Production Management

Subject Code :- HUT1253

BY
ANUPRITA BHOSALE
WHAT IS PRODUCTION
MANAGEMENT ?

• Planning, organizing, directing and controlling of

production activities. Production management deals
with converting raw materials into finished goods
or products.
• |t brings together the 6M's i.e. men, money,
machines, materials, methods and markets to satisfy
the wants of the people.

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6M’S FOR PRODUCTION
MANAGEMENT-

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WHAT IS OPERATION
MANAGEMENT ?
• Operations management is chiefly concerned with
planning, organizing and supervising in the contexts of
production, manufacturing or the provision of
services. It brings together the 6M's i.e. men, money,
machines, materials, methods and markets to satisfy
the wants of the people.
• As such, it is delivery-focused, ensuring that an
organization successfully turns inputs to outputs in an
efficient manner.

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• The inputs themselves could represent anything from
materials, equipment and technology to human
resources such as staff or workers.
• Corporate operations management professionals try
to balance costs with revenue to maximize net
operating profit 4
DIFFERENCE BETWEEN
OM AND PM
• OM includes techniques which enable the
achievement of operational objectives in an
operation system
• The operation system includes both manufacturing
sector as well as service sector
• OM is frequently used where various inputs are
transformed in to intangible services

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• The term OM is evolved from PM

So it can be concluded that PM is subset of OM

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OPERATION MANAGEMENT

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OPERATION
MANAGEMENT-
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 the Role and focus of

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operations in the organization’s overall strategy.
• It also involves product Planning, facility designing and
using the conversion process.

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OPERATION
MANAGEMENT-
Organizing
• Activities that establishes a structure of
tasks and authority.
• Operation managers establish a Structure of
roles and the flow of information within the

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operations subsystem.
• They determine The activities required to
achieve the goals and assign authority and
responsibility for carrying Them out.
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OPERATION
MANAGEMENT-
Controlling
• Activities that assure the actual
performance in accordance with planned
performance.
• To Ensure that the plans for the operations
subsystems are accomplished, the
operations manager Must exercise control

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by measuring actual outputs and comparing
them to planned operations Management.
• Controlling costs, quality, and schedules are
the important functions here.
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OPERATION
MANAGEMENT-
Behavior
• Operation managers are concerned with
how their efforts to plan, organize, and
control affect Human behavior.
• They also want to know how the
behavior of subordinates can affect
Management's planning, organizing, and

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controlling actions.
• Their interest lies in decision- making
behavior.
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OBJECTIVES OF OPERATIONS
MANAGEMENT-
Customer service
• The first objective of operating systems is
the customer service to the satisfaction of
customer Wants.
• Therefore, customer service is a key
objective of operations management.
• The operating System must provide
something to a specification which can

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satisfy the customer in terms of cost And
timing.
• Thus, primary objective can be satisfied by
providing the ‘right thing at a right price at
the right time’.
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OBJECTIVES OF OPERATIONS
MANAGEMENT-
Resource utilization
• Another major objective of operating systems is
to utilize 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.
• Operations management is concerned essentially
with the utilization of resources, i.e., obtaining
Maximum effect from resources or minimizing

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their loss, underutilization or waste.
• The extent Of the utilization of the resources’
potential might be expressed in terms of the
proportion of Available time used or occupied,
space utilization, levels of activity, etc.
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ROLE OF OPERATIONS
MANAGEMENT IN TOTAL
MANAGEMENT SYSTEM-

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INPUTS-OUTPUTS OF
OPERATIONS
MANAGEMENT-

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OPERATIONS
MANAGEMENT FUNCTIONS-

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OPERATIONS
MANAGEMENT FUNCTIONS-
Location of facilities
• It is long term Commitment about the
geographically static factors that affect a
business organization.
• It deals with the questions such as
‘Where our main operations should be
based?’

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• The selection of location is a key-decision
as large investment is made in building
plant and Machinery.
• Hence, location of plant should be based
on the company’s expansion. 16
OPERATIONS
MANAGEMENT FUNCTIONS-
Plant layout and material handling

• Refers to the physical arrangement of

facilities.
• It is the configuration of departments,
Work centres and equipment in the
conversion process.

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• Objective of the plant layout Is to
design a physical arrangement that
meets the required output quality and
quantity most Economically. 17
OPERATIONS
MANAGEMENT FUNCTIONS-
Product design

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OPERATIONS
MANAGEMENT FUNCTIONS-
Process design

• It is 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,
• Hence, the important decisions In process

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design are to analyze the workflow
• for converting raw material into finished
product and to select the workstation for
each included in the workflow.
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OPERATIONS
MANAGEMENT FUNCTIONS-

Production Planning And Control

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OPERATIONS
MANAGEMENT FUNCTIONS-
Quality Control

• ‘a system that is used to maintain a

desired level of Quality in a product or
service’.
• 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

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Feedback system and corrective action
procedure.
• It is industrial management technique by
means of which Product of uniform 21
OPERATIONS
MANAGEMENT FUNCTIONS-
Material Management

• To minimize material cost.

• To purchase, receive, transport and store
materials efficiently and to reduce the
related cost.
• To trace new sources of supply and to
develop cordial relations with them in order

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to Ensure continuous supply at reasonable
rates.
• To reduce investment tied in the inventories
for use in other productive purposes and to
Develop high inventory turnover ratios. 22
OPERATIONS
MANAGEMENT FUNCTIONS-
Maintenance Management

• To achieve minimum breakdown and to keep

the plant in good working condition at the
Lowest possible cost.
• To keep the machines and other facilities in
such a condition that permits them to be
used At their optimal capacity without
interruption.

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• To ensure the availability of the machines,
buildings and services required by other
sections Of the factory for the performance
of their functions at optimal return on
investment. 23
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PROCESS PLANNING-
PRODUCTIVITY

It is quantitative relation between what we

produce and what we use as a resource to
produce them

Productivity = Output/Input

It refers to efficiency of the production system

and indicated how well the factors of production

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(Material, capital, labor, energy) are utilized.

Major problem with productivity is that many

things to many people
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DEFINITIONS OF PRODUCTIVITY
1. Productivity is a function of providing more
and more of every thing to more and more
people with less and less consumption of
resources
2. The volume of output attained in a given
period of time in relation to sum of the direct
and indirect efforts expended in its production
3. How well the resources are brought
together in organization and utilized for
accomplishing a set of objectives

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4. Establishing congruency between
organizational goals and social aspirations
through input output relationships
5. It is multiplier effect of efficiency and
effectiveness 26
PRODUCTIVITY
Can be increased by
1. When production is increased without
increase in inputs
2. The same production with decrease in inputs
3. The rate of increase in output is more
compared to rate of increase in input

Problem 1
A company produces 160 kg of plastic molded
parts of acceptable quality by consuming 200kg of
raw materials for a particular period. For the

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next period, the output is doubled (320kg) by
consuming 420 kg of raw materials and for the
third period, the output is increased to 400kg by
consuming 400kg of raw material.
Comment on the productivity of all periods 27
 EXPECTATIONS
FROM PRODUCTIVITY
Management High ROI, Higher market share and corporate
and image
Entrepreneurs
Managers Maximum utilization of resources, lower unit
cost and higher quality
Workers Higher wages, safe work environment, increased
quality of life
Suppliers Prompt payment and continuous order

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Customers Lower cost, quality, reliability, safety and
timeliness delivery
Government Economic development, employment generation,
more exports
Share holders High dividends 28
 DYNAMICS OF
PRODUCTIVITY CHANGE
Improvement
in productivity

Increase in wages
More output
Increase in demand Better machines
for goods and services

Reduction in
production cost

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Lowering Greater
of prices employment

More profit More savings Higher investments

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PRODUCTIVITY MEASURES
Partial productivity Measures
Total Output
Partial productivity =
Individual input
Total Output
1. Labor productivity =
Labor input

Total Output
2. Capital productivity =
Capital input

Total Output
3. Material productivity =

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Material input

Total Output
4. Energy productivity =
Energy input
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PRODUCTIVITY MEASURES
Total productivity Measures
Total Tangible Output
Total productivity =
Total tangible input

Total Tangible Output= Value of(finished goods + Partial units

produced + dividends + interests +
other income)
Total Tangible Input= Value of(Human + capital + material +
Energy + other inputs)

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Current year price
Deflator=
Base year price

Net Output
Total factor productivity =
Labor + Capital input 31
PROBLEMS
1. The following information regarding the output
produced and inputs consumed for a particular time
period for a company is given below
Output = 10,000 Rs.
Human input =3000 Rs
Material Input= 2000Rs
Capital input = 3000 Rs
Energy input =1000 Rs
Other Misc Input= 500 RS
The values are in terms of base year rupee value.

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Compute various productivity indices

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PROBLEMS
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PROBLEMS