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2006 Prentice Hall, Inc. 1 1
Operations
Management Chapter 1 Operations and Productivity
2006 Prentice Hall, Inc.
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 6e
Operations Management, 8e
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INDUSTRIAL ENGINEERING
science Engineering
Approve
(fundamental)
apply
Industrial
Hospital
Plantation
Bank
Government organisation
Service sector
Operation
management
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Learning Objectives
When you complete this chapter, you should be able to:
Describe or Explain :
A brief history of operations management
Career opportunities in operations management
The future of the discipline
Measuring productivity
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What Is Operations Management?
Production is the creation of goods and services
Operations management (OM) is the set of activities that creates value in the form of goods and
services by transforming inputs into outputs
input output
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Why is it important?
Sales $100,000 $150,000 $100,000 $100,000
Cost of Goods 80,000 120,000 80,000 64,000
Gross Margin 20,000 30,000 20,000 36,000
Finance Costs 6,000 6,000 3,000 6,000
Subtotal 14,000 24,000 17,000 30,000
Taxes at 25% 3,500 6,000 4,250 7,500
Contribution $ 10,500 $ 18,000 $ 12,750 $ 22,500
Finance/ Marketing Accounting OM Option Option Option Increase Reduce Reduce Sales Finance Production Current Revenue 50% Costs 50% Costs 20%
Profit and loss statement
Conc: effective operations is important for global competition.
71% 21% 114%
7500 2250 12000
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What Operations Managers Do
Planning
Organizing
Staffing
Leading
Controlling
Basic Management Functions
They apply to the 10 decision making of OM
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Organizational Charts
Operations
Teller Scheduling
Check Clearing
Collection
Transaction processing
Facilities design/layout
Vault operations
Maintenance
Security
Finance
Investments
Security
Real estate
Accounting
Auditing
Marketing
Loans
Commercial
Industrial
Financial
Personal
Mortgage
Trust Department
Commercial Bank
Figure 1.1(A) (Plan and manage material, man, machine, method..)
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Organizational Charts
Operations
Ground support equipment
Maintenance
Ground Operations
Facility maintenance Catering
Flight Operations
Crew scheduling Flying Communications Dispatching
Management science
Finance/ accounting
Accounting
Payables Receivables General Ledger
Finance
Cash control International exchange
Airline
Figure 1.1(B)
Marketing
Traffic administration
Reservations Schedules Tariffs (pricing)
Sales
Advertising
(Plan and manage material, man, machine, method..)
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Marketing Sales promotion
Advertising
Sales
Market research
Organizational Charts
Operations Facilities Construction; maintenance
Production and inventory control Scheduling; materials control
Quality assurance and control
Supply-chain management
Manufacturing Tooling; fabrication; assembly
Design Product development and design Detailed product specifications
Industrial engineering Efficient use of machines, space, and personnel
Process analysis Development and installation of production tools and equipment
Finance/ accounting Disbursements/ credits
Receivables Payables General ledger
Funds Management
Money market International exchange
Capital requirements
Stock issue Bond issue and recall
Manufacturing
Figure 1.1(C) (Plan and manage material, man, machine, method..)
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Why Study OM?
OM is one of three major functions (marketing, finance, and operations) of any organization
We want (and need) to know how goods and services are produced
We want to understand what operations managers do
OM is such a costly part of an organization
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Ten Critical Decisions Ten Decision Areas Chapter(s)
Service and product design 5 Quality management 6
6 Supplement
Process and capacity 7 design 7 Supplement
Location 8 Layout design 9 Human resources, 10
job design 10 Supplement
Supply-chain 11 management 11 Supplement
Inventory management 12, 14, 16 Scheduling 13, 15 Maintenance 17
Table 1.2
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The Critical Decisions
Service and product design
What good or service should we offer?
How should we design these products and services?
Quality management
How do we define quality?
Who is responsible for quality?
Table 1.2 (cont.)
Chapter 2
Chapter 7
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The Critical Decisions
Process and capacity design
What process and what capacity will these products require?
What equipment and technology is necessary for these processes?
Location
Where should we put the facility?
On what criteria should we base the location decision?
Table 1.2 (cont.)
Chapter 6
Chapter 3
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The Critical Decisions
Layout design
How should we arrange the facility and material flow?
How large must the facility be to meet our plan?
Human resources and job design
How do we provide a reasonable work environment?
How much can we expect our employees to produce?
Table 1.2 (cont.)
Chapter 3
Chapter 5
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The Critical Decisions
Supply-chain management
Should we make or buy this component?
Who are our suppliers and who can integrate into our e-commerce program?
Inventory, material requirements planning, and JIT
How much inventory of each item should we have?
When do we re-order? Table 1.2 (cont.)
Chapter 6
X
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The Critical Decisions
Intermediate and shortterm scheduling
Are we better off keeping people on the payroll during slowdowns?
Which jobs do we perform next?
Maintenance
Who is responsible for maintenance?
When do we do maintenance?
Table 1.2 (cont.)
X
X
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Where are the OM Jobs?
Figure 1.2
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Chronology of OM
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Significant Events in OM
Figure 1.3
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Frederick W. Taylor
Born 1856; died 1915
Known as father of scientific management
In 1881, as chief engineer for Midvale Steel, studied how tasks were done
Began first motion and time studies
Created efficiency principles
Suggested that production efficiency in a shop or factory could be greatly enhanced
by close observation of the individual worker or elimination of waste time and motion
in his operation.
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Eli Whitney
Born 1765; died 1825
In 1798, received government contract to make 10,000 muskets
Showed that machine tools could make standardized parts to exact specifications
Musket parts could be used in any musket
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BS 57: 1951
Specification
for bolt and
nut
ANSI/
ASME
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Taylors Principles
Matching employees to right job
Providing the proper training
Providing proper work methods and tools
Establishing legitimate incentives for work to be accomplished
Management Should Take More
Responsibility for:
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Frank & Lillian Gilbreth
Frank (1868-1924); Lillian (1878-1972)
Husband-and-wife engineering team
Further developed work measurement methods
Applied efficiency methods to their home and 12 children!
Book & Movie: Cheaper by the Dozen, book: Bells on Their Toes
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Born 1863; died 1947
In 1903, created Ford Motor Company
In 1913, first used moving assembly line to make Model T
Unfinished product moved by conveyor past work station
Paid workers very well for 1911 ($5/day!)
Henry Ford
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W. Edwards Deming
Born 1900; died 1993
Engineer and physicist
Credited with teaching Japan quality control methods in post-WW2
Used statistics to analyze process
His methods involve workers in decisions
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Characteristics of Goods
Tangible product
Consistent product definition
Production usually separate from consumption
Can be inventoried
Low customer interaction
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Characteristics of Service
Intangible product
Produced and consumed at same time
Often unique
High customer interaction
Inconsistent product definition
Often knowledge-based
Frequently dispersed
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Productivity
Productivity = Units produced
Input used O
I
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Productivity
Single factor
productivity Multifactor
productivity
The ratio of one resources
(input ) to the goods and
services produced (outputs)
The ratio of many or all
resources (inputs) to the
goods and services
produced (outputs)
Ex: Labor
Productivity =
Units produced
Labor-hours used
Output
Labor + Material + Energy + Capital + Miscellaneous
Productivity =
Ex: Material
Productivity =
Units produced
material used
Ex: Capital
Productivity =
Units produced
Capital used
Also known as total factor
productivity
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Sebuah syarikat mengeluarkan sebanyak 20,000 bungkus roti pada bulan Januari dengan tenaga kerja seramai 10 orang. Mereka bekerja selama 8 jam sehari dan bilangan hari kerja pada bulan tersebut adalah 25 hari. Pada bulan Februari, pengeluaran syarikat telah meningkat kepada 22000 bungkus roti. Dua orang pekerja kontrak telah diambil pada bulan tersebut. Tempoh kerja harian dan bilangan hari bekerja bagi setiap pekerja adalah sama seperti bulan Januari. Oleh itu untuk menentukan indek produktiviti bagi pekerja, pengiraan seperti berikut perlu dilakukan:
Contoh :
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Indek Produktiviti Pekerja Bulan Januari:
Pengeluaran = 20 000 bungkus roti
Jumlah bilangan jam pekerja = 10 orang x 8jam/hari x 25 hari/bulan = 2000 jam-orang / bulan
Indek Produktiviti Pekerja (Januari) = 20 000 bungkus roti/ bulan = 10 bungkus
2000 jam-orang/bulan jam-orang
Indek Produktiviti Pekerja Bulan Februari
Pengeluaran = 22,000 bungkus roti
Jumlah Bilangan jam pekerja = 12 orang x 8jam x 25 hari
hari bulan
= 2400 jam-orang / bulan
Indek Produktiviti Pekerja (Feb.) = 22,000 bungkus roti/ bulan = 9.17 bungkus
2400 jam-orang/bulan jam-orang
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Ulasan:
Peningkatan kuantiti pengeluaran roti sebanyak 10% tidak memberi peningkatan kepada indek produktiviti pekerja. Sebaliknya, pengambilan pekerja kontrak telah menyebabkan indek produktiviti pekerja bagi bulan Februari menurun sebanyak 8.3%. Sementara itu keuntungan syarikat akan bergantung kepada pendapatan jualan dan kos bagi sumber-sumber kemasukan.
Indek Produktiviti Pekerja (Januari) = 10 bungkus
jam-orang
Indek Produktiviti Pekerja (Februari) = 9.17 bungkus
jam-orang
=22 000-20 000
20 000
=10%
=9.17-10 x 100%
10
= -8.3 %
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Case study
Collins Title Co has a staff of 4, each working 8 hours per day (for a payroll cost of $640/ day) and overhead expenses of $400 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 $800 per day.
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Collins Title Productivity
Staff of 4, works 8 hrs/day 8 titles/day
Payroll cost = $640/day Overhead = $400/day
Old System:
= Old labor
productivity 8 titles/day
32 labor-hrs/ day
4 labors x 8hrs /day-labor 8 titles/day
Ex: Productivity = Units produced
Labor-hours used
= .25 titles/labor-hr
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Collins Title Productivity
Staff of 4 works 8 hrs/day 8 titles/day
Payroll cost = $640/day Overhead = $400/day
Old System:
8 titles/day
32 labor-hrs =
Old labor productivity = .25 titles/labor-hr
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Collins Title Productivity
Staff of 4 works 8 hrs/day 8 titles/day
Payroll cost = $640/day Overhead = $400/day
Old System:
14 titles/day Overhead = $800/day
New System:
8 titles/day
32 labor-hrs =
Old labor productivity
= New labor
productivity
= .25 titles/labor-hr
14 titles/day
32 labor-hrs =.4375 titles/labor-hr
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Collins Title Productivity
Staff of 4 works 8 hrs/day 8 titles/day
Payroll cost = $640/day Overhead = $400/day
Old System:
14 titles/day Overhead = $800/day
New System:
8 titles/day
32 labor-hrs =
Old labor productivity = .25 titles/labor-hr
14 titles/day
32 labor-hrs =
New labor productivity
= .4375 titles/labor-hr
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Collins Title Productivity
Staff of 4 works 8 hrs/day 8 titles/day
Payroll cost = $640/day Overhead = $400/day
Old System:
14 titles/day Overhead = $800/day
New System:
= Old multifactor
productivity
8 titles/day
$640 + 400
Output
Labor + Material + Energy + Capital + Miscellaneous
Multifactor Productivity =
RM
RM
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Collins Title Productivity
Staff of 4 works 8 hrs/day 8 titles/day
Payroll cost = $640/day Overhead = $400/day
Old System:
14 titles/day Overhead = $800/day
New System:
8 titles/day
$640 + 400 =
Old multifactor productivity
= .0077 titles/dollar
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Collins Title Productivity
Staff of 4 works 8 hrs/day 8 titles/day
Payroll cost = $640/day Overhead = $400/day
Old System:
14 titles/day Overhead = $800/day
New System:
8 titles/day
$640 + 400 =
Old multifactor productivity
= New multifactor
productivity
= .0077 titles/dollar
14 titles/day
$640 + 800
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Collins Title Productivity
Staff of 4 works 8 hrs/day 8 titles/day
Payroll cost = $640/day Overhead = $400/day
Old System:
14 titles/day Overhead = $800/day
New System:
8 titles/day
$640 + 400
14 titles/day
$640 + 800
= Old multifactor
productivity
= New multifactor
productivity
= .0077 titles/dollar
= .0097 titles/dollar
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Multi-Factor Productivity
Output
Labor + Material + Energy + Capital + Miscellaneous
Productivity =
Also known as total factor productivity
Output and inputs are often expressed in dollars
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Contoh penggunaan j.masa asas dan deflator
2001 2000
8500
1.1
7 000
1.0
Tenaga
Elektrik dan air(RM)
Deflator
25 000
1.25
21 900
1.0
Modal
Wang tunai (RM)
Deflator
620
5.2
660
5
Bahan
Bahan mentah(unit)
Harga (RM/unit)
237
7.20
237
7.00
30
Pekerja
Jumlah jam bekerja (jam)
Kadar purata gaji (RM/jam)
Bilangan pekerja
2000
53
60
3520
50
50
Barangan separa siap
Kuantiti keluaran (unit)
Harga keluaran (RM/unit)
Peratus siap
6200
53
6000
50
Kuantiti keluaran (unit)
Harga (RM/unit)
Barangan siap
Tahun Perkara
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Apa itu jangkamasa asas (base period) dan deflator
Dua istilah penting dalam menentukan indeks produktiviti
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(v) jangkamasa asas
Digunakan sebagai tempoh rujukan untuk mengira indek produktiviti.
Antara perkara-perkara yang mempengaruhi pemilihan jangkamasa asas adalah seperti:
Tempoh pengukuran: bulan, suku tahunan, setengah tahun atau setiap tahun.
Produk dipengaruhi oleh musim atau tidak.
(perlu musim bertemu musim)
Produk sediada atau produk baru.
J masa asas tidak boleh dipilih terhadap j masa yg bermasalah: Perkembangan dalam syarikat seperti yang tidak dijangkakan seperti pembuangan pekerja, mogok dan sebagainya.
80 5.50
60 5.00
Bahan mentah (kg) Harga (RM/kg)
2008 2007
Tahun Input
Malaysia: NPC
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Deflator penghapus kesan inflasi dalam menilai sumber input dan output.
- untuk menunjukkan unsur- unsur kemasukan dan
keluaran dalam bentuk wang yang konstan.
Indek harga pengguna, indek harga pengeluar, kadar upah, indek harga bahan, indek harga tenaga dan lain-lain indek seumpamanya merupakan maklumat deflator yang boleh diperolehi daripada pihak kerajaan. Penggunaan deflator
membolehkan nilai bagi sumber kemasukan dan keluaran
dinyatakan dalam bentuk wang yang konstan.
(vi) deflator
25 000
1.25
21 900
1.0
Modal
Wang tunai (RM)
Deflator
25000
1.25
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Contoh penggunaan j.masa asas dan deflator
2001 2000
8500
1.1
7 000
1.0
Tenaga
Elektrik dan air(RM)
Deflator
25 000
1.25
21 900
1.0
Modal
Wang tunai (RM)
Deflator
620
5.2
660
5
Bahan
Bahan mentah(unit)
Harga (RM/unit)
237
7.20
237
7.00
30
Pekerja
Jumlah jam bekerja (jam)
Kadar purata gaji (RM/jam)
Bilangan pekerja
2000
53
60
3520
50
50
Barangan separa siap
Kuantiti keluaran (unit)
Harga keluaran (RM/unit)
Peratus siap
6200
53
6000
50
Kuantiti keluaran (unit)
Harga (RM/unit)
Barangan siap
Tahun Perkara
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i) Cari produktiviti jumlah (multifactor prod) utk
tahun 2001 dan 2002.
ii) Cari produktiviti separa (single factor prod)
bagi bahan, dan modal utk tahun 2001 dan
2002.
iii) Komen prestasi syarikat secara keseluruhan.
iv) Cari nilai keuntungan syarikat tahun 2002
dengan menganggap semua produk habis
dijual.
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Labor Skills
About half of the 17-year-olds in the US cannot correctly answer questions of this type
Figure 1.8