OPERATION

MANAGEMENT
Unit 1

Prof K.S. Naik

Functional Sub System of Organization

N G FI
TI NA
K E NC
A R E
M Production

PERSONNEL
DEFINITION
Production and Operation Management
• Is the process
• Which combines and transforms
• Various resources
• Used in the production / operation subsystem
• Of the organization
• Into value added products/ services
• In a controlled manner
• As per policies of the organization
Operation/Production Management
• That part of the organization
• Which is concerned with the transformation
• Of a range of inputs
• Into the required outputs ( Products/ Services)
• Having the requisite quality level
• A set of interrelated management activities
• Involved in manufacturing certain products
• Called as operation/production management
• Same part what is service activities also involved
• Is called operations management
Relative Frequency of Decisions
Production Process

INPUTS OUTPUTS

Materials Products
Labor Production
Functions
Capital Services
Energy
Information Information
Resources Products or
Services
Objectives of Production Management
Scope of Operations Management
 Operations Management: Historical
Background
Year Concept Contributor Details
1776 Wealth of Nations Adam Smith Division of Labor
1832 Scientific methods Charles Babbage Shop Floor Problem
1910 Scientific Management FW Taylor Time and Work Study

Motion Study Gilbert Motion Study

Moving Assembly Ford and Gantt Activity Scheduling Chart

1930 EOQ Harris Economic Ordering Quantity

SQC, Sampling, Inspection
Quality Control Shewart Dodge Water Motivation
Roming
Hawthrone Studies Elton Mayo
 Operations Management: Historical
Background
Yearb Concept Contributor Details
1940 Linear Programming Dantizig
1950 – Operations Research Many Researchers Simulation, Waiting, Line
60 Theory, PERT-CPM,
Programming
1970 Computerization - Inventory Control,
Scheduling, Forecasting,
Project Management, MRP
1980 IIT, TQC Automation - Japanese Researchers
Deming and Juran
1990 TQM, Business Process Hamma SAP, Oracle
Re-engineering
Internet
Supply Chain
Management (SCM)
System Aspect of Production/
Operation Function
OPERATION MANAGEMENT

MATERIALS GOODS OR
LABOR Transformation SERVICES

EQUIPMENT (Conversion Process)

CAPITAL

FEEDBACK INFORMATION

ENVIRONMENT
Schematic Representation of Production/
Operation Sub system
Forecast Location Layout

Production Design & Analysis, Work Study

MATERIALS
O
LABOR I PRODUCT/
U
N PRODUCTION SERVICES
EQPT T
P CONTROL P MARKET
CAPITAL U
U
T
T

Maintenance Management

INVENTORY QUALITY
CONTROL CONTROL
Strategic Management
• Defining the organizations philosophy and mission
• Establishing long and short range objectives to achieve
the organization mission
• Selecting the strategy to be used in achieving the
organization objectives
• Hierarchy of Strategies
• Mission
• Objectives
• Corporate Strategies
• Business Unit Strategies

• Functional Strategies
Corporate Strategies
• Stable growth strategy
• Growth strategy
• Concentration as a single product or service
• Concentric diversification
• Vertical diversification
• Horizontal diversification
• Conglomerate diversification
• Endgame strategies
• Retrenchment strategies
• Turnaround strategy
• Disinvestment strategy
• Liquidation strategy
• Combination Strategy
• Simultaneous strategies
• Sequential strategies
Generic Competitive( or Business Unit)
Strategies
• Overall cost leadership strategy
• Differentiation Strategy
• Focus Strategy

Functional Strategies
• Marketing Strategies
• Financial Strategies
• Personnel Strategies
• Production/ Manufacturing Strategies
Production/ Manufacturing Strategies
(Function of O.M)
• Achieving highest efficiency at all operational subsystems

• Gearing up the operations subsystems to meet delivery commitments

• Flexibility in meeting customers demand in terms of change in product

design
• Flexibility in production volume to meet changing customers demand

• Satisfying customers demand with world class product quality

• To be effective in labor relation and manpower cost control

• Effective material utilization and its cost control

• Efficient facility utilization and its cost control

 Types of Production and Operation
Systems Pro
duc
t io n
Pro /O
Production/ Operations Volume

du ctio p er
atio
n/ nF
Op l ex
Continuous Flow Type era i bi l
tion ity
Ca
Mass Production p ac
ity
Type

Batch Type

Job Shop Type

Output / Product Variety