Operation Management

Assignment













Made By:
Chitra Dwivedy
10261203913
MBA 2nd Semester (Section B)
Ques 1 Explain Operation management from a system perspective? (5 Marks)

OPERATIONS MANAGEMENT
Joseph G .Monks defines Operations Management as the process whereby resources, flowing within
a defined system, are combined and transformed by a controlled manner to add value in accordance
with policies communicated by management.
The operations managers have the prime responsibility for processing inputs into outputs. They
must bring together under production plan that effectively uses the materials, capacity and
knowledge available in the production facility. Given a demand on the system work must be
scheduled and controlled to produce goods and/or services required. Control must be exercised over
such parameters such as costs, quality and inventory levels.
The definition of the operations Management contains following keywords: Resources, Systems,
transformation and Value addition Activities.
RESOURCES
Resources are the human, material and capital inputs to the production process. Human resources
are the key assets of an organisation. As the technology advances, a large proportion of human input
is in planning and controlling activities. By using the intellectual capabilities of people, managers can
multiply the value of their employees into by many times. Material resources are the physical
facilities and materials such as plant equipment, inventories and supplies. These are the major assets
of an organisation. Capital in the form of stock, bonds, and/or taxes and contributions is a vital asset.
Capital is a store of value, which is used to regulate the flow of the other resources.
SYSTEMS
Systems are the arrangement of components designed to achieve objectives according to the plan.
The business systems are subsystem of large social systems. In turn, it contains subsystem such as
personnel, engineering, finance and operations, which will function for the good of the organisation.
A systems approach to operations management recognises the hierarchical management
responsibilities. If subsystems goals are pursued independently, it will results in sub-optimization. A
consistent and integrative approach will lead to optimization of overall system goals.
The system approach to specific problems requires that the problem first be identified and isolated
from the maze of the less relevant data that constitute the environment. The problem abstracted
from the overall (macro) environment. Then it can be broken into manageable (micro) parts and
analysed and solutions proposed. Doing this analysis is advantageous before making any changes. If
the solution appears to solve the problem in a satisfactory way, changes can be made to the real
system in an orderly and predictable way.
The ability of any system to achieve its objective depends on its design and its control. System design
is a predetermined arrangement of components. It establishes the relationships that must exist
between inputs, transformation activities and outputs in order to achieve the system objectives.
With the most structured design, there will be less planning and decision-making in the operations
of the system. System control consists of all actions necessary to ensure that activities conform to
preconceived plans or goals. A closed loop control system can automatically function on the basis of
data from within its own system.
TRANSFORMATION AND VALUE ADDING ACTIVITIES
The objective of combining resources under controlled conditions is to transform them into goods
and services having a higher value than the original inputs. The transformation process applied will
be in the form of technology to the inputs. The effectiveness of the production factors in the
transformation process is known as productivity.
The productivity refers to the ratio between values of output per work hour to the cost of inputs.
The firms overall ratio must be greater than 1, then we can say value is added to the product.
Operations manager should concentrate improving the transformation efficiency and to increase the
ratio.




\

Ques 2 Distinguish mass customization from mass production? (5 Marks)

MASS CUSTOMIZATION
The process of delivering wide-market goods and services that are modified to satisfy a specific
customer need. Mass customization is a marketing and manufacturing technique that combines the
flexibility and personalization of "custom-made" with the low unit costs associated with mass
production. Many applications of mass customization include software-based product configurations
that allow end-users to add and/or change certain functionalities of a core product. Sometimes
called "made to order" or "built to order."
Mass customization, in marketing, manufacturing, call centres and management, is the use of
flexible computer-aided manufacturing systems to produce custom output. Those systems combine
the low unit costs of mass production processes with the flexibility of individual customization.
Mass customization is the new frontier in business competition for both manufacturing and service
industries. At its core is a tremendous increase in variety and customization without a corresponding
increase in costs. At its limit, it is the mass production of individually customized goods and services.
At its best, it provides strategic advantage and economic value.

MASS PRODUCTION
The manufacturing of large quantities of standardized products, frequently utilizing assembly line
technology. Mass production refers to the process of creating large numbers of similar products
efficiently. Mass production is typically characterized by some type of mechanization, as with an
assembly line, to achieve high volume, the detailed organization of materials flow, careful control of
quality standards and division of labour.
Also called flow production, repetitive flow production, series production or serial production.
Mass production is the production of large amounts of standardized products, including and
especially on assembly lines. With job production and batch production it is one of the three main
production methods.
The concepts of mass production are applied to various kinds of products, from fluids and
particulates handled in bulk (such as food, fuel, chemicals, and mined minerals) to discrete solid
parts (such as fasteners) to assemblies of such parts (such as household appliances and
automobiles).




Ques 3 Briefly explain the developments in the field of operation management in the course of
evolution with special reference to the concept, tools, techniques and major contributors during
each phase?
OPERATION MANAGEMENT
Operations Management refers to the planning, coordination and control of all the activities
concerned with the conversion of inputs into outputs.
Inputs consist of raw materials, energy, labour, machinery and other productive resources.
Outputs comprises of products and services.
Inputs are transformed into outputs through appropriate system design planning and control.
HISTORICAL BACKGROUND
Concept Time Explanation
Industrial Revolution Late 1700 Brought in innovation that changed production
By using machine.
Power instead of human power.
Scientific Management Early 1900s Brought the concept of analysis and
measurement of the technical aspects
of work design and development of
Assembly lines and mass production.
Human Relation Management 1930s to 1960s Focused on understanding human
elements of Job design such as workers
Motivation and job satisfaction.
Management Science 1940s to 1960s Focused on the development of quantitative
Techniques to solve operation problems.
Computer Age 1960s Enabled processing of large amounts of
data and allowed widespread use of
Quantitative procedures.
Just In Time (JIT) 1980s Designed to achieve high volume
Production with minimal inventories.
Total Quality Management (TQM) 1980s Sought to eliminate causes of production
Defects.
Re-Engineering 1980s Required redesigning a companys processes
in order to provide greater efficiency
And cost reduction.

Environmental Issues 1980s Consider waste reduction, the need for
Recycling and product reuse.
Flexibility 1990s Offered customisation on a mass scale
Time based competition 1990s Based on time such as speed of delivery
Supply chain Management 1990s Focused on reducing the overall cost of the
system that manages the flow of
materials and information from
Suppliers to final customers.
Global competition 1990s Designed operations to compete in global
market
E-Commerce Late 1990s to Early 21
st
century Using Internet to conduct business.
TOOLS AND TECHNIQUES
Total Quality Management (TQM)
It consists of organization-wide efforts to install and make permanent climate in which an
organization continuously improves its ability to deliver high-quality products and services to
customers. In a TQM, all members of an organization participate in improving processes, products,
services, and the culture in which they work.
Kaizen (Continuous Improvement and Efficiency)
Refers to philosophy or practices that focus upon continuous improvement of processes in
manufacturing, engineering, and business management. It has been applied in healthcare,
government, banking, and other industries.kaizen aims to eliminate waste by improving
standardized activities and processes.
Just-in-Time Systems(JIT)
The concept behind creating the firms product in the least amount of time. Close coordination
between manufacturers, suppliers, and customers. The firms inventory of inputs is kept at the
lowest level possible. Inputs arrive at the organization when, not before, they are needed.
Process Engineering
Method of changing the entire production process rather than making incremental changes. The
firm (including its operations management) is viewed as a complete process. Involves fundamentally
rethinking and radically redesigning the entire process including:
1. Cutting out steps that are not needed.
2. Reducing paperwork.


Supply Chain Management
Supply chain management has been defined as the "design, planning, execution, control, and
monitoring of supply chain activities with the objective of creating net value, building a competitive
infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring
performance globally.
CAM
It is the use of computer software to control machine tools and related machinery in the
manufacturing of work pieces.CAM may also refer to the use of a computer to assist in all operations
of a manufacturing plant, including planning, management, transportation and storage. Its primary
purpose is to create a faster production process and components and tooling with more precise
dimensions and material consistency, which in some cases, uses only the required amount of raw
material (thus minimizing waste), while simultaneously reducing energy consumption
CAD
Is the use of computer systems to assist in the creation, modification, analysis, or optimization of a
design? CAD software is used to increase the productivity of the designer, improve the quality of
design, improve communications through documentation, and to create a database for
manufacturing.
MAJOR CONTRIBUTORS


















Ques 4 how operation management differs from production management? How automation has
changed trends in Operation management? (6 Marks)
Production management and operations management are management jargon that needs to be
simplified for those who are sitting on the fence or those inside an organization unable to
comprehend them clearly. Sometimes it becomes confusing to be talking about production
management inside operations management but they are separate and distinct entities in the study
of management as ultimately, production is a part of the whole cycle of operations
Operations Management
The study of set of activities comprising supervision, planning and designing of business operations
in the field of manufacturing of goods and services is termed as operations management. The
purpose of operations management is to make certain that the operations of a business are efficient
and effective and result in minimum of wastage. Operations management tries to cut down
resources involved in operations while at the same time making operations more effective and
productive. In fact operations management is more concerned on processes than people or
products. Operations management in a nutshell is using physical resources in an optimum manner,
converting input into output, so as to supply to the market the desired and finished product.
Production Management
Production management on the other hand focuses specifically on the production of goods and
services and is concentrated upon churning output from input. It is a broad sum of activities that go
into turning raw material into final, finished product. One may feel that production management is a
subset of operations management, but production management in itself is a broad subject that
comprises production planning and control, inventory management, and operations control.
Production management includes all management activities spanning selection. Designing,
operating, controlling and updating production system.
Production management Operation management
1. It is concern with the production or
manufacturing of goods.
It is concerned with providing services.
2. In this system follow make to stock
system
In this make to order system
3. In this the output is tangible In this the output is intangible
4. In p.m there is less consumer
contact
There is more consumer contact
5. In this goods are consumed after a
long period of time
Services are consumed immediately on the
same time.
6. In this capacity is defined in terms
of output
In this capacity is defined in terms of input.
7. There is easiness in quality control In this quality control is difficult.
8. In this we more focus on inventory In this inventory do not arise in case of
control operation management
9. Capacity planning is easily possible Capacity planning is difficult.
10. Ease of access to market is one of
important factor.
Ease of access to market is most important
factor.


AUTOMATION
The dictionary defines automation as the technique of making an apparatus, a process, or a system
operate automatically. We define automation as the creation and application of technology to
monitor and control the production and delivery of products and services.
Automation encompasses many vital elements, systems, and job functions.
Automation provides benefits to virtually all of industry. Here are some examples:
Manufacturing , including food and pharmaceutical, chemical and petroleum, pulp and
paper
Transportation , including automotive, aerospace, and rail
Utilities , including water and wastewater, oil and gas, electric power, and
telecommunications
Defence
Facility operations , including security, environmental control, energy management, safety,
and other building automation
And many others
Automation crosses all functions within industry from installation, integration, and maintenance to
design, procurement, and management. Automation even reaches into the marketing and sales
functions of these industries.
Automation involves a very broad range of technologies including robotics and expert systems,
telemetry and communications, electro-optics, Cyber security, process measurement and control,
sensors, wireless applications, systems integration, test measurement, and many, many more.
AUTOMATED OPERATIONS: BENEFITS FOR THE ORGANIZATION
1. Cost Reduction
Every business faces global pressure to increase their profitability. One approach is to reduce costs.
But, reducing the capabilities of the computer centre negatively impacts the entire company.
Automation software is a better and more intelligent approach to cost containment and reduction.
The greatest opportunity is to increase service to the customer (end user) while systematically
reducing costs. Management often overlooks this potential for savings. Most modern servers have a
low operating cost and the total cost of ownership has been declining. Automation results in higher
productivity, reliability, availability, and increased performance and can reduce operating costs.
Moving to lights-out operations yields a good return on investment.
2. Productivity
As an organizations technology demands grow, productivity becomes a bigger concern. Typically, as
other business areas were given tools to increase their productivity and effectiveness, computer
operations took a back seat. The proliferation of desktop productivity software has created
substantial gains in the office environment. But, instead of alleviating workload for the IT
professionals in the back room, the spread of PCs has meant more tasks to be accomplished.
As people use computers more, they place greater demands on the system. More users are
generating more jobs, and printed output has increased despite efforts to reduce printed reports. In
spite of the trend to online transaction-oriented and client/server systems, batch workloads
continue to grow. Production batch jobs still consume the majority of CPU time, and in large shops,
jobs are constantly being added.
3. Availability
Companies are continually more reliant on their computers. Day-to-day business is routinely
conducted with online systems: order entry, reservations, assembly instructions, shipping orders
the list goes on. If the computer is not available, the business suffers.
Years ago, it was considered acceptable to have the computer unavailable for a few hours. Today,
with the high volume of cloud computing, the outage of key systems can cost millions of dollars in
lost revenue and tarnish a companys reputation.

High availability is clearly one of IT managements primary goals. Here too, automated operations
can help. A disk drive may crash, but the situation becomes serious when there is not an adequate
backup or worse, the tape cannot be found. Automated save and recovery systems ensure
protection from the potential disaster of disk loss, or inadvertent damage to system objects from
human error.
In a networked environment, centralized management also makes sense. Remote resources can
solve business issues while a single operator at a central console observes critical functions
throughout the network. Continuous monitoring with a low CPU and communications overhead
makes it easier to spot vital network performance trends.
4. Reliability
Productivity is an obvious benefit of automation. However, reliability is the real gem that sparkles
with automation. It is the cornerstone of any good computer operations department and without it
you have confusion, chaos, and unhappy users.
Off-shift operations include some of the most boring, repetitive, and error-proned tasks of an IT
organization. But, when you remove the human factor, you eliminate most batch processing errors.
Automated operations ensure that jobs are not forgotten or run out of sequence, that prerequisite
jobs are completed successfully, that the input data is correct, and that any special processing is
performed.
5. Performance
Every company would like to have their enterprise perform like a thoroughbred. In reality, it is more
likely to be overburdened with work. Even though advancements in computers make them faster
and less expensive every year, the demands on them always catch up and eventually exceed the
level of capability that a companys computer system possesses. That leaves a lot of companies
wanting to improve their system performance.
Two options to improve performance are to upgrade hardware or purchase a newer systemboth
expensive choices. Its also possible to tune a system for better performance, but this takes a highly
skilled person who is not normally available 24 hours a day. And, once a system is tuned for a
specific workload, if the workload changes, the settings are no longer optimum.




















Ques 5 Explain the following:-
a) Nature And scope of Operation management
The operation management today presents certain characteristic which makes it look totally
different from what it was during the past.
Transformational process
The production and operation management is concerned with the conversion of raw material.
Value addition
In this at every successive level some value is added to the previous one. Example sand at sea shore
does not adds any value but sand used in construction adds to the value.
System itself
Its a complete step wise process i.e. a proper well defined sequence is followed in production and
operation management.
Exists for certain objective
First there is an objective and to meet that particular objective a complete procedure is followed.
Carried out in part of organization
Its meaning is that production is not alone in the organization rather there are certain other acts also
like finance, research and development etc.
Inter relationship among the system
No system can ever work in isolation and depends on others for certain help. So, there exists an
interrelationship among different system.
Specialization of function
As different functions are performed separately, due to this they are repetitively performed by same
people and there is specialization of functions.
Increase in productivity
As there is specialization in functions so the speed of doing a task increases as a result there is
increase in productivity.
Decrease in cost
Specialization leads to less wastage.
Timely dependent
It dependent timely on certain factors.
SCOPE OF OM
Operations Management concern with the conversion of inputs into outputs, using physical
resources, so as to provide the desired utilities to the customer while meeting the other
organizational objectives of effectiveness, efficiency and adoptability. It distinguishes itself from
other functions such as personnel, marketing, finance, etc. by its primary concern for conversion by
using physical resources. Following are the activities, which are listed under Production and
Operations Management functions:
1. Location of facilities.
Location of facilities for operations is a long-term capacity decision, which involves a long-
term commitment about the geographically static factors that affect a business organisation.
It is an important strategic level decision-making for an organisation.
The selection of location is a key-decision as large investment is made in building plant and
Machinery. An improper location of plant may lead to waste of all the investments made in
plant and machinery equipments. Hence, location of plant should be based on the
companys expansion plan and policy, diversification plan for the products, changing sources
of raw materials and many other factors.

2. Plant layouts and Material Handling.
Plant layout refers to the physical arrangement of facilities. It is the configuration of
departments, work centres and equipment in the conversion process. Material Handling
refers to the moving of materials from the store room to the machine and from one
machine to the next during the process of manufacture. This cost can be reduced by proper
section, operation and maintenance of material handling devices. Material handling devices
increases the output, improves quality, speeds up the deliveries and decreases the cost of
production.

3. Product Design.
Product design deals with conversion of ideas into reality. Every business organisation has to
design, develop and introduce new products as a survival and growth strategy. Developing
the new products and launching them in the market is the biggest challenge faced by the
organizations.

4. Process Design.
Process design is a macroscopic decision-making of an overall process route for converting
the raw material into finished goods. These decisions encompass the selection of a process,
choice of technology, process flow analysis and layout of the facilities. Hence, the important
decisions in process design are to analyse the workflow for converting raw material into
finished product and to select the workstation for each included in the workflow.


5. Production and Planning Control.
Production planning and control can be defined as the process of planning the production in
advance, setting the exact route of each item, fixing the starting and finishing dates for each
item, to give production orders to shops and to follow-up the progress of products according
to orders.



6. Quality Control.
Quality Control may be defined as a system that is used to maintain a desired level of
quality in a product or service. It is a systematic control of various factors that affect the
quality of the product. Quality Control aims at prevention of defects at the source, relies on
effective feedback system and corrective action procedure.

7. Materials Management.
Materials Management is that aspect of management function, which is primarily concerned
with the acquisition, control, and use of materials needed and flow of goods and services
connected with the production process having some predetermined objectives in view.
These objectives can be to minimise cost, to trace new sources of supply and to develop
cordial relations with them in order to ensure continuous supply at reasonable rates and to
reduce investment tied in the inventories for use in other productive purposes and to
develop high inventory turnover ratios.

8. Maintenance Management.
In modern industry, equipment and machinery are a very important part of the total
productive effort. Therefore their idleness or downtime becomes are very expensive. Hence,
it is very important that the plant machinery should be properly maintained.
































b) Recent trends in operation management


Global Market Place
Globalisation of business has compelled many manufacturing firms to have operations in
many countries where they have certain economic advantages.
For example many foreign companies come in India because the material and labour are
easily available that too at low cost.
Production/Operations Strategy
More and more firms are recognising the importance of operation management for the
overall success of their business and the necessity for relating it to their overall business
strategy.
Total Quality Management (TQM)
This approach has been adopted by many firms to achieve customer satisfaction by never
ending quest for improving the quality of goods and services.
Flexibility
The ability to adapt quickly to changes in volume of demand, in the product mix demanded,
and in product design or delivery schedules.
Time Reduction
Reduction of manufacturing cycle time and speed to market for a new product provide
competitive edge to firm over other firm. When companies can provide products at the
same price and quality that too at quick pace.
Re-engineering
This involves drastic measures or break-through improvements to improve the performance
of the firm.
Environmental Issues
There is increasing emphasis on reducing waste, recycling waste, using less toxic chemicals
and using biodegradable materials for packaging.
Supply-Chain Management
Management of supply-chain from suppliers to final customers reduces the cost of
transportation, warehousing and distribution throughout the supply chain.




















Ques 6 Explain how flexible manufacturing system has changed trends in operation
management?

FLEXIBLE MANUFACTURING SYSTEM

A flexible manufacturing system (FMS) is a manufacturing system in which there is some
amount of flexibility that allows the system to react in case of changes, whether predicted or
unpredicted. This flexibility is generally considered to fall into two categories, which both
contain numerous subcategories.

This type of production system is also known as intermittent production system. It means
something that starts (initiates) and stops (halts) at irregular (unfixed) intervals (time gaps).
In the intermittent production system, goods are produced based on customer's orders.
These goods are produced on a small scale. The flow of production is intermittent (irregular).
In other words, the flow of production is not continuous. In this system, large varieties of
products are produced. These products are of different sizes. The design of these products
goes on changing. It keeps changing according to the design and size of the product.
Therefore, this system is very flexible.

For example, assume a scenario where the entire (from start until end) process of
manufacturing a Steam Iron is completely automated.
In this case, the production of a steam iron will go through following automated (computer-
controlled) stages or steps.
First, the computer-controlled system handles drilling of holes in a steam iron.
It then handles the painting and/or coating of the internal and external parts of a steam iron.
The automated system then performs a Quality Check of a steam iron.
Finally, robots do the fast packaging of those steam irons that are ready for retail sales.

CHARACTERISTIC

The characteristics of an intermittent production system are listed as follows:

The flow of production is not continuous. It is intermittent.
Wide varieties of products are produced.
The volume of production is small.
General purpose machines are used. These machines can be used to produce different types
of products.
The sequence of operation goes on changing as per the design of the product.
The quantity, size, shape, design, etc. of the product depends on the customer's orders.


BENEFITS

The benefits or advantages of flexible manufacturing system are listed below:

1. Large variety of same products

Flexible Manufacturing System (FMS) can produce a large variety of the same type
(homogeneous) of products.

2. Profitable investment

The company invests a lot of money (capital) in machines. However, FMS makes optimum
use of these machines. Therefore, though costly, FMS is still a profitable investment.

3. Requires limited inventory

FMS requires limited inventories compared to other production systems.


4. Low labour cost

In FMS, most of the work is done by automated machines and robots. There is hardly any
need of a manual work or some human intervention. Therefore, in FMS, the labour cost
becomes very low.

5. Flexible system

FMS is a very flexible system. This is because it can produce a large variety of similar
products. The quantity and design of production can also be changed very quickly.

6. Speedy production

The products can be produced very quickly because the materials are loaded, unloaded and
transferred from one machine to another by robots.


When FMS is Suitable?

The FMS is suitable or can be adapted in case of following instances. When...
We want to produce a large variety of similar product. For e.g. One FMS can produce
different types of cars. Another FMS can produce various types of bikes, etc.
All the products use the same components or parts.
The numbers of components are moderate. Say between 5 to 50.
The volume of each component is moderate. That is, between 1000 to 50,000 units
in one year.