Production & Operations Management: Outline

PRODUCTION & OPERATIONS
MANAGEMENT
OUTLINE
Resource Person:
Dr. Tashfeen Mahmood Azhar
OM-346 PRODUCTION & OPERATIONS MANAGEMENT
Resource Person: Dr. Tashfeen Mahmood Azhar

Email: tashfeen@umt.edu.pk
Contact Hours: Monday, Tuesday 12:00 pm – 2:00 pm
Wednesday, Thursday 5:00 pm – 7:00 pm
Office Address:
Programme: BBA-H
Section: B
Semester: Fall 2021
Course Pre-requisites: Decision Models, OM-320
Credit Hours: 3
Course Type: Core Course
Venue/Day/Time: -------------- / Wednesday / 2:00 pm – 5:00 pm
Course URL (if any): None
Course Teaching Methodology
Following instructional tools and methodologies may be utilized
during the course:
Lectures Interactive Tests /

discussions Quiz
Class
Participation
Assignments
Course Learning Outcomes (CLOs):
After completing this course, students shall be able to:

CLO-1  appreciate the role of Production and Operations
Management in an organization
CLO-2  formulate and communicate production processes in the
terminology of POM
CLO-3  use quantitative and qualitative methods to make better
decisions as Operations managers
CLO-4  effectively utilize various tools and techniques to improve
the products and services, and thus enhance the
competitiveness of an organization
CLO-5  appreciate the profound environmental impact of POM
function activities
Assessment Structure and Grading Policy
Assessment Item Weight (%) Execution Plan

Class Participation 5% Continuous
Assignments 20% 6-7 assignments
Test / Quiz 10% 2-3 Tests
Mid Term 25% One-time assessment
Final exam 40% One-time assessment

Total 100
Weekly Sessions Plan
Week Topics / Contents Activity
1 OPERATIONS & PRODUCTIVITY CP
2 -- OPERATIONS STRATEGY IN GLOBAL ENVIRONMENT CP
-- DESIGN OF GOODS & SERVICES
3 PROCESS STRATEGY CP
4 CAPACITY PLANNING Numerical
5 LOCATION STRATEGIES Numerical
6 LAYOUT STRATEGIES Quiz -1
7 LAYOUT STRATEGIES Numerical
8 INVENTORY MANAGEMENT Quiz -2
9 MID TERM EXAM
10 INVENTORY MANAGEMENT Numerical
11 AGGREGATE PLANNING Numerical
12 MATERIAL REQUIREMENTS PLANNING (MRP) Numerical
13 MATERIAL REQUIREMENTS PLANNING (MRP) Quiz -3
14 SHORT TERM SCHEDULING Numerical
15 COURSE REVISION
16
17 FINAL TERM EXAMINATION
PRODUCTION
OPERATIONS
MANAGEMENT
INTRODUCTION TO OPERATIONS MANAGEMENT
What is Operations Management?
Production is the creation of goods and services

Operations Management is the set of activities that creates value in the form of
goods and services by transforming inputs into outputs
1. History of Operations Management:

 Division of labor (Adam Smith 1776; Charles Babbage 1852)
 Standardized parts (Whitney 1800)
 Scientific Management (Taylor 1881)
 Coordinated assembly line (Ford/ Sorenson/Avery 1913)
 Gantt charts (Gantt 1916)
What is Operations Management?
 Time-Motion study (Frank and Lillian Gilbreth 1922)
 Quality control (Shewhart 1924; Deming 1950)
 Computer (Atanasoff 1938)
 CPM/PERT (DuPont 1950/US Navy 1957)
 Material requirements planning, MRP (Orlicky 1960)
 Computer aided design (CAD 1970)
 Flexible manufacturing system (FMS 1975)
 Baldrige Quality Awards (1980)
 Supply Chain Management (1982)
 Computer integrated manufacturing (1990)
 Globalization (1992)
 Internet (1995)
Why Study Operations Management?
 OM is one of the three major functions of any organization
 We should be aware of how goods and services are produced
 We want to understand what is the job of an operations manager
 OM is the costliest functional area in most of the organizations

What Operations Managers Do?
1. The Management Process Consists of:

Planning
Organizing
Staffing
Leading
Controlling
2.Ten Strategic OM Decisions
Design of goods and services
Managing quality
Process and capacity strategy
Location strategy
Layout strategy
What Operations Managers Do?
Human resources and job design

Supply chain management
Inventory management
Short Term Scheduling
Maintenance
Operations for Goods and Services
1. Characteristics of Goods
 Tangible product
 Can be kept in inventory
 Similar products produced
 Limited customer involvement in production
 Product standardized
 Production can be automated
 Quality of the product can be easily evaluated
Operations for Goods and Services
2. Characteristics of Service
 Intangible product
 Produced and consumed at same time
 Often unique
 Often knowledge-based
 Inconsistent product definition
 High customer interaction
 Frequently dispersed
Productive System
INPUT OUTPUT
• Material Transformation Process • Goods
• Machines • Services
• Labor
• Management
• Capital
Feedback and Requirements

Productivity Variables
 Labor, which contributes about 10% of the annual increase

 Capital, which contributes about 32% of the annual increase
 Management, which contributes about 52% of the annual increase
Four key variables for improved labor productivity are:

 Basic education of the labor force
 Diet of the labor force
 Social overhead that makes labor available
 Maintaining and enhancing skills of workforce
Productivity Measurement
𝑼𝒏𝒊𝒕𝒔 𝑷𝒓𝒐𝒅𝒖𝒄𝒆𝒅
𝑷𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒗𝒊𝒕𝒚 =
𝑰𝒏𝒑𝒖𝒕 𝑼𝒔𝒆𝒅
Single-Factor Productivity
Labor Productivity:
For example, if units produced = 1,000 and labor-hours used is
250, then:

Productivity Measurement
Multifactor or Total Productivity
For example, if we want to use more than one factor, e.g., labor, capital,
energy and material, then:

Example of Productivity Measurement
Example:
XYZ Insurance Ltd. wants to evaluate its labor and multifactor productivity
with a new computerized title-search system. The company has a staff of
four, each working 8 hours per day (for a payroll cost of $640/day) and
overhead expenses of $400 per day. XYZ processes and closes on 8 titles each
day. The new computerized title-search system 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.
Single Factor Productivity

Old system:
Staff of 4 works 8 hours /day and closes 8 titles/day
Payroll = $640/day and Overhead cost = $400/day
Labor productivity in old system
¿ 𝟎 . 𝟐𝟓𝒕𝒊𝒕𝒍𝒆𝒔 𝒑𝒆𝒓 𝒍𝒂𝒃𝒐𝒓 − 𝒉𝒓𝒔

Single Factor Productivity
New system:
¿ 𝟎 . 𝟒𝟑𝟕𝟓 𝒕𝒊𝒕𝒍𝒆𝒔 𝒑𝒆𝒓 𝒍𝒂𝒃𝒐𝒓 −𝒉𝒓𝒔

Example of Productivity Measurement (b)
Multifactor Productivity
Old system:
¿ 𝟎 . 𝟎𝟎𝟕𝟕 𝒕𝒊𝒕𝒍𝒆𝒔 𝒑𝒆𝒓 𝒅𝒐𝒍𝒍𝒂𝒓

Example of Productivity Measurement (b)
Multifactor Productivity
New system:
¿ 𝟎 . 𝟎𝟎𝟗𝟕 𝒕𝒊𝒕𝒍𝒆𝒔 𝒑𝒆𝒓 𝒅𝒐𝒍𝒍𝒂𝒓

Service Productivity
 Services constitute the largest economic sector
 Typically, it is labor intensive
 Frequently focused on unique individual attributes or desires
 Often an intellectual task performed by professionals
 Often difficult to automate
 Often difficult to evaluate for quality

Current Challenges in Operations Management
From To
 Local or national focus  Global focus
 Batch shipments  Just-in-time
 Low bid purchasing  Supply chain partnering
 Lengthy product  Rapid product development,
development alliances
 Standard products  Mass customization
 Job specialization  Empowered employees,
teams
Past Causes Future

Local or Low-cost, reliable worldwide Global focus
national focus communication and
transportation networks
Batch (large) Short product life cycles and Just-in-time
shipments cost of capital put pressure on shipments
reducing inventory
Low-bid Quality emphasis requires that Supply-chain
purchasing suppliers be engaged in partners,
product improvement Enterprise
Resource
Planning,
e-commerce
Past Causes Future

Lengthy Shorter life cycles, Internet, Rapid product
product rapid international development,
development communication, computer- alliances,
aided design, and collaborative
international collaboration designs
Standardized Affluence and worldwide Mass
products markets; increasingly flexible customization
production processes with added
emphasis on
quality
Job Changing socio-culture milieu; Empowered
specialization increasingly a knowledge and employees,
information society teams, and lean
production

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PRODUCTION & OPERATIONS

Resource Person: Dr. Tashfeen Mahmood Azhar

Lectures Interactive Tests /

Production is the creation of goods and services

1. History of Operations Management:

 OM is one of the three major functions of any organization

 We should be aware of how goods and services are produced

 We want to understand what is the job of an operations manager

 OM is the costliest functional area in most of the organizations

1. The Management Process Consists of:

Human resources and job design

Feedback and Requirements

 Labor, which contributes about 10% of the annual increase

Four key variables for improved labor productivity are:

Multifactor or Total Productivity

Single Factor Productivity

Labor productivity in old system

¿ 𝟎 . 𝟐𝟓𝒕𝒊𝒕𝒍𝒆𝒔 𝒑𝒆𝒓 𝒍𝒂𝒃𝒐𝒓 − 𝒉𝒓𝒔

Single Factor Productivity

Labor productivity in old system

¿ 𝟎 . 𝟒𝟑𝟕𝟓 𝒕𝒊𝒕𝒍𝒆𝒔 𝒑𝒆𝒓 𝒍𝒂𝒃𝒐𝒓 −𝒉𝒓𝒔

Labor productivity in old system

¿ 𝟎 . 𝟎𝟎𝟕𝟕 𝒕𝒊𝒕𝒍𝒆𝒔 𝒑𝒆𝒓 𝒅𝒐𝒍𝒍𝒂𝒓

Labor productivity in old system

¿ 𝟎 . 𝟎𝟎𝟗𝟕 𝒕𝒊𝒕𝒍𝒆𝒔 𝒑𝒆𝒓 𝒅𝒐𝒍𝒍𝒂𝒓

 Services constitute the largest economic sector

 Typically, it is labor intensive

 Frequently focused on unique individual attributes or desires

 Often an intellectual task performed by professionals

 Often difficult to automate

 Often difficult to evaluate for quality

Past Causes Future

Past Causes Future

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