PRODUCTION MANAGEMENT

Dr. Khalid A Chishty

M. COM 3rd 2012-13

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FACTORS OF PRODUCTION

Dr. Khalid A Chishty

Four Functional areas in a business organization. Marketing, Production, Finance And Personnel.

All activities revolve around Production.

Dr. Khalid A Chishty

Basic inputs are Men, Machine, Plant, Services, and Methods.

The Raw Materials are from Mine, Sea, Farm and Forest.
The end product is for the satisfaction of human wants.

DEFINITIONS
Production

Step by step conversion of one form of material to other through chemical or mechanical process.
Planning, organizing, directing and controlling the activities of the production function.

Dr. Khalid A Chishty

Production Management

Operation

Management
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Service oriented industry is broadly known as operations management.

OPERATIONS
the process of changing inputs into outputs and thereby adding value to some entity; this may constitutes the primary function of every organisation

Dr. Khalid A Chishty

Alter: change in the form or state of the inputs. This change may be physical as in manufacturing, or sensual or psychological such as feeling of comfort or satisfaction after getting cured from an illness. Transport: the entity gets value added through transport because it may have more value if located somewhere other than where it currently is. Entity may include people, goods are garbage. Store: the value is enhanced if the entity is kept in a protected environment for some period of time, such as potatoes in cold storage or food-grains in in ware house. Inspect: enriched through an inspection as we better understand its properties and can therefore take more informed decisions regarding their purchase, use, repair etc
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Dr. Khalid A Chishty

UNIVERSITY AS AN EXAMPLE
Input Planning & controlling Supportive Subsystems Output
Dr. Khalid A Chishty

Students
Professor

Class Times

Bookstore

Educated Students
Research Outcomes Service to Public
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Course Development Library School Regulations Computer Lab

Buildings

OPERATION & PRODUCTION MANAGEMENT

INPUT

Design
Dr. Khalid A Chishty

Operation

Output

MANUFACTURING VS SERVICE

Manufacturing: Provide Tangible Goods (Cars / TV Sets / Foods /

Dr. Khalid A Chishty

Service: Provide Intangible (Goods) (Education / Banking / Legal/Repairing / Medical Service / Transportations/

Four Major Differences between Manufacturing and Service:

MANUFACTURING VS SERVICE
Manufacturing Service Measure of Productivity Measure of Quality Customer Involvement Ability to Inventory Easy Easy Low Yes Difficult Difficult High No

Dr. Khalid A Chishty

Most Principles and Techniques for Manufacturing can also be applied to Service Operations.

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OBJECTIVES
PERFORMANCE OBJECTIVES Efficiency: or productivity as output/ unit of input. Effectiveness: it concerns whether a right set of outputs is being produced. Where efficiency may refer to doing things right, effectiveness may mean doing the right things Quality: Quality is the extent to which a product or service satisfies the customer needs. The output conform to quality specifications laid down it can be accepted.

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Dr. Khalid A Chishty

CONT

Lead times: manufacturing lead time or throughput time is the time elapsed in the conversion process. Minimisation of ideal time, delays, waiting etc. throughput time. Capacity utilisation: percentage utilisation of manpower, machine etc. Flexibility: if the conversion process has the flexibility of producing a combination of outputs, it is possible to satisfy a variety of customer needs.

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Dr. Khalid A Chishty

COST OBJECTIVES
Explicit (visible) costs: Material cost Direct labour cost Scrap/rework cost Maintenance cost

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Dr. Khalid A Chishty

Implicit (invisible/hidden) costs: Cost of carrying inventory Cost of stock-outs, shortage, back-logging, lost sales Cost of delayed deliveries Cost of material handling Cost of inspection Cost of grievances, dissatisfaction Downtime costs Opportunity costs

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Dr. Khalid A Chishty

PRODUCTION FUNCTIONS

Improving volume of production Reducing rejection rate Minimizing rework rate Maintaining delivery schedules Controlling idle machine and manpower hours Establishing/updating/improving/setting/ industrial engineering norms Updating processes and procedures Maintaining accuracy and timeliness of management information system Decreasing machine set-up time

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Dr. Khalid A Chishty

CONT

Controlling overtime Checking absenteeism, thefts/pilferage and misconduct Eliminating accidents Effective grievance handling Efficient training and team building Minimising inventory and achieving better yields Enhancing customer satisfaction Total Quality Management (TQM) Business process Re-engineering (BPRE) Automation

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Dr. Khalid A Chishty

SCOPE IN DETAIL

Operational decisions
1.
2.

Production Planning Production Control (PC)

Dr. Khalid A Chishty

Planning Routing Dispatching Follow Up

3. 4. 5. 6. 7.

Inventory Control Quality Control Method Study Maintenance & Replacement Cost Reduction And Control
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MANUFACTURING SYSTEMS CHOICES

Project: are used to manufacture goods that are difficult to move during assembly or after they have been completed. Challenges: Different people and equipment at different times. Specialist staff. Special equipment. Task sequencing over a long period. Quality depends on many factors. Planning takes place under much uncertainty.

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Dr. Khalid A Chishty

Jobbing: noted for flexibility handle a variety of jobs, where each job is different, are processed on common facilities. Each job is however unique. It may consist of a single item or a collection of identical items.
Dr. Khalid A Chishty

Batch: is resorted to when a variety of products are to be & the volume are not large enough to demand a separate line for each product. In this method, general machines are used to turn out different products.

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Line or mass production: when it is worthwhile investing in a dedicated line. Features: The line moves the product from each work station to the next. With no build-up of stock between stages, managers look to achieve line balance. Each work station fulfills only a small part of the complete task. The plant layout is dedicated to one product or a small family. Scheduling is simple in principle, but the line is sensitive to the absence of a key component. Managers monitor flows carefully.

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Dr. Khalid A Chishty

Continuous: in contrast to the above systems producing integral products, continuous production means high volumes of dimensional products. Eg. Chemical plants producing soap, and breweries.
Dr. Khalid A Chishty

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MANUFACTURING SYSTEM CHOICES

Project: one-off contracts Jobbing: wide range of small contracts Batch: narrower range; larger jobs Line: dedicated production system Continuous: dimensional products

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Dr. Khalid A Chishty