This article throws light upon the two main activities performed by operations management. The activities are: 1. Design of the Operations System 2. Operations and Control Decision.

Activity # 1. Design of the Operations System:

These are long-term strategic decisions related to product design, process design, location of facilities, facilities layout and capacity planning.

Product design:

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


Process design:

It determines the way the product or service will be produced.

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 equipment’s should be used — machines, human labour or computer aided manufacturing equipment’s?

(iv) How should the product flow through the production system?

Additions and deletions of work combinations are tried to arrive at the optimum sequence of operations process.


Location of facilities:

This decides the place where operation facilities will be located. They may be located near the source of raw material or consumers. The decision to locate is affected by 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 departments so that goods are produced at minimum cost. In a product layout, machines are arranged in the sequence 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 an existing product mix of an organisation’s operations.” Capacity planning decides 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) Analysing 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.

Activity # 2. Operations and Control Decision:

These decisions relate to inventory planning and control, purchase and quality control. Production planning and control involves five functions: Routing, Loading, Scheduling, Dispatching and Expediting.



It determines:

(1) The operations,

(2) Sequence of operations, and

(3) The path through which operations will be performed.


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



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


It issues orders by the head of operations department to start the operations.


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