Managing operations

Team Introduction
• Hassan Liaqat
• Sarfraz Nasir
• Umair Anjum

 What is Management Operations?
 Productivity & Efficiency
 Mass Customization
 Traditional Production System
 Quality Management
 Managing Inventory
 Product Development and Commercialization

 Operations management refers to the administration of
business practices to create the highest level of efficiency
possible within an organization.
 It is concerned with converting materials and labor into goods
and services as efficiently as possible to maximize the profit
of an organization.

 Efficient and effective operations ensures:
› Competitiveness
› Overall organizational performance
› Maintains quality
› Maintains productivity

Productivity & Efficiency
Productivity can be defined as the output produced by a given input:
Productivity = Output/Input
• The Productivity of Labor : It is typically measured by unit output divided by some measure of
labor input, such as hours worked or number of employees.
• The Productivity of Capital : It is usually measured by sales divided by the total capital invested in
a business.
• The Production system : In an organization, it refers to how the flow of work is configured.
Production can be configured in a number of different ways, depending on the nature of the
product, consumer requirements, and available production technologies.

 By level of productivity we mean the units of analysis used to calculate
or define productivity.
 For example
-aggregate productivity: productivity achieved by a country.
-industry productivity: productivity achieved by all the firms in a
particular industry
-Company productivity: productivity achieved by an individual company

 It determines the organization’s level of profitability.
 It determines people’s standard of living within a particular
country.
 Who has one of the highest level of productivity in the world?
› The U.S.

Manufacturin
g and
Service
Productivity
Growth
Trends
(1970-2000)

Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
18–10
Mass Customization
› Is a design-to-order concept that provides consumers with a product
when, where, and how they want it.
› Makes heavy use of technology (flexible manufacturing techniques)
and engages in a continual dialogue with customers.
Benefits of Mass Customization
› Creates an important relationship between the firm and the customer
in providing loyalty-building value to the customer and in garnering
valuable market information for the firm.

Traditional Production System
Traditional production systems have been categorized into one of four main categories:
 Job Shop
These systems are used when items are ordered individually and tend to be unique to the
Production systems used requirements of a particular customer.
 Small Batch
These production systems are used when customers order in small batches.
 Assembly-Line Production
These systems are used to mass-produce large volumes of a standardized product.
 Continuous Flow Production Systems
These systems continuously produce a standardized output that flows out of the system.

Optimizing Work Flow
It is a way to reduce the cost of functioning without compromising product quality.
Companies try to innovate to gain competitive edge over their rivals.
Example
NASA Vs. ISRO
Asset Utilization
Assets can be anything for a company.
Tracks, Building, Equipment etc.
Managing them in such a way to get their total utilization is called asset utilization.
Example
NASA Vs. ISRO again
Dad with 2 Sons.

Quality Management
• A quality management is a method of management to provide products , services or
processes with characteristics in accordance to the standards and expectations of the
clients .
• Quality and productivity have become major determinants of business success or
failure today.
• achieving higher levels of quality is not an easy accomplishment.
• What is needed for TQM?

• Competition
Quality has become one of the most competitive points in business today
• Productivity
Managers have also come to recognize that quality and productivity are related
• Costs
Improved quality also lowers costs.
Poor quality results in higher returns from customers

Inventory is the raw materials, component parts, work-in-process, or finished products that are held
at a location in the supply chain.
Costs of Inventory
1.Inventory Holding Costs
2. Component Devaluation cost
3. Price Reduction Cost
4. Return Cost
5. Obsolescence Cost
6. Stockout Cost
Inventory turnover : Measured by number of days it takes to totally replace inventory.
Examples : Walmart, Dell etc.
Managing Inventory

Economic Order Quantity & Setup
Time
Economic order quantity
It is the order quantity that minimizes total inventory holding costs and ordering costs. It is
one of the oldest classical production scheduling models. The framework used to determine
this order quantity is also known as Wilson EOQ Model or Wilson Formula.
EOQ = SQRT(2 × Quantity × Cost Per Order / Carrying Cost Per Order)
Setup Time
The existence of a setup time enforces a constraint of time between the replenishments i.e.
to ensure that there is time to make the setup and complete production before
replenishment cycle expires.

Just In Time Inventory
Pull (demand) driven inventory system in which materials, parts, sub-assemblies, and support items
are delivered just when needed and neither sooner nor later. Its objective is to eliminate product
inventories from the supply chain. As much a managerial philosophy as an inventory system, JIT
encompasses all activities required to make a final product from design engineering onwards to the
last manufacturing operation.
Examples
Fast-Food Restaurants, Computer Manufacturers
Build To Order And Inventory
Build to order (BTO)is a production approach where products are not built until a confirmed order for
products is received. BTO is the oldest style of order fulfilment and is the most appropriate approach
used for highly customized or low volume products.
EXAMPLES :- Rolls Royce
Build to stock, is a build-ahead production approach in which production plans may be based upon
sales forecasts and/or historical demand.

Supply Chain Management and
Information System
Supply chain management (SCM) is
the management of the flow of goods.
It includes the movement and
storage of raw materials,
work-in-process inventory,
and finished goods from point
of origin to point of consumption.

Product Development and
Commercialization
Commercialization the process of launching a new
product; it may involve heavy promotion and filling the
distribution networks with the product.
Example
Mahindra cars launched refined Scorpio 2014 with more aggressive look and efficient to maintain its
SUV market.
Design For Manufacturing
The general engineering art of designing products in such a way that they are easy to manufacture.
Example
Toyota works on handles mounted on doors of cars to reduce number of parts from 34 to 5, which
cuts costs by 40 percent and reduced installation time from 12 seconds to 3 seconds.

In Conclusion
As we have seen, managing operations is a central task of an
organization. The skilled and effective management of operations
can increase productivity and lower costs, enabling a firm to
outperform rivals and reach the efficiency frontier in its industry. The
competitive advantage of many enterprises is based on their
superior operating capabilities—their ability to achieve operating
excellence—which in turn is the result of hard work by managers at
the operating level.

Managing operations

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