Operation Management KG Ousl

Introduction to Operations
Management
W. A. Upananda
Former Asst. Professor/ Senior Lecturer
July 14 2019

Chapter One
Evolution of Production Operations
• At the early stage of mankind, operations
are confining to produce food, clothing,
and shelter.
• The development stages divided into three
stages: Adhi Kalina, Madyakalina, industry
revolution and modern eras.
• From 500 AD to 1400 Ad is Madyakalina
• 1400 to 1700 to emergence of Science
• 1700 to Industrial revolution

Changes taken place as a result
of Industrial revolution
• 1. Usage of machines
• 2. Using engine to operate machines
• 3. Production had taking place in factories.
• Noteworthy innovation
– 1400 Printing machine Gutanberg
– 1769 James Watt

4
Chapter Two
Operations Management is:
The business function responsible for
planning, Organizing/coordinating, and
controlling the resources needed to produce
products and services for a company.
Then production management is the science of planning,
organizing, and control of production process.

Production process
• Once determined to start a production following steps
needed to complete operations:
• 1. Identify the consumer demand
• 2. Design and engineering the product
• 3. Planning for production
• 4. Production of implements, and Factory designs
(including finding location for machinery)
• 5. Measurement of works and estimating
• 6. Production control systems
• 7. quality control.

Matching OM with Management Principles
Basic Functions of
Management
Basic Function of OM Specific Functions of OM
Planning Planning Short-and long-term
(need identification, Input
identification )
Planning include :Decision
making
Researching, cost estimating,
product design
Organizing/
coordination
Process (Management of
factory, production and Human
resources
Organizing: Piriyatha organizing
structuring and supply
Management : Directing,
supervising, reporting and
correction
Control Products, quality of durable and
non-durable

7
Operations Management is:
• A management function
• An organization’s core function
• In every organization whether Service or
Manufacturing, profit or Not for profit
• Operation management is science of
product/service planning, organizing and control.

Production system (Paddathi)
• Three things are involved:
– Inputs : natural resources, Human resources
and physical resources
– Process: Management sphere, production
sphere, and employee sphere
– Output : Durable and non-durable products

Types of Processes
• Management process (decision making
according to plans)
• Production processes (conversion of
inputs into outputs with maximum
efficiency)
• Employee process (Utilization of human
resources to the maximum)

Types of inputs
• Need of inputs vary with the types of good
that intended to produce.
• Two types of goods
Durables (at least for three years)
• Non-durables (< three years)
• Accordingly following inputs also vary:
• Natural resources, Finance, Capital,
Energy, Human capital (Knowledge)

11
OM’s Transformation Role
• Operations are done to add value
– Increase product value at each stage
– Value added is the net increase between output product value
and input material value [Value of output - (Value of Input + cost
of operations) = Added value
• An efficient transformation may reduce cost of
production
– Efficiency – means performing activities well for least possible
cost

Production Management at
Home
• Production management can be defined
as the science of planning, organizing, and
controlling of a production.
• Example, kitchen, family
• Kitchen is the factory which has layout to
reach each machines (grinding, scraping,
preparation of curries, rice cooker) with
minimum of time and with ease (Work
measurement)

Stages of production
Management
• 1. Identification of consumer needs
• 2. Selecting the Nature and quality of
product/service
• 3. Determine production planning
• 4. Preparation of implements and
machinery for production
• 5. Inputs for production system
• 6. Controlling production and quality

Important
• Planning include planning for others
(subordinators)
• Organizing include organizing for
maximum efficiency (input/output)
• Control include process, Quality and cost
to satisfy customers.

Planning
• Long-term planning needs high quality
managerial personnel
• Short-term planning include Medium and
low level of management:
• However, following include in planning:
– 1. rules and regulations, goals setting
– 2. Conducting research
– 3. Planning tp Complete the production
process .

Planning
• Functions of Planning
– Long-term (> 5 years) and Short term (<5
years)
– Planning includes:
– 1.Setting Goals and objectives, and
procedures
– 2. conducting research
– 3. production design and cost

Planning include
• 1. Decision making
• 2. researching
• 3. Designing
• 4. Engineering
• 5. Activity planning

Organizing
• Structuring and supplies include in
organizing.
• Organizing chart gives out who do what
• Once structured, next is to supply Or
contracting to supply

Controlling
• Controlling consisted of
– Direction
– Inspection or supervissing (mehayaweema)
– Reporting and
– Correction

Chapter 3
Demand and Need Identification
• Individuals do production to earn a profit. Profit can
be gained if you can sell the product. Then it is
essential to know whether your product could be
sold. Goods and services are bought by individuals
or groups.
• In fact, all producers, builders, organizations
become consumers of some other producer at one
or more stage of production process.
• Once you identified the what consumer want next
you need to tag a price which covers , at least cost
of cost of production

Marketing
• Marketing plan should be consisted of
• Objective of marketing
• Consumer information
• Frequency of buying
• Price and value information
• Advantages of advertising and promotion
• Advertising channel

Factors to be considered by
producer
• 1. Decide the market; no. of buyers
• 2. Were they individuals or organizations
• 3. wikunum hakiyawa; whether market is
expanding
• 4. whether consumers prefer mine over the
others
• 5. Level of competition and my market share
• 6. Can I expand the market share

Identification of market
• Conditions to termed market: i. There should
be a need for individuals ii. they must capability to buy
goods iii. Willingness to exchange goods with money iv.
They must have authority to buy goods.
• Types of market: industrial markets (buys
for production) and consumer market (buy
for consumption)
• Market Segmentation: population, geography,
rural/urban, age, gender, income level, spending
pattern.

Targeting market and Product
life cycle
• Definition: sector of population who may
buy your product
• i. Undifferentiated market ii. differentiated
market iii. focused market iv. Customized
market
• Product life cycle: Introductory phase,
Development phase, mature phase and
declining phase

Marketing Mix and Pricing
• 4Ps: Product, price, promotion and place
• 7Ps: Product, price, promotion, place,
people, process, physical environment.
• Pricing strategies: premium pricing/cost
pricing, penetration pricing (lowest),
economy pricing (pricing with decreased
cost of production) , competitive pricing
and skimming pricing (vary with the
market).

Chapter 4
Engineering
• For any product there are two things
Design and Engineering
• Product design (Appearance and
activities involved.
• Start with a new idea and he has to make a
rough sketch and then a prototype.
• Next add solutions to problem such as Safety,
usage friendliness, cost , production posibility

Production engineering process
• This process include
feasibility of production and presentation
of the product
Engineering process is consisted of 4
activities
Power, assembling, interior design
• process and flow charting
Developing prototypes
Technical details and presentation

Chapter 5
Production Planning
• After designing and engineering, next step is
to planning for production:
• This is the operationalization of production
which consisted of :
• 1. Ability to supply, Capacity, quality, no. of
employees, material and machine requesting
time, operation methods, Transporting,
selection of best production process with
maximum savings (arapirimasma ).

Selection of operation methods
• Factors to be considered for selection of
operation methods:
• 1. Ability to supply (existing machinery)
• 2. Capacity to meet the demand
• 3. Quality (can we maintain the quality)
• 4. Number of employees
• 5. Material storage
• 6. To supply goods at minimum cost while
maintaining quality.

Process of activity planning
• A array of activities consisted of several
operations.
• Steps of planning process:
– Write down the processes sequentially
– Selection of sites/places
– Analysis of flow of works
– Analysis of operation methods

Symbols used to describe
activities
• .
• Operation Motion Inspection Expectation
• Time and distance have to be indicated
• Advantages of flow charts:
• 1. Identify the expensive activities
• 2. Ensure things are at proper places
• 3. places where inspection should be made
• 4. Placement of machine for maximum efficiency

Analysis of operations
• Purpose: To reduce the cost of production. There is a
cost for every motion and need to study to select the
least cost motion but does the needful.
• Before any operation, one must prepare for the task.
This takes time which incur cost.
• Next, there are several types of machines;
• For example, if there are three drilling machines which
make holes vertically, controlled holes, and multiple
holes.

Example: Selection of machine for
minimum cost of production
Method Prepar
ation
cost
Rs.
Cost
per
unit
1
Cost
10
Per
100
Unit
1, 000 10, 000
Vertical
Drilling
120 100 220 112 101 100 100
Controll
ed
drilling
200 40 240 60 42 40 40
Multiple
drilling
200,00 10 20010 2010 210 30 12

Chapter 6
Supply of implements, design and engineering
• Preparation of implements for
production:1. designing machines and
equipment 2. Ordering approved machines
3, Designing specific equipment 4.
Installing supervision and test runs.
• Equipment may need when: Starting a
factory, starting a new production,
modernization, changing dimensions,
introducing new pn. method

Selection of a Site for Factory
• Factored to be considered: Access to
market, raw material 2. labour supply
• 3. Supply of energy/power and water
• 4. Availability of production incentives
provided by the state

Machine room (Yantragara)
Planning
• This is part of factory design; product based and process
based machine rooms are different.
• Once product based or process based machine room is
decided, Machine room is designed.
• Advantages of Good machine room
design: i. parsimony in using land ii. cost of
equipment could be reduced iii. Frequency of
movements can reduced iv. Maximum usage of men and
machines v. protection and comfort.

Chapter 7
Measuring and Cost estimates
• This is important for :
• Estimating time for a task both human and machine.
From that estimated time we can determine the no. of
items to be produced by a worker from a given machine.
• Methods:
• Using stopwatches and measure time for each
components of the task. And finally adding up to
determine the total time for the task.

Cost estimates
• This is forecasting of estimates before starting a
work/task.
• Cost estimating is made using units. For
example, in house construction estimates are
given for linear feet of wall, cubic feet of
concrete, square feet of meters of a roof etc..
• In estimating material units are Kgs or Pounds.
• For a book, the unit of estimate is page,

Chapter Eight
Production Control System
• Management of material, purchased items, and
assembling to make the final product termed production
control. Timely supply of materials and items to given
place is the function of production control.
– Advantages: Not to store too much materials which incur additional
space and cost
– To use equipment and labour more efficiently.
– Types of productions
– Production for orders (anvum nispadhanya)
– Bulk Production
– Continuous production and Batch production

Order production and Bulk
production
• Order production are made on orders
while bulk productions are made to stock.
• Tvs, Shoes, canned food are made in bulk
without specific orders.
• Ships, planes, High valued Motor cars are
examples for order productions.

Continuous and Non-continuous
Production (Akanda and Savirama
Production)
• Continuous production is to produce
similar products which are used by
majority of population.
• Non-continuous productions (Savirama)
made from time to time to full fill an order.
• Order control: Consisted of Six steps
• Billing, making flow charts, work order charts,
inspections, reporting and correction.

Production Control Systems
(PCS)
• PCS is consisted of the followings:
– Order control
– Flow control and
– Stock control
– It is important to understand that stock is the
total capital invested.
– Over stocking materials and equipment is
locking capital which has a cost (interest)

Order Control Process
Preparn.
of bills:
Product
name
Product
Num.
Quantity
Date
Rout
chart
This
display
the steps
required
Work
order
chart
Mat.
Supply
From
the
stores
Supervision/
Inspection
Reporting
Part No.
Nos. of
parts
Required
Nos.
Of parts
Units
Stock No.
Date
Name of
the item
Item No.
Serial
No.
Material
Date
This is
done in
order to
determine
the time
required to
produce
one
unit/item
Product.
Control
differ
from
product
planning
work
order.
From time to
time
inspections
are made.
Matching
planned
product and
actual
product
This is to
inform
authorities
which have
powers to
change the
production flow.

Flow control and Stock Control
• Flow control: is used in continuous production and flow
charts are not necessary since it is already planned.
• It is required for non-continuous (Savirama/kadin kada)
production. It contains: i. deciding quality and quantity of
products ii. Purchase material required
• iii. issuing materials
• Stock control: Stock is the total value of the business.
Stock is invested capital.
• It include, factory, machinery, buildings, equipment and
materials.
• Stock control means to get material and equipment in
enough quantities.

Chapter Nine
Production Quality control systems
• Quality control can be defined as,’ a
process which attempt to bring the product
sellable and attractive to the customers’.
• It is consisted of : Supervising, reporting
and correction.
• Inspection (supectionaya) is a method of
supervising(Adickshanaya). Inspection
include laboratory testing, and analizing.

Types of control
• There are two types of controls:
– Quality control of products
– Quality control of processes
• Product quality control is done at
international level.
For example, ISO 9000 is quality management
standard.
• ISQC is international Standard on quality control.

Process Control
• Process control is applied to continuous
process such as oil, paper, and shoes.
• In this control system, viscosity of liquid
(drawayaka diyaru bawa), colour and
Surface tension (Prustika Athathiya) is
measured.
• Laboratory testing is mandatory for
process control.

Operation Management KG Ousl

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