Managing

Production and
Service
Operations
Engineering Management
Module 10
 • Operation refers to “any process that accepts inputs
Operations and uses resources to change those inputs in useful
ways.”
What is Operation?

• As shown in the diagram above, the inputs include

land, labor, capital and entrepreneurship. The
transformation process converts the input into finals
goods and services.

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 • Here are some examples of final goods and services:

Operations 1. Industrial chemicals like phosphoric acid and chloride,

produced by chemical manufacturing firms.
What is Operation?
2. Services like those for the construction of ports, high-
rise buildings, roads, bridges, etc. which are produced
by construction firms.
3. Electrical products like transformers, circuit breakers,
switch gears, etc. which are produced by electrical
manufacturing firms.
4. Electronic products like microwaves and phones,
produces by electronic manufacturing firms.
5. Mechanical devices produced by manufacturing firms.
6. Engineering consultancy services like construction
management and supervision by engineering 3

consultancy firms
 • Operations is an activity that need to be managed by

Operations competent person. If is defined as “the process of

planning, organizing, and controlling operations to reach
Management objectives efficiently and effectively.”
What is 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 the other functions like those for
marketing and finance. Although the specific activities of
the operations division of firms slightly differ from one
another, the basic function remains the same.

4
 • The engineer manager is expected to produce some
Operations and output at whatever management level he is. If he is

the Engineer
assigned as the manufacturing engineer, his function is “to
determine and define the equipment, tools, and processes

Manager required to convert the design of the desired product into

reality in an efficient manner.”
• The engineer in charge of operations in a construction firm
is responsible for the actual construction of whatever
project his/her company has agreed to put up. He/she is
required to do it using the least-expensive and the easiest
methods.
• The engineer, as operation manager, must find ways to
contribute to the production of quality goods or services
and the reduction of costs in his department.
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 Types of
• The engineer manager must have some knowledge of the
various types of transformation process. They are:
Transformation 1. Manufacturing Processes

Process • Job shop

• Batch flow
• Worker-paced line flow
• Machine-paced line flow
• Continuous flow
• Batch/continuous flow hybrid
2. Service Processes
• Service factory
• Service shop
• Mass service 6

• Professional service
Manufacturing • Job Shop is one whose production is “based on sales
Processes orders for a variety of small lots.” Job shops are very
useful components of the entire production effort,
since they manufacture products in small lots that are
needed by, but cannot be produced economically by
many companies.
• Job shops usually produce custom products. Products
may be manufactured within a short notice. The
equipment used are of the general purpose type.

1. Job Shop 7
Manufacturing • The batch flow process is where lots of generally own

Processes designed products are manufactured. It is further

characterized by the following:
1. There is flexibility to produce either low or high
volumes.
2. Not all procedures are performed on all products.
3. The types of equipment used are mostly for
general purpose
4. The process layout is used.
5. The operation is labor intensive, although there is
less machine idleness.
6. The size of operation is generally medium-sized.
• Examples of factories using large batch flow are
2. Batch Flow wineries, scrap-metal reduction plants, and road-repair
8

contractors.
 Manufacturing • An assembly line refers to a production layout

Processes arranged in a sequence to accommodate processing of

large volumes of standardized products or services.
• The quality and quantity of output in a worker-paced
assembly line depends to a great extent to the skill of
the labor utilized. Example of worker-paced assembly
lines are fast foods.

3. Worker-paced assembly
line 9
 Manufacturing • This type of production process produces mostly

Processes standard products with machines playing a significant

role. Among its other features are as follows:
1. The process is of clear, rigid pattern.
2. Specialized types 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
• Example of machine-paced assembly line are auto-
mobile manufacturers.

4. Machine-paced assembly
line 10
Manufacturing • Is characterized “by the rapid rate at which items move

Processes through the system.” This processing method is very

appropriate for producing highly standardized
products like calculators, automobiles, phones, etc. its
other characteristics are:
1. There is economy of scale in production, resulting
to low per unit cost of production.
2. The process is 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.

5. Continuous Flow 7. Processing is fast.

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 Manufacturing • This method of processing is a combination of the

Processes batch and continuous flow. Two distinct layouts are

used, one for batch and one for the continuous flow.
The typical size of operation is also very large giving
opportunities for economies of scale.
• Example of companies using this process are breweries
and tobacco manufacturers.

6. Batch/Continuous Flow
Hybrid 12
 • A service factory offers a limited mix of services which

Service results to some economies of scale in operations. This

also affords the company to complete in terms of price
Processes and speed of producing the service.
• The process layout preferred by the service factory is
the rigid pattern of line flow processing.

1. Service Factory 13
 • A service shop provides a diverse mix of services. The

Service layout used are those for job shops or fixed position
and are adaptable to various requirements. Among the
Processes service provided by service shops are car engine tune-
up, wheel balancing, wheel alignment, etc.

2. Service Shop 14
 • A mass service company provides service to a large

Service number of people simultaneously. A unique processing

method I, therefore, necessary to satisfy this
Processes requirement. To be able to serve many people, mass
service companies offer limited mix of services.

3. Mass Service 15
 • These are companies that provide specialized services

Service to other firms or individual. Examples of this are:

Processes
1. Engineering consulting services which help in
improving the plant layout or the efficiency of a
company.
2. Design services which supply design for a physical
plant, products, and promotion materials.
3. Advertising agencies which help promote a firm’s
products.
4. Accounting services
5. Legal services
6. Data processing services
7. Health services
4. Professional Service 16
Important parts • Productive systems consist of six important activities
of productive as follows:

systems 1. Product design

2. Production planning and scheduling
3. Purchasing and materials management
4. Inventory control
5. Work flow layout
6. Quality control

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Important parts • Customers expect that the products they buy would
of productive perform according to assigned functions. A good
product design assures that this will be so. Customers
systems avoid buying products with poor product design. An
example is that certain brand of ballpen which fails to
write after one or two days of actual use. This happens
because of poor product design.
• Product design refers to “the process of creating a set
of product specifications appropriate to the demands
of the situation.”

1. Product Design 18
Important parts • Production planning may be defined as “forecasting
of productive the future sales of a given product, translating this
forecast into the demand it generates for various
systems production facilities, and arranging for the
procurement of these facilities.
– Production planning is a very important activity
because it helps management to make decisions
regarding capacity. When the right decisions are
made, there will be less opportunities for wastages.
– Scheduling is the “phase of production control
involved in developing timetables that specify how
long each operation in the production process
takes.” Efficient scheduling assures the
2. Production Planning optimization of the use of human and nonhuman
resources.
and Scheduling 19
Important parts • Firms need to purchase supplies and materials required
of productive in the various production activities. The management
of purchasing and materials must be undertaken with a
systems high degree of efficiency and effectiveness specially in
firms engaged in high volume production. The wider
variety of supplies and materials needed adds to the
necessity of proper managing and purchasing of
materials.
• Materials management refers to “the approach that
seeks efficiency of operation through integration of all
material acquisition, movement, and storage activities
in the firm.”

3. Purchasing and
Material Management 20
Important parts • Inventory control is the process of establishing and
of productive maintaining appropriate levels of reserve stocks of
goods. As supplies and materials are required by firms
systems in the production process, these must be kept available
when they are needed.
– Too much reserves of stocks will penalize the firm
in terms of high storage costs and other related
risks like obsolescence and theft.
– Too little reserves, on the other hand, may mean
lost income opportunities if production activities
are hampered.
• A balance between the two extremes must be
determined.
4. Inventory Control 21
Important parts • Work flow layout is the process of determining the physical
arrangement of the production system. In the transformation

of productive process, the flow of work may be done either haphazardly or

orderly.
systems • The job of the operations manager is to assure that a cost-
effective work-flow layout is installed. A good work-flow layout
will have the following benefits:
1. Minimize investment in equipment.
2. Minimize overall production time.
3. Use existing space most effectively.
4. Provide for employee convenience, safety, and comfort
5. Maintain flexibility of arrangement and operation.
6. Minimize material handling costs
7. Minimize variation ion types of material-handling
5. Work Flow Layout equipment
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8. Facilitate the manufacturing process
9. Facilitate the organizational structure.
 • Quality Control refers to the measurement of products or

Important parts services against standards set by the company. Certain

standard requirements are maintained by the
of productive management to facilitate production and to keep

systems
customers satisfied.
• Poor quality control breeds customer complaints, returned
merchandise, expensive lawsuits and huge promotional
expenditures.

6. Quality Control 23