Production course 1st year

Chapter 1:“Introduction to Operations Management”

System: is a set of interrelated parts that must work together.

Operations management: The management of systems or processes that create goods and/ or
provide services.

With required; types, quantity, quality, timing, cost.

 If we want high quality the required will be as the following: (type, quantity, cost, timing, quality.)

Function within business organization

1) Any business organization 2) Producing and selling goods &/ or

achieves its goals or services
objectives through its output

 The three basic function of business organization

Supply chain: A sequence of activities and organizations involved in producing and delivering a good or
service.

Supply chains are both external and internal to the organization. The external parts of a supply chain
provide raw materials, parts, equipment, supplies, and/or other inputs to the organization, and they deliver
outputs that are goods to the organization’s customers.
The internal parts of a supply chain are part of the operations function itself, supplying operations with
parts and materials, performing work on products, and/or performing services.

All organizations have:

 Similar functions and similar ways of operations.
Whatever:
 The objectives of the organization, (profit or non-profit).

Page | 1
Or, Whatever:
 Product or services it produced.
Operation management affects national’s ability to compete internationally.
*** The evolution
1) The manufacturing function.
2) The production function that have tangible output.
Manufacturing organization + extractive + trading….
3) The operation function Manufacturing
 organization + extractive + trading
 Service organization

Value-added: The difference between the cost of inputs and the value or price of outputs.

Add value= output-input

Manufacturing and service are often different in terms of what is done but quite similar in terms of how
it is done.

Consider these points of comparison:

 Degree of customer contact.

 Labor content of jobs.
 Measurement of productivity.
 Uniformity of output
 Uniformity of input

 Typical differences between Production of goods and Provision of services

 Pareto phenomenon a few factors account for a high percentage of the occurrence of some
event(s).

It also called 80/20 rule; that’s mean 80% of problems are caused by 20% from population.

Page | 2
 Ethical issue.
 Financial statements.
 Worker safety.
 Product safety.
 Quality.
 The environment.
 The community.
 Hiring and firing workers.
 Closing facilities.
 Workers’ rights.

The production & operation system

Design Operation & controlling

(Intermediate & short term

(Long term decision)
decision)
Building houses &small projects

Operate & control

 Demand forecast.
 Aggregate planning.
 Sequencing.
 Scheduling.
 Inventory management.
 Quality control.
 Project management.

E-business: from business to business (Use of the Internet to transact business).

E-commerce: from consumer to organization or to business transaction.
Technology: is the application of scientific discoveries to the development and improvement of
goods and services.
Globalization.
Management of supply chain.
Outsourcing.

Lean Craft Mass

production production production

Page | 3
Lean production use minimum Volume high high
amount of resources and has the Flexibility high high
both advantage of craft and Variety large large
mass production. Cost low low

Team work: the people who works in team.

Work team: the work which done by people who works in team.

Page | 4
Chapter 2: “Competitiveness, Strategy, and Productivity”

Quantity and time strategies quality based on strategies focus on maintaining or improving
productivity and its a measure of effective use of resources, usually expressed as the ratio of output
to input productivity ratio are used For planning workforce requirements scheduling equipment
financial analysis

EXAMPLE 2: Determine the productivity for these cases:

a. Four workers installed 720 square yards of carpeting in eight hours.

b. A machine produced 70 pieces in two hours. However, two pieces were unusable.

SOLUTION:

Page | 5
EXAMPLE 3: Determine the multifactor productivity for the combined input of labor and machine time
using the following data:

Output: 7,040 units

Input: (Labor: $1,000 & Materials: $520 & Overhead: $2,000)

SOLUTION:

 Factors affecting productivity Methods.

 Capital.
 Quantity.
 Technology.
 Management.

 Improving productivity Develop measures.

 Determine critical (bottleneck) operations.
 Develop methods for productivity improvements.
 Establish reasonable goals.
 Get management support.
 Measure and publicize improvements
 Don't confuse productivity with efficiency.

Page | 6
Page | 7
Chapter 4: “product &service design”

 Major factors in design strategy:

 Cost
 Quality
 Time to market
 Customer satisfaction
 Competitor advantage
 Product and service design

 What does product and service design do?

 Translate customer wants and needs into product and service requirements.
 Refine existing products and services
 Develop new product and services.
 Formulate quality goals
 Formulate Cost strategy
 Construct and test prototypes.
 Document specifications.
 Reasons for product or service design.
Economic (low demand, the need to reduce costs.
Social and demographic (population shifts.
Political, liability or legal government changes, salary issues, new regulation.
Competitive new or changed products or service.
Cost or availability of raw materials component.
Technological (in product components, processes) Objectives of product and
service design.
Main focus.
Customer satisfaction.

Reliability

 It is the ability of the product, part or system to be performing its intended function under a
prescribed set of conditions.
 It is a probability that the product or system will:
 Function when activated
 Function for a given length of time.
 Failure: is a situation in which a product, part or system does not perform as intended.
 Cases of failure:
 the smoke (heat) alarm
 Case of partial performance
 Case of working where it should not

Page | 8
General rule: As the number of parts or components increase, the reliability decrease.
So this mean that the more complicated the product or system, the lower its reliability will be.

How can we deal with this situation?

 Through using redundancy.

 Redundancy: the use of backup (stand by components to increase reliability.

Page | 9
Chapter 5: “Strategic Capacity Planning for Products and Services”

 Capacity: is the upper limited ceiling on the load that an operating unit can handle.
The operating unit may be a plant, department, and machine.
The goal of capacity planning is to achieve a match between the
long-term supply capabilities of an organization and the
predicted level of long-term demand.
 Capacity also includes:
 Equipment.
 Space.
 Employee skills.
 The basic questions in capacity handling are:
What kind of capacity is needed?
How much is needed?
When is it needed?
 Importance of Capacity Decisions
Impacts ability to meet future demands.
Affects operating costs.
Major determinant of initial costs.
Involves long-term commitment.
Affects competitiveness.
Affects ease of management.
Globalization adds complexity.
Impacts long range planning.
 Functional definitions of capacity:
Capacity Maximum output rate or service capacity an operation,
process, or facility is designed under idle conditions.
Effective capacity personal time, maintenance, and scrap Design
capacity minus allowances such as planned stops such as periodic
maintenance lunch breaks, problems in scheduling.
Actual output cannot exceed effective capacity outputs. Rate of
output actually achieved materials; defective includes absenteeism
breakdowns, shortage of materials, defective outputs.

 Determining requirements capacity

 capacity are long-term and short-term considerations of capacity
 Long-term relates to overall level of capacity such as facility size, trends, and cycles
 Short-term relates to variations from seasonal, random, and irregular demand.

Page | 10
 Examples of seasonal demand patterns
 Seasonal: clothing, vacations, sports, education.
 Monthly: bank transactions, social security checks.
 Weekly: restaurants, supermarkets, traffic, hotel.
 Daily: telephone calls, power usage, traffic, restaurants.

T.C= F.C +V.C

V.C=Q*v

T.R=R*Q

P=T.R-T.C =(R*Q)-(F.C+V.C)

P= Q(R-v)-FC

Q= (P+F.C)/(R-v)

QBEF=F.C/(R-v)

Page | 11
 Chapter 6: “process selection & facility layout”

Process Selection deciding on the way Production of goods or services will be organized.

• Major characteristics of production system.

 Degree of standardization.
 Types of operations.
 Project.
 Intermittent (job shop & batches).
 Repetitive production & continues processing.

o Standardization: Outputs are classified from:

 Highly standardization.
 Highly customization.
o Standard outputs:
 Having a high degree in uniformity. Like goods ( canned
food/ pens ….) or services (airline/ auto car washing …)
o Customized outputs:
 Designed according to a customer’s requirements, for
specific case; Like goods ( eyes glasses/ cloths ….) or
services (tailoring/ surgery …)

Standardized systems:

Standardized outputs, standardized methods, mechanization (specialized machine),

semi-skilled workers, standardized materials, high Volume production, lower Cost
/unit.

Customized systems:

Each job is different, multi-purpose machines, high skilled workers, and lower
volume of Production, higher cost / unit.

Volume Few units Small quantity Moderate quantity large quantity Very large quantity

Standard Highly customized Similar item Standardized Highly Standardized

customized
Type of 1) 2) 3) 4) 5)
operation project Job shop Batching Mass Continues
production processing

Page | 12
1) Continues processing:
Producing very large volume of only highly Standardized product with
non- discrete (uncountable) units. (Sugar, flour, chemicals, petroleum,
steel).
2) Repetitive (mass/ assembly) Production:
 They are semi continuous operations.
 It involves one or a few similar items with large volumes using automate
specialized machine.
 The output fairly standard involving very little processing variety: (cars,
TV’s, computers …)
3) Batch Processing
Producing batching with moderate volumes of similar items.
It uses the same processing requirements & equipment, arraying one or
more of the ingredients from one batch to the next.
4) Job shop
 Producing lot production of small volume with specifications, according
to customer’s needs.
 Lt’s responsible for specific operations not specific products.
 It handles greater variety of job requirement.
5) Project
 Complex jobs consisting of complication & unique, non-routine (non-
repetitive) activities, with a limited time farm.
 Producing one unique per unit.

Page | 13
Chapter 8: “Location Planning and Analysis"

Need for location decisions

 Marketing strategy
 Cost of doing business
 Depletion of resources

Factors affecting the location decision

1) Location of raw materials

 Necessity: mining, farming, foresting. Fishing
 Preferable because of: Perish ability freezing fresh fruits, dairy products.
 Heavy weight or large volume will affect the transportation costs such as sugar cane.

2) Location of markets
 Distribution costs Because of:
 Perish ability of finished products: bakeries, flower- shops. Fresh seafood
 Heavy weight or large volume For good producers: heavy products sand)
 For services a close customer contact, tailor shops, home repair services
 Governmental services post offices, police Competitive strategy for profit-oriented firms
 For non-profit organization based on the needs of the users
 For service banks, doctors, lawyers, retail sales fast food restaurant, supermarkets. Since
their products are often similar, they rely on convenience to attract customers.

3) Labor factor
o Costs
o Availability (skills, attitudes, volume)
o Productivity and unions

4) Climate and taxes

Severe winters.
Business and personal taxes

5) Foreign locations (multinational operations)

Financial incentives, taxes
Political & economic stability
Language and culture differences

Page | 14
Community consideration

• Quality of life Services: schools, housing, transportation, health care, environment, shopping,
police, fire department
• Attitudes impact on community...... noise, traffic, pollution, airports, and highways
• Taxes state & local, direct & indirect
• Environmental regulations state & local
• Developer support

Site related factors

• Land cost, soil characteristics, room for expansion, parking

• Transportation roads, railway, airports
• Environmental
• Legal

Page | 15