Operations and

Production Management

MSC512M

Enrique J. Martinez
Session 1:

Management of Expectations.

Introduction to Operations Management

 Session Plan

Part 1: Class Orientation Part 2: Introduction to Operations

Introduction of Instructor
Levelling of Expectations
Review of Course Syllabus (Word
File)
Grading System
Creation of Learning Teams
Initial Submission Requirements
 Introduction to Instructor ( See CV)
• Facilities Management • Logistics and Storage • Entrepreneurship
and Real Estate Decisions
Development.
• Business and Operations
Modelling
Management of Expectations

1) Kindly Introduce yourself: Name/ Professional Background/

Undergraduate Studies
2) Kindly tell us about your work
3) Kindly tell us about your expectations for this Operations
Management Class
4) What do you want to accomplish?
My Goal for this class

• Teach a world class operations course.

Classroom Policies

• Attendance Check = Yes

• Tardiness Check = Yes
• Dress code = Implemented as per DLSU Student handbook
• Cellular Phones Ringing Loud= Highly Encouraged
Review of Syllabus

• Kindly refer to the syllabus for the following information

1) The session plans and Schedule
2) The Chapters to be read
3) The parts of the Examination
4) Reference for the grading system.
 Grading System
Recitation 25%

• Student must be diligent to study the course material to be able to Final Project 40%
recall facts, techniques and demonstrate calculations proficiently.
• Project is a simplified simulation of reality
• Must be able to draw conclusion using analytical thinking and
conclusions that are relevant to the topic of discussion • The project aims for students to practice structured creativity
• Must be able to put more “value added” to the discussion • It’s a capstone project that enables students to apply what they
learned in project management
• Must be able to state the facts clearly and establish rapport with the
instructor and fellow students. • The students will be able to simulate projects on the tactical level
up to medium term goal settings
• Must be able to critique each other’s work fairly and objectively
give sound recommendations • Get to plan the execution using market knowledge and operations
and logistics knowledge

• To be able to calculate the figures to implement their strategy and

Examination 35% to understand the full capability of their assets, manpower and can
adjust so scenarios as needed.
• Multiple Choice Qualitative Portion.

• Quantitative Portion will be computational type with open

formulas and with the aid of scientific or business calculators.
Multiple Choice.

• The Spreadsheet portion is present at the third part of the exam.

 Other requested Items

Needed Next week.

1) Your email address ( alternative)
2) Special topics of Interest
3) Your Learning Teams and your roles
4) Your Learning Team company name
5) A Name Tag
Learning Teams

• Please group yourself

into Learning Teams Of
5 by the next session.
 Learning Teams

• Learning Teams are Designation Group A Group B Group C Group D Group E

your support group in
this session and in the Facilities and
project. Locations
Manager
• Form a group that
compliments each Product and
other. In this course Markets Manager
you want a well
rounded group rather Manufacturing
than a group that’s Manager
good on some factors.
Logistics &
• Create a team that has Export Manager
good dynamic and
work ethic. Costing/ Finance
Manager
 The Project

• The Year is 2017 and an automobile group is interested in entering the

South East Asian Market. This Automobile group is the Wunderbar
Autos Gruppe. They have currently no experience in this region except
for some occasional exports. In order to enter the market they deemed
that their general strategy is to evaluate their brands and product lines at
the same time to study the current markets and forecasts in order to be
able to introduce the product line that best fits this dynamic region.
Several members of the board want to adopt the conservative approach
and mentioned that they can focus first on 2 countries and at least 3
regions in the mentioned countries.
• The Wunderbar Autos Gruppe has commissioned your team to plan and
design the operations aspect of this entry.
• Select which side your group will be in: A) Manufacturing side or B)
Retail Side.
South East Asia
 References Shares

In order to give all groups a fair basis of

grading most reference materials will be
given
1) Economic, City List, Demographic
References of South East Asia
2) Manufacturing Plant costs
3) Retail Showroom costs
4) Headquarter Office Costs
5) Transportation Equipment Costs
 Project Overview
The Final Project is a Simulation of setting up of Operations for An
Automobile Group in South East Asia. The Key skills needed will be the
following:
1) Project Management
2) Quality Management
3) Product line management
4) Territory Selection and understanding of market demand
5) Forecasting the demand and Matching to the market
6) Facilities location strategy (manufacturing and warehousing)
7) Transportation Systems
8) Regional selection + Retail and Sales channel setup
9) Capital Costing
10) Quantifying the operational costs.
 Part 2: Introduction to Operations
• What is Operation management
Quick Definition:
Activities that relate to the creation of Goods and Services though the
transformation of inputs to outputs
- Operations Management 11th Edition
Other Definitions
1) The geographical scope of business activities
2) The variety of business activities and process undertaken by a company.
3) Project Based operations
 Part 2: Introduction to Operations
• Why Study Operations management?
1) OM is one of three major functions of an organization
2) We want to know how goods and services are produced.
3) To understand the roles played by an operations manager
4) Operations is a costly part of and organization, we want to know how we can
minimize costs or maximize effectivity and efficiently.
 Organizing to Produce Goods and services

Operations is interlinked with the following disciplines and decisions are

often made that must satisfy the other disciplines
1) Marketing
2) Production
3) Finance/Accounting
 The Supply Chain Overview

Definition:
A Global network of organizations and activities that supplies a firm
with goods and services.

Aspects into Supply Chain:

Flows of material
Flows of information
Facilities Layout
Transportation layout
 The Supply Chain Overview
• Example: Spark Plugs Manufacturing of Bosch
 The Ten Strategic Operations Management
Decisions
Decision Description Examples
1) Design of goods and Services Design to fit the market’s needs and wants and
matching the organization’s capability and aligning
the other operations management decisions
2) Managing Quality Determine the customer’s quality expectations and
establishes procedures, policies and standards for
product and service requirements.
3) Process and Capacity Design Determines how good and how fast a product or
service is produced. These while working within the
acceptable limits of resources, infrastructure,
technology, manpower etc.
4) Location Strategy Decisions on locating within good proximity to
customers, suppliers, talent while considering costs,
infrastructure logistics and government.
5) Layout Strategy Requires integrating capacity needs, personnel
levels, technology and inventory management to
determine efficient flow of materials, people and
information
 The Ten Strategic Operations Management
Decisions
Decision Description Examples
6) Human Resource and Job Strategies with regards to recruiting, motivating, training
Design and retaining personnel with the required talent and skill
sets. People are often an integral and expensive part of
service design.
7) Supply Chain Management How the supply chain is integrated in the firm’s strategy.
Includes decisions on what inputs are purchased from
whom, when and what conditions.
8) Inventory Management Inventory Ordering and holding decisions and how to
optimize them for customer satisfaction while managing
and aligning supplier capability, production schedules
and costs.
9) Scheduling Determines and implements immediate and short term
(operational) schedules that effectively utilize personnel
and resources while meeting customer demands
10) Maintenance The upkeep, wear and tear management of facilities and
infrastructure with consideration to the overall workflow
and keeping clients satisfied. The scheduling of repair and
introduction of improvements.
Operations for Goods and Services

Characteristics of Services Characteristics of Goods

Often Intangible Tangible
Produced and consumed simultaneously Can often be kept in inventory

Unique Similar products

Higher Customer Interaction Lesser customer involvement in production

Variable on a case to case basis Product is standardized

Often Knowledge Based Standard product makes automation feasible
May be dispersed to different customer Often through recognized distribution
contact points channels
Quality may be harder to evaluate Physical properties are easier to evaluate
Reselling is Unusual Product has residual value and may have a
secondary market.
 Discussion on Productivity
• Definition
• The ratio of Outputs (Services and goods) divided by the inputs (resources)
• Results in a ratio of Outputs: Inputs
• Example: Number of Laptops made per 1,000 Watts energy consumed
• Effective versus Efficient
• Productivity Measurement
• Single Factor Productivity
• Productivity = Units Produced/ Input used
• Example = Number of Cars Produced / Number of labor hours per month

• Multiple Factor Productivity

• Productivity = Units Produced/Multiple inputs used
• Example: Number of cars produced/(Labor Hours per month + tons of steel consumed +
electricity consumed)
 Seatwork Examples

Single Factor Productivity

1) Compute for the Single factor productivity of labor if a farm produces 40 Tons of Rice
per Ha with 3 Laborers per 6 months? What's is single factor productivity per year
2) Compute for the single factor productivity of material if 12 tons of stainless steel can
produce 38000 units of cellular phones?

Multi Factor Productivity

1) A yacht manufacturing company manufactures 12 Yachts for this month. It used 300
Labor Hours, 800 Machine Hours, 56000 USD in material and 9Tons of Fiberglass.
What's its multi factor productivity for the month? In a year’s time how many yachts
will it produce and what would be the resources needed?
2) A Boeing 777 plane carried over 34,000 Passengers over a 1 month period, staff hours
are 380 hours, fuel consumed is 182,000 Liters and terminalling costs totaled 180,000
USD. What is the Multi Factor productivity?
Productivity Variables

• Originally Land + Labor + Capital (Smithsonian Economics)

•
Y = f (L, K, N)
• Where Y = National Product
K = Capital
L= Labor
N= Natural Resources (Land)

• The More Modern View:

• Labor
• Capital
• Management
 Challenges in Operation management
Current Challenge Description Ways Forward

1) Global Focus Cross boundary management of Look for the possibilities of global
production and ways forward economic integration, trading blocs,
competitive advantages of certain
countries, resource bases, lower factors
of production and looking for overseas
markets.
2) Supply Chain Partnership Closer ties in terms of information Long term relationships and less
and queuing with suppliers and transaction/decision time leading to
clients. Greater disclosure of plans more focus on activity and well
and specifications. designed products.
3) Sustainability Minimizing the carbon footprint of Finding ways to produce with the lease
products and services as well as environmental impact, ways to recycle
practicing ethical sourcing. product and minimize rubbish in the
end of life stage of the product.
 Challenges in Operation management
Current Challenge Description Ways Forward

4) Rapid Product Development Faster Product Life Cycles and Market trend based product
planned development and ability to scale up or
obsolescence/replacement of to scale down operations
product lines
5) Mass Customization Fulfilling different client Finding the features that the client
requests en masse. places the most importance and creating
ways to deliver it on large scale.
6) Just in Time Performance Minimizing inventory levels Streamlining operations via time and
and maximizing turnover, motion and finding ways to improve
activities or productivity per ergonomics and speed. More open
facility. coordination with suppliers.
7) Empowered employees Employees can make critical Clear and concise communication on
judgement decisions on ways employees so that they can have
they can serve customers, authority to make certain ranges of
suggestions to management and decisions on their level. Management
work dynamics. should always be open to suggestion.