Production and Operations Management: An Overview

Importance of Production and Operations Management

• Definition: Production is the creation of products and services by turning inputs (natural resources, raw materials, human resources, and capital) into outputs (products and services).
• Role of Operations Management: Manages the conversion process.
• Customer Satisfaction: A key aspect of effective production and operations; involves understanding and meeting customer needs.
• Quality Focus: Post-1980s, many U.S. industries lost customers due to inadequate quality; current focus is on meeting quality demands to stay competitive.

Role of Operations Managers

• Responsibilities: Manage and supervise the conversion process.
• Asset Control: Control about three-fourths of a firm’s assets including inventories, wages, and benefits.
• Collaboration: Work with marketing, finance, accounting, and HR to ensure profitable and customer-satisfying production.
• Decision Making: Involved in development and design of goods, determining effective production processes.

Key Decisions in Production and Operations Management

• Production Planning:
  • Purpose: Balance competitive environment and strategic goals to find optimal production methods.
  • Conflicting Goals: High-quality service vs. low operating costs, high profits vs. sufficient inventory.
  • Phases:
    • Long-term Planning: 3-5 years; focus on what, how many, and where to produce.
    • Medium-term Planning: 2 years; concerns facility layout, resource acquisition, and labor issues.
    • Short-term Planning: <1 year; converts broader goals into specific plans and strategies.
• Production Control: Managing quality and costs, scheduling, and daily operations.
• Improving Production and Operations: Developing more efficient production methods.

Production Planning Decisions

• Type of Production Process: Selecting the appropriate production process.
• Site Selection: Choosing the right location for production.
• Facility Layout: Designing the layout of production facilities.
• Resource Planning: Planning the resources required for production.

Concept Check

1. What are the three types of decisions in production planning?

   • Type of production process, site selection, facility layout, and resource planning.

2. What are the three phases of production planning?

   • Long-term, medium-term, and short-term planning.