V SEMESTER BBA -2024

PRODUCTION AND OPERATIONS MANAGEMENT NOTES

 Syllabus: Production and Operations Management

Module No.1: Introduction to Production and Operations Management 12 HRS

Introduction -Meaning of Production and Operations, differences between Production and Operations
Management, Scope of Production Management, Production System. Types of Production, Benefits of
Production Management, Responsibility of a Production Manager, Decisions of Production Management.
Operations management: Concept and Functions.
Module No. 2: Plant Location and layout 10 HRS

Meaning and definition –Factors affecting location, Theory and practices, cost Factor in location – Plant
layout Principles – Space requirement – Different types of facilities – Organization of physical facilities –
Building, Sanitation, Lighting, Air Conditioning and Safety.
Module No.3: Production Planning and Control 12 HRS

Meaning and Definition-Characteristics of Production Planning and Control, Objectives of Production

Planning and Control, Stages of Production Planning and Control, Scope of Production Planning & Control,
Factors Affecting Production Planning and Control, Production Planning System, Process Planning
Manufacturing, Planning and Control System, Role of Production Planning and Control in Manufacturing
Industry.
Module No. 4: Inventory Management 12 HRS

Inventory Management – Concepts, Classification: Objectives: Factors Affecting Inventory Control Policy.
Inventory Management system -Scientific techniques and tools- EOQ Model: Re-order Level: ABC
Analysis: VED: FSN: Stores ledger Quality Management- Quality Concepts, Difference between
Inspections, Quality Control, Quality Assurances, Total Quality Management: Control Charts: acceptance
sampling.
Module 5: Maintenance and Waste Management 10 HRS

Introduction – Meaning – Objectives – Types of maintenance, Breakdown, Spares planning and control,
Preventive routine, Relative Advantages, Maintenance Scheduling, Equipment reliability and Modern
Scientific Maintenance Methods - Waste Management–Scrap and surplus disposal, Salvage and recovery.
Module No.1: INTRODUCTION TO PRODUCTION AND OPERATIONS MANAGEMENT 12 HRS

Introduction -Meaning of Production and Operations, differences between Production and

Operations Management, Scope of Production Management, Production System. Types of
Production, Benefits of Production Management, Responsibility of a Production Manager,
Decisions of Production Management. Operations management: Concept and Functions.

Introduction:

Production management primarily deals with the processes involved in converting raw material, components,
and resources into finished products.
Meaning of Production and Operations,

Meaning: Production management refers to the application of management principles to the production
function in a factory. Production management involves application of planning, organizing, directing, and
controlling the production process.
Definitions: Production Management is concerned with those process which convert the inputs into output
the inputs are the raw materials men, machine, methods etc and output are goods and services.
Production Management is the process of planning regulating the operations of that part of an enterprise
which is responsible for actual transformation of raw materials into finished goods.
Production Management deals with the decision making related to the production process so that the
resulting goods or services is produced according to specification in the amounts and the schedule demanded
and the minimum cost.
Need for the Production Operation Management:

1. Helps to understand and applicate the role played by people in producing goods and services.

2. To know clear picture about factory.

3. Helps in selecting a career

4. Quality Oriented.

5. Convert all the resources into capital

6. Produce the product at right time.

7. Produce the products at minimized cost

8. To arrange for the factors of production

9. To arrange material handling

10. Store keeping

11.Inspection.

12. Selection of materials

13. Design of the product and production system.

14. Helps to understand the people

15. To know the clear picture of the production.

Differences between Production and Operations Management:

Production Management Operations Management

1.Focuses on the Manufacturing goods 1.Encompasses production and services
related activities
2.Deals with physical aspects of 2.Covers the overall management of
production processes and resources.
3.Emphasizes on optimizing production 3.Aims to optimize the entire operations
processes of the Organization.
4.Primarily concerned with the shop floor 4.Concerned with the broader operational
Operations aspects.
5.Involves the coordination of materials 5.Involves coordination of various
and Labour functions and departments
6.places more emphasis on production 6.Focuses on overall operational planning
planning and control and control
7.Concentrates on efficiency and 7.Focuses on efficiency and effectiveness
productivity of workers. of operations.
8.Often found in manufacturing industries 8.Found in both manufacturing and
services industries.

Objectives of Production Operations Management:

Some of the important objectives of production operation management are:-

1. Maximum customer satisfaction through quality, reliability, cost and delivery time.
2. Minimum scrap or rework in better product quality
3. Minimum possible production (output)
4. Maximum operating efficiency
5. Concern for protection on environment
6. Maximum utilization of all kinds of resources

7. Maximum productivity
8. Maximum employee satisfaction
9. Maximum possible profit on return on investment
10. Minimum cash outflow
11. Minimum production life cycle time
12. Minimum possible inventory level [optimum inventory level].
Scope and Functions of Production Management:

Production design and development of production process

1. Fabricating and assembly process: Fabrication modifies the physical characteristic of material upon
which the labour operations are performed. Assembly process means joining different parts already
processed.

2. Analytical synthetic and modifying process: An analytical process breaks down raw material into
different products. Ex. Crude oil is refined into gasoline etc. A synthetic process combines basic parts into
one product. Ex. Soap , shampoo etc... Modifying process is including the metal working industry. Iron or
steel objects are casted and then made in to different shapes and sizes.

3. Production planning and control (PPC): Production planning is a pre-production activity involving
arranging facilities and designing the production system Production control involves the implementation
of production plans or schedules by co coordinating different activities.

4. Purchasing: Purchasing is the act of exchange of goods & services for money or money‘s
value. It is basically a service function.

5. Process selection and planning: Selection of a process of manufacturing involves no. of decision on
the basis of technology, machines and equipment’s used. The type of process planning is a must maximize
the output by using the particular process. Process planning deals with details of the stages involved in a
process.

6. Plant location facilities: Location facility is the basis of any manufacturing activities , improper
selection of the plant location leads to loss.
7. Layout & Material handling facilities:
Plant layout is a plan or scheme of arranging the production facilities in a systematic and schematic manner
that provides profit, efficiency and comfort. The materials and machines and equipment’s should be placed in
such a way which leads to smooth flow of production activities.

8. Capacity planning:
Capacity planning is the procurement of production resources in a productive way. Capacity should be planned
for short- and long-term period.

9. Inventory control:
Inventories are the stock held in the form of raw materials; semifinished parts and finished products.
Inventory control is a part of production management as it helps us in planning for and keeping a check on
purchase and storage of materials.

10. Quality Control:

The quality of the product is plays an important role in the production process. The different
dimensions of qualities are sizes, colour, shape, taste, smell, density, weight, durability etc The
quality control is testing and inspecting different dimensions of the
products quality and standards.

11. Method study:

Method study involves performing a job through human energy which should not be wasted at any cost.
Therefore unwanted, unnecessary movements of human beings should be eliminated and only efficient
movement should be designed for performing a job.

12. Maintenance & Replacements:

Acquiring physical assets and maintaining them is very important. Maintenance means repairs, renewal and
replacements of damaged or obsolete parts of building machines and equipment as the saying goes - ―A stitch
in time saves nine.

13. Cost control and cost reduction:

Cost control involves controlling the un-necessary cost. Cost reduction means improving the productivity
by increasing economy and efficiency and effectiveness of the production process.

14. Automation:
Automation refers to the technique of operating or controlling a productive process by electronic devices and
reducing human intervention to the minimum.
Production System:

The production system of an organisation is that part which produces products of an organisation. It is that
activity whereby resources flowing within a defined system are combined and transformed in a controlled
manner to add value in accordance to policies communicated by management.
Types of Production:

The production can be classified as follows:

1. Job Shop Production

2. Batch Production

3. Mass Production
4.Continous production

1. Job Shop Production:

Job shop production refers to the manufacturing facility that produces several different products in smaller
batches. A machine shop is a type of Job shop.
Examples: an artist drawing portrait .an architect create a custom home plan, an aerospace
manufacturer building a space craft. Large ships. Etc.
Features of Job shop Production:

1. Job shop production system helps to produces variety of products.

2. It utilize of general-purpose machines and facilities.

3. Job shop production system requires skilled operators.

4. Large inventory of materials, tools, Parts.

5. It assists for detailed planning is essential for sequencing the requirements of each product,
capacities for each work centre and order priorities.
Merits of Job shop production:

1. Job shop production system helps to produce variety of products.

2. Job shop production system requires skilled operators, as each job gives those learning opportunities.

3. Full potential of operators can be utilised.

4. Opportunity exists for creative methods and innovative ideas.

Demerits of Job shop production:

1. Job shop production system requires skilled operators which lead to higher operating costs.

2. Job shop production system leads to higher cost due to frequent setup changes.

3. Higher level of inventory at all the levels and hence higher inventory cost.
4.Production planning is complicated.
5.Larger space requirements.

2. BATCH PRODUCTION:

Batch production refers to the manufacturing process in which components or goods are produce in
groups and not a continuous stream. It is characterised by the manufacture of limited number of products
produced at regular intervals and stocked awaiting sales.
Examples: bakery products, Clothing, Pharmaceuticals, Computer chips, News papers
,books. Etc.

Features of batch production

The merits of batch production system are as follows:

1. It helps for better utilization of plant and machinery.

2. It promotes functional specialization.
3. Cost per unit is lower as compared to job order production.
4. The change of setup is required for processing the next batch.
5. The manufacturing lead time and cost are lower as compared to job order production.

Merits of Batch production

The merits of batch production system are as follows:

1. It helps for better utilization of plant and machinery.

2. It promotes functional specialization.
3. Cost per unit is lower as compared to job order production.
4. Lower investment in plant and machinery
5. Flexibility to accommodate and process number of products.
6. Job satisfaction exists for operators.
Demerits of Batch production

The demerits of batch production are as follows:

1. Its material handling is complex because of irregular and longer flows.

2. Production planning and control is complex.
3. Work in process inventory is higher compared to continuous production.
4. Higher set up costs due to frequent changes in set up.

C) Mass production
Manufacturing or processing of uniform products in large quantities using interchangeable parts and
machinery. It is either a wholly automated process or a series of short, repetitive procedures. Mass
production is a system of manufacturing based on principles such as the use of interchangeable parts, large-
scale production, and the high- volume assembly line.
Example: Automobile Industry Features of
Mass Production
The features of mass production can be summarized as follows:

1. This system leads for standardisation of product and process sequence.

2. Mass production contributes special purpose machines having higher production capacities and
output rates.
3. It leads to the large volume of products.
4. Shorter cycle time of production.
5. Lower in process inventory.
6. Perfectly balanced production lines.
7. Flow of materials, components and parts is continuous and without any back tracking.
8. Production planning and control is simple.

Merits of Mass Production

The merits of mass production are:

1. Mass production leads to higher rate of production with reused cycle time.
2. Mass production leads to higher capacity utilisation due to line balancing
3. Less skilled operators are required.
4. Low process inventory.
5. Production and operation cost per unit is low.
Demerits of Mass production

The demerits of mass production are as follows:

1. Line design needs major change with the changes in the product design.
2. High investment in production facilities.
3. The breakdown of one machine will stop an entire production line.
4. The cycle time is determined by the slowest operation.

D) Continuous Production
Continuous Production is a method used to manufacture, produce or process materials without interruption.
Continuous production is called a continuous process or a continuous flow process because the materials,
either dries bulk or fluids that are being processed is continuously in motion, undergoing chemical reactions or
subject to mechanical or heat treatment.
Examples: oil refining, Synthetic Fibres, Fertilizers, Power stations, blast furnace Features of
Continuous Production

The features of continuous production area are as follows:

1. Continuous Production offers plant and equipment with zero flexibility.

2. Material handling is fully computerized.
3. Process follows a predetermined sequence of operations.
4. Component materials cannot be reality identified with final product.
5. Planning and scheduling is a routine action.

Merits of continuous Production:

The merits of continuous production are:

1. Higher rate of manufacture with reduced cycle time.

2. Higher competence utilisation due to line balancing.
3. Standardization of product and process sequence.
4. Material handling is completely automatic.
5. Person with limited skills can be used on the production line.
6. Unit cost is lower due to high volume of production
Demerits of Continuous Production

The demerits of continuous production are as follows

1. Flexibility to contain and process number of products does not exist.

2. The investment for setting flow lines is high.

3. Product differentiation is limited.

Responsibility of a Production Manager:

The specific responsibilities of a production manager can vary based on the industry and company.

1. Production planning and scheduling:

Developing production schedules and plans to meet consumer demand while optimizing resources,
capacity and efficiency. This involves co ordinating with other departments to ensure timely availability
of materials and resources.

2. Resource Allocation:
Allocating labour, Equipment and Materials effectively to different production tasks and projects to
ensure optimal utilisation of resources.

3. Quality Control and Assurance:

Implementing and maintaining quality control measures to ensure that products meet or exceed quality
standards. This involves setting quality benchmarks, Conducting inspections and addressing any quality
related issues.

4. Process Improvement:
Identifying areas for process optimization and efficiency improvement. Implementing strategies such as Lean,
Six Sigma or Other continuous improvement methodologies to streamline processes and reduce waste.

5. Inventory Management:
Managing inventory levels to ensure that materials are available when needed without excess stockpiling,
which tie up capital and increase storage costs.

6. Health and Safety Compliance:

Ensuring that all production process and activities comply with safety regulations and guidelines. Creating safe
working environment for employees is a critical responsibility.
7. Equipment Maintenance:
Overseeing the maintenance and repair of production equipment to minimize downtime and ensure that
machinery operates efficiency.

8. Supplier Coordination:
Collaborating with suppliers to ensure the timely delivery of raw materials and components. Building
strong relationships with suppliers can help mitigate potential supply chain disruptions.

9. Budget Management:
Managing the production budget, including labour costs, Materials, Equipment maintenance and other
related expenses. Ensuring that Production stays within budgetary constraints.

10. Team Leadership:

Leading and supervising production teams, including hiring, training and evaluating employees. Motivating
and guiding the team to achieve production goals and maintain a positive work environment.

Decisions of Production Management:

Production management involves making wide range of decisions to ensure efficient and effective
production processes. These decisions span various aspects of operations and have a significant impact on a
company’s overall performance.
The key decisions in production management:

1. Production Planning:

a) Determining production schedules and priorities to meet customer demand.

b) Selecting appropriate production methods and technologies.
c) Allocating resources like labour, Materials and equipment to different production tasks.

2. Capacity Planning:

a) Deciding on the optimal production capacity to meet current and future.

b) Evaluating whether to Expand capacity or outsource Production to third parties.
3. Inventory management:

a) Setting inventory levels for raw materials, Work in progress, and finished goods.
b) Deciding when and how much to reorder to maintain a balanced inventory.
4. Quality control and Assurance:

a) Deciding on quality standards and benchmarks for products.

b) Determining inspection and testing procedures to ensure products meet specifications.
5. Process Improvement:

a) Identifying areas for Processes optimizing and waste reduction.

b) Choosing appropriate methodologies such as Lean, Six Sigma or Total Quality
Management to improve efficiency.

6. Supplier and vendor Management:

a) Selecting and evaluating suppliers based on factors like quality, reality and cost.
b) Deciding on the frequency and quantity of orders from suppliers.
7. Equipment and Technology Investment:

a) Evaluating and selecting production equipment and technology that align with production
goals.

b) Deciding whether to invest in automation, robotics, or other advanced technologies.

8. Employees Training and Management:

a) Identifying training needs for production employees.

b) Deciding on Workforce size, hiring, and performance evaluation.
9. Production Cost Analysis:

a) Analysing production cost, including direct materials, labour, overhead, and operational expenses.
b) Making decisions to reduce costs while maintaining quality.
10. Scheduling:

a) Creating production schedules that optimize resource utilisation and minimize downtime.
b) Deciding on shift schedules, overtime and holiday production plans.
11. New Product Introduction:

a) Deciding how to integrate new products into existing production processes.

b) Determining the feasibility and Cost-effectiveness of producing new products.
12. Maintenance and Repair:

a) Deciding on Maintenance schedules and strategies to ensure equipment reliability.

b) Determining when to repairs or replace equipment.
13. Supply Chain Decisions:

a) Deciding on sourcing strategies such as local or global suppliers.

b) Evaluating options for transportation, warehousing and distribution.
14. Environmental Considerations:

a) Making decisions to adopt sustainable practices and reduce the environmental impact of production
processes.

15. Crisis Management:

Making decisions to address unexpected disruptions like equipment breakdowns, naturals disasters, or supply
chain interruptions.

Production Operations management:

Production and operations management refers to the management of the conversion process which
converts land, labour, capital and management inputs into outputs of goods and services.
Concept

INPUT PROCESS OUTPUT

RAWMATERIALS CONVERSION FINISHED PRODUCTS
Benefits of Production operations management

1. Smooth operations:

Operation management focuses on the tools and techniques a manufacturing firm uses to ensure a smooth,
effective production process.
2. Better Profitability management:

Sound operations management causes corporate leadership to challenge conventional wisdom or employees.
helps the managers to adapt at monitoring their revenues and expenses.
3. Competitive advantages:

Operations management improves the company’s competitive standing. This is because the business gets a
better understanding of its internal and external environments to overcome the competitors.
4. Manufacturing Edge:

Operations management allows a manufacturing firm to change or improve the way it produces goods as
well as how it stores items such as raw materials work in progress merchandise and completely finished
products.by using manufacturing tools used in operations management computer aided production software,
defect tracking programmes, warehouse management software and process of reengineering applications.
5. Regulatory compliance:

In order to avoid paying fine and penalty to the government for not following rules and regulations prescribed
by the Govt. nowadays all companies are following Industrial norms.
6. Improved efficiency – Product optimization and waste elimination in operations management
help the company increase efficiency and productivity while lowering operations costs and
increasing customer satisfaction.

7. Innovation & Competitiveness – By continuously looking for new ways to improve and add new
technologies, operations management plays a crucial role in innovation and keeping a business
competitive.
8. Better Use of Resources – Operations Management makes a company fully use its resources.
Implementing operation management theories, technologies, and best practices into production eliminates
waste and ensures the resources are used efficiently.
9. Create Value for Customers – By designing and managing the production process to meet the
customer’s needs and preferences (timely production, less-priced product, effective use), operations
management creates value for customers.

10. Improved Product Quality – Operations Management implements effective quality measures during
production to improve product quality. It ensures the products are of the highest quality standards to meet
the target customer’s expectations.

Demerits of production operations management:

1. Production scheduling can be complex

2. Another potential problem with using production scheduling is the cost of

implementation.

3. Operations management depends on many different components within the organisation working
together to achieve success.

4. Operations management implements an effective plan, if operation management does not carry out the
plan properly the plan will fail.
5. operation management will have limited success within organisation.

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