Module 1 8operations Management

Dr. Filemon C.
Aguilar Memorial College of Las Piñas

Golden Gate Subdivision, Talon III, Las Piñas City
CBME 2 - OPERATIONS MANAGEMENT WITH TOTAL QUALITY MANAGEMENT
MODULE 1: OPERATIONS AND PRODUCTIVITY

Lesson presentation:
This module discusses the introduction to operations management, specifically,
operations and productivity. Operations management will be defined in many ways as well
as goods and services. Differences between goods and services will be identified as well
as production and productivity. Problems related to productivity will also be analyzed and
solved.
Figure
1.
Production Process for Products and Services
(Attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license.)
Operations management is a discipline that applies to all industries. Regardless of

whether it is a restaurant, a manufacturing company, a hotel, a hospital, or a department
store - the production of goods and services needs operation management. And the
effective and efficient production of goods and services requires application of the
concepts, tools and techniques of operations management. Before we proceed to our main
topic, let us first define some terms.
Production is the creation of goods and services. It turns inputs, such as natural resources,
raw materials, human resources, and capital, into outputs, which are goods and services.
This process is shown in the above Figure1. Managing this conversion process is the role
of operations management.
Goods are physical products that can be seen, touch, or possibly consume.
Dr. Filemon C. Aguilar Memorial College of Las Piñas
Services are primary or complementary activities that does not directly produce physical
products
Production management deals with decision making related to production processes so

that the resulting goods or services are produced according to specifications, in the amount
and by the schedule demanded and out of minimum cost” E.S. Buffa
Production management is the process of planning and regulating the operations of that
part of a business which is responsible for actual transformation of materials into finished
products. A.W.Field
Production management is concerned with the process which convert the inputs into
outputs such as men, material, money, method etc. and the output such as goods or
services. H.A.Harding
Operations management involves three main types of decisions, typically made at

three different stages:
1. Production planning. The first decisions facing operations managers come at

the planning stage. At this stage, managers decide where, when, and how production
will occur. They determine site locations and obtain the necessary resources.
2. Production control. At this stage, the decision-making process focuses on

controlling quality and costs, scheduling, and the actual day-to-day operations of
running a factory or service facility.
3. Improving production and operations. The final stage of operations management

focuses on developing more efficient methods of producing the firm’s goods or
services.
Heritage of Operations Management https://slideplayer.com/slide/8584134/#.XzevKTzAy2A.google
Example 1.
Collins title Company has a staff of 4 each, each working 8 hours per day (for a payroll cost
of P640/day) and overhead expenses of P400 per day. Collins processes and closes on 8
titles each day. The company recently purchased a computerized title-search system that
will allow the processing of 14 titles per day. Although the staff, their work hours, and pay
are the same, the overhead expenses are now P800 per day. What will be the impact on
productivity of the new system?
Given: Old System New System
no. of staff = 4 working 8 hrs/day 4 working 8 hrs/day
Payroll cost = P640/day P640/day
Overhead expenses = P400/day P800
No. of closes = 8 titles /day 14 titles /day
Required: Impact on productivity
Solution:
Labor productivity has increased from .25 to .4375. The change is

.4375/.25 = 1.75, or a 75% increase in labor productivity.
Multifactor productivity has increased from .0077 to .0097. This change is

0.0097/.0077 = 1.26 or a 26% increase in multi factor productivity.
Example 2.
Productivity can be measured in a variety of ways, such as by labor, capital, energy,
material usage, and so on. At Modern Lumber, Inc. Art Binley, president and producer of
apple crates sold to growers, has been able, with his current equipment, to produce 240
crates per 100 logs. He currently purchases 100 logs per day, and each log requires 3
labor-hours to process. He believes that he can hire a professional buyer who can buy a
better-quality log at the same cost. If this is the case, he can increase his production to
260 crates per 100logs. His labor-hours will increase by 8 hours per day.
What will be impact on productivity (measured in crates/labor-hour) if the buyer is hired?
Given: current units produced per 100 logs = 240
Current Labor-hours per 100logs = 3
Units produced per 100 logs with buyer = 260
Labor-hours with buyer = 8
Required: impact on productivity
240crates
P=
Solution: Current labor productivity, 100logsx3hours/log = .8 crates/labor-hour
260crates
P 1=
Labor productivity with buyer, (100logs)(3hours/log )+8hours = .844crates/labor-hour
Using current productivity as a base, the increase will be .844/.8 =1.055 or a 5.5%
Example 3.
Art Binley has decided to look at his productivity from a multifactor (total factor
productivity) perspective. To do so, he has determined his labor, capital, energy. And
material usage and decided to use dollars as the common denominator. His total labor-
hours are now 300 per day and will increase to 308 per day. His capital and energy costs
will remain constant at P350 and P150 per day, respectively. Material costs for the 100
logs per day are P1,000 and will remain the same. If he pays an average of P10 per hour
(with fringes), determine the impact on the productivity.
Given: Labor-hour/day = 300
Material cost for 100 logs/day = P1,000
Capital = P350
Energy = 150
Pay/hour = P10
Required Impact on Productivity
Solution:
Current System System with Buyer

Labor 300hrs x P10 = P3,000 308 x 10 = P3,080
Material 100 logs/day = P1,000 P1,000

Capital 350 350
Energy 150 150
P4,500 P4,580
Multifactor 240crates 260 crates
= =0. 0533crates/peso = =0 .0568
Productivity P4,500 peso
Using the current productivity, the increase will be
0.0568/0.0533 = 1.066 or 6.6% increase.
MODULE2: OPERATIONS STRATEGY IN A GLOBAL ENVIRONMENT

Lesson presentation
This module discusses operations strategy in a global environment. We start by
discussing first the mission and strategy followed by identifying and explaining the three
strategic approaches to competitive advantage. Furthermore, the ten decisions of
operations management will be discussed as well as the five OM strategy insights provided
by PIMS research.
A Global View of Operations

The term ‘globalization’ describes businesses’ deployment of facilities and
operations around the world. This means that domestic production and exporting may no
longer be feasible business model and that local production and exportation may no longer
guarantee success or even survival. As what Prof Thomas Sewell claimed “ No great
civilization has developed in isolation”. The globalization of strategy contributes efficiency
and adds value to goods and services, however it also complicates the work of operations
managers. The following are identified reasons why domestic business operations decide
to change to some form of global operations
1. Reduce Costs Foreign locations with lower wage rates and tariffs can lower direct
and indirect costs.
2. Improve the Supply Chain The supply chain can be improved by locating facilities
closer to countries with unique resources
3. Provide Better Goods and Services In order to provide better goods and services, we
need a better understanding of differences in culture and of the way business is done in
different countries.
4. Understand Markets Interacting with foreign customers and suppliers can lead to
new opportunities. Knowledge of the markets not only helps industries understand where
the market is going but also helps them diversify their customer base, add production
flexibility, and smooth the business cycle.
5. Learn to improve operations. Learning cannot be done alone. Industries are able
to serve their customers well when they are open to free flow of ideas.
6. Attract and Retain Global Talent Global organizations can attract and retain better
employees by offering more employment opportunities. During economic downturns in one
country, a global firm has the means to relocate unneeded personnel to more prosperous
country.
Missions and Strategies

An effective operations management effort must have a mission so it knows where it

is going and a strategy so it knows how to succeed.
Mission states the purpose or rationale for organization’s existence. This provide
boundaries and focus for organizations and the concept around which the industry can rally.
Once an organization’s mission has been decide, each department within the firm
determines their own mission that is in line with the firm’s mission. Below are some
examples of a firm’s mission.
Strategy on the other hand is an organization’s action plan to achieve the mission.
Each department has a strategy for achieving its own mission and at the same time
helping the firm attain the overall mission. There are three strategic approaches to
competitive advantage - differentiation, cost leadership and response. When we say
competitive advantage, we are referring to the creation of a unique advantage over
competitors.
1.
Differentiation - is concerned with providing uniqueness. This can be attained, for example,
through innovative design, by providing a broad product line, by offering excellent after-sale
service, or through adding a sensory experience to the product or service offering. In the
service sector, one option for differentiation is through experience. The idea of experience
differentiation is to engage the customer to use people’s five senses so they become
immersed, or even an active participant in the product. Example on this are Disney with its
Magic Kingdom and Hard Rock Cafe with its classic rock music, big screen rock videos,
memorabilia, etc.
1. Cost leadership - achieving maximum value, as perceived by the customer. This can
be attained, for example, via low overhead, effective capacity use, or efficient inventory
management. A low cost strategy does not imply low quality.
2. Response - also referred to as flexible response, is a set of values related to rapid,
flexible, and reliable performance. This can be attained, for example, by offering a
flexible product line, reliable scheduling, or speedy delivery.
In practice, these three approaches can increase productivity and generate a
sustainable competitive advantage, as shown in the figure below. Correct
implementation of the following decisions by operations managers will allow these
advantages to be achieved.
Ten Strategic OM Decisions

The three approaches to competitive advantages can be achieved when managers
make effective decisions in ten areas of operations management. These are known as
the operations decisions. The ten decisions of operations management that support
missions and implement strategies are:
This ten strategic operations management are implemented in ways that provide
competitive advantage.
Issues in Operations Strategy
Whether the operations management strategy is differentiation, cost or response, OM is a
critical player. Hence before establishing and attempting to implement a strategy, some
alternative perspective may be utilized.
1. Resources view. This is a method used to evaluate the resources at their disposal and
manage or alter them to achieve competitive challenge. This means OM should think in
terms of financial, physical, human, and technological resources available and ensure that
the potential strategy matches with those resources.
2. Value-chain analysis. This is a method that is used to identify activities that represent
strengths, or potential strengths.
3. Five forces method. This is a method of analyzing the five forces-immediate rivals,
potential entrants, customers, suppliers, and substitute products, in the competitive
environment.
Strategy Development and Implementation

Once OM understands the firm itself and the environment, a SWOT analysis should follow.,
then the key success factors should be identified as well as the core competencies.
SWOT Analysis is a formal review of the internal strengths and weakness and the external
opportunity and threats. This provides an excellent model for evaluating a strategy.
Key Success Factors (KSF) are those activities that necessary for a firm to achieve its
goals.
Core competencies. Are the set of unique skills, talents, and capabilities that a firm dies
at a world-class standard.
Global Operations Strategy Options

As was previously discussed many operations strategies require an international
dimension. A firm with an international dimension is called international business or a
multinational corporation. When we talk of an international business we are referring to a

firm that engages in international trade or investment, while a multinational corporation is a
firm with extensive international business involvement. Multinational corporation applies to
most of the world’s large, well-known businesses. The following are the operation
strategies that operations managers of international and multinational firms could utilized:
(Heizer and Render, 10th ed)
The saying “no man is an island” can be applied also in industries. No firm will
survive alone. For the firm to grow, it has to tie up with other firms, most especially outside
the country. International operations provide a significant increase in both the challenges
and opportunities for different firms. Although the job is challenging to operations
managers, international or global operations could improve productivity. There are six
reasons why domestic business operations decide to change to international operation.
They are 1) reduce cost, 2) improve the supply chain, 3) provide better goods and
services, 4) understand markets, 5) learn to improve operations, and 6) attract and retain
global talent.
Establishing a business firm requires a mission and strategy for it to succeed.
Mission is needed so that it will know where it is going and a strategy so it will know how to
get there. Business firms achieve mission in three conceptual ways: 1) differentiation, 2)
cost leadership, and 3) response. These three conceptual ways can be achieved when
managers make effective decisions in ten areas which are called operations decisions.
Business firms, in order to be successful, need to identify its strengths and weaknesses and
complement the opportunities and threats in the environment. If this process is performed
well, the firm can have competitive advantage through some combination of product
differentiation, low cost, and response. This is often achieved through a move to
international, multi domestic, global, or transnational strategies.
MODULE3: PROJECT MANAGEMENT PART 1

Lesson presentation
This module discusses the project management. According to Jay Heizer and Barry
Render, authors of the book titled Principles of Operations Management, “wherever your
career takes you, one of the most useful tools you can have, as a manager, is the ability to
manage a project”. So it is of utmost importance that we master this topic.
A project refers to a series of related tasks directed toward some major output that
requires to be completed in a specified time considering costs and quality
constraints. Many require a significant period of time to execute. Projects entail different
levels of uncertainty and therefore carry risks. While often thought to be one-time
occurrences, some projects can be repeated or transferred to other settings or products
resulting to another output.
Structuring Projects
Before any project starts, management decides on how the project will be structured and
looks at the characteristics of the project leader. The three organizational structures are
pure project, function project or matrix project.
Pure Project - is a self-contained team works full time on the project. It is a small project
oriented team that is autonomous, an entrepreneurial center of opportunity and
characterized by speed and flexibility (Tom Peters).
Advantages
 Only the project manager has full authority over the project.
 Team members report to only one boss.
 Lines of communication are shorter so that decisions are quick.
 Team pride, motivation and commitment are high.
Disadvantages
 Resources are duplicated because equipment and people are not shared across
projects.
 Team members are often both physically and psychologically removed from
headquarters so that organizational goals and policies are ignored.
 Organization lags in its knowledge of new technology due to weakened functional
divisions.
 Team members have no functional area home, they Team members worry about life-
after-project because they have no functional area home; project termination may be
delayed.
Functional Project
At the other end of the project organization spectrum is the functional project, housing the
project within a functional division. The organizational structure might look like the one
shown below:
Advantages
 Team members can work on several projects.

 Technical expertise is maintained within the functional area even if individuals leave
the project or organization.
 There is a functional area where team members go back to after completing the
project. Functional specialists can advance vertically.
 A critical mass of specialized functional area experts creates synergistic solutions to
a project’s technical problems.
Disadvantages
 Aspects of the project that are not directly related to the functional area get
shortchanged.
 Motivation of team members is often weak.
 Needs of the client are secondary and are responded to slowly.
Matrix Project
 This attempts to blend the properties of functional and pure project structures.
 Each project utilizes people from different functional areas.
 The project manager decides what tasks and when they need to be performed but
functional managers control which people and technologies are to be used.
 Different projects (rows of the matrix) borrow resources from functional areas
(columns).
 Senior management decides whether a weak, balanced or strong form of a matrix.
This refers to whether project managers have little, equal or more authority than the
functional managers who control the resources.
 The organizational structure might look like the one shown below.
Advantages
 Communication between functional divisions is enhanced.

 A project manager is held responsible for successful completion of the project.
 Duplication of resources is minimized.
 Team members have a functional "home" after project completion, so they are less
worried about life-after-project than if they were a pure project organization.
 Policies of the parent organization are followed increasing support for the project.
Disadvantages
 There are two bosses. Who is listened to first, the functional manager or the project
manager?
 Requires strong negotiating skills from the project manager.
 Sub-optimization is a danger as project managers might hoard resources for their
own project and consequently harming other projects.
It should be noted that the project manager is the primary contact point with the customer
no matter which organizational form is chosen. Consequently, communication and flexibility
are enhanced due to one person having the responsibility for the successful completion of
the project.
Project management involves planning, directing and controlling resources (people,
equipment and material) to meet the technical, cost and time constraints of the project.
The primary challenge of project management is to achieve all of the project goals within
the given constraint.
Importance of Project Management
1. Strategic Alignment. Ensures what is being delivered is right and will deliver real value
against the business opportunity.
2. Clear Focus and Objectives. Ensures there’s a prper plan for executing on strategic
goals.
3. Quality Control. Ensures the quality of whatever is being dlivered, consistently hits the
mark.
4. Leadership. Brings leadership and direction to projects.
5. Risk Management. Ensues risks are properly managed and mitigated against to avoid
becoming issues.
6. Orderly Process. Ensures proper project process is followed throughout the project life
cycle.
7. Subject Matter Expertise. Someone needs to be able to understand if everyone’s
doing what they should.
8. Continuous Oversight. Ensures a project’s progress is tracked and reported properly.
9. Managing and Learning from Failure and Success. It learn from the successes and
failures of the past.
Management of projects involves three phases. These are the following:
1. Planning. This includes goal setting, defining the project, and team organization
2. Scheduling. This phase relates people, money, and supplies to specific activities
and relates these activities to each other.
3. Controlling. Here the firm monitors resources, costs, quality, and budgets. It also
revises or changes plans and shifts resources to meet time and cost demands.
Project Planning
In this phase a project organization is usually formed to make sure existing programs
continue to run smoothly on a day to day basis while new projects are successfully
completed.
The project organization works best when:

1. Work can be defined with a specific goal and deadline.
2. The job is unique or somewhat unfamiliar to the existing organization.
3. The work contains complex interrelated tasks requiring specialized skills.
4. The project is temporary but critical to the organization.
5. The project cuts across organizational lines.
Project Scheduling
This phase involves sequencing and allotting time to all project activities. The manager
decides how long each activity will take and compute how many people and materials will
be needed at each stage of production. Managers also chart separate schedules for
personnel needs by type of skill. Gantt charts are also used in scheduling.
Gantt charts are low-cost planning charts used in scheduling resources and alloted time.
Project Controlling
This phase involves close monitoring of resources, cost, quality, and budgets by using a
feedback loop to revise the project plan and shift resources to where they are needed
most.
Project Life Cycle

Projects vary in size, length and scope according to its nature and purpose. Nevertheless,
projects go through the same series of stages. These phases include project definition,
planning, execution of major activities and project phase-out. A graphical representation is
shown below that also shows where the bulk of the work (effort level) might be.
Definition
 This stage has two parts. The first part involves conceptualizing the project. The
organization, here, may recognize the need for the project or respond to a request
for a proposal from a potential customer or client. The second part involves
conducting the feasibility studies. This examines the expected costs, benefits and
risks of undertaking the project.
 Goals, specifications, tasks, responsibilities and teams for the project are set; the
project manager is also appointed.
 This stage is sometimes referred to as the initiation stage. A business problem (or an
opportunity) is usually identified and might solicit several solutions. The feasibility
then is conducted to explore the ability of different solutions in solving the problem or
taking advantage of the opportunity at hand.
Planning
 This stage spells out details of the work and the risks involved. This entails preparing
specifics for the following:
 Project Plan: Outlines the activities, tasks, dependencies and timeframes.
 Resource Plan: Lists the labor, equipment and materials required.
 Financial Plan: Identifying the labor, equipment and materials costs.
 Quality Plan: Provide quality targets, assurance and control measures.
 Risk Plan: Highlight potential risks and actions taken to mitigate them.
 Acceptance Plan: List the criteria to be met to gain customer acceptance.
 Communications Plan: List the information needed to inform stakeholders.
 Procurement Plan: Identify products to be sourced from suppliers.
 The project is now ready for execution after all these plans are put in place.
Execution
 Involves implementing each of the activities and tasks in project plan.
 Monitoring and controlling activities are executed to ensure that the deliverables of
the project are met. Changes, risks and issues are identified and reviewed against
the acceptance criteria.
 This phase often accounts for the majority of time and resources consumed by a
project.
Delivery
 Involves delivering the final deliverable to the customer, handing over project
documentation, terminating supplier contracts, releasing project resources
(reassigning personnel and dealing with any leftover materials and equipment) and
communicating the closure of the project to all stakeholders.
 A post implementation review is undertaken to quantify the overall success of the
project and list any lessons learned for future projects.
 Closure is achieved.
It should be noted that the phases can overlap so that firms are able to reduce the time
necessary to move through the life cycle and, consequently, generate some competitive
advantage and cost savings. Careful coordination of activities will minimize the risk of
wastage that may occur.
MODULE4: PROJECT MANAGEMENT PART 2

Lesson presentation
This module discusses project management. According to Jay Heizer and Barry
Render, authors of the book titled Principles of Operations Management, “wherever your
career takes you, one of the most useful tools you can have, as a manager, is the ability to
manage a project”. so it is of utmost importance that we master this topic. Project manage
ment requires people and technical skills. The management activities related to motivating
people, and resolving conflicts and leading a team to get the work (project) done are the
components of people skills. Though this is undoubtedly important, this module focuses on
the technical aspects of project management - structuring project networks and calculating
for the critical path.
Network-Planning Models
Two of the most commonly used network planning models to fast track planning and
monitoring of projects were developed in the 1950s: the Critical Path Method (CPM) and
the Program Evaluation and Review Technique (PERT). The two were developed for different
purposes but, through the years, distinguishing features of CPM and PERT have
diminished.
CPM and PERT owe their development from the Gantt chart. Relationships of
activities to time are easy to see in a Gantt chart for small projects. These
interrelationships, however, become extremely difficult to visualize and to work with for
projects when the number of activities is increased (as include more than 25 activities). It
has no direct procedure also for determining the critical path (CP), which is of great
practical value when identified.
The CP in a project refers to the sequence of activities that form the longest chain in
terms of completion time. Delaying an activity in the critical path means a delay in the entire
project. It is also important then that scheduling information and the time for each of the
activities are determined properly. Both CPM and PERT calculate when an activity must
start and end. This, in turn, determines whether the activity belongs to the critical path.
Example 1. CPM with a Single Time Estimate2.4.1. CPM with a Single Time Es
Assume that you have a group assignment that requires a decision on whether you
should invest in a company. You are instructed to perform the analysis in the following four
steps:
1. Select a company. Your group of 4 people decides to divide the project into 4

activities. Team members will be involved in selecting the company and it should
take one week to complete this activity. You will meet at the end of the week to
decide what company the group will consider.
2. Obtain the company’s annual report and perform a ratio analysis. Two members of
the group will be responsible for the annual report and ratio analysis. Your group
expects to take 2 weeks to get the annual report and perform the ratio analysis.
3. Collect technical stock price data and construct charts. The other 2 will collect the
technical data and construct the charts which will take a week to finish.
4. Individually review the data and make a team decision on whether to buy the
stock. The two groups will work independently. But, before you meet as a team to
make a purchase decision, you want to allow one week for each team member to
review all the data.
Find the CP
Solution:
Below are the steps in computing for the CP.
1. Identify each activity to be done in the project and estimate how long it will take to
complete each activity. We identify the activities as follows: A(1), B(2), C(1), D(1) in
our simple project. The numbers represent the expected duration of the activity.
2. Determine the required sequence of activities and construct a network reflecting the
precedence relationships. First, identify the immediate predecessors associated with
an activity. Activity A needs to be completed before activities B and C can start. B
and C need to be completed before D can start. Information from steps 1 & 2 can be
translated into the following network and table:
IMMEDIATE TIME
DESIGNATION
PREDECESSORS (WEEKS)
Select company A None 1
Obtain annual report and perform ratio
B A 2
analysis
Collect stock price data and perform
C A 1
technical analysis
Review data and make a decision D B and C 1
3. Determine the CP. Consider each sequence of activities that runs from the beginning
to the end of the project. The simple project here shows two paths: A-B-D and A-C-
D. Since CP is the path where the sum of the activity times is the longest, A-B-D with
4 days, therefore is the CP. Any activity that is delayed along this CP will delay the
entire project.
4. Determine the early start/finish and late start/finish schedule. Scheduling the project
requires finding when each activity needs to start and finish. For some activities,
there may be a slack time or some leeway in terms of when it can start and finish.
For each of the activity, we calculate the early start (ES), early finish (EF), late start
(LS) and the late finish (LF) times. The difference between the late start time and
early start time is the slack time. These are usually represented as shown in the
figure below.
Calculating the Numbers:

1. To find ES and EF, start from the beginning of the network and work to the end.
1.1 Start counting with the current period, designated as period 0. Activity A has an
ES of 0 and an EF of 1. Activity B�s ES is A�s EF or 1. Similarly, C�s ES is 1.
1.2 The EF for B is 3, and the EF for C is 2.
1.3 Now consider activity D. D cannot start until both B and C are done. Because B
cannot be done until 3, D cannot start until that time. The ES for D, therefore, is 3,
and the EF is 4. The network diagram now looks like the one below.
2. To find LF and LS times, start from the end of the network and work toward the front.
1.1. Consider activity D. The earliest that it can be done is at time 4; and if we do
not want to delay the completion of the project, the LF needs to be set to 4.
With a duration of 1, the latest that D can start is 3.
1.2. Now consider activity C. C must be done by time 3 so that D can start, so C �s
LF is 3 and its LS is 2. Notice the difference between the ES and LS and LF:
This activity has one week of slack time. Activity B must be done by time 3 so
that D can start, so its LF is 3 and LS is 1. There is no slack in B.
1.3. Finally, activity A must be done so that B and C can start. Because B must start
earlier than C, and A must get done in time for B to start, the LF for A is 1.
Finally, the LS for A is 0. Notice there is no slack in activities A, B and D. The
final network should look like the one below.
Example 2. Three Times Estimates

We use the same information in Example 1. except that the activities have three time
estimates as shown in the table below.
As in the CPM, a) Each of the activities to be done in the project is identified.
b) The sequence of activities is to be determined.
c) A network reflecting the precedence relationships is to be constructed.
Then, find the three estimates for each of the activities as shown in the table.
ACTIVITY TIME ESTIMATES

ACTIVITY
DESIGNATION a m b
Design A 10 22 28
Build prototype B 4 4 10
Evaluate equipment C 4 6 14
Test prototype D 1 2 3
Write report E 1 5 9
Write methods report F 7 8 9

Write final report G 2 2 2
1. Calculate the expected (ET) and variances (σ2) for each of the activities.
The formula for these calculations are
2. Determine the critical path. Using the expected times, a critical path is
calculated in the same way as the single time case. Following the steps just
outlined, the table shows the computed expected times and variances.
EXPECTED ACTIVITY
ACTIVITY TIME ESTIMATES
ACTIVITY TIMES (ET) VARIANCES
DESIGNATION
a m b
Design A 10 22 28 21 9
Build prototype B 4 4 10 5 1
Evaluate equipment C 4 6 14 7 2 7⁄9
Test prototype D 1 2 3 2 1⁄9
Write report E 1 5 9 5 1 7⁄9
Write methods report F 7 8 9 8 1⁄9
Write final report G 2 2 2 2 0
Below is the updated project network.
3. Determine the probability of completing the project on a given date, based on

the application of the standard normal distribution. Below is the mechanics on
how to derive this probability.
Mechanics
1. Sum the variance values associated with each activity on the critical path.
2. Substitute this figure, along with the project due date and the project
expected completion time, into the Z transformation formula. This formula
is
3. Calculate the value of Z, which is the number of standard deviations (of a
standard normal distribution) that the project due date is from the expected
completion time.
The project network was created the same as we did previously. The CP is
determined in the same way it was computed for the one-time example above. The
difference is that the activity times are weighted averages and, hence, there is a difference
in computing probabilities of completion.
Because there are two critical paths in the network, we use the information on
variances in deciding which is CP is more likely to be completed. A conservative approach
dictates using the path with the largest total variance to focus management’s attention on
the activities most likely to exhibit broad variations. On this basis, the variances associated
with activities A, C, F and G would be used to find the probability of completion. Thus, Σσ2cp =
9 + 2 7⁄9 + 1⁄9 + 0 = 11.89 . Suppose management asks for the probability of completing the
project in 35 weeks. D, then, is 35. The expected completion time was found to be 38.
Substituting into the equation and solving, we

A value of -0.87 yields a probability of 0.1922. This means that the project manager has
only about a 19% chance of completing the project in 35 weeks.
Cautions on Critical Path Analysis

We have so far seen the utility of both CPM and PERT in project management. It should be
noted that several assumptions need to be made to use these. We have listed below some
of these assumptions and the corresponding criticisms.
Network Diagrams and Approaches

The first step in a PERT or CPM is to divide the entire project into significant activities in
accordance with the work breakdown structure.
Approaches for drawing a project network:
1. Activity on node (AON) - a network diagram in which nodes designate activities.
Activities consume time and resources.
2. Activity on arrow (AOA) - a network diagram in which arrows designate activities.
The nodes here represent the starting and finishing times of an activity and are also
called events. So the nodes here do not consume time and resources.
Figure 3.5 below illustrates both conventions for a small portion of the airline turnaround
Gantt Chart in Figure 3.4. In Figure 3.5(a), activity A must finished before activity B is
started, and B must, in turn, be completed before C begins. Activity A represents “deplaning
passengers,” while B is “cabin cleaning,” and C is “boarding new passengers.” Figures
3.5(e) and 3.5(f) show that the AOA approach sometimes needs the addition of a dummy
activity to clarify relationships. It does not consumes time or resources, but is required when
a network has two activities with identical starting and ending events, or when two or more
follow some, but not all, “preceding” activities.
Example 1.
Milwaukee Paper Manufacturing, Inc., has long been delaying the expense of
installing air pollution control equipment in its facility. The EPA has recently given the
manufacturer 16 weeks to install a complex air filter system. Milwaukee Paper has
been warned that it may be forced to close the facility unless the device is installed in
the allotted time. The plant manager wants to make sure that installation of the
filtering system progresses smoothly and on time.
Given the following information, develop a table showing activity precedence
relationships.
MODULE5: FORECASTING
Lesson presentation
This module discusses basic forecasting, in which the main purpose is to make good
estimates. Almost everyday OM managers make decisions with uncertain outcomes or
results. No one can see what will happen tomorrow, yet managers need to come up with a
wise decisions and implement them in order to move the organization forward.
What is Forecasting?
Forecasting is the art and science of predicting what will happen in the future. Sometimes
that is determined by a mathematical method; sometimes it is based on the intuition of the
operations manager. Most forecasts and end decisions are a combination of both.
Forecasting time horizons.
A forecast is usually classified by the future time horizon that it covers. It falls into three
categories:
1. Short range forecast. While it can be up to one year, this forecast is usually used for three
months or less. It is used for planning purchases, hiring, job assignments, production levels,
and the like.
2. Medium range forecast. This is generally three months to three years. Medium range
forecasts are used for sales and production planning, budgeting, and analysis of different
operating plans.
3. Long range forecast. Generally three years or more in time span, it is used for new products,
capital expenditures, facility expansion, relocation, and research and development.
Types of Forecasts
There are three major types of forecasting, regardless of time horizon, that are used by
organizations.
1. Economic forecasts address the business cycle by predicting housing starts, inflation rates,
money supplies, and other planning indicators.
2. Technological forecasts monitor rates of technological progress. This keeps organizations

abreast of trends and can result in exciting new products. New products may require new
facilities and equipment, which must be planned for in the appropriate time frame.
3. Demand forecasts deal with the company's products and estimate consumer demand.
These are also referred to as sales forecasts, which have multiple purposes. In addition to
driving scheduling, production, and capacity, they are also inputs to financial, personnel,
and marketing future plans.
Strategic Importance of Forecasts
Operations managers have two tools at their disposal by which to make decisions: actual
data and forecasts. The forecast is the only estimate of demand until actual demand
becomes known. Let us discuss the impact of product demand forecast on the following:
1. Human Resources. Hiring, training, and laying off workers all depend ion anticipated
demand. If the human resources department hire additional workers without warning, the
amount of training declines and the quality of the workforce suffers.
2. Capacity. When capacity is inadequate, the resulting shortage can lead to loss of
customers and market share.
3. Supply-Chain Management. Good supplier relations and the ensuing price advantages
for materials and parts depend on accurate forecasts.
Forecasting System
These seven steps can generate forecasts.

1. Determine the use of the forecast
2. Select the items for the forecasted.
3. Determine the time horizon of the forecast.
4. Select the forecast model type.
5. Gather data to be input into the model.
6. Make the forecast.
7. Verify and implement the results.
Routinely repeat these steps, regardless of the time horizon, to stay abreast of changes in
regard to internal and external factors.
Forecasting Approaches
There are two predominant approaches to forecasting: qualitative approach and

quantitative analysis. A qualitative approach uses factors such as experience, instinct and
emotion while the quantitative analysis relies heavily on mathematics, historical data and
casual variables.
Qualitative methods include:
1. Jury of executive opinion. This is based on the inputs and decisions of high-level experts or
management.
2. Delphi method. Decision makers, staff, and respondents all meet to develop the forecast.
Every shareholder in the process provides input.
3. Sales force composite. Each sales person provides an individual estimate which is reviewed
for realism by management, and then combined for a big picture view.
4. Consumer market survey. This is surveying the prospective customer base to determine

demand for existing products and can also be used for new products.
Quantitative methods are in two categories.

1. Time-Series Models. Time-series models attempt to predict the future by using
historical data.
This is based on a sequence of evenly spaced (weekly, monthly, quarterly, etc.) data
points.
A. Naive approach is a forecasting technique which assumes that demand in the next
period is
equal to demand in the most recent period.
B. Moving Average is a forecast technique that uses a number of historical actual data
values to generate a forecast. This is useful if we can assume that market demands will
stay fairly steady over time. The formula is as follows:
Σ demand in previous n periods

Moving average = -------------------------------------------
n
where n = is the number of periods in the moving average
Example1. Donna’s garden Supply wants a 3-month moving -average forecast,

including a forecast for next January, for shed sales.
Month Actual Shed Sales 3-Month Moving Average

January 10
February 12
March 13
April 16 (10 +12 + 13)/3 = 11.7
May 19 (12 +13 + 16)/3 = 13.7
June 23 (13 + 16 + 19)/3 = 16
July 26 (16 +19 + 23)/3 = 19.3
August 30 (19 + 23 + 26)/3 = 22.7
September 28 (23 + 26 + 30)/3 = 26.3
October 18 (26 + 30 +38)/3 = 28
November 16 (30 + 28 + 18)/3 = 25.3
December 14 (28 +18 +16)/3 = 20.7
January forecast = (18 + 16 + 14)/3 = 16
Weighted Moving Average. When a detectable trend or pattern exists, weights can
be used to give more emphasis on recent values. This practice makes forecasting
techniques more responsive to changes because more recent periods may be more
heavily weighted. A weighted moving average may be expressed mathematically as:
Σ(weight for period n)(Demand in period n)
Weighted moving average = --------------------------------------------------------------
Σ Weights
Example: Donna’s Garden Supply wants to forecast storage shed sales by weighing
the past 3 months, with more weight given to recent data to make them more
significant.
Month Actual Shed Sales 3-Month Moving Average
January 10
February 12
March 13
April 16 [(10 x 1) +(12 x 2) + (13 x 3)]/6 = 12.2
May 19 [(12 x 1) + (13 x 2) + (16 x 3)]/6 = 14.3
June 23 [(13 x 1) + (16 x 2) + (19 x 3)]/6 = 17
July 26 [(16 x 1) + (19 x 2) + (23 x 3)]/6 = 20.5
August 30 [(19 x 1) + (23 x 2) + (26 x 3))/6 = 23.8
September 28 [(23 x 1) + (26 x 2) + (30 x 3)]/6 = 27.5
October 18 [(26 x 1) + (30 x 2) + (38 x 3)]/6 = 28.3
November 16 [(30 x 1)+ (28 x 2) + (18 x 3)]/6 = 23.3
December 14 [(28 x 1) + (18 x 2) +(16 x 3)]/6 = 18.7
C. Exponential Smoothing. A weighted-moving-average forecasting technique in which

data points are weighted by an exponential function. This involves very little record
keeping of past data. The basic exponential smoothing formula is as follows:
New forecast = Last period’s forecast + α(Last period’s actual demand - Last
period’s forecast)
Ft = Ft-1 + α(At-1 - Ft-1) where α = smoothing constant (0 ≤ α
≥ 1)
Example1. In January, a car dealer predicted February demand for 142 Ford Mustang.
Actual
February demand was 153 autos. Using a smoothing constant chosen by management
of α = .20, find the forecast March demand using the exponential smoothing model.
Solution: Ft = Ft-1 + α(At-1 - Ft-1)
FMarch = 142 + .2(153 - 142) = 144.2,
Hence the March demand forecast for Ford Mustang is 144.
Example2: During the past 8 quarters, the Port of Baltimore has unloaded large
quantities of grain from ships. The port’s operations manager wants to test the use of
exponential smoothing to see how well the technique works in predicting tonnage unloaded.
He guesses that the forecast of grain loaded in the first quarter was 175 tons. Make a
forecast using two values of α: α = .10 and α = .50.
Quarter Actual Tonnage Forecast Forecast

Unloaded α = .10 α = .50
1 180 175 175
2 168 175.00 + .10(180 - 175) = 175.50 175.00 + .50(180 - 175.00) = 177.50
3 159 175.50 + .10(168 - 175.50) = 174.75 177.50 + .50(168 - 177.50) = 172.75
4 175 174.75 + .10(159 - 174.75) = 173.18 172.75 + .50(159 - 172.75) = 165.88
5 190 173.18 + .10(180 - 173.18) = 173.36 165.88 + .50(180 - 165.88) = 170.44
6 205 173.36 + .10(180 - 173.36) = 175.02 170.44 + .50(180 - 170.44) = 180.22
7 180 175.02 + .10(180 - 175.02) = 178.02 180.22 + .50(180 - 180.22) = 192.61
8 182 178.02 + .10(180 - 178.02) = 178.22 192.61 + .50(180 - 192.61) = 186.30
9 ? 178.22 + .10(180 - 178.22) = 178.59 186.30 + .50(180 - 186.30) = 184.15
D. Trend Projection. Trend projection is a technique that fits a trend line to a series of
historical data points and then projects the line into the future for medium to long-range
forecasts. We shall be using the least-squares method whose formula is as follows:
^y =a+bx
where a = y intercept, a= ȳ−b x̄
b=
∑ xy−n x̄ ȳ
b = slope , ∑ x 2−n x̄ 2
Example: Using the previous example, determine the trend equation and forecast actual
tonnage unloaded on the first quarter of 2020.
Solution
Quarter Actual Tonnage Unloaded, y Time Period, x x2 xy
2018, 1st 180 1 1 180

2nd 168 2 4 336
3rd 159 3 9 477
4th 175 4 16 700
2019, 1st 190 5 25 950
2nd 205 6 36 1230
3rd 180 7 49 1260
4th 182 8 64 1456
2020 1st
n=8 Σy = 1439 Σx = 36 Σx2 = 204 Σxy = 6589

x̅ = 36/8 = 4.5 y̅ = 1439/8 = 179.9
b=
∑ xy−n x̄ ȳ
∑ x 2−n x̄ 2 = [(6589 - 8(4.5)(179.9)]/[204 - 8(4.5)2] = 2.68
a= ȳ−b x̄ = 179.9 - 2.68(4.5) = 167.8
Trend equation: ^y =a+bx = 167.8 + 2.68x

Y(1st Q,2020) = 167.8 + 2.68(9) = 191.92
MODULE6: CAUSAL OR ASSOCIATIVE FORECASTING

Lesson presentation
This module discusses causal or associative forecasting method, in
which the main purpose is to make good estimates.
In the previous lesson, we have learned the different time series forecasting
methods. Today we will learn another method of forecasting which is the causal or
associative forecasting method.
Regression Line Formula:

^y =a+bx
where:
nΣxy −∑ x ∑ y
b=
n∑ x 2 − ( ∑ x )2
∑ y−b∑ x
a=
n
y x y2 x2 xy
1 264 2.5 69,696 6.25 660
2 116 1.3 13,456 1.69 150.8
3 165 1.4 27,225 1.96 231
4 101 1 10,201 1 101
5 209 2 43,681 4 418
Sum 855 8.2 164,259 14.9 1560.8
6 ? 1.75
∑y = 855
∑x = 8.2
∑y^2 = 164,259
∑x^2 = 14.9
∑xy = 1560.8
n = 5
nΣxy −∑ x ∑ y
b=
n∑ x 2 − ( ∑ x )2
5 ( 1560.8 ) −8.2 ( 855 )

b=
5 ( 14.9 ) − ( 8.2 )2
b = 109.23
∑ y−b∑ x
a=
n
855− 109.23 ( 8.2 )

a=
5
a = -8.137
^y =− 8.137+109.23 x
When x = 1.75
y = -8.137 + 109.23(1.75)
y = 183
MODULE7:DESIGN OF GOODS AND SERVICES

Lesson presentation
One of the most important strategic decisions of operations managers
involves designing and developing new goods and services and the value
chain structure and process that make and deliver them.
It is common knowledge to firms that the basis for an organization’s
existence is the good or service it provides to the society. Great products are
the keys to success and to maintain the success of a firm, it should
continuously improve its product.
An effective product strategy connects product decisions with
investment, market phase and product life cycle, and defines the breadth of
the product line.
Product decision refers to the selection, definition, and design of
products. Its objective is to develop and implement a product strategy that
meets the demands of the marketplace with a competitive advantage.
Criteria of an Effective Product Strategy:

1. Selection of Goods and Services
Product selection is choosing the good or service to provide customers or
clients by developing a competitive advantage through differentiation, low
cost, rapid response or a combination of them.
Product Life Cycle

Products, just like human beings are born. They live and die and are cast
aside by a changing society. The product’s life cycle is divided into four
phases:
Product-by-Value Analysis
- is a list of products, in descending order of their individual peso contribution to the
firm, as well as the total annual peso contribution of the product. A product-by-value
report allows management to evaluate positive strategies for each product.
2. Generating New Products

Because products die; must be weeded out and replaced; and since firms generate most
of their revenue and profit from new products - product selection, definition and design
takes place on a continuous basis. Knowing how to successfully find and develop new
products is a requirement.
One technique to generate new product ideas is brainstorming. Brainstorming is a
technique in which a diverse group of people share, without criticism, ideas on a particular
topic. However, operations manager must be aware of the following factors and be able to
anticipate changes in product opportunities, the product themselves, product volume, and
product mix.
1. Understanding the customer is the premier issue in new-product development. Many

products are initially thought of and even prototyped by users rather than producers.
Hence operations managers must be “tuned in” to the market and particularly these
innovative lead users.
2. Economic change brings increasing levels of affluence in the the long run but
economic cycles and price changes in the short run. In the long run, for instance, more
and more people can afford automobiles, but in the short run, a recession may weaken
the demand for automobiles.
3. Sociological and demographic change may appear in such factors as decreasing
family size. This trend alters the size preference for homes, apartments, and
automobiles.
4. Technological change makes possible everything from cell phones to iPods to
artificial hearts.
5. Political/legal change brings about new trade agreements, tariffs, and government
requirements.
6. Other changes may be brought about through market practice, professional
standards, suppliers, and distributors.
Stages of Product Development

An effective product strategy links product decisions with cash flow, market dynamics,
product life cycle, and the organization’s capabilities. An organization must have cash flow
for product development, understand the changes constantly taking place in the
marketplace, and have the necessary talents and resources available. The product
development system may well determine not only product success but also the firm’s future.
The figure below shows the stages of product development.
Quality Function Deployment (QFD)

Quality function deployment is a process for determining customer requirements(customer
“wants”) and translating them into the attributes (the “hows”) that each functional area can
understand and act on.
One of the tools of QFD is the house of quality. The house of quality is a
graphic technique for defining the relationship between customer desires and product (or
service). To build the house of quality, we perform seven basic steps:
Example of Constructing a House of Quality

Issues for Product Development

The following are the techniques in the design of a product:
1. Robust Design – is a design that can be produced to requirements even with

unfavorable conditions in the production process.
2. Modular Design – is a design in which parts or components of a product are

subdivided into modules that are easily interchanged or replaced.
3. Computer-Aided Design (CAD) – is the use of computers to interactively design
products and prepare engineering documentation.

4.Computer-Aided Manufacturing (CAM) – refers to the use of specialized computer

programs to direct and control manufacturing equipment.
5. Virtual Reality Technology

– is a visual form of
communication in which
images substitute for the real
thing but still allow the user
to respond interactively.
6. Value Analysis – is a review of successful products that takes place during the production
process.
3. Defining the Product

https://www.slideserve.com/valerie/operations-management-powerpoint-ppt-presentation
MODULE8: QUALITY MANAGEMENT
Lesson development
Many organizations have found out that quality is a wonderful tonic for improving
operations. Managing quality helps build successful strategies of differentiation, low cost,
and response. For instance, defining customer quality expectations has helped Bose Corp.
Successfully differentiate its stereo speakers as among the best in the world. Nucor has
learned to produce quality steel at low cost by developing efficient processes that produce
consistent quality. And Dell Computers rapidly responds to customer orders because
quality systems, with little rework, have allowed it to achieve rapid throughput in its plants.
As can be seen from the figure below, improvements in quality help firms increase
sales and reduce costs, both of which can increase profitability. Increases in sales often
occur as firms speed response, increase or lower selling prices, and improve their
reputation for quality products. Similarly, improved quality allows costs to drop as firms
increase productivity and lower rework, scrap, and warranty costs.
Quality, or the lack of quality, affects the entire organization from supplier to customer and
from product design to maintenance. The figure below lays out the flow of activities for an
organization to use to achieve total quality management (TQM). A successful quality
strategy begins with an organizational culture that fosters quality, followed by an
understanding of the principles of quality, and then engaging employees in the necessary
activities to implement quality. When these things are done well, the organization typically
satisfies its customers and obtains a competitive advantage. The ultimate goal is to win
customers.
Definition of Quality
An operations manager’s objective is to build a total quality management system that
identifies and satisfies customer needs. Total quality management takes care of the
customer.
Quality, according to the American Society for Quality, is the totality of features and
characteristics of a product or service that bears on its ability to satisfy stated or implied
needs.
Others, however, believe that the definition of quality fall into several categories:
For user based: quality lies in the eyes of the beholder, and higher quality means better
performance, nicer features, and other improvements.
For manufacturing based: Quality means conforming to standards and “making it right the
first time.”
For Product based: Quality is a precise and measurable variable.
Implications of Quality:
The following are the reasons why quality is important:
1. Company reputation:
An organization can expect its reputation for quality-be it good or bad-to follow it. Quality will
show up in perceptions about the firm’s new products, employment practices, and supplier
relations.
0. Product liability:
The courts increasingly hold organizations that design, produce, or distribute faulty
products or services liable for damages or injuries resulting from their use.
0. Global implications:
For both company and a country to compete effectively in the global economy, products
must meet global quality, design, and price expectations. Inferior products harm a firm’s
profitability and the country’s balance of payments.
Cost of Quality (COQ)
The cost of quality refers to the cost of doing things wrong--that is, the price of non
conformance. There are four major categories associated with cost of quality, they are:
 Prevention costs - costs associated with reducing the potential for defective parts or
services (e.g., training, quality improvement programs).
 Appraisal costs - costs related to evaluating products, processes, parts or services
(e.g., testing, labs, inspectors)
 Internal failure - costs that occur before delivery of defective parts or services (e.g.,
rework, returned goods, liabilities, lost goodwill, costs to society).
 External costs - costs that occur after delivery of defective parts or services (e.g.,
rework, returned goods, liabilities, lost goodwill, costs to society).
Leaders in the Field of Quality

Management

International Quality Standards

ISO 9000 - is a set of quality standards developed by the International Organization for
Standardization (ISO). The focus is to establish quality management procedures, through
leadership, detailed documentation, work instructions, and recordkeeping.
To become ISO 9000 certified, organizations go through a 9- to 18-month process that

involve documenting quality procedures, an on-site assessment, and an ongoing series of
audits of their products or services.
ISO 14000 - is a series of environmental management standards that contain five core
elements:
1. Environmental management
2. Auditing
3. Performance Evaluation
4. Labeling
5. Life cycle assessments

Total Quality Management (TQM)
 refers to a quality emphasis that encompasses the entire organization, from
supplier to customer.
 Stresses a commitment by management to have a continuing company wide drive
toward excellence in all aspects of products and services that are important to the
customer.
W. Edwards Deming used 14 points to indicate how he implemented TQM.

SEVEN CONCEPTS FOR AN EFFECTIVE TQM PROGRAM
1. Continuous Improvement
TQM requires a never-ending process of continuous improvement that covers
people, equipment, suppliers, materials, and procedures. The basis of the philosophy is that
every aspect of an operation can be improved. The end goal is perfection, which is never
achieved but always sought.
Plan-Do-Check-Act (PDCA Model) developed by Walter Shewhart as his version of

continuous improvement.
The Japanese use the word Kaizen to describe this ongoing process of unending improvement
In the U.S., TQM and zero defects are also used to describe continuous improvement efforts.
0. Six Sigma
The term SIX SIGMA, popularized by Motorola, Honeywell, and General Electric, has
two meanings in TQM.
0. In Statistical sense, it describes a process, product, or service with an
extremely high capability (99.9997% accuracy), and 3.4 defects per million opportunities
(DPMO).
B. It is a program designed to reduce defects to help lower costs, save time, and
improve customer satisfaction. Six Sigma is a comprehensive system -- a strategy, a
discipline, and a set of tools -- for achieving and sustaining business success.
 It is a strategy because it focuses on total customer satisfaction.
 It is a discipline because it follows the formal Six Sigma Improvement Model

known as DMAIC. The five-step process of the improvement model are as follows:
0. Employee Empowerment
This means involving employees in every step of the production process. Enlarging
employee jobs so that the added responsibility and authority is moved to the lowest level
possible in the organization. Techniques for building employee empowerment include the
following:
1. Building communication networks that include employees

2. Developing open, supportive supervisors
3. Moving responsibility from both managers and staff to production employees
4. Building high-morale organizations
5. Creating such formal organization structures as teams and quality circles.
Quality circle is a group of employees who meet regularly with a facilitator to solve work-
related problems in their work areas. They are trained in planning, problem solving, and
statistical methods.
0. Benchmarking
Involves selecting a demonstrated standard of products, services, costs, or practices that
represent the very best performance for a process or activity. The steps for developing
benchmarks are:
0. Just-in-Time (JIT)
6.Taguchi Concepts
These are engineering and
experimental design methods to improve product and process design. The goal is to identify
the key component and process variables affecting product variation. Genichi Taguchi
provided us with three concepts aimed at improving both product and process quality. These
are:
Quality robust are products that can be produced uniformly and consistently in adverse
manufacturing and environmental conditions. Taguchi’s idea is to remove the effects of
adverse conditions instead of removing the causes. Taguchi suggests that removing the
effects is often cheaper than removing the causes and more effective in producing a robust
product.
Quality loss function (QLF) is a mathematical function that identifies all costs connected with
poor quality and shows how these costs increase as product quality moves from what the
customer wants.
Target-Oriented Quality is a philosophy of continuous improvement to bring a product

exactly on target.
0. Knowledge of Tools of Tqm

The TQM tools that are particularly helpful in the TQM are as follow:
For powerpoint presentation use the link below
https://www.slideshare.net/RIZWANKHURRAM/heizer-06-15124618
Reinforcement
Answer 6.14 and 6.15 below:

Module 1 8operations Management

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Dr. Filemon C.

Aguilar Memorial College of Las Piñas

MODULE 1: OPERATIONS AND PRODUCTIVITY

Production Process for Products and Services

(Attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license.)

Operations management is a discipline that applies to all industries. Regardless of

Production management deals with decision making related to production processes so

Operations management involves three main types of decisions, typically made at

1. Production planning. The first decisions facing operations managers come at

2. Production control. At this stage, the decision-making process focuses on

3. Improving production and operations. The final stage of operations management

Labor productivity has increased from .25 to .4375. The change is

Multifactor productivity has increased from .0077 to .0097. This change is

Current System System with Buyer

Material 100 logs/day = P1,000 P1,000

MODULE2: OPERATIONS STRATEGY IN A GLOBAL ENVIRONMENT

A Global View of Operations

Missions and Strategies

An effective operations management effort must have a mission so it knows where it

Ten Strategic OM Decisions

Strategy Development and Implementation

Global Operations Strategy Options

multinational corporation. When we talk of an international business we are referring to a

MODULE3: PROJECT MANAGEMENT PART 1

 Team members can work on several projects.

 Communication between functional divisions is enhanced.

Importance of Project Management

The project organization works best when:

Project Life Cycle

 Project Plan: Outlines the activities, tasks, dependencies and timeframes.

 Resource Plan: Lists the labor, equipment and materials required.

 Financial Plan: Identifying the labor, equipment and materials costs.

 Quality Plan: Provide quality targets, assurance and control measures.

 Risk Plan: Highlight potential risks and actions taken to mitigate them.

 Acceptance Plan: List the criteria to be met to gain customer acceptance.

 Communications Plan: List the information needed to inform stakeholders.

 Procurement Plan: Identify products to be sourced from suppliers.

 Involves implementing each of the activities and tasks in project plan.

MODULE4: PROJECT MANAGEMENT PART 2

1. Select a company. Your group of 4 people decides to divide the project into 4

Below are the steps in computing for the CP.

Calculating the Numbers:

Example 2. Three Times Estimates

ACTIVITY TIME ESTIMATES

Write methods report F 7 8 9

Below is the updated project network.

3. Determine the probability of completing the project on a given date, based on

Substituting into the equation and solving, we

Cautions on Critical Path Analysis

Network Diagrams and Approaches

Forecasting time horizons.

2. Technological forecasts monitor rates of technological progress. This keeps organizations

Strategic Importance of Forecasts

These seven steps can generate forecasts.

There are two predominant approaches to forecasting: qualitative approach and

Qualitative methods include:

4. Consumer market survey. This is surveying the prospective customer base to determine

Quantitative methods are in two categories.

Σ demand in previous n periods

Example1. Donna’s garden Supply wants a 3-month moving -average forecast,

Month Actual Shed Sales 3-Month Moving Average

January forecast = (18 + 16 + 14)/3 = 16

C. Exponential Smoothing. A weighted-moving-average forecasting technique in which