y Qperations management Module-t oo Module-I 1.1 Introduction to operations management A manufacturing organization essentially engages in converting a variety of inputs into products that are useful for individuals and organizations. For example, a manufacturer of machine tools employs several production workers, buys raw material and components from various suppliers, and manufactures machine tools ina factory using an extensive array of manufacturing facilities. In this case, the factory encompasses a large number of interrelated conversion processes for the transformation of raw material into the final product, that is, the machine tool. Similarly, a manufacturer of electrical bulbs will process raw material using productive resources in a factory and produce bulbs of different ratings. A service organization, on the other hand, responds to the requirements of customers and satisfies their needs through a service delivery process. Typical examples of such organi7*tions include automobile garages, hotels, hospitals and banks. A_ service organization may not always make use of material inputs and may not always produce products that are used by the customer. For instance, a law firm providing legal consultancy to its clients may not provide material inputs to the system or produce material output. Instead, the input and output are informational and experiential in nature. However, in the case of a service system like an automobile garage, a ‘estaurant or a health care system, there are material inputs and naterial outputs. Despite this difference, service systems also have a conversion process that utilizes resources and delivers useful outputs tom the system. ‘An operations system is defined as one in which several clivities are performed to transform a set of inputs into a useful uiput using a transformation process. These inputs and outputs can ¢ tangible, as in the case of raw materials and physical products, or itangible, as in the case of information and experiences, Viewed in lis manner, we can say that manufacturing and service systems yuld be broadly classified as operations systems. The basic inputs in 1 operating system are labour, material and capital. Processing cludes the various activities that an operating system undertakes to invert the raw material into useful products for customers.fodule-t Operations management Modul The conversion process adds value to the product and enables the onwanization to sell it in the market. The output of an operations tem consists or goods and services. In an operations system, ‘ealback ster el ; areas requiring improvement and feedback system helps to identify the areas requiring improvemen ‘or closed. An open system interacts with. its environment. An Organization in an open system interacts regularly with external forces such as government agencies, customers and suppliers. These external forces have an impact on organization practices: Fromme ar rods avery Tohoar efficiency Element of operations systems Operations management refers to the activities, decisions and responsibilities of managing the resources which are dedicated to the production and delivery of products and services. The part of an organization that is responsible for this activity is called the operations function and every organization has one as, delivery of a product andlor service is the reason for existence. Operations managers are the people who are responsible for overseeing and managing the resources that make up the operations function. Operations management can significantly contribute to the success of an organization using the available resources effectively to produce products and services in a way that satisfies customers. Activities in operations management include organizing work, selecting processes, arranging layouts, locating facilit designing jobs, measuring performance, controlling quality scheduling work, managing inventory, and planning production The four primary functional areas ofa firm are marketing, finance ‘operations, aid human resources. For most firms, operations is the technical core or “hub” of the organization, interacting with the other functional areas and suppliers to produce goods and provide services for customers, LS Ee operations management rere objectives of operations management Objectives of operations managem follows 1, Customer service ~ Customer operations management. The of something to a specification, w in terms of cost and timing, Thu a right price at the right time’ ¢ 2. Resource utilization ~ Operati with the utilization of resour effect from resources and und ‘must be provided with the achi through efficient use of resour or inadequate customer servis system. 1.2 Decision levels in operation Decision making is a proces consciously chosen from available achieving desired results, Manage decisions which affeet the work ar understanding the significance of a have been identified and are discuss Strategic decisions ~ Stra direction, long term goals decisions are most risky at partly because they rea decisions involves decision decisions on process sel facility location, decisior handling, decisions on ca, 2. Tactical decisions decisions. They tend significance, with moder the future vision of the b steps needed to achieve |Operations management Module-I ae Objectives of operations management Objectives of operations management can be categorized as follows. 1.2 1. Customer service — Customer service is a key objective of operations management. The operating system must provide something to a specification, which can satisfy the customer in terms of cost and timing. Thus, providing the ‘right thing at a right price at the right time’ can satisfy primary objective. Resource utilization — Operations management is concerned with the utilization of resources, i.¢., obtaining maximum effect from resources and underutilization. Customer service must be provided with the achievement of effective operations through efficient use of resources. Inefficient use of resources or inadequate customer service leads to failure of operating system. Dec ion levels in operations management Decision making is a process by which a course of action is consciously chosen from available alternatives for the purpose of achieving desired results. Managers are required to take many decisions which affect the work and life of others. As a means of understanding the significance of a decision, three levels of decision have been identified and are discussed below. 2. Tactical decisions ~ Tactical deci; 1. Strategic decisions — Strategic decisions concerns general direction, long term goals, philosophies and values. These decisions are most risky and of the most uncertain in nature, partly because they reach so far into the future. Strategic decisions involves decisions on product selection and design, decisions on process selection and planning, decisions on facility location, decisions on facility layout and material handling, decisions on capacity planning, etc. tc ions support strategic decisions. They tend to be medium range, medium significance, with moderate consequences. Strategy involves the future vision of the business and tacties involve the actual steps needed to achieve that vision.Operations management Module-I For example, a marketing strategy for a motel might be to target travel agents, and develop a business package es them, Tactics are the practical steps needed to implement the stratepy such as to build a list of local travel agents, prepare a business incentive scheme, ete. It can be seen that the strategy always comes first, and then come the tactics: 3. Operational decisions ~ These are every day decisions, used to support tactical decisions. They are often made with litle thought and are structured. Their impact is immediate, short term. short range, and usually low cost. The consequences of a bad operational decision will be minimal, although a series of bad or sloppy operational decisions can cause harm, Operational decisions can be preprogrammed, pre-made, or set out clearly in policy manuals. 13 Plant design A factory or manufacturing plant or simply plant is an industrial site, usually consisting of buildings and machinery, or more commonly a complex having several buildings, where workers manufacture goods or operate machines processing one product into another. Plant design involves the planning of various processes needed to accomplish a physical or chemical transformation of certain types of materials. Plant design may be used to design a new facility or to expand or modify an existing facility. Although it typically begins at a conceptual level, plant design usually ends with the creation of some type of fabrication or construction plans, 14 Production Production isthe sequence of technical processes requiring either directly or inditectly the mental and physical skill of craftsman and consists of changing the shape, size and properties of materials and ultimately converting them into useful articles, Some examples of production are manufacturing custom-made products like constrecin flats, manufacturing standardized products like, ear, motor cache television, ete. Production system of an organization is that att, which produces products of that organization, At one end ot she Production system are the inputs and atthe other end outpets, mt and output are linked by certain operations ot process a. wine imparting value to the inputs, —Operations management Module-t S. The processes, operations or activities may be called production system. The nature of production system may differ from ‘company to company or from plant to plant in the same firm. A typical production system comprises of three main components inputs, transformation process and output. 1.5 Types of production ‘The production systems are classified according to the volume of production and product standardization as follows. 1. Intermittent production a) Job shop production b) Batch production ©) Project industries 2. Continuous production a) Mass production b) Flow production 3. Assembly lines 4, Cellular production 1.5.1 Intermittent production In this system, the goods are manufactured specially to fulfill orders made by customers rather than for stock. Here the flow of material is intermittent, Intermittent production systems are those where the production facilities are flexible enough to handle a wide variety of products and sizes. These can be used to manufacture those products where the basic nature of inputs changes with the change in the design of the product and the production process requires continuous adjustments. Considerable storage between operation is required, so that individual operations can be carried out independently for further utilization of men and machines. It is desirable to arrange the machines on the process layout basis rather than on product layout which is more suited to continuous manufacturing. Machine shops doing job works and batch type chemical formulations (pharmaceuticals) are examples of intermittent | production. bes11, Most products are produced in small quantities, Advantages of intermittent production agement Module-T of intermittent productic 3 open een nagement Modules! ee + of intermittent production ‘Demand forthe products is small and non-uniform. [Non-standard and unique produ Tarp products requiring pars tobe brought tone Jsation In this method, production iuction is characteris ets designed and produced as per in prefixed time and cost. Each job ious order and i imation OF jobs, yy may be even one. Ws orders, dg prefer spect ited for machinery and p ‘ Wise coy ado chan Hoi up none operation des no tages of intermivent production Due fo frequent changes in produet design Planning ise Taman complex and mech setups need a can ical to achieve, = 858 inventories are high. rs are require. . m of labour and equi "abour and equipment results ia a unit costs, 3 Chara Disadvantages of ob production o oso tha ‘purpose equipments, spa istics of job order product cost of raw materials ‘As the purchase of raw materials is I ‘willbe high. For handling of different types of needed Higher set up and tooling costs duet jobs, skilled labours are 10 frequent setup changes.——_ Operations management Module ob Characteristics of intermittent produetion “The volume of production is generally smal Aide varity of products are produced ‘The flow of production is not continuous, but interspersed with waiting for operations. 4. The sequence of operations change with different products and different batches 5. General purpose machines and equipments adaptable for different operation are use. 6. funetional lay-out i usually used for Mexbiity 7. Components are produced and stocked for assembly into finished product as pr eustomer requirements 8. Organization of produetion planning and control operations in intermittent systems. needs. estimation of jobs, routing, scheduling, preparation of manufacturing orders, dispatching and prodiction contol 9, Workloads are generally unbalanced. 10, Highly skilled operators are required for efficient use of rmachines and equipment. 11. Most produets are produced in small quantities. Advantages of intermittent production Investment required for machinery and plant is small. tis flexible and easily adaptable to changes in produet design, A hold up in one operation does not cause disruption of others. In the functional grouping of machinery. specialization and skill development of operators are possible 5. Shee he operators handle vary of jobs there is more job satisfaction, Disadvantages of intermittent production 1. Due to frequent changes in product design production planning is complex and machine set-ups need frequent changes. ‘Optimum machine loading is dificult to achieve. Raw material and work in process inventories are high. Highly skilled operators are required, Ini iain of labour and eaupment resus in i unit costs Operations management Modate-t A ‘Suitability of intermittent production |. Demand for the products is small and non-uniform, 2. Non-standard and unique products. 3. Lange products requiring parts to be brought to one location Job or Unit production In this method, production activity is carried out on a very small scale, Job production is characterized by the manufacture of one product or small quantity of products designed and produced as per the specification of customers within pre-fixed time and cost. Each job fondet may be different from the previous order and is not likely to be repeated. The numberof products to be manufactured is very small, it may be even one. General purpose machines and flexible layout are preferred so that different types of works can be earried out with slight adjustments. This type of production is used for things which cannot be produced on a large scale, things requiring maximum attention, skilled workers, etc. Factories adopting this type of production are ‘generally small in size (ship building is an exception). Products like special purpose equipments, space vehicles, ete., are examples CCharacteristies of job onder production are :— 1. High variety and low volume of products can be manufactured. 2, High skilled workers are needed 3. Frequent changing of set up is needed. Advantages of job production Individual requirements can be met ‘There is no managerial of workers. Because. procclialersis of OntIOWS Produ, in market demand fF the pro ex! goods stocks, ine can stop the entire pry! Pry > ay antago ms reduced cycle time. own of stent one product as production Mass pro he changes in the pe large numberof identical items gy 2 however the equipment need not be designed t0 produce gh fits, Bath plant and equipment are flexible enough yg 5c 2 A oa acing tesame production procesesey * SO catia a ‘mechanized press shop that can be utilized yy tifferent types of product of steel metal without the ned ‘changes. Usually demand of the produ ‘manufactyglow production ‘er high Auge quantity of same product is manufac, yoy production or procens production, he Pls eaiee Diferent product will reqieyjent, and layout are designed to produce a particular put of one operation becomes teipy duct. nagement decides to switch over to a different type vraatin extensive change in layout, and equipment Iy through a uniform and mn i usually rates are use. (Characteristics of mass production |. Standardization of product and process sequence 2. Dedicated special purpose machines having highe capacities and output rates, Large volume of produets, Short ece tie of pradtion ined or botled soda 53 Assembly lines ing process in which parts nedModules Batch produc the method of manufacturing of products in small or large vals by a series of operations each op le batch before any subsequent operat iuction is generally adopted in medium, ions characterized by the manufacture ts produced at regular intervals and Wr sales, The facilities can be used for producing products during the interval. Batch production is said between job. production and mass. produetion, In_ job it dernand is met by ite fuction continuous. demand. is sat ing these two in batch production, continuous demand termittent production and stocking. ; | Advantages of batch production | 1. Compared to mass production less capital is required. 2. [fdemand of one product decreases, then produetion of ‘another produet ean be increased, Disadvantages of batch production 1. Compared to mass product 2, Raw materials to be purchas mass prod mass prod Project industries Operations management Module-t 7 1.5.2 Continuous production In continuous production, the production process is caried rough a sequence of operations which forms a continuous ren or flow. This production method is fora single product in Tange numbers or atleast afew similar products with a standard set of operations and sequences. Goods are produced on a large scale for We and selling, They are not produced on customer’ orders. idization is the fundamental characteristic of this system ion, is there with respect 10 srupied flow of material is maintained through pre- ce the product ‘where the product consumes fe and has continuous demand. This type of production requires special planned layout, one-purpose machinery and costly equipments. This method of production makes use of automatic machines. Characteristics of continuous production 1. The volume of output is general produced in anticipation of demand. The product design, the production operations and their sequence are standardized. Machines and equipments are arranged according to the ‘operations sequence. large and items areOper inuous production ee Advantages in market demand for the products may cause ished goods stocks, Jn stop the entire production tine, mn with reduced cycle time, are required. ines are one purpose mact jt changeable to other types of| ‘handle only one type of work. They may fer some time they may feel bored Mass production In this type, a large number of ider however, the equipment need not be designed of items. Both plant and equipment are flexible enough to deal ther products needing the same production processes. For example, 'y mechanized press shop that can be utilized to produce sent types of product of steel metal without the need of ‘hanges. Usually demand ofthe product very high. A huge same product sm nd is socked forsale. Different product wil require di . : p s n {particular type of manufacturing ies. Outpt of on operation Beso neon lin ean produce on ene We of : Sd Prod and process ons cared out continously trough unfo od tanked sequence of operons. Process ri ually condi using proprina ‘Standardization of product and process sequence. Dedicated special purpose machines having higher producti ‘capacities and output rates. Large volume of products Shorter eyele time of production. Lower in process inventory. and control is easy. can be comytechnology helps to have highé design and manufacturing funet Products wnology is to reduce wi ogress. and improve del performance by reducing lead times. = — Benefits of cellular manufacturing Production 4 Disadvantages of cellular manufacturing 1 Tatermitten ufacturing system wherein the machi Characteristic pm lows. a continuous and smooth Generalized machine with ale proces whl neu Machinery ges st may Be that matter. Cel o suit the needs. of parts that have similar processing requirements are ly skilled labour root miler par th nown as pare family. Then Labour fe bined volumes of the far ames are small. CM, thus Difference between continuous and intermittent production production (CP) or Cellar manufacturing (Cy) to produce that part far Factors affecting the choice of manufacturing process Following factors need Qn members helps to improve communica jon arising from misunderstood or Workers become mult future needs ofa business Greater worker motivation arising from variety of work, team ‘working and more responsi illed and more adaptable 10 the Part families identified for design purposes may not be appropriate for manufacturing purposes ‘balance the workflow through a cell than -produet assembly line because items may follow: different sequences through the ceModule! mu es oo va a, sepa ol salvar omhs nl ln ed factor to make process, Incase ‘competition certainly influence the choice of produc process. 4. Flexibility and efficiency —The manufacturing proces to be flexible enough to adapt contemplated changes and ‘volume of production should be large enough to lower costs for entrepreneur to consider ing a decision regarding the type ring process to be adopted. As for as Small Scale e concemed they usually adopt batch processes due estment, Make or Buy decis Tam Breshoven chart, ‘The manufacture or purchase dainpuchaig 1 ice be m0 2000 se f sales are 1000 TV sets, it is better to purchase picture tubes from supplier. he rate of 6000 per year and 1 =1200000 + @ 1000 Tot purchasing the picture tube = 02000 At BEP, cost of buying and manufacturing willbe the same. ie, 1200000 + 0 « 1000 = 9 2000 {0 «2000 @ + 1000 = 1200000 Q ~ 1200 units Cost of manufacturing 1000 picture tubes = = Fixed Cost +¥ Cost Hence, if the ‘economical to buy, 000 + 10001000 = 2200000Made! manage! a ee Modes incering Operations momagenet ssiness Process Ree — 7 incering i621 In Which gyi Factors affecting the need for design for re-engineering uxiness engineering Which ening perth samergtel tothe business world. Engingan Tel Compton — Resnenering wil be ead if we eelopment means the applications of eqet Sompetorcnpny stars marin «rth ng vrs to the design, development, plementation, fee more performance than tke company’s pros peineines tothe di rer: tng i nS rn af aytcm pone iy Tichelsl dienes -Re-agincsig wil 62 alist Creighton of oe POC a ‘ihon newer technology is avalable Tor manufacturing the cares hngue to design and implement effective and pret ws ewe hn wa tar ombin peopl organization Srutre and eee iuabil engineering will be needed if the Sinking profitability ~ Re-engineering will be need existing product does not bring profit to the company, Business Process Re-engineering (BPR) is the gg smajor functions with the goal of . See ae ng Challenges faced by reengineering efforts business process isaset of logically related tasks performed vo, Companies that begin BPR projects face many of the following a find busines outcome. BPR bezan a a private sector technigg challenaee to help organizations Fundamentally rethink how they do theit work ‘order to dramatically improve customer service, cut operational and become world-class competitors. Value ereation to the custome ce 's the leading factor for BPR and information technology plays a, Traiion rational ways of doing things dont de ei important enabling role. Micheal Hammer and James Champy pot thy afin apart f the organization's clare. This eats the follwing definition of BPR. the culture and beliefs held by individuals will also have Resistance ~ Change, especially radical change, always meets ‘a great deal of resistance. | chang Recengincering isthe fundamental rethinking and radi ike alvaye redesign of the business process to achieve dramatic improvemens 3. Time requirements ~ BPR is a lengthy process, almost alway: eral contemporary measures of performances such ay tos taking two or more years to complet, ‘ality, service and speed. This definition comprises Four Keyworle Cost ~ Its costly to exarsine the way business is handled to Nz. fardamental, radical, dramatic and processes. Understand ent way to accomplish the fundamental operations of business is the first step prioc | feenginesring. Radical redesign means disregarding all existing Sects and procedures, and inventing completely new ways {ccomplishing work. Reeogineering is about business reinventi begins with no assump Reenginsering isnot ak ‘ eliminated bef Performance. Hammer and ct oe functions as a collection of activiti Sere ie ae input and creates an output that is of © b cenginee aay ‘more than just business. improvising. It can in whole which _inel organizational work, a high-level assessment of the} improvement. D als, and customer needs. costs. Reengineering starts with organizations mission, strategiesion lpn the ree ind raect objective ~ RC ae wee naan ay te eas, moe pelo ee argu ngewe ing the existing involves ‘create pro the needs of particular eustomers or mark: 3 Defining the process to be re-engineered — Next step is ‘idemify, analyze, and redesign the organi the aim of achieving dramaie al performance measures, such asco quality, service, and peed. IT levers ~ Identify the areas were informatog technology ean be made use of, Implementation ~ This step involves. implementing the chosen business process and closely monitoring the proces, Guidelines of design for reengineering | |. Reengineering must establish consistency with other busines processes, policies and procedures. fed towards enterprise-wide objectives ted departmental or program objectives. redundar Re-engineering ty productivity Re-engineering helps Re-engineering brings improvement of profit customer satisfaction,ing plant is no ne Ot near a st. This w Mose must bi this will result in red may be neces New facilities jing demands, eC work, to meet ris and social changes ~ Pi ies of the for Nearnes 0 ransmater sMertation oer aril order 10 ‘even K ages ny ele Po vere acme atin Got may announce sme ax Bem eae, Thin may nate Fins wits emotes hasie modes of 12. Gs decision, they under controllable,imate ~ The geology of the any ns influence human ef 4. Supporting industries and services ~ Plant location mu near its supporting industries and services. I A number of techniques can help Some of ip with qual lp with qui measured, such as distance. We factor rating Fac Transportation Supplies Taxes and Regulations Ines + pape] Toral 02 ~ on 3 ol 4 Taxes and ‘ 4 Regulations _|_° Z 8 2 ‘customers | Overall Factor- 4 ratingMoiuled %, Operations management Module a there are three locations, Viz. te Dad netfave been evaluated on different factors any [S.No | Showroom | Neaxis | Yoaxis | Mobiles sold/month Mreighoge according 10 iS reams | CTA 130, | 250 1200) ngs wo these factors For the differen ocatgg, [2 B 300 | $50 1300 Oy 10D and auny these ratings ig, [3 [C700 | | 1.10.2 Center of gravity technique | “The eenterof-gravity technique. ot weight center technique, ive method for locating a facility such as a warehouse 11501200 + 300515004 70051700 415,64 820) ‘ea based on weight and distance. This method, 1200 1500.1 7001 identifies a set of coordinates identifying a central location relative 1 all other locations and quantity weight of the produ ion ofeach facility ts ‘coordinate system (Cartesian coordinate system) locations are marked on the grid, the centre of gr Y cootdinate = __ 25051200 + 5501500 + 900%1700 | 1200+ 1500+ 1700 “Thus, the suggested coordinates are x = 414 and y = 604, ‘The values are plotted in the graph as below. = 603.41 = Coordinates of the new fa = Coordinates of existing facility, = Annual weight shipped from facility i. ‘The centre-of-gravity method indicates the ideal lo rid that would ensure that the weighted dis I Problems : |. The coordinates of mobile showrooms and number of mobile very month are given inthe following table. What is the ocation for a new mobile warehouse! temporary storage ‘considering distances and quantity sold per month?pany wants t0 construct a jon center 10 Pr package the them fo their various X coordinate = 200% 75 +100x105 + 250%135+500%60 _ 555 75+ 105+135+60 Y coordinate = 200% 75-+500%105 +600%135+300%60 _ 444 15 +105-+135+60 ‘Thus, the suggested coordinates are x= 238 and y = 444. Module 29. 1e graph as below. a) Determine the best location for the outlet mall using the centre-of- gravity method, }b)_ Plot four towns and the location of the new mall on a grid ‘map. Soluion: ‘The new coordinates can be computed using the expressions.pertns manager Mollet 20 Sun Sm as X coordinate 065+ Soe4.2410% 5442459435 ¥ coordinte= X65 442+ OHS9AIHDS 59 53 Gs raa HSA sted coordinates are x = 30 and y = 54. “The values are plotted inthe graph as below. 004, 5355) (01 1.10.3, Load distance technique Load diaance technique sa vastion ofthe center-of gravity method for determining a faiity location. Load distance method Cvalluates two oF more. potential locations with regard to the supply/demand points. Various locations are evaluated using a load distance value that is @ measure of weight and distance. The load distance method provides a measure ofthe total oad distance foreach othe potential locations. Operations management Module-d 31 For a single potential location, a load-distance value is, computed as follows. 1D where, LD = The load-distance value, n= Number of demand (or supply) points, 1, = Load expressed as a weight, number of trips, or units being shipped from proposed site to location i, dy = The distance between the proposed site, j and existing location, i ‘The distance din is computed using the following formula for the straight-line distance between two points as follows. y= (x5) (= 9) where, = Coordinates of existing site, Coordinates of proposed facility Problems: 1. Burger Doodle wants to evaluate three different sites it has identified for its new distribution center relative to the four suppliers, A. B, C, and D. The locations of the four suppliers, ‘A.B. C,and D, and the annual number of trailer loads that will be transported to the distribution center are shown in the following table [SNe Supplier | Keats | Vani [Ope [1A 900 pois 2 [8 | 100] 500-105 3_| C1] 250s meng aenas 4[—p | soo | 300) The coordinates ofthe thre sites under consideration are ‘SNe. | Sie [Neate [Vea 1 Steet | 360 180 2 |Site? [#20] 450 3_[- Site-¥ [250 | 400.Madule-tt 2 Module-It rodluce work in a given time or in of a facility. Capacity (500-180) = 412.3, is expressed as the total commonly used =170 = 200, do = 2603 put measures are used, jor could be correspondingly the expression, LD = LD (Site-1) = 75 x 161.2-+ 105% 412.3 + 135% 434.2 + ‘60 184.4 = 125063 5 x 333 + 108x 323.9 + 135 226.7 + 0 x 170= 99789 isavery complex issue. 75 x 206.2 + 10S x 180.3 + 135 x 200+ ive method, (60 x 2693 = 77585 ' has to decide whether to set up a large plant or a for its new range of refrigerators,