CBME1_Chapter1-Operations-and-Productivity.pptx

Figure 1. Production Process for Products and Services (Attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license.) Goods are physical products that can be seen, touch, or possibly consume. Services are primary or complementary activities that does not directly prod...

Figure 1. Production Process for Products and Services (Attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license.) Goods are physical products that can be seen, touch, or possibly consume. Services are primary or complementary activities that does not directly produce physical products Production management deals with decision making related to production processes so that the resulting goods or services are produced according to specifications, in the amount and by the schedule demanded and out of minimum cost.”E.S. Buffa Production management is the process of planning and regulating the operations of that part of a business which is responsible for actual transformation of materials into finished products. A.W.Field Production management is concerned with the process which convert the inputs into outputs such as men, material, money, method etc. and the output such as goods or services. H.A.Harding Operations management involves three main types of decisions, typically made at three different stages: 1.Production planning. The first decisions facing operations managers come at the planning stage. At this stage, managers decide where, when, and how production will occur. They determine site locations and obtain the necessary resources. 2.Production control. At this stage, the decision-making process focuses on controlling quality and costs, scheduling, and the actual day-to-day operations of running a factory or service facility. 3.Improving production and operations. The final stage of operations management focuses on developing more efficient methods of producing the firm’s goods or services. Example 1. Collins title Company has a staff of 4 each, each working 8 hours per day (for a payroll cost of P640/day) and overhead expenses of P400 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 P800 per day. What will be the impact on productivity of the new system? Given: Old System New System no. of staff = 4 working 8h/day 4 working 8h/day Payroll cost = P640/day P640/day Overhead expenses = P400/day P800/day No. of closes = 8 titles /day 14 titles /day Required: Impact on productivity Labor productivity has increased from.25 to.4375. The change is Multifactor productivity has increased from.0077 to.0097. This change is Example 2. Productivity can be measured in a variety of ways, such as by labor, capital, energy, material usage, and so on. At Modern Lumber, Inc. Art Binley, president and producer of apple crates sold to growers, has been able, with his current equipment, to produce 240 crates per 100 logs. He currently purchases 100 logs per day, and each log requires 3 labor-hours to process. He believes that he can hire a professional buyer who can buy a better-quality log at the same cost. If this is the case, he can increase his production to 260 crates per 100logs. His labor-hours will increase by 8 hours per day. What will be impact on productivity (measured in crates/labor-hour) if the buyer is hired? Given: Current units produced per 100 logs = 240 Current Labor-hours per 100logs = 3 Units produced per 100 logs with buyer = 260 Labor-hours with buyer = 8 Required: impact on productivity Solution: Current labor productivity, P = =.8 crates/labor-hour Labor productivity with buyer, P1 =.844crates/labor-hour Using current productivity as a base, the increase will be.844/.8 =1.055 or a 5.5% Example 3. Art Binley has decided to look at his productivity from a multifactor (total factor productivity) perspective. To do so, he has determined his labor, capital, energy, and material usage and decided to use pesos as the common denominator. His total labor-hours are now 300 per day and will increase to 308 per day. His capital and energy costs will remain constant at P350 and P150 per day, respectively. Material costs for the 100 logs per day are P1,000 and will remain the same. If he pays an average of P10 per hour (with fringes), determine the impact on the productivity. Given: Labor-hour/day = 300 Material cost for 100 logs/day = P1,000 Capital = P350 Energy = 150 Pay/hour = P10 Required Impact on Productivity  Current System System with Buyer Labor 300hrs x P10 = P3,000 308 x 10 = P3,080 Material 100 logs/day = P1,000 P1,000 Capital 350 350 Energy 150 150 P4,500 P4,580 Multifactor Productivity Using the current productivity, the increase will be 0.0568/0.0533 = 1.066 or 6.6% increase. REINFORCEMENT Direction. Solve the following problems and write it in a letter size bond paper. 1. Briefly describe the contributions of four individuals who have contributed to the theory and techniques of operations management. 2.Outline the operations, finance/accounting, and marketing functions of the organizations. Prepare a chart similar to the organizational charts in the lesson outlining the same functions for any two of the following: a) a newspaper b) a drugstore c) a college library d) a school