Course Contents

Unit I: Introductions to Operations Management

Chapter 1: Operations and Productivity 5h
Definition, operations functions its environment, operation system, the life cycle
approach, historical development of operation management, productivity and
competitiveness
Chapter 2: Operations Strategy 5h
Global view of operations, developing mission and strategies, achieving
competitive advantages through operations, strategy development and implementation

Unit II: Designing Operations

Chapter 3: Product and Process Design 7h
Product selection, Generating new product, product development, issues for product
design, service design, process strategies, process analysis and design, product process
matrix, service process design, capacity planning, capacity consideration, demand and
capacity management in service
Chapter 4: Quality Assurance 7h
Defining quality, International standards, Total quality management, Tools of TQM,
TQM in services, statistical process control.
Unit III: Managing Operations
Chapter 5: Supply Chain Management 7h
Strategic importance, supply chain strategies, vendor selection,
logistics management, measuring supply chain performance,
Outsourcing, risks in outsourcing, ethical issues in outsourcing.
Chapter 6: Inventory Management 7h
Functions of inventory, types of inventory, inventory models for
independent demand, material requirement planning, enterprise
resource planning.
Chapter 7: Operations Scheduling 6h
Strategic importance, scheduling issues, loading jobs, sequences
jobs, scheduling services.
Chapter 8: JIT and Lean Operations 4h
Just-in-Time, JIT layout, JIT inventory, JIT scheduling, JIT
quality, Lean Operations, lean operations in services.
CHAPTER-1
INTRODUCTION
Definition, operations functions its environment,
operation system, the life cycle approach, historical
development of operation management, productivity
and competitiveness

• Production management: production management as

the art of managing production process to best support
the organizational goals and policies.
• Operation management: Operation management as the
art of managing transformation process to best support
the organizational goals and policies.
Definitions:
• According to Jay Heizer and Berry Render “ Operation
management is the set of activities that creates value in the form
of good and services by transforming inputs into output.”

• According to Kaniska Bedi “POM is defined as the design,

operation and improvement of the transformation process,
which converts the various inputs into the desired output of
products and services.”

• Operation management deals with the design and management

of products, processes, services and supply chains. It considers
the acquisition, development and utilization of resources that
firm need to deliver the goods and services their clients want.
#Why operation management (Objectives of operation
management)
• Ultimate objectives
– Right quality
– Right quantity
– Right time
– Pre-established cost
• Intermediate objectives.
– Machinery & equipment
– Materials
– Manpower
– Manufacturing services
– Efficiency
– Effectiveness
– Capital utilization
– Flexibility
#Scope of operation management
• Activities relating to production system designing
– Human factor
– Research and development activities
• Activities relating to analysis and control of activities.
– Production planning
– Production control
– Quality control
– Industrial engineering
– Purchasing
– Plant engineering
– Manufacturing
– Method analysis
– Inventory control
– Plant layout and materials handling
– Work measurement etc…..
Functions of the operations: (refer Azaya B Sthapit page 6)
1) Planning: Operation strategies, Forecasting, Product
Planning, Process Choice, Capacity Planning,
Location planning, Layout planning
2) Organizing: Job Design, Production/operation
standards, Work measurement, Project management.
3) Controlling: Material control(inventory control and
Materials Requirement Planning),Japanese
manufacturing system, Managing for quality, Quality
control and analysis.
4) Behavior
5) Model
 Operation system(Transformation
System):
Random Disturbances

Quality of Input Quality of Output

Monitored Monitored

Inputs Transformation Outputs

• Plant & Process • Goods
buildings • Services
• People
• Raw materials
Feed back Mechanism
• Management
Comparison
• Information
Actual vs desired
The life cycle approach:
#Historical Development of Operation Management:
Evolution of production management as operation
management:
Till 1930’s: Scientific management and FW Taylor
1930’s-1950’s: Production management
1970’s: Operation management
1980’s and 1990’s: Robotics and numerical control,
computer assisted design, statistical process control for
quality(TQM), Lean (just-in-time) manufacturing,
Benchmarking, ISO standard, Time based competition,
Outsourcing, Contract manufacturing, Supply Chain
management, Virtual management
Brief synopsis of Heritage of the operation management
Year Concept Tool
1910s Principles of scientific management Formalization time-study and work-study concept
Industrial psychology Motion study
Moving assembly line Activity scheduling chart
Economic lot size EOQ applied to inventory control

1930s Quality control Sampling inspection and statistical tables for quality
Hawthorne studies of worker motivation control
Activity sampling for work analysis

1940s Multidisciplinary team approaches to Simplex method of linear programming

complex system problems

1950s-60s Extensive development of operation research Simulation, waiting-line theory, decision theory,
tools mathematical programming, project scheduling
techniques of PERT and CPM
1970s Widespread use of computers in business Shop scheduling, inventory control, forecasting, project
Service quality and productivity management, MRP
Mass production in the service sector

1980s Manufacturing strategy paradigm JIT, TQC, Manufacturing as a competitive weapon

and factory automation Synchronous Kanban, Poka-yokes, CIM, FMS, CAD/CAM, robots etc.
manufacturing Bottleneck analysis, OPT, theory of constraints

1990s Total quality management Baldrige quality award, ISO 9000, quality function
Business process reengineering development, value and concurrent engineering ,
Electronic enterprise continuous improvement paradigm radical change
Supply chain management paradigm.
2000s E-commerce Internet, World Wide Web
#Trend in POM (Future prospective of POM)
• Global competition
• Operation strategy
• Flexibility
• Cycle time Reduction (Raw materials, Work in progress
WIP, Finished Goods)
• Business process reengineering
• Supply Chain management
• Workers involvement
• Lean manufacturing(TQM)
• More product variety
• More services
• Advances in technology
• Environmental concern
External and internal Environment to OM

eti ti on •
• comp Poli
ti cal c
h ang
e s
Finance
e

accountin
hang

g
mi c c

Marketin
cono

g Productio

• T
n& HRM
cio e

e
Operation

c h
system
• S

n
Engineeri

ical c
ng Purchasin

h a
g

n
•

ge
De R&D
mo
gra
ph
ic c
han o licy
ges nt p
rn me
Gove
•
#Productivity Challenges:
The creation of goods and services requires
changing resources into goods and services. The
more efficiently we make this change, the more
productive we are and the more value we added to
the goods or service provided.Productivity is the
ration of outputs(goods and services) of the system to
inputs(labor, capital or management) employed in the
system.
Productivity(P)=
The operation manager’s job is to enhance (improve) this
outputs to inputs. Improving productivity means
improving efficiency.
# Productivity measurement
The measurement of productivity can be done in
following ways:
a. Partial productivity=
Labour productivity =
Capital productivity =
Material productivity =
Energy productivity =
Machinery productivity =
b. Total factor productivity =

c. Total productivity =

Multifactor productivity =

(example: sandeepshresthapg 26)

# Operation in service sector (sandeep shrestha pg. 18)
a n ce
in
d om
e
se r vi c

TEACHING
s ing

NURSING
a
dominance
re
Inc

THEATRE
Service

TRAVEL
FOOD
dominance

AIR
FAST
Product

NECK TIE

CAR
nce
SALT

n a
d omi
uc t
rod
sin gp
re a
Inc

Fig: Product vs Service dominance

# Ethics and Social Responsibility
Operation managers are subjected to constant
changes and challenges. The systems they build to
convert resources into goods and services are
complex. The physical and social environment
changes, as do laws and values. These changes
present a variety of challenges that come from the
conflicting perspectives of stakeholders such as
customer, distributors, suppliers, owners, lenders,
and employees. These stakeholders, as well as
government agencies at various levels, require
constant monitoring and thoughtful response
Identifying ethical and socially responsible responses
while building productive systems is not always
clear-cut. Among the many ethical challenges facing
operation managers are:
 Efficiently developing and producing safe, quality
products.
 Maintaining a clean environment.
 Providing a safe workplace.
 Honoring community commitments.
Managers must do all of this in an ethical and
socially responsible way while meeting the demands
of the marketplace.