ANNOUNCEMENT !

ANNOUNCEMENT DATED ON: MONDAY- APRIL 28-2025

JIMMA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT .

PROGRAM: POST GRADUATE=MASTERS

PROGRAMME : POST GRADUATE=MASTERS :
COURSE TITLE: OPERATIONS MANAGEMENT (OM):
CREDIT HOURS:3
TARGETS=SECOND DEGREE-POST GARUTE STUDENTS

CAMPUS: BUSINESS AND ECONOMICS COLLEGE, JIMMA CAMPUS

ACADEMIC YEAR : 2017 E.C / 2025 G.C
SEMESTER : TWO
COURSE INSTRUCTOR ::WENDWESEN SIYUM(BA, MBA. PGDIM)
PROFESSOR(AST) OF MANAGEMENT)

Announcement! ANNOUNCEMENT-DATED ON– MONDAY- APRIL 28-2025-

ANNOUNCEMENT DATED ON : OPERATIONS Management Course Lecture
ANNOUNCEMENT-DATED ON– Program: second Degree
MONDAY- APRIL 28-2025- Stream : Regular Program
Academic Year : 2017 E.C -2025 G.C
Operations Management Course Lecture Schedules
OPERATIONS Management Monday 8:00 -10:00 ;Morning
Course Lecture Tuesday-8:00 -10:00 ;Morning
Wedensday-8:00 -10:00 ;Morning
Thursday-8:00 -10:00 ;Morning
Friday - 8:00 -10:00 ;Morning
COURSE LECTURE DURATION- THREES
WEEKS OF LECTURE=15 DAYS OF
LECTURE=FOR THREE CREDIT HOUR
COURSES=APRIL 28,29,30, MAY
1,2,5,6,7,8,9,12,13,14,,15 AND 16
Lecture Room: BECO 102
Course Instructor:
Wendwesen (BA, MBA, PGDIM)
Professor(Ast) of Management
Course Operations Management
office Consultation HOURS( BECO Monday 10:00 -12:00 ;Morning
305 office Number) Tuesday-10:00 -12:00 ;Morning

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 Wedensday-10:00 -12:00 ;Morning
Thursday-10:00 -10:20 ;Morning
Friday - 10:00 -10:20 ;Morning
Course Referenced Documents: Operations Management Course : Lecture Notes, Having THIRTY EIGHT (38) PAGES, Soft
Types , Day and Date Given to Copy, which was given to you on MONDAY- APRIL 28-2025-
you
Academic Year 2017 E.C=2025 G.C
Semester II
Targets Second Degree Students
Program Post Graduate
Mid Exam Marks Fifty(50) Marks

Mid Exam: Question Types , Question Types=Discussion Questions And Case Questions
Marks and Time allocated a)Discussion Questions( Two In Number=Each Discussion Question Wort's 10(Ten) Marks=
2 x 10 =20 Marks= Time Allowed For The Two Discussion Questions =Thirty(30) Minutes
b) Case Questions( Two In Number= Each Case Question Worth's 15(Fifteen) Marks=2 x
15=30 Marks=Time Allowed For The Two Case Questions=One( 1) Hour
Total Time Allocated=1:30
Remark-. One Discussion Question From Chapter One=10 Marks=15 Minutes
One Discussion Question From Chapter Two=10 Marks=15 Minutes
One Case Question From Chapter One =15 Marks=30 Minutes
One Case Question From Chapter Two=15 Marks= 30 Minutes
Mid Exam Durations, Date, Day Ninety(90) Minutes. 1:30= MONDAY-MAY 9--2025 Starting Time Exatcly at 9:00 Morning at BECO 102
And Time LECTURE ROOM
Mid Exam Coverage’s Chapters Chapter One : Nature Of Operations Management: 1.1 : Concepts Of Operations Management 1.2:
Operations Management And Related Concepts 1.3: Scopes Of Operations Management 1.4 :
Objectives Of Operations Management 1.5: Application Areas, Challenges And Opportunities In
Operations Management 1.5.1 : Application Areas Of Operations Management 1.5.2: Opportunities In
CHAPTER ONE AND TWO Operations Management 1.5.3: Challenges (Threats) In Operations Management
Chapter Two : Operations Strategy & Competitiveness 2.1 : Operations Strategy : Basic Concepts 2.2:
Operations Strategy : related Concepts 2.2.1: Mission 2.2.2; mission statement 2.2.3: vision 2.2.4:
objectives 2.2.5: Core competencies 2.3: Strategy : Basic Levels 2.4: Operations Strategy: Basic
Features 2.5 : Operations Strategy: Basic Types 2.5.1: Corporate strategy 2.5.1.1: Joint venture 2.5.1.2:
Export 2.5.1.3: Foreign Direct Investment 2.5.1.4; Wholly Owned Subsidiaries( Acquisition) 2.5.1.5:
Liquidation 2.5.2; Business Strategy 2.5.2.1: Promotional strategy 2.5.2.2; pricing strategy 2.5.2.3;
distribution strategy 2.5.2.4; concentric strategy 2.5.2.5: conglomerate strategy(differentiation strategy)
2.5.3: Functional Strategy 2.5.3.1: Human Resource Management Related Strategy 2.5.3.2: Financial
Resource Management Related Strategy 2.5.3.3: Informational Resource Management Related strategy
2.5.3.4: Material Resource Management Related Strategy
Time Allowed For Mid Exam, 90 Minutes(1:30), Starting time : Exactly at 9:00 Morning –Ending Time:10:30 Morning..
Starting , Ending Time And Place. BECO 102 Lecture Room
Place

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Final Exam Marks Fifty(50) Marks
Final Exam : Question Types, Question types=Discussion Questionndss and case Questions
Marks And Time Allotted A) Discussion Questions( two in number=each discussion question worth's 10(ten) marks= 2 x
10 =20 marks= Time Allowed for the two discusiin QUestions=Thirty(30) Minutes
B) Case Questions( two in number= each case question worth's 15(fifteen) marks=2 x 15=30
marks=Time Allowed For the two case questions=one( 1) Hour
Total Time Allocated=1:30
Remark= One discussion question from chapter three=10 marks=15 minutes
One discussion question from chapter four=10 marks=15 minutes
One case question from chapter three=15 marks=30 minutes
One case question from chapter four=15 marks=30 minutes
Final Exam Durations, Date, Day 90(Ninety) Minutes(1:30 Hours), Starting time : Exactly at 9:00 Morning, Ending Time:4:30-Morning .
And Time .Place. BECO 102 Lecture Room. FINAL EXAM DAY/DATE- FRIDAY MAY 23-2025
Final Exam Coverage’s Chapters CHAPTER THREE: DESIGN OF THE OPERATION SYSTEM 3.1 : Product Design 3.1.1: Product
Design: Basic Concepts
, Reasons For , Challenges And Steps 3.1.1.1: Product Design: Basic Concepts .1.1.2: Product
Design: Reasons For 3.1.1.3: Product Design: Challenges 3.1.1.4: Product Design: Basic Steps 3.2:
Service Design: Basic Concepts, Reasons for, challenges and steps 3.2.1: Service Design: Basic
Concepts , Reasons For , Challenges And Steps 3.2.1.1: Service Design: Basic Concepts 3.2.1.2:
Service Design: Reasons For 3.2.1.3: Service Design: Challenges 3.2.1.4: Service Design: Basic Steps
3.3: Process Selection 3.3.1: Continuous Process 3.3.2: Assembly Line Process 3.3.3: Intermittent
Process 3.4: Strategic Capacity Planning 3.5: Facility Lay out and Location 3.5.1: Facility Lay Out
3.5.2: Facility Locations 3.6 :Job Design and Work Measurement 3.6.1: Job Design 3.6.2: Work
Measurement Chapter FOUR: QUALITY MANAGEMENT AND CONTROL 4.1: Meaning and Nature
of Quality 4.2: Overview of Total Quality Management(TQM) 4.3: Quality Specifications 4.4:
Continuous Improvements 4.5: Process Control Charts
Time Allowed For Final Exam 1:30 Hours= Ninety(90) Minutes
Day , Date , Time And Place To MONDAY- MA y 26-2025-EXACTLY AT 9:00 MORNING at BECO 102 Lecture ROOM
See Total Sco5( Mid Exam(50%),
Final Exam(50%), Total
Score(100%)
And Letter Grads
Instructor Wendwesen S(BA, MBA, PGDIM)
Professor (Ast) of Management

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 JIMMA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT

PROGRAMME : POST GRADUATE=MASTERS :

COURSE TITLE: OPERATIONS MANAGEMENT (OM):
CREDIT HOURS:3
TARGETS=SECOND DEGREE-POST GARUTE STUDENTS

CAMPUS: BUSINESS AND ECONOMICS COLLEGE, JIMMA CAMPUS

ACADEMIC YEAR : 2017 E.C / 2025 G.C
SEMESTER : TWO
COURSE INSTRUCTOR ::WENDWESEN SIYUM(BA, MBA. PGDIM)
PROFESSOR(AST) OF MANAGEMENT)

COURSE DESCRIPTION
Operations Management the heart of all management disciplines which bring
competitive advantage and market focus for all business organization. Thus, the course
covers Meaning of operations and production management, operations management as
competitive weapon, product and service design, quality and quality control, capacity
planning, location decision, layout decision, aggregate planning, scheduling, work
design, and time―based operations.
COURSE OBJECTIVES
The course enables students to have an understanding on:
define operations management, understand operations strategy and competitiveness,
understand facility location and layout, know capacity planning, differentiate
aggregate planning and scheduling, describe operations management, its scope and
activities, describe the decision involved in designing and controlling the operations
system and apply selected quantitative tools, techniques and models in the analysis of
decisions for the designing, planning and controlling of operation systems.
COURSE OUTLINE
Chapter One : Nature Of Operations Management
1.1 : Concepts Of Operations Management
1.2 : Operations Management And Related Concepts
1.3 : Scopes Of Operations Management
1.4 : Objectives Of Operations Management
1.5 : Application Areas, Challenges And Opportunities In Operations Management
1.5.1 : Application Areas Of Operations Management
1.5.2 : Opportunities In Operations Management
1.5.3 : Challenges (Threats) In Operations Management

Chapter Two : Operations Strategy & Competitiveness

2.1 : Operations Strategy : Basic Concepts
2.2 : Operations Strategy : related Concepts
2.2.1 : Mission
2.2.2 ; mission statement

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2.2.3 : vision
2.2.4 : objectives
2.2.5 : Core competencies
2.3 : Strategy : Basic Levels
2.4 : Operations Strategy: Basic Features
2.5 : Operations Strategy: Basic Types
2.5.1 : Corporate strategy
2.5.1.1 : Joint venture
2.5.1.2 : Export
2.5.1.3 : Foreign Direct Investment
2.5.1.4 ; Wholly Owned Subsidiaries( Acquisition)
2.5.1.5 : Liquidation
2.5.2 ; Business Strategy
2.5.2.1 : Promotional strategy
2.5.2.2 ; pricing strategy
2.5.2.3 ; distribution strategy
2.5.2.4 ; concentric strategy
2.5.2.5 : conglomerate strategy(differentiation strategy)
2.5.3 : Functional Strategy
2.5.3.1 : Human Resource Management Related Strategy
2.5.3.2 : Financial Resource Management Related Strategy
2.5.3.3 : Informational Resource Management Related Strategy
2.5.3.4 : Material Resource Management Related Strategy
CHAPTER THREE: DESIGN OF THE OPERATION SYSTEM
3.1 : Product Design
3.1.1 : Product Design: Basic Concepts , Reasons For , Challenges And Steps
3.1.1.1 : Product Design: Basic Concepts
3.1.1.2 : Product Design: Reasons For
3.1.1.3 : Product Design: Challenges
3.1.1.4 : Product Design: Basic Steps
3.2 : Service Design: Basic Concepts, Reasons for, challenges and steps
3.2.1 : Service Design: Basic Concepts , Reasons For , Challenges And Steps
3.2.1.1 : Service Design: Basic Concepts
3.2.1.2 : Service Design: Reasons For
3.2.1.3 : Service Design: Challenges
3.2.1.4 : Service Design: Basic Steps
3.3 : Process Selection
3.3.1 : Continuous Process
3.3.2 : Assembly Line Process
3.3.3 : Intermittent Process
3.4 : Strategic Capacity Planning
3.5 : Facility Lay out and Location
3.5.1 : Facility Lay Out
3.5.2 : Facility Locations
3.6 :Job Design and Work Measurement
3.6.1 : Job Design
3.6.2 : Work Measurement
Chapter FOUR: QUALITY MANAGEMENT AND CONTROL
4.1 : Meaning and Nature of Quality
4.2 : Overview of Total Quality Management(TQM)
4.3 : Quality Specifications
4.4 : Continuous Improvements
4.5 : Process Control Charts

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 Chapter FIVE: OPERATIONS PLANNING AND CONTROL
5.1 Aggregate Production Planning
5.2 Operations Scheduling

Chapter One : Nature Of Operations Management

1.1 : Concepts Of Operations Management
1.2 : Operations Management And Related Concepts
1.3 : Scopes Of Operations Management
1.4 : Objectives Of Operations Management
1.5 : Application Areas, Challenges And Opportunities In Operations Management
1.5.1 : Application Areas Of Operations Management
1.5.2 : Opportunities In Operations Management
1.5.3 : Challenges (Threats) In Operations Management
1.1 : Concepts Of Operations Management
Operations management is an aspect of the entire managerial activities that is
concerned with
Specifying and managing time at the work places
Converting organizational resources(inputs) in to out puts(final products, or
services)
Identifying and deciding on the exact locations of carrying out operational
activities
Pertains to ideas of specifying the minimum and maximum production
capacity of an organization
Devising operational strategies that will be used to attain organizational
targets
Specifying quality levels, carrying out product design activities,
1.2 : Operations Management And Related Concepts
Operations management and related concept includes ideas of lead time management,
location( factory or plant) decisions, production management, franchising,
outsourcing, make decisions and business process reengineering concepts
1.2.1 : Operations Management Vs Lead Time Management
Lead time
Is the time that is needed to accomplish a given job
Is affected by technology
Affects customers levels of satisfactions
Affects image ,revenue levels, competitive positions and growth rate of an
organization
Affects service / [product delivery rates of an organization
Is among the top concerns of managers and organizations carrying out
business in a competitive industry
1.2.2 :Operations Management Vs Location( Factory Or Plant) Decisions
Location-plant –factory -locations decisions
Refer set of activities to be carried out identifying , locating and then deciding
on the exact areas with which operational activities of an organization are to
be carried out
Are long term operational decisions because they require too much time and
too much budget to do so
Are Affected both by internal and external factors
Internal factors affecting factory(organizations) locations decisions are
Capital, commitment of management, nature of product, nature of services,
age, size, vision, etc of an organization
External factors affecting facility location decisions are to be divided in to two

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 Macro external environmental factors( they include availability of customers,
suppliers, brokers, agents, competitors, employees, financial institutions like
banks and insurance companies)
Macro external environmental factors( economic environmental factors(
remittances, inflations, economic growth, economic development, economic
system, of a given nation), demographic environment( language, religion, size
of populations, availability of labour literacy rates of local communities),
natural environmental factors( availability of raw materials, climatic
conditions, power supply, etc…) political legal factors( include tariffs, tax ,
citizenship requirements, domestication requirements, presences of
international business deals and agreements)
1.2.3 : Operations Management Vs Production Capacity Decisions

Production Capacity Decisions

Focuses on describing the ability of a given factory to produce a given
quantities of products during a given periods of hours and also the number of
customers that is service seekers to be served by service provider in a given
period of time
Are long term operational decisions as they require too much buget, time and
feasibility analysis
Are aimed at matching supply side of an organization with the demand side of
customers
Are to be made in responses of ensuring the existences, survival, growth of an
organization, and also to increments in the size of populations( size of
customers) and increment in market competitions
Are affected by many more factors( as mentioned above _see internal and
external factors )

Types of production capacity

Production capacities are divided in to three: designed production capacity, actual
production capacity and effective production capacity
i) Designed production capacity
Designed production capacity is the initial / original production capacity of an
organization to produce certain quantities of products or certain number of customers
to be served during a given periods of times
Designed production capacity is known before erecting a given factors
ii) Actual production capacity
Actual production capacity is the current-actual production capacity of an
organization to produce certain quantities of products or certain number of customers
to be served during a given periods of times
Designed production capacity is known after erecting a given factors
iii) Effective production capacity
The idea of effective production capacity is also called utilization rate and also
idleness rate of a given factory
Effective production capacity describes the differences between designed production
capacity and actual production capacity
Effective production capacity =actual production capacity x 100
designed production capacity
Effective production capacity describes the extent to which the factory, along
with its machines and employees are busy and idle at the work places
Effective production capacity will be 100% if actual production capacity
perfectly equals to designed production capacity

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 If actual production capacity is lower than designed production capacity, there
will be some idleness , and some utilization
If actual production capacity is exactly equals to or greater than the designed
production capacity, there will be 100 % utilization and zero(no) idleness
Utilization rate + idleness rate=1, it means if utilization rate is 100%, idleness
rate is zero, if idleness rate is 100%, utilization rate is zero(none) , in formula:
1-utilization rate=idleness rate, and 1- idleness rate=utilization rate
1.2.4 : Operations Management Vs Production Management
Production management
Is a segment of the concept of operations management
Focuses on reconverting inputs( common resources( human, financial,
informational and material resources) and unique resources in to final ready
made products and services
Stands for quantities of products to be produced or number of customers to be
served during a given periods of times
Production management decisions specifies the type and varieties of products
to be produces
It includes the concepts of economies of scale and economies of scope
Economies of scale
The term economies of scale describes the situation in which an organization
produces, at much more quantity levels, the same type of product out of a
single raw material
Correlates ideas of organizational efficiency or organizational productivity (
out put/ input)
Means using fewer resources( inputs) and produce many more products, which
are of the same type
Is aimed at reducing cost of productions, reducing sales prices
Is designed to meet requirements of customers whose income and purchasing
power is low
Product just out of a given raw material or organizational resources
Holds the opposite concept with the concepts of quality
Is related to ideas of efficiencies and organizational productivity
Economies of scope
The essences of economies of scope
Describe the case in which one organization, produces, just out of a single raw
material, one main product and many more by(additional ) products
Is commonly observed in the petroleum companies
Is expected to enable to reduce wastages at the work places
Is affected by technology in use, commitment of management, nature of
product processing equipment’s, capital, mind of employees
Operations management
Is affected by technologies in use,
1.2.5 : Operations Management Vs Employees Knowledge Management
Employees knowledge refers to the practices of storing information, that is
needed to do a given job , just in the mind
Employees skill refers to the practices of applying the knowledge stored in the
mind
Employees knowledge and skills are acquired from education and experiences
Employees knowledge and skill together will generate and describe the power
, authority, responsibility, and accountability levels of an employees to do a
given job
Employees power is the ability(capacity) to management employee and an
organization it self

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 Employees power is gained from education( formal education=university) and
informal education( sharing knowledge with experienced people) and
experience( service period that is work experience’s of an employees)
Employees authority- is the right to manage employees and the organization it
self
Authority is supported by formal authority recognition letter and seal
Brilliant managers will usually have and can be described as
BM=E+ E, WHERE IN BR=BRILLIANT MANAGER, E= EDUCATION,
E= EXPERIENCE
BM=P + A, WHERE IN BM=BRILLIANT MANAGER, P= POWER,
A=AUTHORITY
Employees responsibility
Responsibility describes the obligations of an employees to carry on the job
assigned to him/ her
Accountability-refers to the case in which an employees is to become liable
for every of the responsibilities that he bears and for every of the decisions
that he/ she makes
1.2.6 : Operations Management Vs Franchising
Franchising
Is an aspect and key concern areas of operations management
Is the case when a given local organization, which is less poplar in in the
international market context views named the franchise,, will seek and get the
globally known brand name, brand mark and trade mark of the famous
globally known international company called franchisor
Brand name is a name , that is usually uttered and pronounced , given to a
given product or service rendering organization
Brand mark-is a symbol that is difficult to utter and pronounces , given to a
given product or service rendering organization
Trade mark-describes the brand name and brand mark that is given full
recognition by the government for the bearer of the brand name and trade
mark
Describes the case that the bearer of the registered brand name and brand mark
has exclusive( full) rights to produce, copy, distribute, export, sale and
generate revenues
Is commonly observed in the hotel service operations
Is one of the easiest and simplest ways of expanding operational activities of
an organization
1.2.7 : Operations Management And Out Sourcing
Outsourcing
Describes the situation in which a local organization, whose management is so
weak, to be administered by another giant/ perfect/ angel/ and best/ and
internally famous company
Involves sharing / transfer of experiences/ technology / and knowledge from
the global famous company to the local company
It does not involve transfer of ownership
Works on agency relationship terms
Refers to an agreement to be carried out by a local company and famous
company, and lasts for two year but subject for renewal and works on 85%(to
the government( local populations) -15%( to the best global company) profit-
loss agreement
Is expected to enhance operational activities of a local organization, say in
terms of offering fast services, and building image of an organization
1.2.8 : Operations Management And Make Decisions

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Make decision
Involves producing raw materials and final products just at home , with in
Ethiopia
Focuses on properly using, producing, exporting and selling raw materials and
final products that are available at too much degrees and at abundant levels to
the foreign countries
Is expected to build image of a nation
Is expected to reduce cost of productions and will reduce sales prices of
products
Involves paying too much attentions on product export( that are highly
available and produced with in Ethiopia)
Focuses on discouraging import of on product export( that are highly available
and produced with in Ethiopia)
Is expected to avoid interruptions in production activities
Is expected to increase cash inflow of a nation
Is expected to reduce cash out flow of a nation

1.2.9 : operations management and business processing reengineering

Business process reengineering is also called bpr
is a recent management concept that is aimed at
supporting the on-going operational activities-both in the manufacturing and
service sector-with the latest technology
reducing ups and downs , times and signatures to offer services to customers
shifting from paper based to digital based ways of serving customers
educating and training employees that will serve customers
enabling customers to get services of the service rendering organization on
online basis that is easy and fast (digitalized) access
is commonly observed in the service sector
1.3 : Scope Of Operations Management
Among others, the following are among the basic factors that explains the scope of
operations management
effectiveness: is all about listening to the requirements of customers and serve them
accordingly
Efficiencies: means producing products at lower costs and selling products at
lower prices and rendering , and selling services at the lower costs
, and correlates , that is the ideas of efficiency implies the ideas of productivity
Product design : product design is all about improving the existing features of
a given product, say, durability, spare parts, reliability, aesthetics, guarantees,
portability, assurances, image, carrying capacity, saving capacity,
Service design: service design means increasing the existing neatness levels,
trust levels, locations, employees knowledge, technology, time to deliver
services, empathy, up and down procedures that is ups and downs to provide
services, assurance levels, of the services being given by the service provider
to the service seeking organization, it also focuses on reducing, if possible,
eliminating organizational politics, corruptions, bribers,
Operational cycle: the idea of operational cycle refer to viscous circle and
relationships existing between input-processing- and output stage of
operational activities
Value addition activities: value addition activities refer to set of activities that
will generate packages of benefits in each and every aspects of operational
activities staring from input-processing- and output stage of operational
activities

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 That is all about benefiting parties involved in the input stage( say raw
material producers), parties in the processing stage( say product manufactuere
and service yielding organizations) and output stage( say final consumers,
customers, whole sellers, agents, brokers, etc..)
Facility location decisions: facility location decisions refer to ideas of locating
the exact arena/ area with which an organization is to be located and
established
Facility lay out decisions: facility lay out decisions specify the internal and
external arrangement of offices and compounds , and flow of jobs of an
organization
Production capacity decisions: production capacity decisions specifies the
designed , actual, and effective production capacity of an organization, and
factory utilization and idleness rates as well
Quality management: quality management focuses on producing and selling
error free products, and services to customers, it means producing and selling
products that match the requirements of customers
Feasibility analysis : feasibility analysis refers to initial study to be made by a
given product producing organization or a given service providing
organization, and these study can be internal feasibility analysis( see internal
factors mentioned above) and external feasibility analysis (see macro and
macro external factors mentioned above)
Operations strategy : operations strategies are all about set of options/
alternatives/ mechanisms/ rods that an organization pursues and implements at
the work places just so as to attain its targets
Demand forecasting: demand forecasting is all about predicting the quantities
of products being demanded and hence to be purchased by customers during a
given periods of times
Supply side analysis; supply side analysis is all about predicting the quantities
of products being produced(supplied) and hence to be sold to the customers
during a given periods of times

Material requirement planning and analysis : material requirement planning

and analysis specifies the qualities , quantities and timings of raw materials
that are needed by an organization during a given periods of times
Mission: mission describes the current job and the - now- basic benefits to be
given by an organization to its customers
Vision: vision describes the future job and the – upcoming - basic benefits to
be given by an organization to its customers
Objectives: objectives describe the basic targets, say in financial and non
financial terms, that a given organization wants to attain during a given
periods of times
Corporate social responsibilities: corporate social responsibilities describes the
case when an organizations participates in those actions that will contribute
more to the societal needs say offering financial donations, sponsoring public
requirements, participating in the local communities societal needs are among
the top corporate social responsibility practices

1.4 : Objectives Of Operations Management

The end targets , behind running operations management activities , are to be seen
From organizational objectives , legal factors(objectives) , societal objectives
and stakeholders (objectives) perspective view points

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 From organizational objectives view points, the objectives of operations
management are to be seen from employees, employers and stakeholders
objectives view points
From employees view points, the objectives of operations management are
The need to be employed, to get salary, to apply immense knowledge
possess, and to cover living expenses
From employers view points, the objectives of operations management will be
the need to realize financial performances( revenues, market share,
competitive positions, existences, survival and growth and expansion of an
organization) and non financial performance( the need to maintain good
image, ensure customers levels of satisfactions view points)
From organizational stake holders view points, the objectives of operations
management includes meeting the basic requirements of organizational
customers, shareholders, suppliers, agents, brokers, government agencies
From societal view points, the objectives of operations management include:
ensuring social stability, reducing social chase, generating employment
opportunities
1.5 : Application Areas, Challenges And Opportunities In Operations Management

1.5.1 : Application Areas Of Operations Management

1.5.2 : Opportunities In Operations Management

1.5.3 : Challenges In Operations Management

1.5.1 : Application Areas Of Operations Management

Om In Manufacturing Sector- Om In The Service Sector-

Example Car Manufacturers Example Hospital
Ideas To Differentiate
Items To Be Produced
Key Resources Material Resources Human Resource

Varieties Of Items One Or Fewer Many

Importance’s To Human High Very High
Elements
Degree Of Governmental Relatively Low Relatively Very High
Control
Degree Of Customers Relatively Low Relatively Very High
Complaints
Degree Of Physical Contact Mostly Indirect Mostly Directly That Is Face To
Face-Physical Contact-
Between Service Provides And
Service Seeks
Easiness Of Calculating Prices Relatively Low Relatively Very High
Nature Of Operations Relatively Low Relatively Very High
Locations Of Operational Near Raw Materials Near9within) Town(Population)
Activities
Initial Paid Up Staring Capital Relatively Too Much Relatively Fewer
Of The Business
Uniformity Of Benefits To Be Relatively Stable Depends Up On Mind And
Gained Effort Levels Of Service

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 Providing Employees

Tangibility Easy To Perceive Difficult To Perceive

Easiness Of Conducting Relatively Easy Relatively Difficult
Promotional Activities
Degree Of Perishability Very Low Very High

1.5.2 : Opportunities In Operations Management

Opportunities in operations management refer to set of factors that will bring golden
chances that in turn contributes much more and positively regarding the existences,
survival, growth and further expansion of an organizations, and hence positively
affect operations management activities of an organization
-they can be seen from internal factors and external factors view points
Internal factors that will bring too much opportunities for and hence positively affect
positively operational activities of a given organization can be expressed terms of
having and availability of : better ( top level management commitment levels,
employees levels of knowledge, location of an organization, possessing too much
capital , unique technology and unique resources)
External factors that will bring too much opportunities for and hence positively affect
positively operational activities of a given organization can be seen from political –
legal factors, economic factors, demographic factors and natural factors)
Political –legal factors that will bring too much opportunities for and hence positively
affect positively operational activities of a given organization can be expressed terms
of having and availability of better( investment policies, taxation policies, tariff
policies, guarantees given by government, stable political situations and esiness o f
getting investment licens es) ,
Economic factors that will bring too much opportunities for and hence positively
affect positively operational activities of a given organization can be expressed terms
of having and availability of better (per capital income, economic growth, economic
development, remittances, markets, economic systems, foreign direct investment
policies and customers purchasing power)
Demographic factors that will bring too much opportunities for and hence positively
affect positively operational activities of a given organization can be expressed terms
of having and availability of better( population sizes, cheap labour, literacy rates and
income of the local populations),
Natural factors that will bring too much opportunities for and hence positively affect
positively operational activities of a given organization can be expressed terms of
having and availability of better ( natural resources, raw materials, climatic conditions,
nations access to port, and power supply)

1.5.3 : Challenges(Threats) In Operations Management

Challenges (threats) in operations management refer to set of factors that will have
negative impacts upon operations management activities of an organizations
-they can be seen from internal factors and external factors view points
Challenges (threats) in operations management refer to set of factors that will
contribute negatively towards the existences, survival, growth and expansion of an
organization and hence negatively affect operations management activities of an
organization

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 -they can be seen from internal factors and external factors view points
Internal factors refer to and includes set of factors that will contribute negatively
towards the existences, survival, growth and expansion of an organization and hence
negatively affect operations management activities of an organization can be
expressed terms of having and availability of : lower ( top level management
commitment levels, employees levels of knowledge, location of an organization,
possessing too much capital , unique technology and unique resources)
External factors refer to and includes set of factors that will contribute negatively
towards the existences, survival, growth and expansion of an organization and hence
negatively affect operations management activities of an organization can be
expressed terms of having and availability of : lower and they can be seen from
political –legal factors, economic factors, demographic factors and natural factors)
Political –legal refer to and includes set of factors that will contribute negatively
towards the existences, survival, growth and expansion of an organization and hence
negatively affect operations management activities of an organization can be
expressed terms of having and availability of : lower and can be expressed terms of
having and availability of fewer ( investment policies, taxation policies, tariff policies,
guarantees given by government, stable political situations and easiness of getting
investment licenses),
Economic factors that will bring too much opportunities for and hence positively
affect positively refer to and includes set of factors that will contribute negatively
towards the existences, survival, growth and expansion of an organization and hence
negatively affect operations management activities of an organization can be
expressed terms of having and availability of : lower and can be expressed terms of
having and availability of fewer (per capital income, economic growth, economic
development, remittances, markets, economic systems, foreign direct investment
policies and customers purchasing power)
Demographic factors refer to and includes set of factors that will contribute
negatively towards the existences, survival, growth and expansion of an organization
and hence negatively affect operations management activities of an organization can
be expressed terms of having and availability of : lower and can be expressed terms
of having and availability of fewer ( population sizes, cheap labour, literacy rates and
income of the local populations),
Natural factors refer to and includes set of factors that will contribute negatively
towards the existences, survival, growth and expansion of an organization and hence
negatively affect operations management activities of an organization can be
expressed terms of having and availability of : lower and can be expressed terms of
having and availability of fewer ( natural resources, raw materials, climatic
conditions, nations access to port, and power supply)

CHAPTER TWO
OPERATIONS STRTEGY AND COMPETITVNESS
2.1 : Operations Strategy : Basic Concepts
2.2 : Operations Strategy : related Concepts
2.2.1 : Mission
2.2.2 ; mission statement
2.2.3 : vision
2.2.4 : objectives
2.2.5 : Core competencies
2.3 : Strategy : Basic Levels
2.4 : Operations Strategy: Basic Features
2.5 : Operations Strategy: Basic Types
2.5.1 : Corporate strategy

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2.5.1.1 : Joint venture
2.5.1.2 : Export
2.5.1.3 : Foreign Direct Investment
2.5.1.4 ; Wholly Owned Subsidiaries( Acquisition)
2.5.1.5 : Liquidation
2.5.2 ; Business Strategy
2.5.2.1 : Promotional strategy
2.5.2.2 ; pricing strategy
2.5.2.3 ; distribution strategy
2.5.2.4 ; concentric strategy
2.5.2.5 : conglomerate strategy(differentiation strategy)
2.5.3 : Functional Strategy
2.5.3.1 : Human Resource Management Related Strategy
2.5.3.2 : Financial Resource Management Related Strategy
2.5.3.3 : Informational Resource Management Related Strategy
2.5.3.4 : Material Resource Management Related Strategy

2.1 : Operations Strategy

Operations Strategy
Is a means/ option/road/ mechanism of
Attaining target/ s of a given company
Maximizing(sales volumes, market shares, number of customers, revenues, profits,
etc…) of a company
Fighting with and winning rival-competing companies
Adapting the organization to its environment
Winning a bid
Attracting and retaining customers
Refers to a system of decisions that shapes all long-term operational capabilities and
their offering to the overall achievement of a strategy.
Is a series of decisions that can help an organization implement competitive and
sustainable business strategies.
Supports linking long and short-term operational-level decisions with corporate
strategy.
States that from a strategic viewpoint, this allows organizations to make key
operations decisions and maintain consistency with its overall objectives.
Assumes that from operations strategy examples, we see that it drives an
organization’s operations — the part of the business responsible for producing and
distributing services and goods.
Beliefs that along with a business strategy, it’s critical for a business to compete in
dynamically shifting markets.
Enables operations management professionals to optimize the use of people,
processes, technology and resources.
2.2 : Operations Strategy : related Concepts
Among others, the concepts of mission, mission statement , vision and objectives are
among some of the basic concepts that relates to the ideas of operations strategy
2.2.1 : Mission
Mission describes
Packages of benefits that local communities expect from a given organization(
currently)
Describes reasons for the existences of an organizations
Describes the current jobs of an organizations
Explains the current geographical areas, customers and other stake holders that
a given organization serves and does its businesses currently

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 Organizational missions can be
Primary mission: primary mission are the first-basic current benefits offered
by an organization currently to its customers
Secondary mission: secondary missions are additional benefits that are
currently offered by an organization to its communities
Organizational mission affected by internal and external factors
Internal factors that affect mission of an organization includes available
budget, commitment of top management, prospects, locations and nature of
products and services of an organization
External factors affecting mission of an organization will include political,
market economic, legal, environmental and demographic situations of a given
nation situation
2.2.2 : Mission Statement
Mission statement is a short , complete, concise and to the point statements
that explains packages of benefits given by an organization to its customers
Will be expected to serve as indirect form of promotions
Need to be developed and used uniquely by a single business organization
Mission statement shouldn’t be copied
Mission statement should be easy to remind and read, and should be simple to
understand
2.2.3 : Vision
Vision explains
The future benefits that a given organization will offer to its future customers
Describes future jobs of an organizations
Explains the dream that managers have about their organization
Include ideas like producing new products, joining new foreign markets, serve
customers at much geographical areas
Organizational vision affected by internal and external factors
Internal factors that affect vision of an organization includes available budget,
commitment of top management, prospects, locations and nature of products
and services of an organization
External factors affecting vision of an organization will include political,
market economic, legal, environmental and demographic situations of a given
nation situation
2.2.4 : Objectives

Objectives describe targets of an organization to be realized at the end of a

given operational period
Objectives can be financial objectives( that are measured in mathematical-
numbers terms like revenues, market share, profits, etc…) and non financial
terms( like building image of an organizations, or ensuring customers levels of
satisfactions)
Organizational objectives should be stated in SMART CRITERIA
S=SPECFIC=Organizational objectives should not be complex and vague,
rather it should be easy to understand
MEASURABLE= organizational objectives should be quantifiable enough
A=ATTAIABLE=using the current organizational resources, organizational
objectives should be realized
R-REALISTIC=organizational objectives must be real and accepted by
employees and other stakeholders of an organization
T= TIMED=organizational objectives must have specific time horizons to be
achieved
2.2.5 : Core Competencies

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Core competencies
Explains the specific focus areas, say technology, capital, budget, location,
volume of product, varieties of products, research and development, unique
organizational resources, that will
Enable an organization to differentiate it self from those of competitors
Enable an organization fight with and win its rival companies
Maximize its sales volume
Attract much more customers
Generate much more profits
2.3 : Strategy: Basic Levels
Strategy can be seen from four different levels
Strategy From Individual employees view points: They can be expressed In
terms of setting out various options with which a given individual drafts and
implements that will enable him / her to attain his / her own personal goals
Strategy from organizations view points: : They can be expressed In terms of
setting out various options with which a given organization drafts and
implements that will enable it own organizational goals
Strategy from national view points: : They can be expressed In terms of
setting out various options with which a given nation drafts and implements
that will enable it own national goals
Strategy from global view points: : They can be expressed In terms of setting
out various options with which various professional sets out and implements
various strategies that will bring something of valuable to the people of the
world
2.4 : Features of Operations Strategy
Among others, the following are the key features of operations strategy
Can be copied, improved and implemented by competitors
Is a committee work
Is a non stop and universal managerial activity
Needs deployment of too much budget, financial/human/informational/material
resources
Is to be made after carefully conducting environmental analysis
Becomes complex for complex organizations
Is to be affected internally by willingness/ commitment/ budget/ human resource
/material resources/location/size/nature of an organization
Is to be affected externally by economic /legal/natural/demographic/technological
factors
Is to be made after Conducting SWOT Analysis
It is the process of setting broad policies & plans for using the resources of the firm to
best support the firm’s long- term competitive strategy
Action plan to achieve goals - mission
Strategies exploit opportunities and strengths, neutralize threats, and avoid
weaknesses
Operations strategy answers the question: How can a firm’s operations function best
contribute to the organization’s overall strategy?
The Operations Strategy is how you pursue the goals of adding value using your key
business
2.5 : Operations Strategy: Basic Types
Among others, corporate strategy, business strategy and functional strategy are among
the basic types of operations strategy
2.5.1 : Corporate strategy
Corporate strategy
Are to be developed at the top level management

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 Requires long term thinking, time, much capital
Are highly risky and profitable as well
Mainly focuses on ensuring further growth and expansion of an organization
Include sub strategies like joint ventures, export, foreign direct investment,
wholly owned subsidiaries ( acquisitions) and liquidations
2.5.1.1 : Joint venture
Joint venture is a temporary arrangement and agreements that is to be made
between two or more the same or similar companies to undertake a given
project
Can last from one up to fifteen years
Can be 50-50, 60-40, 70-30, 80-20, 90-10 profit loss arrangements, where in
parties in the agreement contribute resources as per these rations and also
share profits and losses as well according to these numbers
Are easier ways of ensuring further growth of an organization
Have the advantages of
Being free of nationalization, confiscation and expropriation risks
Winning a bid
Sharing risks, as per the set agreements
Early chance of competing project related assignments given to them
Has the disadvantages of
Mix( abuse) of culture
Loss of original technology

2.5.1.2 : Export
Export focuses on simply delivering and selling products that are available
locally at much quantities to foreign nations
Has the advantages of
Being low cost joining foreign markets and ensuring growth of an
organization
Free of facing investment related risks to be faced in foreign nations
Getting tariff reductions and tax exemptions
Fully utilization the current production capacity of an organization
Has the disadvantages of
Perfectly matching local products features with customers demand in foreign
countries
May face political and economic embargo(sanctions)
May face different trade –import-export requirements in different nations
Will have too much transportations and insurance expenses for products to be
shipped
2.5.1.3 : Foreign Direct Investment
Is one means of ensuring further growth of an organization
Focuses on investing too much money in foreign nations and then establishing
a company in foreign nations
Is the most risky and most profitable corporate strategy
Has the advantages of
Building image of an organization
Operating at the fullest production capacity levels
Full profit assumptions
Making use of opportunities available in foreign nations
Has the disadvantages of
Facing nationalization(case when a government pays 100% compensation to
an investor), expropriation risk (case when a government pays 50%

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 compensation to an investor), and confiscation risks(case when a government
pays 0% compensation to an investor),
May face resistances from local laws and local culture in foreign nations
May be affected by changes in the form of government in foreign nations

2.5.1.4 ; Wholly Owned Subsidiaries( Acquisition)

Wholly owned subsidiary
Is also called acquisitions
Means purchasing another company in another nation
Has the advantages of
Building image of an organization
Operating at the fullest production capacity levels
Full profit assumptions
Making use of opportunities available in foreign nations
Has the disadvantages of
Facing nationalization, expropriation and confiscation risks
May face resistances from local laws and local culture in foreign nations
May be affected by changes in the form of government in foreign nations
2.5.1.5 : Liquidation
Liquidation it means either partially reducing(retrenchment strategy) or
totally stopping the current business ( destitute strategy) of an organization
either because of court decisions or business collapse and bankruptcy
Retrenchment strategy focuses on eliminating unpromising and unprofitable
product lines and focusing on the production and sale of promising and
profitable product lines

Destitute strategy focuses on totally stopping just doing on and carrying on

the current business because of business bankruptcy, natural catastrophes and
calamities, court decisions, political and economic turmoil in a given nation

2.5.2 ; Business Strategy

Business strategies
Are to be developed at the middle level management
Are supportive to the corporate strategy
Are derived from corporate strategies
Are aimed at fighting with and winning competitors, maximizing sales volume
and number of market shares , revenues and profits of an organizations
Paves the way for the formulations of functional strategies
Business strategies includes promotional stogies, pricing strategies,
distribution strategies, concentric strategies and conglomerate strategies
2.5.2.1 : Promotional Strategy
Promotional strategies
Makes use of media like TV, radio and news paper, seminars, bazars,
exhibitions, sales people , brokers, agents, and then announce, promote ,
attract , sale to them and retain customers
Are to be divided in to
Adverting strategies: makes use of media like TV, radio and news paper and
then announce, promote , attract , sale to them and retain customers

Sales promotions strategy: makes use of organizations sales people, brokers,

and agents, bazars and exhibitions and then announce, promote , attract , sale
to them and retain customers

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 Public relations: means creating and maintaining good relationships with the
local communities, say in terms of giving financial donations to the poor
sections of the society, participating in poverty reduction programs, etc., and
public relation is indirect form of promotions, where as advertising and sales
promotions are direct forms of promotional strategies
Publicity : publicity means introducing research and innovation break through,
new product and service development activities of an organization, that will be
presented in national media, while paying zero birr( expenses) to these media
Is the most credible and trust worthy promotional strategy: advertising needs
paying much more money to the media, where as publicity involves paying no
money to the media, adverting is less credible , publicity is power and more
credible than advertising
2.5.2.2 ; Pricing Strategy
Pricing strategies are aimed at specifying the amount of prices to be charged
for a given product and services
Are divided in to
market penetration strategies: is a case when the service or the product is old
and out of fashion and near its expiry date, and the company charges lowest
price in the market
Market skimming strategies: is a case when the service or the product is new
and highly fashion and near its expiry date, and the company charges highest
price in the market
Cost plus Margin pricing strategies: is a case when the company distributes
total costs of production over the total quantities of products produced, and
then adds, in terms of percentages that is called profit margin and the n charge
the price accordingly
Discount strategies: describes a situation when the company significantly
reduces the original sales prices and then charges the new prices accordingly
Flexible strategies: means, depending on market condition, charge different
amounts of prices for the same product
2.5.2.3 : Distribution Strategy
Distribution strategies fall in to direct and indirect distribution strategies
Direct Distribution strategy: describes the case when a given organization
directly, using its sales forces and employees, and then approaches and sales
its products and services , directly to its customers
It is to be used when an organization is to sale very expensive( price less )
products
In Direct Distribution strategy: is the opposite of direct distribution strategy
describes the case when a given organization indirectly, using its agents,
brokers, and whole buyers , and then approaches and sales its products and
services , indirectly to its customers
It is to be used when an organization is to sale very cheap products

2.5.2.4 : Concentric Strategy

Concentric (specific) strategy
Is to be used in case when a given organization produces, promotes,
distributes and then sales only one type or only two or more of fewer similar
products just only in one or fewer market centers
Is to be practiced by young-new-infant organizations
Requires fewer times, budget and resources
Generates fewer profits

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2.5.2.5 : Conglomerate (Many) Strategy:
Conglomerate strategy
Is also called Differentiation Strategy
Is to be used in case when a given organization produces, promotes,
distributes and then sales many unrelated types of products just in many
more market centers
Is to be practiced by old –multinational and international companies
Require deployment of too much budget, time and resources
Generates much more profits
Needs allocations of too much budget for producing, promoting, pricing and
distributing many types of products in many more markets
Is expected to reduce operational risk levels of an organization

2.5.3 : Functional Strategy

Functional strategies
Are to be carried out at the lower level management
Are derived from business strategy
Are supportive to business strategy
Include strategies on how to effectively use human resources, financial
resources. Informational resources and material resources at the work places
2.5.3.1 : Human Resource Management Related Strategy
Human resource strategies focuses on how to effectively makes use of the
efforts and knowledge and skills of employees, on daily basis, at the work
places
2.5.3.2 : Financial Resource Management Related Strategy
Financial resource strategies focuses on how to effectively makes use of the
available daily budgets and working capital of an organization , on daily basis,
at the work places

2.5.3.3 : Informational Resource Management Related Strategy

Informational resource strategies focuses on how to effectively makes use of
the different types of information’s coming daily, say from customers,
financial institutions to the organization

2.5.3.4 : Material Resource Management Related Strategy

Material resource strategies focuses on how to effectively makes use of the
available equipment, machinery and other fixed assets of an organizations

CHAPTER THREE: DESIGN OF THE OPERATION SYSTEM

3.1 : Product Design
3.1.1 : Product Design: Basic Concepts , Reasons For , Challenges And Steps
3.1.1.1 : Product Design: Basic Concepts
3.1.1.2 : Product Design: Reasons For
3.1.1.3 : Product Design: Challenges
3.1.1.4 : Product Design: Basic Steps
3.2 : Service Design: Basic Concepts, Reasons for, challenges and steps
3.2.1 : Service Design: Basic Concepts , Reasons For , Challenges And Steps
3.2.1.1 : Service Design: Basic Concepts
3.2.1.2 : Service Design: Reasons For
3.2.1.3 : Service Design: Challenges
3.2.1.4 : Service Design: Basic Steps
3.3 : Process Selection
3.3.1 : Continuous Process

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3.3.2 : Assembly Line Process
3.3.3 : Intermittent Process
3.4 : Strategic Capacity Planning
3.5 : Facility Lay out and Location
3.5.1 : Facility Lay Out
3.5.2 : Facility Locations
3.6 :Job Design and Work Measurement
3.6.1 : Job Design
3.6.2 : Work Measurement

3.1.1 : Product Design: Basic Concepts , Reasons For , Challenges and steps
3.1.1.1 : Product design: Basic Concepts
Product design is all about
Improving existing features like durability, reliability, aesthetics, portability,
functionality, carrying capacity, comfort levels, etc of a given product
Updating the benefits of a given product in the line of the emerging needs of
customers
Is all about going with the current demand of customers
Is a mechanical engineering and business ideas
Is to be developed after conducting detailed analysis of human resources,
financial resources, informational resources, economic environment, legal
environment, marketing environment and competitions related factors
Is aimed at not only ensuring the existences of an organization but also further
growth and expansion of an organization
3.1.1.2 : Product Design: Reasons For
The reasons to design product can be seen from the manufacturers and
customers view points
From the manufacturers view points, the reasons to design a given product
includes the need to
Adapt the organization to the changes in the market environment
Fully utilize employees levels of knowledge
Build image of an organization
Generate much more profits
Attract and retain many more customers
Intimidate, fight with and win its rival companies
From the customers view points, the reasons to design a product includes
The need to create and maintain long lasting relationships with customers
To retain existing customers
Meet the current demands of customers
Be competent enough in the eyes of customers
3.1.1.3 : Product design: Challenges
Product design is a challenging job because it is affected by
Budget availability
Availability of skillful employees
Nature of the product
Expected costs and revenues of the product
Brain drain
Local communities attitude
Permissions given by the government

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 Available technology
3.1.1.4 : The Product Design : Basic Steps
Certain steps are common in the development of most product designs.
idea generation
product screening
preliminary design and testing and
final design.
Product designs are never finished, but are always updated with new ideas.
I. Idea Development
All product designs begin with an idea.
idea might come from: a product manager and engineers
To remain competitive, companies must be innovative and bring out new
products regularly
In some industries, the cycle of new product development is predictable
The timing often has to do with the market for a product
When sales are declining or continuing to grow.
Sources of product design Ideas
Customers: the driving force in the design of goods and services
Marketing is a vital link between customers and product design
Competitors:- by looking at product design, pricing strategy and other aspects
of the operation.
For example reverse Engineering :-
Reverse Engineering:- using competitors’ ideas buying a competitor’s new
product and study its design features
Suppliers:- Developing partnering relationships with their suppliers, to jointly
satisfy the end customer
II. Product Screening
Evaluating likelihood of success of product idea
The product design idea will be evaluated according to the needs of the major
business functions
Evaluation executives from each function area. Such as :
Operations:- production needs of the proposed new product and how to
match with existing resources, facilities and equipment needed
Marketing:- potential size of the market for the proposed new product
• The long-term product potential
Finance:- new product’s financial potential, cost and return on investment
III. Preliminary Design and Testing
design engineers translate general performance specifications into technical
specifications
Prototypes are built and tested
For service companies involves testing the offering on a small scale and
working with customers to refine the service offering
IV. Final Design
final product specifications are drawn up
The final specifications are then translated into specific processing instructions
to manufacture the product; selecting equipment, outlining jobs that need to
be performed and identifying specific materials needed and suppliers

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3.2 : Service Design: Basic Concepts, Reasons for, challenges and steps
3.2.1 : Service Design: Basic Concepts , Reasons For , Challenges And Steps
3.2.1.1 : Service Design: Basic Concepts
Service design is all about
Improving the procedures in which services are being offered to the customers
currently
Supporting the current business with the latest technology
Reducing errors in service provisions
Incorporating customers feedback in the service delivery processes
Improving the existing knowledge of service providing employees
Including and improving tangibility, assurances, reliability, empathy,
technology, perfections, trust levels, in the services being offered
3.2.1.2 : Service Design: Reasons For
The reasons to design services can be seen from the service providing
organization and service seeking customers view points
From the service providing organizations view points, the reasons to design a
given service includes the need to
Adapt the organization to the changes in the market environment
Fully utilize employees levels of knowledge
Build image of an organization
Generate much more profits
Attract and retain many more customers
Intimidate, fight with and win its rival companies
From the service seeking customers view points, the reasons to design a
services includes
The need to create and maintain long lasting relationships with customers
To retain existing customers
Meet the current demands of customers
Be competent enough in the eyes of customers
3.2.1.3 : Service Design: Challenges
Service design is a challenging job because it is affected by
Budget availability
Availability of skillful employees
Nature of the service
Expected costs and revenues of the services to be provided
Brain drain
Local communities attitude
Permissions given by the government
Available technology

3.2.1.4 : Service Design: Basic Steps

Service designs have the following basic steps
Step One: Gathering information about the weak sides regarding the way
services are being offered currently from various sources: From within the
organization( Employees, employers, board of directors and consultants of an

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 organization ) and out side sources of an organization( customers and other
stake holders like agents, brokers and suppliers of an organization )
Step Two: Allocating the Necessary Resources( Human Resources,
Technological Resources, Material resources , Time, Informational Resources)
and redesign the SERVICE DELIVERY APPROACHES
Step Three: Implementing the designed Processes: It is all about putting in to
practice the service being designed and conduct pilot survey that is render the
newly designed services to sample customers of an organization
Step Four: Full Commercial: It is all about fully applying the newly designed
services to the target customers-service-seeking- customers of an organization
3.3 : Process Selection
Process planning and design is the complete description of the specific steps in
production
It involves choice of technology and related issues and it has major
implications for capacity planning, layout of facilities, equipment, and design
of work systems
Types of Processes
At the basic level, the types of process can be categorized into three main
categories:
Conversion Processes
Is the reaction under specific controlled conditions yields products that may
hardly look like their parents.
For example, changing iron ore into steel sheets .
Fabricating Processes
This process involves changing raw materials into some specific form.
For example making chair out of wood
Assembly processes
it brings together necessary raw materials or components that makeup a
product.
For examples, assembly automobiles, building construction, house appliances
etc.
Types of process flow structure
• There are basically, four (4) types of processing systems:
continuous,
assembly line,
intermittent and
project processing
3.3.1 : Continues process (product-focused)
A form of production processing organization in which production
departments are organized according to the type of product being produced.
All of the production operation required to produce a product are ordinarily
grouped in to one production department.
It is also called line flow production or continuous production because; the
product follows a pre-determined sequence of steps
It produce high volume of standardized output.
The ultimate continues processing systems produce a single product such as
powder , sugar, chemicals, liquid, etc
3.3.2 : Assembly line process (Repetitive process)

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 Assembly line process refers to production of discrete parts moving from
workstation to workstation at a controlled rate, following the sequence steps
needed to build the product.
This part of continuous process produces output that allows for some variety;
products are highly similar but not identical.
Examples include assembly of automobiles, televisions, computers
,calculators, cameras, appliances/ machine etc.
Typically, these products are produced in discrete units.
3.3.3 : Intermittent Processing (Process-focused)
is used when systems handle a variety of processing requirements on a start-
and stop basis
i.e. irregular
This system is characterized by:
A low volume of output than continuous process
Use general-purpose equipment that can satisfy a variety of processing
requirements.
Require semiskilled or skilled workers who operate the general equipment
The system is relatively flexible.
Span of supervision is narrow than in the case of continuous process system.
Intermittent Processing takes two forms:
Batch Processing- Produces the same item again and again, usually in a
specified lot sizes.
i.e . each of which is produced in periodic batches, either to customers order or
for inventory.
Job shop process- Used to handle/produce small batches/lots of a large number
of different products most of which require a different set or sequence of
processing steps
Examples
Commercial printing firms, publication
airplane manufacturers
3.4 : STRATEGIC CAPACITY PLANNING
Capacity can be defined as ability to produce certain out put with in a
specified time period or the rate of out put that can be achieved from a
process.
Capacity is also a product design specification
Design Capacity
It represents the maximum output that can be achieved in a specific time
period under ideal condition
Effective Capacity
It represents the maximum output per unit time given a particular product
mix, labour, skills, product quality level, material quality, available
maintenance, and time between setups
Important Concepts of Capacity Decisions….
Actual or Operating Capacity
It is the average output per unit of time over a preceding time period adjusted
to reflect actual reject levels and scheduling and maintenance losses.
Capacity Measures
the two measures frequently cited to justify investments in equipment and
processes are:
Efficiency and
Utilization

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 Efficiency is a measure of the use of effective capacity in producing a
particular result.
Efficiency = actual output per time period Effective capacity per time period
Utilization is a measure relating design capacity to output
Utilization = actual output per time period
Design capacity per time period
Factors Influencing Effective Capacity
The major factors affecting effective capacity are the following.
Product Design
Layout of facilities
Job design
Out put standards
The quality of and variation Employee attitude and motivation
External factors.
Operational factors:( Inventory stocking decisions, late deliveries,
acceptability of purchased materials)
Capacity planning decisions
Capacity planning normally involves the following steps.
Assessing existing capacity
Forecasting capacity needs
Identifying alternative ways to modify capacity
Evaluating financial, economical and technological capacity alternatives.
Selecting a capacity alternative most suited to achieving strategic mission.
Evaluating Capacity Alternatives
Break-Even Analysis
Decision Tree
3.5 : Facility Lay out and Location
3.5.1 : Facility Lay Out
3.5.2 : Facility Locations
3.5.1 : Facility Lay Out
Facility layout is to locate people, machines, and processes in an optimal time-
saving and money saving relationship that meets the anticipated production
level
It refers to the arrangement of departments, work centers and equipment with
a particular emphasis on movement of work through the system.
Objectives of Facility layout
layout is to provide a smooth work flow and control;
reducing cost of material through the factory or uncomplicated pattern for both
consumers and workers in a service organization.
Specific objectives of layout decision for manufacturing firm
Provide enough production capacity
Minimize material handling cost and effort
Minimize labour requirements
Provide a smooth flow of materials and product
Provide for volume and product flexibility
Maximize the uses of machine tools
Maximize output
Minimize health hazards etc
Specific objectives of layout decision for service operations
provide for customer comfort and convenience
allow attractive display

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 reduce travel of personnel and customers
provide for private in work areas
promote communication
3.5.1 : Facility Lay Out: Basic Concepts and Basic Types of Layouts
There are four basic types of plant or facility layouts.
The basic difference among these layouts is in their handling of the flow of
materials and product
Process layout /for job-shops/
Product or Line Layout
Cellular Manufacturing (CM) Layouts’
Fixed position Layout
Process layout /for job-shops
It is concerned with the grouping of machines, processes or services according
to their function
i.e. similar equipments or functions are grouped together.
For example, map-reading, typing, shipping etc are activities that require such
types of arrangements
Product or Line Layout
It is the sequence of production or assembly operation required for producing
a part or a product
Eg cement, oil refining, auto assembly and the so on
Cellular Manufacturing (CM) Layouts’
Machines are grouped into cells
this layout groups dissimilar machines into work centers (or cells) to work on
products that have similar shapes and processing requirements
Fixed position Layout
The product by virtue of its bulk or weight remaining at one location,
It minimizes the amount of product movement required
For example, Shipbuilding, dam construction, power generating (steam)
turbines, bridge etc which are (bulky, large, heavy, and fragile).
Developing and Analyzing Facility Layouts
o Important inputs to the layout decision are:
Specification of objectives of the system in terms of output and flexibility
Estimation of product or service demand on the system
Processing requirements in terms of number of operations and amount of flow
between departments and work centers.
Space availability with in the facility itself.
3.5.2 : Facility Locations
Facility location is the process of determining a geographic site for a firm’s
operations.
The selection of location is a key-decision because improper location of plant
may lead to waste of all the investments made in building and machinery,
equipment
The purpose of the location study is to find an optimum location result in the
greatest advantage to the organization.
Globalization allows companies greater flexibility in their location choices
However, in practice, the question of location is very much linked to two
competitive imperatives
The need to produce close to the customer due to time based competition,
trade agreements, and shipment costs

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The need to locate near the appropriate resource pool to take advantage of
low costs
The Need for location Decisions
o some of the reasons for such decisions (other than the need for greater
capacity).
Opportunity for expanding market share
Business growth in demand
Depletion of Basic resources =if existing resources depleted
Operating Costs = particular location reach a point where other location begin
to look more attractive. In this case, the company may shift to a cost effective
location.
Shift in Market /demand
Merge of companies
Introduction of new product
Factors Affecting Location Decisions
Regional factors Business Climate.
Total Costs.
Infrastructure
Quality of Labor
Suppliers
Location of raw materials
Factors Affecting Location Decisions …..
B. Community Considerations
o a number of factors determine the desirability of a community as a
peace for its workers and managers to live. They include:
Facilities for education, shipping, recreation transportation , religious
workshop, entertainment, the quality of policy and medical services
attitude towards the company
The size of the community
Cost and availability of utilities
Environmental regulations
Taxes and
Existence of development support or incentive.
IN GENERAL FACILITY LOCATION DECSIONS ARE AFFECTED BY
Opportunities in operations management refer to set of factors that will bring
golden chances that in turn contributes - FACILITY LOCATION DECSIONS
-much more and positively regarding the existences, survival, growth and
further expansion of an organizations, and hence positively affect operations
management activities of an organization
-they can be seen from internal factors and external factors view points
Internal factors that will bring too much opportunities for and hence positively
affect positively operational activities - FACILITY LOCATION DECSIONS-
of a given organization can be expressed terms of having and availability of :
better ( top level management commitment levels, employees levels of
knowledge, location of an organization, possessing too much capital , unique
technology and unique resources)
External factors that will bring too much opportunities for and hence
positively affect positively operational activities-- FACILITY LOCATION
DECSIONS of a given organization can be seen from political –legal factors,
economic factors, demographic factors and natural factors)
Political –legal factors that will bring too much opportunities for and hence
positively affect positively operational activities- FACILITY LOCATION
DECSIONS of a given organization can be expressed terms of having and

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 availability of better( investment policies, taxation policies, tariff policies,
guarantees given by government, stable political situations and easiness of
getting investment licenses),
Economic factors that will bring too much opportunities for and hence
positively affect positively operational activities - FACILITY LOCATION
DECSIONS -of a given organization can be expressed terms of having and
availability of better (per capital income, economic growth, economic
development, remittances, markets, economic systems, foreign direct
investment policies and customers purchasing power)
Demographic factors that will bring too much opportunities for and hence
positively affect positively operational activities - FACILITY LOCATION
DECSIONS- of a given organization can be expressed terms of having and
availability of better( population sizes, cheap labour, literacy rates and income
of the local populations),
Natural factors that will bring too much opportunities for and hence positively
affect positively operational activities -FACILITY LOCATION DECSIONS -
of a given organization can be expressed terms of having and availability of
better ( natural resources, raw materials, climatic conditions, nations access to
port, and power supply)

3.6 : Job Design and Work Measurement

3.6.1 : Job design
Job Design is planned structuring of work effort performed by an individual
or a team of persons
Good job designs must answer
what work is to be performed
who is to perform the work
where the work is to be done
when the work is to be done
why the job is necessary and how should the work be accomplished.
Job designers usually attempt to minimize the amount of physical human
effort.
job design has two basic elements, a human element and a work element.
The objective of job design is :
to develop work assignments that meet the requirements of the organization
and the technology
To satisfy the personal and individual requirements of the job holder.
Degree of Labor Specialization
• Specialization of labor is the two-edged sword of job design
• Advantages of specialization to management
– rapid training of the workforce – ease in recruiting new workers
– high output due to simple and repetitive work
– low wages due to ease of substitutability of labor and – Close control over
work flow and workloads.
• Disadvantages to Management
• difficulty in controlling quality since no one person has responsibility for the
entire product
• hidden' costs of worker dissatisfaction
Disadvantages to Labor
(a) Boredom stemming from repetitive nature of work
(b) little satisfaction from the work
(c) little or no control over the work place leading to frustration and fatigue
(d) little opportunity to progress to a better job

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(e) little opportunity to show initiative through developing better methods or
tools
(f) little opportunity for communication with fellow workers due to layout of
work area.
3.6.2 : Work Measurement
Work measurement
• It is determining the amount of time required to perform a unit of work
• It may be used to determine the standard number of minutes that a qualified
properly trained, and experienced person should take to perform a specific task or
operation when working at a normal pace
• makes available the necessary data for effective planning and scheduling
• provides a basis for wage and salary administration for devising sound
incentive schemes.
Work Measurement Procedure
basic steps
• Select the work to be studied.
• Record all the relevant data
• Measure each element in terms of time over a sufficient number of cycles of
activity to ensure that a representative picture has been obtained.
• Examine the recorded data and time elements critically to ensure that
unproductive or random elements are separated from productive elements; also
examine the recorded times of each element and determine a representative time for
each.
• Compile (bring together )a time for the operation will provide a realistic
standard of performance
• Define precisely the series of activities and method of operation for which the
time has been allowed and issue the standard time for the activities and methods
specified.
• Techniques of Work Measurement
Time study
Work sampling: Estimates percent of time a worker spends on various tasks
Pre-determined motion-time system (PMTS):-Divide manual work into small basic
elements that have established times
Analytical estimating
Synthesis from standard data
MOST(Maynard Operation Sequence Technique) :- is to calculate the cycle
time for an operation based on Pre-determined time study data
Time Study
• Time study is a technique for determining as accurately as possible from a
limited number of observations, the time necessary to carry out a given activity at a
defined standard of performance.
• One of the primary methods of work measurement, is the stop watches
technique of time study
• The operation to be studied is divided into small elements each of these
elements and the the times are added together to get the total selected time for
performing the operation(normal time).
Time Study Procedure

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 1. Select the job to be studied (short cycle or long cycle, repetitive or
nonrepetitive).
2. Record all the information about the job, the operator and the surrounding
conditions which are likely to affect carrying out of the work
3. Measure with a stop watch the time for each element repeated for sufficient
number of cycles
4. Rating is a comparison of actual performance with some standard notion or
normal performance
Normal performance (or pace) is the working rate of the average worker working
under capable supervision but without the stimulus of an incentive wage plan
CHAPTER-FOUR
QUALITY-MANAGEMENT-AND-CONTROL

4.1 : CONCEPTS/ DEFINITIONS OF QUALITY

4.2 : DIMENSIONS OF QUALITY
4.3 : COSTS OF QUALITY
4.4 : QUALITY CONTROL
4.5 : INSPECTION VS QUALITY CONTROL
4.1 : QUALITY MANAGEMENT AND CONTROL
What is Quality and Why is it so Important?
• Quality :-Totality of features and characteristics of a product or service that bears on
its ability to satisfy the customer.
• there is no clear or agreed definition of what ‘quality’ means
• Definitions of Quality can be seen from five approaches
 the transcendent approach.
 the manufacturing-based approach.
 the user-based approach.
 the product-based approach and
 the value-based approach.
• Transcendent definition: views quality as synonymous with innate /inborn excellence .
• defined quality as the absolute – the best possible, in terms of the product’s or
service’s specification.
For example A ‘quality’ car is a Rolls-Royce.
• The manufacturing-based approach :products or services that are free of errors and that
conform precisely to their design specification.
• quality’ product is that has been built or delivered precisely to its design specification.
• The user-based approach:- – is concerned with making sure that the product or service
is fit for its purpose. appropriateness of specification for the customer.
 The product-based approach:- views quality as a precise (and measurable) set of the
characteristics which will satisfy customers.The value-based approach: defines quality
in terms of cost and price. quality should be perceived in relation to price.
 A customer may well be willing to accept something of a lower specification quality,
if the price is low.
 Why Quality Is Important
 Higher quality minimises processing time.
 Reduce inventory, rework and scrap costs.
 Reduce inspection and test costs.
 Reduce complaint and warranty, and service costs.
 costs can be brought down by improved efficiencies, productivity and the use of
capital.
4.2 : Dimensions of Quality

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 The concepts of dimensions of quality represent the fact that customers value/
perceptions a product keeping in mind different dimensions. such as:
1. Performance - main characteristics of the product/service: for what purpose the
product is made.
2. Special Features - extra characteristics; e.g. Aesthetics - appearance, feel, smell, taste..
3. Conformance - how well product/service conforms to customer’s expectations.
4. Reliability - consistency of performance without breakage.
5. Durability - useful life of the product/service.
6. Perceived Quality - indirect evaluation of quality (e.g. reputation).
7. Serviceability - service after sale/maintainbility.
Achievement of Quality
The two distinct but interrelated aspects of quality are:
– Quality of design &
– Quality of conformance
I. Quality of Design:- is
 identification of the right product.
 selection of the appropriate features for the selected product.
 preparation of detailed specifications (performance, durability, easy of maintenance,
easy of operation, etc.)
 to ensure that product renders satisfactory service to the customer at the optimal cost.
• The starting point in the product design is an assessment of customer's expectations
from the product.
• b/c customer satisfaction has to be central theme of the product design.
II.Quality of Conformance
• refers to the extent the product manufactured conform to the laid-down design (i.e.
design specifications and tolerances).
 Such as: performance, looks, ease of maintenance, ease of operation, durability,
reliability, cost of operation, etc.)
• The more closely the product meets the requirements of the design, the higher is said
to be its quality of conformance.
• It is the good design coupled / attached with a good execution (conformance) which
results in good quality of product.
o Quality Standards
o Material specifications :
o pertain to aspects of the product and they form a vital part of engineering function.
o Dimensional specifications :
o refer to the size aspects of the product and incorporated into the component drawings.
o Performance specifications :
o refer to the actual performance of the product.
o Environmental specifications :
o pertain to the climatic conditions, which the component/ product /material/ should
withstand.
o Two basic requirements of quality standards are:
o Quality standards must be definite and understandable.
o Quality standards should also be reasonable and achievable.
4.3 : Costs of Quality
• Costs of quality can be classified into four categories:
– Internal failure costs Quality Failure Costs
– External failure costs
– Appraisal costs Quality Control Costs
– Prevention costs
• Internal failure costs:

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– Costs that result from production of defective parts or services before delivery to
customers.
– Example: rework costs, scrap, and downtime.
– Variety of reasons:
– defective material from vendors,
– Incorrect machine settings,
– faulty equipment, carelessness, and faulty or improper material handling procedures.
• External failure costs :
• Costs that occur after delivery of defective products or services.
• Examples are customer warranty replacements, loss of customers or goodwill,
handling of complaints, and rework repair costs.
• Appraisal costs (inspection costs)
• Includes cost of quality inspections, product testing, and performing audits to make
sure that quality standards are being met.
• Prevention costs
• are costs related to reducing the potential for quality problems.
• Prevention costs relate to attempts to prevent defects from occurring.
• Examples are planning and administration systems, working with vendors, training,
quality control procedures, and extra attention in both the design and production
phases.
4.4 : Quality Control
To ensure quality, scientific quality control recognizes three distinct functions:
 Acceptance function:- inspection of goods to ensure that they are up to the
specifications. Acceptance function of quality is called "Inspection”.
 Preventive function: refers to the identification of defects in materials, components,
machining processes, or men to fix responsibility of defectives thereby avoiding or
minimizing occurrence of defectives.
 Preventive function of quality is called "Quality Control”.
• Assurance function :refers to verification that every quality characteristic or product is
assured to meet a pre-determined performance standard at each stage in the
manufacturing cycle.
– The assurance function includes elements like customer complaints, quality audit,
quality determination, accuracy of inspection, executive reports on quality, etc.
4.5 : Inspection versus Quality Control
closely related yet they differ in respect of the following;
 Quality Control
 aims to produce better quality products at the least cost to the company and
 inspection is one of the tool to achieve it.
 Quality Control
 determines the causes of variations ,while
 Inspection tests and measures ,compare products and their performance with specified
standards. Inspection determines the acceptability.
 Quality Control
 determines what, when and how much to inspect while
 inspection actually conducts examination of goods for the quality characteristics called
for by the Quality Control.
• Benefits of Inspection and Quality Control
• To satisfy customers and to meet competition of rival producers.
• To ensures that parts are within the specified limits.
• Reduces defective work and increase utilization of facilities and labour.
• Prevents labour and machine time from being spent on work already identified as
defective.

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 CHAPTER FIVE
OPERATIONS PLANNING AND CONTROL
5.1 Aggregate Production Planning
5.2 Operations Scheduling
5.1 Aggregate Production Planning
• Aggregate planning is essentially a "big-picture" approach to planning
• It involves translating annual and quarterly business plan into broad labor and
output plans for the intermediate term (6 – 18 months)
• Its objective is to minimize the cost of resources required to meet demand
over that period
• Main purpose of aggregate planning is to specify the optimal combination of
production rate, work force level, and inventory on hand.
aggregate planning …
• It is connected to the budgeting process.
• It begins with a forecast of aggregate demand for the intermediate range
• This is followed by a general plan to meet demand requirements by setting
output employment, and finished-goods inventory levels or service capacities
aggregate planning …
• Demand and Capacity:
In order to balance, aggregate planners are concerned with the quantity and
the timing of expected demand
If total expected demand different from available capacity over that same
period, the planners will be to try to achieve a balance by altering capacity, demand, or
both
aggregate planning …
• Inputs to Aggregate Planning:
• Effective aggregate planning requires good information
First, the available resources over the planning period must be known
a forecast of expected demand must be available
planners must take into account any policies regarding changes in
employment levels
aggregate planning …
• Demand and Capacity Options
• Aggregate planning strategies can be described as :
proactive, reactive, or mixed.
• Proactive strategies involve demand options
They attempt to alter demand so that it matches capacity
…
Reactive strategies: involve capacity options:
They attempt to alter capacity to it matches demand
Mixed strategies involve an element of each of these approaches
Demand Options.
• The basic demand options are the following:
• Pricing
• Pricing differentials are commonly used to shift demand
• for example, some hotels offer lower rates for weekend stays
• Promotion
• Advertising and other forms of promotion, such as direct marketing, can sometimes
be very effective in shifting demand so that it conforms more closely to capacity
Demand Options
• Back orders
An organization can shift demand to other periods by allowing back orders

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 That is, orders are taken in one period and deliveries promised for a later
period.
The success of this approach depends on how willing customers are to wait
for delivery
. New demand; bringing new customers
Capacity Options:
• The basic capacity options are the following Hire and layoff workers
• Is the impact that changes in the workforce level will have on capacity
• Overtime/slack time
• It is attractive in dealing with seasonal demand peaks by reducing the need to
hire and train people who will have to be laid off during the off-season
• Part-time workers
• the use of part-time workers is a feasible option-much depends on the nature
of the work, training and skills needed, and union agreements.
• Seasonal work requiring low-to-moderate job skills lends itself to part-time
workers, who generally cost less than regular workers in hourly wages and fringe
benefits.
Capacity Options….
• Inventories
• The use of finished-goods inventories allows firms to produce goods in one
period and sell or ship them in another period, although this involves holding or
carrying those goods as inventory until they are needed
• Subcontracting
• Subcontracting enables planners to acquire temporary capacity, although it
affords less control over the output and may lead to higher costs and quality problems
Aggregate Production Plan

Indicates production output levels for the major product lines of the company
5.2 Master Production Schedule
It is the specific schedule of individual products and models that is derived
from the aggregate production plan
It is a list of the products to be manufactured, when they should be completed
and delivered, and in what quantities
• Master production schedule includes three categories of items:
1. Firm customer orders
2. Forecasted demand
3. Spare parts
Master Production Schedule

Specific schedule of individual products, quantities and times

Material Requirements Planning (MRP)
Computational technique that converts the master production schedule for end
products into a detailed schedule for the raw materials and components used in the end
products
• Useful for dependent demand items, not independent demand items
– Independent demand items
• Final products and spare parts
– Dependent demand items
• Component parts used in final products
Structure of an MRP System • .

Inputs to the MRP System

1. Master production schedule

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– Expressed in terms of time buckets
2. Bill of materials file – product structure and list of component parts in each
product
3. Inventory record file (item master file) – includes:
– Item master data – part number, order quantities, lead times
– Inventory status – time-phased/interval record of inventory status
Benefits of MRP
1. Reduction in inventory
2. Quicker response to changes in demand
3. Reduced setup and changeover costs
4. Better machine utilization
5. Improved capacity to respond to changes in master production schedule
6. Aid in developing the master schedule
Production Control
• Concerned with determining whether the necessary resources to implement
the production plan have been provided
– If not, it attempts to take corrective action to address the deficiencies
• Major topics in production control:
1. Inventory control
2. Manufacturing resource planning
3. Enterprise resource planning
Inventory Control
• Concerned with achieving an appropriate compromise between two opposing
objectives:
1. Minimizing the cost of holding inventory
• Implies keeping inventory to a minimum
2. Maximizing customer service
• Implies keeping large stocks on hand so the customer can immediately take
possession
Costs of Holding Inventory
1. Investment costs
– Cost of money tied up in inventory until the customer pays for the finished
product
2. Storage costs – Cost of space to store the inventory
3. Cost of possible obsolescence or spoilage
– Reduction in value of inventory when it cannot be used
• Collectively, these costs are referred to as carrying costs or holding costs
Extensions of MRP
• Manufacturing resource planning (MRP II)
• Enterprise resource planning (ERP)
Manufacturing Resource Planning -(MRP II)
Computer-based system for planning, scheduling, and controlling the materials,
resources, and supporting activities needed to meet the master production schedule
• Typical modules in MRP II:
– Management planning – aggregate production planning, master production
scheduling
– Customer service – sales forecasting, order entry, finished goods inventory
– Operations planning – MRP enhanced with capacity requirements planning
– Operations execution – purchasing, production scheduling and control, shop
floor control
(MRP II)….
• MRP-II includes functions such s:
business planning, production planning and

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 scheduling, capacity requirement planning, job costing, financial management and
forecasting, order processing time and attendance, performance measurement and,
sales and operations planning

REFERENCE
NEWSAPAPERS
LOCAL NEWSPAPAERS
GLOBAL NEWSPAPERS
TEXT BOOK
OPERATIONS AND SUPPLY CHAIN MANAGEMENT
:BY F. ROBERT JACOBS (AUTHOR), RICHARD B.
CHASE (AUTHOR)

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 THE END!

TOTAL NUMBER OF PAGES IN THIS OPERATIONS

MANAGEMENT COURSE LECTURE NOTES ARE
FORTY(40)

Advantages & Disadvantages of MRP II

Advantages
standardization and automation of business processes
improvements in cost control and revenue.
enables employees in those business areas to do more and have increased visibility
of information for their jobs.
allows the company to be more competitive
Enterprise Resource Planning (ERP)
Defined as a computer software system that organizes and integrates all of the data and
business functions of an organization through a single, central database
• The functions include:
Sales Marketing Purchasing
Operations Logistics Finance
Inventory control Accounting
Human resources
• ERP runs as a client-server system - users access the system through their PCs
• ERP operates company-wide, not just plant-based
ERP Systems Include
Multiple Software Modules
• Each module is focused on a different business function or group of functions
• Modules are integrated through the ERP framework
• Modules can be classified into four main groups
1. Production and materials management - MRP II, master production
scheduling, process planning
2. Sales and marketing - order input, customer service, delivery, invoicing,
product returns
3. Finance and accounting - budgeting, cost control, asset management, accounts
payable
4. Human resources - payroll, benefits, training, job descriptions, employee
personal data T e\

The end !

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t

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