Chapter-01 Productivity

Why About learn operation Management

1.If you work in manufacturing, understanding operations is important as this is the areas of the
business where a vast majority of a company’s money is made or lost.. if u just consider an
operation whatever it is whether it is manufacturing company whether it is banking sector
whether it is other academic sector each an every organization has three main department one is
finance another one is operation and last one is marketing because if u do want to any business
first we need to some money and after having the capital you have to generate the product or
you have to produced the service that’s why known about the operation management is
important

Finance is responsible for securing financial resources at favorable prices and allocating those
resources throughout the organization, as well as budgeting, analyzing investment proposals, and
providing funds for operations. Marketing is responsible for assessing consumer wants and
needs, and selling and promoting the organization’s goods or services. Operations are
responsible for producing the goods or providing the services offered by the organization.

Goods-Actually Goods are physical items that include- Raw materials, Parts, Subassemblies. If
you just consider your soft you are using a cell phone ,laptop .so cell phone laptop is also
goods .if we are using any other part thing in our home all the things are goods like micro oven,
chair, table .which are the tangibility characteristics that’s are goods .

Services- Services are activities that provide some combination of time, location, form, or
psychological value. that means whenever we feel or we face our problem regarding our mobile-
phone or sim card then we go to customer care service center there the time when we go
,location is the customer care center from its whether it will be automated or manual an then
psychological value is after getting the service may be problem will be solve or may be not.this
four thing will be always combined in a service section. .

Production- Production is the creation of goods and services. when we produce any good and
services that is the production.

Operation Management- is the management of systems or processes that create goods and/or
provide services. when we have to potato chips in our factory first we need to collect some raw
materials then we need to collect some spice and also the packaging box so after collecting the
raw material first we need to pill of the potato and then we need to cut the potato than we need to
voile the potato then we have fry it and then finally we have mixed all the spices with the potato
and lastly we need to do packaging and then shipment. All of this process system we need to
produce the product .its process system is production management.

Operation Management creates the value of goods and services by transforming input into output
Supply Chain- supply chain is a channel stretching from raw materials to components to
finished products carried to final buyers. Raw material—supplier---manufacturing—distribution
—customer---consumer.

Difference between goods and services.

Characteristics of goods it must be visible ,it must be shape ,it must affordable 1.Goods are
tangible 2.easily can be inventoried, it can be moved one place to another ,same goods provided
to random people quality is measureable .low customer interaction.

Characteristics of services service are intangible ,it can not be inventoried, can not move to one
place to another, quality is not measureable.

Economic Production System Input(labor, capital ,management)-process(economic system

transforms inputs to output)-output(goods and services)----feedback loop

Example- If we input potato then output will become chips. if we input wood then output will
become furniture.

Why feedback loop is necessary—Actually feedback loop is necessary for collecting the
opinion of the product. for collecting the quality that means the opinion the quality of the
product. heather all the features are working correctly or not. whether the customer are happy
with the product or not.

Work Measurement- Actullly Work Measurement is for identifying the standard time of any
task .so we need to identify the standard time for each an every task so that we can identify how
much time it will take to produce a product. How much time to required cut the potato how much
time to required voil a potato we need to identify the standard time.

Vital inputs for Production: Manpower and machine planning• Reducing labor costs•
Scheduling• Budgeting• Designing incentive systems-after identifying this standard time if it is
identify that within one hour it is possible to complete hundred product. if were employee able to
do more than hundred product at the time you will get some extra benefit.

Standard time- is Amount of time a qualified worker should spend to complete a specified task,
working at sustainable rate, using given methods, tools and equipment, raw material and
workplace. Formula=Normal time × allowances

Most commonly used methods of work measurement: Time study • Historical times •
Predetermined data • Work sampling

Difference between Historical times and predetermined data- actually while their collecting
historical data then we can collect data from our own company and from different company
also .but predetermined data we confined to our own company only.
Time Study: Measure the time by means of a stop watch taken by the operator to perform each
element of the operation. Most widely used method of work measurement. Average of a few
properly trained workers’ performed time are taken as the standard.

Work sampling- It is a technique for estimating the proportion of time that a

worker or machine spends on various activities and the idle time. example-while constructing the
building we need to construct the wall while making the wall workers has to do the task for a
long time after doing the wall they need to plaster then the need to do painting that’s work
sampling is appropriate for long time non repetitive task.

Basic difference between work sampling and time study- when we have time study we found
that it is appropriate for short and repetitive task but work sampling is appropriate for long and
non repetitive task

Formula

Observed Time (OT =

∑ XI
N

Normal Time= OT× PR

Standard Time (ST)=NT× AF

AF JOB =1+A

Productivity: Productivity is the ratio of outputs (goods and services) divided by the inputs
(resources such as labor and capital) .if input is 100 and output is 60 and waste is 40 so out
productivity is 60% . if we are reduced the waste then we can improved our productivity.
Output /input .If we used productivity Measure of process and performance improvement.
Productivity is increased then our standard of living improve.

Formula-unit produced/ input

Productivity Growth =Current Productivity- Previous Productivity) × 100 /Previous

Productivity

Difference between single and multifactor productivity .

Single-factor productivity refers to the measurement of productivity that is a ratio of output and one
input factor. One resource input

Multifactor productivity (MFP) is a measure of economic performance that compares the amount of
output to the amount of combined inputs used to produce that output. Multiple resource inputs
 output
Single Factor Productivity = labor+ Material+ overhead

E-business: Use of the Internet to transact business

E-commerce: Consumer-to-business transaction

Challenges facing operations managers: Developing and producing safe, quality products
Maintaining a clean environment, Providing a safe workplace

Ethical Conduct: Financial statements, Worker safety, Product safety, Quality, The environment,
The community, Hiring and firing workers, Closing facilities, Workers’ right

Respect Employees--can gain the respect of employees by standing up for their best interests
and offering strong, professional leadership.

Maintain right price-Cost-based pricing involves calculating the total costs it takes to make
your product, then adding a percentage markup to determine the right price