Introduction to Production &
Operations Management
Nature of Production
• In an industrial organization, production is the most
important functional area
• Production is the process by which inputs are converted
into output
• Usually, the term production and manufacturing is used
interchangeably, but both the terms are different in
management.
• Manufacturing is used in the case of tangible goods and
production includes both tangible gods as well as
services.
• Production can be easily understood if we view the
manufacturing function from three angles:
– Production as a system
– Production as an organizational function
– Production as a decision making function
PRODUCTION AS A SYSTEM
• A system is understood as a whole that functions
with the help of various sub-components. From
this angel, production comprises of three sytems:
• PRODUCTION SYSTEM
• CONVERSION SUB-SYSTEM
• CONTROL SUB-SYSTEM
PRODUCTION AS A SYSTEM
PRODUCTION SYSTEM CONCEPTS
CONCEPT
DEFINITION
1. Production System
A system whose function is to convert
a set of inputs into a set of desired
outputs
2. Conversion Sub-System
A sub system of the larger production
system where inputs are converted
into outputs
3. Control sub-system
A sub system of the larger production
system where a portion of the output
is monitored for feedback signals to
provide corrective action if required
PRODUCTION AS AN ORGANIZATIONAL FUNCTION
• The core of production system is its
conversion sub-system , wherein workers ,
materials and machines are used to convert
inputs into products and services.
• This process of conversion is the heart of
production function in an organization where
manufacturing is the key process.
PRODUCTION AS DECISION MAKING SYSTEM
• The operations manager in an organization
need to take various decisions related to
production function.
• They plan , organize, staff, direct and control
all the activities in the process of production.
• The decisions taken by operations manager
related to production falls into three general
level of categories. They are:
PRODUCTION AS DECISION MAKING SYSTEM
1. STRATEGIC DECISIONS
 These decisions are major ones have strategic
importance in production
1. OPERATING DECISIONS
 These decisions are related to planning
production to meet demand
1. CONTROL DECISIONS
 These decisions relates to planning and
controlling operations
Types of Decisions - Strategic
Type of Decisions
Strategic
Decisions
Area of Involvement
Production Process
Nature of Activities
Developing long range
production plans
Production Technology
Selecting and managing
production technology
Facility Layout
Planning the arrangement
of facilities
Allocating resources to
strategic alternatives
Planning for the optimal
distribution of scarce
resources among product
lines or business units
Long range capacity
Answering ‘how much’ and
‘where’ questions about
long range production
capacity
Types of Decisions – Operating Decisions
Type of Decisions
Operating
Decisions
Area of Involvement
Nature of Activities
Production planning system
Aggregate planning and
master production
scheduling
Independent demand
inventory system
Planning and controlling
finished goods inventories
Resource requirement
planning system
Planning materials and
capacity requirements
Shop floor planning and
control at each work center
Short range decisions about
what to produce and when
to produce
Materials management
Managing all facets of
material system
Types of Decisions – Control Decisions
Type of Decisions
Control
Decisions
Area of Involvement
Nature of Activities
Productivity and employees
Planning for effective and
efficient use of human
resources in operations
Total quality control
Planning and controlling the
quality of products and
services
Project planning and control Planning and controlling
techniques
projects
Maintenance management
and reliability
Planning for maintaining the
machines and facilities of
production
DISTINCTION BETWEEN PRODUCTION & OPERATIONS MANAGEMENT
• Even though both the terms are used frequently together,
there exists at least two distinctions between the two terms.
They are:
1. The term production management is used for a system where
tangible goods are produced whereas operations
management is more frequently used where various inputs
are transformed into intangible services.
 Viewed from this perspective, operations management will
cover services such as banks, airlines, utilities, pollution
control agencies, super bazaars, educational institutions,
libraries etc. in addition to the manufacturing enterprises
2. The second difference is the evolution of the term as
operations management is a term used nowadays.
Production management precedes operations management
in the historical perspective of the growth of the subject.
RECENT TRENDS IN PRODUCTIONS AND OPERATIONS MANAGEMENT
1. Global market place
2. Production/operations strategy
3. TQM
4. Flexibility
5. Time Reduction
6. Technology
7. Worker involvement
8. Re-engineering
9. Environmental issues
10.Corporate downsizing
11.Supply chain management
12.Lean production
Product A
• Feature 1
• Feature 2
• Feature 3
Product B
• Feature 1
• Feature 2
• Feature 3