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Main Reference: Operations Management: Sustainability and Supply Chain Management, Jay Heizer,
Barry Render, Chuck Munson, Global Edition, 12/E, ©2017 • Pearson
Operations Management
• In a Turbulent World …
How to Run
a Successful Corporate ?
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500
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Operations …
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Operations …
• Set of Activities
• Inputs / outputs
• Goods / Services
• Added Value
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3 Basic Functions …
To create goods & services, all Organizations
perform ...
Organization
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3 Basic Functions …
Case 1 Organization
Commercial Bank
• Teller Scheduling
SUB FUNCTIONS
• Check Clearing
• Collection
• Transaction
• Layout Design
• Vault Operations
• Maintenance
• Security
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3 Basic Functions …
Case 2 Organization
Airline Industry
• Ground support
SUB FUNCTIONS
• Catering
• Flight Operations
• Crew Scheduling
• Maintenance
• Communications
• Dispatching
• Reservations
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3 Basic Functions …
Case 3 Organization
Manufacturing
• Facilities Layout
SUB FUNCTIONS
• Production Control
• Materials Control
• Quality Assurance
• Fabrication
• Maintenance
• Job Scheduling
• Process Analysis
© Copyright Prof. Dr. Aziz Ezzat ElSayed – BIS 963 Operations Management - Lecture Handouts 9
Example 1:
Examining Options for increasing contribution
Marketing Finance Operations
Consider the current Option Option Option
situation of a firm Increase
Increase Reduce Reduce
sales
Sales 50%
50% Finance Production
Current Costs 50% Costs 20%
Sales $100,000 $150,000 $100,000 $100,000
Cost of Goods Sold – 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
Exercise: what is the impact of 15% decrease in costs in the OM option ?
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Operations …?
Human
Financial
Resources Physical
Information
Transformation
Inputs Outputs
System
• Capital
Conversion
• • Goods
• Materials
Transportation
• • Services
• Equipment
Storage
•
• Facilities
Inspection
•
• Labor Data
• Knowledge Data
Action (information)
(information)
• Time
Action Monitoring and
Action = Feed Back Control
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Adding Values in
Operations … ? a Supply Chain
Up Down
Stream Stream
(Wheat)
Supply Chain
$0.10 $0.15 $0.25
• The chain of activities for
supplying bread to consumers.
• Each stage adds value for the
final customer.
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Supply Chain
• A global network of organizations and
activities that supply a firm with goods
and services.
• Members of the supply chain collaborate
to achieve high levels of customer
satisfaction, efficiency and competitive
advantage.
© Copyright Prof. Dr. Aziz Ezzat ElSayed – BIS 963 Operations Management - Handouts 7
Supply Chain Management
© Copyright Prof. Dr. Aziz Ezzat ElSayed – BIS 963 Operations Management - Lecture Handouts 15
Source: “ A Fuzzy Approach for a Supply Chain Network Design Problem” , Proceedings of 26th Annual
Production and Operations Management Society Conference, Washington DC, USA, May 2015
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Example: Supply Chain in Services
Up Stream Down Stream
Tier 1 Tier 2 Tier 3 Tier 4 Tier 1 Tier 2
Labor
Sand Quarry Contractor
Guests
Cement
Supplier
Gravel Quarry
Building
Contractor Guests
Hotel
Management
Company
Lumber Frames
Provider Contractor Furniture Supplier
Mill
Food Supplier
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Sustainability in production processes
Four R’s to address sustainability:
1. Resources
Special pressure on the use of non-renewable resources-
depletion of resources – water – energy.
2. Recycling
Wastes and scrap : burn it – bury it (undesirable) or
reuse it – recycling starts at design stage.
3. Regulations
Laws and regulations affect methods of transportation,
waste and noise.
4. Reputation
Bad Reputation can have negative consequences.
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Operations Management
Topics - Decisions …
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Forecasting Strategy Projects Quality
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Operations Management Decisions
• Project Management: The application
of processes, methods, knowledge, skills
and experience to achieve the project
objectives.
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Operations Management Decisions
• Scheduling: The process of assigning,
and sequencing of jobs and workloads
in production of goods or services.
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Operations Management Decisions
• Facility Layout: The arrangement of
different aspects of facilities in an
appropriate manner as to achieve
desired operations output results.
• Maintenance Management:
Maintaining the resources/assets of the
organization so that operations performs
effectively and efficiently.
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Course Modules
# Topic Category
1 Introduction to OM & Essential
2 Productivity Enhancement Essential
3 Forecasting Demand Essential
4 Quality Management Tentative
5 Capacity Planning Essential
6 Process Strategy Essential
7 Location Planning Tentative
8 Scheduling Tentative
9 Inventory Management Essential
10 Supply Chain management Tentative
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Course Materials
Operations Management: Sustainability and Supply
Chain Management, Global Edition, 12/E
• Jay Heizer,
• Barry Render,
• Chuck Munson,
• ISBN-10: 1292148632,
• ©2017 , Pearson
Lecture Handouts
Your Notes !
Excel Files
Assignments
Global Edition
Handouts:
https://sites.google.com/site/omaast/ Bis963AAST%
© Copyright Prof. Dr. Aziz Ezzat ElSayed – BIS 963 Operations Management - Lecture Handouts 29
Grades ..
Your Grade in this course is the sum of the following:
No Subject % grade
1 Assignments and home works 25%
2 Mid-Term Assessment (Exam) 30%
3 Participation, attendance,… 15%
4 Final Assessment (Exam) 40%
Total 100%
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Assignments ..
All Assignments , Class work and Projects
should be sent in WS, PDF or PPT Format to
this email Address
mba.om.bis963@gmail.com
Example:
Group A-Ibrahim Abdou - 900123456- Forecast - Assignment # 2
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Department of Industrial and Management Engineering
Module 2
Productivity Enhancement
Prof. Aziz Ezzat ElSayed, Ph.D.
Main Reference: Operations Management: Sustainability and Supply Chain Management, Jay Heizer,
Barry Render, Chuck Munson, Global Edition, 12/E, ©2017 • Pearson
Productivity ...
© Copyright Prof. Dr. Aziz Ezzat ElSayed – BIS 963 Operations Management - Lecture Handouts 14
1
Productivity
OUTPUT
Productivity =
INPUT
Measures …
1. Partial measure : Output ÷ (single input)
2. Multi-factor measure: output ÷ (multiple inputs)
3. Total measure : output ÷ (total inputs)
Growth …
[ This Period Productivity – Last Period Productivity]
Productivity
=
Growth Rate (%)
Last Period Productivity
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Measures of Productivity
Partial measures
Labor productivity = (Output Quantity number of workers)
Labor productivity = (Value of Output number of workers)
Machine productivity = (Output number of Machines)
Energy productivity = (Output Energy consumed)
Capital productivity = (Output Capital Invested)
Multifactor measures
Output (Labor + Machines)
Output (Capital + Energy+ Labor)
Total measures
Goods or services produced ( All inputs used to produce them)
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2
Case :
Productivity Improvement
Starbucks and the Game of Seconds ..!
A team of 10 analysts
continually look for ways
to save time.
Some improvements:
Case :
Productivity Improvement
Starbucks and the Game of Seconds ..!
3
Problem 1
• A firm produces 10,000 units of a certain
product which is sold at $10 per unit. The
firm uses 500 labor hour at a labor rate of $9
per hour.
What is the labor productivity ?
Labor Productivity = 10000 ÷ 500 = 20 units/lab.hr 1
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Productivity
Continued ...
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4
Problem 4
The following labor data are collected for four departments
in a firm, compare the labor productivity:
Output Units # of Workers Hours
1 720 4 8
2 680 5 6
3 350 6 4
4 570 8 3
Output (units)
Labor Productivity =
No. of Workers X(working hours)
Department Productivity
1 22.50
2 22.67
3 14.58
4 23.75
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Problem 5
• ABCD Company operates 12 hours per day to
produce 240 pumps. The OM manager thinks
that by changing one of the suppliers she can
increase the rate to 360 pumps per day. Total
material cost for each pump is approximately
$3.50; she has to invest $20 in the necessary
supplies (disposables) per day; energy costs are
assumed to be only $4.00 per day; and the firm
has 20 workers each is making $10 per hour.
Viewing this from a total (multifactor)
productivity perspective, what is the productivity
now and with the new supplier?
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5
Solution Working hours = 12 hours/day
Current Method New Supplier
Output 240 Pumps Output 360 Pumps
Input (Materials) $3.5 Per pump
Input (Materials) $20 Per day
Input (energy) $4.0 Per day Same Inputs
Input (workers) 20 Worker N.B. Materials Input will change
Input (worker/hr) $10 Per worker/hr
Case Study
Productivity A firm has its Productivity Progress as
Growth Rate shown in Figure Below
(%)
7
6
5
4
3
2
1 Time (Years)
08 09 10 11 12 13 14 15 16 17
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6
World Productivity
GDP per Capita (PPP) (2017)
Gabon
Botswana
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Improving Productivity
• Develop productivity measures
• Determine critical (bottleneck) operations
• Develop methods for productivity
improvements (Use IT)
• Establish reasonable goals
• Get management support
• Measure and publicize improvements
• Don’t confuse productivity with efficiency
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7
Productivity Vs. Efficiency
Consider a simple production system with a single input (x) and single output (y)
Output
Production Frontier
Efficiency is ..
Maximum O/P at same I/P (point B)
O/P at minimum I/P (point C)
Input
The Production Frontier defines the relationship between (X) and (Y),
the maximum output at each input. So any point on the production
frontier is efficient (points B and C). Point (A) is inefficient because the
output could be increased to reach level (B)
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