Chapter 10 MANAGING PRODUCTION AND SERVICE

OPERATIONS

Manufacturing processes are those that refer to the making

of products by hand or with machinery.

WHAT OPERATIONS IS

Job Shop. A job shop is one whose production is "based on

sales orders for a variety of small lots."

Operations refers to "any process that accepts inputs and

uses resources to change those inputs in useful ways. The
transformation process converts the inputs into final goods or
services.
Examples of final goods and services are as follows:
1.
2.
3.
4.
5.
6.

Industrial chemicals like methylene chloride, borax

powder, phosphoric acid, etc., which are produced by
chemical manufacturing firms;
Services like those for the construction of ports, highrise buildings, roads, bridges, etc., which are
produced by constructions firms;
Electrical products like transformers, circuit breakers,
switch gears, power capacitors, etc., which are
produced by electrical manufacturing firms;
Electronic products like oscilloscope, microwave tests
systems, transistors, cable testers, etc., which are
produced by electronics manufacturing firms;
Mechanical devices like forklifts, trucks, loaders, etc.,
which are produced by manufacturing firms;
Engineering Consultancy services like those for
construction management and supervision, project
management services, etc., which are produced by
engineering consultancy firms.

WHAT OPERATIONS MANAGEMENT IS

Operations is an activity that needs to be managed by
competent persons. Aldag and Stearns accurately defined operations
management as "the process of planning, organizing, and controlling
operations to reach objectives efficiently and effectively.
Efficiency is related to "the cost of doing something, or the
resource utilization involved.
Effectiveness refers to goal accomplishment.
OPERATIONS AND THE ENGINEER MANAGER
The engineer manager is expected to produce some output
at whatever management level be is. If he is assigned as the
manufacturing engineer, his function is "to determine and define the
equipment, tools, and processes required to convert the design of the
desired product into reality in an efficient manner.
The engineer, as operations manager, must find ways to
contribute to the production of quality goods or services and the
reduction of costs in his department.
The typical operations manager is one with several years of
experience in the operations division and possesses an academic
background in engineering.
TYPES OF TRANSFORMATION PROCESS
1.

2.

Manufacturing processes
a) job shop
b) batch flow
c) worker-paced line flow
d) machine-paced tine flow
e) batch/continuous flow hybrid
f) continuous flow
Service processes
a) service factory
b) service shop
c) mass service
d) professional service

MANUFACTURING PROCESSES

Job shops produce custom products, in general. Products

may be manufactured within a short notice. The equipment used are
of the general purpose type.
The type of layout used by job shops is the process layout,
where similar machines are grouped together. The typical size of
operation is generally small. Job shops are labor intensive and
machines are frequently idle.
Batch Flow. The batch flow process is where lots of
generally own designed products are manufactured. It is further
characterized by the following:
1.
2.
3.
4.
5.
6.

There is flexibility to produce either low or high

volumes.
Not all procedures are performed on all products.
The type of equipment used are mostly for general
purpose.
The process layout is used.
The operation is labor intensive, although there is less
machine idleness.
The size of operation is generally medium-sized.

Examples of factories using the large batch flow are

wineries, scrap-metal reduction plants, and road-repair contractors.
Worker-Paced Assembly Line. An assembly line refers to a
production layout arranged in a sequence to accommodate
processing of large volumes of standardized products or services.
The quality and quantity of output in a worker-paced
assembly line depends to a great extent to the skill of the labor
utilized. Examples of worker-paced assembly lines are food marts
like McDonalds and Shakeys.
The worker-paced assembly line is characterized by the
following:
1.
2.
3.
4.
5.
6.
7.

The products manufactured are mostly standardized.

There is a clear process pattern.
Specialized equipment is used
The size of operation is variable.
The process is worker-paced.
The type of layout used is the line flow.
Labor is still a big cost item.

Machine-Paced Assembly Line. This type of production

process produces mostly standard products with machines playing a
significant role. Among its other features are as follows:
1.
2.
3.
4.
5.
6.

The process is of clear, rigid pattern.

Specialized type of equipment is used.
The line flow layout is used.
Capital equipment is a bigger cost item than labor.
Operation is large.
The process is machine-paced.

Example of machine-paced assembly line are automobile

manufacturers like General Motors and Ford Motors.
Continuous Flow. The continuous flow processing is
characterized by the rapid rate at which items move through the
system." This processing method is very appropriate for producing
highly standardized products like calculators, typewriters,
automobiles, televisions, cellular phones, etc.
Its other characteristics are as follows:
1.

There is economy of scale in production, resulting to

low per unit cost of production.

2.
3.
4.
5.
6.
7.

The process is clear and very rigid.

Specialized equipment are used.
The line flow layout is used.
Operations are highly capital intensive.
The size of operations is very large.
Processing is fast.

5.
6.

Using multiskilled floating staff.

Installing customer self-service.

IMPORTANT PARTS OF PRODUCTIVE SYSTEMS

1.
2.
3.
4.
5.
6.

product design
production planning and scheduling
purchasing and materials management
inventory control
work flow layout
quality control

Batch/ Continuous Flew Hybrid. This method of processing

is a combination of the batch and the continuous flow. Two distinct
layouts are used, one for batch and one for the continuous flow. The
typical size of operation is also very large giving opportunities for
economies of scale.

Product Design

Examples of companies using the batch/continuous flow

hybrid are breweries, gelatin producers, and tobacco manufacturers.

Product design refers to the process of creating a set of

product specifications appropriate to the demands of the situation.

Service Processes

Production Planning and Scheduling

Service processes are those that refer to the provision of

services to persons by hand or with machinery.

Production planning may be defined as "forecasting the

future sales of a given product, translating this forecast into the
demand it generates for various production facilities, and arranging
for the procurement of these facilities."

Service Factory. A service factory offers a limited mix of

services which results to some economies of scale in operations.
This also affords the company to compete in terms of price and
speed of producing the service.
The process layout preferred by the service factory is the
rigid pattern of line flow processing. McDonalds and Shakeys are
also examples of service factories.
Service Shop. A service shop provides a diverse mix of
services. The layout used are those for job shops or fixed position
and are adaptable to various requirements.
Service shops abound throughout the Philippines.
Examples are Servitek and Megashell. Among the services provided
by these shops are car engine tune-up, wheel balancing, wheel
alignment, change oil, etc.
Mass Service. A mass service company provides services
to a large number of people simultaneously. A unique processing
method is, therefore, necessary to satisfy this requirement. To be
able to serve many people, mass service companies offer limited mix
of services.

Scheduling is the "phase of production control involved in

developing timetables that specify how long each operation in the
production process takes."
Purchasing and Materials Management
The management of purchasing and materials must be
undertaken with a high degree of efficiency and effectiveness
specially in firms engaged in high volume production.
Materials management refers to "the approach that seeks
efficiency of operation through integration of all material acquisition,
movement, and storage activities in the firm."
Inventory Control
Inventory control is the process of establishing and
maintaining appropriate levels of reserve stocks of goods.
There are ways of achieving proper inventory control. They
are as follows:

The process layout used is typically fixed position where

customers move through the layout.

1.
2.
3.

Professional Services. These are companies that provide

specialized services to other firms or individuals. Examples of such
firms are as follows.

4.

1.
2.
3.
4.
5.
6.
7.

Engineering or management consulting services

Design services
Advertising agencies
Accounting services
Legal services
Data processing services
Health services

Professional service firms offer a diverse mix of services.

There is a lower utilization of capital equipment compared to the
service factory and the service shop. The process pattern used is
very loose. The process layout used is identical to the job shop.
Professional service firms are, oftentimes, faced with
delivery problems brought about by nonuniform demand. Strategies
that may be used depending on the situation are as follows:
1.
2.
3.
4.

The use of staggered work-shift schedules.

The hiring of part-time staff.
Providing the customer with opportunity to select the
level of service.
Installing auxiliary capacity or hiring subcontractors.

determining reorder point and reorder quantity

determining economic order quantity
the use of just-in-time (JIT) method of inventory
control
the use of the material requirement planning (MRP)
method of planning and controlling inventories.

Work-Flow Layout
Work-flow layout is the process of determining the physical
arrangement of the production system.
1.

A good workflow layout will have the following

benefits:
2. Minimize investment in equipment.
3. Minimize overall production time.
4. Use existing space most effectively.
5. Provide for employee convenience, safety, and
comfort.
6. Maintain flexibility of arrangement and operation.
7. Minimize material handling cost.
8. Minimize variation in types of material-handling
equipment.
9. Facilitate the manufacturing (or service) process.
10. Facilitate the organizational structure.
Quality Control
Quality control refers to the measurement of products or
services against standards set by the company.