OPERATION AND PRODUCTIVITY

Lecture Notes for Operation Management

By Fahmy Radhi
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Operations Management
Planning, organizing, executing and
controlling in a systematic process
that transform inputs into outputs
of greater value

It deals with the production of
goods and services

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Transformation Process
Input Process Output
Materials
Machines
Man/workers
Money/capital
Information
Manufacturing
Assembling
Transporting
Storing
Consulting

Automobiles
Televisions
Services
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Functions - Bank
Operations
Finance/
Accounting
Marketing
Check
Clearing
Teller
Scheduling
Transactions
Processing
Security
Commercial Bank
1984-1994
T/Maker Co.
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Functions - Airline
Operations
Finance/
Accounting
Marketing
Ground
Support
Flight
Operations
Facility
Maintenance
Catering
Airline
1984-1994 T/Maker Co.
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Functions - Manufacturer
Operations
Finance/
Accounting
Marketing
Production
Control
Manufacturing
Quality
Control
Purchasing
Manufacturing
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Characteristics of Goods
Tangible product
Consistent product
definition
Production usually
separate from
consumption
Can be inventoried
Low customer
interaction
1995 Corel Corp.
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Characteristics of Service
Intangible product
Produced & consumed at
same time
Often unique
High customer
interaction
Inconsistent product
definition
Often knowledge-based
Frequently dispersed

1995 Corel Corp.
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The output from most operations is a mixture of
goods and services
PURE GOODS
Tangible
Can be stored
Production precedes
consumption
Low customer
contact
Can be transported
Quality is evident
PURE SERVICES
Quality difficult to judge
Cannot be transported
High customer contact
Production and
consumption are
simultaneous
Cannot be stored
Intangible
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10 Strategic OM Decisions
Goods & service design
Quality
Process & capacity design
Location selection
Layout design
Human resource and job design
Supply-chain management
Inventory
Scheduling
Maintenance
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The Critical Decisions
Quality management
Who is responsible for quality?
How do we define quality?
Service and product design
What product or service should we offer?
How should we design these products and
services?
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The Critical Decisions
Process and capacity design
What processes will these products require
and in what order?
What equipment and technology is
necessary for these processes?
Location
Where should we put the facility
On what criteria should we base this
location decision?
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The Critical Decisions
Layout design
How should we arrange the facility?
How large a facility is required?
Human resources and job design
How do we provide a reasonable work
environment?
How much can we expect our employees
to produce?
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The Critical Decisions
Supply chain management
Should we make or buy this item?
Who are our good suppliers and how many
should we have?
Inventory, material requirements
planning,
How much inventory of each item should
we have?
When do we re-order?

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The Critical Decisions
Intermediate, short term, and project
scheduling
Is subcontracting production a good idea?
Are we better off keeping people on the
payroll during slowdowns?
Maintenance
Who is responsible for maintenance?
When do we do maintenance?
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Types of Manufacturing Operations

Job Shop Manufacturing make-to-order
product in accordance with design supplied
by the customer.
Its characteristics:
High variety product with low volume,
Using the multipurpose equipments and
flexibility material handling,
Need broad range skills.
E.g. custom-built home, custom tailor clothes,
specific machines

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Types of Manufacturing Operations
Repetitive Manufacturing make-to-stock
produced to anticipation of customer
demand.
Its characteristics:
High volume with low variety as standardized
product for mass market
Repetitive process using the single purpose
equipment for the same process
Need a specialist skills.
E.g. Television, Refrigerator, most costumer
goods

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Types of Manufacturing Operations
Batch Manufacturing similar standard
product produced periodically in batches.
Its characteristics:
Combination of product variety and average
volume per product,
Using flexible Equipment that must be
capable of performing some variety of tasks,
Need a variety of skills.
E.g. hand tools, bakeries
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Types of Services Operation

Service Factories: Low labor intensity - Low
customer interaction. E.g.: airline, hotel.
Service Shops: Low Labor intensity - high
customer interaction. E.g.: hospital, repair
service
Mass Service: high labor intensity - low
customer interaction. E.g.: Banking,
Education
Professional Services: both highly labor-
intensity and customer interaction. E.g.:
Doctors, Lawyer

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Layout Types

Process/functional Layouts arranged by
group similar process or function or activities
in department or work centers
Product/line Layouts arranged in line
according to the sequence of operations for
particular product or service
Fixed-position Layout arrangement in
which the product is in fixed place, while
worker along with equipments are move to
the product

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Measure of process improvement
Represents output relative to input
Only through productivity increases can our
standard of living improve
Productivity
Productivity
Units produced
Input used
=
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Thank for Attention
To be continued