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Objectives of production and operation management:-

Main objective

To attain maximum output with given set of resources (input).

To produce maximum with lowest cost.

Subsidiary objectiveTo control pollution and wastage.

To ensure optimum capacity utilization.

To exercise inventory control.

To control and reduce cost of operation.

To ensure optimum utilization of resources.

To ensure timely delivery of output.

To ensure quality of products.

To suggest changes in machinery and equipment.

Nature or features or characteristics of production and operation managementIts a transformational process

The production and operation management is concerned with the conversion of raw

material.

Its result into value addition

In this at every successive level some value is added to the previous one. Example sand at

sea shore does not ass any value but sand used in construction adds to the value.

Its a system itself

Its a complete step wise process i.e. a proper well defined sequence is followed in

production and operation management.It exists for certain objective

First there is an objective and to meet that particular objective a complete procedure is

followed.

Its carried out in part of organization

Its meaning is that production is not alone in the organization rather there are certain

other acts also like finance, research and development etc.

Inter relationship among the system

No system can ever work in isolation and depends on others for certain help. So, there

exists an interrelationship among different system.Stratum formulation

A production system consist of various strata of corporate hierarchy in which every

stratum has a role to play depending upon the size of the firm. Every stratum enjoys

certain benefits as a result of stratum performance.

Specialization of function

As different functions are performed separately, due to this they are repetitively

performed by same people and there is specialization of functions.

Increase in entropy

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Its a measure of degradation of the matter and energy in the universe to an ultimate

stage. To check this degradation process fresh blood must be infused in every production

system.

ISO finality

Uniformity in objectives its the process of reaching the same goal by different rates.There are different approaches for converting the input into outputs.

Increase in productivity

As there is specialization in functions so the speed of doing a task increases as a result

there is increase in productivity.

Decrease in cost

Specialization leads to less wastage.

Timely dependent

Its dependent timely on certain factors.

Function of production and operation managementTo achieve the predefine objectives there are certain functions that the production and

operation management should perform.

1. Planning

2. Organizing

3. Controlling

Planning

Product design and development

Deals with issues of converting market feedback on the requirements pertaining to the

type of product to be produced into specifications and drawings that helps in production.Production process selection

Helps evaluate different process option possible to produce the type of product in terms of

volumes and variety and other factors to select the best suited process.

Planning facility location

Deals in evaluating different possible locations for production and selecting the most

suitable one that meets the organizational objectives of producing in required quantities at

minimal costs.

Planning facility layout

Refers to studying various options in term of plant and machinery layout that enablessmooth flow materials for smooth production.

Capacity planning

Deals with the issues pertaining to planning the capacity for the plant that enables cost

competitive production even with certain degree of fluctuations in the required volumes.

Organizing

Work study

Also known as time and motion study that aims at improving the cycle time required for

producing a product.

Material management

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Aims at establishing sources for the required material in terms of inputs materials or

consumable at the right time. So no delays in production occur also unwanted inventories

are not created.

Purchasing management

Is responsible for making the input material available in time, at the right price and in theright quantity and quality.

Controlling

Stores management

Refers to managing the stores inputs materials, consumables and finished stocks while

avoiding over stock of materials. Store are accountable for recording the stock and

consumption for these materials.

Quality control

Is responsible for monitoring the quality requirements of the product so that no defective

parts are passed on to the consumers.inventory management

is responsible for maintaining minimum inventory for all critical materials and ensuring

no over stocking take place.

Scope of production and operation management

Plant location

While performing the task of producing products and services business system utilizes

facility like plant, machinery, warehouses etc. plant location is considered important because

it directly has bearing on factors like financial, employment and distribution patterns.

Capacity planningCapacity is the measure of ability to produce goods and services or it may be called as rate of

output. Its seen that full capacity is never used due to certain constraints e.g. production the

different constraints can be input, market demand, government.

Aggregate planning

Its a process that follows capacity planning and its medium range forecast. The plan do not

necessarily have to be some detailed as to provide specific instructions for daily or weekly

operations such as loading, sequencing, expending and dispatching.

Scheduling of activities

It simply means sequencing of different activities according to these importance andresources which are available.

Economics

It shows and helps in finding out how the best utilization of limited resources can be made to

satisfy the unlimited wants of the people or society as a whole.

Computers

In production the desired result are feeded and stored for references purposes. Its being said

that computers in todays hi-tech world are being used in each and every field. So how

production and operation management can be remained untouched by it.

HRM

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It start for recruitment, selection of employees and see that various task are being performed

in the best way.

Statistics and mathematics

The data is collected, analyzed and interpreted as per our requirement. And its later on used

to solve the problem in best possible manner.Decision area of production and operation management

On the basis of function on the basis of level

Technology selection and allocation strategic decisions

Capacity management tactical decisions

Scheduling operational decisions

System maintenance

On the basis of function

Technology selection and management

The very first decision which has to be taken in production and operation management isregarding the type of technology because in this hi-tech world it keeps on changing everyday

and decisions regarding how the management has to perform its functions are taken.

Capacity management

The decisions has to be taken regarding the capacity as full capacity is never being used due

to certain constraints and because of it they have to decide maximum capacity which can be

used and how it can be managed.

Scheduling or time allocation

Here, as we know that a proper sequence is followed so time is divided among these

activities. Time is allocated so that no activity which could be completed in les time is takingexcessively more time.

System maintenance

Its concerned with controlling aspect. The overall maintenance of complete system is also

important because any fault in one subsystem can cause a great problem in the overall result.

On the basis of level

Strategic decision

These decision are taken at top level. Alternative manufacturing approaches and alternative

approaches to automation are used. Example product selection and design, facility design,

process selection and planning, capacity planning, facilities layout and material handling.Tactical decision

Decision which are taken by middle level. To cope with the decisions level and also relating

to factors which are out of control how to control and manage them. Example summary

reports which compare overall planned or standard performance for such classification as cost

per unit and labour used.

Operational decisions

Reports comparing actual performance to production schedule and highlighting areas where

bottlenecks occur. Example production planning, production control, inventory control,

method study, cost reduction control and quality control. such decisions are taken by bottomlevel.

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5(a)

MB0044 : List the objectives of JIT.

Explain briefly characteristics of JIT.

MB0044 : List the objectives of JIT. Explain briefly characteristics of JIT.Answer : Just-In-Time (JIT) manufacturing is a process by which companies dont keep lots

of excess inventory; instead, they manufacture a product as an order comes in. It is a

management philosophy of continuous and forced problem solving.

The objective of JIT manufacturing system is to:

Eliminate waste that is, minimise the amount of equipment, materials, parts, space,

and workers time, which adds a great value to the product

Increase productivity

JIT means making what the market demands when it is in need. It is the most popular systemsthat incorporate the generic elements of lean systems. Lean production supplies customers

with exactly what the customer wants, when the customer wants, without waste, through

continuous improvement.

Deploying JIT results in decrease of inventories and increases the overall efficiencies.

Decreasing inventory allows reducing wastes which in turn results in saving lots of money.

There are many advantages of JIT:

Increases the work productivity Reduces operating costs

Improves performance and throughput

Improves quality

Improves deliveries

Increases flexibility and innovativeness

For industrial organisations to remain competitive, cost efficiencies have become

compulsory. JIT helps in this process. It is extended to the shop floor and also the inventory

systems of the vendors. JIT has been extended to mean continuous improvement. These

principles are being applied to the fields of Engineering, Purchasing, Accounting, and Data

processing.

Characteristics of JITThe consequent savings are to be utilised for reducing cost and rendering better service to the

customer. Shigeo Shingo an authority on JIT at Toyota classifies the wastes to be eliminated

as follows.The seven wastes to be eliminated according to JIT are:

Over production

Inventory

Waiting time

Movement

Effort

Defective products

Over processing

1. Over production: Over production is to manufacture products before it is actually needed.

If the demand for that product decreases, the extra parts or products produced may not be

useful or needed. Also over production results in high storage costs and is also difficult todetect defects. So, over production is considered a waste.

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2.Inventory: Excess procurement or production builds up stock of materials which are not

immediately used, thus locking space and funds carrying heavy costs. The figure 13.2,

illustrates the inventories at different levels of an organisationSupplier distribution,

Production, and Customer distribution.

3. Waiting time: Waste of time happen when goods are not moving or being processed. The

operator, the machine or the part will either be not working or be worked upon. The durationof waiting is can be said to be unproductive and may create more serious consequences.

4.Movement: Any unnecessary movement is a waste of energy; it causes blockages,

disrupting movements and delaying the flow of other items creating delays.

5.Effort: The people, who work, do not make a study as to how the products on which they

are making are utilised and do not realise the purpose for which they are made. This lack of

education will lead to waste of resources. Finally, they end up in shortage of resources when

needed.

6.Defective products: The defective products lead to a tremendous loss to the company. This

is because they use up the same equipments, workmen and the time that would be used to

make good products. Thus defective products use up resources and result in losses.

7. Over Processing: Some steps like unnecessary processing or production do not add valueto the final output. As a result, it is waste of all the inputs that go into the process.

1(i)Economic order quantity (EOQ)Economic order quantity (EOQ) refers to the optimal order size that will result in the lowest

ordering and carrying costs for an item of inventory based on its expected usage.

EOQ model answers the following key quantum of inventory management.

What should be the quantity ordered for each replenishment of stock?

How many orders are to be placed in a year to ensure effective inventory management?

EOQ is defined as the order quantity that minimises the total cost associated with inventory

management.

EOQ is based on the following assumptions:

Constant or uniform demand: The demand or usage is even through-out the period

Known demand or usage: Demand or usage for a given period is known i.e. deterministic

Constant unit price: Per unit price of material does not change and is constant irrespective of theorder size

Constant Carrying Costs: The cost of carrying is a fixed percentage of the average value ofinventory

Constant ordering cost: Cost per order is constant whatever be the size of the order

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Aassumptions os eoqEOQ is one of the most common known inventory control technique. This

technique involves some assumptions:

1. demand is known and constant

2. the lead time is known and constant

3. the receipt of inventory is instantaneous

4. quantity discounts are not possible

5. the only variable costs are the ordering cost and the holding cost.

6. orders are placed so that stockouts are avoided.

if the annual demand for a product is 350,000 units, then the annual carrying cost rate is 25 percent of

the cost per unit, the product costs 14.75 dollar per unit to purchase, and each time the product is

ordered the related ordering cost is 53.00 dollar

(a) what is the EOQ ?

(b) what is the TSC at the EOQ ?

(c) how much would the TSC increase if the order quantity must be 2,500 units because of a standard

shipping size.

2 years ago

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Yuri

Best Answer - Chosen by Voters

Assuming JIT, no safety stocks, no demand volatility, flat and linear demand (no slopes, trends,

seasonality) and all costs are nominal & not discounted:

1)

EOQ= (2350'00053/(0.2514.75)) = 400(3710/59) 3171.91

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2)

TC = 53350000/EOQ + 0.2514.75EOQ/2 = 25218890 11696.4

3)

TC = 53350000/2500 + 0.2514.752500/2 = 96235/8 12029.4 TC = TC - TC +332.955