SUMMARY CHAPTER 1-5

OPERATION MANAGEMENT

INTRODUCTION TO OPERATION MANAGEMENT SUMMARIZED BY: JHENNA SHENELL AQUINO HRDM 3E Operations management transforms inputs (labor, capital) into outputs (goods and services) that provide added value to customers. KEY TAKEAWAYS The operation management is The operation functions is represent in The chapter also represent a brief part of a business organization both service oriented an product overview of historical evolution of operation management and end responsible for planning, oriented organizations. Design decisions with trend of business which are; coordinating the use of the relate to capacity, facility location, facility Electronic Business, Technology, organization's resources to convert inputs to outputs. The layout, product and service planning, Globalization, Management of operations functions is the one acquisition and placement of equipment. Supply Chains, of the three functions of Operations decision relates Outsourcing. Agility, Ethical business organizations; the Management of personnel, Inventory Behavior. other two are marketing and management and control, Scheduling finance. Project management Quality assurance REFERENCES: Chapter 1 Introduction to Operations Management (PPT) McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

COMPETITIVENESS, STRATEGY AND PRODUCTIVITY SUMMARIZEDBY: MARYROSE ENCIOHRDM3E This chapter discusses competitiveness, strategy Competition is the driving force in many and productivity, three separate but related topics organizations. It may involve price, quality, special that are vitally important to business features or services, time, or other factors. To organizations. Competitiveness relates to the develop effective strategies for business, it is essential for organizations to determine what effectiveness of an organization in the marketplace relative to other organizations that combinations of factors are important to offer similar products and services. Operations customers, which factors are order qualifiers, and which are order winners. It is essential that goals and marketing have a major impact on and strategies be aligned with the organization’s competitiveness. Strategy relates to the plans that determine how an organization pursues its mission. Strategies are plans for achieving goals. Operation strategy is particularly important organizational goals. They provide focus for in this regard. Productivity relates to the effective decision making. Strategies must take into account use of resources, and it has a direct impact on present and future customer wants, as well as the competitiveness. Operations Management is organization’s strengths and weaknesses, threats and opportunities. These can run the gamut from chiefly responsible for productivity. what competitors are doing, or are likely to do, to technology, supply chain management, and e- business. Organizations generally have overall strategies that pertain to KEY TAKEAWAYS: the entire organization and strategies that pertain to each of the functional areas. Functional strategies are narrower in 1.Competitive pressure often means that scope and should be linked to overall strategies. Time-based business organizations must frequently strategies and quality-based strategies are among the most assess their competitors’ strengths and widely used strategies business organizations employ to serve their customers and to become more productive. The chapter weaknesses, as well as their own, to includes a description of the Balanced Scorecard approach, remain competitive. which can be helpful for transforming strategies into actions, and the implications of organization strategy for operations 2. Strategy formulation is critical because strategies provide direction for the management. Productivity is a measure of the use of resources. There is considerable interest in productivity both organization, so they can play a role in the success or failure of a business from an organizational standpoint and from a national organization. standpoint. Business organizations want higher productivity because it yields lower costs and helps them to become more 3. Functional strategies and supply chain strategies need to be aligned with the goals competitive. Nations want higher productivity because it and strategies of the overall organization. makes their goods and services more attractive, offsets inflationary pressures associated with higher wages, and results in a higher standard of living for their people. 6. High productivity is particularly important for 4. The three primary business organizations that have a strategy of low strategies are low cost, costs. responsiveness, and differentiation. REFERENCES: 5. Productivity is a key factor in the cost of CHAPTER 2: COMPETITIVENESS, STRATEGY AND PRODUCTIVITY goods and services. Increases in (POWER POINT PRESENTATION(POWER POINT PRESENTATION productivity can become a competitive PREPARED BY: MICHELLE G. ACUAVERA, MBA) advantage.

FORECASTING SUMMARIZEDBY: KRISHNAMARIEBALINOHRDM3E Forecasts are predictions about the future. Theelementsof a goodforecast whichare; The better those predictions, the more Forecast Should be timely , Forecast Should be informed decisions can be. Some forecasts reliable, Forecast Should be expressed in are long range, covering several years or meaningfulunits, ForecastShouldbeinwriting, more. It is a decision-making tool that helps Forecast Should be simple to understand and use businesses cope with the impact of the futures , ForecastShouldbecosteffective.Providesa uncertainty by examining historical data and guidelines toimprove cashflowplanning, trends. support in raising finance, time saving and error reduction, andmostimportantlyithelpsto enhanced the performance moinitoring. There are five quantitative forecasting methods, all MOVING AVERAGE : ∑DEMAND IN PREVIOUS N PERIODS of which use historical data which fall into two N categories: WEIGHTED MOVING AVERAGE : 1.Time-Series Models this implies that future values are FORMULA ∑ (WEIGHT FOR PERIOD N) (DEMAND IN PERIOD N) predicted only from past values and that other variables, ∑ WEIGHTS EXPONENTIAL SMOOTHING: no matter how potentially valuable, may be ignored. NEWFORECAST=LASTPERIOD’SFORECAST +Α (LASTPERIOD’SACTUALDEMAND -LASTPERIOD’S Measuring Forecast Error the overall accuracy of any FORECAST) forecasting model – moving average, exponential FORECAST ERROR : ACTUALDEMAND–FORECASTVALUE = AT–FT smoothing, or other – can be determined by comparing MEAN ABSOLUTE DEVIATION (MAD) : the forecasted values with the actual or observed FORMULA MAD = ∑ (ACTUAL – FORECAST) values. N MEAN SQUARED ERROR: 2. Associative Model- Trend projection,(seasonal MSE = ∑ (FORECAST ERRORS) N variations data, cyclical variations in data) MEAN ABSOLUTE PERCENTAGE: Associative Forecasting methods: Regression and MAPE = ∑ ABSOLUTE PERCENT ERROR N Correlation Analysis In this chapter it also discussed the Qualitative Methods which are the: 1. JURY OF EXECUTIVE OPINION 2. DELPHI METHOD 3. SALES FORCE COMPOSITE 4. CONSUMER MARKET SURVEY This 4 qualitativetechniquesusesthe views of experts to create business performance forecasts. These experts base their opinions on the results of a certain action, or on their personal experiences and education. REFERENCES: CHAPTER 3:FORECASTING (WORD DOCUMENT)

STRATEGIC CAPACITY SUMMARIZEDBY: ELLENNICOLEALMANDREZHRDM3E CAPACITY - refers to an upper limit or ceiling on the The two most useful functions load that an operating unit of capacity planning are: can handle. Capacity needs include equipment, 1. Design capacity refers to the maximum designed service space and employee skills. capacity or output rate. STRATEGICCAPACITYPLANNINGGOAL- to 2. Effective capacity is the design capacity minus personal achieve a match between long-term and other allowances. supply capabilities of an organization and the These two functions of capacity can be used to find the predicted level of demand. efficiency and utilization. These are calculated by the formulas below: •Overcapacity causes operating cost that are too Efficiency = Actual Output/ Effective Capacity x 100% high. While, under-capacity Utilization = Actual Output/ Design Capacity x 100% causes strained resources and possible loss of CAPACITY CONSIDERATIONS: customers. 1. Forecast Demand Accurately 2. Understand the technology and capacity increments MANAGING DEMAND 3. Find the optimum operating size(volume) •DEMAND EXCEEDS CAPACITY- the firm may 4. Build for change be able to curtail demand simply by raising prices, scheduling long lead times, and MAKE OR BUY - The organization must decide whether to produce a good or provide a service itself discouraging marginally profitable business. •CAPACITY MANAGEMENT - through changes or outsource (buy) from another organization in full-time, temporary, or part-time staff may be FACTORS: an option. 1. Available Capacity 2. Expertise Three Important Factors in planning service capacity 3. Quality Considerations 4. The nature of Demand 1. The need to be near customers 2. The inability to store service 5. Cost 3. The degree of volatility 6. Risk DEVELOPING CAPACITY ALTERNATIVES -Design Flexibility into system. -Take Stage of life cycle into account. -Take a “Big Picture” approach to capacity changes. FINANCIAL ANALYSIS Cash flow - the difference between cash received from sales and other sources, and cash outflow for labor, material, overhead, and taxes. Present value - the sum, in current value, of all future cash flow of an investment proposal. REFERENCES: DECISION THEORY STRATEGIC CAPACITY PLANNING FOR PRODUCTS AND SERVICES - represents a general approach to decision making which is suitable for a wide (POWERPOINTPRESENTATION PREPAREDBY:MICHELLEG.ACUAVERA,MBA) range of operations management decisions, including: - Capacity planning - Product and service design - Location planning - Equipment selection

DESIGN OF WORK SYSTEM SUMMARIZEDBY: JAQUILINE GUTIERREZHRDM3E Design of Work Systems is an important component in Work System Design consists of job design, work Production and Operations Management. Design of Work measurement and establishment of time standards and Systems forms the basis and explains the importance of work worker compensation. The interesting fact is that even in design. Design of Work Systems is used to describe the two basic approaches to job design, the first approach focuses on decisions in other areas of design can affect the work Efficiency through job specialization and the other focuses design system or even a change in the work design system behavioral approaches to job design. Design of Work System also entails method analysis which in turn centers on how can change the decisions in other areas. Like Product or Service design will affect Design of Work Systems. Layout jobs are performed. Motivation and Trust also form an Decisions will also affect Design of Systems. It is thus logical important dimension in Design of Work systems as this alone to ensure that systems approach is followed in a decision for design, so a decision in one part of the system is equally provides an opportunity to the Organization to develop replicated and acceptable to all the system. E.g. Product or effective teams who can achieve organizations short and long Service Design would require proper people with term objectives. Motivation and Trust observations also Job design invsotalvnedsasrpdeizceifdyijnogbthdeesccorniptetniotna.nd methods of emphasizes working conditions that in turn lead to work job. In general the goal of the job designis to create a work measurements which leads to reward and compensation of the individual working for the organization. In short this topic of system that is not only productive but also efficient. Job Design of Work Systems provides the perfect bridge between designers are concerned with: What will be done,bWho will Production and Operations Management with Human do the job, How the job will be done, Where the job will be Resource Management. done, and Ergonomics. Design of Work Systems • Motivation • Specialization The importance of these approaches to job design is that they have the potential to increase the motivational power of jobs by The term specialization refers to work that concentrates on increasing worker satisfaction through improvement in quality of some aspect of a product or service. Jobs that have a narrow worklife. Motivation always influences quality and productivity. It contributes to work environment where as: Trust influences scope. Assembly lines, medical specialties, MBA courses. Specialization jobs tend to yield high productivity, low unit costs productivity and employee-management relations. • Teams and lead to high standard of living in most of the industrial nations. Organization adopt teams in order to exploit the benefits of teams. Higher quality, Higher productivity, Greater worker satisfaction. • Behavioral Approaches to Job Design Self-directed teams are groups of empowered to make certain In order to make jobs more interesting and meaningful job changes in their work process. designers often consider Job Enlargement,Job Rotation and • Methods Analysis Job Enrichment. Job Enlargement relates to giving a worker a Methods analysis deals with analyzing how a job gets done, larger portion of the total task by horizontal loading. Job Rotation pertains to Workers periodically exchange jobs. Job Enrichment begins with overall analysis and then moves to specific details like is increasing responsibility for planning and coordination tasks, changes in tools and equipment, Changes in product design or new products, Changes in materials or procedures and Other by vertical loading. factors (e.g. accidents, quality problems)

Analyzing the Job and proposing new MOTION STUDY AND MOTION STUDY TECHNIQUES methods Motion Study is the systematic study of the human Job Design Analyst should question the motions used to perform an operation. The purpose is integrity and effectiveness of present and to eliminate /weed-out unnecessary motions and proposed methods. He or she should use charts, graphs and verbal descriptions to identify the best sequence of operations for maximum capture how the job is being performed. This efficiency. Motion study forms an important part in can be the first basis and can lead to productivityimprovements. MotionStudyTechniques improvement in job design. often incorporate the following four types: Motion study Compensation principles - guidelines for designing motion-efficient An Operations Manger comes across two workprocedures, Analysisoftherbligs-basic types of compensation, working for any service or manufacturing based organization: elemental motions into which a job can be broken down, Micro motion study - use of motion pictures and Time-based system, which is the slow motion to study motions that otherwise would be compensation based on time an employee too rapid to analyze, and Charts Motion study principles. has worked during a pay period. And Output- The importance of work design has been often overlooked based (incentive) system, which is because the work of Operations Manager in the past was not compensation based on the amount of output an employee produces during a pay linked with the Human Resource Department of the same organization. Times have changed and now Operations side period. work in tandem with Human Resource Department. Operations Managers are trained to understand the two basic approaches to job design. This lecture provided us with an opportunity that we discussed the advantages and disadvantages of specialization and Behavioral approaches to Job Design. Supplementary discussions focused on Method Analysis and Motion Study Techniques, which focused on efficiency aspect of the job. This may ignore the behavior aspect but still form an important and integral part of job design. And last but not the least work measurements dealt specifically with the length of time needed to complete a job and was linked with Personnel Planning, Cost Estimation, Budgeting, Scheduling and Worker Compensation. REFERENCES: CHAPTER 5: DESIGN OF WORK SYSTEM (POWERPOINT PRESENTATION)