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Operations Management
Process to ensure that the objectives of the production subsystem are achieved efficiently & effectively.
Operations Management
Refers to the management of the production system that transforms inputs into finished goods and services.
Production system: the way a firm acquires inputs then converts and disposes outputs. Operations managers: responsible for the transformation process from inputs to outputs.
Operations management seeks to increase the quality, efficiency, and responsiveness of the firm.
Seeks to provide a competitive advantage.
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Operations Management
Corporate Strategy
Finance Strategy
Operations Strategy
Market Strategy
HR strategy
People
Plants
Parts
Processors
Services
Core services E.g.: Main activities of an organization -: Production Value added/ supportive services E.g.: Not main but supportive services -: Sale support, Maintenance
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System
Inputs
Process / Transformation
Desired Out-put
Classification of processes
Manufacturing processes E.g.: Garments Location processes E.g.: Shipping Company Physiological processes E.g.: Health centre Psychological processes E.g.: Clubs, cinemas
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Classification of processes
Exchange processes E.g.: Retail shops Information processes E.g.: Communication Centre Warehouse processes E.g.: Self Storages Facilities
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Product focus
Auto assembly
Intermediate
plant Mail processing
Resource flows
Mass production
Garment
Large batch
Process focus
Sporadic (unstable)
Product volume
Sources: Adapted from Brown, H.K., Clark, K.B., Holloway, C.A., and Wheelwright, S.C. The Perpetual Enterprise Machine: Seven Keys to Corporate Renewal Through Successful Product and Process Development. New York: Oxford University Press, 1994; Upton, D.M. The management of manufacturing flexibility. California Management Review, Winter 1994, 7289.
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Without customers, organizations cease to exist. Non-profit and for-profit firms all have customers. Managers need to identify who the customer is and their needs. What do customers want? Usually customers prefer: A lower price to a higher price. High quality over low quality. Fast service over slow service. Also good after sale support. Many features over few features. Products tailored to their specific needs.
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Operation Strategy
Setting up of policies & plans for using resources of the firm to best support the firms long term competitive strategy
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Production Methods
Continuous production Once production started it will run until object converted in to finish product E.g.: Garment, Shoe Intermittent production production is done continuously but there will be interruption & intervals in-between
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Production Methods
Flow production Chemicals Repetitive production Garment Mass production Soap Job production House construction Unit production Plants & machineries Project production Bridge Batch production Shoe
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Types of Products
Standardize products
Customize products
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Location Planning
Location planning refers to where the production system is to be located. This is amounted to a strategic decision.
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Place
Area
Quantitative
Qualitative
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Place
Nature of the soil Space for expansion Parking space
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Quantitative Factors
Factors which make impact on profit Material price Labor rate Government incentives Cost of facilities Transportation cost
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Qualitative Factors
They make impact on profit but it cannot be measured Climate condition Availability of materials Population growth Culture & social environment Educational level
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Collect Alternatives
Evaluation Technique
Evaluate
Select
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Example-01
City Fixed Cost 500 400 350 300 Variable cost (P/U) 6 8 15 16 Total Total cost Variable cost 120 620 160 300 320 560 650 620
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Questions?
Assume above details are for 20000 units; if Production is, 10000 units 15000 units 35000 units 45000 units Explain your stand
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Example - 2
Criteria Transpor -tation Material Climate Infrastruc ture Colombo 10 80 100 95 Kandy 30 10 30 60 Vavuniya 40 90 60 30 Matara 50 60 70 30
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Location Index
LI = CFI { OFI )( + SFI(1- )} Where; LI = Location index CFI = Critical factor index OFI = Objective factor index SFI = Subjective factor index = Importance of objective factors
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Transportation Method
This method also useful in deciding the location based on the transportation cost. i.e. cost involve in transporting some items from one location (Source) to another (Destination)
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Different Situation
Source
Destination
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Different Situation
Destination
Source
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Example
Colombo Kandy Katunay ake Koggala Pannala 6 7 8 8 9 6 Anuradh Matara apura 10 10 7 9 5 10
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Capacity
Katunayake Koggala Pannala 12000 10000 8000
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Requirement
Colombo Kandy Anuradhapura Matara 15000 8000 4000 3000
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Layout Planning
The arrangement of physical component (Including people) is consider as lay out planning. The main objective is to ensure the Smooth flow of production (Factory) or control the respective traffic Patton (Service).
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Types of Lay-outs
Product lay-out For mass production Process lay-out For job production Fixed position lay-out For Unit production Project lay-out For project production
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Product Lay-out
It is in which components are arranged according to the progressive steps in which the product is made. Generally there is an unbroken flow from raw materials to finish product. e.g.: Garment/ cat manufacturing assembly line
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Process Lay-out
The components are grouped according to the general functions of the work centre. E.g.: Computer production
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Project Lay-out
This lay-out is used for the products which cannot be moved. E.g.: Bridges, Shopping Centre
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Cycle Time
The time gap between two consecutive production process. In other time taken to produce one unit of output
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Example
1. There are 8 hours to produce 300 units to produce. What could be the cycle time. 2. What is the cycle time in following example? A B C D 1.0 1.2 0.7 0.7
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