Managing Production and

Service Operations

What Operation Is?

Operations refers to any process that accepts inputs
and uses resources to change those inputs in useful
ways
Examples of final goods and services are:
Industrial chemicals like methylene chlorine, borax powder, HCl, etc.,
which are produced by chemical manufacturing firms;
Services like those for the construction of ports, high-rise buildings,
roads, etc., by construction firms
Electrical products like transformers, circuit breakers, etc. by
electrical suppliers; and transistors, microwave tests systems, PCB
by electronics manufacturing firms
Hotel, luxury lines, malls, and other establishments needs services
of engineers
Consultancy firms, government agencies, and NGOs renders
engineering services too

The Production Process

Land

Equipment

Labor

Procedures

Capital

Technology

Entrepreneurship

Management Systems

INPUTS

TRANSFORMATION
PROCESS

Products
and
Services

OUTPUTS

What is Operations Management?

The process of planning, leading, organizing,
and controlling operations to reach objectives
efficiently and effectively defines operations
management
Efficiency is related to the cost of doing
something, or the resource utilization involved
Effectiveness refers to goal accomplishment
Operations management must be performed in
coordination with other functions like those for
marketing, finance, administrative and other
technical supports.

Types of Transformation Process

a)
b)
c)
d)
e)
f)

Manufacturing
Processes
Job shop
Batch flow
Worker-paced line flow
Machine-paced line flow
Batch/continuous flow
hybrid
Continuous flow

a)
b)
c)
d)

Service Processes
Service factory
Service shop
Mass service
Professional service

The Job Shop

A job shop is one whose production is based on
sales orders for a variety of small lots
It manufacture products in small lots that are
needed, but cannot be produced economically
by many companies
Generally, job shops produced custom products
The type of layout used by job shops is the
process layout, where similar machines are
grouped together
Job shops are labor intensive and machines are
frequently idle.

The BATCH FLOW process is where lots of generally own

designed products are manufactured. It is further
characterized by the following:
1.
2.
3.
4.
5.
6.

There is flexibility to produce either low or high volume

Not all procedures are performed on all products
The type of equipment used are mostly for general
purpose
The process layout is used
The operation is labor intensive, although there is less
machine idleness
The size of operation is generally medium-sized.

(Examples of factories using the large batch flow are

wineries, scrap metal reduction plants, and road-repair
contractors)

Worker-Paced Assembly Line

The worker-paced assembly line is characterized by

the following:
1. The products manufactured are mostly standardized.
2. There is clear process pattern.
3. Specialized equipment is used.
4. The size of operation is variable.
5. The process is worker-paced.
6. The type of layout used is the line flow.
7. Labor is still a big cost item.
(Can you give examples of operations having worker-paced
assembly lines?)

Machine-Paced Assembly Lines

This type of production process produces mostly

standard products with machines playing a significant
role. Among its other features are as follows:
1. The process is clear, rigid pattern.
2. Specialized type of equipment is used.
3. The line flow layout is used.
4. Capital equipment is a bigger cost item than labor.
5. Operation is large.
6. The process is machine-paced.
(Examples???)

Continuous Flow

The continuous flow processing is characterized by

the rapid rate at which items move through the
system. This method is very appropriate for producing
highly standardized products like calculators,
cellphones, T.V.s, etc.:
1. There is economy of scale in production, resulting to
low per unit cost of production.
2. The process is very clear and very rigid.
3. Specialized equipment are used.
4. The line flow layout is used.
5. Operations are highly capital intensive.
6. The size of operations is very large.
7. Processing is fast.
(Other Examples???)

Batch/Continuous Flow Hybrid

Uses the combination of the batch and
continuous flow.
Two distinct layouts are used, one for batch, and
one for continuous flow.
The typical size of operation is also very large
giving opportunities for economies of scale.
Examples of companies using batch/continuous
flow hybrid are breweries, gelatin producers,
tobacco manufacturers, (What else???)

Service Processes
Service Factory offers a limited mix of services
which results to some economies of scale in
operations (ex. Mc Donalds and Shakeys)
Service Shop provides a diverse mix of
services (Ex. Servitek, Shell (gas stations))
Mass Service provides services to a large
number of people simultaneously (ex. Railway
Transit, Malls and Retailing Institution)
Professional Services provide specialized
services to other firms or individuals (Can you
give some of these companies?)

Important Components of Productive

Systems
Product Design
Production Planning
and Scheduling
Purchasing and
Materials
Management
Inventory Control
Work Flow layout
Quality Control

Tips to Achieving Proper Inventory Control

Determining reorder point
and reorder quantity
Determining economic
order quantity
The use of just-in-time
(JIT) method of inventory
control
The use of material
requirement planning
(MRP) method of
planning and controlling
inventories (e.g. FIFO
system)

Benefits of a Good Work-Flow Layout

1.
2.
3.
4.
5.
6.
7.
8.
9.

Minimize investment in equipment.

Minimize overall production time.
Use existing space most effectively.
Provide for employee convenience, safety, and
comfort.
Maintain flexibility of arrangement and operation.
Minimize material handling cost.
Minimize variation in types of material-handling
equipment
Facilitate the manufacturing (or service) process
Facilitate the organizational structure

Quality Control

Quality control refers to the

measurement of products or
services against standards set
by the company.
Certain standard requirements
are maintained by the
management to facilitate
production and to keep
customers satisfied.
Poor quality control breeds
customer complaints, returned
merchandise, expensive
lawsuits, and huge promotional
expenditures.

Your Next Assignment !

1.

2.
3.
4.

Draw the transformation process of an existing

company and define/label it. Indicate where
improvements in the flow could be introduced.
Compare/contrast quality control and quality
assurance. How to improve QC/QA?
What are the components of good manufacturing
practices (GMP)?
Give substantial examples and definitions of statistical
process techniques used in quality control.