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Scope of operations management

Operations management involves the following activities:

(a)Design of the Operations System:
These are long-term strategic decisions related to product design, process design, and location of facilities, facilities layout and capacity planning.

Product design:

 It is deciding about what to produce and sell. Managers select the products which are technologically feasible, marketable and compatible with the organizational goals (in terms of the human and physical resources) and design them in terms of cost, quality and ease of production.

Process design:

The process design determines the way the product or service will be produced.

The manager answers the following questions in designing the process:

(i) Which technology should be used to produce the product?
(ii) Given a particular technology, which conversion or transformation process will be used?
(iii) What types of equipments should be used- machines, human labour or computer aided manufacturing equipments?
(iv) How should the product flow through the production system? Addition and deletions of work combinations are tried to arrive at the optimum sequence of operations process.

Location of facilities:

This means choosing the place where operation facilities will be located. They may be located near the source of raw material or consumer. The decision to locate is affected by the fixed costs (cost of land, plant and machinery, construction costs etc.)And variable costs (cost of labour, material, transportation and distribution costs, etc.)

Facilities layout:

It involves decisions about how to arrange the product and process facilities or the various departments in a plant so the products are produced at a minimum cost. In a product layout, machines are arranged in the order of steps required to produce the product. This facilitates smooth flow of goods from one process to the other (for example, production of car). In process layout, all machines of similar type are located at one place. In a garment manufacturing unit, for example, all cutting machines are grouped together and all stitching and ironing machines are placed in another group.

Capacity planning:

Capacity means “The maximum theoretical rate of productive or conversion capability for and existing product mix of and organization’s operation.” Capacity planning decided the number of products/services to be produced.

Capacity planning, according to Buffa, involves the following steps:

(i) Predicting demand, including, insofar as possible, the likely impact of technology, competition, and other events.

(ii) Translating these predictions into actual physical capacity requirements.

(iii) Generating alternative capacity plans to meet the requirements.

(iv) Anal sing and comparing economic effects of the alternative plans.

(v)Identifying and comparing the risks and strategic effects of the alternative plans.

(vi) Deciding on a plan for implementation.

(b) Operations and Control Decision:

These decisions relate to inventory planning and control, purchasing and quality control to carry out production smoothly. Production planning and control involves five functions: Routing, Loading, Scheduling, Dispatching and Expediting.


 It determines (1) the operations,(2)sequences of operations, and (3)the path through which operations will be performed.


It refers to assigning the work to a machine in advance so that the best machine can be selected to optimize the production and control decision.


 It enables operation to be finished on time so that subsequent operations do not suffer and goods can be delivered to customers in time. Scheduling determines the time at which each operation will take place.


 It involves orders issued by the head operations department to start the operations


This is similar to the managerial controlling function. It ensures that production activities are carried according to plans.

Operations Strategies:

To achieve organizational goals through the exaction production processed and improves these processes to keep pace with technological advancements and competitors’ policies, operations managers adopt the following operations strategies:

(a) Cost-Effective Strategy
(b) Innovative Strategy

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