PRODUCTION AND OPERATIONS MANAGEMENT: POM management of the conversion process, which converts land, labor, capital and

d management inputs into desired outputs of goods and services. Function within the Business Organization: Operations the operation function consists of all activities that are directly related to producing goods or providing services. The production function exists not only in manufacturing and assembly operations, which are goods-oriented, but also in such areas as health care, transportation, food handling, and retailing, which are primarily service-oriented. - The operation function is the core of the most business organizations; operation is responsible for the creation of an organizations product or services. RANDOM FLUCTUATIONS Adjustment
Inputs: Land Labor Capital Management

Monitor Output Conversion Process

Outputs: Goods Services

Needed

Comparison: Actual vs. Desired FEEDBACK A Finance the finance function comprises of activities related to securing monetary resources at favorable prices and allocating those resources throughout the organization. Finance and operations management personnel cooperate in exchange of information and expertise in such activities as: o Budgeting must be periodically prepared in order to plan financial requirements. Budgets must sometimes be adjusted, and performance relative to budget must be evaluated. o Economic Analysis of investment proposals evaluation of alternative investments in plant and equipment requires inputs from both operations and finance people. o Provision of funds the necessary funding of operations and the amounts and timing of funds can be important and even critical when funds are tight. Marketing main functions is with selling the organizations products or services. Primary marketing activities in addition to selling include advertising and promotion, generally developing and maintaining a market, and sales forecasting. Marketing is in position to measure the needs and preferences of consumers, and marketing can be a valuable source of information relating to ideas for product or service improvement as well as for ideas for new products or services. Other Functions: Accounting has responsibility for preparing the financial statements, including the income statement and balance sheet. It also supplies cost data on labor, materials and overhead and may provide reports on such items such as scrap, downtime, and inventories. Purchasing is charged with procurement of materials, supplies, and equipment. Close contact with operations is necessary to ensure correct quantities and timing of purchases. It also involves shipping, receiving, and inspecting with purchased goods. Personnel Department concerned with recruitment and training of personnel, labor relations, contract negotiations, wage and salary administration, assisting in manpower projections, and ensuring the health and safety of employees.

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 Public Relations has the responsibility for building and maintaining a positive image of the organization. Potential benefits include being regarded as a good place to work (labor supply), improving chances of getting zoning change requests approved, getting community acceptance of expansion plans, and generating a positive attitude among employees. Industrial Engineering is often concerned with scheduling, performance standards, work methods, quality control, and material handling. This function is typically found in manufacturing plants in medium and large firms. Maintenance is responsible for general maintenance and repair of equipment, maintenance of buildings and grounds, heating and air conditioning, removing toxic wastes, parking and perhaps security. Distinguishing Between Manufacturing and Service Operations: Differing between manufacturing and service technologies can be difficult. Generally, we consider distinguishing characteristics such as: 1. 2. 3. 4. 5. 6. Tangible/intangible nature of output Consumption of output Nature of work(jobs) Degree of customer contract Customer participation in conversion Measurement of performance

Manufacturing Operations has tangible outputs (products), customer consumption of outputs over time, jobs that use less labor and more equipment, little customer contract, no customer participation in the conversion process (in production), and sophisticated methods of measuring production activities and resource consumption as products are made. Manufacturing allows a separation of production and consumption, so that manufacturing often occurs in an isolated environment, away from the customer. Product-oriented operations can build up inventories of finished goods, which enable them to absorb some of the shocks caused by various demands.

Service Operation have intangible outputs, immediate consumption, jobs that require a lot of labor but some equipment, direct customer contract, frequent customer participation in the conversion process, and rather elementary methods for measuring conversion activities and resource consumption. Some services are equipment based-computer programming services, railroad services, telephone services and people-based accounting services, hairstyling and gold instruction. - By its very nature, services involve a much higher degree of customer contact than manufacturing does. Because of their contact with customers, can sometimes be much more limited in their range of options in some areas. Historical Summary of Operations Management: For over two centuries, operations management has been recognized as an important factor in our economic well being. Date (Approximate) 1776 1799 1832 Specialization of labor in manufacturing Interchangeable parts, cost accounting Division of Labor by skill; assignment of jobs By skill, basic of time study MARK J. SANTIAGO: PAMANTASAN NG LUNGSOD NG VALENZUELA Charles Babbage Page 2 Adam Smith Eli Whitney & Others Contribution Contributor

1900

Scientific management; time study and work Study, dividing planning and doing of work Frederick W. Taylor Frank B. Gilbreth

1900 1901

Motion Study of jobs scheduling techniques for employees, machines, Jobs in manufacturing

Henry L. Gantt F.W. Harris Elton Mayo

1915 1927 1931

Economic lot sizes for inventory control Human relations, the Hawthorne studies Statistical inference applied to product quality Quality control charts

Walter A. Shewhart H.F. Dodge and H.G. Roming P.M.S. Blacket & others John Mauchly and J.P. Eckert

1935

Statistical sampling applied to product quality Control; inspection sampling plans

1940 1946

Operations Research applications in WWII Digital Computer

1947

Linear Programming

George B. Dantzig, William Orchard-Hays

1951 1960

Commercial Digital Computer Organizational Behavior; continued study Of people at work

Sperry Univac L. Cummings, L. Porter and others W. Skinner W.E. Deming and J. Juran

1970 1980

Integrating operation into overall strategy Quality and Productivity Applications Robotics, computer aided design...etc.

Productivity a measure of the effective use of resources, usually expressed as the ration of output to input. It is an index that measures output (g/s) relative to the input (labor, materials, energy and other resources) used to produce them.

Productivity = output/input Improving Productivity: There are number of key steps that a company or a department can take toward improving productivity 1. Develop productivity measures for all operations; measurement is the first step in managing and controlling an operation 2. Look at the system as a whole in deciding which operations to concentrate on; it is overall productivity that is important. Improvements in the bottleneck operation will lead to increase productivity, up to the point that the output rate of the bottleneck equals the output rate of the operations feeding it. MARK J. SANTIAGO: PAMANTASAN NG LUNGSOD NG VALENZUELA Page 3

3. Develop methods for achieving productivity improvements, such as soliciting ideas from workers, studying how other firms have increased productivity, and re-examining the way work is done. 4. Establish reasonable goals for improvement. 5. Make it clear that management supports and encourages productivity improvement. 6. Measure improvements, and publicize them. Types of Productivity measures: 1. Partial Productivity based on a single input 2. Multifactor Productivity based on more than one input 3. Total Productivity based on all inputs The choice of productivity measure depends primarily on the purpose of the measurement. Partial Measures: Output Labor Multifactor Measures: Output Labor + machine Total Measures: Goods/Services produced All inputs used to produce them EXAMPLE 1: 1. Determine the productivity for these cases a. Four workers installed 720 sq. yards of carpeting in 8 hours. b. A machine produced 68 usable pieces in 2 hours. 2. Determine the multifactor productivity for the combined input of labor and machine time using the following data. Output Input Labor Materials Overhead : : : P 1, 000 P 520 P 2, 000 : 1, 760 units Output Labor +capital+energy Output machine Output capital Output energy

Formula: Quantity Produced at standard price Labor Cost +material cost+overhead

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EXAMPLE 2 1. A company that processes fruits and vegetables is able to produce 400 cases of canned peaches in one-half hour with 4 workers. What is labor productivity? 2. A wrapping paper company produced 2, 000 rolls of paper one day. Labor cost was P160; material cost was P50 and overhead was P320. Determine the multifactor productivity.

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