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Operations Management Tutorial

Operations management tutorial provides you with information about the concepts and theories behind operations management in addition to terminology, methods, and strategies applied in operations management.

Introduction to Operations Management

Let us discuss operations management in two terms of operations and management:

Operation is responsible for converting various inputs into the essential output, while meeting the required level of quality. Operation is considered as an element in an organization.

Management integrates and converts diverse supplies applied in the operations subsystem of the corporation into added value services in an ordered behavior as per the guidelines of the corporation. Unlike operation, management is considered as a process.

Given the above statements on operation and management, we can say that operation management is a series of interconnected management actions, engaged in manufacturing specific products or services. If the similar notion is expanded to services management, then the associated series of management actions is entitled as operations management.

Concept of Operations

Production function is that element of a corporation concentrating on the transformation of various inputs into the necessary outputs (products) that meet the required quality level.

Production is described as the step-by-step transformation of one types of material into another one via chemical or mechanical procedure to generate or improve the use of the product to the user. Therefore, production is a value addition procedure, at any stage.

Production System

The production system is that element of a corporation that generates products of the corporation. It is that action whereby resources, running into a definite system, are integrated and converted in an organized behavior to add worth associated with the guidelines provided by management.

Production System Characteristics

  1. Production is an arranged action, so each manufacturing system has its own objective.
  2. The system converts the diverse inputs to necessary outputs.
  3. It does not function in separation from the other organization system.
  4. There is a feedback about the actions vital to control and enhance system
  5. Performance

Production System Categories

  • Job-Shop Production
  • Batch Production
  • Mass Production
  • Continuous Production

Production Management Objectives

  1. Right Quality
  2. Right Quantity
  3. Right Scheduling
  4. Right Manufacturing Budgeting

Production Management Configuration

  • Planning: the action that sets up a sequence of actions and policies for making decisions in future. The operations manager elaborates the objectives for the operations subsystem of the corporation, and the guidelines, and processes for accomplishing the objectives. This stage consists of assigning the role and concentrates on operations in the corporation’s general strategy. It also includes planning the product planning, designing the facility, and applying the conversion process.
  • Organizing: the actions that set up a framework of responsibilities and authority. Operation managers implement a construction of tasks and the movement of information inside the operations subsystem. They identify the actions necessary to accomplish the objectives and allocate authority and roles to perform them
  • Controlling: the actions that certify the real functioning associated with the designed implementation. To ensure that the plans for the operations subsystems are achieved, the operations manager must practice regulation by evaluating real outputs and comparing them to planned operations management. Monitoring costs, quality, and time are the essential functions.

Operations Management Priorities

  • Quality (product performance)
  • Cost efficiency (low product price)
  • Dependability (reliable, timely delivery of orders to customers)
  • Flexibility (responding rapidly with new products or changes in volume)

Strategic Planning

  • Production and Operations
  • Approaches for Production/Operations
  • Forced Choice Model
  • Operations Model

Service Operations Characteristics

  1. Tangible/intangible type of output
  2. Production and utilization
  3. Nature of job
  4. Amount of customer interaction
  5. Customer involvement in transformation
  6. Evaluation of performance
  7. Quality of output
  8. Inventory collected


  • Modern dynamic notion
  • Factor productivity vs total productivity
  • Productivity evaluation
    1. Trend assessment
    2. Horizontal assessment
    3. Vertical assessment
    4. Budgetary assessment

The Elements Impacting Efficiency and Productivity

  • Capital/labor ratio
  • Shortage of some resources
  • Workplace changes
  • Creativity and new technology
  • Controlling impacts
  • Negotiating power
  • Executive elements
  • Quality of work life

Operations Management Scope

  • Facilities location
  • Plant layouts and material handling
  • Product design
  • Process design
  • Production and planning control
  • Quality control
  • Materials management
  • Maintenance management

Materials Management

Materials Management is that feature of management operation that is mainly focused on the acquisition, control, and use of materials needed and flow of goods and services connected with the production process having some predetermined objectives in view.
The main objectives of Material Management are:

  1. To reduce the cost of material
  2. To buy, receive, ship, and store materials productively and to cut the associated cost
  3. To reduce expenses via simplification, standardization, value evaluation, import substitution, etc.
  4. To monitor new sources of supply and to generate cordial relations with them in order to ensure continuous supply at reasonable rates
  5. To cut down investment secured in the inventories for applying in other productive goals and to grow high inventory turnover ratios

Manufacturing and Service Systems

Manufacturing and service systems are preparations of facilities, devices, and staff to manufacture products and services under controlled circumstances.

Manufacturing systems generate standardized goods in high volumes. Such plant demonstrates a determinate volume and provides stationary expenses that must be tolerated by the products generated. Different costs are added as labor is employed to integrate or treat the raw materials and other elements. Value addition will occur over the manufacturing process for the product. The cost of output related to the cost of input can be evaluated, as the real cost is known.

Service systems demonstrate more doubt in regards to both capacity and costs. Services are generated and utilized in the presence of the customer and there is small or no chance to store value, as there is in a final products inventory. Therefore, ability of service systems such as hospitals, restaurants, and many other services must be adequately adjustable to provide a highly variable demand. Plus, many services such as legal and medical engages professional or intellectual services judgments that are not standardized very simple. This makes it more challenging to gather costs and evaluate the efficiency of the services.

Process of Capacity Planning

  • Long-term capacity strategies
  • Multiple products
  • Phasing in capacity
  • Phasing out capacity
  • Short-term capacity strategies
  • Inventories
  • Backlog
  • Employment level (hiring or firing)
  • Employee training
  • Subcontracting
  • Process design

Plant Layout Objectives

  1. Rationalize the flow of materials through the plant
  2. Simplify the production process
  3. Maintain high revenue of the in-process inventory
  4. Reduce materials handling and expenses
  5. Effective utilization of men, equipment and spaces
  6. Make efficient use of cubic space
  7. Adjustability of production operations and arrangements
  8. Deliver convenience, safety, and comfort for staff
  9. Reduce investment in equipment
  10. Reduce total manufacturing time
  11. Sustain the adjustability of arrangement and function
  12. Simplify the organizational structure.

Plant Layout Notions

  • Integration
  • Minimum distance
  • Best use of cubic space
  • Flow
  • Highest flexibility
  • Safety, security and satisfaction
  • Lowest handling

Layout Category

  • Process layout
  • Product layout
  • Combination layout
  • Fixed position layout
  • Group layout

Inventory Management

Inventory mainly refers to the stored materials. It is also known as the stand-by supply of an enterprise. Inventories demonstrate those components that are either stored for sale or in the process of production or in the type of materials, need to be used. The gap between receiving the buying parts and converting them into final goods differs from industries to industries relying on the time frame of production. Hence, It is important to keep inventories of different types to serve as a safeguard between supply and demand for productive function of the system. Therefore, an efficient control on inventory is vital to facilitate and optimize the performance of the manufacturing cycle with the least disruptions.

Reasons for Keeping Inventory

  1. To soothe production
  2. To take advantage of price discounts
  3. To keep up with the requests over the down time period
  4. To avoid loss of orders (sales)
  5. To keep up with ever changing market

How Can You Learn More About Operations Management?

TONEX offers hands-on training courses designed for different groups of audiences and various needs. Check them out to find what fits you best:

Operations Management Training Boot Camp

Operations Management Training

Network Management and Operations Training

Operations Management Tutorial