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01 - Operations and Productivity
01 - Operations and Productivity
01 - Operations and Productivity
Organizational Functions
Marketing
Gets customers
Operations
Finance/Accounting
Obtains funds
Tracks money
Prof. Kedar P. Joshi
Current
Sales
Cost of Goods Sold
Gross Margin
Finance Costs
Net
Margin
Taxes @ 25%
Contribution
Finance &
Accounting Option
Sales Revenue : +50% Finance Costs: -50%
OM Option
Production
Costs: -20%
$100,000
$100,000
$100,000
$150,000
-80,000
-120,000
-80,000
-64,000
20,000
-6,000
14,000
30,000
-6,000
24,000
20,000
-3,000
17,000
36,000
-6,000
30,000
-3,500
10,500
-6,000
18,000
-4,250
12,750
-7,500
22,500
Organizational Charts
Commercial Bank
Operations
Finance
Marketing
Teller Scheduling
Check Clearing
Collection
Transaction
processing
Facilities
design/layout
Vault operations
Maintenance
Security
Investments
Security
Real estate
Loans
Commercial
Industrial
Financial
Personal
Mortgage
Accounting
Auditing
Trust Department
Organizational Charts
Manufacturing
Operations
Finance/
accounting
Facilities
Construction; maintenance
Design
Industrial engineering
Disbursements/
credits
Receivables
Payables
General ledger
Funds Management
Money market
International
exchange
Capital requirements
Stock issue
Bond issue
and recall
Marketing
Sales
promotion
Advertising
Sales
Market
research
Process analysis
Significant Events in OM
GOODS OR SERVICES?
OPM 1 Term 2, B2014-16, Oct-Dec 2014
14
Characteristics of Goods
Tangible product
Consistent product
definition
Production usually separate
from consumption
Can be inventoried
Low customer interaction
Characteristics of Services
Intangible product
Produced and consumed at
same time
Often unique
High customer interaction
Inconsistent product
definition
Often knowledge-based
Frequently dispersed
OPM 1 Term 2, B2014-16, Oct-Dec 2014
Reselling unusual
Difficult to inventory
Quality difficult to measure
Selling is part of service
Attributes of Services
(Intangible Product)
New Trends in OM
Global focus
Mass
customization
Just-in-time
performance
Empowered
employees
Supply chain
partnering
Rapid
product
development
Environmentally
sensitive
production
Ethics
11th 5 yr plan
Heavy manufacturing
& high technology
Light industry
The end of cheap China: What do soaring Chinese wages mean for global manufacturing? Mar 10th 2012 | HONG KONG AND SHENZHEN
Source: http://www.economist.com/node/21549956
OPM 1 Term 2, B2014-16, Oct-Dec 2014
Made In India*: As China begins to lose its competitive advantage, manufacturing starts moving to India by Goutam Das
Source: http://businesstoday.intoday.in/story/india-benefits-china-begins-to-lose-manufacturing-edge/1/203040.html
Made in India
Havells
Bosch
Micromax
Made In India*: As China begins to lose its competitive advantage, manufacturing starts moving to India by Goutam Das
Source: http://businesstoday.intoday.in/story/india-benefits-china-begins-to-lose-manufacturing-edge/1/203040.html
OPM 1 Term 2, B2014-16, Oct-Dec 2014
PRODUCTIVITY CHALLENGE
OPM 1 Term 2, B2014-16, Oct-Dec 2014
Productivity Challenge
Productivity is the ratio of outputs (goods and services) divided by the
inputs (resources such as labour and capital)
The objective is to improve productivity!
Important Note!
Productivity
Productivity =
Units produced
Input used
Productivity Calculations
Labor Productivity
Productivity =
Units produced
Labor-hours used
1,000
=
= 4 units/labor-hour
250
One resource input single-factor productivity
OPM 1 Term 2, B2014-16, Oct-Dec 2014
Multi-Factor Productivity
Productivity =
Output
Labor + Material + Energy +
Capital + Miscellaneous
PRACTICE PROBLEM
OPM 1 Term 2, B2014-16, Oct-Dec 2014
32
Old labor
=
productivity
8 titles/day
Overhead = $400/day
8 titles/day
32 labor-hrs
8 titles/day
Overhead = $400/day
8 titles/day
Old labor
=
= .25 titles/labor-hr
productivity
32 labor-hrs
8 titles/day
Overhead = $400/day
Overhead = $800/day
8 titles/day
Old labor
=
= .25 titles/labor-hr
productivity
32 labor-hrs
14 titles/day
New labor
=
productivity
32 labor-hrs
OPM 1 Term 2, B2014-16, Oct-Dec 2014
8 titles/day
Overhead = $400/day
Overhead = $800/day
8 titles/day
Old labor
=
= .25 titles/labor-hr
productivity
32 labor-hrs
14 titles/day
New labor
=
= .4375 titles/labor-hr
productivity
32 labor-hrs
OPM 1 Term 2, B2014-16, Oct-Dec 2014
8 titles/day
Overhead = $400/day
14 titles/day
Overhead = $800/day
Old multifactor
=
productivity
8 titles/day
$640 + 400
8 titles/day
Overhead = $400/day
Overhead = $800/day
8 titles/day
Old multifactor
=
= .0077 titles/dollar
productivity
$640 + 400
8 titles/day
Overhead = $400/day
Overhead = $800/day
8 titles/day
Old multifactor
=
= .0077 titles/dollar
productivity
$640 + 400
14 titles/day
New multifactor
=
productivity
$640 + 800
OPM 1 Term 2, B2014-16, Oct-Dec 2014
8 titles/day
Overhead = $400/day
Overhead = $800/day
8 titles/day
Old multifactor
=
= .0077 titles/dollar
productivity
$640 + 400
14 titles/day
New multifactor
=
= .0097 titles/dollar
productivity
$640 + 800
OPM 1 Term 2, B2014-16, Oct-Dec 2014
Measurement Problems
Quality may change while the quantity of inputs and outputs
remains constant
External elements may cause an increase or decrease in
productivity
Precise units of measure may be lacking