transportation cost buy buying in bulk and transporting as a container load or a
full truck load. Part shipments can be costlier. In terms of transit time too,
transit time for full container shipment or a full truck load is direct and faster
unlike part shipment load where the freight forwarder waits for other loads to
fill the container which can take several weeks.

There could be a lot of factors resulting in shipping delays and

transportation too, which can hamper the supply chain forcing companies to
hold safety stock of raw material inventories.

vi. Long Lead and High demand items need to be held in Inventory

Often raw material supplies from vendors have long lead running into
several months. Coupled with this if the particular item is in high demand and
short supply one can expect disruption of supplies. In such cases it is safer to
hold inventories and have control.
  Topic 4
Discuss the similarities and differences between the aggregate
planning problems of service organisation and product
organisation.
 Marketing Similarities Between Products & Services

Companies sell both products and services to meet the needs and
desires of diverse consumer groups. Businesses market both products and
services in strikingly similar ways. Marketers should be familiar with the
distinction as well as the similarity between marketing products and services to
maximize the effectiveness of their marketing strategies.

 Features

Although products and services are different in distinct ways, there are a
number of similarities between the two. Products are generally physical items,
such as automobiles, tissue paper or personal computers. Services, on the
other hand, are intangible bundles of value derived from action, such as tax
preparation services, car washes or guided tours. Both products and services
gain their existence from an unmet need in the marketplace, and both rely on
demand from target customer groups. Both products and services attempt to
provide value to individuals, families or businesses, and both rely on marketing
to stimulate demand.

 Types

Marketing comprises a range of specific activities, all of which can be

employed to promote either products or services. Advertising is the most
visible component of marketing, comprising one-way messages sent over mass
market and other media. Promotions are the branch of marketing concerned
with encouraging customers to try products or services or to make repeat
purchases. Promotions include things like coupons, in-store sales and loyalty
programs. Public relations are the arm of marketing concerned with managing
relationships with public entities, including the government and news
organizations. Donating money to local charities and sending press releases to
all local newspapers detailing the donation is an example of a public-relations
activity.

 Advertising Similarities

Effective advertising begins with a specific purpose. While the details of

a product's and service's value may differ, the purposes for sending advertising
messages are virtually identical. For both products and services,
advertisements can be created to inform customers of new offerings, to
remind customers about established brands, to encourage repeat purchases or
brand switching or to stimulate momentum for promotional activities.

 Promotions

Promotions are where products and services diverge from a single

marketing track, although product and service promotions are not vastly
different from each other. The main purpose of product promotions is to get
products into consumer's hands for the first time or to encourage brand-
switching. The purpose of a service promotion, on the other hand, is usually to
bring people in the door and give them a limited-service offering accompanied
by a sales hook for a full, paid service.

 Considerations

Products and services are not always mutually exclusive. Innovative

companies learn to bundle products and services to diversify and strengthen
their income statements. Examples of product and service bundles include
software packages with technical support contracts or salons that sell their
own cosmetic products. For these businesses, products and services can often
be effectively marketed together.

 Differences Between Service and Manufacturing Organizations

 Physical Goods

The key difference between service firms and manufacturers is the

tangibility of their output. The output of a service firm, such as consultancy,
training or maintenance, is intangible. Manufacturers produce physical goods
that customers can see and touch.
  Inventory Levels

Service firms, unlike manufacturers, do not hold inventory; they create a

service when a client requires it. Manufacturers produce goods for stock, with
inventory levels aligned to forecasts of market demand. Some manufacturers
maintain minimum stock levels, relying on the accuracy of demand forecasts
and their production capacity to meet demand on a just-in-time basis.
Inventory also represents a cost for a manufacturing organization.

 Customer Demands

Service firms do not produce a service unless a customer requires it,

although they design and develop the scope and content of services in advance
of any orders. Service firms generally produce a service tailored to customers’
needs, such as 12 hours of consultancy, plus 14 hours of design and 10 hours
of installation. Manufacturers can produce goods without a customer order or
forecast of customer demand. However, producing goods that do not meet
market needs is a poor strategy.

 Labor Requirements

A service firm recruits people with specific knowledge and skills in the
service disciplines that it offers. Service delivery is labor intensive and cannot
be easily automated, although knowledge management systems enable a
degree of knowledge capture and sharing. Manufacturers can automate many
of their production processes to reduce their labor requirements, although
some manufacturing organizations are labor intensive, particularly in countries
where labor costs are low.

 Physical Location

Service firms do not require a physical production site. The people

creating and delivering the service can be located anywhere. For example,
global firms such as consultants Deloitte use communication networks to
access the most appropriate service skills and knowledge from offices around
the world. Manufacturers must have a physical location for their production
and stock holding operations. Production does not necessarily take place on
the manufacturer's own site; it can take place at any point in the supply chain.
  Topic 5
Identify different types of inspection and discuss their roles in
the quality assurance and control process.
 What is a quality inspection?

The term “inspection” generally refers to the activity of checking

products, whereas “audit” applies to analyzing manufacturing processes and
organizations. The quality inspector usually follows a pre-established checklist
that is based on the product specifications. Inspected products can be the
components used for production, semi-finished goods, or (most often) finished
goods before shipment to a customer.

Inspection is an important tool to achieve quality concept. It is necessary

to assure confidence to manufacturer and aims satisfaction to customer.
Inspection is an indispensable tool of modern manufacturing process. The
inspection and test unit is responsible for appraising the quality of incoming
raw materials and components as well as the quality of the manufactured
product or service. Inspection only measures the degree of conformance to a
standard in the case of variables. Inspection is the most common method of
attaining standardization, uniformity and quality of workmanship.

 The most common types of quality inspections

i. Pre-production inspection/ Initial production inspection
“Garbage in, garbage out”: a factory usually cannot turn defective inputs
(components, or raw materials) into good products. And the problems are
much harder to detect once the materials are embedded in the final product.
Thus, to decrease quality risks, the inputs can be inspected prior to production.
Some samples can be taken randomly and checked visually (or sent to a
laboratory for tests). Also, the buyer should clearly define what inputs are
acceptable, before he gives any order. Generally speaking, pre-production
inspections are adapted to customized and complex products.
ii. During production inspection/“in-line” or “in-process” inspection
Typically, in an in-line inspection, the first products that got out of the
line are inspected for conformity. If issues are raised at this stage, the factory
can immediately take some corrective actions and avoid delays. Also, based on
the production start date and the number of products already finished, the
buyer can have a fair idea about the shipment schedule. A third advantage of
in-line inspections is that the buyer knows where the goods are produced.
Some suppliers show a factory to a buyer, and then sub-contract the
production in another workshop.
iii. Final random inspection/Pre-shipment inspection
This is the most popular type of QC inspection for importers. It takes
place once all the products are finished and ready for shipment. The
conformity of the products is checked against a list of criteria defined by the
buyer (product quantity, workmanship, function, safety, aspect, size, packing,
etc). Buyers are advised to ask their inspectors to keep track of which cartons
were opened. This way, a 2nd “spot” inspection can give an idea of how
seriously the control was performed.
iv. The Container loading inspection
It can be useful if the buyer has a precise loading plan and needs it to be
respected very precisely (e.g. some cartons are too fragile to be placed at the
bottom), or if the packaging is not conventional (e.g. some garments hung on
bars, with no carton protection). It can also ensure that the right kind of
products is shipped out in the right quantity, when the importer places no trust
in his supplier or when several suppliers bring their products for consolidation.

 Objectives of Inspection
i. To detect and remove the faulty raw materials before it undergoes
production.
ii. To detect the faulty products in production whenever it is detected.
iii. To bring facts to the notice of managers before they become serous to
enable them discover weaknesses and over the problem.
iv. To prevent the substandard reaching the customer and reducing
complaints.
v. To promote reputation for quality and reliability of product.

 Types of Inspection in Production Management

i. Floor inspection: In this system, the inspection is performed at the place
of production. It suggests the checking of materials in process at the machine
or in the production time by patrolling inspectors. These inspectors move from
machine to machine and from one to the other work centers. Inspectors have
to be highly skilled. This method of inspection minimize the material handling,
does not disrupt the line layout of machinery and quickly locate the defect and
readily offers field and correction.
ii. Centralized inspection: Inspection is carried in a central place with all
testing equipment; sensitive equipment is housed in air-conditioned area.
Samples are brought to the inspection floor for checking. Centralized
inspection may locate in one or more places in the manufacturing industry.
iii. Combined inspection: Combination of two methods whatever may be
the method of inspection, whether floor or central. The main objective is to
locate and prevent defect which may not repeat itself in subsequent operation
to see whether any corrective measure is required and finally to maintain
quality economically.
iv. Functional inspection: This system only checks for the main function,
the product is expected to perform. Thus an electrical motor can be checked
for the specified speed and load characteristics. It does not reveal the variation
of individual parts but can assure combined satisfactory performance of all
parts put together. Both manufacturers and purchasers can do this, if large
number of articles is needed at regular intervals. This is also called assembly
inspection.
v. First piece inspection: First piece of the shift or lot is inspected. This is
particularly used where automatic machines are employed. Any discrepancy
from the operator as machine tool can be checked to see that the product is
within in control limits. Excepting for need for precautions for tool we are
check and disturbance in machine set up, this yields good result if the operator
is careful.
vi. Pilot piece inspection: This is done immediately after new design or
product is developed. Manufacturer of product is done either on regular shop
floor if production is not disturbed. If production is affected to a large extent,
the product is manufactured in a pilot plant. This is suitable for mass
production and products involving large number of components such as
automobiles aero planes etc., and modification are design or manufacturing
process is done until satisfactory performance is assured or established.
vii.Final inspection: This is also similar to functional or assembly inspection.
This inspection is done only after completion of work. This is widely employed
in process industries where there are not possible such as, electroplating or
anodizing products. This is done in conjunction with incoming material
inspection.

 Methods of Inspection

i. 100% INSPECTION: This type will involve careful inspection in detail of

quality at each strategic point or stage of manufacture where the test is
involved is non-destructive and every piece is separately inspected. It requires
more number of inspectors and hence it is a costly method. There is no
sampling error. This is subjected to inspection error arising out of fatigue,
negligence, difficulty of supervision etc.
ii. SAMPLING INSPECTION: In this method randomly selected samples are
inspected. Samples taken from different patches of products are
representatives. If the sample proves defective, the entire concerned is to be
rejected or recovered. Sampling inspection is cheaper and quicker. It requires
less number of Inspectors. It is subjected to sampling errors but the magnitude
of sampling error can be estimated.