Production and Process
Management
Lesson 1
Introduction
About the syllabus
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Lecturers (in alphabetical order):
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Ágnes Kotsis, assistant professor
András István Kun, assistant professor
2 lecture (Tuesday) and 2 seminar
(Thursday) in every week
Syllabus will be available on the internet
Calculators are needed on the seminars!
About the Requirements
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The calculation of the final grade is
as follows:
• mid-term test
• end-term test (exam)
30%
70%
Compulsory reading
Selected chapters from:
 Stevenson J. William (2009): Operations
Management. 10th edition. McGraw-Hill
Irvin, London.
Mid-term test
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Students are required to take the midterm test. There is only one possibility to
retake the mid-term test in the study
period.
Multiple choices + calculations
Roots of operations
management I.
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Industrial revolution (1770’s)
Scientific management (1911)
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Mass production
Standardizing (interchangeable parts)
Division of labor
Human relations (HR) movement (1920-60)
Decision models (1915, 1960-70’s)
Influence of Japanese management
Roots of operations
management II.
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Production and production management
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Production: creation of finished goods (and services)
using the factors of production: land, labor, capital (+
enterpreneurship, knowledge)
Production magagement: Planning, implementation, and
control of industrial production processes to ensure smooth
and efficient operation (the activites of managers do to help
their firms create goods). Ensures that goods (and services)
are produced efficiently; that they are of the right quality,
quantity, cost; and that they are produced on time.
As service sector becomes larger, concepts of (industrial)
production management become influenced by it.
Differences between products and
services (can they be distiquished?)
Characteristic
Manufacturing Service
Output
Tangible
Customer contact
Low
High
Uniformity of input
High
Low
Labor content
Low
High
Uniformity of output
High
Low
Measurement of productivity
Easy
Difficult
Opportunity to correct
quality problems
High
Low
High
Intangible
Operations management
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Includes the production of services.
The term production has been repleaced by
operations.
Specialized area in management that converts
or transforms resources into goods and
services.
It managing systems and processes as well.
Process management
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Process: actions that transform inputs
into outputs
• Upper-managment processes
• Governance, strategy
• Operational processes
• Core processes that make up the value stream
• Supporting processes
• These enhances the core processes
Adding value
Business environment
Organization
Inputs
Transformational
processes
Feedback
Outputs
The Value Chain
Suppliers’
Value Chain
Customers’
Value Chain
Supply Chain
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A sequence of activities and
organisations involved in producing and
delivering goods and services.
Supplier
Supplier
Supplier
}
Storage
Mfg.
Storage
Dist.
Retailer
Customer
The place of operations management
between other funcions
Head of the
Organization
Finance
Operations
Organziational Functions
Marketing
Operations overlap
Operations
Marketing
Finance
Operations interfaces
)
Industrial
Engineering
Maintenance
Distribution
Purchasing
Operations
Public
Relations
Legal
Personnel
Accounting
MIS
Key decisions
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What
to produce / amount to produce
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When
to produce / to order / to supply
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Where
Is the best location for work / process / store etc.
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How
designed
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Who
to do the work (or which team)
Key responsibilities
Planning
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Capacity
Location
Products & services
Make or buy
Layout
Projects
Scheduling
Controlling/Improving
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Inventory
Quality
Costs
Productivity
Organizing
– Degree of centralization
– Process selection
Staffing
– Hiring/laying off
– Use of Overtime
Directing
– Incentive plans
– Issuance of work orders
– Job assignments
Thanks for the attention