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1.meaning and scope of operational research with limitations2.Revelance of or techniques of solving business problems

3.what is operation product management4.types of productin system and layout

5. short note on jst in tym process

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(Q.2)

1. IntroductionIn modern business, planning becomes an ordinary thing for every company. Managers,allover the world, are trying to predict what will happen tomorrow or to solve different kindsof

problems which they are facing every day. If they want to be successful in their job theymustcontinuously work on finding new ways for dealing with problems. We can easily findvarious methodologies and techniques for different kinds of decision making processeswhichare solving or analyzing only a part of the problem, but it is very hard to find a structuredmethodology which will explain the whole process of business problem solving. Thispaper will try to make an overview on this interesting topic and offer some useful methodologyfor future managers.2

. Business problem solving methodology At the beginning of this paper I will try to answer one very important question ± ³Why isitimportant to have a structure for problem solving?´ The problem-solving process shouldbegin not just with facts that we get every day in our database but with flexible structurewhich we can use for different cases and different situations. Structure allows managersor consultants to pass the way from new ideas over the initial hypotheses to possiblesolutions. If we try to solve a problem without any structure we can find that ideas can be lost veryeasilybecause we didn¶t analyze the problem for all angles. So, the general conclusion is thatweuse structure to strengthen our thinking and get some clear and logical view on theproblem.This fact-based problem solving model consists of 8 phases:Phase 1 - Preparation phasePhase 2 - Ideas generating phasePhase 3 - Forming a hypothesis



Phase 4 - Designing the analysisPhase 5 - Finding alternative solutionsPhase 6 ± Choosing the best solutionPhase 7 - Implementation of the solutionPhase 8 - Evaluation of results2

.1 Phase 1 - Preparation phaseThis is the starting phase of our model. We already have the problem we will be dealingwithso our task is to collect basic information about the problem and to break the probleminto itscomponent elements so that we can solve it faster and more accurately. This process isalsoimportant because this way, we are collecting some basic information for the ideasgeneratingprocess. There are two useful techinques we can use in order to make this processmore

efficient: Proper prior preparation (3P) and Logic tree.Proper prior preparation (3P)Before you start with the problem solving process, you have to know something abouttheproblem you¶ll be working on. Proper prior preparation (3P) is a method for preparingyourself or a group for the ideas generating phase. If you are working in a team firstmakesure that everyone on the team has the same information. The best way for doing that istomake a ³fact pack´. A ³fact pack´ is a summary of the key points and data that you¶vediscovered in the process of research, and shared it to your team. It is important that allteammembers make their ³fact packs´. Once everyone on the team has read all the ³factpacks´,you¶ll all have the same knowledge base when the time to generate ideas comes.Logic tree

After we have acquired some basic knowledge about the problem we can now turn todefiningand simplifying the problem. The first step is to break the problem into its componentelements. In most cases, a complex problem can be reduced to a group of smaller,simpler problems that can be solved individually. Separating the individual pieces of theproblem willmake it easier to identify the key drivers of the problem when we come to the analysispart. Avery useful tool for breaking problems apart is the logic tree, a hierarchical listing of allthecomponents of a problem, starting at the ³20,000-feet view´ and moving progressivelydownward.Figure 1 ± Information gathering logic tree



In the first figure we can see the logic tree which we used in our problem solving activityonSAC 2006. We made a logic tree which shows how we can gather information for writing our essays.

After we gathered some information about the problem and broke the problem apart wearenow ready for the second phase ±the ideas generating phase.2.2 Phase 2 - Ideas generating phaseThis phase is the connection between preparation phase, where we acquired theneededinformation and broke apart the problem we started with, and the forming of hypothesisphase, where we should define an initial hypothesis which will guide us throughresearch andanalysis. We suggest two techniques which could be used in this phase: Brainstormingand

Six Thinking Hats.Brainstorming

The brainstorming method is a creative group activity. We can use it frequently indifferentactivities to come up with new ideas for innovation or improvement in different fields.Theleader of the group is encouraging members to put forward ideas about a problem andhow itmay be solved, in order to generate as many ideas as possible, even if they are notalwaysusable alternatives.These are some main points of brainstorming:1. Put in as much ideas as you can2. There are no bad ideas3. There are no stupid questions4. Know what to say and when5. Put it down on paper 6. Summarize them at the endSix Thinking HatsThe Six Thinking Hats technique is a model that can be used for exploring differentperspectives towards a complex situation or challenge. Observing things from differentperspectives is often a good approach if we are dealing with complex problems.Each of the Hats is named after a color that is mnemonically descriptive of theperspectiveone adopts when wearing the particular hat.Those are typical steps in using six hats method:step 1: present the facts of the case (white hat)step 2: generate ideas on how the case could be handled (green hat)step 3: evaluate the merits of the ideas - list the benefits (yellow hat), list the drawbacks(black hat)



step 4: think about possible alternatives (red hat)step 5: summarize the idea generating process (blue hat)Hats Team ideasWhite hat(objective facts)

4 access internet, 7 laptops, 4 professors books, 5 additional books, a lotof e-booksGreen Hat(possibilitiesand hypotheseshow to solve)Look for specific topic after agendaPrecious search

AbstractSearch engine in acrobat reader

Yellow Hat

(benefits)Speed, classify, keep overview, keep energyBlack Hat(drawbacks)Potential loss of important information, possible mistake, burn out too fastRed Hat(possiblealternatives)Broad researchPreciseSearch phasesBlue Hat(summarizing)Classify, keep energy, search phasesOn the Table 1 you can see the Six thinking hats ideas generating activity in which wetried tosolve problem of handling too much information (focusing).This phase is also very important because sometimes in the process of generatingideas wecan find out that actually the problem which we started with is not the main problem andthatwe made a wrong judgement at the beginning. In that case we should redefine theproblemand continue with our problem solving process.2.3 Phase 3 - Forming a hypothesis

After breaking the problem apart to its essential components and finishing with theprocess of ideas generating, we got some insight on the topic and we are now ready to pass on tothe nextstep in the business decision making process - forming a hypothesis.



I nitial hypothesisThe best way for beginning the forming a hypothesis phase is to make an initialhypothesis atthe start. These are two good arguments why you should rely on an initial hypothesisfrom the

beginning: An initial hypothesis will save you time and an initial hypothesis will makeyour decision making more effective. Forming an initial hypothesis will allow you to workthroughyour problem more quickly. It saves you time because it allows you to start drawingconclusions based on limited information which, at the beginning of the problem-solvingprocess, is usually the only thing you have.Table 1 ± Six thinking hats ± Solving problem ³Howto organize information overflow´Quick and Dirty Test (QDT)

After you have formed a hypothesis you should test it to see if it works or not. Good tool

for testing your hypothesis is Quick and Dirty Test. QDT is one very simple question whichyoucan ask yourself or a group about your hypothesis: what assumptions are you makingthatneed to be true in order for your hypothesis to be true? You should try to find as manyof these assumptions as you can. If any of these assumptions is false, then the hypothesisis false.In that case you must try to make another hypothesis which will answers positively onallquestions. If now you have found an initial hypothesis that passed the QDT you can goon tothe next step in this phase.I ssue treeYour next step will be to test your hypothesis more thoroughly and, if necessary,redefine it.To accomplish these goals, we should make again a kind of a logic tree - issue tree. Anissuetree is the evolved cousin of the logic tree. Where a logic tree is simply a hierarchicalgrouping of elements, an issue tree is a series of questions or issues that must beaddressed toprove or disprove a hypothesis. The Issue tree allows us to determine what questions toask inorder to form your hypothesis, and serves as a road map for your analysis in the nextphase. Italso allows us to eliminate dead ends in our analysis, since the answer to any issueimmediately eliminates all the branches falsified by that answer.If you use the steps we offered so far to create an initial hypothesis, you will be able toselect



the analyses and areas of research that will allow you to reach overall conclusion in theshortest possible time. Our next step will be to plan an analysis to prove or disproveyour hypothesis.2.4 Phase 4 - Designing the analysis

In this phase we should lay out the analytical tasks that we must perform to prove our initialhypothesis which we made in the previous phase. Also, we will show how to interprettheresults of those analyses in ways that will allow us to get the best ideas from them, for makingsome alternative solutions. In this phase we identify six steps we can use for analyzingdifferent fields of potential problems in business:1. Identify the key drivers2. Scan your external environment3. Scan your company

4. Scan the process5. Scan the company's portfolio6. Scan the productsIt is important to say that the first step (Identify the key drivers) is the most importantonebecause when we identify the key drivers we also decide which analysis we will do tothe end.So you won¶t need to use all of the techniques and methods for solving problems, justthat onewhich you will need to prove your hypothesis with and maybe get some new ideas for thesolution.1. I dentify the key driversIn business your time and resources are limited, and you don¶t have the luxury toexamineevery single factor in detail. So you must figure out which factors affect the problem themost,and then focus on them. Drill down to the core of the problem instead of picking aparteachand every piece. To identify key drivers correctly you can use Performance analysistechnique.Performance analysis is a process of gathering formal and informal data to help usdefine andachieve our goals. Performance analysis can give us several perspectives on a problemor opportunity, determines any and all drivers toward, or barriers to successfulperformance.Identify the key drivers step is very important because in this step we choose whichanalysis



we will be using in the continuance of our problem solving process and that it is why it isveryimportant for us to focus on this step.

After we have identified our key drivers we can start with the analysis. We offer vastrange of

techniques and methods that we can use in analyzing our hypothesis.We would like to underline once again that we don¶t suggest you to use all of them(becauseyou might not have time for it), but only to a make wise choice which methods andtechniquesyou will use in the problem solving process to prove your initial hypothesis.2 . Scan your external environment It is very important for problem solving to have an overall look on the problem of thecompany. If we want to understand the problem,a good start is to first understand theexternalenvironment in which our company is doing a business. We could get a better

perspective onthis using the following analyses: PEST analysis, Porter Five Forces, MarketSegmentationand Stakeholders analysis.PEST analysisThe PEST Analysis is a framework that we can use to scan the external macro-environment in which a firmoperates. PEST is an acronym for the following factors:Political factorsEconomic factorsSocial factors, andTechnological factors.

PEST factors play an important role in work of a firm. It is important to say that macro-economical factors candiffer per continent, country or even region, so we should do a PEST analysis for thecountry in which our firmoperates.Porter Five ForcesMichael Porter provided a framework that models an industry as being influenced byfiveforces. We can use this model to better understand the industry context in which thefirmoperates.SUPPLIER POWERSupplier concentrationImportance of volume to supplier Differentiation of inputsImpact of inputs on cost or differentiationSwitching costs of firms in the industryPresence of substitute inputsThreat of forward integrationCost relative to total purchases in industry



BARRIERSTO ENTRY

Absolute cost advantagesProprietary learning curve

Access to inputsGovernment policyEconomies of scaleCapital requirementsBrand identitySwitching costs

Access to distributionExpected retaliationProprietary productsTHREAT OFSUBSTITUTES-Switching costs-Buyer inclination tosubstitute-Price-performancetrade-off of substitutes

BUYER POWERBargaining leverageBuyer volumeBuyer informationBrand identityPrice sensitivityThreat of backward integrationProduct differentiationBuyer concentration vs. industrySubstitutes availableBuyers' incentivesDEGREE OF RIVALRY-Exit barriers

-Industry concentration-Fixed costs/Value added-Industry growth-Intermittent overcapacity-Product differences-Switching costs-Brand identity-Diversity of rivals-Corporate stakes

Market SegmentationMarket segmentation is the segmentation of markets into homogenous groups of customers,each of them reacting differently to promotion, communication, pricing and other variables of the marketing mix. Market segments should be formed in a way that those differencesbetween buyers within each segment are as small as possible. Thus, every segmentcan beaddressed with an individually targeted marketing mix.Figure 2 - Diagram of Porter's 5 Forceshttp://www.quickmba.com/strategy/porter.shtml

Stakeholders analysis



The stakeholder analysis is a summary of the people who influence the management of theprotected area, and whose life and work is influenced by the management of theprotectedarea. In this analysis it is important to identify stakeholders and to define their interests

andpriorities.3. Scan your company

After we did some analysis of external environment we can do some analysis of our firmandmake cooperation with our competitors. We can see where are we now and where wewant tobe in the future. In this stage we can use four methods: The Strategy Canvas(CompetitivePosition), SWOT analysis, Value added analysis and PRIME model combined with gapanalysis.

The Strategy Canvas (Competitive Position)The strategy canvas is both a diagnostic andan action framework. It serves two purposes.First, it show us the current state of play in theknown market space. This allows you tounderstand where the competition is currentlyto be found. It includes investigating thefactors in industry we are currently competingwith, in products, service, and delivery. Wecan see which is our position on the market.SWOT analysisSWOT analysis is a tool for auditing an organization and its environment. It is the firststageof planning and helps marketers to focus on key issues. SWOT stands for strengths,weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors.Opportunities and threats are external factors.Value added analysisEconomic Value-Added Analysis measures the amount of value a company has createdfor itsshareholders. It determines how much profit a company has produced after it hascovered thecost of its capital. Whereas conventional accounting methods edict interest paymentson debt,Economic Value Added Analysis also deducts the cost of equity²what shareholderswouldFigure 3 - Strategy canvas example

have earned in price appreciation and dividends by investing in a portfolio of companieswithsimilar risk profiles. Economic Value-Added Analysis thus offers a truer picture of thereturna company delivers to its shareholders and provides a framework to assess options for



increasing it. By making the cost of capital visible, Economic Value-Added Analysishelpscompanies identify whether they need to operate more efficiently, to focus investmentonprojects that are in the best interests of shareholders and to work to dispose of or

reduceinvestment in activities that generate low returns.PRIAM model combined with gap analysisThere is one interesting approach which is dealing with which problems to attack andhow toanalyze the impact they are having on firm. The approach used is a six-step processcalledPRIAM, for PRoblem Identification and Analysis Model. While the model can be usedbyindividuals, it is also very effective with working groups.In this model in the first phase we are identifying three main points:

Impact on the business in terms of business metrics

Impact on business processes

Impact on worker performance.In the second phase we are thinking about the situation how it should be, and in the lastphasewe are trying to identify obstacles to top performance we defined in the phase before.Figure 4- PRIAM model combined withgap analysis example

4. Scan your process After scanning the company we should go deeper in analysis. Next stage is scanning of theprocess in our company. Two good techniques for this part of analysis are: BusinessProcessReengineering and EFQM.Business Process ReengineeringThe Business Process Reengineering method (BPR) is 'the fundamentalreconsideration andthe radical redesign of organizational processes, in order to achieve drasticimprovement of current performance in cost, services and speed'. These are the questions we can ask if we usethis mode:

Did we develop appropriate business vision and process objectives?

Can we identify the business processes that need to be redesigned?

Do we understand and measure the properly existing processes?

Did we identify the IT lever?EFQMThe EFQM Model is a non-prescriptive TQM framework based on nine criteria. Fiveof these are 'E nablers' and four are 'Results'. The 'Enabler' criteria are covering what an



organization does. The 'Results' criteria are covering what an organization achieves.'Results'are caused by 'Enablers' and feedback from 'Results' help to improve 'Enablers'.The EFQM Model recognizes that there are many approaches to achieving sustainableexcellence in all aspects of performance. It is based on the assumption that excellent

resultswith respect to Performance, Customers, People and Society are achieved throughLeadershipdriving Policy and Strategy, that is delivered through People Partnerships andResources, andProcesses.EFQM is a non-prescriptive framework that recognizes that there are many approachesto achieving sustainable excellence. Within this non-prescriptive approach there aresomefundamental concepts which underpin the EFQM Model.5 . Scan company¶s portfolio

In this phase we should analyze the portfolio of our company. There are two very oftenusedmethods for this job: BCG Matrix and McKinsey Matrix.BCG MatrixThe BCG (Boston Consulting Group) Matrix method is the most well-known portfoliomanagement tool. It is based on product life cycle theory. The BCG Matrix can be usedtodetermine what priorities should be given in the product portfolio of a business unit. Toensure long-term value creation, a company should have a portfolio of products thatcontainsboth high-growth products in need of cash inputs and low-growth products that generatea lotof cash. The Boston Consulting Group Matrix has 2 dimensions: market share andmarketgrowth. The basic idea behind it is: if a product has a bigger market share, or if theproduct'smarket grows faster, it is better for the company.The McKinsey MatrixThe McKinsey Matrix is a model to perform a business portfolio analysis on theStrategicBusiness Units of a corporation. A business portfolio is the collection of StrategicBusinessUnits that together form a corporation. The optimal business portfolio is one that fitsperfectlyto the company's strengths and helps to exploit the most attractive industries or markets. AStrategic Business Unit (SBU) can either be an entire medium size company or adivision of alarge corporation as long as it formulates its own business level strategy and hasseparate



objectives from the parent company.THE AIM OF PORTFOLIO ANALYSIS1. Analyze its current business portfolio and decide which SBU's should receive more or less investment2. Develop growth strategies for adding new products and businesses to the portfolio

3. Decide which businesses or products should no longer be retained.6 . Scan product The last part in the analysis phase is where we should analyze single products. Thebestmethod for this is Product Life Cycle analysis.Product Life CycleThe Product Life Cycle model can help to analyze maturity stages of products andindustries.Every company is constantly seeking ways to grow future cash flows by maximizingrevenuefrom the sale of products and services.

We use this analysis to identify where our product is at this moment and which actionsweshould do in the future.2.5 Phase 5 ± Finding alternative solutions

After we analyzed important points of our problem, and found out what is wrong ± nowweshould find the solution for our problem (problems). In order to solve our problem/s weshould think from different perspectives and make different approaches to findingsolution. If we want to follow this idea we should make two or three alternative solutions for our problems and then decide which solution is the best one. Again, we can use somemethodswhich can help us to find good solutions for our problems. These methods are:Confrontationmatrix and Eliminate, Reduce, Rise, Create Matrix.Confrontation matrixConfrontation matrix or expended SWOT analysis is helpful to see what we can usefromSWOT analysis. We can intersect strengths with opportunities and see how we can useour strengths to expand the field of opportunities or, for example, to see how we canperformgood trades with our strengths. This matrix is good for getting an idea about newstrategiesfrom information we already have.Eliminate, Reduce, Rise, Create (ERRC) MatrixIn this matrix we think about four main parts of every strategy ± about what we canEliminate,Reduce, Rise, Create in that particular problem. This matrix is much better for generating new



ideas than the Confrontation matrix and we can use it for thinking out-of-box solutions.2.6 Phase 6 ± Choosing the best solutionIn this part we should make some kind of an evaluation system which will help us tomake thebest choice from alternatives we have gained. We can part this process in several steps

so wecan understand it more easily:

Good starting point (maybe the easiest) can be just to find advantages anddisadvantages of every solution.

Next step is to try to identify who is the main obstacle in these solutions or maybebetter say, who can make it harder to achieve the goal. For this step we can use theForce field analysis.

In the next step we should choose the criteria for making the decision making system. After defining these criteria we should measure them and give them some weights of importance. Next step is to compare all alternatives with this decision making system.

After this we should choose the best solution from measuring weights of criteria for

every solution and find the best one.The last step is to think about the evaluation system which will monitor our solution.2.7 Phase 7 ± Implementation of the solutionIn this phase we should think about three main things:

We must make an implementation plan

We must assign responsibilities to our team members

We must allocate our resources.We must be very careful because managers very often make mistakes in this part. Theymakesome great solutions but then don¶t implement them properly. In order to start thisprocess,

some plan is very important. If you don¶t have a plan it is better not to start with it at all. Aplan is like a map which will show us the way while we will go ahead. After that we mustassign responsibilities to our team members so that everybody has enough work ± nottoomuch, not too little. If you give somebody too much work they won¶t do it properlybecausethey won¶t have enough time. Also, if you give them too little, they won¶t be happybecauseyou underestimate their capacities. So you also must be careful about this. The lastthing is

resource allocation. We must be very economic with recourses because they are noteternal.We must use them wisely.2.8 Phase 8 ± Evaluation of results

After some period of time we must evaluate results we got with this solution. We willcheckour results and evaluate them with the evaluation system we made before. After all of these



processes we will know wether our solution was good, proper or bad. If we find it goodenough we can continue to use it with small improvements, but if we find it inappropriatewemust try again to find a new one which will be suitable for our company. This is a circlewhich never ends«

3. ConclusionIn this paper I tried to make an optimal model for solving problems. It was hard to collectallthese methods, to understand how they work and why managers in the modern worlduse it.But in the end, my conclusion is that the model is not enough for finding good solutions.It isvery important to know and have a structure and to know how you should think, but after all,the most important thing here is to have good people. If you have creative experiencedand

well motivated people this problem solving process can help everybody to rise their abilitiesand to make problem-solving activity more powerful and to get better solutions in theend.But if the people are not like this no one model will help« So, the main conclusion isthatthis model is just a tool for problem solving and the most important driving force are thepeople who will use it«

11.1 Introduction1.2 Historical Evolution of Production andOperations Management1.3 Concept of Production1.4 Production System1.5 Production Management1.6 Operating System

INTRODUCTION TO PRODUCTION AND OPERATION MANAGEMENT

11.7 Operations Management1.8 Managing Global Operations1.9 Scope of Production and OperationsManagement� Exercises� Skill Development� Caselet



CHAPTER OUTLINE1.1 INTRODUCTIONProduction/operations management is the process, which combines and transforms various

resources used in the production/operations subsystem of the organization into value added product/services in a controlled manner as per the policies of the organization. Therefore, it is

that part of an organization, which is concerned with the transformation of a range of inputs into

the required (products/services) having the requisite quality level.The set of interrelated management activities, which are involved in manufacturing certain

products, is called as production management. If the same concept is extended to servicesmanagement, then the corresponding set of management activities is called as operations

management.

1.2 HISTORICAL EVOLUTION OF PRODUCTION AND OPERATIONS MANAGEMENTFor over two centuries operations and production management has been recognised as an

important factor in a country¶s economic growth. _ _________ _ _ ________ __ _____ _

The traditional view of manufacturing management began in eighteenth century when Adam

Smith recognised the economic benefits of specialisation of labour. He recommended breakingof jobs down into subtasks and recognises workers to specialised tasks in which they would

become highly skilled and efficient. In the early twentieth century, F.W. Taylor implementedSmith¶s theories and developed scientific management. From then till 1930, many techniqueswere developed prevailing the traditional view. Brief information about the contributions tomanufacturing management is shown in the Table 1.1.TABLE 1.1 Historical summary of operations management

Date Contribution Contributor

1776 Specialization of labour in manufacturing Adam Smith

1799 Interchangeable parts, cost accounting Eli Whitney and others1832 Division of labour by skill; assignment of jobs by skill;

basics of time study Charles Babbage1900 Scientific management time study and work study

developed; dividing planning and doing of work Frederick W. Taylor

1900 Motion of study of jobs Frank B. Gilbreth

1901 Scheduling techniques for employees, machines jobs inmanufacturing Henry L. Gantt

1915 Economic lot sizes for inventory control F.W. Harris

1927 Human relations; the Hawthorne studies Elton Mayo

1931 Statistical inference applied to product quality: quality

control charts W.A. Shewart1935 Statistical sampling applied to quality control: inspection

sampling plans H.F. Dodge & H.G. Roming1940 Operations research applications in World War II P.M. Blacker and others.

1946 Digital computer John Mauchlly and

J.P. Eckert

1947 Linear programming G.B. Dantzig, Williams &

others

1950 Mathematical programming, on-linear and stochastic A. Charnes, W.W. Cooper processes & others

1951 Commercial digital computer: large-scale computations

available. Sperry Univac

1960 Organizational behaviour: continued study of peopleat work L. Cummings, L. Porter 1970 Integrating operations into overall strategy and policy, W. Skinner J. Orlicky andComputer applications to manufacturing, Scheduling G. Wright

and control, Material requirement planning (MR P)

1980 Quality and productivity applications from Japan: W.E. Deming and



robotics, CAD-CAM J. Juran.

Production management becomes the acceptable term from 1930s to 1950s. As

F.W. Taylor¶s works become more widely known, managers developed techniques that focussedon economic efficiency in manufacturing. Workers were studied in great detail to eliminatewasteful efforts and achieve greater efficiency. At the same time, psychologists, socialists and _ _________ __ _________ _ _ ________ __ _____ _ _

other social scientists began to study people and human behaviour in the working environment.In addition, economists, mathematicians, and computer socialists contributed newer, moresophisticated analytical approaches.

With the 1970s emerges two distinct changes in our views. The most obvious of these,reflected in the new name operations management was a shift in the service and manufacturingsectors of the economy. As service sector became more prominent, the change from µproduction¶

to µoperations¶ emphasized the broadening of our field to service organizations. The second, more

suitable change was the beginning of an emphasis on synthesis, rather than just analysis, inmanagement practices.

1.3 CONCEPT OF PRODUCTIONProduction function is that part of an organization, which is concerned with the transformation

of a range of inputs into the required outputs (products) having the requisite quality level.

Production is defined as ³the step-by-step conversion of one form of material intoanother form through chemical or mechanical process to create or enhance the utility of the product to the user.´ Thus production is a value addition process. At each stage of

processing, there will be value addition.

Edwood Buffa defines production as µa process by which goods and services are created ¶.

Some examples of production are: manufacturing custom-made products like, boilers with a

specific capacity, constructing flats, some structural fabrication works for selected customers,etc., and manufacturing standardized products like, car, bus, motor cycle, radio, television, etc.Fig. 1.1 S chematic production system

1.4 PRODUCTION SYSTEMThe production system of an organization is that part, which produces products of an organization.It is that activity whereby resources, flowing within a defined system, are combined and transformed

in a controlled manner to add value in accordance with the policies communicated by management.A simplified production system is shown above. _ _________ _ _ ________ __ _____ _

The production system has the following characteristics:

1. Production is an organized activity, so every production system has an objective.

2. The system transforms the various inputs to useful outputs.

3. It does not operate in isolation from the other organization system.4. There exists a feedback about the activities, which is essential to control and improvesystem performance.

1.4.1 Classification of Production SystemProduction systems can be classified as Job Shop, Batch, Mass and Continuous Production

systems.Fig. 1.2 Classification of production systems

JOB SHOP PR ODUCTION

Job shop production are characterised by manufacturing of one or few quantity of products

designed and produced as per the specification of customers within prefixed time and cost. The

distinguishing feature of this is low volume and high variety of products.A job shop comprises of general purpose machines arranged into different departments.Each job demands unique technological requirements, demands processing on machines in a

certain sequence.

Characteristics



The Job-shop production system is followed when there is:

1. High variety of products and low volume.2. Use of general purpose machines and facilities.

3. Highly skilled operators who can take up each job as a challenge because of uniqueness.4. Large inventory of materials, tools, parts.

5. Detailed planning is essential for sequencing the requirements of each product, capacities

for each work centre and order priorities. _ _________ __ _________ _ _ ________ __ _____ _ _

AdvantagesFollowing are the advantages of job shop production:1. Because of general purpose machines and facilities variety of products can be produced.

2. Operators will become more skilled and competent, as each job gives them learning

opportunities.3. Full potential of operators can be utilised.4. Opportunity exists for creative methods and innovative ideas.

LimitationsFollowing are the limitations of job shop production:

1. Higher cost due to frequent set up changes.

2. Higher level of inventory at all levels and hence higher inventory cost.3. Production planning is complicated.

4. Larger space requirements.

BATCHPR ODUCTION

Batch production is defined by American Production and Inventory Control Society (APICS) ³as

a form of manufacturing in which the job passes through the functional departments in lotsor batches and each lot may have a different routing.´ It is characterised by the manufactureof limited number of products produced at regular intervals and stocked awaiting sales.

CharacteristicsBatch production system is used under the following circumstances:1. When there is shorter production runs.

2. When plant and machinery are flexible.

3. When plant and machinery set up is used for the production of item in a batch andchange of set up is required for processing the next batch.

4. When manufacturing lead time and cost are lower as compared to job order production.

AdvantagesFollowing are the advantages of batch production:

1. Better utilisation of plant and machinery.

2. Promotes functional specialisation.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.

Limitations

Following are the limitations of batch production:1. 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.

MASSPR ODUCTION

Manufacture of discrete parts or assemblies using a continuous process are called mass production.



This production system is justified by very large volume of production. The machines are arranged

in a line or product layout. Product and process standardisation exists and all outputs follow thesame path.

CharacteristicsMass production is used under the following circumstances:1. Standardisation of product and process sequence.

2. Dedicated special purpose machines having higher production capacities and output rates.3. 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 easy.9. Material handling can be completely automatic.

AdvantagesFollowing are the advantages of mass production:

1. Higher rate of production with reduced cycle time.2. Higher capacity utilisation due to line balancing.

3. Less skilled operators are required.4. Low process inventory.

5. Manufacturing cost per unit is low.

LimitationsFollowing are the limitations of mass production:

1. Breakdown of one machine will stop an entire production line.2. Line layout needs major change with the changes in the product design.

3. High investment in production facilities.

4. The cycle time is determined by the slowest operation.

CONTINUOUSPR ODUCTION

Production facilities are arranged as per the sequence of production operations from the first

operations to the finished product. The items are made to flow through the sequence of operations

through material handling devices such as conveyors, transfer devices, etc.

CharacteristicsContinuous production is used under the following circumstances:

1. Dedicated plant and equipment with zero flexibility. _ _________ __ _________ _ _ ________ __ _____ _ _

2. Material handling is fully automated.

3. Process follows a predetermined sequence of operations.4. Component materials cannot be readily identified with final product.5. Planning and scheduling is a routine action.

AdvantagesFollowing are the advantages of continuous production:

1. Standardisation of product and process sequence.

2. Higher rate of production with reduced cycle time.3. Higher capacity utilisation due to line balancing.

4. Manpower is not required for material handling as it 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.

LimitationsFollowing are the limitations of continuous production:1. Flexibility to accommodate and process number of products does not exist.



2. Very high investment for setting flow lines.

3. Product differentiation is limited.1.5 PRODUCTION MANAGEMENTProduction management is a process of planning, organizing, directing and controlling the activitiesof the production function. It combines and transforms various resources used in the production

subsystem of the organization into value added product in a controlled manner as per the policies

of the organization. E.S. Buffa defines production management as, ³Production management deals withdecision making related to production processes so that the resulting goods or services are

produced according to specifications, in the amount and by the schedule demanded and

out of minimum cost.´

1.5.1Objectives of Production ManagementThe objective of the production management is µto produce goods services of right quality and

quantity at the right time and right manufacturing cost¶.

1. R IGHT QUALITY

The quality of product is established based upon the customers needs. The right quality is not

necessarily best quality. It is determined by the cost of the product and the technical characteristics

as suited to the specific requirements.

2. R IGHT QUANTITY

The manufacturing organization should produce the products in right number. If they are produced

in excess of demand the capital will block up in the form of inventory and if the quantity is produced in short of demand, leads to shortage of products. _ _________ _ _ ________ __ _____ _

3. R IGHT TIME

Timeliness of delivery is one of the important parameter to judge the effectiveness of productiondepartment. So, the production department has to make the optimal utilization of input resources

to achieve its objective.

4. R IGHTMANUFACTUR ING COST

Manufacturing costs are established before the product is actually manufactured. Hence, all

attempts should be made to produce the products at pre-established cost, so as to reduce the

variation between actual and the standard (pre-established) cost.1.6 OPERATING SYSTEMOperating system converts inputs in order to provide outputs which are required by a customer.It converts physical resources into outputs, the function of which is to satisfy customer wants i.e.,

to provide some utility for the customer. In some of the organization the product is a physicalgood (hotels) while in others it is a service (hospitals). Bus and taxi services, tailors, hospital and

builders are the examples of an operating system. Everett E. Adam & Ronald J. Ebert define operating system as, ³ An operating system( function) of an organization is the part of an organization that produces the organization¶s

physical goods and services.´ Ray Wild defines operating system as, ³ An operating system is a configuration of resourcescombined for the provision of goods or services.´

1.6.1 Concept of OperationsAn operation is defined in terms of the mission it serves for the organization, technology it employs

and the human and managerial processes it involves. Operations in an organization can be categorisedinto manufacturing operations and service operations. Manufacturing operations is a conversion

process that includes manufacturing yields a tangible output: a product, whereas, a conversion process

that includes service yields an intangible output: a deed, a performance, an effort.1.6.2Distinction between Manufacturing Operations and Service OperationsFollowing characteristics can be considered for distinguishing manufacturing operations with

service operations:



1. Tangible/Intangible nature of output

2. Consumption of output3. Nature of work (job)

4. Degree of customer contact5. Customer participation in conversion

6. Measurement of performance.

Manufacturing is characterised by tangible outputs (products), outputs that customers consumeovertime, jobs that use less labour and more equipment, little customer contact, no customer

participation in the conversion process (in production), and sophisticated methods for measuring production activities and resource consumption as product are made. _ _________ __ _________ _ _ ________ __ _____ _ _

Service is characterised by intangible outputs, outputs that customers consumes immediately,

jobs that use more labour and less equipment, direct consumer contact, frequent customer

participation in the conversion process, and elementary methods for measuring conversion activitiesand resource consumption. Some services are equipment based namely rail-road services, telephoneservices and some are people based namely tax consultant services, hair styling.

1.7 OPERATIONS MANAGEMENT1.7.1 A Framework for Managing Operations

Managing operations can be enclosed in a frame of general management function as shown inFig. 1.3. Operation managers are concerned with planning, organizing, and controlling the activitieswhich affect human behaviour through models.

PLANNING

Activities that establishes a course of action and guide future decision-making is planning.The operations manager defines the objectives for the operations subsystem of the organization,

and the policies, and procedures for achieving the objectives. This stage includes clarifying therole and focus of operations in the organization¶s overall strategy. It also involves product

planning, facility designing and using the conversion process.

OR GANIZING

Activities that establishes a structure of tasks and authority. Operation managers establish astructure of roles and the flow of information within the operations subsystem. They determine

the activities required to achieve the goals and assign authority and responsibility for carryingthem out.

CONTR OLLING

Activities that assure the actual performance in accordance with planned performance. Toensure that the plans for the operations subsystems are accomplished, the operations manager must exercise control by measuring actual outputs and comparing them to planned operations

management. Controlling costs, quality, and schedules are the important functions here.

BEHAVIOUR

Operation managers are concerned with how their efforts to plan, organize, and control affecthuman behaviour. They also want to know how the behaviour of subordinates can affect

management¶s planning, organizing, and controlling actions. Their interest lies in decision-making behaviour.

MODELS

As operation managers plan, organise, and control the conversion process, they encounter many problems and must make many decisions. They can simplify their difficulties using models like

aggregate planning models for examining how best to use existing capacity in short-term,

break even analysis to identify break even volumes, linear programming and computer simulation for capacity utilisation, decision tree analysis for long-term capacity problem of facility expansion, simple median model for determining best locations of facilities etc.

_________ _ _ ________ __ _____ _

Fig. 1.3 General model for managing operations



_ _________ __ _________ _ _ ________ __ _____ _

1.7.2 Objectives of Operations ManagementObjectives of operations management can be categorised into customer service and resource

utilisation.

CUSTOMER SER VICE

The first objective of operating systems is the customer serivce to the satisfaction of customer

wants. Therefore, customer service is a key objective of operations management. The operatingsystem must provide something to a specification which can satisfy the customer in terms of cost

and timing. Thus, primary objective can be satisfied by providing the µright thing at a right priceat the right time¶.These aspects of customer service²specification, cost and timing²are described for four

functions in Table 1.2. They are the principal sources of customer satisfaction and must, therefore,

be the principal dimension of the customer service objective for operations managers.TABLE 1.2 Aspects of customer service P rincipal P rincipal customer wants

function P rimary considerations Other considerationsManufacture Goods of a given, requested or Cost , i.e., purchase price or cost of obtaining

goods.

acceptable specification Timing , i.e., delivery delay from order or request

to receipt of goods.Transport Management of a given, requested Cost , i.e., cost of movements. Timing , i.e.,

or acceptable specification 1. Duration or time to move.

2. Wait or delay from requesting to its commencement.

Supply Goods of a given, requested or Cost , i.e., purchase price or cost of obtaining

acceptable specification goods.Timing , i.e., delivery delay from order or requestto receipt of goods.Service Treatment of a given, requested or Cost , i.e., cost of movements.

acceptable specification Timing , i.e.,

1. Duration or time required for treatment.

2. Wait or delay from requesting treatment to

its commencement.

Generally an organization will aim reliably and consistently to achieve certain standards andoperations manager will be influential in attempting to achieve these standards. Hence, thisobjective will influence the operations manager¶s decisions to achieve the required customer

service.

R ESOUR CE UTILISATION

Another major objective of operating systems is to utilise resources for the satisfaction of

customer wants effectively, i.e., customer service must be provided with the achievement of _ _________ _ _ ________ __ _____ _

effective operations through efficient use of resources. Inefficient use of resources or inadequatecustomer service leads to commercial failure of an operating system.Operations management is concerned essentially with the utilisation of resources, i.e., obtaining

maximum effect from resources or minimising their loss, under utilisation or waste. The extent

of the utilisation of the resources¶ potential might be expressed in terms of the proportion of available time used or occupied, space utilisation, levels of activity, etc. Each measure indicates

the extent to which the potential or capacity of such resources is utilised. This is referred as theobjective of resource utilisation.Operations management is also concerned with the achievement of both satisfactory customer

service and resource utilisation. An improvement in one will often give rise to deterioration in the

other. Often both cannot be maximised, and hence a satisfactory performance must be achievedon both objectives. All the activities of operations management must be tackled with these twoobjectives in mind, and many of the problems will be faced by operations managers because of



this conflict. Hence, operations managers must attempt to balance these basic objectives.

Table 1.3 summarises the twin objectives of operations management. The type of balanceestablished both between and within these basic objectives will be influenced by market

considerations, competitions, the strengths and weaknesses of the organization, etc. Hence, theoperations managers should make a contribution when these objectives are set.TABLE 1.3 The twin objectives of operations management

1.8 MANAGING GLOBAL OPERATIONSThe term µglobalization¶ describes businesses¶ deployment of facilities and operations around the

world. Globalization can be defined as a process in which geographic distance becomes a factor of diminishing importance in the establishment and maintenance of cross border economic, politicaland socio-cultural relations. It can also be defined as worldwide drive toward a globalized

economic system dominated by supranational corporate trade and banking institutions that are not

accountable to democratic processes or national governments.There are four developments, which have spurred the trend toward globalization. These are:1. Improved transportation and communication technologies;

2. Opened financial systems;3. Increased demand for imports; and

4. Reduced import quotas and other trade barriers.

When a firm sets up facilities abroad it involve some added complexities in its operation.Global markets impose new standards on quality and time. Managers should not think aboutdomestic markets first and then global markets later, rather it could be think globally and actThe customer service objective.To provide agreed/adequate levels of customer

service (and hence customer satisfaction) by

providing goods or services with the right

specification, at the right cost and at the right time.

The resource utilisation objective. To achieveadequate levels of resource utilisation (or

productivity) e.g., to achieve agreed levels of

utilisation of materials, machines and labour. _ _________ __ _________ _ _ ________ __ _____ _ _

locally. Also, they must have a good understanding of their competitors. Some other importantchallenges of managing multinational operations include other languages and customs, different

management style, unfamiliar laws and regulations, and different costs.Managing global operations would focus on the following key issues: _ To acquire and properly utilize the following concepts and those related to global operations,supply chain, logistics, etc.

_ To associate global historical events to key drivers in global operations from different perspectives.

_ To develop criteria for conceptualization and evaluation of different global operations. _ To associate success and failure cases of global operations to political, social, economicaland technological environments.

_ To envision trends in global operations.

_ To develop an understanding of the world vision regardless of their country of origin,residence or studies in a respectful way of perspectives of people from different races,

studies, preferences, religion, politic affiliation, place of origin, etc.

1.9 SCOPE OF PRODUCTION AND OPERATIONS MANAGEMENTProduction and 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 µconversion by using physical resources.¶ Following are the activities which are listed under production and



operations management functions:

1. Location of facilities2. Plant layouts and material handling

3. Product design4. Process design

5. Production and planning control

6. Quality control7. Materials management8. Maintenance management.

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 organization. It is animportant strategic level decision-making for an organization. It deals with the questions such asµwhere our main operations should be based?¶

The selection of location is a key-decision as large investment is made in building plant andmachinery. 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 company¶s expansion _ _________ _ _ ________ __ _____ _

plan and policy, diversification plan for the products, changing sources of raw materials and manyother factors. The purpose of the location study is to find the optimal location that will resultsin the greatest advantage to the organization.

PLANTLAYOUT ANDMATER IAL HANDLING

Plant layout refers to the physical arrangement of facilities. It is the configuration of departments,

work centres and equipment in the conversion process. The overall objective of the plant layoutis to design a physical arrangement that meets the required output quality and quantity most

economically.According to James Moore, ³P lant layout is a plan of an optimum arrangement of

facilities including personnel, operating equipment, storage space, material handling

equipments and all other supporting services along with the design of best structureto contain all these facilities´.

µMaterial Handling¶ refers to the µmoving of materials from the store room to the machineand from one machine to the next during the process of manufacture¶. It is also defined as the

µart and science of moving, packing and storing of products in any form¶. It is a specialisedactivity for a modern manufacturing concern, with 50 to 75% of the cost of production. This costcan be reduced by proper section, operation and maintenance of material handling devices.

Material handling devices increases the output, improves quality, speeds up the deliveries anddecreases the cost of production. Hence, material handling is a prime consideration in the

designing new plant and several existing plants.

PR ODUCT DESIGN

Product design deals with conversion of ideas into reality. Every business organization have 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.

The entire process of need identification to physical manufactures of product involves threefunctions: marketing, product development, manufacturing. Product development translates theneeds of customers given by marketing into technical specifications and designing the variousfeatures into the product to these specifications. Manufacturing has the responsibility of selecting

the processes by which the product can be manufactured. Product design and development

provides link between marketing, customer needs and expectations and the activities required to

manufacture the product.

PR OCESS 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 decisionsin 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.

PR ODUCTIONPLANNINGAND CONTR OL

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. _ _________ __ _________ _ _ ________ __ _____ _ _

The principle of production planning and control lies in the statement µFirst Plan Your Work and then Work on Your Plan¶. Main functions of production planning and control includes

planning, routing, scheduling, dispatching and follow-up.Planning is deciding in advance what to do, how to do it, when to do it and who is to doit. Planning bridges the gap from where we are, to where we want to go. It makes it possiblefor things to occur which would not otherwise happen.

R outing may be defined as the selection of path which each part of the product will follow,which being transformed from raw material to finished products. Routing determines the most

advantageous path to be followed from department to department and machine to machine till

raw material gets its final shape.Scheduling determines the programme for the operations. Scheduling may be defined asµthe fixation of time and date for each operation¶ as well as it determines the sequence of

operations to be followed.Fig. 1.4 S cope of production and operations management

Dispatching is concerned with the starting the processes. It gives necessary authority soas to start a particular work, which has already been planned under µRouting¶ and µScheduling¶.Therefore, dispatching is µrelease of orders and instruction for the starting of production for any

item in acceptance with the route sheet and schedule charts¶.The function of follow-up is to report daily the progress of work in each shop in a prescribed

proforma and to investigate the causes of deviations from the planned performance. _ _________ _ _ ________ __ _____ _

QUAL

ITY CONTR

OL

Quality Control (QC) may be defined as µa 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

feed back system and corrective action procedure.Quality control can also be defined as µthat industrial management technique by means of which

product of uniform acceptable quality is manufactured¶. It is the entire collection of activities which

ensures that the operation will produce the optimum quality products at minimum cost.The main objectives of quality control are:

_ To improve the companies income by making the production more acceptable to the

customers i.e., by providing long life, greater usefulness, maintainability, etc. _ To reduce companies cost through reduction of losses due to defects. _

To achieve interchangeability of manufacture in large scale production. _ To produce optimal quality at reduced price.

_ To ensure satisfaction of customers with productions or services or high quality level, to build customer goodwill, confidence and reputation of manufacturer. _ To make inspection prompt to ensure quality control.

_ To check the variation during manufacturing.

MATER IALSMANAGEMENT

Materials management is that aspect of management function which is primarily concerned withthe acquisition, control and use of materials needed and flow of goods and services connected



with the production process having some predetermined objectives in view.

The main objectives of materials management are: _ To minimise material cost. _ To purchase, receive, transport and store materials efficiently and to reduce the related cost. _ To cut down costs through simplification, standardisation, value analysis, import substitution, etc.

_ To trace new sources of supply and to develop cordial relations with them in order to

ensure continuous supply at reasonable rates. _ To reduce investment tied in the inventories for use in other productive purposes and todevelop high inventory turnover ratios.

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 veryimportant that the plant machinery should be properly maintained.The main objectives of maintenance management are:

1. To achieve minimum breakdown and to keep the plant in good working condition at thelowest possible cost.

2. To keep the machines and other facilities in such a condition that permits them to be used

at their optimal capacity without interruption.

3. To ensure the availability of the machines, buildings and services required by other sectionsof the factory for the performance of their functions at optimal return on investment. _ _________ __ _________ _ _ ________ __ _____ _ _

EXERCISES

Section A 1. What do you mean by µProduction¶?2. What do you mean by production system?

3. Mention the different types of production systems.

4. What is job shop production?

5. What is batch production?

6. What is mass production?

7. What is continuous production?

8. Mention any four advantages of job shop production.

9. Mention any four limitations of job shop production.

10. Mention any four advantages of batch production.

11. Mention any four limitations of batch production.

12. Mention any four advantages of mass production.

13. Mention any four limitations of mass production.14. Mention any four advantages of continuous production.

15. Mention any four limitations of continuous production.

16. Define production management.

17. Mention any four objectives of production management.

18. Define operating system.

19. How do you manage operations?

20. What do you mean by operations?

21. What do you mean by manufacturing operations?

22. What do you mean by service operations?23. What do you mean by µglobalization¶?

Section B 1. Briefly explain the production system and its characteristics.

2. What is job shop production? What are its characteristics, advantages and limitations?

3. What is batch production? What are its characteristics, advantages and limitations?

4. What is batch production? What are its characteristics, advantages and limitations?

5. What is mass production? What are its characteristics, advantages and limitations?

6. What is continuous production? What are its characteristics, advantages and limitations?



7. Explain in brief the objectives of production management.

8. Explain in brief the objectives of operations management.

9. Distinguish between manufacturing operations and service operations.

10. Explain the key issues to be considered for managing global operations.

Section C1. Explain the different types of production systems.

2. Explain the framework of managing operations.3. Explain the scope of production and operations management.

_ _________ _ _ ________ __ _____ _

Skill DevelopmentVisit a fast food restaurant like Pizza hut, Pizza corner to understand the concept of thischapter by getting the information for the following questions.

1. Identify the type of production system followed.2. Check how production system is managed.

3. Find out utilisation of the resources namely manpower, capacity and material.4. How the customer services is rendered [feedback system exist or not]

CASELET

SHEENA Sheena had worked for the same Fortune 500 Company for most 15 years. Although the

company had gone through some tough times, things were starting to turn around. Customer

orders were up, and quality and productivity had improved dramatically from what they had beenonly a few years earlier due company wide quality improvement program. So, it comes as a real

shock to Sheena and about 400 of her co-workers when they were suddenly terminated followingthe new CEO¶s decision to downsize the company.After recovering from the initial shock, Sheena tried to find employment elsewhere. Despite

her efforts, after eight months of searching she was no closer to finding a job than the day she

started. Her funds were being depleted and she was getting more discouraged. There was one bright spot, though: She was able to bring in a little money by mowing lawns for her neighbors.She got involved quite by chance when she heard one neighbor remark that now that his children

were on their own, nobody was around to cut the grass. Almost jokingly, Sheena asked him how

much he¶d be willing to pay. Soon Sheena was mowing the lawns of five neighbors. Other

neighbors wanted her to work on their lawns, but she didn¶t feel that she could spare any moretime from her job search.However, as the rejection letters began to pile up, Sheena knew she had to make animportant decision in her life. On a rainy Tuesday morning, she decided to go into business for

herself taking care of neighborhood lawns. She was relieved to give up the stress of job hunting,

and she was excited about the prospects of being her own boss. But she was also fearful of being

completely on her own. Nevertheless, Sheena was determined to make a go of it.At first, business was a little slow, but once people realized Sheena was available, many

asked her to take care of their lawns. Some people were simply glad to turn - the work over

to her; others switched from professional lawn care services. By the end of her first year in business, Sheena knew she could earn a living this way. She also performed other services such

as fertilizing lawns, weeding gardens, and trimming shrubbery. Business became so good that

Sheena hired two part-time workers to assist her and, even then, she believed she could expandfurther if she wanted to.

Questions1. In what ways are Sheena¶s customers most likely to judge the quality of her lawn care services?

2. Sheena is the operations manager of her business. Among her responsibilities are forecasting,inventory management, scheduling, quality assurance, and maintenance. _ _________ __ _________ _ _ ________ __ _____ _ _

(a) What kinds of things would likely require forecasts?

(b) What inventory items does Sheena probably have? Name one inventory decision she has



to make periodically.

(c) What scheduling must she do? What things might occur to disrupt schedules and cause

Sheena to reschedule?

(d ) How important is quality assurance to Sheena¶s business? Explain.(e) What kinds of maintenance must be performed?

3. What are some of the trade-offs that Sheena probably considered relative to:(a) Working for a company instead of for herself?(b) Expanding the business?

4. The town is considering an ordinance that would prohibit putting grass clippings at the curb for

pickup because local landfills cannot handle the volume. What options might Sheena consider

if the ordinance is passed? Name two advantages and two drawbacks of each option.

[Source: P roduction/Operations Management by William J.S tevenson, Irwin/McGraw-Hill ]

WEGMANS FOODMARK ETSWegmans Food Markets, Inc., is one of the premier grocery chains in the United States.

Headquartered in Rochester, NY, Wegmans operates over 70 stores. The company employs over 23,000 people, and has annual sales of over Rs. 2.0 billion.

Wegmans has a strong reputation for offering its customers high product quality and excellentservice. Through a combination of market research, trial and error, and listening to its customers,

Wegmans has evolved into a very successful organization. In fact, Wegmans is so good at what

it does that grocery chains all over the country send representatives to Wegmans for a firsthandlook at operations.

SUPER STOR ES

Many of the company¶s stores are giant 100,000 square foot superstores, double or triple the sizeof average supermarkets. A superstore typically employs from 500 to 600 people.Individual stores differ somewhat in terms of actual size and some special features. Aside

from the features normally found in supermarkets, they generally have a large bakery Section(each store bakes its own bread, rolls, cakes, pies, and pastries), and extra large produce

sections. They also offer film processing a complete pharmacy, a card shop and video rentals.

In-store floral shops range in size up to 800 square feet of space, and offer a wide variety of fresh-cut flowers, flower arrangements, varies and plants. In-store card shops covers over 1000square feet of floor of floor space. The bulk foods department provides customers with the

opportunity to select what quantities they desire from a vast array of foodstuffs and somenonfood items.Each store is a little different. Among the special features in some stores are a dry cleaning

department, a wokery, and a salad bar. Some feature a Market Cafe that has different foodstations, each devoted to preparing and serving a certain type of food. For example, one stationhas pizza and other Italian specialties, and another oriental food. There are also being a sandwich

bar, a salad bar and a dessert station. Customers often wander among stations as they decide _ _________ _ _ ________ __ _____ _

what to order. In several affluent locations, customers can stop in on their way home from work

and choose from a selection of freshly prepared dinner entrees. Some stores have a coffee shopsection with tables and chairs where shoppers can enjoy regular or specialty coffees and variety

of tempting pastries.

PR ODUCE DEPAR TMENTThe company prides itself on fresh produce. Produce is replenished as often as 12 times a day.

The larger stores have produce sections that are four to five times the size of a produce sectionof an average supermarket. Wegmans offers locally grown produce a season. Wegmans usesa ¶farm to market¶ system whereby some local growers deliver their produce directly to individual

stores, bypassing the main warehouse. That reduces the company¶s inventory holding costs and

gets the produce into the stores as quickly as possible. Growers may use specially designedcontainers that go right onto the store floor instead of large bins. This avoids the bruising thatoften occurs when fruits and vegetables are transferred from bins to display shelves and the need



to devote labor to transfer the produce to shelves.

MEAT DEPAR TMENT

In addition to large display cases of both fresh and frozen meat products, many stores have afull-service butcher shop that offers a variety of fresh meat products and where butchers are

available to provide customized cuts of meat for customers.

OR DER ING

Each department handles its own ordering. Although sales records are available from records of items scanned at the checkouts, they are not used directly for replenishing stock. Other factors,such as pricing, special promotions, local circumstances must all be taken into account. However,

for seasonal periods, such as holidays, managers often check scanner records to learn what past

demand was during a comparable period.The superstores typically receive one truckload of goods per day from the main warehouse.

During peak periods, a store may receive two truckloads from the main warehouse. The shortlead-time greatly reduce the length of the time an item might be out of stock, unless the mainwarehouse is also out of stock.

The company exercises strict control over suppliers, insisting on product quality and on-time

deliveries.

EMPLOYEES

The company recognises the value of good employees. It typically invests an average of Rs.7000to train each new employee. In addition to learning about stores operations, new employees learnthe importance of good customer service and how to provide it. The employees are helpful,

cheerfully answering customer questions or handling complaints. Employees are motivated througha combination of compensation, profit sharing, and benefits.

QUALITY

Quality and Customer satisfaction are utmost in the minds of Wegmans management and its

employees. Private label food items as well as name brands are regularly evaluated in testkitchens, along with the potential new products. Managers are responsible for checking and _ _________ __ _________ _ _ ________ __ _____ _ _

maintaining products and service quality in their departments. Moreover, employees are encouraged

to report problems to their managers.

If a customer is dissatisfied with an item and returns it, or even a portion of the item, thecustomer is offered a choice of a replacement or a refund. If the item is a Wegmans brand food

item, it is then sent to the test kitchen to determine the cause of the problem. If the cause can be determined, corrective action is taken.

Questions1. How do customers judge the quality of a supermarket?

2. Indicate how and why each of these factors is important to the successful operation of a

supermarket:

(a) Customer satisfaction.

(b) Forecasting.(c) Capacity planning.

(d ) Location

(e) Inventory management.

( f ) Layout of the store.( g ) Scheduling.

[Source: P roduction/Operations Management by William J.S tevenson, Irwin/McGraw-Hill ]

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