Course Title # Operations Management

Lecture 1
Introduction

Topics Covered:

Meaning of Production or Operations Management

Reasons for Studying Operations Management
Functions of Production or Operations Management
Analytical Tools of Production Management
Operations as a System
Model Questions

Meaning of Operations/
Production Management
Operations or Production Management may be defined as
The design, operation and improvement of the Production systems that create and deliver the
firms primary products or services.
- Chase & Jacobs
The term operations management refers to the direction and control of the processes that
transforms inputs into products and services.
- Krajewski and Ritzman
Production Management is the management of systems or processes that create goods or
provide services.
- William J. Stevenson
The field of production management in the past focused almost extensively on manufacturing
management with a heavy emphasis on the methods and techniques used in operating a factory.
In recent years, the scope of production management has broadened considerably to a wide range
of activities and situations outside manufacturing such as health care, food service, recreation,
banking, hotel management, retail sales, education, transportation and government. This
broadened scope has given the field the name operations management that more closely reflects
the diverse nature of activities to which its concepts and techniques are applied.

Reasons for Studying Operations Management

There are a number of very good reasons for studying operations management:
FirstlyOperations Management activities are at the core of all business, regardless of what business
they are in. A business education is incomplete without an understanding of modern approaches
to managing operations.
SecondlyOperations management presents interesting career opportunities. Most of the jobs are in
Operations Management related areas- such areas as customer services, quality assurance,
operations planning and control, scheduling, job design, inventory management and many more.
ThirdlyActivities in all of the other areas of business organization such as finance, accounting, human
resources, logistic marketing, purchasing as well as others are all interrelated with Production

Management activities. So it is very essential for these people to have a basic understanding of
Operations Management.
FinallyBeyond all of these is the reality that Operations Management is about management and all
managers need to posses the knowledge and skills in the content areas of Operations
Management.
Functions of Production Management
The functional area of production management is not narrow. A production manager has to
perform a lot of activities at the time of producing a product. The functions or activities of
production management are given below:
1.

2.

3.

Preparatory Functions:
Product design
Production planning
Work study
Method study
Functions at production period:
Production control
Inventory control
Quality control
Maintenance of machinery
Research and development
Other Functions:
Purchase and procurement
Factory and plant layout
Production budget
Preparatory Functions
Product Design:
Production management has to be concerned for preparing the model or design of the product
to be produced. All other activities are dependent on the design of the product.
Production Planning:
A complete production planning should be established according to the design of product. It
should include where to do, how to do, when, how and who shall do and which materials will
be required for producing the product.
Work Study:
It means finding the best way to perform production activities. Work related issues such as
time study, motion study and fatigue study are analyzed here so that products can be
produced with least labor involvement.

 Method Study:
Method study is important to produce quality products. Here the total production process is
analyzed and activities are taken accordingly.
Functions at Production Period
Production Control:
Production control is the observation of production process whether the activities are being
conducting according to the plan or proposed design, finding deviation and taking corrective
actions.
Inventory Control:
For smooth production, raw material, finished, semi-finished, packaging, spares and others
are stocked in order to meet an expected demand or distribution in future.
Quality Control:
To maintain quality of products is an important task of production management. If any
deviation found in the product quality, corrective measures should be taken.
Maintenance of machinery:
Machineries, tools and accessories that are necessary for smooth operation, should be kept in
proper place at proper time.
Research and Development:
In order to compete and exist in the market, Production Management should conduct research
and development programs on a regular basis. Product development, product simplification,
design change, introduction of latest production method is included in research and
development.
Other Functions
Purchase and procurement:
Sometimes, Production Manager has to take responsibility of purchasing raw materials,
machineries and other related accessories for smooth operation of Production process.
Factory and Plant Layout:
Production Managers play an important role in establishing factory planning, buildings and
plant layout.
Production Budget:
Production budget is another important function of production management or operations
management.

Analytical Tools of Production Management

The analytical tools used in production management are given below:
1. Cost Analysis Method
2. Linear Programming
3. Waiting Line or queuing model
4. Simulation Analysis
5. Statistical Analysis
6. Schematic/Graphic Analysis
7. Network Planning Model
8. Computer Search Method
1. Cost Analysis Method:
It focuses on relationships between cost, revenue and volume of output. The purpose of cost
analysis method is to estimate the income of an organization under different operating
conditions.
2. Linear Programming:
It is a powerful tool used by production managers to obtain optimal solutions to problems
that involve restrictions or limitations such as available materials, budgets, labor and
machine times. It consists of a sequence of steps that will lead to an optimal solution to
problems in cases where an optimum exits.
3. Waiting Line or Queuing Model:
The goal of waiting line is essentially to minimize total cost. Waiting lines have a tendency
to form in a wide variety of service systems such as Airport ticket counters, Cable television
company, Hospital emergency rooms. Analysis is useful in helping managers choose a
capacity level that will be cost effective through balancing the cost of having customers wait
with the cost of providing additional capacity.
4. Simulation Analysis:
Simulation is a descriptive technique in which a model of a process is developed and then
experiments are conducted on the model to evaluate its behavior under various conditions.
Simulation models are fairly simple to use and understand. Extensive computer software
packages make it easy to use fairly sophisticated models.
5. Statistical Analysis:
Statistical analysis is important for production managers. Various statistical methods are
extensively used such as mean, correlation, standard deviation, sampling, probability theory,
statistical quality control etc. At the time of introducing a new product, statistical hypothesis
is a must and that can be done by statistical analysis.
6. Schematic/Graphic Analysis:
It is a traditional method used in Production Management. One of the techniques of this
method is flow chart analysis. Sequences and timing of activities are shown in a flow chart.

Various types of schematic and graphic diagrams are used in the industry for proper
utilization of work force, production scheduling and production controlling.
7. Network Planning Model:
PERT(Project Evaluation & Review Technique) & CPM (Critical Path Method) are two of
the most widely used techniques for planning and coordinating large scale projects. By
using PERT & CPM managers are able to obtain:
# A graphical presentation of project activities
# An estimate of how long the project will take
# An indication of which activities are the most critical to timely project completion
# An indication of how long any activity can be delayed without lengthening the
project
8. Computer Search Method:
Now-a-days computer search method is frequently used for solving highly complex
problems. For example, this method is widely applied in finding proper solution of
production scheduling problems.
Operations as a System
Operations has been defined as a transformation system that converts inputs into outputs. Inputs
to the system include energy, materials, labor, capital, and information (see Figure 1.1). Process
technology is then used to convert inputs into outputs. The process technology is the methods,
procedures, and equipment used to transform materials or inputs into products or services.
The systems view of operations is very useful in unifying seemingly different operations from
different industries. For example, the transformation system in manufacturing is one of material
conversion from raw materials into finished products. When an automobile is produced, steel,
plastics, aluminum, cloth, and many other materials are transformed into parts that are then
assembled into the finished automobile. Labor is required to operate and maintain the equipment,
and energy and information are also required to produce the finished automobile. The following
figure shows an operation as a productive system:

In service industries a transformation process is also used to transform inputs into service
outputs. For example, airlines use capital inputs of aircraft and equipment and human inputs
of pilots, flight attendants, and support people to produce safe, reliable, fast, and efficient
transportation. Transformations of many types also occur in other industries, as indicated in
Table 1.3. By studying these different types of transformation process, you can learn a great
deal about how to analyze and identify any operation as a system.
All systems interact with their internal and external environments. We have already indicated
the nature of internal interaction through cross-functional decision making. Interaction with
the external environment occurs through the economic, physical, social, and political
environment of operations. As Figure 1.2 indicates, operations is surrounded by its
environment and constantly interacts with it. The interactive nature of these relationships
makes it necessary to constantly monitor the environment and to make corresponding changes
in operations when needed. In the fast-changing world of today's global business, constant
change in operations has become essential as a means of survival. The systems view helps us
understand how operations cannot be insulated from changes in the environment but rather
must adapt to them. The examples of productive systems are shown in the following table:

Model Questions:
1. What do you mean by Production or Operations Management?
2. What are the Reasons for Studying Operations Management?
3. State the Functions of Production or Operations Management.
4. Discuss the Analytical Tools of Production Management.
5. Describe and show, with illustration, operations as a System.

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