Professional Documents
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Chap 1
Chap 1
Operations Management
The systematic design, direction, and control of
processes that transform inputs into services and
products for internal, as well as external, customers
Operation
A group of resources performing all or part of
one or more processes
Integration
between
Different
Functional
Areas of a
Business
Figure 1.1
Figure 1.2
Figure 1.4
Figure 1.4
Figure 1.4
Figure 1.4
Figure 1.4
Figure 1.4
New Service/
Product Development
Design
Analysis No
Development
Full launch Performance
Operations Strategy Yes Gap?
Competitive Competitive
Priorities Capabilities
The critical dimensions The cost, quality, time, and
that a process or flexibility dimensions that a
supply chain must process or supply chain
possess to satisfy its actually possesses and is
internal or external able to deliver.
customers, both now
and in the future.
QUALITY
Table 1.3
Table 1.3
Table 1.3
Figure 1.6
Figure 1.6
Low-cost operations Cost per billing $0.0813 Target is $0.06 Eliminate microfilming
statement and storage of billing
statements
Weekly postage $17,000 Target is Develop Web-based
$14,000 process for posting bills
Table 1.5
Output
Productivity =
Input
600 policies
= = 5 policies/hour
(3 employees)(40 hours/employee)
Value of output
Multifactor productivity =
Labor cost + Materials cost
+ Overhead cost
(400 units)($10/unit) $4,000
= = = 2.35
$400 + $1,000 + $300 $1,700
$150 tuition +
50 student 3 credit hours $100 state support
Value of output =
class student credit hour
= $37,500/class
Value of inputs = Labor + Materials + Overhead
= $4,000 + ($20/student 50 students/class) + $25,000
= $30,000/class
Multifactor Output $37,500/class
= = 1.25
productivity Input $30,000/class
Copyright 2016 Pearson Education, Inc. All rights reserved. 1-35
Solved Problem 1
b. Labor productivity is the ratio of the value of output to labor
hours. The value of output is the same as in part (a), or
$37,500/class, so
14 hours 16 weeks
Labor hours of input =
week class
= 224 hours/class
Output $37,500/class
Labor productivity =
Input 224 hours/class
= $167.41/hour