1-1 Introduction to Operations Management

CHAPTER
1

Introduction to
Operations Management

Geetanjali Juneja
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Operations Management
Figure 1.1
The management of systems or processes
that create goods and/or provide services
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Value-Added
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Food Processor
Table 1.2

Inputs Processing Outputs

Raw Vegetables Cleaning Canned
Metal Sheets Making cans vegetables
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment
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Hospital Process
Table 1.2

Inputs Processing Outputs

Doctors, nurses Examination Healthy

Hospital Surgery patients
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
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Manufacturing or Service?

Tangible Act
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Production of Goods vs. Delivery of
Services
Production of goods – tangible output
Delivery of services – an act
Service job categories
– Government
– Wholesale/retail
– Financial services
– Healthcare
– Personal services
– Business services
– Education
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Key Differences
• Customer contact
• Uniformity of input
• Labor content of jobs
• Uniformity of output
• Measurement of productivity
• Amount of inventory
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Manufacturing vs Service

Characteristic Manufacturing Service

Output Tangible Intangible
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Measurement of productivity Easy Difficult

High
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Scope of Operations Management

Operations Management includes:
– Forecasting
– Capacity planning
– Scheduling
– Managing inventories
– Assuring quality
– Deciding where to locate facilities
– And more . . .
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The operations function

– Consists of all activities directly related to
producing goods or providing services
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Responsibilities of Operations Management

Table 1.6

Planning Organizing
– Capacity
– Location – Process selection
– Products & services Staffing
– Make or buy – Hiring/laying off
– Layout
– Projects Directing
– Scheduling
– Job assignments
Controlling/Improving
– Inventory
– Quality
– Costs
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Key Decisions of Operations

Managers
What
What resources/what amounts
When
Needed/scheduled/ordered
Where
Work to be done
How
Designed
Who
To do the work
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Decision Making

System Design
– capacity
– location
– arrangement of departments
– product and service planning
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Decision Making

System operation
– personnel
– inventory
– scheduling
– project
management
– quality assurance
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Quantitative Approaches

• Linear programming
• Queuing Techniques
• Inventory models
• Project models
• Statistical models
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Systems Approach

“The whole is greater than

the sum of the parts.”

Suboptimization
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Business Operations Overlap

Figure 1.5
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Simple Product Supply Chain

Figure 1.7

Supply Chain: A sequence of activities

And organizations involved in producing
And delivering a good or service
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Figure 1-8
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A Supply Chain for Bread

Stage of Production
Farmer produces and harvests wheat
Wheat transported to mill
Mill produces flour
Flour transported to baker
Baker produces bread
Bread transported to grocery store
Grocery store displays and sells bread
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Decision Making in POM

Strategic Decisions
Tactical Decisions
Operational Decisions
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Strategic Decisions
These decisions are of strategic importance and
have long-term significance for the organization.
Examples include deciding:
– the design for a new product’s production
process
– where to locate a new factory
– whether to launch a new-product development
plan
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Tactical Decisions
These decisions are necessary if the
ongoing production of goods and services
is to satisfy market demands and provide
profits.
Examples include deciding:
– how much finished-goods inventory to carry
– the amount of overtime to use next week
– the details for purchasing raw material next
month
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Operational Decisions
These decisions concern the day-to-day
activities of workers, quality of products
and services, production and overhead
costs, and machine maintenance.
Examples include deciding:
– labor cost standards for a new product
– frequency of preventive maintenance
– new quality control acceptance criteria
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What Controls the Operations

System?
Information about the outputs, the
conversions, and the inputs is fed back to
management.
This information is matched with
management’s expectations
When there is a difference, management
must take corrective action to maintain
control of the system
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Ch-2 Design Of Process

Design Of Process:-Process design is a
planning process for each and every component
manufactured ,that determines the number of
steps involved in manufacturing, the number and
type of steps used and the time spent in each of
these steps.
It means various choices that we make with
respect to the flow of parts in a manufacturing
system.
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Characteristics Influence The

Choice of alternative Processes
Volume:-Indicates the average quantity
of the products produced in a
manufacturing system.
For example :-
 FMCG sector , having high volume of
production
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Variety :-Variety refers to the number of

alternative products and variants of each
product that are produced in a
manufacturing system
For example :-Titan Industries Limited:-
offers more than 40,000 variants of
Watches.
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Types of Process
 Projects
 Batch Production
 Mass Production
 Continuous Production
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Projects
A Project
2. Involves a large investment of funds and
resources .
 Produces one at a time to customer
order .
For example :-
Construction Projects, shipbuilding and
Aircraft manufacturing .
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Batch Production

Batch Production Systems process

Many different jobs at the same time in groups
(or batches)
Made to customer Order
Volume is low
Most of the operations in batch production
involve fabrication rather than assembly. Jobs
are sent through the system based on their
processing requirements so that those jobs
requiring lathe work are sent to one location,
those requiring painting to another etc.
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Other Names
Intermittent production
Job shop production
Example :-Machine Shops
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Mass Production
Produces large volumes of standard
product for mass market .
Capital –Intensive, with Specialized
equipment and limited labor skills.
Other Names
 Flow lines
 Assembly lines
Example:-Automobiles ,televisions etc.
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Continuous Process
Used for very high volume commodity
products that are very standardized .
The system is highly automated (the
worker’s role is to monitor the equipment)
and is typically in operation continuously
24 hours a day
Example :-Refined oil ,Suger ,glass
referred as process industries.
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Broader View
Process-Focused Systems

Product- Focused Systems

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Process-Focused Systems
Facilities are organized by process
Similar processes are together
– Example: All drill presses are together
Low volume, high variety products
‘Jumbled’ flow Product A
Other names Operation
1 2 3
– Intermittent process
– Job shop
– Batch production Product B
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Process Focus
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Process-Focused Strategy
Examples

Bank
© 1995

Hospital
Corel
Corp.

Machin
© 1995 Corel Corp. e Shop
© 1995 Corel Corp.
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Process Focused System -

Pros & Cons
Advantages
– Greater product flexibility
– More general purpose equipment
– Lower initial capital investment
Disadvantages
– High variable costs
– More highly trained personnel
– More difficult production planning & control
– Low equipment utilization (5% to 25%)
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Product-Focused System
Facilities are organized by product
High volume, Standardized products
results in continuous use of the facilities.
low variety products
Other Names
 Mass production
 Continuous process manufacturing
Example :-Automobile Fabrication and
assembly
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Product-Focused System
Pros & Cons
Advantages
– Lower variable cost per unit
– Specialized labor skills
– Easier production planning and control
– Higher equipment utilization (70% to 90%)
Disadvantages
– Lower product flexibility
– More specialized equipment
– Usually higher capital investment
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© 1984-1994 T/Maker Co.

Paper (Continuous)
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Flow Diagram Showing the

Steelmaking Process at NUCOR
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Flow Diagram Showing the

Production Process
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Ch-3 Facility Layout

Defined
Facility layout can be defined as the process by which
the placement of departments, workgroups within
departments, workstations, machines, and stock-
holding points within a facility are determined
This process requires the following inputs:
– Specification of objectives of the system in terms
of output and flexibility
– Estimation of product or service demand on the
system
– Processing requirements in terms of number of
operations and amount of flow between
departments and work centers
– Space requirements for the elements in the layout
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Basic Production Layout Formats

Process Layout (also called job-shop or

functional layout)

Product Layout (also called flow-shop layout)

Group Technology (Cellular) Layout

Fixed-Position Layout
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Assembly Lines Balancing Concepts

Question: Suppose you load work into the three work
stations below such that each will take the corresponding
number of minutes as shown. What is the cycle time of
this line?

Station 1 Station 2 Station 3

Minutes
per Unit 6 7 3
Answer: The cycle time of the line is always
determined by the work station taking the longest
time. In this problem, the cycle time of the line is 7
minutes. There is also going to be idle time at the
other two work stations.
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Example of Line Balancing

You’ve just been assigned the job a setting
up an electric fan assembly line with the
following tasks:

Task Time (Mins) Description Predecessors

A 2 Assemble frame None
B 1 Mount switch A
C 3.25 Assemble motor housing None
D 1.2 Mount motor housing in frame A, C
E 0.5 Attach blade D
F 1 Assemble and attach safety grill E
G 1 Attach cord B
H 1.4 Test F, G
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Example of Line Balancing:

Structuring the Precedence Diagram
Task Predecessors Task Predecessors
A None E D
B A F E
C None G B
D A, C H E, G

A B G
H

C D E F
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Example of Line Balancing:

Precedence Diagram
Question: Which process step defines the maximum
rate of production?

2 1 1
A B G 1.4
H

C D E F
3.25 1.2 .5 1
Answer: Task C is the cycle time of the line and
therefore, the maximum rate of production.
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Example of Line Balancing: The
Bottleneck

Production time per day 420 mins

Max Production = = = 129 units
Bottleneck time 3.25 mins / unit

Task Time (Mins) Description Predecessors

A 2 Assemble frame None
B 1 Mount switch A
C 3.25 Assemble motor housing None
D 1.2 Mount motor housing in frame A, C
E 0.5 Attach blade D
F 1 Assemble and attach safety grill E
G 1 Attach cord B
H 1.4 Test E, G
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Example of Line Balancing: Determine

Cycle Time

Question: Suppose we want to assemble

100 fans per day. What would our
cycle time have to be?
Answer:
Production time per period
Required Cycle Time, C =
Required output per period

420 mins / day

C= = 4.2 mins / unit
100 units / day
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Example of Line Balancing:

Determine Theoretical Minimum
Number of Workstations
Question: What is the theoretical minimum
number of workstations for this problem?

Theoretical Min. Number of Workstations, N t

Answer:

Sum of task times (T)

Nt =
Cycle time (C)

11.35 mins / unit

Nt = = 2.702, or 3
4.2 mins / unit
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Task Followers Time (Mins)
A 6 2
2 1 1
1.4 C 4 3.25
A B G
H D 3 1.2
B 2 1
E 2 0.5
C D E F
F 1 1
3.25 1.2 .5 1
G 1 1
H 0 1.4

Station 1 Station 2 Station 3

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Task Followers Time (Mins)
A 6 2
2 1 1
1.4 C 4 3.25
A B G
H D 3 1.2
B 2 1
E 2 0.5
C D E F
F 1 1
3.25 1.2 .5 1
G 1 1
H 0 1.4

Station 1 Station 2 Station 3

A (4.2-2=2.2) C (4.2-3.25)=.95 D (4.2-1.2)=3

B (2.2-1=1.2) E (3-.5)=2.5
G (1.2-1= .2) F (2.5-1)=1.5
H (1.5-1.4)=.1
Idle= .2 Idle = .95 Idle = .1
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Example of Line Balancing: Determine

the Efficiency of the Assembly Line
Sum of task times (T)
Efficiency =
Actual number of workstations (Na) x Cycle time (C)

11.35 mins / unit

Efficiency = =.901
(3)(4.2mins / unit)
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Product Layout (Flow shop Layout)

Product Layout :-A production system design in
which every item to be produced follows the
same sequence of operations from beginning to
end, such as an assembly line.

Two version of Product Layout:

Fabrication Line:-builds components ,such as
automobile tires or metal parts for refrigerator,
on series of machines
Assembly Line:- puts the fabricated parts
together at a series of workstations.
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Product Layout for Carwash

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Process Layout
(job shop or functional layout)
A production system design in which
similar machines or functions are grouped
together.
Most efficient when making products that
have different requirements or when
handling customers who have different
needs
Low-volume, High-variety
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Process Layout
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Fixed-Position Layout

– A production system arrangement in which

the product being built or produced stays at
one location and the machines, workers,
and tools required to build the product are
brought to that location as needed, as for
the building of ships
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Layout Strategies
Project (Fixed- Job-shop Continuous
Position ) (Process (Product
oriented) oriented)
Example
Construction Hospitals TV assembly
Road Building Machine Shop, Automobiles
Manufacturer Kitchen
Problem
Move material Material Flow Balancing
To limited Varies with Each Product Flow
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Group Technology/cellular Layout

Groups dissimilar Machines in to work
centers (or cells) to work on products that
have similar shapes and processing
requirements. A group technology layout
is similar to a process in that cells are
designed to perform a specific set of
processes and it is similar to a product
layout in that the cells are dedicated to a
limited range of products.
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