BME 2- OPERATIONS

MANAGEMENT
 SUBJECT DESCRIPTION
• This course is an introduction to the concept, principles, problems
and practices of operations management. Emphasis is on
managerial processes for effective operations in both goods-
producing and service rendering organization.
• Topics include operations strategy, process design, capacity
planning, facilities location and design, forecasting, production
scheduling, inventory control, quality assurance and project
management. The topics are integrated using a systems model of
the operations of an organization.
 COURSE LEARNING OUTCOMES
• At the end of this course, the student will be able to:

• 1. Recognize the key features of operations management and its

basic theories and concepts in the industry.
• 2. Understanding on the various production and operation design
decisions and how they relate to the overall strategies.
• 3. Understand the importance of product and service design decision and
its impact in the operations
• 4. Obtain an understanding of quality management practice in
organizations and how total quality management facilitate organizational
effectiveness.
• 5. Understand the operational management approach in managing
organization’s resources
• 6. Understand the contemporary operations and tourism and
hospitality approaches and the supply chain management activities and
the renewed importance of this aspect of organizational strategy.
• 5. Understand the operational management approach in managing
organization’s resources
• 6. Understand the contemporary operations and tourism and
hospitality approaches and the supply chain management activities and
the renewed importance of this aspect of organizational strategy.
 LEARNING OUTCOMES
• At the end of the day, the students should be able to:

• 1.Define operations management.

• 2.Explain the distinction between goods and services.
• 3.Explain the difference between production and
productivity.
• Identify the critical variables enhancing productivity.
 INTRODUCTION
• Operation is that part of an organization, which is
concerned with the transformation of a range of inputs
into the required output (services) having the requisite
quality level.
• Management is the process, which combines and
transforms various resources used in the operations
subsystem of the organization into value added services
in a controlled manner as per the policies of the
organization.
• production management. The set of interrelated
management activities, which are involved in
manufacturing certain products, is called as
• If the same concept is extended to services management,
then the corresponding set of management activities is
called as operations management.
 OPERATIONS SYSTEM
• Anoperation was defined in terms of the mission it serves
for the organization, technology it employs and the
human and managerial processes it involves. Operations
in an organization can be categorized into Manufacturing
Operations and Service Operations.
• Operations system converts inputs in order to provide
outputs, which are required by a customer. It converts
physical resources into outputs, the function of which is to
satisfy customer wants
• Everett
E. Adam & Ronald J. Ebert defines as ‘An operating
system is the part of an organization that produces the
organization’s physical goods and services’.

• Ray Wild defines operations system as ‘a configuration of

resources combined for the provision of goods or
services’.
• Planning is the activity that establishes a course of
action and guide future decision-making.
• 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
OPERATIONS MANAGEMENT operations in the
organization’s overall strategy. It also involves product
planning, facility designing and using the conversion
process
• Organizing is the activities that establish a structure
of tasks and authority.
• Operation managers establish a structure of roles and
the flow of information within the operations
subsystem. They determine the activities required to
achieve the goals and assign authority and responsibility
for carrying them out.
• Controlling is the 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 by measuring actual outputs and comparing them
to planned operations management.
• Controlling costs, quality, and schedules are the
important functions here.
• Behavior: Operations managers are concerned with the
activities, which affect human behavior through models.
They want to know the behavior of subordinates,
which affects managerial activities. Their main interest
lies in the decision-making behavior.
• Models: Models represents schematic representation of
the situation, which will be used as a tool for decision-
making. Following are some of the models used
• a. Aggregate planning models for examining how best to
use existing capacity in short term, break-even analysis
to identify break-even volumes,

• b. Linear programming and computer simulation for

capacity utilization, Decision tree analysis for long-term
capacity problem of facility expansion, simple median
model for determining best locations of facilities, etc.
 OPERATIONS MANAGEMENT
DEFINED
• Joseph G. Monks defines Operations Management as the
process whereby resources, flowing within a defined
system, are combined and transformed by a controlled
manner to add value in accordance with policies
communicated by management.
• The operations managers have the prime responsibility
for processing inputs into outputs.
• Operations management is the management of processes
that transform inputs into goods and services that add
value for the customer.
• Operations Management refers to the ongoing
management of daily works of a company, such as
technical support, network management, etc. With
Operations Management, there is no set end point.

• An Operations Manager would typically be involved in all

operations of a company, ensuring that everything is
running smoothly and that staffs are delivering correctly
• Operations management (OM) is any business function
responsible for managing the process of making goods
and services and without it there would be no products or
services to sell to customers. It is any management
function responsible for planning, controlling and
coordinating the necessary inputs (resources) such as
technology, information, people, equipment, inventory
etc.
• Organizations heavily rely upon operational processes to
produce effective products and efficiently deliver them on
time and customers receiving services relative to buying
goods, will often participate more extensively in the
creation and delivery of services ‘more visibly’ seeing
operations being performed.
• The definition of the operations Management contains
following keywords: Resources, Systems,
transformation and Value Addition Activities.
• RESOURCES. Resources are the human, material and
capital inputs to the production process. Human
resources are the key assets of an organization
• SYSTEMS. Systems are the arrangement of components
designed to achieve objectives according to the plan. The
business systems are subsystem of large social systems.
• In turn, it contains subsystem such as personnel,
engineering, finance and operations, which will function
for the good of the organization.
• TRANSFORMATION AND VALUE ADDING ACTIVITIES. The
objective of combining resources under controlled
conditions is to transform them into goods and services
having a higher value than the original inputs.
• The transformation process applied will be in the form of
technology to the inputs.
 OPERATIONS MANAGEMENT
OBJECTIVES
• Joseph G.Monks defines Operations Management as the
process whereby resources, flowing within a defined
system, are combined and transformed by a controlled
manner to add value in accordance with policies
communicated by management
 OBJECTIVES OF OPERATIONS
MANAGEMENT CAN BE CATEGORIZED
INTO CUSTOMER SERVICE AND
RESOURCE UTILIZATION
• CUSTOMER SERVICE The first objective of operating
systems is to utilize resources for 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 satisfy the customer in terms of cost and
timing
• RESOURCE UTILISATION Another major objective of
operating systems is to utilize resources for the
satisfaction of customer wants effectively.
• Customer service must be provided with the achievement
of effective operations through efficient use of resources.
Inefficient use of resources or inadequate customer
service leads to commercial failure of an operating
system
• THE GOAL OF OPERATIONS MANAGEMENT The goal of
operations management is to maximize efficiency while
producing goods and services that effectively fulfill
customer needs.
 STRATEGIC PLANNING FOR
DIFFERENT ORGANIZATIONS
• Strategic planning is the process of thinking through the
current mission of the organization and the current
environmental conditions facing it, then setting forth a
guide for tomorrow’s decisions and results.
• Strategic planning is built on fundamental concepts: that
current decisions are based on future conditions and
results.
 SCOPE OF OPERATIONS
MANAGEMENT
• Operations Management concern with the conversion of
inputs into outputs, using physical resources, so as to
provide the desired utilities to the customer while
meeting the other organizational objectives of
effectiveness, efficiency and adoptability.
• It distinguishes itself from other functions such as
personnel, marketing, finance, etc. by its primary concern
for ‘conversion by using physical resources’
• Following are the activities, which are listed under Production and
Operations Management functions
• LOCATION OF FACILITIES Location of facilities for
operations is a long-term capacity decision, which
involves a long-term commitment about the
geographically static factors that affect a business
organization. It is an important strategic level decision-
making for an organization. It deals with the questions
such as ‘where our main operations should be based?
• PLANT LAYOUT AND MATERIAL HANDLING Plant layout
refers to the physical arrangement of facilities. It is the
configuration of departments, work canters and
equipment in the conversion process. The overall
objective of the plant layout is to design a physical
arrangement that meets the required output quality
and quantity most economically.
• According to James More ‘Plant layout is a plan of
an optimum arrangement of facilities including
personnel, operating equipment, storage space, material
handling equipment and all other supporting services
along with the design of best structure to contain all
these facilities’
• PRODUCT DESIGN Product design deals with conversion of
ideas into reality.
• Every business organization have to design, develop and
introduce new products as a survival and growth strategy.
Developing the new products and launching them in the
market is the biggest challenge faced by the organizations.
• The entire process of need identification to physical
manufactures of product involves three functions— Design
and Marketing, Product, Development, and manufacturing
• PROCESS DESIGN Process design is a macroscopic
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, process flow analysis
and layout of the facilities. Hence, the important
decisions in process design are to analyze the workflow
for converting raw material into finished product and to
select the workstation for each included in the workflow.
• PRODUCTION PLANNING AND CONTROL Production
planning and control can be defined as the process of
planning the production in advance, setting the exact
route of each item, fixing the starting and finishing
dates for each item, to give production orders to shops
and to follow-up the progress of products according to
orders.
• The principle of production planning and control lies in
the statement ‘First Plan Your Work and then Work on
Your Plan’. Main functions of production planning and
control include: Planning, Routing, Scheduling,
Dispatching and Follow-up
• a. Planning is deciding in advance what to do, how to do
it, when to do it and who is to do it. Planning bridges the
gap from where we are, to where we want to go. It makes
it possible for things to occur which would not otherwise
happen.
• Routing may be defined as the selection of path, which
each part of the product will follow, which being
transformed from raw material to finished products.
Routing determines the most advantageous path to be
followed for department to department and machine to
machine till raw material gets its final shape.
• Scheduling determines the program for the operations.
Scheduling may be defined as 'the fixation of time and
date for each operation' as well as it determines the
sequence of operations to be followed.
• Dispatching is concerned with the starting of the
processes. It gives necessary authority so as to start a
particular work, which has been already been planned
under ‘Routing’ and ‘Scheduling’. Therefore, dispatching
is ‘Release of orders and instruction for the starting of
production for any item in acceptance with the Route
sheet and Schedule Charts
• The function of Follow-up is to report daily the
progress of work in each shop in a prescribed
proforma and to investigate the causes of deviations from
the planned performance.
 QUALITY CONTROL (QC)
• Quality Control may be defined as ‘a system that is used
to maintain a desired level of quality in a product or
service’. It is a 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 feedback system and corrective
action procedure.
 MATERIALS MANAGEMENT
• Materials Management is that aspect of management
function, which is primarily concerned with the
acquisition, control, and use of materials needed and flow
of goods and services connected with the production
process having some predetermined objectives in view
• MAINTENANCE MANAGEMENT In modern industry,
equipment and machinery are a very important part of
the total productive effort. Therefore, their idleness or
downtime becomes are very expensive. Hence, it is very
important that the plant machinery should be properly
maintained
 ACTIVITY
• ESSAY:
• 1.Briefly describe the term operations management. Identify the three
major functional areas of business organizations and briefly describe how
they interrelate.
• 2.List five important differences between goods production and service
operations.
• 3.Why are services important? Why is manufacturing important? What are
non-manufactures goods?
• 4.Why is it important for the various functional areas of a business
organization to collaborate?
• 5.Why people do things that are unethical?
 INSTRUCTIONS
WORD FILE
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SUBMIT YOUR ACTIVITY TO YOUR CLASS PRESIDENT
SUBMISSION DATE: NEXT WEEK
LESSON 1-LAWS ON
LABOR AND
EMPLOYMENT
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