75  Operations Management — Role and Scope

75.1 What is Operations Management?

Operations Management (OM) = the systematic design, direction and control of processes that transform inputs into goods and services — Stevenson. The field originated with F.W. Taylor (scientific management 1911), Henry Ford (mass production 1913), W. Edwards Deming (quality), Taiichi Ohno (Toyota Production System), and Eliyahu Goldratt (Theory of Constraints). Modern textbooks: Jay Heizer & Barry Render; William J. Stevenson; Roger Schroeder.

75.2 Inputs-Transformation-Outputs Model

TipITOM model

Inputs (5 Ms — Men, Materials, Machines, Money, Methods) → Transformation (operations) → Outputs (goods + services) → Feedback / Control.

75.3 5 Ps of Production

Tip5 Ps of Production

• Product — design and specifications.
• Plant — facilities and equipment.
• Processes — workflows.
• Programmes — schedules.
• People — workforce.

75.4 OM Functions / Scope

TipOM functions

• Product / Service Design.
• Process Design.
• Capacity Planning.
• Facility Location.
• Facility Layout.
• Aggregate Planning.
• Master Production Scheduling (MPS).
• MRP / ERP.
• Inventory Management.
• Quality Management.
• Maintenance.
• Work Study and Methods.
• Supply Chain Management.

75.5 History and Evolution of OM

TipMilestones in OM

Era	Milestones
Pre-1900s	Adam Smith (1776) — division of labour
1900s-1920s	F.W. Taylor scientific management (1911); Gilbreth time-motion; Henry Ford moving assembly line (1913); Henry Gantt chart
1930s-1940s	Hawthorne studies (Mayo); statistical quality control (Shewhart); WWII OR
1950s-1970s	Deming, Juran Japan quality; Toyota Production System (Ohno) — JIT, Kanban; MRP (Orlicky); Goldratt TOC
1980s	TQM, Six Sigma (Motorola 1986); BPR (Hammer 1990)
1990s-2000s	Lean · Agile · Mass Customisation · ERP (SAP) · SCM
2010s-	Industry 4.0 · IoT · AI · Digital Twin · Sustainable operations

75.6 Manufacturing vs Service Operations

TipManufacturing vs Service

Dimension	Manufacturing	Service
Output	Tangible	Intangible
Inventory	Yes	Limited (perishable)
Customer contact	Low	High
Quality measurement	Standards	Variable
Productivity measurement	Easier	Difficult
Capital intensity	High	Variable

75.7 Production Systems

TipTypes of production systems

System	Volume	Variety	Layout	Example
Project / Custom	One-off	Highest	Fixed-position	Ship, building
Job / Intermittent	Low	High	Process	Job shop
Batch	Medium	Medium	Process / hybrid	Bakery, pharma
Mass / Repetitive	High	Low	Product / line	Auto, FMCG
Continuous / Process	Very High	Very Low	Product	Oil refinery, chemicals

75.8 Productivity

\[\text{Productivity} = \frac{\text{Output}}{\text{Input}}\]

TipProductivity measures

• Partial / Single-factor — output / single input.
• Multi-factor — output / multiple inputs.
• Total productivity — output / all inputs.
• TFP (Total Factor Productivity) — Solow.

75.9 Forecasting

TipForecasting methods

Qualitative: Delphi · Expert opinion · Market research · Sales force composite. Time series: Naive · Moving averages · Exponential smoothing (Brown, Holt, Holt-Winters) · ARIMA (Box-Jenkins 1970). Causal / Associative: Regression · Econometric · Leading indicators. Modern: AI / ML / LSTM / Prophet.

75.10 Capacity Planning

TipCapacity concepts

• Design capacity — maximum theoretical.
• Effective capacity — practical after allowances.
• Utilisation = Actual / Design.
• Efficiency = Actual / Effective.
• Strategies: Lead · Lag · Match · Mixed.
• Tools: Decision trees · Break-even · NPV.

75.11 Aggregate Planning

Medium-term (3-18 months) planning to match supply with demand.

TipAggregate strategies

• Chase strategy — match demand exactly (vary workforce/hours).
• Level strategy — constant output; absorb fluctuations through inventory.
• Hybrid / Mixed.

75.12 Indian Context

TipIndian operations highlights

• Maruti-Suzuki — JIT, world-class manufacturing.
• Tata Motors — multiple plants, lean.
• Reliance Refining — world’s largest single-site refinery (Jamnagar).
• Bharat Forge — global forging leader.
• Infosys-TCS — service operations.
• PLI Scheme (2020) — manufacturing push.
• Make in India (2014).
• Atmanirbhar Bharat (2020).
• Industry 4.0 missions.

75.13 Modern Trends

TipModern OM trends

• Industry 4.0 — IoT, AI, robotics.
• Digital Twin — virtual replica.
• 3D Printing / Additive Manufacturing.
• Lean + Agile.
• Mass Customisation.
• Sustainability / Circular operations.
• Smart factories.
• AI-driven planning (Anaplan, o9).
• Cobots — collaborative robots.
• Servitisation of products.
• Friend-shoring of supply chains.
• Real-time operations control towers.

75.14 Practice Questions

Q 01TaylorEasy

Scientific Management (1911) is by:

• AF.W. Taylor
• BHenry Ford
• CGantt
• DDeming

View solution

Correct Option: A

F.W. Taylor (1911).

Q 02FordEasy

Moving assembly line (1913) is associated with:

• AHenry Ford
• BTaylor
• CToyota
• DGM

View solution

Correct Option: A

Ford's Model T plant.

Q 035 PsMedium

5 Ps of production do NOT include:

• AProduct
• BPlant
• CProfit
• DPeople

View solution

Correct Option: C

Product · Plant · Processes · Programmes · People.

Q 04ContinuousMedium

An oil refinery is an example of:

• AJob production
• BBatch
• CMass
• DContinuous / Process

View solution

Correct Option: D

Continuous process production.

Q 05ProductivityEasy

Productivity equals:

• AInput − Output
• BOutput / Input
• COutput × Input
• DInput / Output

View solution

Correct Option: B

Ratio of output to input.

Q 06ChaseMedium

A "chase" aggregate plan:

• AMatches output to demand
• BKeeps output constant
• CEliminates inventory
• DAlways uses subcontracting

View solution

Correct Option: A

Chase strategy matches demand.

Q 07TPSMedium

Toyota Production System is associated with:

• ATaiichi Ohno
• BHenry Ford
• CEdwards Deming
• DEli Whitney

View solution

Correct Option: A

Taiichi Ohno (Toyota).

Q 08Industry 4.0Medium

Industry 4.0 is most associated with:

• ASteam power
• BElectricity
• CComputers
• DIoT · AI · cyber-physical systems

View solution

Correct Option: D

Fourth industrial revolution (Germany 2011).

Q 09PLIEasy

India's PLI scheme started in:

• A2014
• B2020
• C2022
• D2024

View solution

Correct Option: B

2020.

Q 10GanttMedium

Gantt chart was developed by:

• AHenry Gantt
• BTaylor
• CFord
• DGilbreth

View solution

Correct Option: A

Henry L. Gantt.

Q 115 MsEasy

The 5 Ms of inputs do NOT include:

• AMen
• BMaterials
• CMarketing
• DMachines

View solution

Correct Option: C

Men · Materials · Machines · Money · Methods.

Q 12EffectiveHard

Efficiency in OM = Actual /:

• ADesign capacity
• BEffective capacity
• CMaximum capacity
• DIdle capacity

View solution

Correct Option: B

Utilisation uses design; Efficiency uses effective.

Q 13GoldrattHard

Theory of Constraints (1984) is by:

• AEliyahu Goldratt
• BDeming
• CJuran
• DCrosby

View solution

Correct Option: A

Eliyahu Goldratt, *The Goal* (1984).

Q 14HawthorneMedium

Hawthorne Studies (1924-32) are by:

• AElton Mayo
• BTaylor
• CMaslow
• DMcGregor

View solution

Correct Option: A

Elton Mayo at Western Electric Hawthorne Plant.

Q 15Make in IndiaEasy

"Make in India" was launched in:

• A2010
• B2014
• C2018
• D2020

View solution

Correct Option: B

Sept 2014.

75.14.1 Advanced Format Questions

AR 1Assertion-ReasonHard

A: Productivity = Output/Input.
R: Higher productivity directly raises profit.

• ABoth true; R explains A
• BBoth true; R does not explain A
• CA true, R false
• DA false, R true

View solution

Correct Option: B

S 1Statement-basedMedium

Production systems: (i) Project. (ii) Job. (iii) Batch. (iv) Mass. (v) Continuous.

• AAll five
• B(i), (ii), (iii) only
• C(iv) and (v) only
• D(i) only

View solution

Correct Option: A

N 1NumericalMedium

Design capacity 1,000 units/day; effective 800; actual 720. Utilisation:

• A72 %
• B90 %
• C80 %
• D100 %

View solution

Correct Option: A

Utilisation = Actual/Design = 720/1000 = 72%.

N 2NumericalHard

Same data: Efficiency = Actual/Effective =

• A90 %
• B72 %
• C80 %
• D100 %

View solution

Correct Option: A

720/800 = 90%.

75.15 Quick Recall

ImportantQuick recall

• OM = transform inputs → outputs. Stevenson · Heizer-Render · Schroeder.
• ITOM: Inputs (5 Ms) → Transformation → Outputs → Feedback.
• 5 Ps: Product · Plant · Processes · Programmes · People.
• History: Smith 1776 · Taylor 1911 · Ford 1913 · Gantt · Gilbreth · Mayo Hawthorne · Deming-Juran Japan quality · Ohno TPS · MRP (Orlicky 1975) · Goldratt TOC 1984 · Motorola Six Sigma 1986 · Hammer BPR 1990 · Industry 4.0.
• Manufacturing vs Service: tangible/intangible · inventory · contact · variability.
• Production systems: Project · Job · Batch · Mass · Continuous.
• Productivity = Output / Input; Partial, Multi-factor, Total, TFP (Solow).
• Forecasting: Qualitative (Delphi) · Time series (MA, exp smoothing, ARIMA) · Causal · ML.
• Capacity: Design · Effective · Utilisation = Actual/Design · Efficiency = Actual/Effective.
• Aggregate Planning: Chase · Level · Hybrid.
• India: Maruti JIT · Tata · Reliance Jamnagar · Bharat Forge · Make in India 2014 · PLI 2020 · Atmanirbhar Bharat 2020.
• Modern: Industry 4.0 · Digital Twin · 3D Printing · Lean + Agile · Cobots · Smart factories · Servitisation · Real-time control towers · Friend-shoring.