JEFF CEDRIC F.

FRANCIA
PRODUCTIONS AND OPERATIONS MANAGEMENT

REQUIREMENT #1: DISCUSS CHAPTER 7

The importance of work system design is underscored by the organization's dependence on human
efforts to accomplish its goals. work design is one of the oldest fields of operations management.
It is important for management to make design of work systems a key element of its operation
strategy. In spite of the major advances in computers and manufacturing technology, people are
still the heart of a business; they can make or break it, regardless of the technology used.
Technology is important but technology alone is not enough.

Job design is concerned with specifying the content and methods of jobs. In general, the goal of
job design is to create a work system that is productive and efficient, taking into account the costs
and benefits of alternatives for the organization and its workers. Practically speaking, job designers
are concerned with who will do a particular job, how that job will be done, and where it will be
done.

Successful job design must be:

- Carried out by experienced personnel who have the necessart training and background.
- Consistent with the goals of the organization.
- In written form.
- Understood and agreed to by both management and employees.

Job Enlargement means where two or more simple tasks are combined and allotted to an
employee Eg: As in the case of vehicle driver, apart from driving he can undertake the job of
maintenance of the vehicle.

Job rotation refers to a technique where the employee is periodically rotated from one job to
another within the work design. It involves moving employees among different jobs over a period
of time.
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Job enrichment involves providing an employee with more responsibility for a job and challenges
the individual’s skills at work. Enrichment involves increasing the decision-making authority and
encouraging the employee with their tasks.

Methods analysis is the study of how a job is done. Whereas job design shows the structure of the
job and names the tasks within the structure, methods analysis details the tasks and how to do
them.

The basic procedure in methods analysis is:

1. Identify the operation to be studied, and gather all pertinent facts about tools, equipment,
materials, and so on.

2. If the job is currently being done, discuss the job with the operator and supervisor to get their
input.

3. Study and document the present method of an existing job using process charts.

4. Analyze the job.

5. Propose new methods.

6. Install new methods.

7. Follow up installation to assure that improvements have been achieved.

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Flow process charts are used to review and critically examine the overall sequence of an operation
by focusing on the movements of the operator or the flow of materials. These charts are helpful in
identifying nonproductive parts of the process.
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Motion study is the systematic study of the human motions used to perform an operation. Below
is an example of motion study:
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There are a number of techniques that motion study analysts can use to develop efficient
procedures. Some most used techniques are: motion study principles; analysis of therbligs;
micromotion study; and charts.

Working conditions are an important aspect of job design. Physical factors such as temperature,
humidity, ventilation, illumination, and noise can have a significant impact on worker
performance in terms of productivity, quality of output, and accidents. In many instances,
government regulations apply.

Work measurement. Determines how long it should take to do a job.

Standard time. The length of time it should take a qualified worker using appropriate process and
tools to complete a specific job, allowing time for personal fatigue and unavoidable delays.

There are two basic systems of compensating employees, time-based system and output-based
system. For time-based system, the employee is compensated based on how long that employee
worked in a day/week/month. It is also called hourly and measured daywork system. Example
of this is the compensation of an instructor. On the other hand, output-based systems compensate
employee according to the amount of output they produce during a specific point in time. Time-
based system is more common than the latter because the computation for wages is straightforward
and managers can readily estimate the labor costs for a given employee level.

To obtain the maximum benefit from an incentive plan, the plan should be:

1. Accurate

2. Easy to apply

3. Consistent

4. Easy to understand

5. Fair
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PRODUCTIONS AND OPERATIONS MANAGEMENT

Furthermore, incentive systems may focus on the output of each individual or that of a group.

Individual incentive plans are based on meeting work-related performance standards, such as
quality, productivity, customer satisfaction, safety, or attendance.

Individual incentive plans require monitoring, and it is important to remember that the incentive
scheme is not a substitute for good management.

Team or group incentive plans are a reward for collective performance. These are most effective
when all group members have some impact on goals. The rewards can be equal or different for
each member, but this requires an understanding of team dynamics. Be sure to avoid contrasting
motivational forces.

Companies that operate a knowledge-based pay environment reward employees for reaching
specific criteria with regard to their professional and personal skills, education and development.

The innate incentive in knowledge-based pay structures are for individuals to improve and
master themselves in terms of skills and assessed attainment.
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PRODUCTIONS AND OPERATIONS MANAGEMENT

REQUIREMENT #2: DISCUSS CHAPTER 8

There are two primary reasons that location decisions are a highly important part of
production systems design. One is that they entail a long-term commitment, which makes mistakes
difficult to overcome. The other is that location decisions often have an impact on investment
requirements, operating costs and revenues, and operations. For instance, a poor choice of location
might result in excessive transportation costs, a shortage of qualified labor, loss of competitive
advantage, inadequate supplies of raw materials, or some similar condition that is detrimental to
operations. For services, a poor location could result in loss of customers and/or high operating
costs.

Manageres can consider four options in location planning:

1. Expand an existing facility.

2. Add new locations while retaining existing facilities.
3. Shut down one location and move to another.
4. Do nothing.

Location Decision:

General procedure

1. Decide on the criteria to use for evaluating location alternatives

2. Identify important factors, such as location of markets or raw materials

3. Develop location alternatives

4. Evaluate the alternatives and make a decision

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PRODUCTIONS AND OPERATIONS MANAGEMENT

Location of business

The location of a business is the place where it is situated. There are a number of factors that need
to be considered in choosing a location for a business. One of the earliest decisions any
entrepreneur has to make is where to locate his or her business. In order to do this, he or she has
to make a careful assessment of costs. The ideal location would be one where costs are minimised.
The entrepreneur would need to look at the benefits which each area had to offer as well as any
government help which might be available.

The main factors affecting location are:

Market. The nearness of the market and the cost of delivering the goods are likely to be important
factors.

Raw materials. If the raw materials are bulky and expensive to transport it will clearly be in the
entrepreneur's interest to locate near to them.

Transport costs. The two major influences are the pull of the market and the pull of the raw
materials and these are determined by whether or not the industry is bulk-increasing or bulk-
decreasing.

Land. Land costs vary considerably nationally and some firms, e.g. wholesalers, might need a
large square-footage. They might, therefore, be influenced by the cheaper rents and property prices
found in some areas.
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PRODUCTIONS AND OPERATIONS MANAGEMENT

Labour. The availability of labour might well attract firms to an area, particularly if that labour
force has the skills they require.

Safety. Some industries have to locate their premises well away from high density population
levels and their choice of location is limited.

Waste disposal. Certain industries produce considerable waste and the costs associated with the
disposal of this might affect their location.

Government. Government provides special assistance to areas of high unemployment. This takes
place within the UK, and is also a feature of wider European Union regional policy.

A convenient location. A number of businesses have set up close to Heathrow Airport because of
its location. For example, companies engaging in importing and exporting find this a convenient
location. In addition there is a range of hotels, and taxi firms who benefit from the international
flow of passengers. Additionally security and aircraft maintenance firms have located there.
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Factors Affecting Region/Community Decision

• Attractiveness of region (culture, taxes, climate, etc.).

• Labor availability, costs, attitudes towards unions.

• Environmental regulations of state and town.

• Proximity to customers & suppliers.

• Corporate desires.

• Costs and availability of utilities.

• Government incentives.

• Land/construction costs.

Factors Affecting Site Decision

• Access to air, rail, highway, and waterway systems.

• Proximity to needed services/supplies.

• Site size and cost.

• Zoning restrictions.

• Environmental impact issues.

Multiple Plant Manufacturing Strategies

1. Product Plant Strategy -assign different product lines to different plants

2. Market Area Plant Strategy -assign different market areas to different plants

3. Process Plant Strategy -assign different processes to different plants

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PRODUCTIONS AND OPERATIONS MANAGEMENT

Location Evaluation Methods

Factor-Rating Method

- Most widely used location technique.

- Useful for service & industrial locations.
- Rates locations using factors.
- Intangible (qualitative) factors.
Example: Education quality, labor skills.
- Tangible (quantitative) factors.
Example: Short-run & long-run costs.
- Based on weighted average.

Locational Break-Even Analysis

- Cost-volume analysis used for location.

Steps:

1. Determine fixed & variable costs for each location.

2. Find break-even point.
3. Plot cost for each location.
4. Select location with lowest total cost for expected production volume.

- Must be above break-even.

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PRODUCTIONS AND OPERATIONS MANAGEMENT

Center of Gravity Method

- Finds location of single facility serving several destinations.

- Used for services and distribution centers.

Requires:

 Location of existing destinations (Markets, retailers etc.)

 Volume to be shipped.
 Shipping distance (or cost).

Transportation Model

- Finds amount to be shipped from several sources to several destinations.

- Used primarily for industrial locations.
- Type of linear programming model.

Objective: Minimize total production & shipping costs.

Constraints:

 Production capacities at sources (factories).

 Demand requirements at destinations.