MG 403 - Chapter 1: Operations and Productivity
MG 403 - Chapter 1: Operations and Productivity MG 403
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This 6 page Class Notes was uploaded by Haley Hummer on Saturday September 5, 2015. The Class Notes belongs to MG 403 at University of Alabama at Birmingham taught by Dr. Philip Musa in Fall 2015. Since its upload, it has received 293 views. For similar materials see Operations Management in Business, management at University of Alabama at Birmingham.
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If Haley isn't already a tutor, they should be. Haven't had any of this stuff explained to me as clearly as this was. I appreciate the help!
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Date Created: 09/05/15
MG403 Chapter 1 Operations and Productivity Production the creation of goodsservices 0 Not the same as productivity Operations the set of activities that create value in the form of goodsservices by transforming inputs into desired outputs Operations Management the management of the set of activities that create value in the form of goodsservices Organizing to Produce GoodsServices o 3 Essential Functions these functions tend to be present in organizations regarless of industry 1Marketing generates demand 2Production Operations creates the product 3Finance Accounting tracks how well the organization is doing pays bills collects money Reasons to study Operations Management 0 Its one of the three major functions of any organization 0 We want to study how people organize themselves for productive enterprise 0 We wantneed to know how goodsservices are produced We want to understand what OM managers do OM is such a costly part of an organization What operation managers do 5 basic management functions 0 Planning 0 Organizing Staffing Leading Controlling Ten Critical OM Strategy Decisions or Skills Sets Required 1Design of goodsservices 2Quaity management 3Process and capacity design 4Location strategy 5Layout strategy 6Human Resources and job design 7Suppy chain management 8nventory MRP JIT 9Scheduing 10 Maintenance and Reliability Design of goodsservices o What goodsservices do we offer 0 How should we design these productsservices Managing Quality 0 How do we de ne quality 0 Who is responsible for quality Process and Capacity Design 0 What processes and what capacities will these products require 0 What equipment stechnology is necessary for these processes Location Strategy 0 Where should we put the facility 0 On what criteria should we base the location decision Layout Strategy 0 How should we arrange the facility 0 How large should the facility be to meet the plan Human Resource and Job Design 0 How do we provide a reasonable work environment 0 How much can we expect our employees to produce Supply Chain Management 0 Should we makebuy this component 0 Who should be our suppliers and how can we integrate them into the strategy Inventory Material Requirements Plan and JustlnTime o How much inventory of each item should we have 0 When do we reorder Intermediate and Shortterm Scheduling oAre we better off keeping people on the pay roll during slow downs 0 Which jobs do we perform next Maintenance and Reliability 0 How do we build reliability into our process 0 Who is responsible for maintenance OrganizationsSources for Certi cations oAPICS American Production and Inventory Control Society oASQ American Society of Quality 0 ISM Institute for Supply Management 0 Counsel of Supply Chain Management Professionals 0 CIPS Charter Institute of Purchasing and Supply Eli Whitney Born 1765 Died 1825 o In 1798 received government contract to make 10000 muskets o Showed that machine tools could make standardized parts to exact speci cations Fredrick W Taylor Born 1856 Died 1915 0 quotFather of Scienti c Management 0 1881 chief engineer for Midvale Steel studied how tasks were done 0 Began rst motion and time studies 0 Created ef ciency principles Management should take more responsibility for 1Matching employees to the right job 2Providing proper training 3Providing proper work methodstools 4Establishing legitimate incentives for work to be accomplished Frank and Lillian Gilbereth 0 Frank 18681924 Lillian 18781972 0 Husband and wife engineering team 0 Further developed work measurement methods oApplied efficiency methods to their home and 12 children Book and Movie Cheaper by the Dozen Bells on Their Toes 390 Henry Ford Born 1863 Died 1947 1903 Created Ford Motor Company 1913 rst used moving assembly line to make modelt Un nished product moved by conveyor past work stations Paid workers very well for 1911 5day O O W Edward Deming Born 1900 Died 1993 Engineer and physicist Continued teaching japan quality control methods post WW2 Used statistics to analyze process His methods involved workers in decisions 0 0 0 0 Characteristics of Goods Tangible products Consistent product de nition Production usually separate form consumption Can be inventoried Low customer interaction 0 O Characteristics of Services 0 Intangible products Produced and consumed at the same time Often unique High customer interaction Inconsistent product de nition Often knowledge based 0 0 Frequently dispersed Supply Chain 0 A global network of organizations and activities that supply a rm with goodsservices Members of the supply chain collaborate to achieve high levels of customer satisfaction efficiency and competitive advantage 0 Service Pay Information 0 General perception that services are low paying jobs 0 42 of services workers are receive above average wages o 14 of 33 service industries pay below average 0 Retail trade pays only 61 of national average 0 Overall average of service wages is 96 of the US average wages New and Evolving Challenging in OM From local focus to global focus From batch shipments to justintime From low bid purchasing to supply chain partnering From lengthy product development to rapid product development From standard products to mass customization Form job specialization to empowered employees and teams 0 O Productivity Challenge Productivity is the ration of goodsservices divided into inputs resources labor capital Measures of output only not a measure of efficiency Measure of process improvement Represents output relative to input Only through productivity increases can our standard of living increase 0 0 Productivity Units producedinput used Labor Productivity 0 Productivity units producedlabor hours used 0 One resource input single factor productivity 0 Multifactor Productivity 0 Productivity outputlabor material energy capital misc resources used Multiple resource inputs multifactor productivity 0 0 Productivity Example 0 Collins Title productivity has 4 workers that work 8hrsday payroll cost 640day creates 8 titlesday overhead costs 400 Labor productivity 8 titles4832 32hrs 025 titles per laborhour Collins changes to 14 titles a day with 800 overhead 0 New Labor Productivity 1432 4375 titles per labor hour 0 O o What is the percent change in labor productivity 0 Newoldold 43752525 75100 75 increase in labor productivity 0 Multifactor productivity o 8 titles640payroll 400overhead 81040 0077titles 0 New multifactor productivity o 14640800 141440 0097titleshour What is the percent change in multifactor productivity 0 009700770077 002007 26 0 Example 2 A cleaning company used 10 of chemicals 40 of labor and 5 of misc expenses for each house it cleans After some quality complaints the company has decided to increase the use of chemicals by 50 By what percent has multifactor productivity fallen 0 Old productivity 1 house55 00181818 0 New productivity 1house60 00666667 o 066666700181818 9169 100 9169 oThe new productivity is only 9169 of the old productivity 0 1009169 831 Productivity was decreased by 831 Measurement Problems 0 Quality may change while the quality of inputs and outputs remain constant 0 External elements may cause an increase or decrease in productivity 0 Precise units of measurement may be lacking Productivity Variables 0 Labor contributes approximately 10 of the annual 25 increase in productivity in the US 0 Capital 38 of annual 25 increase 0 Management 52 of the annual 25 increase Labor 3 key variables for improved labor productivity 0 Basic education appropriate for the labor force 0 Diet of the labor force 0 Social overhead that makes labor available 0 Challenge is in maintaining and enhancing skills in the midst of rapidly changing technology and knowledge Management 0 Ensures labor and capital are efficiency used to increase productivity through use of knowledge and application of technology oProductivity in the Service Sector oTypicay labor intensive 0 Frequently focused on unique individual attributes or desires o Often intellectual tasks performed by professionals 0 Often difficult to mechanize o Often difficult to evaluate for quality Ethics and Social Responsibility 0 Development and produce safe quality products 0 Maintaining a clean environment 0 Providing a safe work place 0 Honoring stakeholder commitments
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