1st assignment (opm)

MuhammadDanish| www.knowledgedep.blogspot.com
Directorate of Distance Learning
Education
G.C University Faisalabad
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Name of student: Muhammad Danish Name of Tutor: Sir Quaisar Ijaz Khan
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Semester: 3rd
Year: 2015-2017
Address: H # P-802, G M Abad Faisalabad
Name of course:
Operation & Production Management
Assignment No. 1st Code No._____
Last date of submission of Assignment:_21-01-2017
Date of submission of Assignment:__20-01-2017_
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Q: 1- What is Production operations management and why is
production operations management important in all types
of organization?
Answer:
PRODUCTION OPERATIONMANAGEMENT:
Production and Operations Management ("POM") is all about the transformation of
production and operational inputs into "outputs" that, when distributed, and meet the needs of
customers.
Operations management is an area of management concerned with designing and
controlling the process of production and redesigning business operations in the production of
goods or services.
IMPORTANCE OF PRODUCTION OPERATIONMANAGEMENT:
1. Helps to Introduce New Products:
Production management helps to introduce new product within the market. It
conducts analysis and development. This helps the firm to develop newer and higher
quality product. These products are productive within the market as a result of the offer
full satisfaction to the purchasers.
2. Expansion of the Firm:
The production management helps the firm to get bigger and grow. This is often
as a result of it tries to enhance quality and cut back prices. This helps the firm to earn
higher profits. These profits facilitate the firm to expand and grow.
3. Minimizes price of Production:
Production management helps to reduce the value of production. It tries to
maximize the output and minimize the inputs. This helps the firm to attain its price
reduction and potency objective.
4. Accomplishment of Firm’s Objectives:
Production management helps the business organization to attain all its objectives.
It produces product that satisfy the customer’s wants and needs. So, the firm can increase
its sales. This can facilitate it to attain its objectives.

5. Reputation, Goodwill and Image:
Production management helps the firm to satisfy its customers. This will increase
the firm’s name, goodwill and image. an honest image helps the firm to expand and grow.
6. Helps to Face Competition:
Production management helps the firm to face competition within the market.
This can be as a result of production management produces product of right amount, right
quality, and right value and at the correct time. These products are delivered to the
purchasers as per their necessities.
7. Optimum Utilization of Resources:
Production management facilitates optimum utilization of resources like work
force, machines etc. therefore the firm will meet its capability utilization objective. This
may bring higher returns to the organization.
8. Supports different useful Areas:
Production management supports different useful areas in a corporation, like
selling, finance and personnel. The marketing department can notice it easier to sell
good-quality product and therefore the finance department can get a lot of funds as a
result of increase in sales. it’ll conjointly get a lot of loans and share capital for
enlargement and modernization. The staff office are going to be ready to manage the
human resources effectively because of the higher performance of the production
department.

Q: 2- What is production system? And explain classification of
production system?
Answer:
PRODUCTION SYSTEM
Operations Management can be defined as the management of the conversion process,
which converts land, labor, capital, and management inputs into desired outputs of goods and
services. It is also concerned with the design and the operation of systems for manufacture,
transport, supply or service.
CLASSIFICATION OF PRODUCTION SYSTEM:
When viewed from a different context, the operations/ production system can be equated
with the flow of materials — flow into, flow through and flow out of the conversion process.
When we analyze the characteristics of this flow, we find in some systems it to be very smooth,
whereas in others it is much more complex. The more difficult the materials flow, the more
complex is the system to manage. Depending on the flow characteristics, there are four classes of
the production system.
1. Mass production or flow â€“line production system.
2. Batch production system.
3. Job shop.
4. Projects (unit manufacture)
5. Process production system
Problems confronting a production man are relevant with reference to a particular system.
Problems which are critical for mass production may not be that important for batch production.
Thus the system determines our focus of attention.
1. Mass Production systemor Flow-Line production Systems:
In these systems, the flow is in a straight line. All facilities are arranged as per the
sequence of operations. Output of one operation becomes the input for the subsequent operation.
The system is cascaded. Some peculiar problems of this system are balancing of assembly
line/production function. Maintenance must be very good to prevent the breakdown of the whole
system. Raw material fed initially is very important since all the operations depend upon it.
Balanced workload results in a smooth output rate.

2. Batch Production System:
In this system, a batch consisting of a certain quantity is made on a machine. The same
machine then may be used for another product. Thus here there are a variety of products; and it is
not possible to maintain a separate assembly line for each product. Products compete for the
share of the machine. Machines are general purpose. Pharmaceutical companies make medicinal
formulations by batch production system. Production problems are complex here. There is
machine assignment problem. Again, what should be the size of each batch is another problem.
Scheduling becomes more complex. Production planning, in response to demand, becomes
challenging. Layout of the system also merits attention.
3. Job Shop production system:
Here, the shop accepts customer€™s orders and executes them. It does not have its own
product mix. Primarily, we have facilities and processes in a job shop to undertake a wide variety
of customer jobs in different batch quantities. Each order may be unique — requiring its own
planning and tooling. Here the flow of material is also complex. A busy job shop is a difficult
system to plan and control. There is need to priorities different jobs for dispatching to customers.
At times, short-processing-time (SPT) becomes the yardstick to sequence the different jobs. Job
shop is technically speaking a queuing problem. Simulation techniques do help in analyzing it.
4. Projects production system:
Consider the manufacturing of a ship. Such products are never made in large numbers.
Manpower, facilities and other resources center around such products. Each such product can
therefore be treated as a project, requiring sequencing of certain activities either in series or
concurrently. PERT/CPM or network analysis is a useful technique to plan and control such
projects
5. Process production flows:
Here, a single product is produced and stocked in warehouses until it is demanded in the
market. The flexibility of these plants is almost zero because only one product can be produced.
Examples of these plants include, steel, cement, paper, sugar, etc. There is a highly mechanized
system for handling materials. Conveyors and automatic transfer machines are used to move the
materials from one stage to another.
Low-skilled labor and skilled technicians are required. There is very less work-in-
progress because material flow is continuous. The production planning and scheduling can be
decided well in advance. The full production system is designed to produce only one specific
type of item.

Q: 3- Explain decision and frame work of decision making?
Answer:
DECISION:
A decision can be defined as a course of action purposely chosen from a set of
alternatives to achieve organizational or managerial objectives or goals. Decision making process
is continuous and indispensable component of managing any organization or business activities.
Decision-making in business is important because there are consequences to making the
wrong decision. When managers are making decisions on behalf of the company, it is important
that they weigh their options because poor choices can result in legal, financial or brand issues.
FRAMEWORK OF DECISION MAKING
There are seven steps of decision making framework, which are following.
1. Define the problem:
The first and the foremost step in the decision-making process are to define the real
problem. A problem can be explained as a question for and appropriate solution. The manager
should consider critical or strategic factors in defining the problem. These factors are, in fact,
obstacles in the way of finding proper solution. These are also known as limiting factors.
For example, if a machine stops working due to non-availability of screw, screw is the
limiting factor in this case.
2. Analyzing the problem:
After defining the problem, the next important step is a systematic analysis of the available
data. Sound decisions are based on proper collection, classification and analysis of facts and
figures.
3. Developing alternative solutions:
After defining and analyzing the problem, the next step is to develop alternative solutions.
The main aim of developing alternative solutions is to have the best possible decision out of the
available alternative courses of action. In developing alternative solutions the manager comes
across creative or original solutions to the problems.
In modern times, the techniques of operations research and computer applications are
immensely helpful in the development of alternative courses of action.

4. Selecting the best type of alternative:
After developing various alternatives, the manager has to select the best alternative. It is
not an easy task. The following are the four important points to be kept in mind in selecting the
best from various alternatives:
I. Risk element involved in each course of action against the expected gain.
II. Economy of effort involved in each alternative, i.e. securing desired results with the least
efforts.
III. Proper timing of the decision and action.
IV. Final selection of decision is also affected by the limited resources available at our
disposal. Human resources are always limited. We must have right type of people to carry
out our decisions. Their caliber, understanding, intelligence and skill will finally determine
what they can and cannot do.
5. Implementation of the decision:
Under this step, a manager has to put the selected decision into action. For proper and
effective execution of the decision, three things are very important i.e.
 Proper and effective communication of decisions to the subordinates. Decisions should be
communicated in clear, concise and understandable manner.
 Acceptance of decision by the subordinates is important. Group participation and
involvement of the employees will facilitate the smooth execution of decisions.
 Correct timing in the execution of decision minimizes the resistance to change. Almost
every decision introduces a change and people are hesitant to accept a change.
Implementation of the decision at the proper time plays an important role in the execution
of the decision.
6. Follow up:
A follow up system ensures the achievement of the objectives. It is exercised through
control. Simply stated it is concerned with the process of checking the proper implementation of
decision. Follow up is indispensable so as to modify and improve upon the decisions at the
earliest opportunity.
7. Monitoring and feedback:
Feedback provides the means of determining the effectiveness of the implemented
decision. If possible, a mechanism should be built which would give periodic reports on the
success of the implementation. In addition, the mechanisms should also serve as an instrument of
“preventive maintenance”, so that the problems can be prevented before they occur.

Q: 4- What is aggregate planning? Explain level and chase
strategies?
Answer:
1. AGGREGATE PLANNING:
Aggregate planning is the process of developing, analyzing, and maintaining a
preliminary, approximate schedule of the overall operations of an organization. The aggregate
plan generally contains targeted sales forecasts, production levels, inventory levels, and customer
backlogs. This schedule is intended to satisfy the demand forecast at a minimum cost.
In simple terms, aggregate planning is an attempt to balance capacity and demand in such
a way that costs are minimized. The term "aggregate" is used because planning at this level
includes all resources "in the aggregate;" for example, as a product line or family. Aggregate
resources could be total number of workers, hours of machine time, or tons of raw materials.
Aggregate units of output could include gallons, feet, pounds of output, as well as aggregate
units appearing in service industries such as hours of service delivered, number of patients seen,
etc.
Aggregate planning does not distinguish among sizes, colors, features, and so forth. For
example, with automobile manufacturing, aggregate planning would consider the total number of
cars planned for not the individual models, colors, or options. When units of aggregation are
difficult to determine (for example, when the variation in output is extreme) equivalent units are
usually determined. These equivalent units could be based on value, cost, worker hours, or some
similar measure.
Aggregate planning is considered to be intermediate-term (as opposed to long- or short-
term) in nature. Hence, most aggregate plans cover a period of three to 18 months. Aggregate
plans serve as a foundation for future short-range type planning, such as production scheduling,
sequencing, and loading. The master production schedule (MPS) used in material requirements
planning (MRP) has been described as the aggregate plan "disaggregated."
Aggregate planning strategies
There are two pure planning strategies available to the aggregate planner: a level strategy
and a chase strategy. Firms may choose to utilize one of the pure strategies in isolation, or they
may opt for a strategy that combines the two.
2. LEVEL STRATEGY.
A level strategy seeks to produce an aggregate plan that maintains a steady production
rate and/or a steady employment level. In order to satisfy changes in customer demand, the firm

must raise or lower inventory levels in anticipation of increased or decreased levels of forecast
demand. The firm maintains a level workforce and a steady rate of output when demand is
somewhat low. This allows the firm to establish higher inventory levels than are currently
needed. As demand increases, the firm is able to continue a steady production rate/steady
employment level, while allowing the inventory surplus to absorb the increased demand.
A second alternative would be to use a backlog or backorder. A backorder is simply a
promise to deliver the product at a later date when it is more readily available, usually when
capacity begins to catch up with diminishing demand. In essence, the backorder is a device for
moving demand from one period to another, preferably one in which demand is lower, thereby
smoothing demand requirements over time.
A level strategy allows a firm to maintain a constant level of output and still meet
demand. This is desirable from an employee relations standpoint. Negative results of the level
strategy would include the cost of excess inventory, subcontracting or overtime costs, and
backorder costs, which typically are the cost of expediting orders and the loss of customer
goodwill.
3. CHASE STRATEGY.
A chase strategy implies matching demand and capacity period by period. This could
result in
 considerable amount of hiring, firing or laying off of employees;
 insecure and unhappy employees;
 increased inventory carrying costs;
 problems with labor unions;
 and erratic utilization of plant and equipment.
It also implies a great deal of flexibility on the firm's part. The major advantage of a
chase strategy is that it allows inventory to be held to the lowest level possible, and for some
firms this is a considerable savings. Most firms embracing the just-in-time production concept
utilize a chase strategy approach to aggregate planning.
Most firms find it advantageous to utilize a combination of the level and chase strategy.
A combination strategy (sometimes called a hybrid or mixed strategy) can be found to better
meet organizational goals and policies and achieve lower costs than either of the pure strategies
used independently.

Q: 5- Identify factors influencing plant location or facility
location?
Answer:
FACTORS INFLUENCING PLAN T LOCATION:
1) Availability of Raw Materials:
One of the most important considerations involved in selection of industrial location has
been the availability of raw materials required. The biggest advantage of availability of raw
material at the location of industry is that it involves less cost in terms of ‘transportation cost.
If the raw materials are perishable and to be consumed as such, then the industries always
tend to locate nearer to raw material source. Steel and cement industries can be such examples.
In the case of small- scale industries, these could be food and fruit processing, meat and fish
canning, jams, juices and ketchups, etc.
2) Proximity to Market:
If the proof of pudding lies in eating, the proof of production lies in consumption.
Production has no value without consumption. Consumption involves market that is, selling
goods and products to the consumers. Thus, an industry cannot be thought of without market.
Similarly if the transportation costs add substantially to one’s product costs, then also a
location close to the market becomes all the more essential. If the market is widely scattered over
a vast territory, then entrepreneur needs to find out a central location that provides the lowest
distribution cost. In case of goods for export, availability of processing facilities gains
importance in deciding the location of one’s industry. Export Promotion Zones (EPZ) are such
examples.
3) Infrastructural Facilities:
Of course, the degree of dependency upon infrastructural facilities may vary from
industry to industry, yet there is no denying of the fact that availability of infrastructural facilities
plays a deciding role in the location selection of an industry. The infrastructural facilities include
power, transport and communication, water, banking, etc.

Yes, depending upon the types of industry these could assume disproportionate priorities. Power
situation should be studied with reference to its reliability, adequacy, rates (concessional, if any),
own requirements, subsidy for standby arrangements etc. If power contributes substantially to
your inputs costs and it is difficult to break even partly using your own standby source,
entrepreneur may essentially have to locate his/her enterprise in lower surplus areas such as
Maharashtra or Rajasthan.
4) Government Policy:
In order to promote the balanced regional development, the Government also offers several
incentives, concessions, tax holidays for number of years, cheaper power supply, factory shed,
etc., to attract the entrepreneurs to set up industries in less developed and backward areas. Then,
other factors being comparative, these factors become the most significant in deciding the
location of an industry.
5) Availability of Manpower:
Availability of required manpower skilled in specific trades may be yet another deciding
factor for the location of skill- intensive industries. As regards the availability of skilled labour,
the existence of technical training institutes in the area proves useful. Besides, an entrepreneur
should also study labour relations through turnover rates, absenteeism and liveliness of trade
unionism in the particular area.
Such information can be obtained from existing industries working in the area. Whether the
labour should be rural or urban; also assumes significance in selecting the location for one’s
industry. Similarly, the wage rates prevalent in the area also have an important bearing on
selection of location decision.
While one can get cheaper labour in industrially backward areas, higher cost of their training and
fall in quality of production may not allow the entrepreneur to employ the cheap manpower and,
thus, establish his/her enterprise in such areas.
6) Local Laws, Regulations and Taxes:
Laws prohibit the setting up of polluting industries in prone areas particularly which are
environmentally sensitive. Air (Prevention and Control of Pollution) Act, 1981 is a classical
example of such laws prohibiting putting up polluting industries in prone areas. Therefore, in
order to control industrial growth, laws are enforced to decongest some areas while
simultaneously encourage certain other areas.
For example, while taxation on a higher rate may discourage some industries from setting up in
an area, the same in terms of tax holidays for some years may become the dominant decisional
factor for establishing some other industries in other areas. Taxation is a Centre as well as State

Subject. In some highly competitive consumer products, its high quantum may turn out to be the
negative factor while its relief may become the final deciding factor for some other industry.
7) Ecological and Environmental Factors:
In case of certain industries, the ecological and environmental factors like water and air pollution
may turn out to be negative factor in deciding enterprise location. For example, manufacturing
plants apart from producing solid waste can also pollute water and air. Moreover, stringent waste
disposal laws, in case of such industries, add to the manufacturing cost to exorbitant limits. In
view of this, the industries which are likely to damage the ecology and environment of an area
will not be established in such areas. The Government will not grant permission to the
entrepreneurs to establish such industries in such ecologically and environmentally sensitive
areas.
8) Competition:
In case of some enterprises like retail stores where the revenue of a particular site depends on the
degree of competition from other competitors’ location nearby plays a crucial role in selecting
the location of an enterprise. The areas where there is more competition among industries, the
new units will not be established in these areas. On the other hand, the areas where there is either
no or very less competition, new enterprises will tend to be established in such areas.
9) Incentives, Land Costs, Subsidies for Backward Areas:
With an objective to foster balanced economic development in the country, the
Government decentralizes industries to less developed and backward areas in the country. This is
because the progress made in islands only cannot sustain for long. The reason is not difficult to
seek.
“Poverty anywhere is dangerous for prosperity everywhere.” That many have-not’s will not
tolerate a few haves is evidently clear from ongoing protests leading to problems like terrorism.
Therefore, the Government offers several incentives, concessions, tax holidays, cheaper lands,
assured and cheaper power supply, price concessions for departmental (state) purchases, etc. to
make the backward areas also conducive for setting up industries.
It is seen that good number of entrepreneurs considers these facilities as decisive factor to
establish industries in these locations. However, it has also been observed that these facilities can
attract entrepreneurs to establish industries in backward areas provided other required facilities
do also exist there. For example, incentives and concessions cannot duly compensate for lack of
infrastructural facilities like communication and transportation facilities. This is precisely one of
the major reasons why people in-spite of so many incentives and concessions on offer by the
Government, are not coming forward to establish industries in some backward areas.
10) Climatic Conditions:

Climatic conditions vary from place to place in any country including India. And,
climatic conditions affect both people and manufacturing activity. It affects human efficiency
and behaviour to a great extent. Wild and cold climate is conducive to higher productivity.
Likewise, certain industries require specific type of climatic conditions to produce their goods.
For example, jute and textiles manufacturing industries require high humidity.
As such, these can be established in Kashmir experiencing humidity-less climate. On the other
hand, industrial units manufacturing precision goods like watches require cold climate and
hence, will be established in the locations having cold climate like Kashmir and Himachal
Pradesh.
11) Political Conditions:
Political stability is essential for industrial growth. That political stability fosters industrial
activity and political upheaval derails industrial initiates is duly confirmed by political situations
across the countries and regions within the same country. The reason is not difficult to seek.
The political stability builds confidence and political instability causes lack of confidence among
the prospective and present entrepreneurs to venture into industry which is filled with risks.
Community attitudes such as the “Sons of the Soil Feeling” also affect entrepreneurial spirits and
may not be viable in every case.

Q: 6- Describe the variety of decisions in which production
operational manager is involved in?
Answer:
VARIETY OF DECISIONS:
Operations managers are required to make a series of decisions in the production
function. They plan, organize, staff, direct and control all the activities in the process of
converting all the inputs into finished products. At each level, operating managers are expected
to make decisions and implement them too. The decisions made by operations managers about
the activities of production systems tend to fall into three general categories viz.
1. Strategic decisions:
Decisions relating to products, processes and manufacturing facilities. These
decisions are major ones, having strategic importance and long-term significance for the
organization. It includes;
 Developing long range production plans
 Including process design
 Selecting and managing production Technology.
 Planning the arrangement of facilities
 Planning for the optimal distribution of Scare resources among
product lines or Business units.
 Answering the hoe much and where questions about long range
production capacity.
4. Operating decisions:
Decisions relating to planning production to meet demand. These
decisions are necessary in order to ensure that, the ongoing production of goods and
services meets the market demand and provides reasonable profits for the organization.
 Aggregate planning and master production scheduling
 Planning and controlling finished goods inventories.
 Planning materials and capacity requirements.

 Short range decisions about what to produce and when to
produce at each work centre.
 Managing all facts of materials system.
2. Control decisions:
The decisions which are relating to planning and controlling operations are called
control decisions. These decisions concern the day to day activities of workers, quality of
products and services, production and overhead costs and maintenance of machines.
 Planning for the effective and efficient use of human resources in
operations.
 Planning and controlling the quality of products and services.
 Planning and controlling projects.
 Planning for maintaining the machines and facilities of production.

Q: 7-
(a) A company that processes the fruit and vegetables is able to
produce 400 cases of peaches in one half-hour with workers. What
is labor productivity?
(b) A packaging paper company produces 3000 rolls of papers one
day. Overhead cost was $400, Labor cost was $175 and Material
cost was $60. Determine the overhead productivity and multifactor
productivity
(A)
Value of outputs = 400 cases
Value of inputs = 1/2 hour = 0.5 hour
Labor Productivity =?
Labor Productivity =
Output
Inputs
Labor Productivity =
400
0.5
= 800 cases per hour
Labor productivity = 800 cases perhour
(B)
Value of Output s = 3000 Rolls
Value of Inputs = Overhead + Labor cost + Material cost
= $ 400+175+60
= $ 635
Overhead Productivity =?
Multifactor Productivity =?
Overhead Productivity =
Output
Inputs
=
3000 rolles
$ 400
= 7.5 rolls
Multifactor Productivity =
Output
Inputs
=
3000 rolles
$ 635
= 4.72 rolls

Q: 8- Describe capacity planning and its process?
Answer:
CAPACITY PLANNING
Capacity planning is the process of determining the production capacity needed by an
organization to meet changing demands for its products. In the context of capacity planning,
design capacity is the maximum amount of work that an organization is capable of completing in
a given period.
CAPACITY PLANNING PROCESS:
Any manufacturing facility benefits from the financial and logistical capabilities of
capacity planning, no matter the size of the business. It is a method of management that features
the efficient use of resources through a projection of production needs. Capacity planning can
apply to a company’s computer network, storage, workforce maintenance, and product
manufacturing.
Planning for capacity breaks down into three steps: determining service level
requirements, analyzing current capacity, and planning for the future. To gain a better grasp on
how each applies to the planning process, let us take a closer look at each one individually.
1. DETERMINING SERVICE LEVEL REQUIREMENTS
In this step, a business breaks down work into categories; it also quantifies users’
expectations for how that works gets done. Within this first step exist three stages:
 Establishing workloads,
 Determining the unit of work,
 And setting service levels.
Businesses choose to organize workloads by either who is doing the work, the type of
work performed, or the work process. They then create a definition of satisfactory service for
each load. Whereas a workload measures the resources needed to accomplish the work, a unit of
work measures a quantity of work completed.
A "service level agreement" lays out the acceptable parameters between the provider and the
consumer.
2. ANALYZE CURRENT CAPACITY
Businesses take an in-depth look at their current production schedule to evaluate capacity. They
analyze each workload and system as a whole, following these steps:
 Compare the measurements of any items referenced in service level agreements with their
objectives

 Check the usage of the various resources of the system
 Take a look at the resource utilization for each workload and decipher which workloads
are the major users of each resource
 Determine where each workload spends its time. This provides insight into which
resources take the greatest portion of response time for each workload
3. PLAN FOR THE FUTURE
Finally, after analyzing current capacity, it’s time to plan for the future. Base a plan on
forecasted processing requirements to prevent overwhelming the system. In order to accomplish
this task, you need to know the amount of incoming work expected over the coming quarters.
Then, configure the optimal system for satisfying service levels over this period.
These three steps in capacity planning help your organization prepare for future growth.
Optimal configuration ensures you meet service level requirements while only purchasing what
you need to get the work completed. This process facilitates a manufacturing process’ well-
being. It offers your company an opportunity to optimize its production process and ready itself
for the future.

Q: 9 - What are the General Functions of Operations and
Production Management?
Answer:
GENERALFUNCTIONS OF OPM:
The functions of operation and production management are as follows:
1. Selection of Product and Design
Production management first selects the right product for production. Then it selects the
right design for the product. Care must be taken while selecting the product and design because
the survival and success of the company depend on it. The product must be selected only after
detailed evaluation of all the other alternative products. After selecting the right product, the
right design must be selected. The design must be according to the customers' requirements. It
must give the customers maximum value at the lowest cost. So, production management must
use techniques such as value engineering and value analysis.
2. Selection of Production Process
Production management must select the right production process. They must decide about
the type of technology, machines, material handling system, etc.
3. Selecting Right Production Capacity
Production management must select the right production capacity to match the demand
for the product. This is because more or less capacity will create problems. The production
manager must plan the capacity for both short and long term's production. He must use break-
even analysis for capacity planning.
4. Production Planning
Production management includes production planning. Here, the production manager
decides about the routing and scheduling. Routing means deciding the path of work and the
sequence of operations. The main objective of routing is to find out the best and most
economical sequence of operations to be followed in the manufacturing process. Routing ensures
a smooth flow of work. Scheduling means to decide when to start and when to complete a
particular production activity.
5. Production Control
Production management also includes production control. The manager has to monitor
and control the production. He has to find out whether the actual production is done as per plans
or not. He has to compare actual production with the plans and finds out the deviations. He then
takes necessary steps to correct these deviations.

6. Quality and Cost Control
Production management also includes quality and cost control. Quality and Cost Control
are given a lot of importance in today's competitive world. Customers all over the world want
good-quality products at cheapest prices. To satisfy this demand of consumers, the production
manager must continuously improve the quality of his products. Along with this, he must also
take essential steps to reduce the cost of his products.
7. Inventory Control
Production management also includes inventory control. The production manager must
monitor the level of inventories. There must be neither over stocking nor under stocking of
inventories. If there is an overstocking, then the working capital will be blocked, and the
materials may be spoiled, wasted or misused. If there is an under stocking, then production will
not take place as per schedule, and deliveries will be affected.
8. Maintenance and Replacement of Machines
Production management ensures proper maintenance and replacement of machines and
equipments. The production manager must have an efficient system for continuous inspection
(routine checks), cleaning, oiling, maintenance and replacement of machines, equipments, spare
parts, etc. This prevents breakdown of machines and avoids production halts.

Q: 10 - What is strategy also explain strategy formulation.
Answer:
STRATEGY:
Strategy is a long term plan of action designed to achieve a particular goal or set of goals
or objectives. Strategy is management's game plan for strengthening the performance of the
enterprise. It states how business should be conducted to achieve the desired goals.
“A plan of action designed to achieve a long-term or overall aim”.
STRATEGYFORMULATION:
Strategy formulation refers to the process of choosing the most appropriate course of
action for the realization of organizational goals and objectives and thereby achieving the
organizational vision. The process of strategy formulation basically involves six main steps.
Though these steps do not follow a rigid chronological order, however they are very rational and
can be easily followed in this order.
1. Setting Organizations’ objectives:
The key component of any strategy statement is to set the long-term objectives of the
organization. It is known that strategy is generally a medium for realization of organizational
objectives. Objectives stress the state of being there whereas Strategy stresses upon the process
of reaching there. Strategy includes both the fixation of objectives as well the medium to be used
to realize those objectives. Thus, strategy is a wider term which believes in the manner of
deployment of resources so as to achieve the objectives.
While fixing the organizational objectives, it is essential that the factors which influence
the selection of objectives must be analyzed before the selection of objectives. Once the
objectives and the factors influencing strategic decisions have been determined, it is easy to take
strategic decisions.
2. Evaluating the Organizational Environment:
The next step is to evaluate the general economic and industrial environment in which the
organization operates. This includes a review of the organizations competitive position. It is
essential to conduct a qualitative and quantitative review of an organizations existing product
line. The purpose of such a review is to make sure that the factors important for competitive
success in the market can be discovered so that the management can identify their own strengths
and weaknesses as well as their competitors’ strengths and weaknesses.
After identifying its strengths and weaknesses, an organization must keep a track of competitors’
moves and actions so as to discover probable opportunities of threats to its market or supply
sources.

3. Setting Quantitative Targets:
In this step, an organization must practically fix the quantitative target values for some of
the organizational objectives. The idea behind this is to compare with long term customers, so as
to evaluate the contribution that might be made by various product zones or operating
departments.
4. Aiming in context with the divisional plans:
In this step, the contributions made by each department or division or product category
within the organization are identified and accordingly strategic planning is done for each sub-
unit. This requires a careful analysis of macroeconomic trends.
5. Performance Analysis:
Performance analysis includes discovering and analyzing the gap between the planned or
desired performance. A critical evaluation of the organizations past performance, present
condition and the desired future conditions must be done by the organization. This critical
evaluation identifies the degree of gap that persists between the actual reality and the long-term
aspirations of the organization. An attempt is made by the organization to estimate its probable
future condition if the current trends persist.
6. Choice of Strategy:
This is the ultimate step in Strategy Formulation. The best course of action is actually
chosen after considering organizational goals, organizational strengths, potential and limitations
as well as the external opportunities.

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