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Production AND Operations Management Notes
Accounting and finance
Kyambogo University
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NEW HORIZON COLLEGE MARATHALLI, BANGALORE
A Recipient of Prestigious Rajyotsava State Award 2012 conferred by the (Affiliated to Bangalore University) Government of Karnataka
II SEM BBM STUDY MATERIAL
PRODUCTION AND OPERATIONS MANAGEMENT
Prepared By
MS. C. SHARMILA RAO
MS. VIJAYALAKSHMI
Ring Road, Bellandur Post, Near Marathalli, Bangalore - 560 103 Tel : +91- 80 -6629 7777 Fax : +91- 80 -2844 0770 E-mail : principalnhc@gmail Web : newhorizonindia
Unit 1 AN INTRODUCTION TO PRODUCTION AND OPERATION MANAGEMENT
Product : Product is an output obtained by transforming inputs like materials and labor. Product v/s Service:
Products Services
Products are visible Services are invisible Production and consumption occurs separately
In services, products and consumption happens simultaneously Products can be stored and therefore are having physical dimensions Services has no such dimension and can not be stored Products may be perishable Services are not perishable
Production - Production is the process of making products - In production different inputs like materials, humans,capital and other resources are transformed in to goods and services of having higher value Production Management - ―Production management is the process of effectively planning and regulating that part of an enterprice which is resposible for the actual transformation of materials into finished goods.‖ - EFL Bridge
Layout & Material handling facilities:Plant layout is a plan or scheme of arranging the production facilities in a systematic and schematic manner that provides profit, efficiency and comfort. The materials and machines and equipments should be placed in such a way which leads to smooth flow of production activities.
Capacity planning: Capacity planning is the procurement of production resources in a productive way. Capacity should be planned for short and long term period.
Inventory control:Inventories are the stock held in the form of raw materials; semi- finished parts and totally finished products. Inventory control is a part of production management as it helps us in planning for and keeping a check on purchase and storage of materials.
Quality Control: The quality of the product is plays an important role in the production process. The different dimensions of qualities are sizes,colour,shape,taste,smell,density, weight,durability etc... quality control is testing and inspecting different dimensions of the products quality and standards.
Method study:Method study involves performing a job through human energy which should not be wasted at any cost. Thereforeunwanted, unnecessary movements of human beings should be eliminated and only efficient movement should be designed for performing a job.
Maintenance & Replacements:Acquiring physical assets and maintaining them is very important. Maintenance means repairs, renewal and replacements of damaged or obsolete parts of building machines and equipment as the saying goes - ―A stitch in time saves nine.‖
Cost control and cost reduction:Cost control involves controlling the un-necessary cost reduction means improving the productivity by increasing economy and efficiency and effectiveness of the production process.
OBJECTIVES OF PRODUCTION MANAGEMENT
- The objectives of PM can be classified into two broad categories:
- ULTIMATE, and
- IMMEDIATE OBJECTIVES
- ULTIMATE OBJECTIVES: These are also called as PRIMARY objectives. These include: Control and reduction in manufacturing costs To improve the product quality Manufacturing schedule
- IMMEDIATE OBJECTIVES: Itincludes: Machinery and equipment Materials Manpower Manufacturing services, and Methods CONTROL AND REDUCTION IN MANUFACTURING COSTS
Cost reduction is a must in addition to the cost reduction.
Proper estimates of the cost is very important.
Higher the capacity utilization, lesser would be the unit cost.
Accurate and proper allocation of the expenses should be done. TO IMPROVE THE PRODUCT QUALITY
Quality is the ultimate objective of a production manager.
CONCLUSION: the production system has to make sure that it develops a product that meets the quality, quantity, time, place and place dimensions that the community expects and aspires for. Types of Production Systems
- Flow Process A. Mass Production B. Assembly production
- Intermittent Production A. Job Production B. Project Production C. Batch Production Intermittent Production System Production is performed on a start-and-stop basis, such as for the manufacture of made- to-order products. Done to produce small volume and high diversity products. Mass Production A special type of intermittent production process using standardized methods and single- use machines to produce long runs of standardized items. Usually used to produce small volume and low diversity products. Project Process Different employs and machineries are employed to produce perform a specified task or project.
Job and Batch Process - Specified types are services or tasks are performed in different departments. - In Batch production batches are produced in different time by same machineries. Example- tablet production in pharmaceutical industries. Assembly production It is a type of Production system in which the assembly of different equipment takes place to produce the final product Example- Manufacturing of a car. Basic Types of Production Processes (cont’d): Continuous Production Processes A production process, such as those used by chemical plants or refineries, that runs for very long periods without the start-and-stop behavior associated with intermittent production. Enormous capital investments are required for highly automated facilities that use special-purpose equipment designed for high volumes of production and little or no variation in the type of outputs AUTOMATION - Automation is the substitution of mechanical , hydraulic, electrical and electronic devices for human organs for decisions and efforts - Automation is the process of progressively increasing the role of machine but not only in replacing the manual labor. - Automation is the process of mechanizing our manual and mental activities for administrative process.
ADVANTAGES OF AUTOMATION
- Increased output and enhanced productivity.
- Improved and uniform quality.
- Reduced cost.
- Fewer accidents.
- Better production control.
- Complicated task can be done by machines. DISADVANTAGES OF AUTOMATION
- Heavy capital investment.
- Replacement of human beings leading to unemployment.
- Benefit of employee suggestion is lost.
- Most specificity is required for machine operation.
- Cost of supply failure will increase.
- During off season there won‘t be any production.
- Problems with the developing countries.
Industrial Automation - Computing
- While Weber gave more importance to transportation cost and he considered two factors for calculating transportation cost: weight and distance.
- Weber classified raw materials into two categories:
- Weight loosing materials, and
- Non weight loosing materials. Weight loosing materials
Examples: all metal industrial plants, cement, sugar, jewelry, diamond etc. Non-Weight loosing materials
Salt, cotton etc. FURTHER CLASSIFICATION OF RAW MATERIALS:
Ubiquitous materials: these are available everywhere. Ex. Clay, water, sand, bricks, pebbles etc.
Localized materials: these are available only in certain places. Ex. Coal, iron ore, manganese, lead, sandalwood etc. THEORY OF LOCATION OF SERGENT FLORENCE
He expressed his theory in terms of: Location factor Coefficient of location
Location factor and Coefficient of location is the sum total of the deviations of regional percentages of employees in a particular industry from the corresponding regional percentage of employees in all industries. THEORY OF LOCATION BY ANDRÉAS PREDOHL
Mr. Andreaspredohl tried to prove an alternative to the theory of Alfred weber.
This theory fails to explain the factors forcing for a change in plant location (Relocation).
Therefore this theory is not having any application in finding a new plant location. NEW THEORY OF INDUSTRIAL LOCATION
According to Bethel, the important decision on selecting a plant location involves three major steps 1 of a region
Selection of a community
Selection of a exact site A. Selection of a region
While selecting a particular region the following factors need to be analyzed: Availability of raw materials: It involves an adequate and quality supply of raw materials. The materials are classified in to ubiquitous and localized The materials can be classified into pure (Weight gaining) and gross (Weight loosing)
Proximity to fuel and power : This is very important factor as the plant requires the basic amenities in the form of fuel and power. The different type of energy are nuclear energy , solar energy , wind power , thermal energy and so on
Means of transportation: Means of transportation it includes a choosing particular mode of transportation depending on cost, time, speed and suitability.
Market place: Nearness to the market place helps in giving prompt and easy service to the customers which facilitates after sale service
Type of the soil
Ease of waste disposal
Potentiality of future expansion
Existence of commercial services and amenities
The health of the site(local conditions of the site like water, heat, cold, humidity, rain, pest and parasites.)
Statutory restrictions(laws of that particular locality)
People‘s attitude(public opinion)
Existence of religious and social institutions. SELECTING SEMI-URBAN AREAS MERITS:
Suppliers good contact for raw materials
Availability of labour supply
Existence of service facilities(technical and commercial services like repair workshops, banks etc)
Better utility services are available
Effective means of transportation connectivity and communication system
Availability of ready market DEMERITS
Expensive and long run cost are high
Problems of labour absenteeism
High labour cost
SELECTING VILLAGE SITE/RURAL AREA
MERITS
- Availability of big plots
- Cheap labour
- Natural and more environment friendly environment. Waste disposal is not a problem
- Concessions( electricity at subsidized rates)
- Abundant natural resources DEMERITS
- Lack of transportation and communication facilities
- Lack of power supply
- Lack of much skilled and educated labour force
- Absence of civic amenities(canteens, housing facilities, medical and education facilities)
- No ready market- so no direct selling of goods in the market What is an ideal location?
- An ideal location is one where the cost of the product is kept to minimum, with large market share, the least risk and the maximum social gain.
- It is the place of maximum net advantage or which gives lowest unit cost of production and distribution.
- For achieving this objective, small-scale entrepreneur can make use of locational analysis for this purpose.
Production AND Operations Management Notes
Course: Accounting and finance
University: Kyambogo University
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