Chapter 4: Production and Operations Management – Questions & Answers

📌 Part A – 1 Mark Questions (Very Short Answer)

1. What is production management?
   Production management means managing the process of converting raw materials into finished goods.
2. What is the difference between production and operations?
   Production makes tangible goods (like cars). Operations provide services (like banking).
3. Who makes strategic decisions?
   Top level management makes strategic decisions.
4. Who makes tactical decisions?
   Middle level management makes tactical decisions.
5. Who makes operational decisions?
   Lower level management or floor managers make operational decisions.
6. What are strategic decisions? Give an example.
   Strategic decisions are long-term plans for 5+ years. Example: Building a new factory.
7. What are operational decisions? Give an example.
   Operational decisions are daily plans. Example: Deciding today’s worker schedule.
8. What is plant location?
   Plant location means deciding where to place a factory or business facility.
9. What is plant layout?
   Plant layout is the physical arrangement of machines, equipment, and workers in a factory.
10. Name the four types of plant layout.
    Product layout, Process layout, Fixed position layout, and Combined layout.
11. What is product or line layout?
    In product layout, machines are arranged in the sequence of operations. Example: Car assembly line.
12. What is process layout?
    In process layout, similar machines are kept together in one place. Example: All drilling machines in one area.
13. What is fixed position layout? Give an example.
    In fixed position layout, the product stays in one place, and workers and machines move to it. Example: Ship building.
14. What is combined layout?
    Combined layout is a mix of product layout and process layout.
15. What is aggregate planning?
    Aggregate planning is medium-term planning (3 to 18 months) for production, workers, and inventory.
16. Name the three aggregate planning strategies.
    Level strategy, Chase strategy, and Hybrid strategy.
17. What is level strategy in aggregate planning?
    Level strategy keeps production and workforce constant. Inventory is used to meet changes in demand.
18. What is chase strategy in aggregate planning?
    Chase strategy changes production and workforce to match demand exactly.
19. What does MPS stand for?
    Master Production Schedule.
20. What is a Master Production Schedule (MPS)?
    MPS is a detailed plan showing what products to make and in what quantity each week.
21. MPS ensures a proper balance between ________ and ________.
    Demand and supply.
22. Give an example of an industry that uses fixed position layout.
    Ship building, aircraft manufacturing, or boiler manufacturing.
23. Give one factor that affects plant location.
    Nearness to raw materials (or availability of workers, power supply, transport, etc.).

📌 Part B – 2/4 Marks Questions (Short Answer)

1. Write any four differences between Production and Operations.

   • Output: Production makes tangible products (goods). Operations provide intangible services.
   • Scope: Production is used in a narrow sense (only manufacturing). Operations is used in a broad sense (all organizations).
   • Organization: Production is applied to manufacturing companies. Operations is applied to both manufacturing and service companies.
   • Stock: Production has closing stock (inventory) of goods. Operations have no closing stock as services cannot be stored.
   • Demand: Demand for products can be regular. Demand for services often fluctuates.

   (Any four points are sufficient)

2. Explain the three major decisions of production management.

   • Strategic Decisions: These are long-term decisions (5+ years) made by top management. Example: Building a new factory, buying big machines, choosing technology.
   • Tactical Decisions: These are medium-term decisions (2-3 years) made by middle management. Example: Planning equipment, hiring workers, improving efficiency.
   • Operational Decisions: These are short-term, daily decisions made by floor managers. Example: Assigning jobs to workers, deciding machine schedules, setting daily targets.

3. What factors should be considered when selecting a plant location? (Write any four)

   • Nearness to raw materials: Factory should be close to where raw materials are available to save transport cost.
   • Availability of labor: Skilled workers should be easily available nearby.
   • Transport and communication: Good roads, railways, and internet connectivity are important.
   • Power and water supply: Regular electricity and water are essential for production.
   • Government support: Good government policies, subsidies, and rules help the business.
   • Banking facilities: Banks should be nearby for easy financial transactions.

   (Any four factors are sufficient)

4. Briefly explain the different types of plant layout.

   • Product or Line Layout: Machines are arranged in the order of production steps. Used for mass production of one product. Example: Car assembly.
   • Process or Functional Layout: Similar machines are grouped together. Used for batch production. Example: All drilling machines in one section.
   • Fixed Position Layout: The product is too large to move, so it stays fixed. Workers, materials, and machines come to it. Example: Ship, bridge, or aircraft construction.
   • Combined Layout: A mix of product and process layouts. Used in most industries where some parts are made in batches and then assembled on a line.

5. What is aggregate planning? Explain its strategies.

   Aggregate planning is planning for production, workforce, and inventory for a medium-term period of 3 to 18 months. It helps to match supply with demand.

   Strategies:

   • Level Strategy: Production rate and workforce are kept constant. Inventory goes up when demand is low and down when demand is high.
   • Chase Strategy: Production rate is changed to match demand. Workers are hired when demand is high and laid off when demand is low.
   • Hybrid Strategy: A mix of level and chase strategies. Some parts are leveled, and some are chased to find a balance.

6. What is Master Production Schedule (MPS)? Why is it important?

   Master Production Schedule (MPS) is a detailed plan that shows exactly what products will be made and in what quantity, usually on a weekly basis.

   Importance: It helps to balance customer demand with the factory's production capacity. It ensures that the right products are available at the right time. It guides purchasing, staffing, and inventory decisions.

📌 Part C – 6/8 Marks Questions (Long Answer)

1. What is plant layout? Explain the different types of plant layout in detail with examples.

   Plant layout means the physical arrangement of machines, equipment, work areas, and other facilities in a factory. A good layout ensures a smooth flow of work and materials at the lowest cost.

   The four main types of plant layout are:

   1. Product or Line Layout:

   • Meaning: Machines and equipment are arranged in a single line according to the sequence of operations needed to make the product. The output of one machine becomes the input of the next.
   • Example: An automobile assembly line. The car chassis moves from one station to the next. At station one, the engine is fitted; at station two, the doors are fitted; at station three, the painting is done.
   • Suitable for: Mass production of a single or few standardized products.

   2. Process or Functional Layout:

   • Meaning: All machines of the same type or function are grouped together in one department. For example, all drilling machines are in the drilling department, all welding machines in the welding department. Jobs move from one department to another as needed.
   • Example: A machine shop where all lathe machines are kept in one area and all milling machines in another area. A job might first go to the lathe section, then to the milling section.
   • Suitable for: Batch production and job order production where many different products are made.

   3. Fixed Position Layout:

   • Meaning: The product is too large or heavy to move. It remains fixed at one location. All materials, machines, and workers are brought to the product's location.
   • Example: Construction of ships, airplanes, bridges, or large turbines. The ship is built in one dry dock, and all work happens there.
   • Suitable for: Projects involving very large, bulky products.

   4. Combined Layout:

   • Meaning: Most industries use a combination of product and process layouts to get the benefits of both. Some parts of the factory may be arranged by process, while the final assembly is done on a product line.
   • Example: A factory that makes components in batches (process layout) and then assembles them on a final assembly line (product layout).
   • Suitable for: Most modern industries that have both standardized and customized operations.

2. Explain the concept of aggregate planning and describe its three main strategies in detail with examples.

   Aggregate planning is an intermediate-term planning activity (usually for 3 to 18 months) that determines the best way to meet forecasted demand by adjusting production rates, workforce levels, and inventory levels. The goal is to balance costs and meet customer demand.

   The three main aggregate planning strategies are:

   1. Level Strategy:

   • Idea: Maintain a constant production rate and a stable workforce regardless of demand fluctuations. When demand is low, excess production is stored as inventory. When demand is high, the stored inventory is used to meet the extra demand.
   • Example: An ice cream factory produces the same quantity every month of the year. The ice cream made in winter (when demand is low) is stored in freezers. In summer, when demand is high, they sell from both current production and the stored inventory.
   • Features: Stable workforce, high inventory costs, low hiring/firing costs.

   2. Chase Strategy:

   • Idea: Adjust the production rate and workforce levels to exactly match the changing demand. When demand increases, hire more workers or add shifts. When demand decreases, lay off workers or reduce shifts. Inventory levels remain constant and low.
   • Example: A garment factory making festive wear. Before the festival season, they hire many temporary workers and run extra shifts to meet high demand. After the festival, they lay off the temporary workers and reduce shifts.
   • Features: Low inventory costs, high costs of hiring and firing, potential impact on employee morale.

   3. Hybrid Strategy (or Mixed Strategy):

   • Idea: Combine elements of both level and chase strategies to find a balance. A company might keep a core workforce stable (level) but use overtime or part-time workers to handle peak demand (chase).
   • Example: A toy company keeps its permanent workforce stable all year (level strategy). During the Christmas season, they ask permanent workers to do overtime and also hire some temporary staff (chase strategy) to meet the surge in demand.
   • Features: A balanced approach, tries to minimize the disadvantages of the other two strategies.