Production and Project Management

Course code: ChEg 5104

Credit Hours: 3

Aregawi G/Eyesus (Assistant Professor)

Email: [email protected] Cellphone: +251968925386

February 10, 2025

 Course Outline
Chapter 1 Introduction to Production and Operations 1 week
Management
1.1 Production system, Production management
1.2 Operations management Classifications, objectives
and scope.
1.3 Strategy and Operations

Chapter 2 Plant Location and Layout 1 week

2.1 Factors influencing plant location - location models
2.2 Plant layout – objectives, classifications
2.3 Design of product and process layout
Chapter 3 Operations Planning 2 weeks
3.1 Strategies for adjusting capacity
3.2 Aggregate Planning
3.3 Material Requirements Planning (MRP)
3.4 Scheduling
3.5 Capacity Requirements Planning
3.6 Maintenance planning and scheduling
3.7 Enterprise Resource Planning (ERP)
 Course Outline
Chapter 4 Inventory Management 2 weeks
4.1 Role of Inventory
4.2 Elements of Inventory Management
4.3 Demand Forecasting
4.4 Inventory Control Systems
4.5 Inventory Models
Chapter 5 Quality Management 3 weeks
5.1 Definition of Quality
5.2 Quality Tools
5.3 TQM & QMS
5.4 The Cost of Quality and its effect on Productivity
5.5 Statistical Quality Control p, x and R charts etc.
Chapter 6 Project Management 2 weeks
6.1 Basics of project management - classifications,
objectives
6.2 Project Management Stages
6.3 Scheduling models – Gantt chart;
6.4 Priority decision rule, Network Models, PERT, CPM
 Course Outline
Chapter 7 Decision Making 1 week
7.1 General Model for decision making - ayes’
Decision Rule;
7.2 Decision Making under Uncertainty and Risk
7.3 Decision Tree Method

Chapter 8 Contemporary issues 1 week

8.1 Lean Production
8.2 Lean Six Sigma
8.3 ISO 9000

1 week
Mini project presentation
 Learning Outcomes of the Course
On completion of this course, the students will be able to:
 Explain the basic tools and principles of production and
project management. (CLO 1)

 Apply knowledge and understanding of production and

project management tools & principles. (CLO 2)

 Solve production & project management related problems

faced by chemical manufacturing industries. (CLO 3)

 Internalize current issues in production and project

management scenario. (CLO 4)
 Course Schedule and Instructional Method
student learning time (SLT)
• 38 hours of class contact hours Lecture
• 82(59+14+9) hours of non-class contact hours to complete
Assessments, Readings and Exam preparation
• Participate and learn mode
Face-to-face, online or in blended learning mode
• Engagement of students in using resources
and working on tasks & creating experiences
Experimental design, research-integrated learning,
problem based learning & Project based learning
Method of Course Delivery:
Lecture (L)
Group discussion or Seminars
Group assignment & Individual activity
Industrial visit
Project work and Home study

Feedback on Assessments
When after a week/ next day after Final exam end
Where on Class/ on Office B64 R CE 207
How in Individual or in group/ in Individual
Mode of Assessments:
I. Continuous Assessment =50%
Test 1=15%
Test 2 =15%
Group Assignment 1(Case study) = 10%
Group Assignment 2(Mini Project, Seminar) = 10%

II. Summative Assessment =50%

Final exam =50%
Text Book:
Kiran R. Golwalkar (2016), “Production Management of Chemical
Industries” Springer International Publishing Switzerland

References:
•F. R. Jacobs and R.B. Chase, Operations and Supply Chain
Management, 13th Edition. New York, McGraw Hill, 2011.
•S. ANIL KUMAR & N. SURESH (2008), “Productions and
operations management”, New Age International (p) Ltd.
publishers.
•Gill Lawson, Stephen H. Wearne, Peter Iles-Smith, (1998) Project
Management for the Process Industry - IChemE-Inst of Chemical
Engineers UK.
•E-learning, OER, or other Web resources
Academic Integrity(Code of Conduct, Cheating, Plagiarism
“Turnitin’) and Referencing Style (IEEE) as per AASTU Guideline
 Chapter 1

Introduction to Production
and Operations Management
 1.1 Production system, Production
Management
• Production system, any of the methods used
in industry to create goods and services from
various resources.
• All production systems, when viewed at the
most abstract level, might be said to be
“Transformation processes”—processes that
transform resources into useful goods and
services
• The transformation process typically uses
common resources such as labour, capital (for
machinery and equipment, materials, etc.), and
space (land, buildings, etc.) to effect a change.
• Economists call these resources the “factors of
production” and usually refer to them as labour,
capital, and land.
• Production managers have referred to them as
the “five M’s”: men, machines, methods,
materials, and money.
• When viewed as a process, a production system may be
further characterized by flows (channels of movement) in the
process:
• Both the physical flow of materials, work in the intermediate
stages of manufacture (work in process), and finished goods;
and the flow of information and the inevitable paperwork that
carry and accompany the physical flow.
• The physical flows are subject to the constraints of the
capacity of the production system, which also limits the
system’s ability to meet output expectations.
• The capacity of the information-handling channel of the
production system is an important measure of a system’s
output.
• The management of information flows, or the planning and
control of the system to achieve acceptable outputs, is an
important task of the production manager.
 Productivity: Definition

Productivity is the relationship between the

outputs generated from a system and the
inputs that are used to create those outputs.
Mathematically

O
P =
I
 Productivity Improvement

Productivity Improvement (PI) is the result of

managing and intervening in transformation
or work processes.
PI will occur if:

O O O O O
I I I I I
 Measures of Productivity

Partial Output ; Output ; Output ; Output

measures Labor Machine Capital Energy

Multifactor Output ; Output

measures Labor + Machine Labor + Capital + Energy

Total Goods or Services Produced

measure All inputs used to produce them
Examples of Partial Productivity Measures

Labor Units of output per labor hour

Units of output per shift
Productivity Value-added per labor hour

Machine Units of output per machine hour

machine hour
Productivity
Capital Units of output per birr input
Birr value of output per birr input
Productivity
Energy Units of output per kilowatt-hour
Birr value of output per kilowatt-hour
Productivity
Factors Affecting Productivity

Capital Quality

Technology Management
 Improving Productivity
• Develop productivity measures

• Determine critical (bottleneck) operations

• Develop methods for productivity improvements

• Establish reasonable goals

• Get management support

• Measure and publicize improvements

Types of Production Systems
• There are three common types of basic production systems:
the batch system, the continuous system, and the project system.
• In the batch system, general-purpose equipment and methods
are used to produce small quantities of output (goods or
services) with specifications that vary greatly from one batch to
the next.
• A given quantity of a product is moved as a batch through one or
more steps, and the total volume emerges simultaneously at the
end of the production cycle.
• Examples include systems for producing specialized machine
tools or heavy-duty construction equipment, specialty chemicals,
and processed food products, or, in the service sector, the system
for processing claims in a large insurance company.
• In the continuous system, items to be processed flow through
a series of steps, or operations, that are common to most
other products being processed.
• Since large volumes of throughput are expected, specially
designed equipment and methods are often used so that
lower production costs can be achieved.
• Frequently the tasks handled by workers are divided into
relatively small segments that can be quickly mastered and
efficiently performed.
• Examples include systems for assembling automobile engines
and automobiles themselves, as well as other consumer
products such as televisions, washing machines, and personal
computers.
• Continuous production systems are often referred to as
assembly systems or assembly line systems and, as noted
below, are common in mass production operations.
• Process is any part of an organization which takes a
set of input (resources) which are then used to
transform something into outputs of products or
services.
• Processes can be

– Intermittent processes: Processes used to produce a

variety of products with different processing requirements
in lower volumes.

– Repetitive processes: Processes used to produce one or a

few standardized products in high volume.
 Computer Integrated Manufacturing (CIM)
• Product and process design
• Planning and control
• The manufacturing process
 Computer Aided Techniques used in CIM
Some or all of the following subsystems may be found in a CIM operation:

• CAD (computer-aided design)

• CAE (computer-aided engineering)

• CAM (computer-aided manufacturing)

• CAPP (computer-aided process planning)

• CAQ (computer-aided quality assurance)

• PPC (production planning and control)

• ERP (enterprise resource planning)

• A business system integrated by a common database.

 Devices and Equipment Required in CIM
• CNC, Computer numerical controlled
machine tools
• DNC, Direct numerical control
machine tools
• PLCs, Programmable logic controllers
• Robotics
• Computers
• Software
• Controllers
• Networks
• Interfacing
• Monitoring equipment
 Technologies used in CIM
• FMS, (flexible manufacturing
system)

• ASRS, (automated storage and

retrieval system)

• AGV, (automated guided vehicle)

• Robotics

• Automated conveyance systems

 Flexible Automation

numerous conveyors, robots, CNC machines, paint shops, logistics, connection to

administration
Industrial Automation - Machines
• Storage Systems
• Handling Systems
• Assembly Lines
– Assembly Cells
– Machines
• Actuators
• Sensors
• Production Lines
– Production Cells
– Machines
• Actuators
• Sensors
Industrial Automation - Computing

 Computers

 Controllers

 Actuators

 Sensors

 Software
Automation Migration Strategy
Product-Process Grid
Product-Process Grid contd.

• Project
• High variety and low volume
• One off product to customer specification
• Staff and equipment move to the product site
• Limited in time frame
• Example: building construction, ship manufacturing, airplane
manufacturing etc
• Jobbing
• One off or low volume product to customer specification
• The product moves to the location of manufacturing equipment
• Staff and equipment can be shared among many products
• Undertake frequent setting of equipment
• Example: machine tool manufacturing, precision engineering etc
Product-Process Grid contd.
• Batch
• Medium variety and medium volume
• Products are grouped as they move across the manufacturing process
• Products move to the location of the manufacturing equipment
• Setting of equipment is done between batches of products
• Example: Book printing, automotive parts, assembly etc
• Line
• Products of high volume and low variety
• It can be automated for production and material handling
• Time spent per unit must be equalized for each stage – line balancing
• Set-up time is low
• Example: car, TV, food etc
• Continuous
• Very high volume products
• Large amount of specialized and dedicated equipment
• Labor is used merely to monitor and control the process
• Example: water treatment, electricity, oil, gas etc
 Production Management
• When the principles of management are applied to the
production function of the Organization. It is known as
production management.

• It is a process of planning, Scheduling, supervising and

controlling the activities involved in the production of
goods and services.

• It focuses on the transformation process of inputs and

raw materials in to the company’s finished product.

• In this process, the decision regarding the quality,

quantity, price, packaging, design, etc.. are taken by
the production manager.
1.2 Operations management Classifications,
Objectives and Scope
Operation Management
• Operation Management is the set of activities that
create goods and services through the transformation
of input in to outputs
• Operation Management implies the management of
day to day business activities.
• It involves administration of production, manufacturing
and provision of services in an organization.
• It deals with designing, implementing and controlling
the production process using resources,, in order to
provide desired goods and services to customers.
 Difference between Production Management and
Operation Management
Production Management Operation Management
Production Management can Operation management deals
be defined as the with the administration of both
administration of the set of production of goods & delivery
activities concerning the of goods & services to customer
transformation of raw Operation manager looks the
material in to finished goods. product design, quality,
Production manager has to quantity, process design,
make decisions regarding the location, Human power
design, quality, quantity & cost required, storing, Maintenance,
of the product manufactured logistics , inventory management,
by the department waste management, etc
 Difference between Production Management and
Operation Management
Production Management Operation Management
Production Management can Operations management in
only be found in the firms every organization. i.e.
where production of goods is manufacturing concerns,
undertaken. service-oriented, firms, banks,
The basic objective of hospitals, agencies, etc…
production management is to Operations management aims
provide the right quantity at making the best possible
goods in the right quantity at use of organization’s
right time and best price resources, in order to fulfil
the customer’s wants.
• Production Management covers administer all
the activities which are involved in the process
of production. Where as,
• Operations Management entail all the
activities involved in the production of Goods
and delivery of services such as material
Management, quality Management,
Maintenance Management, Process
Management, Process design, product design,
etc…
 What is Operations Management?
• Operations management (OM) is the
administration of business practices to create
the highest level of efficiency possible within
an organization.
• It is concerned with converting materials and
labor into goods and services as efficiently as
possible to maximize the profit of an
organization.
• Operations management teams attempt to
balance costs with revenue to achieve the
highest possible net operating profit
• Operations management involves utilizing resources
from staff, materials, equipment, and technology.
Operations managers acquire, develop, and deliver
goods to clients based on client needs and the
company’s abilities.
• Operations management handles various strategic
issues, including determining the size of manufacturing
plants and project management methods and
implementing the structure of information technology
networks.
• It include the management of inventory levels, work-in-
process levels and raw materials acquisition, quality
control, materials handling, & maintenance policies.
• An operations management professional
understands local and global trends, customer
demand, and available resources for production.
• Operations management approaches the
acquisition of materials and the use of labor in a
timely, cost-effective manner to deliver customer
expectations. Inventory levels are monitored to
ensure that ample quantities are on hand.
• Operations management is responsible for
finding vendors that supply the appropriate
goods at reasonable prices and have the ability to
deliver the product when needed.
• operations management (OM) is the process
of prioritizing and employing business
practices designed to achieve maximum
efficiency as a means to achieve maximum
profitability. Within the process, operations
managers utilize organization and productivity to
achieve their primary goals.

• Balancing the efficient use of resources, including

staff, materials, equipment, and technology, is
key to a successful OM process and, by extension,
the success of the company.
• Another large facet of operations
management involves the delivery of goods to
customers.
• It ensure that products are delivered within
the agreed time commitment.
• Operations management also typically follows
up with customers to ensure that the products
meet quality and functionality needs.
• Operations management takes the feedback
received and distributes the relevant
information to each department to use in
process improvement.
What Operations Managers Do
• Operations managers are involved in
coordinating and developing new processes
while reevaluating current structures.

• Organization and productivity are two key drivers

of being an operations manager, and the work
often requires versatility and innovation.

• As part of their daily responsibilities, operations

managers must possess a variety of skill sets,
including the below skills.
• Technical expertise in areas such as production automation,
data entry, budget tracking, and design.
• Organizational ability and attention to detail, including
keeping track of project files, employee reports, budgets,
schedules, and other details related to company processes.
• Motivational prowess in the form of strong leadership skills
that provide the expertise to motivate others, inspire ideas,
and foster a supportive and diverse team.
• Analytical aptitude, including skill in risk analysis and
mitigation when initiating new projects. Operations managers
must also analyze processes to identify challenges and offer
solutions if negative situations develop.
• Decision-making proficiency, especially under stress, when
there is very little time to assess all factors.
• Ability to maintain quality standards, including as they relate
to raw materials, machinery, manufacturing procedures,
packaging, delivery processes, and the finished product.
Classification of operations management
1.Product design and development
2.Planning and management of manufacturing
facilities
3.Purchasing/procurement
4.Forecasting
5.Capacity planning
6.Inventory management
7.Quality control
8.Delivery to customers
 Objectives of Operations Management
The management of functions that a business
needs to run effectively day-to-day, including:
• Overseeing multiple departments and
providing goals
• Overseeing and streamlining processes
• Balancing revenue and costs
• Developing strategic plans
• Production, logistics, and supply chain
 1.3 Strategy and Operations
• Strategy is a plan of action designed to
achieve a long-term or overall aim
• Strategic plan provides the guiding light to
keep your business on track towards its long-
term aspirations.
• Meanwhile, an operational plan focuses on
the execution of that strategic vision.
• It delves into the specific, actionable steps
required to bring the strategy to life
• Strategy as plan – a directed course of action to achieve
an intended set of goals; similar to the strategic planning concept;
• Strategy as pattern – a consistent pattern of past behavior, with a
strategy realized over time rather than planned or intended. Where
the realized pattern was different from the intent, he referred to the
strategy as emergent;
• Strategy as position – locating brands, products, or companies within
the market, based on the conceptual framework of consumers or
other stakeholders; a strategy determined primarily by factors
outside the firm;
• Strategy as ploy – a specific maneuver intended to outwit a
competitor; and
• Strategy as perspective – executing strategy based on a "theory of the
business" or natural extension of the mindset or ideological
perspective of the organization
• strategy as the unfolding of the internal and external aspects of the
organization that results in actions in a socio-economic context
 Strategy

Mission Strategy Tactics

How does mission, strategies and tactics relate to

decision making and distinctive competencies?
 Strategy
• Mission
– The reason for existence for an organization
• Mission Statement
– States the purpose of an organization
• Goals
– Provide detail and scope of mission
• Strategies
–Plans for achieving organizational goals
• Tactics
– The methods and actions taken to accomplish strategies
 Strategy Example
Ruta is a high school student. She would like to have a career in
business, have a good job, and earn enough income to live
comfortably

Mission: Live a good life

• Goal: Successful career, good income

• Strategy: Obtain a college education

• Tactics: Select a college and a major

• Operations: Register, buy books, take courses, study,

graduate, get job
 Strategy and Tactics
• Distinctive Competencies: The special attributes or abilities that
give an organization a competitive edge.

• Strategy Factors
– Price: Low cost, premium discounting,
– Quality: High-performance design or high quality, Consistent
quality
– Time: Rapid delivery, On-time delivery
– Flexibility: Variety, Volume
– Service
– Location
 Global Strategy
• Strategic decisions must be made with respect to
globalization

• What works in one country may not work in another

• Strategies must be changed to account for these

differences

• Other issues

– Political, social, cultural, and economic differences

 Strategy Formulation
• Order qualifiers

– Characteristics that customers perceive as minimum

standards of acceptability to be considered as a
potential purchase

• Order winners

– Characteristics of an organization’s goods or services

that cause it to be perceived as better than the
competition
 Key External Factors for Strategy
• Economic conditions

• Political conditions

• Legal environment

• Technology

• Competition

• Markets
 Key Internal Factors of Strategy
• Human Resources

• Facilities and equipment

• Financial resources

• Customers

• Products and services

• Technology

• Suppliers
 Quality and Time Based Strategies
• Quality-based strategies
– Focuses on maintaining or
improving the quality of an
organization’s products or
services
– Quality at the source

• Time-based strategies
– Focuses on reduction of time
needed to accomplish tasks
 Operations
• Operations refer to the business activities that a
firm engages in to convert materials into finished
products or services, sell them to customers, and
earn a profit.

• It is also defined as the activities involved in a

company producing goods or delivering services.

• Operations can also refer to the performance of a

practical work or of something involving the practical
application of principles or processes.
 Cont’d… Operations

• The way that parts of a machine or system work

together, or the process of making parts of a
machine or system work together.
• Performance of a practical work or of something
involving the practical application of principles or
processes.
• The activities involved in a company producing goods
or delivering services.
In mathematics, operations refer to mathematical
processes such as add, subtract, multiply and divide
 Cont’d… Operations
• Operation means the actions and decisions made by
participants and members of a business that affect
the production, distribution, service, management,
etc.. needed for a company to function that requires
the use of resources and assets.

• Operations are the business activities that a firm

engages to convert materials into finished products
or services, sell them to customers, and earn profit
End of Chapter One