Operations and Marketing Management

UNIT-II
By
Dr. H.S. ABZAL BASHA, M.B.A., Ph.D.
RUHI AFREEN, M.B.A.
Assistant Professor,
Department of Management Studies,
G. Pullaiah College of Engineering & Technology,
Kurnool.

OPERATIONS MANAGEMENT
Operations management refers to the
application of management principles to the
production function in a factory. It involves
application of planning, organizing, directing
and controlling to the production process.
Production/Operation management is the
process which combines and transforms
various resources used in the
production/operation subsystem of the
organization into value added products/services
in a controlled manner as per the policies of the
organization.

Scope of Operation Management
 Forecasting
 Capacity Planning
 Scheduling
 Managing Inventories
 Assuring Quality
 Motivating Employees
 Decide Facility Location
 Design of work System
 Operational Planning and Control
 Resource Requirement Planning
 Project and Quality Management

Responsibilities of Operations Management

Key Decisions of Operation
Managers

PLANT LOCATION
Plant location is a strategic decision,
several factors influence this decision,
such as:
 Nearness to Market
 Nearness to supply of raw materials
 Availability of labour
 Transport and communication facilities
 Availability of power and fuel
 Climatic conditions
 Availability of water
 Financial and other aids:

PLANT LAYOUT
A technique of locating machines, processes and
plant services within the factory in order to secure the
greatest possible output of high quality at the lowest
possible total cost of production.
Types of plant layout:
 Product Layout
 Process Layout
 Fixed Layout

METHODS OF PRODUCTION
 Job Production
 Batch Production
 Mass Production

Job Production Batch Production Mass Production
No. of units
manufactured
Every time, only one
product or service can be
provided.
Every time, a few, say 100 or
1000 are produced.
It is a continuous
production process.
Design
From product to product
design differs.
From batch to batch, the
design differs: every batch has
identical products.
There is no change in
design.
Cost per unit
Cost per unit changes
from job to job.
Cost per unit is relatively
lower when compared to job
production, but keep on
changing from batch to batch.
Cost per unit is likely
to be lowest of all
methods of
production.
Plant layout Process type Process type Product type
Degree of planning
Moderate degree of
planning is required.
Large degree of planning is
required.
Meticulous planning is
required at every
stage of production.
Degree of Control
Greater degree of control
is exercised.
Moderate control is exercised.
Less control is
required.
Accuracy of product
quality
Tends to be satisfactory. Likely to be good Likely to be very high.
Example
Special purpose
Machines, large turbo
generators etc.
Pharmaceuticals, readymade
garments, paints etc
All FMCG goods

WORK STUDY
Work study refers to the method study
and work measurement, which are used
to examine human work in all its
contexts by systematically investigating
into all factors affecting its efficiency and
economy to bring forth the desired
improvement.

METHOD STUDY
The systematic recording and critical examination of
existing and proposed ways of doing work, as a
means of developing and applying easier and more
effective methods and reducing cost it is also called
motion study.
Basic procedure for Method Study:
 Select
 Record
 Examine
 Develop
 Define
 Install
 Maintain

WORK MEASUREMENT/
TIME STUDY
Work measurement is the application of techniques
designed to establish time for a qualified worker to
carry out a specified job at a defined level of
performance. The main aim of work measurement is
to develop standard time.
Procedure for Work Measurement:
 Select
 Record
 Examine
 Measure
 Compile

STATISTICAL QUALITY
CONTROL
The process of
applying statistical
principles to solve
the problem of
controlling the
quality of a
product or service
is called statistical
quality control.

INVENTORY MANAGEMENT
Inventory is the stock of materials of any
kind stored for future use which is
mainly for the production process.
Inventories consists of raw materials,
semi finished goods
Inventory management is the
management of inventory and stock.

OJECTIVES OF INVENTORY MANAGEMENT:
 To ensure a continuous supply of
materials to facilitate uninterrupted
production.
 To maintain sufficient stocks of raw
materials during short-supply;
 To maintain sufficient finished goods for
efficient customer service;
 To minimise the carrying cost; and
 To maintain the optimum level of
investment in inventories and finished
products.

NEED FOR INVENTORY CONTROL
 Efficient use of financial resources
 Economy in purchasing
 Keep the wheels of production moving
 Solid protection against material
losses
 Proper calculation of cost of
production
 Keeping prompt delivery to the
customers
 Reduces excess or dead inventory

ABC ANALYSIS
Category Value (%) Volume (%)
Degree of
Control
A 70 10 STRICT
B 20 20 MODERATE
C 10 70 LOW
ABC analysis is a technique of controlling
inventories based on their value and quantities. It is
more remembered as an analysis for ‘Always Better
Control’ of inventory

ECONOMIC ORDER QUANTITY
Economic order quantity is defined that
quantity of materials, which can be ordered
at one time to minimize the cost of ordering
and carrying the stocks. In other words, it
refers to size of each order that keeps the
total cost low.
EOQ = 2AO/C

MARKETING MANAGEMENT
 Marketing as a social process by
which individuals and groups obtain
what they need and want through
creating, offering exchanging products
and services of value with others.
 “Creating, communicating, delivering a
value for a target market of a profit is
called marketing.” – Philip Kotler

NATURE OF MARKETING
 Marketing is customer
oriented
 Marketing is the delivery of
value
 Marketing is network of
relationships
 Marketing is business
 Marketing is dynamic

SALES PROMOTION
“Sales promotion consists of short term incentives
to encourage purchase or sales of a product.”

Operations and Marketing Management

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