This document discusses various types of production management including operations management, service operations, and goods production. It also discusses different types of utilities including time utility, place utility, ownership utility, and form utility. Key factors for time utility include anticipation and a sense of urgency. The document provides examples and questions to illustrate these concepts.

2. Types of Production Management
1. Operation Management
- A set of methods and technologies used in the production of a good or a service.
2. Service Operations
- Production activities that yield tangible and intangible service products.
3. Goods Production
- Production activities that yield TANGIBLE products.

3. TYPES OF UTILITIES
Time Utility
- When the product is available
Place Utility
- Where the product is available
Ownership (Possession) Utility
- Consumption or use of product
Form Utility
- Product’s form (the transformation of raw materials into a finished products).

4. Time Utility
- When the product is available
- Example, the manager of a food
manufacturing company shall
anticipate the massive amount of
orders from their distribution
chain in December.
Key Factor:
1. Anticipation
2. Sense of Urgency

5. Time Utility
Question 1: If you’re an Operation Manager,
What are the factors you should consider when receiving additional client orders?
Quiz 1
Answer:
1. Amount of product the company can produce
2. Amount of the current order from the current client/customers
3. The new amount of order from your new client/customer

6. Assume you have the following details:
1. Amount of product the company can produce = 800 units per day (max)
2. Amount of the current order from the current client/customers = 16,000 / month
Question 2:
If a new customer request 8,000 unit of your product each month,
would you accept it or not?
Explain your answer:
800 x 30 = 24,000
16,000 24,000 – 16,000 = 8,000 -

7. Place Utility
- Where the product is available
The 1st thing you should consider when dealing with the
customer from a far location is?

8. Ownership (Possession) Utility
Possession utility is the value derived from a product which
comes with the complete ownership of the product with a
choice to use the product immediately and for any purpose.
Possession utility gives complete rights of the product to the
customer by giving possession of the product immediately so
that the customer can start using it.

9. Form Utility
Form utility is defined as a process that increases the value of
a product to the consumer by making changes and altering
its physical appearance.
Companies invest time and money into product research to pinpoint exactly
what products or services consumers desire.
From there, company executives strategize on the development of the product
with the goal of meeting or exceeding those needs to create form utility.

10. STORY
As long as Ferruccio Lamborghini is an entrepreneur in the tractor sector, sports cars are
nothing but a passion for him. For example, he owns two Ferrari cars, but his experience with
the Prancing Horse brand did not satisfy him as he expected. Hence, in 1962 he heads to
Maranello to speak to Enzo Ferrari directly.
The problem Lamborghini points out to the Drake is the clutch: in his view it is way too small
for the supercars of the Maranello-based company, and he suggests Ferrari should seek a
solution. Ferrari, however, immediately incensed, retorts, “The clutch is not the problem. The
problem is you don’t know how to drive a Ferrari and you break the clutch.”
Ferruccio’s reply is equally spontaneous and off the cuff, and also sounds like a challenge.
“Dear engineer, I'll never buy your cars again. From now on I’ll make my own cars, then I can
be sure they work the way I want them to.” No sooner said than done. One year later

11. Interacting with customers
Difference Between Service &
Manufacturing Operations
Services can be intangible and not storable
The customers presence in the operations process
Service quality considerations (intangible make all difference)

13. Quality is the visual sign of how well an operation does what it does.
It's a consistent indicator which customers and staff base their
expectations around.
Quality

14. SPEED
Speed is the turnaround time between customers ordering a product or
service and the point at which they receive it. When an organization
delivers the goods or services on time, the more likely a customer is to
be satisfied with their experience.

15. DEPENDABILITY
Dependability means that customers can rely on your organization to
receive their goods and/or services as and when promised. While this may not
affect the chances of a customer selecting the service - as they have already
'consumed' the product - it influences whether the customer returns to make a
future purchase or recommends your business.

16. Flexibility
Flexibility is the means of changing an operation to match a customer's requirements.
This may involve changing what the operation does or how it works so that the service
is bespoke.
Customers are likely to require change for four reasons:
•Product/service flexibility occurs in order to introduce a new or modified product.
•Mix flexibility is the ability to have the variety of products available grow.
•Volume flexibility involves the output of a process and being able to produce different
quantities/volumes.
•Delivery flexibility is being able to change the timings of delivery in a product/service.

17. Flexibility
Example
If you have total order of 400 cakes from
your regular customers, then all of the
sudden, a new customer requests a total
of 500 cakes from you. How can you deal
with such amount of an increase in order?

18. Cost
Cost is an important factor for companies which compete directly on rates. The
lower a company can keep its production costs, the lower they can have their
customer-facing prices.
Even companies who do not compete on price want to keep their costs as low
as possible while still maintaining the levels of quality, speed, dependability and
flexibility that their customers demand.
The minimalization of costs is as important so that resources can be spared to
grow other areas of the business.

22. What is Net Promoter Score?
Net Promoter Score (NPS) is a customer loyalty and satisfaction measurement
taken from asking customers how likely they are to recommend your
product or service to others on a scale of 0-10—but there's a lot more to the
story than that.

23. Customer Profitability Score
A. Attracting a new customer is 6-7 times more expensive than retaining a
current one.
B. 52% of customers say they have made an additional purchase from a
business after a single positive customer service experience.
C. 70% of customers claim they have already made a choice to support a
business that offers great customer service.
It is a method use to analyze the accurate profit the company
got from a customer by deducting the customer support cost
from revenues earned from a customer in a given period.

24. Customer Profitability Score = (revenues earned from
a customer in a given period) MINUS (the cost of supporting
the customer in the same period).
Assume that the only SUPPORT COST your company had is the Customer
Service.
The total cost of a Customer service is P200,000/month.
Your company generates P15,000,000 this month from a total of 25,000 customers.
How much is your Customer Profitability Score?

26. Number of Customers
8,000 8,000
2,000 New
Customers
- Total Customer from Previous Month
- Total Customer for this Month

27. What is Customer Conversion Rate?
Customer conversion rate is the percentage of potential customers
who take a specific desired action. In e-commerce or online
marketing, it refers to the percentage of website visitors that perform
a specific desired action on the website or landing page..

28. Example: Assume you have 18,000 visitors for this month in your e-
commerce website.
8,000 of them Purchase a product from your website.
The Customer Conversion Rate is:
= (8,000/18,000) x 100
= 44%
The Customer Conversion Rate is