Intro of Operations Management d) Development of Workers: Developing each

worker to their fullest potential for maximum
1. An organisation exist in a society. The purpose of
all organisations is to serve the society. The
society assigns the purpose to the organisation.
2. To whom the organisation serves? What activity
the organisations undertake to serve the
customers? These are the two basic questions
are to be answered.
This gives two basic issues:
a) An organisation serves the society by offering
some product (goods or services) of right
quantity, right quantity, at right time, at right
place and at right price.
b) The customer or the consumer may be the
outsiders or may be the insiders of the
organisation.
3. Thus an organisation may be considered to be
made up of two sub-systems
a) One which determines the need of the
customers and transfer the need satisfier
(product or services) to the customers. That is
the marketing function.
b) The other is the production of need satisfier,
which are to be transferred to the
customers. That is the production or operation
function.
4. One can easily identify these two operations in
an organisation in a organisation. The
relationship of these two functions that is,
marketing and operation function determines
the success of the organisation, the survival of
the organisation or the growth of the
organisation. The close together the functions
are, the greater the likehood of success of the
success.
5. In most cases when the organisation is formed, it
is small and the production and marketing
function are usually carried out by one and same
person. In this case there is more co-operation
and co-ordination between these two functions.
6. As the organisation become bigger, these two
functions separate and there is more likehood of
disaster. There is lack of co-ordination, lack of
co-operation, distrust, and confusion takes
place. This can be shown by a picture.
 What is Operation Management?
Operations management (OM) is the
administration of business practices aimed at
achieving the highest level of efficiency within an
organization. It involves designing and
controlling the process of production and
redesigning business operations in the
production of goods or services.
 History development of Operations
Management?
a) Industrial Revolution Period
b) Post Civil War period
c) Scientific Management
d) Human relations and behaviour period.
e) Operations Research period.
f) The service revolution period.
g) The computer revolution period
 What are the main principles of Scientific
Management?
a) Science, Not Rule of Thumb: Using scientific
methods to determine the most efficient way of
doing work.
b) Harmony, Not Discord: Ensuring that there is
harmony within the workforce instead of
discord.
c) Cooperation, Not Individualism: Encouraging
cooperation among workers instead of
individualism.
 Other contributors of Scientific Management
efficiency and prosperity
 Contribution of Frank & Lillian Gilbreth
1. Frank and Lillian Gilbreth worked on the ideology
of Taylor
2. Husband and wife pair.
3. Frank’s work was mainly based on time study
and motion study. He introduced the concept of
Micro- motion study of human. Any work or
activity can be divided into some basic motions
of human being, these are the micro-motions.
During the work, the basic micro motions are
studied and unnecessary eliminated. The
unnecessary motions tier the worker. Avoid the
unnecessary motion by placing the tools,
equipment at a convenient distance.
4. Few of the micro motions are search, find, grab
etc. He identified 27 of such micro motions. He
named them as THERBLIGS ( the opposite of
Gilbreth).
5. Gilbreth used slow motion picture to measure
the work of a worker.
6. Lillian Gilbreth was an industrial Psychologist.
She was one of the first lady in the field of
management. She was one of the first industrial
psychologist. Her work was mainly on
psychology of workers in work environment.
Some are:
a) Fatigue studies
b) Human factor in work
c) Employee selection and training
 Contribution of Henry Gantt 1861-1919
1. Another philosopher whose name is necessary to
mention is Henry Gantt. He was also a follower
of Taylor.
2. His main works are:
a) He developed a pictorial method of planning and
scheduling, known as Gantt Chart. It is basically
a linear calendar where activities are shown
along Y- axis and time is shown along X- axis.
This shows starting and completion time of an
activity.
b) He was an industrial consultant. His major
contribution was teaching (training) and
i.
development of workers and managers and build
co-operation among them. He termed this
ii.
concept as “ Harmonious Co-operation”.
iii.
c) He contributed on scientific selection for
workers.
d) He developed different incentive and Bonus
systems based on productivity.
 Contribution of Henry Ford 1863-1947
1. Another important name in scientific
management is Henry Ford.
2. He did not invented any scientific management
tool or technique, but incorporated many of the
best practices of scientific management in his
factory to increase efficiency in production.
3. Ford designed the “Model T” Ford automobile,
to be build in assembly line. The assembly line
used major scientific tools like:
a) Standard product design
b) Mass production
c) Low cost manufacturing
d) Mechanised assembly line
e) Specialisation of labour
f) Interchangeable parts
4. Ford popularised the assembly line concept as
the way of producing large volume low cost
products
5. He paid the workers more than the ongoing
wage rate.
6. He established sociological department, that is
the beginning of personnel department
1. Carl G Barth (1860 – 1939)
a) Mathematical Analysis
b) Slide Rule
c) Feed and Speed studies
d) Consulting to Automobile industries
2. Harrington Emerson (1885 – 1931)
a) Principles of efficiency
b) Method of control
3. Morris L Cook (1872 – 1960)
Scientific management application to Education
and Government
 What is Scientific Management?
Scientific management is a theory of
management that analyzes and synthesizes
workflows with the main objective of improving
economic efficiency, especially labor
productivity. It involves applying scientific
principles to the engineering of processes and
management.
 What are the factors affecting Operation
Management?
Operation Management is influenced by several
factors, including:
1. Global Competition: The need to compete in
international markets affects decisions and
strategies.
2. Material and Capital: Ensuring the security and
efficient use of resources.
3. Quality, Customer Service, and Cost: Balancing
these three elements is crucial for success.
4. Social Responsibilities: Aligning operations with
societal expectations and norms.
5. Technology Advancement: Keeping up with
technological changes to improve processes.
6. Legal Considerations: Adhering to laws and
regulations that impact operations.
7. Business Ethics: Maintaining ethical practices
throughout operations
 China Factor
1. Present day China has become the workshop of
the world. There are various reasons for that:
a) Hourly wage in China is low If we compare the
wage structure in China and other developed
countries, it can be seen that
Wage rate in Norway is the highest with
compatible rate in Germany.
US and Japan has very close hourly rate
Where as Mexico and China have the lowest
wage rate per hour.
c) Production Workers China accounts 20% of
world’s population. China has the world’s largest
production workers. It is more than combined
production workers in US, UK, Germany, France,
Japan Italy and Canada. It has 1.3 billion people
in labour market.
d) Huge Consumer market. China not only has huge
labour market, it is also big consumer market. As
China’s industrial base increases it needs more
machines and equipment. As more and more
companies move in China, their supplies move
in, thus demand increases.
e) China has unbeatable manufacturing capabilities,
but many companies are gradually reducing the
risks and sourcing from other low cost countries
like India, Bangladesh, Pakistan, Vietnam and so
on.

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 India Effect
Often people consider globalisation more in the
context of products. There is also dramatic rise
in outsourcing of services as well. It started with
back office work, such as accounting, claim
processing, computer programming etc.
a) Large source of highly skilled engineers, doctors,
scientists and technically trained workers
available at less than half the cost of developed
countries.
b) Large source of export of IT services
c) Indian companies like WIPRO, Infosys, and Tata
Consultancy Services atr the world leaders in
software development businesses
d) Large source of export of IT services.
e) However, there are many other low cost
countries such as Philippines, Malaysia, Brazil are
also developing in these areas
 Production System Model Inputs
1. External Inputs: External inputs are generally
informational in nature and provide knowledge
about conditions outside the production system.
a) Legal & Political Inputs: it gives constraints
within which the system is to operate.
b) Social & Economical Input: it gives trend that
may affect the system
c) Technological Input: may be obtained from trade
association, trade journals, Govt. information,
suppliers and other sources. This gives
information about breakthrough technology,
machines, tools, material etc.
2. Market Inputs: This is also informational in
character. Information about competition,
product design, customer desire and other
aspects of market which are essential for
the system.
3. Primary Resources: Inputs that directly affect the
production and delivery of goods and services
are referred as primary resources. These are,
materialand supplies, personnel, capital and
utilities.
 Production System Model Outputs
1. Direct Output: Direct outputs are generally of
two forms
a) Tangible Goods: Automobile, mobile phone etc.
b) Intangible Output: Education , haircut, banking,
hospital etc.
2. Indirect Output: There are indirect output of
production system like, wages, salaries, taxes
technological advancement, social and
community impact etc.
 A Production System Model Output
Generally they do not receive the same attention
as the direct output (goods and services) that
generate revenues. The indirect outputs are
often both a matter of pride and concern for an
organisation.
 Conversion Process/ transformation process
The Conversion process or the transformation
process is the focus of attention or the heart of
the production or operation system. The
conversion process converts the input into the
output of the organisation. The conversion
process in known by different names like
manufacturing, retailing, wholesaling, education,
hoteling travel, warehousing etc.
 Objectives of Production Management
The objectives of operations management is
derived from the organisational objectives are:
1. Efficiency Objective: Efficiency is output- input
relationship. Produce more out of less. That is
produce maximum output of goods and services
from with minimum resources. That
is produce with minimum or no loss, no waste,
no rework.
2. Effectiveness Objective: Objective gives the
relationship between output and objective. That
is do the right thing to attain the objectives. That
is produce the right kind of goods and services to
satisfy the customers.
3. Quality Objective: Produce right quality of
product and services. From operation
management point of view produce goods and
services that conform to the specifications.
4. Capacity Utilisation Objective: Maximum
utilisation of available capacity. That is maximum
utilisation of available resources eg, man,
machine , capital ,material etc.
5. Cost Objective: Minimise cost of production of
goods and services.
Productivity
Productivity = Quantity of goods or services
produced divided by (/) amount of resources
used
 Multifactor’s approach to measure productivity
1. Capital Productivity: Number of product or
services produced divided by the asset value.
2. Material Productivity: Number or quantity of
products produced divided on money spent on
material.
3. Direct Labor Productivity: Number of products
produced divided by direct labour hour used.
4. Overhead Productivity: Number of products
produced divided by the money spent on
overhead.
 What are the two productivity in International
Business?
1. Labour Productivity
2. Rate of change of labour productivity
 What is Labor Productivity?
Labor productivity is a measure of economic
performance that compares the amount of
goods and services produced (output) with the
amount of labor time used to produce them. It’s
typically expressed as output per labor hour and
is used to gauge a country’s economic efficiency
 What is Rate of change of Labor Productivity?
The rate of change of labor productivity
measures how the amount of goods and services
produced by a worker changes over time. It’s
typically expressed as a percentage and
calculated by dividing the change in productivity
by the initial level of productivity, then
multiplying by 100.
 What is Motivation?
Motivation is the process that initiates, guides,
and maintains goal-oriented behaviors. It’s what
causes you to act, whether it’s getting a glass of
water to reduce thirst or reading a book to gain
knowledge. It involves the biological, emotional,
social, and cognitive forces that activate
behavior.
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 Advantages of Job Designing?
1. Alignment of Goals: It aligns business objectives
with employee values, leading to decreased
turnover and increased productivity
2. Competitive Advantage: Regular job design
helps companies stay current and competitive,
attracting top talent and enhancing employee
competencies
3. Employee Motivation: Well-designed jobs can
boost motivation, reduce confusion about job
duties, and increase job satisfaction
4. Optimized Performance: By integrating
necessary duties and qualifications, job design
maximizes performance and adds value to the
organization
 Disadvantages of Job Designing?
1. Monotonous Work: Job simplification can lead
to boredom.
2. Too Much Control: Enrichment can give
excessive control to senior employees, causing
conflicts.
3. Work Flow Disruption: Rotation can affect work
quality and flow.
4. Loss of Focus: Enlargement might cause
employees to lose focus on core competencies
 What is Cross Training?
Workers are trained to perform several jobs, so
that they can be moved from one job to another
job as needed.
 What is Job Enlargement?
Add additional similar tasks to the workers job.
Thus, it is called horizontal job enlargement.
 What is Job Enrichment?
Adding more planning, inspecting and other
management functions to workers job. Thus,
it is referred as vertical job enlargement.
 What is Team Production?
Organise workers into team work. That is work is
done by small small teams. Select the team
members, train them to work as a team, assign
responsibility for management and production
to the team.
 What are the objectives of Work Method
Analysis?
1. increasing the production capacity of the
operation
2. reducing the cost of production
3. improving product quality
4. It improves the plant layout
5. it improves the procedure of doing a work
6. it improves the overall working environment
 What is Define & Install?
The process layout is written, the technique is
communicated to the foreman, supervisor,
managers and operators for their comment.
After approval by the management, the process
is required to be installed. Once the method is
accepted and installed, the operators are
required to be trained to the new idea, new
work method.
Facility Planning
 Facility plan includes
1. Capacity plan
2. Location plan
3. Layout plan
 Where a factor or plant can be located?
1. Proximity to raw materials: to reduce
transportation costs.
2. Access to labor: availability of skilled and
unskilled workers.
3. Transportation facilities: for ease of distribution
of finished goods.
4. Proximity to markets: to minimize the cost of
reaching consumers.
5. Infrastructure: availability of utilities, roads, and
communication systems.
6. Government policies: tax incentives, subsidies,
and zoning regulations.
7. Environmental considerations: compliance with
environmental regulations.
 What are the factors affecting location
decision?
1. Market Proximity: Being close to customers to
reduce transportation costs and provide better
service.
2. Supply Chain: Access to suppliers, cost of
transportation, and distribution logistics.
3. Labor Availability: Access to a skilled workforce
and cost of labor.
4. Infrastructure: Availability of basic infrastructure
like roads, ports, internet connectivity.
5. Government Policies: Taxation, incentives, and
regulations that could affect operations.
6. Environmental Considerations: Regulations on
pollution and waste management.
7. Costs: Land, construction, utilities, and other
operational costs.
8. Competition: Presence of competitors in the
area.
 Difference between National Decisions, regional
Decision, community Decision, Site Decision?
1. National Decision: Made at the country level
and affects the entire nation. It’s typically made
by the federal government or national
authorities.
2. Regional Decision: Concerns a specific region
within a country and is usually made by local
government bodies or regional authorities.
3. Community Decision: Involves decisions that
affect a local community, neighborhood, or
group of people. These are often made by
community leaders or local councils.
4. Site Decision: Relates to decisions made for a
particular location or site, like a workplace,
school, or specific area. These are usually made
by the site’s management or governing body.
Layout Decision
 What is Layout Decision?
Layout decision is a strategic decision. Once a
layout is made, whether it is a product focused
or process focused, it is to continue for several
years. Shifting from one layout to another layout
is a difficult job. Layout decision is a long term
decision.
1. Facility decision generally cover : discussions and collaboration.
2. factory building layout
3. material handling facility layout
4. production facility layout
 What are the types of Layout?
1. Process layout
2. Product layout
3. Cellular Manufacturing
4. Fixed Position Layout
 What is Process Layout?
Process layout is often called Functional Layout,
because the machines or the facilities are
arranged according to their functions or the
functions they perform..
 What are the characteristics of Process Layout?
1. Flexibility: It can handle a variety of products or
parts.
2. Specialization: Each section specializes in a
particular operation.
3. High Skill Level: Operators may be highly skilled
in the specific processes.
4. Equipment Utilization: Machines may have
lower utilization due to varied product
requirements.
5. Material Handling: Can be complex due to
varied paths for different products.
6. Supervision: Can be challenging due to the
diverse tasks being performed.
 What is Production Line?
Product layout is often called production line or
assembly line. This describes the nature of the
route followed by the product in the production
system. In this layout the products tends to
follow direct linear paths without zig-zag, back
tracking or side tracking.
 Difference between Product Layout & Process
Layout?
1. Product Layout is designed for mass production A Flexible Manufacturing System (FMS) is a
of a single product. The equipment and production method designed to adapt easily to
workstations are arranged in a line with the changes in the product type and quantity being
product moving along the line until it is
manufactured. It involves integrated groups of
completed. This layout is efficient for high-
volume, low-variety production. processing machines and material-handling
2. Process Layout, also known as functional layout, equipment under computer control for
is set up around the production process. Each automatic processing of parts. This system can
section or department specializes in a particular handle both predictable and unpredictable
type of operation. This layout is more flexible changes, offering flexibility in manufacturing
and can handle a variety of products or services, processes
making it suitable for low-volume, high-variety
production.
 What is Cellular Layout?
A Cellular Layout is an arrangement within a
company that organizes workers and machines
into small groups, or cells, to improve workflow,
efficiency, and production. Each cell is typically
dedicated to producing a specific part or product
family and contains all the necessary equipment
and a small team of workers to operate as a self-
contained unit
 What are the advantages of Cellular Layout?
1. Reduced Movement: It minimizes the
movement of materials and workers by grouping
all necessary equipment and workstations close
together.
2. Faster Setup Times: With equipment and
materials closer, setup times are reduced,
increasing efficiency.
3. Enhanced Flexibility: It allows for quick changes
in production to meet customer demands or
switch between product types.
4. Improved Quality Control: Closer proximity of
workstations facilitates better communication
and quicker response to quality issues.
5. Lower Inventory Levels: The layout supports
just-in-time production, reducing inventory
levels and associated costs.
 What are the disadvantages of cellular layout?
1. Consumes Huge Space: Requires more space
than open layouts due to separate spaces for
staff.
2. Poor Administration: Can lead to less effective
management and coordination.
3. Unproductive Employees: Private spaces may
lead to reduced productivity.
4. Ineffective Communication: May hinder ad-hoc
5. Expensive: Implementation and maintenance
can be costly.
6. Equipment Sharing Issues: Equipment may not
be easily shareable.
 What is called Fixed Position Layout?
A Fixed Position Layout is an operational setup
where the main product or project remains
stationary, and workers, materials, and
equipment move to the product’s location for
assembly or construction. It’s typically used for
large, complex products such as ships, buildings,
or airplanes
 What is called Hybrid Layout?
Product layout, process layout and fixed position
layout are the three basic form of layout. Many
manufacturing facilities may use a combination
of such layouts. Such layout is called hybrid
layout.
We discuss mainly three form of Hybrid layout
1. Cellular Layout
2. Flexible manufacturing system (FMS)
3. Mixed Model Assembly Line
 What is Mixed Model Assembly Line?
A Mixed Model Assembly Line is a
manufacturing process where several distinct
models of a product are assembled on the same
line without changeovers. This method
sequences the models in a way that smoothens
the demand for upstream components
 What is Flexible Manufacturing System?