OPERATIONS

MANAGEMENT
R.LAKS HMINARAYANAN
PROF. OPERATIONS, LOGISTICS AN D SUPPLY CHAIN MANAGEMENT.
 Operations management MB 24107
Recommended Books
1. Mahadevan B., Operations Management Theory and Practice, Pearson Publication
2. R. Panneerselvam, Production and Operations management, Prentice Hall India private limited
3. William J Stevenson, Operations Management, 13th Edition, McGraw Hill Education (India) Pvt.
Ltd., 2022
4. Albert Fernandes, Operations Management, Discovery Publishing House, 2023
5. Aswathappa, K.,ShridharaBhat, K., Production and Operations Management , Himalaya
Publishing House, 2014
6. Norman Gaither and Greg Frazier, Operations Management, 9th Edition, Cengage publications,
2002 (Reprint 2013)
7. Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman, and Samir K. Srivastava, Operations
Management – Processes and Supply Chains, 12th Edition, Pearson Publication, 2018
 SCOPE
➢Explain what is meant by Operations Management?
➢State the objectives of operations management.
➢List the functions of operations management.
➢Explain what is meant by productivity in an organisation.
➢State how productivity can be increased in an
organisation
WHAT IS OPERATIONS MANAGEMENT?

INPUTS
OUTPUT
WHAT IS OPERATIONS MANAGEMENT?
➢Operations management is a systematic
approach to addressing issues in the
transformation
INPUTS process that converts inputs
OUTPUT
into
useful, revenue-generating outputs.
WHAT ARE INPUTS AND OUTPUTS?
➢INPUTS
➢MATERIALS
➢LABOUR
➢CAPITAL
INPUTS
OUTPUT
➢EQUIPMENT

➢OUTPUT
➢GOODS
➢SERVICES
WHAT CAN BE TRANSFORMATION
PROCESS?

➢MAKING A PRODUCT
➢MANUFACTURE OF VARIOUS PRODUCTS. Eg….
INPUTS
OUTPUT

➢GIVING A SERVICE
➢INTANGIBLE Eg….
Manufacturing facility
Service facility- Hospital
Product service continuum
FUNCTIONS OF OPERATIONS
MANAGEMENT
➢DESIGN OF
➢LOCATION
➢LAYOUT
➢PROCESS
➢PRODUCT DESIGN
➢SERVICE DESIGN
➢CAPACITY PLANNING
➢QUALITY PROCESS
FUNCTIONS OF OPERATIONS
MANAGEMENT
➢CONTROL OF
➢OPERATIONAL PLANNING
➢CONTROL OF PRODUCTION/SERVICE
➢FORECASTING
➢MAINTENANCE MANAGEMENT
➢SUPPLY CHAIN MANAGEMENT
OBJECTIVES OF OM
➢QUALITY

➢QUANTITY

➢COST

➢TIMELY DELIVERY
PRODUCTIVITY
➢ IT IS AN INDEX
➢THE RATIO OF OUTPUT TO THE INPUT USED TO PRODUCE
THEM.
➢PRODUCTIVTY= OUTPUT/INPUT
➢EXAMPLES
➢PARTIAL
➢MULTIFACTOR
➢TOTAL
 PRODUCTIVITY EXAMPLES: MARUTI
SUZUKI CARS
PARTIAL PRODUCTIVITY
ANNUAL CAR SALES/NUMBER OF EMPLOYEES
DETAILS 2021-22 2022-23 2023-24 REMARKS

ANNUAL CAR SALES 1,652,653 1,966,164 2,135,323

NUMBER OF 16259 16875 18228

EMPLOYEES

CAR SALES PER 101.64 116.51 117.15 PARTIAL

EMPLOYEE PRODUCTIVITY
INCREASE YoY
 PRODUCTIVITY EXAMPLES: MARUTI
SUZUKI CARS
MULTI FACTOR PRODUCTIVITY
ANNUAL CAR SALES/(EMPLOYEE BENEFITS + MATERIAL COST)
DETAILS 2021-22 2022-23 2023-24 REMARKS

ANNUAL CAR SALES 1,652,653 1,966,164 2,135,323

Employee benefits 40222 46051 54784
Million Rs
Net mat costs Million 658928 861062 1004179
Rs
MULTI FACTOR PROD. 2.36 2.16 2.01 REDUCTION YoY
( CARS PER MILLION
RS)
 PRODUCTIVITY EXAMPLES: MARUTI
SUZUKI CARS
TOTAL MEASURE
TOTAL REVENUE/TOTAL EXPENSE
DETAILS 2021-22 2022-23 2023-24 REMARKS

TOTAL REVENUE Mn Rs 900891 1196842 1447874

TOTAL COST Mn Rs 855068 1095251 1277470

TOTAL REVENUE/ 1.054 1.093 1.133 Increase YoY

TOTAL COST
QUESTIONS?
Operations management – a systems
perspective
OPERATIONS
MANAGEMENT
R.LAKS HMINARAYANAN
PROF. OPERATIONS, LOGISTICS AN D SUPPLY CHAIN MANAGEMENT.
REVIEW QUESTIONS

➢ WHAT IS OPERATIONS MANAGEMENT?

➢WHAT CAN BE TRANSFORMATION PROCESS?
➢OBJECTIVES
INPUTS –Q,Q,T,C
OUTPUT

➢FUNCTIONS-DESIGN, CONTROL
➢PRODUCTIVITY
 SCOPE
➢Explain operations management from a systems perspective.
➢Draw and explain the schematic representation at sub system
level.
➢Identify all the functions in any organisation.
➢Explain the interrelation ship between the various functions
and operations in an organisation.
Operations management – a systems
perspective
Operations management – a systems
perspective
➢ EXAMPLES
➢MANUFACTURING INTERRELATIONSHIPS
➢SERVICE INTERRELATIONSHIPS
CASE STUDY-1

Video
CASE STUDY-2
INTEGRATION WITH OTHER FUNCTIONS IN AN
ORGANISATION

FINANCE

OPERATIONS HRM

MARKETING
PRODUCTION/OPERATIONS SUB SYSTEM
QUESTIONS?
OPERATIONS
MANAGEMENT
R.LAKSHMINARAYANAN
PROF. OPERATIONS, LOGISTICS AND SUPPLY CHAIN MANAGEMENT.
PREVIOUS CLASS REVIEW
 Interrelationship of operations with other functions in any
organisation.
Organisation
INPUTS
as a systems approach.
OUTPUT
 SCOPE
What is industry 4.0?
What are the applications of Industry 4.0
What are the Present challenges to operations management.
Explain the Latest trends in operations management.
Operations management – a historical
perspective
Pre industrial revolution- Handloom
Industrial revolution Division of labour
(Industry 1.0)
Assembly line Ford Motors 1920
(Industry 2.0)
Computers and internet communication
(Industry 3.0)
INDUSTRY 4.0
INDUSTRY 4.0
Industry 4.0, synonymous with smart manufacturing
Digital transformation of industry
Delivering real-time decision making
Enhanced productivity, flexibility and agility
Revolutionize the way companies manufacture, improve and
distribute their products.
INDUSTRY 4.0
Industry 4.0
 IoT (video)
Cloud computing
Additive manufacturing
Augmented reality
Big data analytics
Cyber security
Autonomous mobile robots( video)
Internet of things
Cloud computing
On-demand availability of computing resources over the internet.
 Eliminates the need for individuals and businesses to self-manage
physical resources.
 Only pay for what you use.
 Public and private cloud
Infra as service.
Platform as service.
 Software as service.
Additive manufacturing
Additive manufacturing is also called 3D manufacturing
It is construction of a three-dimensional object from
a CAD model or a digital 3D model.
 It can be done in a variety of processes in which material
is deposited, joined or solidified under computer control.
Material is added together (such as plastics, liquids or
powder grains being fused), typically layer by layer.
Additive manufacturing
Augumented Reality
Augmented reality is an interactive experience
 Enhances the real world with computer-generated perceptual
information.
 Uses software, apps, and hardware such as AR glasses.
Augmented reality overlays digital content onto real-life
environments and objects.
Usage examples.
Augumented reality
Big data analytics
 Big data analytics refers to the systematic processing and analysis of large
amounts of data,
 Used to extract valuable insights.
 Allows for the uncovering of trends, patterns and correlations in large amounts
of raw data.
Helps analysts make data-informed decisions.
 Some uses in manufacturing- Quality control, Supply chain management,
Predictive maintenance, Faster customer support.
Cyber security
 Cybersecurity is the practice of protecting systems, networks, and programs
from digital attacks.
These cyberattacks are usually aimed at accessing, changing, or destroying
sensitive information.
May result in interrupting normal business processes.
 Manufacturing companies are shifting toward integrated Internet of Things
(IoT) processes.
 Because autonomous machinery can be hacked there is requirement of cyber
security to protect the manufacturing process.
PRESENT CHALLENGES TO OPERATIONS
MANAGEMENT
Growing customer expectations.
Variety (Customisation)
Better quality
Technological developments.
Reduction in time to get services and products.
Booking through smartphones
PRESENT CHALLENGES TO OPERATIONS
MANAGEMENT
Environmental issues.
Reduce demand on natural resources.
Disposal of e waste
Competitive pressure.
Reducing prices
Reduced time to deliver products.
LATEST TRENDS
Globalisation.
Agility – shorter time to new products.
Outsourcing.
Management of technology & shorter obsolescence
period.
LATEST TRENDS
 e Commerce.
Integrated supply chains
Lean production
Conclusion
Questions?
OPERATIONS
MANAGEMENT
R.LAKSHMINARAYANAN
PROF. OPERATIONS, LOGISTICS AND SUPPLY CHAIN MANAGEMENT.
 Scope
What is meant by production process
What is production process design?
What are the factors influencing the selection of process?
What are the steps in process planning design and give an example
for the same.
Production process - Cement
What is meant by production process?
 A method of using input resources, like raw material, labor,
machines, carrying out a set of activities and providing the finished
goods and services to customers.

 The process is hence manufacturing products or providing services.

 The production process needs to ensure the quality of the

product/service to the customer.
What is meant by process planning
design?
Process planning design is the determination of specific
technological steps and their sequence to be followed to produce
products of the desired quality, quantity and cost.
This involves
Method of manufacturing
Sequence
Type of operation
Selection of tools and equipment
Fitting the activities within the facilities.
Steps in process planning & development

video
Steps in process planning & development
Steps in process planning & development
Analysis of item in print
Divide into parts as required.
Identify basic operations required to produce the item
Determine the economical and practical way to make it
Identify the tools and other equipment to make this part
Devise the sequence of operations
Execute the pilot project, make corrections as required.
Finalize the plan for mass production.
Basic Factors influencing selection of process
Volume – high volume amenable to continuous flow and
automation.
Variety – high variety requires frequent change in
machine setting.
Flow – flow indicates the conversion of raw materials to
finished products.
Relationship - Volume and Variety
HIGH VOLUME MID VOLUME HIGH VARIETY
LOW VARIETY MID VARIETY LOW VOLUMES

MASS PRODUCTION  Pharma  Building Projects

 Petro chemicals  Consumer durables  Power plants
 Automobiles  Garment  Bridges
 FMCG  Satellites
Redesign of process
No change in final prooduct
Making the product in a different way.
Increase efficiency
Improve quality
Improve RoI
 In case of total change of Process it is called Business Process
Reengineering (Video)
Redesign of manufacturing process

video
Conclusion
 Review
What is meant by production process
What is production process design?
What are the factors influencing the selection of process?
What are the steps in process planning design and give an example
for the same.
Questions?
OPERATIONS
MANAGEMENT
R.LAKS HMINARAYANAN
PROF. OPERATIONS, LOGISTICS AN D SUPPLY CHAIN MANAGEMENT.
 Scope
➢What are the factors influencing the selection of process?
➢What are the types of flow systems. Explain
Basic Factors influencing selection of process
➢Volume – high volume amenable to continuous flow and
automation.
➢Variety – high variety requires frequent change in
machine setting.
➢Flow – flow indicates the conversion of raw materials to
finished products.
Relationship - Volume and Variety
HIGH VOLUME MID VOLUME HIGH VARIETY
LOW VARIETY MID VARIETY LOW VOLUMES

MASS PRODUCTION ▪ Pharma ▪ Building Projects

▪ Petro chemicals ▪ Consumer durables ▪ Power plants
▪ Automobiles ▪ Garment ▪ Bridges
▪ FMCG ▪ Satellites
Continuous flow
➢High volume output
➢Limited variety
➢Each variety has adequate numbers
➢Highly standardised
➢Amenable for automation
➢Repetitive operations
1. Continuous flow discrete (Assembly
line).( video)

2. Continuous flow (Process industry)

( Making of paper)
Intermittent flow
➢ For mid volume mid variety
➢Eg garment manufacturing by designs, colours, sizes.
➢Needs change of setting for each batch.
➢Generally called batch processing.
➢ Used in pharmaceutical also.
Intermittent process

Garment manufacturing( Video)

Medicine Tablets manufacturing( Video)
Jumbled flow
➢Non standard
➢Complex
➢Unique for each product. Eg. Project organisation or
customised manufacturing
➢Generally one or two items only demanded by the
customer.
Jumbled flow Eg.. Bridges
 Job Shop Production system
➢Manufacturing of one or a few products within a
predetermined time and cost.
➢Production takes place as per the specifications of the
customer.
➢ High in variety and low in volume.
➢ Machines are general purpose.
➢Specific order of processing
Job shop
Job shop
Conclusion
 Review
➢What are the factors influencing the selection of process?
➢What are the types of flow systems. Explain
Questions?
OPERATIONS
MANAGEMENT
R.LAKS HMINARAYANAN
PROF. OPERATIONS, LOGISTICS AN D SUPPLY CHAIN MANAGEMENT.
 SCOPE
➢What is make or buy decision?
➢Few cases of Make or Buy
➢Numerical on simple cost analysis.
Ford 1920 Vs Toyota 1980
➢ Ford 1920
➢Extract iron ore from own mines
➢Manufacture steel
➢Make own components for manufacturing a car
➢Toyota 1980
➢Purchasing 75% of requirements for a car from outside vendors
➢Focussing on assembly and integration of parts in assembly line
➢Produce a defect free car.
 Make vs Buy
(case of Airtel)
Airtel mobile operations
Airtel business model
➢Airtel focuses on only two things:
➢Customer acquisition and servicing (retention)
➢Business development or expansion.
➢All other functions
➢ Hardware, network management, backend applications
(billing, etc.), and other services are outsourced.
MAKE OR BUY: THREE ALTERNATIVES

New
product
Make or Buy
➢Make – make it inside the company and then sell with company brand name.
➢Buy – buy from an external vendor and either use it in the company (if a sub
component) or sell it with company brand name.
➢To the customer irrespective of source the company is responsible for Quality,
cost and time.
➢Regular review
➢Important factors
➢Core vs Non Core Eg..Tpt service
➢Cost
Criteria for make
➢ Lower cost to manufacture in house
➢Limited capacity in outside firms
➢Critical part for the product requiring strict quality checks
➢Existing facilities and labour experience can be used.
Criteria for buy
➢High investment on facilities need to be done, while it is already
available at supplier end.
➢Though facilities not there, company has other more profitable
opportunities.
➢Employees not readily skilled and require training.
➢Patent or other legal barriers.
➢Temporary or seasonal demand.
➢Better usage of existing facility to make other parts more profitably.
Three Approaches for Make or Buy
decision
➢Simple cost analysis

➢Economic analysis

➢Break-even analysis
Costs in manufacture
Find Solutions for
➢ Annual Demand = 2000
➢Annual Demand = 5000
Conclusion
OPERATIONS
MANAGEMENT
R.LAKS HMINARAYANAN
PROF. OPERATIONS, LOGISTICS AN D SUPPLY CHAIN MANAGEMENT.
 SCOPE
➢What Economic analysis for buy/make?
➢Example cases
➢Numerical on Economic analysis.
Costs in Buy
➢Apart from the unit cost, there is also a cost associated
with Purchase.( Buy)
➢This is called procurement or order cost.
➢Orders are done for certain numbers every time for Annual
demand.(EOQ) Eg…
➢Each time involves the procurement cost.
➢Annual carrying costs are also required to be computed.
Buying costs- Product costs & EoQ
➢ Ex:- Demand = 1200 Units; unit cost of buy = Rs 5.00; Cost per order(Co)= Rs 12.00; Carrying
Cost = 20% of unit cost (Cc= {(20/100)* 5.00} = Rs 1.00
➢Product cost = 1200x5= Rs 6000. ------------------------------------------(a)
➢Get Economic order quantity.
➢EOQ= Sqroot{ 2* D* ( Co/Cc)}
= Sq Root{(2* 1200* ( 12/1)}
= Sq Root{ 28800}
= 169.7 units
 Buying costs - Ordering costs
➢ Number of orders = D/EOQ
= 1200/ 169
= 7.01
Each order cost = Rs 12.00
Total ordering costs 12x 7.1 = Rs 85.20 --------------------------------------------(b)
Buying costs – carrying costs
➢Average Inventory = (EoQ/2)
➢Carrying Cost = (EoQ/2) * Cc
= (169.7/2) * 1.00
= Rs 84.85 -------------------------------------------------(c)
Summary of steps for buying costs
➢Get Item cost by multiplying number of items demanded and unit
cost. (a)
➢Calculate EOQ
➢From EOQ get Number of orders
➢Multiply number of orders and cost for each order to get ordering
cost (b)
➢From EOQ get the holding cost by multiplying with carrying
cost/2.(c)
➢Get total costs in buy model by adding above three costs.( a+b+c)
Costs in Make
➢Costs in setting up machinery.
➢Production is generally done in batches to match periodic
supply.
➢Annual demand hence divided into Economic Production
Size.
➢Need to add carrying costs.
 Making /Manufacturing
➢Total cost for manufacturing model includes three cost elements as
follows
➢Production cost (P)
➢Set-up cost (Cs)
➢Carrying / Holding cost (Cc)
➢Production cost = (Demand x Make Cost per unit)
➢Set up Costs = (Set-up cost per set-up x No. of set-ups)
➢ Carrying ( or Holding) costs = (Unit Carrying cost x Average inventory)
 Making /Manufacturing
➢Production cost = (Demand x Cost of manufacture/make per unit)
= Dx M
Ex If demand is 1200 units. And cost of making each unit is Rs 4.50 then
Production cost is = 1200x4.50=Rs 5400/--------------(1)
 Set up costs
➢Step 1 - Calculate Economic batch quantity

➢Cs= Cost of each set up

➢Cc= Cost of carrying per unit per year, D= Demand
➢Get the Economic batch Quantity
 EBQ- Economic batch quantity
➢Get EBQ
➢Ex:- If D =1200 units, each unit make cost is Rs 4.50, R= 7500 units per
year, Cs= Rs 50 per set up, Carrying cost is 20 % of unit cost then
Cc=(20/100)*4.50= Rs 0.90
➢Then EBQ= Sqroot( 2*50*1200/{0.90*(7500-1200)/7500})
= Sqroot( 120000/{0.90*0.84})
= Sqroot( 120000/0.756)
= Sqroot( 1,58,730.15)
= 398 units
 Setting up costs
➢Number of set ups = Demand/EBQ
➢Ex: D= 1200 Units, EBQ= 398 ;
➢Number of set ups = 1200/398=3.01
➢Cost for each set up = Rs 50
➢Hence total Setting up costs = 50*3.01= Rs 150.50 --------------(2)
 Holding or carrying costs
➢Holding or carrying costs = carrying cost per unit x average inventory
➢Carrying cost per unit = Cc
➢Average inventory = {(EBQ/2)* (( R-D)/R)}
➢Ex:- EBQ = 398; R= 7500 Units per Year; D= 1200 Units, Cc= 20% of unit cost = Rs 0.90
per unit per year
➢Average inventory= {(398/2)*(( 7500-1200)/7500)}
= 199*(0.84)
= 167.16
Holding costs = 0.90*167.16=Rs 150.44 ----------------------(3)
Summary of steps for manufacturing costs
➢Get Item cost by multiplying number of items demanded and unit
cost.
➢Calculate EBQ
➢From EBQ get Number of batches
➢Multiply number of batches and cost for setting up each batch to
get setting up cost
➢From EBQ get the holding cost
➢Get total costs in make model by adding above three costs.
Cost of making less than buying
Conclusion
OPERATIONS
MANAGEMENT
R.LAKS HMINARAYANAN
PROF. OPERATIONS, LOGISTICS AN D SUPPLY CHAIN MANAGEMENT.
 SCOPE
➢What is break even analysis?
➢Example cases
➢Numerical on break even analysis.
Total Cost

Total Cost

Variable
Fixed costs
costs
Cost of product
➢Fixed cost – constant, independent of number of items
manufactured. Eg..
➢Variable costs depends on the volume of products manufactured-
includes material and other costs. Eg..
➢Total costs = fixed costs + variable costs.
Revenue of product
➢Revenue is obtained by selling the product.
➢Total revenue is selling price of one unit x volume of sales.
Break Even point
➢The break-even point is the point at which total cost and
total revenue are equal, i.e. "even".
➢ There is no net loss or gain. i.e. It is a point where no
profit no loss situation.
➢ In the case of Buy or Make at “Break even” both Options
are equal.
Break Even analysis
➢Break-even analysis tells you how many units of a product
must be sold to cover the fixed and variable costs of
production
Numerical example
Example
A company produces a sophisticated chair which it sells for
Rs. 900 each. If the company makes the chairs, it will incur
variable costs of Rs. 650 per unit. The annual fixed cost is Rs.
10,00,000. The Sales over the next year is estimated to be
5,000 units. Would it be profitable for the company to make
the chairs. Find the break even point. (Develop break even
chart for this example)
Conclusion
OPERATIONS
MANAGEMENT
R.LAKS HMINARAYANAN
PROF. OPERATIONS, LOGISTICS AN D SUPPLY CHAIN MANAGEMENT.
 SCOPE
➢What is selection of process?
➢What are the three different types of manufacture?
➢What are process performance measures?
Three types of manufacture
➢MTS( Made to Stock)

➢MTO( Made to Order)

➢ ATO (Assemble to order)

➢Ex…
Made to Stock
➢The basic approach to planning in the MTS system is to schedule production for
the purpose of replenishing stocks to some predetermined level.
➢The objective of MTS planning systems is to ensure that the production system
efficiently responds to the depletion of finished goods inventory through the
planning system.
➢ Traditionally, organizations use a variety of production planning and control
tools for MTS systems, to compute the materials and capacities required for
production
➢Then they schedule various operations in the manufacturing system to produce
as per plan
Made to order
➢In MTO Planning and scheduling production is only against specific production
orders.
➢Once a customer order is launched into the production system, the
requirement details are computed and production is planned.
➢The key implication of this method is that it results in a long planning and
execution window for order delivery.
➢ A long planning and execution window results in greater manufacturing lead
time and the associated problems of large inventory investment and greater
uncertainty of operations and outcomes.
Assemble to Order
➢ATO is used when variety is not very high, as in the case of a jumbled flow
process, it is possible to work with a planning methodology that is intermediate
to MTS and MTO.
➢ This approach to planning is known as assemble to order (ATO).
➢ The ATO planning framework incorporates some of the features of MTS into
the MTO planning methodology to create a hybrid version.
➢ In this approach, the system utilizes MTS for the early stages of the
manufacturing process.
➢ At the later and final stages of the manufacturing system, the planning
changes to that of MTO
Process performance measures
1. Throughput time: Throughput time (TPUT) is the elapsed time from the first
stage of the process to the last stage of the process. It is also known as lead
time.
2. Cycle time: Cycle time is the elapsed time between two successive outputs
from a process that is continuously operating in a given period of time.
3. Bottleneck: That stage of the process that dictates the output of a process is
the bottleneck..
4. Throughput time is a relevant measure for MTO systems. Measures such as
cycle time and bottlenecks, on the other hand, are relevant in the case of
MTS systems.
Conclusion
WHAT IS OPERATIONS MANAGEMENT?

➢Operations management is a systematic

approach to addressing issues in the
transformation
INPUTS process that converts inputs
OUTPUT
into useful, revenue-generating outputs.
WHAT ARE INPUTS AND OUTPUTS?
➢INPUTS
➢MATERIALS
➢LABOUR
➢CAPITAL
INPUTS
OUTPUT
➢EQUIPMENT

➢OUTPUT
➢GOODS
➢SERVICES
OBJECTIVES OF OM
➢QUALITY

➢QUANTITY

➢COST

➢TIMELY DELIVERY
FUNCTIONS OF OPERATIONS MANAGEMENT
➢DESIGN OF
➢LOCATION
➢LAYOUT
➢PROCESS
➢PRODUCT DESIGN
➢SERVICE DESIGN
➢CAPACITY PLANNING
➢QUALITY PROCESS
FUNCTIONS OF OPERATIONS MANAGEMENT
➢CONTROL OF
➢OPERATIONAL PLANNING
➢CONTROL OF PRODUCTION/SERVICE
➢FORECASTING
➢MAINTENANCE MANAGEMENT
➢SUPPLY CHAIN MANAGEMENT
Operations management – a systems
perspective
INTEGRATION WITH OTHER FUNCTIONS IN AN
ORGANISATION

FINANCE

OPERATIONS HRM

MARKETING
INDUSTRY 4.0
What is meant by production process?
➢ A method of using input resources, like raw material, labor,
machines, carrying out a set of activities and providing the finished
goods and services to customers.

➢ The process is hence manufacturing products or providing services.

➢ The production process needs to ensure the quality of the

product/service to the customer.
What is meant by process planning design?
➢Process planning design is the determination of specific
technological steps and their sequence to be followed to produce
products of the desired quality, quantity and cost.
➢This involves
➢Method of manufacturing
➢Sequence
➢Type of operation
➢Selection of tools and equipment
➢Fitting the activities within the facilities.
 Steps in process planning & development
➢Analysis of item in print
➢Divide into parts as required.
➢Identify basic operations required to produce the item
➢Determine the economical and practical way to make it
➢Identify the tools and other equipment to make this part
➢Devise the sequence of operations
➢Execute the pilot project, make corrections as required.
➢Finalize the plan for mass production.
Basic Factors influencing selection of process
➢Volume – high volume amenable to continuous flow and
automation.
➢Variety – high variety requires frequent change in
machine setting.
➢Flow – flow indicates the conversion of raw materials to
finished products.
Relationship - Volume and Variety
HIGH VOLUME MID VOLUME HIGH VARIETY
LOW VARIETY MID VARIETY LOW VOLUMES

MASS PRODUCTION ▪ Pharma ▪ Building Projects

▪ Petro chemicals ▪ Consumer durables ▪ Power plants
▪ Automobiles ▪ Garment ▪ Bridges
▪ FMCG ▪ Satellites
Redesign of process
➢No change in final product
➢Making the product in a different way.
➢Increase efficiency
➢Improve quality
➢Improve RoI
➢ In case of total change of Process it is called Business Process
Reengineering (Video)
Make or Buy
➢Make – make it inside the company and then sell with company brand name.
➢Buy – buy from an external vendor and either use it in the company (if a sub
component) or sell it with company brand name.
➢To the customer irrespective of source the company is responsible for Quality,
cost and time.
➢Regular review
➢Important factors
➢Core vs Non Core Eg..Tpt service
➢Cost
Criteria for make
➢ Lower cost to manufacture in house
➢Limited capacity in outside firms
➢Critical part for the product requiring strict quality checks
➢Existing facilities and labour experience can be used.
Criteria for buy
➢High investment on facilities need to be done, while it is already
available at supplier end.
➢Though facilities not there, company has other more profitable
opportunities.
➢Employees not readily skilled and require training.
➢Patent or other legal barriers.
➢Temporary or seasonal demand.
➢Better usage of existing facility to make other parts more profitably.
Three Approaches for Make or Buy decision
➢Simple cost analysis

➢Economic analysis

➢Break-even analysis
Three types of manufacture
➢MTS( Made to Stock)

➢MTO( Made to Order)

➢ ATO (Assemble to order)

➢Ex…
Process performance measures
1. Throughput time: Throughput time (TPUT) is the elapsed time from the first
stage of the process to the last stage of the process. It is also known as lead
time.
2. Cycle time: Cycle time is the elapsed time between two successive outputs
from a process that is continuously operating in a given period of time.
3. Bottleneck: That stage of the process that dictates the output of a process is
the bottleneck..
4. Throughput time is a relevant measure for MTO systems. Measures such as
cycle time and bottlenecks, on the other hand, are relevant in the case of MTS
systems.
Conclusion