Production And Operation Management
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Production and operation management


An organization consist of various functions such as marketing, production, finance, personal etc. the production subsystem which is concerned with the management of physical resources for the production of an item or provision of a service.

Production management

Production is value added function and conversion of raw material or conversion of input into output. Production management is a set of interrelated management activities which are involved in the manufacturing of certain products. Therefore in general the concept of manufacturing products is called production management. Examples manufacturing standard products like car, bus, radio, television, etc. This concept of manufacturing product is called production management.

Operation management

It is a set of interrelated management activities which are involved in extending services is called operation management. Example medical facilities, developing standard computer software.

Production and operation management

It is part of an organization which is concerned with the transformation of a range of inputs( man, money, material, machine) into the required outputs (products or services) having the requisite quality level.


According to elwood s. buffa, “production management deal with decision making in production process so that the resulting goods and services are produced according to the specification in amount and by the scheduling demanded and in minimum cost.”

A conceptual model of a production system

1. First of all inputs are required so that conversion process can be started.

2. Conversion is effected by random fluctuations and after that output in form of goods and services are obtained.

3. Comparison is made between standards and actual performance and if deviations are there adjustment is needed so that they can be prevented.

4. This is possible because of feedback.

Production management

Operation management

  1. It is concern with the production or manufacturing of goods.

It is concerned with providing services.

  1. In this system follow make to stock system

In this make to order system

  1. In this the output is tangible

In this the output is intangible

  1. In p.m there is less consumer contact

There is more consumer contact

  1. In this goods are consumed after a long period of time

Services are consumed immediately on the same time.

  1. In this capacity is defined in terms of output

In this capacity is defined in terms of input.

  1. There is easiness in quality control

In this quality control is difficult.

  1. In this we more focus on inventory control

In this inventory do not arise in case of operation management

  1. Capacity planning is easily possible

Capacity planning is difficult.

  1. Ease of access to market is one of important factor.

Ease of access to market is most important factor.

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 objective

To 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 management

It’s 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.

It’s a system itself

It’s 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.

It’s 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

It’s 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 it’s 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 management

To achieve the predefine objectives there are certain functions that the production and operation management should perform.

  1. Planning
  2. Organizing
  3. Controlling


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 enables smooth 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.


Work study

Also known as time and motion study that aims at improving the cycle time required for producing a product.

Material management

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 the right quantity and quality.


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 planning

Capacity 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

It’s 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 and resources which are available.


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.


In production the desired result are feeded and stored for references purposes. Its being said that computers in today’s hi-tech world are being used in each and every field. So how production and operation management can be remained untouched by it.


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 is regarding 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 taking excessively 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 bottom level.

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