Exam questions on operations management

1. About Operations Management And Its Contributions

   Operations management is concerned with controlling the production process and business operations in the most efficient manner possible.

   Operations management involves certain responsibilities. One of those responsibilities is ensuring the business operates efficiently, both in terms of using the least amount of resources necessary and of meeting customers' requirements to the highest economic standard. Operations management involves managing the process by which raw materials, labor, and energy are converted into goods and services. People skills, creativity, rational analysis, and technological knowledge are all important for success in operations management.

   In the history of business and manufacturing operations, division of labor and technological advancements have benefited company productivity. Systematically measuring performance and calculating with formulas was a somewhat unexplored science before Frederick Taylor’s early work in the field. In 1911, Taylor published his principles of scientific operations management, characterized by four specific elements: developing a true science of management; scientific selection of an effective and efficient worker; education and development of workers; and close cooperation between management and staff.

   Modern operations management revolves around four theories: business process redesign (BPR), reconfigurable manufacturing systems, six sigma and lean manufacturing. BPR was formulated in 1993 and is a business management strategy that focuses on analyzing and designing workflow and business processes within a company. The goal of BPR is to help companies dramatically restructure their organizations by designing the business process from the ground up.

   Reconfigurable manufacturing systems are production systems designed to incorporate accelerated changes in structure, hardware, and software components. This allows systems to adjust rapidly to the capacity at which they can continue production and how efficiently they function in response to market or intrinsic system changes.

    JUST-IN-TIME SYSTEMS' GOALS

   Companies use a Just-in-Time manufacturing and inventory management system to improve the efficiency of their company and reduce costs. The system requires manufacturers to purchase only when customer orders create a demand. Companies must develop a relationship with vendors to ensure parts reach the facility in time to manufacture products for the customer's request. Businesses only produce inventory when there is a customer order in place. The system does not allow the business to produce or store excess inventory. Just-in-Time systems work in large and small organizations and those that produce products or services. With adjustments, the principles of Just-in-Time inventory management and manufacturing can work in any business.

   Companies use a Just-in-Time manufacturing and inventory management system to improve the efficiency of their company and reduce costs. The system requires manufacturers to purchase only when customer orders create a demand. Companies must develop a relationship with vendors to ensure parts reach the facility in time to manufacture products for the customer's request. Businesses only produce inventory when there is a customer order in place. The system does not allow the business to produce or store excess inventory. Just-in-Time systems work in large and small organizations and those that produce products or services. With adjustments, the principles of Just-in-Time inventory management and manufacturing can work in any business.

   Lower Inventory Costs

   Using a Just-in-Time inventory system reduces the amount of material on hand in the production facility. Companies can reduce the cost of storing and maintaining excess inventory and eliminate the risk of materials becoming obsolete while in storage. High inventory levels tie up company funds, which could otherwise benefit other areas of the business, such as research and development of new products. With the reduction in inventory costs, companies can expand and grow their businesses.

   Reduced Lead Time

   Just-in-Time manufacturing also uses a pull system to move materials through the production cycle. For example, in a manufacturing business, materials do not move to the next step on an assembly line until that step or station is ready. This reduces the stockpiling of unfinished products at any stage in the production process. When the company eliminates bottlenecks, production speed or lead-time is faster. Process engineers must determine the maximum quantity any station in the production process can have waiting. While workers may sit idle waiting to move production to the next step, the process is more efficient.

   An Efficient Manufacturing Layout

   Companies must create a layout on the production floor to move materials through the process efficiently. Some companies must move workstations closer together to eliminate steps in the work process. This leads to a more efficient manufacturing layout that can significantly reduce lead time. Building products efficiently is a primary focus for a company implementing a lean manufacturing system.

   Improve Customer Satisfaction.

   Companies implement a Just-in-Time system or lean manufacturing to satisfy the demands of customers. The voice of the customer is always present in a Just-in-Time manufacturing environment. Reductions in lead time and costs can help a company deliver a product to a customer faster and for a lower price. Objectives of Operation Management Functions The objectives

    

   of production management may be amplified as under:

   • Producing the right kind of goods and services that satisfy customers’ needs (effectiveness objective).
   • maximizing output of goods and services while using the fewest resources (efficiency goal).
   • that goods and services produced conform to pre-set quality specifications (quality objective).
   • Minimizing throughput-time—the time that elapses in the conversion process—by reducing delays, waiting time, and idle time (lead time objective).
   • Maximizing utilization of manpower, machines, etc. (Capacity utilization objective).
   • Minimizing the cost of producing goods or rendering a service (cost objective)

   The role of operations management is to create some kind of value-added in the form of goods and services by transforming a company’s inputs into output as finished goods and services. The activities in operations can be divided into three types: input, transformation process, and output. The company’s inputs include human resources, such as workers and managers; information technology (IT); facilities and processes such as equipment, buildings, or land and materials. Then the operations system will convert the transformed resources from inputs into outputs, which are goods and services that are produced by the company, and after that, it will get feedback information about the activities in the operation system. The importance of layout decisions

    

   A facility layout can be defined as an arrangement of all that is needed for production of a good or the delivery of a service, and a facility is a unit that enables the routine of a certain job, an example being a warehouse (Drira, Pierreval and Gabouj). Many factors come into play when dealing with inefficient layout problems that cause productivity concerns. One of the most common is static layout problems, which arise when operations management assumes that the primary data and products the workshop produces will remain constant over a long period of time. In addition to that, it is also well known that manufacturing plants must be able to respond quickly to changes in demand and production volume (Drira, Pierreval, and Gabouj). Drira, Pierreval and Gabouj have investigated further and have identified that 1/3 of US companies restructure their production facilities every 2 years. This is where the concept of dynamic layout takes into account possible changes in the production facilities. Dynamic layout deals with changes in material handling over multiple periods (months, weeks, or years) and reorganizes production in sequences. However, in many cases, data that affects layout problems is not exactly known for each period and having to constantly change handling procedures can also carry high costs. Taking into consideration that many organizations do reorganize their production facilities and the concept of fuzzy logic has been introduced to handle the imprecision or uncertainty inherent in dynamic layouts. Drira, Pierreval, and Gabouj indicate that there are a few approaches based on fuzzy concepts that exist to design layouts. Drira, Pierreval, and Gabouj indicate

   four main types of layouts within organizations and production facilities, such as fixed product layout, process layout, product layout, and cellular layout. With a fixed product layout, the product does not normally circulate within the production facility but resources such as machines, workers, etc. are utilized as they perform operations. This type of layout is commonly found in industries that manufacture ships or aircraft, usually large-sized products (Drira, Pierreval, and Gabouj). Process layout arranges facilities with similar functions together and groups similar activities. An example of a process layout would be a department store where there are many different sections such as menswear, women’s apparel, and home appliances. Drira, Pierreval, and Gabouj describe product layout for organizations that have high production volumes and a low assortment of products. Products tend to move quickly, an example being an assembly line. S.N. Chary, author of Production and Operations Management, asserts that a disadvantage of a product layout is the lack of ability to change product designs easily. The fourth type of layout discussed is cellular, where machines are grouped into cells to process similar parts; similar machines are also placed close together.

   The primary objective of selecting a layout is to minimize a function related to the travel of parts, i.e., the total material handling cost, the travel time, and the travel distance (Drira, Pierreval, and Gabouj). In the present day, when it comes to constructing a factory in an urban area, land supply is generally insufficient and open land is generally expensive. Many organizations have limited availability of horizontal space and must create a vertical dimension within the facility, making the layout design more complex. As an organization develops and plans strategies to cope with challenges that arise in an operating environment, a system should be designed so that it is capable of producing quality products in an acceptable time frame. As summarized in an article produced by http://www.INC.com "Facility layout and design are an important component of a business’s overall operations, both in terms of maximizing the effectiveness of the production process and meeting the needs of employees." In conclusion, layout planning is very important as it eliminates unnecessary costs for space and materials handling, which leads to producing goods and services at a higher rate.