PRODUCTION AND OPERATION MANAGEMENT

1. Operation Management
Mahr Irfan Ahmad Tahir
B.Sc., ACFMA(Pak), MIPA(Aus)
AFA(UK)

2. OM-Market Analysis
• Market analysis divides customer into market segment and
identifies the needs of each market segment
– Market segmentation is the process of identifying groups of customers
with enough in common to warrant the design and provision of
services or product that the group wants and needs
– Identifies the needs of each segment and assesses how well
competitors are addressing those needs
– Market needs may be grouped
• Service or product needs(attributes such as price, quality and degree of
customization)
• Delivery system needs(attributes of processes and supporting system and
recourses needed to deliver such as availability, convenience, courtesy, safety,
accuracy, reliability)
• Volume needs(attributes of demand such as high/low volume, degree of
variability in volume, degree of predictability in volume)
• Other needs(other attributes such as reputation, no of years in business, after
sale technical support, ability to invest, competent legal services)

3. Competitive priorities and capabilities
• Competitive priorities are the critical
operational dimensions a process or supply
chain must to satisfy internal or external
customers, both now and in future
• Competitive capabilities(cost, quality, time
and flexibility dimensions that a supply chain
or process actually possesses and able to
deliver)

4. Order winner and qualifier
• Order winner- a criterion customers to
differentiate the services or products of one
firm from others
• Order qualifier-minimal level from a set of
criteria for a firm to do business in a particular
market segment.

5. Trends and challenges in OM
• Productivity Improvement (value of output
produced divided by the value of input)
– Productivity=output/input
– Measuring productivity

6. OM-Productivity calculation
• Three employees process 600 insurance
policies in a week. They work 8 hrs/day,
5days/week.
• A team make 400 units, market price@$10
each. Job costs are $400 labor, $1000
material, $300 overheads.

7. OM-Trends and challenges
• Role of management (how addressed)
• Global competition
comparative cost advantage (china& india
have low cost)
disadvantage of globalization (quality,
technology, training etc)
strong global competition affects
industries everywhere)

8. Designing & operating Process and SC
• Managing processes
– Process strategy and analysis
– Quality & performance
– Capacity planning
– Constraint management
– Lean systems
– Project management

9. Designing & operating Process and SC
• Managing customer demand
– Forecasting
– Inventory management
– Operations planning &scheduling
– Resource planning
• Managing supply chains
– Supply chain design
– Supply chain logistic networks
– Supply chain integration
– Supply chain sustainability

10. OM-problems
• Student tuition at university is $150 per semester
credit hour. The supplements school revenue by
$100 per semester credit hour. Average class size
of 3-credit hour is 50 students. Labor costs are
$4,000/class, material costs $20per student per
class and overhead costs are $25,000 per class.
– Calculate multifactor productivity ratio for this course
process
– If instructor work an average of 14 hours per week for
16 weeks for each 3-credit class of 50 studens, what is
labor productivity ratio?

11. OM-problem
• NA makes garments. In a week, employees
worked 360 hours for batch of 132 garments,
of which 52 were “seconds”. Seconds are sold
@ $90 each. Rest are sold @$200 each. What
is the labor productivity ratio?