operations management
DESCRIPTION
information on operation management first 2 unitsTRANSCRIPT
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OPERATIONS OPERATIONS MANAGEMENTMANAGEMENT
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INTRODUCTION
OM is the area concerned with the efficiency and effectiveness of the operation in support and development of the firm's strategic goals
OM include the design and operations of systems to provide goods and services
OM is the planning, scheduling, and control of the activities that transform inputs (raw materials and labor) into outputs (finished goods and services).
term operations management conjure up views of manufacturing environments, many of these concepts have been applied in service settings, with some of them actually developed specifically for service organizations.
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HISTORY
18th century, agriculture was the predominant industry in every country.
The advent of the steam engine and Eli Whitney's concept of standardized parts paved the way for the Industrial Revolution with its large manufacturing facilities powered by steam or water
The introduction of Taylor's method of scientific management and Henry Ford's moving assembly line brought the world into an age where management was predominantly centered around the production of goods.
late 1950s and early 1960s scholars moved from writing about industrial engineering and operations research into writing about production management
Production management had itself become a professional field as well as an academic discipline
services are such a pervasive part of our life that the term operations management is used almost exclusively.
HISTORY - CONTRIBUTIONS
INDIVIDUAL EFFICIENCYF.w. Taylor studied the simple output to
time relationship for manual laborThis is precursor for “TIME-STUDY”Frank Gilbert, and his wife Lillian Gilbert
examined the motion of the limbs of the workers (legs,hands,eyes)
This formed precursor for “MOTION-STUDY”
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HISTORY - CONTRIBUTIONS
COLLECTIVE EFFICIENCYPrevious focus on controlling the work-
output of manual laborers or machineFocused on individual efficiencyIntroduced Gantt chart for schedulingIn 1930 inventory model for efficiency in
use of materials
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HISTORY - CONTRIBUTIONS
QUALITY Previous quantitative aspects, now it is in qualitative aspects Quality which is an important customer service objective came to
recognized for scientific analysis Included the effectiveness addition to efficiency In 1931, walter shewart came up with his theory regarding control
charts for quality/process control. These charts suggests a simple graphical methodology monitor characteristics of output and how to control it.
1935, H.F. Dodge And H.G Romig exercise control over quality by applying statically principles acceptance/rejection “acceptance sampling”
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HISTORY - CONTRIBUTIONS
EFFECTIVENESS AS A FUNCTION OF INTERNAL CLIMATE
Hawthorne experiment draws the effectiveness by increasing efficiency
Explained through angle of human psychology Till now ruled by taylors theory of evaluation of
task and thus the specialization in one task which found much use in Henry ford assembly line.
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HISTORY - CONTRIBUTIONS
Advent of operations research techniquesWorld war-ii a bog boost for scientific
techniquesAllied force work stasticians engineers
and other professionals.
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Operations management is also an academic field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing or service firm and their operations.
concepts derived from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions.
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WHAT DO OPERATIONS MANAGERS DO?
Strategic Level
(Long term)
Tactical level
(Medium term)
Operational level(Lower level)
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STRATEGIC LEVEL (LONG TERM),
Responsible for or associated with making decisions about product development (what shall we make?)
Process and layout decisions (how shall we make it?),
Site location (where will we make it?), And capacity (how much do we need?).
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TACTICAL LEVEL (INTERMEDIATE TERM),
hand in deciding employee levels (how many workers do we need and when do we need them?),
inventory levels (when should we have materials delivered and should we use a chase strategy or a level strategy?),
capacity (how many shifts do we need? Do we need to work overtime or subcontract some work?).
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OPERATIONAL LEVEL, (LOWER-LEVEL) (daily/weekly/monthly) planning and control.
Operations managers and their subordinates must make decisions regarding scheduling (what should we process and when should we process it?),
sequencing (in what order should we process the orders?),
loading (what order to we put on what machine?), and work assignments (to whom do we assign individual machines or processes?).
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REQUIREMENTS OF OPERATIONS MANAGER
operations manager must have knowledge of advanced operations technology and technical knowledge relevant to his/her industry,
interpersonal skills and knowledge of other functional areas within the firm.
Operations managers must also have the ability to communicate effectively, to motivate other people, manage projects, and work on multidisciplinary teams.
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SCOPE OF OPERATIONS MANAGEMENT
SUPPLY CHAINS —management of all aspects of
providing goods to a consumer from extraction of raw materials to end-of-life disposal.
OPERATIONS MANAGEMENT/MARKETING INTERFACE
—determining what customers' value prior to product development.
OPERATIONS MANAGEMENT/FINANCE INTERFACE
—Capital equipment and inventories comprise a sizable portion of many firms' assets.
SERVICE OPERATIONS—Coping with inherent service
characteristics such as simultaneous delivery/consumption, performance measurements, etc.
OPERATIONS STRATEGY—Consistent and aligned with
firm's other functional strategies.
PROCESS DESIGN AND IMPROVEMENTS
—Managing the innovation process.
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MANUFACTURING SYSTEM
INPUT OUT PUTCONVERSION PROCESS
CONTROL
DECISION MAKER
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TYPES OF MANUFACTURING SYSTEM
INTERMITTENT SYSTEMJob productionBatch productionCONTINUOUS SYSTEMMass productionProcess production
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INTERMITTENT SYSTEM
Most products are produced in small quantities Machines and equipment are laid out by
process Work loads are generally unbalance Highly skilled operators are required for
efficient use of machines and equipment In-process inventory is large Flexible to suit production varietiesExamples Machines shops, hospitals, general office
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JOB PRODUCTION
Entire project is taken as a single operation Work is to be completed on each product
before processing the next item Versatile and skilled labor is needed High capital investment Control operation are relatively simple High unit cost of productionExampleShip building, dam construction, bridge building
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Batch production
Unique product production Highly skilled employee Production planning is not based on sales forecast but
one hat to estimate or evaluate the requirements on the basis of general business conditions, past information and future sales promotion programme.
Once the orders are received, production scheduling operations begin.
EXAMPLEElectronic instruments, machine tools, printing press
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Problems with intermittent system
Demand can be discontinuous All operational stages may not be balanced Elaborate sequencing and scheduling is require. Needs high investment Planning, routing and scheduling changes with fresh
orders Storage is necessary at each stage of production
process Can adjust to new situations and specifications Inspection is not in line with production Items are manufactured according to orders
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CONTINUOUS SYSTEM
There must be continuity of demand Product must be standardized Material should be per specifications and delivered in
time All operational stages in the process must be balanced Work must conform to quality standards Appropriate plant and equipment must be provided Maintenance must be by anticipation and not by
default Inspection must in line with production
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MASS PRODUCTION
Produce large quantities and much emphasis is not given to consumers orders.
Production for stock not to orderSystem can produce only one type of
product at one time.
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PROCESS PRODUCTION
Analogous to mass production with more stress on automation in production process.
Volume of production is highProducts where demand is continuous
and high.EXAMPLEPetroleum products, brand of medicines
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Distinction between manufacturing system and service
Followed by tables
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POINT OF DISTINCTION
SERVICE GOODS
•Entity•Storage•Quality
•Producer
•Labor intensity
•life
IntangibleNot possibleVaries with time and personInseparable from serviceTends to be highshort
TangiblePossibleMore standardizedCan be separableLower
longer
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POINT OF DISTINCTION
SERVICES GOODS
•Production•Customer involment•Physical presence of the customer•Physical surrounding•Standardization•Facility location
SpontaneousHigh
Essential
Very importantOnly some routine serviceClose to customer
Time-spreadCan be low
May not be necessary
May not be soPossible all over
Near supply
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POINT OF DISTINCTIO
N
SERVICES GOODS
•Facility design
•Product design•Process design•Scheduling
•Production planning
Accommodate physical and psychological needsEnvironment plays a vital roleImmediate effect on customerAs per customer interestSmoothing results in losses
To enhance production
Only physical productCustomer not involvedCompletion dates
possible
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POINT OF DISTINCTION
SERVICES GOODS
•Inventory•Quality control
•Quality objective•Worker skill•Time standard•Capacity planning•Wage payment•Type of technology
PersonnelVaried quality standardsZero defectionInteractionLooseFluctuating
Time-basedGenerally soft
Raw materialFixed
Zero defectTechnicalTightAverage
Unit-basedGenerally hard
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Role of production and operation manager
Produce the products and services in the quantities needed, available when needed and at a controlled cost and quality.
The deal with forecasting and scheduling systems and a variety of controls to ensure that the systems are continuing to function properly
Decisions seem to seek balance Must try to see relationships and integrate the
results.
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Functions and responsibilities
Product selection and design
Process selection and planning
Facilities location Capacity planning Production planning Productions controls Quality control Method analysis Proper inventory controls
Plant layout and material handling
Work measurement Maintenance and
replacement Cost reduction and cost
control Other functions Engineering economics,
stores and warehouse mgt., Maximizing labor efficiency, Price analysis - wage,
incentives to workers Standardization and storage
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PRODUCTIONPRODUCTION PLANNING & CONTROL PLANNING & CONTROL
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PRODUCTION PLANNING CONTROL
Organization and planning of the manufacturing process.
Co-ordinates supply and movement of materials and labor
Ensures economic and balanced utilization of machines and equipment
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STAGES OF PRODUCTION PLANNING
Factory planning Building, machines &
equipments, Plant layout &
location Process planning
Input processing output
operation planning Selection of work
centre Designing of tools
required
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SCHEDULINGROUTING LOADING
PRESCRIBE THE SEQUENCE OF OPERATIONS REQUIRED TO
TRANSFORM INPUTSINTO DESIRED
OUTPUT
WHEN AND WHEREEACH OPERATION
OF THE PRODUCTIONPROCESS IS TO BE
PERFORMED
STUDIES RELATION SHIP
BETWEEN LOAD &
CAPACITY OF WORK CENTERSIN THE SYSTEM
PRODUCTION PLANNING CATEGORIES
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GANTT CHART
It is one of the techniques in schedulingRepresented in the form of chartsCharts portrays planned production and
actual performance over a period It is a regulatory chart divided by parallel
horizontal and vertical lines
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Types of Gantt chart
MACHINE RECORD CHARTS (available machines and the time at
which various jobs are planned)
ORDER CHARTS (start and completion of work)
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GANTT CHART FORMATlabour time Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
A 2 mo.
B 2 mo.
C 2 mo.
D 2 mo.
E 2 mo.
F 2 mo.
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Gant chart cont…
The horizontal axis of the Gantt chart is a time scale, expressed either in absolute time or in relative time referenced to the beginning of the project.
The time resolution depends on the project - the time unit typically is in weeks or months.
Rows of bars in the chart show the beginning and ending dates of the individual tasks in the project.
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MAINTENANCE MANAGEMENT
An activity to keep equipment, or other assets that a manufacturing firm possess, in working condition.
OBJECTIVES To minimize long-run maintenance costs To minimize the instance of breakdown of
machines and facilities To provide a safe working environment To provide reliable conditions for equipment
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MAINTENANCE ADMINISTRATION
Work must be scheduledInventories of spare parts maintainedPrescribed quality standards metLabor standards establishedIn case of breakdowns or shutdowns of
plants, sometimes, outside contract maintenance work is resorted.
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CLASSIFICATION OF MAINTENANCE FUNCTIONS
The availability of plant can be defined as
A = availability of a plant Tup = the cumulative time of operation in the nominal working stateTdown = the cumulative down time.
(to improve the value of (A) one has to minimize the down time)
A = Tup / TUP + Tdown
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Types of maintenance policies
PREVENTIVE MAINTENANCE
CORRECTIVE MAINTENANCE
DESIGN-OUT MAINTENCE
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PREVENTIVE MAINTENANCE
Which is carried out at predetermined intervals and is intended to reduce the likelihood of an equipment’s condition falling below a required level of acceptability.
It can be time based / condition – based
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PREVENTIVE MAINTENANCE
TIME BASED IS EFFECTIVE The failure of any item of
an equipment is time-dependent.
Item is expected to wear out within the life of the equipment
The total costs of replacement of the item are substantially lesser than those of failure replacement repair.
CONDITION BASED IS EFFECTIVE
In response to a significant deterioration in a unit as indicated by a change in monitored parameter of the unit condition or performance.
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Advantages
Reduction of the total down-time and consequent reduction in production losses
Reduction n the number of major repairs, and consequently reduced maintenance expenses.
Reduction in the number of rejects and an improvement in product quality.
Reduction in the inventory of spare parts. Reduction in the number of accidents in the
plant. Reduction in the unplanned or crisis
management in maintenance.
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Advantages cont…..
Scheduled down-time of production.Replacement parts and supplies.Instruments i.e., in the case of condition
monitoring.Wages of preventive maintenance
technicians and staff.Minor costs such as those of record-
keeping.
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CORRECTIVE MAINTENANCE
Also know as breakdown maintenance which is carried out when equipment fails, or falls below an acceptable condition, while in operation.
Repair time depends upon the type of complexity of the equipment, management methods and engineering techniques and above all the skill of the crafts people.
Difficult to forecast the level and nature of corrective maintenance load.
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DESIGN-OUT MAINTENCE
Aims at minimizing the effect of failure and at eliminating the cause of maintenance.
Requires engineering action rather than maintenance action.
Tries to pin point the mistakes of the design of the equipment.
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MAINTENANCE COSTS
Maintenance is considered as the operation of pool of resources men, spares, equipment) directed towards controlling the plant availability.
UNAVAILABILITY COSTS Loss of in-service material Production loss while in repair Waiting for repair. Undergoing preventive maintenanceRESOURCE COSTS Corrective maintenance labor Preventive maintenance labor Maintenance equipment tools Spares usage and holding costs
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MAINTENANCE PLAN
Classification and identification of equipment
Collection of information like failure characteristics of equipment, repair characteristics, consequences of failure, safety regulations
Organization of maintenance resource like administrative structure, working planning system
SELECTION OF POLICY FIXED-TIME REPAIR POLICY (low cost equipment) CONDITION-BASED POLICY (complex, high cost equipment) DESIGN-OUT
MAINTENANCE (all high cost maintenance items) CORRECTIVE
MAINTENANCE POLICY (no preventive actions are
effective.)
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MAINTENANCE CONTROL
3 AREAS OF CONTROL Work control(men,spares,equipment, work load) Plant condition control(diagnose basic causes) Maintenance cost control
Identification of the high –cost areas of plant. Monitoring the trend of maintenance effectiveness (
failures in labor utilization, machines)
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MEASURING MAINTENANCE PERFORMANCE
Define the operational goals Establish priorities for the improvement
of maintenance techniques.Raise the morale of the maintenance
department, which in our country, is being traditionally treated as a subsidiary department.
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Management models in maintenance
Work studyOperational research techniquesLogical fault finding
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WORK STUDY
Select the jobDefine the objectiveRecord all the relevant factsExamine critically all the activities
(why,how,what,where,when,who.)Develop the best methodInstall the improved method and
maintain it.
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Operations research techniques
EXPECTED VALUE THEORY SIMULATION MODELS(The above theories widely applied for estimating
break down costs and selecting appropriate maintenance policies.)
WAITING LINE THEORY (establishing repair crew size, the number of facilities)
RELIABILITY THEORY (failure rates of equipment and components)
REPLACEMENT THEORY (determine replacement strategies for equipment)
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LOGICAL FAULT FINDING
Location of detection time as well as ratification time.
6 stage procedure generally followed Analysis of the symptoms of the fault Inspection of equipment Faulty stage location Removal of fault Repair and replacement Performance testing information
documentation.
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INDUSTRIAL SAFTY
The application of human biological science in conjunction with engineering science to the worker and working environment, so as to obtain maximum satisfaction for the worker which at the same time enhances productivity
--- ILO
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SECURITY MEASURES
The quantity of equipment and machines to be installed inside the factory buildings
The risk of installing the equipment and machines in an open space
The extent of costly plant and equipment involved which require special security
The extent security required from the point of view of insurance and other statutory regulations
The organization for the security department and the deployment of people in strategic positions
The rotation of security personnel at different positions Provision of necessary equipment to security staff for protection
and communication. Definition of clear-cut measures for security at different points in
the factory Periodic review of security measures
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Causes of accidents
MECHANICAL FACTORSInadequately guardedUnguardedUnsafe design or constructionHazardously arranged (overloading)
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ENVIRONMENTAL FACTORS
Illumination Ventilation Temperature Noise Fumes and dust Speed of work Hours of work Spread-over of the work period Work load
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HUMAN-MECHANICAL factors
INDIVIDUAL FACTORS
Age Marriage Schooling Health Length of service Work performance
PSYCHOLOGICAL FACTORS
Attitude towards the job
Interest and difficulties
Machine habits Attention or lack of it fatigue
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PERSONALITY FACTORS Intellectual level Emotional maturity Adjustment Anxiety level
SOCIOLOGICAL FACTORS Size of the employee’s
family Number of dependents Financial position Social status Interpersonal
relationships Home environment
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Thanq