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«ISBN : 978-81-224-2425-6 PUBLISHING FOR ONE WORLD NEW AGE INTERNATIONAL (P) LIMITED, PUBLISHERS 4835/24, Ansari Road, Daryaganj, New Delhi - 110002 ...»

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Copyright © 2008, 2006 New Age International (P) Ltd., Publishers

Published by New Age International (P) Ltd., Publishers

All rights reserved.

No part of this ebook may be reproduced in any form, by photostat, microfilm,

xerography, or any other means, or incorporated into any information retrieval

system, electronic or mechanical, without the written permission of the publisher.

All inquiries should be emailed to rights@newagepublishers.com ISBN : 978-81-224-2425-6

PUBLISHING FOR ONE WORLD

NEW AGE INTERNATIONAL (P) LIMITED, PUBLISHERS

4835/24, Ansari Road, Daryaganj, New Delhi - 110002 Visit us at www.newagepublishers.com

PREFACE TO THE SECOND EDITION

The second edition of the book Production and Operations Management incorporates several suggestions offered by our colleagues and students all over the country.

In this edition we have endeavored to strengthen the basic characteristics of the book. The subject matter has been presented systematically in ten chapters, which can enable the reader to master the topics covered without any additional guidance. In keeping with the basic objective of making the learning of the ‘Concept and Principles in Production and Operations Management’, the following chapters have been revised as per the suggestions.

Chapter 1 on Introduction to POM was revised with the addition of Managing Global Operations with the concept of globalization. Chapter 2 on Plant Location and Layout was revised with locational models and the design of product and process layout. Service layout was also included. Chapter 4 on Materials Management was revised with the addition of special purchasing system. Chapter 6 on Quality Control was revised with the addition of ISO 14000 series along with the recognized bodies for ISO certification. Chapter 8 on Maintenance Management was revised with the concept of Total Preventive Maintenance.

The revised edition also contains Caselets which provides additional input to understand the subject with practical application of the techniques used in each chapter.

For the development of application skill of the theoretical knowledge of production and operation management, it is necessary to arrange for a visit or conduct the project work either by individual or group of students in a manufacturing or service organisation.

In this context the revised edition contains skill development/practicals in each chapter. For this purpose the students are adviced to visit a Fast Food Restaurant like Pizza Hut or Pizza Corner for getting the information for the questions given under skill development in each chapter.

In addition to the caselet, cases are given to understand the entire concept of production and operations management at the end of the book.

Complete care has been taken to make the book error free. However, mistakes might have crept inadvertently. Readers finding any error are requested to bring it to our notice, for enabling us to rectify them in our future editions.

We are grateful to New Age International (P) Limited, Publishers, and the editorial department for their untiring effort to publish the book within a short span of time with a nice get up.

Our acknowledgements are also due to Dr. Poornima Anil Kumar and Mrs. Bharathi Suresh, without whose support and sacrifice this work would not have been completed by the deadline.

Finally, our acknowledgement is due to the Almighty who has blessed us with the knowledge, required for writing this book.

AUTHORS

PREFACE TO THE FIRST EDITION

Production and Operations Management has been recognised as an important factor in a country’s economic growth. The traditional view of manufacturing management is the concept of Production Management with the focus on economic efficiency in manufacturing. Later the new name Operations Management was identified, as service sector became more prominent. Rapid changes in technology has posed numerous opportunities and challenges which have resulted in enhancement of manufacturing capabilities through new materials, facilities, techniques and procedures. Hence, managing a service/production system has become a major challenge in the global competitive environment. Production and Operations Management leads the way for the organisations to achieve its goals with minimum effort. Hence the study of the subject at undergraduate and postgraduate level has more significance.

This book on ‘Production and Operations Management’ covers the complete syllabus of Bachelor of Business Management of Bangalore University, however the coverage is wide enough to include the requirements of the other Indian Universities and professional courses like MBA and Engineering.

Being student-friendly is the unique feature of this book. The subject matter has been presented systematically in ten chapters, which can enable the reader master the topics covered without any additional guidance.

Complete care has been taken to make the book error free. However, mistakes might have crept inadvertently. Readers finding any error are requested to bring it to our notice, for enabling us to rectify them in our future editions.





We are grateful to Mr. Saumya Gupta, Managing Director and Mr. Babu V.R. of New Age International (P) Ltd., for providing us this opportunity to share our knowledge with you.

Our acknowledgements are also due to Dr. Poornima Anil Kumar and Mrs. Bharathi Suresh, Mr. K. Raghavendra and M.N. Ramachandra without whose support and sacrifice this work would not have been completed by the deadline.

Finally, our acknowledgement is due to the Almighty who has blessed us with the knowledge, required for writing this book.

AUTHORS

CONTENTS

–  –  –

1.1 INTRODUCTION Production/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 services management, then the corresponding set of management activities is called as operations management.

1.2 HISTORICAL EVOLUTION OF PRODUCTION AND OPERATIONS MANAGEMENT

For over two centuries operations and production management has been recognised as an important factor in a country’s economic growth.

–  –  –

other social scientists began to study people and human behaviour in the working environment.

In addition, economists, mathematicians, and computer socialists contributed newer, more sophisticated 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 manufacturing sectors of the economy. As service sector became more prominent, the change from ‘production’ to ‘operations’ 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, in management practices.

1.3 CONCEPT OF PRODUCTION Production 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 “the step-by-step conversion of one form of material into another 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 ‘a 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 Schematic production system

1.4 PRODUCTION SYSTEM The 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.

" PRODUCTION AND OPERATIONS MANAGEMENT

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 improve system performance.

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

–  –  –

JOB SHOP PRODUCTION

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.

#

INTRODUCTION TO PRODUCTION AND OPERATION MANAGEMENT

Advantages

Following 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.

Limitations

Following 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.

BATCH PRODUCTION

Batch production is defined by American Production and Inventory Control Society (APICS) “as a form of manufacturing in which the job passes through the functional departments in lots or batches and each lot may have a different routing.” It is characterised by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales.

Characteristics

Batch 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 and change 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.

Advantages

Following 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.

$ PRODUCTION AND OPERATIONS MANAGEMENT

3. Work in process inventory is higher compared to continuous production.

4. Higher set up costs due to frequent changes in set up.

MASS PRODUCTION

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 the same path.

Characteristics

Mass 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.



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