UNIVERSITY OF MINDANAO

Tagum College

College of Business Administration Education

Human Resource Management Program

Physically Distanced but Academically Engaged

Self-Instructional Manual (SIM) for Self-Directed Learning (SDL)

Course/Subject: CBM 112/ Operations Management with TQM

Name of Teacher: RAIZA MAE C. NARCISO, PhD

THIS SIM/SDL MANUAL IS A DRAFT VERSION ONLY; NOT FOR

REPRODUCTION AND DISTRIBUTION OUTSIDE OF ITS INTENDED USE.
THIS IS INTENDED ONLY FOR THE USE OF THE STUDENTS WHO ARE
OFFICIALLY ENROLLED IN THE COURSE/SUBJECT.
EXPECT REVISIONS OF THE MANUAL.

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

Table of Contents
Page

Part 1. Course Outline and Policies ...................................................... 1

Part 2. Instruction Delivery
CC’s Voice ............................................................................…….. 5
Course Outcomes ........................................................................... 5
Big Picture A: Unit Learning Outcomes ............................................. 5
Big Picture A in Focus: ULOa ………………………………………… 5
Metalanguage .......................................................................... 5
Essential Knowledge ............................................................... 6
Self-Help .................................................................................... 11
Let’s Check .................................................................................... 11
Let’s Analyze ......................................................................... 13
In a Nutshell .................................................................................... 15
Q&A List .................................................................................... 16
Keywords Index ......................................................................... 16
Big Picture A in Focus: ULO b ………………………………………… 17
Metalanguage .......................................................................... 17
Essential Knowledge ............................................................... 17
Self-Help .................................................................................... 22
Let’s Check .................................................................................... 23
Let’s Analyze ......................................................................... 23
In a Nutshell ....................... ............................................................. 25
Q&A List .............................................. ...... ................................ 26
Keywords Index ......................................................................... 26

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

Big Picture B: Unit Learning Outcomes ............................................. 27

Big Picture B in Focus: ULO a ………………………………………… 27
Metalanguage .......................................................................... 27
Essential Knowledge ............................................................... 28
Self-Help .................................................................................... 32
Let’s Check .................................................................................... 32
Let’s Analyze ......................................................................... 33
In a Nutshell .................................................................................... 36
Q&A List .................................................................................... 36
Keywords Index ......................................................................... 36
Big Picture B in Focus: ULO b …………………………………………… 37
Metalanguage .......................................................................... 37
Essential Knowledge ............................................................... 37
Self-Help .................................................................................... 53
Let’s Check .................................................................................... 53
Let’s Analyze ......................................................................... 55
In a Nutshell .................................................................................... 57
Q&A List .................................................................................... 58
Keywords Index ......................................................................... 58

Big Picture C: Unit Learning Outcomes ............................................. 59

Big Picture C in Focus: ULOa …………………………………………… 59

Metalanguage .......................................................................... 59

Essential Knowledge ............................................................... 60

Self-Help .................................................................................... 69
Let’s Check .................... .................... ............................................ 69

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

Let’s Analyze ......................................................................... 70

In a Nutshell .................................................................................... 72
Q&A List .................................................................................... 72
Keywords Index ......................................................................... 73
Big Picture C in Focus: ULO b …………………………………………… 74
Metalanguage .......................................................................... 74
Essential Knowledge ............................................................... 74
Self-Help .................................................................................... 80
Let’s Check .................................................................................... 81
Let’s Analyze ......................................................................... 82
In a Nutshell .................................................................................... 85
Q&A List .................................................................................... 85
Keywords Index ......................................................................... 86

Big Picture D: Unit Learning Outcomes ............................................. 87

Big Picture D in Focus: ULO a …………………………………………… 87

Metalanguage .......................................................................... 87
Essential Knowledge ............................................................... 87
Self-Help .................................................................................... 100
Let’s Check .................................................................................... 101
Let’s Analyze ......................................................................... 101
In a Nutshell .................................................................................... 103
Q&A List .................................................................................... 104
Keywords Index ......................................................................... 104
Part 3. Course Schedule ......................................................................... 104
Online Code of Conduct .............................................................. 105

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

Monitoring of OBD and DED... .............. ........................................... 106

Course Outline : CBM 112 –Operations Management with TQM

Course Coordinator: Dr. Raiza Mae C. Narciso

Email: raiza_narciso@umindanao.edu.ph
Student Consultation: By appointment
Mobile: 0933-820-1418
Effectivity Date: June 2020
Mode of Delivery: Distance Education Learning (DED)
Time Frame: 54 Hours
Student Workload: Expected Self-Directed Learning
Requisites: BAHR 211
Credit: 3
Attendance Requirements: A minimum of 95% attendance is required at all
scheduled Virtual or face to face sessions.

Course Outline Policy

Areas of Concern Details

Contact and Non-contact Hours This 3-unit course self-instructional manual is designed
for distance education delivery mode with 54 expected
number of hours, which includes the scheduled virtual
sessions and online conduct of learning exercises. The
virtual class shall consist of a question and answer
session from students with concerns regarding the topic
via google meet.

Assessment Task Submission Submission of assessment tasks shall be strictly

observed based on the course schedule at the bottom of
this SIM. Assessment will be given via
www.quipper.com. Specific instructions will be given per
assessment. Thus, you are required to create an
account at Quipper.

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

Turnitin Submission To ensure honesty and authenticity, all research

assignment tasks are required to be submitted through
Turnitin with a maximum similarity index of 30% allowed.
This means that if your paper goes beyond 30%, you will
either opt to redo your paper or explain in writing
addressed to the course coordinator the reasons for the
similarity or you may be called for a disciplinary action in
accordance with the University’s OPM on Intellectual and
Academic Honesty.

Please note that academic dishonesty such as cheating

and commissioning other students or people to complete
the task for you have severe punishments (reprimand,
warning, expulsion).

Penalties for Late Assessments If you were not able to submit exercises on time and
should you want to ask for an extension due for some
important reasons, you shall make a letter of request for
extension which is subject for approval from your course
coordinator. You will also be required to present/attach
evidences which is necessary to strengthen your request.

Once approved, the score will be reduced by 5% from the

possible highest points if the learning exercises was
submitted late.
Return of Assessments Assessment tasks shall be returned to you two (2) weeks
after the deadline of submission. This will be returned
through quipper portal.
Assignment Resubmission You should request in writing addressed to the course
facilitator your intention to resubmit an assessment task.
The resubmission is premised on the student’s failure to
comply with the similarity index and other reasonable
grounds such as academic literacy standards or other
reasonable circumstances e.g. illness, accidents financial
constraints.

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

Re-marking of Assessment Papers You should request in writing addressed to the course
and Appeal coordinator your intention to appeal or contest the score
given to an assessment task. The letter should explicitly
explain the reasons/points to contest the grade. The
course coordinator shall communicate with the
complainant on the approval and disapproval of the
request.

If disapproved by the course coordinator, you can

elevate your case to the program head then the dean
with the original letter of request. The final decision will
come from the dean of the college.
Grading System Submission of the final grades shall follow the usual
University system and procedures.

Class Participation – 30%

- Quizzes/Assignments Participation (10%
- Research, Projects and Requirements (20%)
1st – 3rd Examination – 30%
Final Examination– 40%
Total – 100%
Preferred Referencing Style You are required to use the general practice of the
Harvard Referencing Style. The sample will be uploaded
in the quipper portal.

Student Communication You are required to create a student quipper account at

www.quipper.com. Then, the course coordinator shall
provide code for you to access the materials and
resources of the course. All communication formats: chat,
submission of assessment tasks, requests etc. shall be
through the portal and other university recognized
platforms.

Also, google meet will be used as an official means for

your scheduled virtual sessions. Thus, you are required
to use the official umindanao account as much as
possible.

Normal communication and announcement shall be via

FB messenger, the course facilitator shall create a Group
Chat within the first week of the start of the class.

You can also meet the course facilitator in virtual through

the scheduled virtual sessions to raise your issues and
concerns.

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

Contact Details of the Dean Gina Fe G. Israel, EdD

Smart:0909-994-2314
deansofficetagum@umindanao.edu.ph
Contact Details of the Program Raiza Mae C. Narciso
Head Email: raiza_narciso@umindanao.edu.ph
Mobile: 09338201418
Students with Special Needs If you are a student with special needs, you shall
communicate with the course coordinator about the
nature of your special needs. Depending on the nature of
the need, the course coordinator with the approval of the
program head may provide alternative assessment tasks
or extension of the deadline of submission of assessment
tasks. However, the alternative assessment tasks should
still be in the service of achieving the desired course
learning outcomes.
Video Conference You are required to use the google meet for the
scheduled video conferencing. Please note that it is pre-
scheduled. Please refer to the course schedule given by
your subject teacher.
Help Desk Contact Dean’s Office
Globe:09158325092
Smart:
deansofficetagum@umindanao.edu.ph

Business Administration Education

Globe: 09955870420
Smart: 09107045559
FB page: UM Tagum College – DBAE

Cashiering Office
Globe: 09458941623
Smart: 09494254457
Sun: 09336032028

Records and Admission Center

Globe: 09752634831 / 09151825490
rac.tagum@umindanao.edu.ph

Student Accounts Office

Smart: 09075135112 / 09755119982
saotagum@umindanao.edu.ph
Library Contact 0927-395-1639

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

Course Information – see/download course syllabus in the Black Board LMS

CC’s Voice: Hello prospective business practitioners! Welcome to this course CBM 112:
Operation’s Management with TQM. By now, I am confident that you really
wanted to become a successful business professional and that you have
visualized yourself already doing business in your own specific field of
expertise.

CO: Before the actual business practice, you have to deal with several challenges
that needs the application of appropriate tools or methods for basic
productions and operations scenarios and solve actual business problems
through the use of quantitative and qualitative tools and techniques which
are the course outcomes of this subject. This particular subject shall dicuss
the nature, scope and limitation, and importance of Operations, Production,
and Total Quality Management in a business entity. This comprise topics on
productivity, project management, forecasting, decision making
environment, and Total Quality Management. Specific cases/problems will
be given to actualize and internalize your comprehension of the topic for
easy understanding

Let us begin!

Big Picture A

Week 1-3: Unit Learning Outcomes (ULO): At the end of the unit, you are expected to

a. Introduce and discuss operations Management and Productivity; and

b. Discuss the Global Environment and Identify the different Operations Strategy in
an International Environment.

Big Picture A in Focus: ULOa.

a. Introduce and Discuss Operations Management and Productivity

Metalanguage

In this section, the most essential terms relevant to the study of production management
and to demonstrate ULOa was operationally defined and discussed in the essential
knowledge to establish a common frame of reference as to how the texts work in your
chosen field or career. You will encounter these terms as we go through the study of
production management. Specific discussion per topic shall be provided in the later part

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

to help you understand more about the scope in studying this course. There will be
computation as well, formula and sample was also provided to guide you in answering
the exercises in this unit.
1. Production. Production is the creation of goods and services.
2. Productivity. The concept refers to the amount of outputs (goods and services)
divided by inputs (like labor and capital resources).
3. Single-factor productivity. Indicates the ratio of one resource (input) to the (output)
generated products and services.
4. Multi-factor productivity. Indicates the ratio of many or all resources (inputs) to the
products and services (outputs) produced.

Essential Knowledge

To perform the aforesaid big picture (unit learning outcomes) for the first week of the
course, you need to fully understand the following essential knowledge that will be laid
down in the succeeding pages. Please note that you are not limited to exclusively refer to
these resources. Thus, you are expected to utilize other books, research articles and
other resources that are available in the university’s library e.g. ebrary,
search.proquest.com etc.

1. Hard Rock Café. This multi-national company is a world class restaurant which later
diversify its business to gaming, hotel, and casinos. Hard Rock Café was built in the
year 1971, it was the best dining restaurant in London due to its unique themed food
services which gives customers a rock and roll ambiance.
1.1 This rock and roll themed restaurant prepares and customized over 3,500 meals
every day. Hard Rock Café in Orlando, Florida, is one of the largest restaurants
in the world. Despite the demands of the customers, the operations manager in
HRC is incredibly competitive which consistently serve the “hot food hot and the
cold food cold”.
1.2 Having an efficient work layout and process are just some of the priorities of the
Operations Manager in HRC. This may also be the reason of the employee’s
effective and efficient work job. Operations and Production related process was
carefully and meticulously checked by the managers to ensure that the food was
served right on time with correct measures, temperatures etc.
1.3 In 1979, the famous singer Eric Clapton once visited the cafe and due5 to its
delight he gave his guitar as memorabilia to show satisfaction and delight of the
restaurant magnificent dining experience. Ever since, the idea on covering its
walls with rock and roll memorabilia commence. Many icons/artist who visited the
place did the same and left valuables to the café, which paves its way to become
a Restaurant with mini museum with valuable things hanging at the wall. Some
known artist was Madona/Michael Jackson etc.
1.4 The secret for maintaining its reputation lies in the effective work lay-out set by
the operations manager considering process from grilling, baking, frying, and

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

more of it, which helped in ensuring quality in any aspect of service and goods
served to its customers.
1.5 Operations management is complex, difficult and exciting. It's impacting our daily
lives. The operations managers basically decide how well we live.
2. Operations Management. To define the operations management, it is a sequence
of activities that generate value by transformation of inputs into outputs in the form of
products and services.
2.1 Production. Production is the creation of goods and services.
3. How to organize the production of goods & services. Business entities always
considered the 3 major function that are vital in the creation of goods and services.
Most of its operation are primarily focused in these departments. These are
considered to be a vital key for productivity as well as in surviving organizational
competition.
3.1 Marketing function. This department/function primarily concerns the
identification, advertising and penetrating existing or target market. Thus, this
function is vital as it generates the demands of the product.
3.2 Production/Operation function. Obviously, without this the company does not
have anything to sell. This function mainly concerns the Creation of the product.
3.3 Finance/Accounting function. This function tracks the inflow and outflow of
the company finances which concerns the payment of bills, collection of money
and many others.
4. Why Study Operations Management? Good Om managers are scarce and as a
result, career opportunities and pay are excellent. There are four major reasons why
studying OM is essential for businesses:
4.1 Operation’s Management belongs to the 3 major functions. Thus, it’s
essentially to know basic function of it since it’s related to all.
4.2 In order to know how goods and services are created and produced.
4.3 Operations manager always encounter challenges which requires
decision making, to understand them studying OM will be very helpful.
4.4 In business most specially in manufacturing industry and services
Operations Management holds a big portion of budget and deciding
matters on where to cut cost and other decision is vital.
5. Major Task of the Operation’s Manager. All managers still go back in doing the 5
distinct process of management known as POSDICON.
5.1 Planning. This function tackles about the setting of objectives, long-term/
short-term plans, company policy, operations and procedures which aims
to attain the goals of the company.
5.2 Organizing – This refers to grouping of the different organizational
resources particularly the 6M’s which includes men, money, machineries,
market, method, and moment.
5.3 Staffing. This is a highly HR function that particularly targets on “putting
the right person in the right job”.

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

5.4 Directing – This function concerns topic on Leadership, Motivation, and

Communication. This is a difficult function since you are dealing with
people which is highly unpredictable.
5.5 Controlling – The last process is about assessment and evaluation of the
other 4 distinct process to ensure conformity to the plans being set.
5.6 There are 10 major decision areas that an operation manager must. An
effective manager can be able to address these 10 decision areas to the
best of his/her knowledge. The job of an Operation Manager is very
demanding and challenging indeed.
10 Decision Areas Issues
1. Design of goods & What goods/services should we offer?
services How should we design these products?

2. Managing quality How do we define quality? Who is responsible for quality?

3. Process & Capacity What process & what capacity will these products require?
design What equipment & technology is necessary for these
processes?

4. Location Strategy Where should we put the facility? How large must the facility
be to meet our plan?

5. Layout strategy How should we arrange the facility? How large must the
facility be to meet our plan?

6. Human resources & How do we provide a reasonable work environment? How

job design much can we expect our employees to produce?

7. Supply-Chain Should we make/buy this component? Who should be our

Management suppliers & how can we integrate them into our strategy?

8. Inventory, material How much inventory of each item should we have? When do
requirements planning we reorder?
& JIT

9. Intermediate & Are we better off keeping people on the payroll during
short-term scheduling slowdowns? Which job do we perform next?

10. Maintenance How do we build reliability into our processes? Who is

responsible for maintenance?

6. Difference Between Goods and Services.

CHARACTERISTICS OF SERVICES CHARACTERISTICS OF GOODS

Intangible: Ride in an roller coaster Tangible: The coaster itself

Produced and consumed simultaneously: Product can usually be kept in inventory
Coffee Shop selling Frappe that is (beauty care products)
consumed as it is

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

Unique: Your investments and medical care Similar products produced (iPods)
are unique
High customer interaction: Often what the Limited customer involvement in production
customer is paying for (consulting,
education)
Inconsistent product definition: Auto Product standardized (iPhone)
Insurance changes with age and type of car

Often knowledge based: Legal, education, Standard tangible product tends to make
and medical services are hard to automate automation feasible

Services dispersed: Service may occur at Product typically produced at a fixed facility
retail store, local office, house call, or via
internet.
Quality may be hard to evaluate: Consulting, Many aspects of quality for tangible
education, and medical services products are easy to evaluate (strength of a
bolt)
Reselling is unusual: Musical concert or Product often has some residual value
medical care

7. Challenges in Productivity. In creating goods and providing of services,

several issues or challenges will be encountered which requires decisions
relating to operations and production. Other may use the cost-benefit analysis
or even the opportunity cost to address such challenges.
7.1 Some of the productivity challenge may include how to reduce input/raw
materials while output remains the same or how to maximize output if there
are no changes in input.
8. Starbucks improvement in productivity. Starbucks is known for providing a
world-class service with quality products. The brand itself always connotes a
quality goods and services that many coffee shops imitate. As part of
continuous improvement, the company conducted study and form 10 team of
analyst that studies ergonomics or process efficiency on how to save time in
their operations to cater the customer quickly which later leads to satisfaction.
Part of the changes they did are the following:
8.1 For purchases under $25 dollars, they do not require a signature on credit
card transactions: By this, they were able to save 8 seconds per credit card
transactions.
8.2 The team created an ice scoop that is equivalent to 1 order per drinks to
save time in scooping ice one by one: This saved 14 seconds per drink
8.3 Instead of having a barista they bought an expresso machine to automate
process: They were able to save 12 seconds per shot.

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

8.4 Despite the improvements made, Starbucks' Services and Development

boosted total sales per store from $250,000 to $1,000,000 in seven years.
Productivity has increased by 27% or around 4.5% per annum.
9. Measurement in Productivity. Measuring productivity in operation helped manager
in identifying how effective the process is. Understanding productivity is vital in
improving our quality of life.
9.1 Productivity. The concept refers to the amount of outputs (goods and
services) divided by inputs (like labor and capital resources). Referring to
this, let us remember that productivity relates to output in the manufacture
of goods and does not imply the production amount of a given product.
9.2 Single-factor productivity. Indicates the ratio of one resource (input) to
the (output) generated products and services. Refer to the computation
bellow:
Productivity = Units Produced/Input Used
9.3 Multi-factor productivity. Indicates the ratio of many or all resources
(inputs) to the products and services (outputs) produced; This is the Multi-
factor productivity formula for computing:
Productivity = Units Produced/ Labor + Material + Energy + Capital +
Miscellaneous
9.4 Change in Productivity. To measure the exact percentage of change in
productivity, the formula below is used:
% Δ = New Productivity – Old Productivity / Old Productivity

Example: Through a modern computerized title-search program, Collins Title needs to

determine the labour and multi-factor productivity. The business has a workforce of
four, each operating eight hours per day (for a $640 / day payroll cost) and $400 annual
overhead expenses. Collins manages & finishes every day on eight names. The new
computerized title-search program would require 14 titles to be searched every day.
Also if the workers, their hours of service, and salaries remain the same, the payroll
costs are still $800.
Solutions:
Using single-factor productivity:
● Old Labor Prod. = 8 titles per day / 32 labor-hrs = .25 titles/labor-hr
● New Labor Prod. = 14 titles per day / 32 labor-hrs = .4375 titles/labor-hr
● % Δ = .4375 - .25 / .25 = .75 or 75% change

Using multi- factor productivity:

● Old MFP = 8 titles per day / $640 + 400 = .0077 titles/dollar
● New MFP = 14 titles per day / $640 + 800 = .0097 titles/dollar
● % Δ = .0097 - .0077 / .0077 = .2597 or 25.97% change
10. Variables in Productivity. Changes in productivity are dependent on three products
variable. If you want productivity to improve you must take note of the following
factors and focus attention on improving such variable. In a survey conducted, the
following result was the percentage of influence that such variable contributes to
productivity:

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

10.1 Labor. 10% of the improvement in productivity annually is caused by the

Human Resources working in the company. Labor contributes about 10%
of the annual increase. Labor productivity is a result of a good employee-
employer relationship, communication, and continuous learning.
10.2 Capital. 38% of the improvement in productivity is caused by capital
investment. Business competition has been very stiff in this information
technology age, investment in Technology, advance equipment, system
and others are necessary to adopt in this highly competing environment.
Improvement in Labor is also caused by Capital, giving them advance an
updated tools or means in doing job can help them improve their
performance.
10.3 Management. 52% of the improvement in productivity is caused by
management leaders. Top and Middle management are responsible for
decisions involving the other two variables. Result of their decision or even
their leadership affects the business entirely. Dealing with people and
analyzing the connection of investing such capital is a big factor in the
increase of productivity. Thus, a large percentage of influence for the
improvement of productivity is caused by management.

Self-Help: You can also refer to the sources below to help you
further understand the lesson:

* Heizer, J. and Render, B. (2011). Principles of Operations management. 10th edition.

Upper Saddle River, NJ: Prentice Hall, pp 33-51.

* Schroeder, R. G., Goldstein, S. M. and Rungtusanatham, M. J. (2017). Operations

management in the supply chain: decisions and cases. 7TH edition. New York, NY:
McGraw-Hill Education, pp 2-15.

Let’s Check
QUIZ EXERCISE 1. Now that you know the most essential terms in the introduction of
production management. Let us try to check your understanding of these terms. In the
space provided, write the term/s being asked in the following statements (10 pts):
Services
_______________1. Often produced and consumed simultaneously.
Operation management
_______________2. Activities linked to the production of products and services, through turning
inputs into outputs.

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116
Single factor productivity
_______________3. Indicates the ratio of one resource (input) to the goods & services produced
(outputs).
Capital
_______________4. A variable that contributes about 38% of the annual increase.
Production
_______________5. Refers to the creation of goods & services.

_______________6. Hard Rock Café in Makati City was established in what complete date?
Organizing
_______________7. Grouping together of people, establishing relationship among them, and
defining the authority and responsibility the personnel have in the use of
the company’s material resources to attain predetermined goals and
objective.
Multi-
factor
_______________8. Indicates the ratio of many or all resources (inputs) to the goods and
services produced (outputs).
Controll
ing
_______________9. Process of measuring and correcting the activities of subordinates and the
company itself to assure conformity to plans.
Productivity
______________10. The ratio of outputs (goods and services) divided by the inputs (resources
such as labor and capital).

QUIZ EXERCISE 2. Write TRUE if the statement is Correct and write FALSE if it is incorrect
(10 points).

______________ 1. Hard Rock Café in Orlando, Florida , prepares over 1,500 meals
each day.
______________ 2. The use of productivity measures aids manager in determining how
well they are doing.
______________ 3. The formula in measuring productivity is Input / Output used.
______________ 4. The marketing function creates goods and services.
______________ 5. Productivity improvements are easy to achieve.

Let’s Analyze
ASSIGNMENT 1. Getting acquainted with the computations in the topic productivity.
Now, I will require you to solve the problem given considering the requirements.

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 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

PROBLEM: Klaus Mikaelson makes Volleyballs in his New Orlean plant. He has a
renewed belief in productivity with recent increases in the prices. Klaus had an interest
in assessing his organisation 's profitability. He would like to ask if his business achieves
an annual production gain of three percent in manufacturing. He has the following details
reflecting a month from last year, and this year's corresponding month.

Last Year Now

Units produced (Volleyballs) 1,000 1,000
Labor (hours) 300 275
Pounds (lbs.) 50 45
Capital interest ($) 10,000 11,000
Energy (BTU) 3,000 2,850

REQUIREMENT (Place your solution for each category per box below):

1. Compute for the productivity of each category (up to 4 decimal point per answer).
Show your solution

2.Compute for the productivity percentage change for each category (up to 4 decimal
point per answer). Show your solution.

13
 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

3. Does the organization maintain the manufacturing average of 3% increase in

productivity? Elaborate your answer.

____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

14
 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________

In a Nutshell

The study of production management is indeed a pre-requisite to becoming a successful

business practitioner. It is a very complicated and demanding task which requires
patience and technical expertise including knowledge outside the classroom and school.

Based from the definition of the most essential terms of production management and the
learning exercises that you have done, please feel free to write your arguments or lessons
learned below. I have indicated my arguments or lessons learned.

1. Business practitioners must have basic knowledge on the five management function
process: Planning, Organizing, Staffing, Directing, and Controlling (POSDICON).
2. Argue which is the best measurement of productivity: Single-factor or Multi-factor?
Single-factor productivity is often used especially in the service sector. Measuring
labor productivity has been very important since human resources are considered as
one of the main reasons of its increase/decrease. However, Multi-factor productivity
is a holistic approach in measuring productivity since it does not consider one input

but multiple inputs over time. Thus, it is very helpful as it results to achieve an
objective decision.

Your Turn

3. ______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Q&A LIST.

15
 DEPARTMENT OF BUSINESS ADMINISTRATION EDUCATION
Human Resource Management Program
Mabini Street, Tagum City
Davao del Norte
Telefax: (084)655-9591 Local 116

In this section, you may list down all emerging questions or issues to help you in your
review of concepts and essential knowledge. Answers will be specifically tackled in the
scheduled video conferencing.
Do you have any Questions or clarifications?
Questions/Issues Answers
1.

2.

3.

KEYWORDS INDEX.

Management Operations Single-factor Multi-factor

Process/Function Management Productivity Productivity
Products Project Manager Production Products
Planning Organizing Staffing Directing
Labor Capital Management Controlling
Goods Services Operations Manager

16
 Big Picture A in Focus: ULOb.
b. Discuss the Global Environment and Identify the different
Operations Strategy in an International Environment

Metalanguage
For you to understand ULOb, you will need to have an idea of the Global Company Profile:
Boeing. This international company is a best example on how Boeing’s Global Strategy
yields competitive advantage.
1. Mission. The purpose or rationale for an organization’s existence.
2. Strategy. The organization’s action plan to achieve the mission. Firms achieve mission
in three conceptual ways: Differentiation, Cost leadership, and Response.
3. International Business. Refers to companies that venture in international trade or
investment.
4. Multi-national corporation. It a firm with significant presence in multinational markets,
operates or manages assets in more than one nation.
5. International Strategy. This firms involve in exporting and importing to expand
business in an international setting.
6. Multi-domestic strategy. Operations of this firms are highly decentralized, his is highly
sensitive to the culture and styles of the country where it operates.
7. Global Strategy. Opposite to Multi-domestic global strategy operation is centralized
no matter what country you are in.
8. Transnational Strategy. This is the best strategy yet the costliest one, this is a
combination of global and multi-domestic strategy where standardization of process is
maintained but local responsiveness was also focused on.

Essential Knowledge
Before you proceed further with the topic, it is highly important to rationalize discussion on
the global view of operations, developing missions and strategies, achieving competitive
advantage through operations, issues in operations strategy and global operations strategy
options.
1. Operation in a Global Setting. Thinking globally should be the mindset of all
operation’s managers at this time. In 1990s, a lot of problem was seen as hindrance
in improving productivity and these are: religions, ethnicity, colors politics, and even
cultural barriers. Gone are the days were discrimination is prevalent that affects the
productivity of the people working in a certain company.

17
 The creation of Boeing 787 dreamliner is considered as one of the best strategy
applied both in global and engineering perspective. This breakthrough in
manufacturing and engineering raises the bar in supply chain management. The
787 dreamliner acquired a record breaking sales dues to its state-of-the-art design
branded as fast-selling commercial jets in history;

Using a virtual work station allows Boeing engineers to coordinate and collaborate
in real time even if sub-parts were made in other countries including partners in
Australia, Japan, Italy, Canada, and across the Unites States. Digital testing was
used in identifying errors before the actual production per sub-part of the
dreamliner;

Lastly, after digital testing, the parts were shipped at Everest Washington for the
final assembly;
35% of the Dreamliner was built by Japanese suppliers and others were distributed
from different countries. This implies that the trust of several Multi-national
companies in Japan is huge due to their robust design and quality product which is
vital in ensuring quality output; and

Therefore, domestic production is not anymore viable for Global companies in this
Globalized era. Many Businesses also considered other strategies in expanding the
market, exporting/importing is already an old strategy, venturing multi-domestic,
global, and transnational strategy for multi-national company is the new normal.

2. Traditional method of operation is already outdated many engineers, scientist, and

business practitioners have challenged the old ways of doing things. Business
operation highly evolved for a better a fast process. Globalization therefore has
direct impact in company’s improvement in their product, extending services
throughout the market and offering something new to satisfy people’s insatiable
needs. A production that takes how many days, weeks, or months to accomplish
can now be produced in minutes, hours or days considering the concept of the
economies of scale. However, globalization strategies might give competitive
advantage to the company but it also complicates the work of the operation’s
manager. That is why Operation Manager is one of the highest paid job nowadays
because work is very demanding.
3. Various reason was identified why local business operation shift to international or
global operation. These are:
3.1 Cost Reduction. A lot of companies engage in global operation to reduce cost
and take advantage of the opportunity. Aside from that companies can also
purchase raw materials directly in other country at a lesser cost with high quality.

18
 3.1.1 Labor cost is one of the variables that needs to be focused on and some
countries like Philippines, China, and other Asian Countries offer lesser
cost of labor than in developed countries.
3.1.2 trade agreements have aimed to eliminate taxes and therefore to
decrease the costs of running facilities abroad:
3.1.2.1 World Trade Organization (WTO). An international organization
that promotes world trade by lowering barriers to the free flow of
goods across borders;
3.1.2.2 North American Free Trade Agreement (NAFTA). A free trade
agreement between Canada, Mexico, and the United States;
3.1.2.3 Maquiladoras. Mexican factories located along US – Mexico
border that receive preferential tariff treatment; and
3.1.2.4 European Union (EU). A European trade group that has 27
member states.
TRIVIA ► U.S. CARTOON CHARACTERS WERE CREATED IN MANILA
---------------------------------------------------------------------------------------------------------
Around 90% of U.S. televised cartoon were created by Filipinos to name some of it are: FRED
FLINSTONE, TOM & JERRY, ALADIN, and DONALD DUCK. Filipinos are flexible in adapting
other country’s culture plus the familiarity and expertise in the universal language paved way to
be one of the outsourced labor in Asian countries. Filipinos are also liked by foreign country due
to its talents, character, and intelligence.

Disney, Marvel, Warner Brother and Hanna-Barbera are the major universal studios that
outsourced Filipinos to create storyboards and sketches per episode and voice tracks to the
Philippines. Approximately, 20,000 sketches were drawn for a 30-minutes episode. These giant
companies were able to save a lot of labor cost from $500,000 dollars if US made to $130,000 if
Philippine-made or $160,000 if Korean-made.

Sources: Journal of Global Information Technology Management (2007): 1-6; The New York
Times (February 26, 2004): A29; and the Wall Street Journal (August 9, 2005): D8.

3.2 Supply Chain improvement. Going near to the main source of supply is also
a wise move for most companies, they were able to save shipping fees and
other costs involve in raw materials acquisition.
3.2.1 Auto mecca of Southern California were known for its world-class auto
styling studios in which most companies move there to learn auto-design;
3.2.2 China is famous for its cheap production costs thus some known athletic
shoe like Nike transferred from South Korea to China to save labor and
production cost;
3.2.3 Grasse, France is where the world’s best essences was located. Most
known Perfume manufacturer has outlet or plant in there to acquire in

19
 close contact the flowers in the Mediterranean which are used to extract
essence for perfumes.
3.3 Provide an Improve Product. Going global permits companies to understand
the culture of other countries inspiring them to innovate and improve current
existing product. Foreign markets can also be a tool to discover something new
in your business thereby contributing in a new and improved version of your
goods and services.
3.4 Understand Markets. Competition can lead to new opportunities. Due to
hypercompetition companies thrives to be better with its rival at all times. With
this, opportunity from service providers are also sufficient. Same with supply
chain improvement the following examples was also noted due to
understanding market competition:
3.4.1 Japan was known for its robust design and quality products. Thus, a lt of
Cell phone manufacturers outsourced computer aided design (CAD)
and computer aided manufacturing (CAM) in Japan.
3.4.2 For developed country like Japan, product life cycle works differently
compared to developing countries. Thus, engaging global operations can
also be a tool to extend the product life cycle of an existing product.
Example, a declining cellphone edition in Japan might be an introductory
edition in the Philippines. So instead of junking it why not sell it to
developing countries to make more profit out of it;
3.4.3 As discussed OM job becomes more demanding because of the different
variations in lifestyle, culture and economic activity in every county. Thus
understanding each is vital, for instance, Whirlpool designs washing
machines with dry washers in countries with four seasons while in tropical
country it’s optional. Likewise, refrigerators in some Asian country like
India or Bangkok were in bright colors because it was displayed at the
living room which became part of their decorations while in others colors
are in white, black, or cream.
3.5 Continuously Learn to Improve Operations. Learning is like a race with no
finish line. It’s fluid and allow a free flow of ideas.
3.5.1 When it comes to product design and inventory management Japanese
and Scandinavians are so good at that. In ergonomics, designing product
must always aim in making our life better, the connection of the design
and on how we use it must be beneficial to the customer considering not
to waste time and save motion.
3.5.2 The international operations will boost customer satisfaction and
response time.
3.6 Attract and Retain Global Talent. Potential employees can be kept intact if
companies gave them opportunities to grow and develop their potentials.

20
 Wasting such talents is a big loss to global companies, in going global one
needs a highly competitive human resources also to understand well what’s
happening in the bigger picture.
4. Mission and Strategy Development. It is uncommon for companies to set a
mission and develop a strategy. To continue business operation, setting the
preliminaries are vital because every decision must be anchored in the big picture.
4.1 Mission. The purpose or rationale for an organization’s existence.
4.2 Strategy. The organization’s action plan to achieve the mission. Firms achieve
mission in three conceptual ways: Differentiation, Cost leadership, and
Response.
5. Conceptual ways in achieving mission. These strategies paved way for
companies to stay on track and develop its competitive edge over others:
5.1 Competitive Advantage. Something that you have that others do not have. It
is also something about the product leader that you have or the best service
that you offer that others cannot or do not give.
5.2 Differentiation. This strategy can also be matched with the competitive
advantage that you have. Adding value to the product is a tool to attain such
edge. This is attributed to the customer’s transcendent perspective in viewing
your product, the uniqueness and may go into both physical and service
characteristics. Exceeding customer’s perception of value.
5.3 Cost Leadership. This is about offering product in a just price. It does not imply
cheap prices for a product but it tackles about the relationship with quality and
cost. Using Cost Leadership does not imply low quality because it particularly
targets mass market, acquiring quality and affordable product.
5.4 Response. It is normal for a company to experience post-purchase services
and responding timely to customer’s concern is highly relevant. A lot of company
also cater to the specific needs of the customer in which response strategy can
be used in maintaining customer satisfaction.
6. Global Operations Strategy Options. Nowadays, companies that settle in
traditional business operation are associated with less sale records as compared to
a global firm. Going global does not always mean selling product outside the country
but also means improving product using global operations.
6.1 International Business. Refers to companies that venture in international trade
or investment.
6.2 Multi-national corporation. It a firm with significant presence in multinational
markets, operates or manages assets in more than one nation.
6.3 International Strategy. This firms involve in exporting and importing to expand
business in an international setting. In the Philippines, this is very common in
agricultural products were DOLE or SUMIFRU engages in such activities. This
has little local responsiveness and little cost advantage.

21
 6.4 Multi-domestic strategy. Operations of this firms are highly decentralized, his
is highly sensitive to the culture and styles of the country where it operates.
Example is the leading fast food chain in the world, McDonalds. This Restaurant
offers variety of menu depending on the country they are in. For instance,
Mcdonalds in France offers wine, beer in Germany, Teriyaki in Japan etc. The
strategy has high local responsiveness with little or no cost advantage.
6.5 Global Strategy. Opposite to Multi-domestic global strategy operation is
centralized no matter what country you are in. This is common in BPOs in which
they just expanded their business operation to ot her country. This has
significant cost reduction but little local responsiveness.
6.6 Transnational Strategy. This is the best strategy yet the most costly one, this
is a combination of global and multi-domestic strategy where standardization of
process is maintained but local responsiveness was also focused on. The best
sample for this is the Boeing 787 dreamliner were parts were made across
boarders but maintain business operation standard at home country. This
strategy has significant cost reduction and significant local responsiveness.

Self-Help: You can also refer to the sources below to help you further
understand the lesson:
* Heizer, J. and Render, B. (2011). Principles of Operations management. 10th edition.
Upper Saddle River, NJ: Prentice Hall, pp 59-79.

22
* Schroeder, R. G., Goldstein, S. M. and Rungtusanatham, M. J. (2017). Operations
management in the supply chain: decisions and cases. 7TH edition. New York, NY:
McGraw-Hill Education, 18-32.

Let’s Check

QUIZ EXERCISE 3. Please encircle the letter of your correct answer that best reflects your
thinking (10 points).
1. A mission statement is beneficial to an organization because it:
a. is a statement of the organization’s purpose.
b. identifies important constituencies.
c. Details specific income goals.
d. ensures profitability.
2. The three strategic approaches to competitive advantage are _________,
_________, and ________.
a. international, mutidomestic, and transnational strategy
b. response, cost leadership, and differentiation
c. response, global, and multidomestic
d. mission, strategy, and competitive advantage
3. A company that is organized across boundaries, with decentralized authority and
substantial autonomy at each business via subsidiaries, franchises, or joint venture
has:
a. a global strategy c multidomestic strategy
b. a transnational strategy d. international strategy
4. The purpose or rationale for an organization’s existence.
a. Vision b. Goals c. Mission d. company philosophy
5. A Global Operations Strategy that produces goods considering the cultural
background of the country.
a. International Strategy c. Multidomestic Strategy
b. Transnational Strategy d. Global Strategy

Let’s Analyze

RESEARCH EXERCISE 1 - Provide your own discussion in the blank spaces. This activity
will be rated according to the rubrics below:
Note: Answer will be rated per item/requirement including references (5-point is the highest
– total of 25 points)
1. Based on the description and analysis for this topic, would Boeing be better described
as a global firm or a transnational firm? Discuss.

23
Answer:
_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

__________________________________________________________________

______________________________________________________________________

2. There are three primary ways to achieve competitive advantage. Provide an example
not included in the text for each, support your choices (use APA format 6 th edition in
proper citation and referencing).
Answer:
Differentiation _________________________________________________________
_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

________________________________________________________________

Cost Leadership ________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

24
_______________________________________________________________________

_______________________________________________________________________

__________________________________________________________________

Response _____________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

__________________________________________________________________Refere

nce

In a Nutshell

The importance of understanding the global environment and operations strategy is vital.
In this unit, you will be required to state your arguments or synthesis relevant to the topics
presented. I will supply the first two items and you will continue the rest.

1. For many organizations, the operations function provides the competitive advantage.
2. The operation’s manager job is to implement an OM strategy, provide competitive
advantage, and increase productivity.

Your Turn

25
3.____________________________________________________________________

______________________________________________________________________

4.____________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Q&A LIST.
In this section, you may list down all emerging questions or issues to help you in your
review of concepts and essential knowledge. Answers will be specifically tackled in the
scheduled video conferencing.
Do you have any Questions or clarifications?
Questions/Issues Answers
1.

2.

3.

KEYWORDS INDEX.

Multi-national International Business Productivity Variables World Trade

Corporations Organization
Goods Productivity Maquiladoras Mission
Production Services Differentiation Strategy
Cost Leadership Response European Union Global Strategy
International Strategy Multi-domestic Transnational Strategy Competitive
Strategy Advantage

26
North American Free Products Project Manager Production
Trade Agreement

27
 DEPARTMENT OF BUSINESS ADMINSTRATION EDUCATION /
HUMAN RESOURCE MANAGEMENT PROGRAM
Contact: 09955870420 / 09107045559

Big Picture B

Week 4-5: Unit Learning Outcomes (ULO): At the end of the unit, you are expected to

a. Identify the importance of Project Planning, Scheduling, and Controlling; and

b. Rationalize the concept of Network Techniques: PERT/CPM.

Big Picture B in Focus: ULOa.

a. identify the importance of Project Planning, Scheduling, and
Controlling

Metalanguage

In this section, the most essential terms relevant to the study of project management and
to demonstrate ULOa will be discussed. No matter what profession you are in the ability
to manage a project effectively is necessary since project is naturally formulated once in
a while. Remember that the outcome of your project can make or break your company in
general thus, it is a necessity to learn project management. Encountering Challenges are
just normal in project management, delays, fortuitous event, demanding customer/client
are just some of it but knowing how to manage it may lessen the problem on planning,
scheduling, and controlling. In this unit, you will learn of the three phases of managing
the projects, these are:
● Planning. Planning refers to the phase where goals, project description and
project team are planned/formulated. This is a crucial phase because output is
dependent on the input that you used, meaning task, labor, materials and others
shall be planned well for a smooth implementation;
● Scheduling: This phase tackles about the organization of the 6M’s of
management (men, money, market, machinery, method, market, and moment).
Success in project management also depends on how you handle well this
organizational resources; and
● Controlling: The last phase of project management yet the most challenging one.
Normally, when a project is near to its end, common bottlenecks will be
encountered (lack of supplies, budget constraints, client’s change of mind, project
behind schedule) and a sudden shift in client decision’s like fast tracking the
completion of project are usually common. At this phase, project manager should
be adaptive to the demands of time, so revising plan is not common at this phase
but as to how much cost and least time a project can be shorten were just some
of the questions that needs to be addressed in here.

28
 DEPARTMENT OF BUSINESS ADMINSTRATION EDUCATION /
HUMAN RESOURCE MANAGEMENT PROGRAM
Contact: 09955870420 / 09107045559

Essential Knowledge

To discuss the aforesaid big picture (unit learning outcomes) for the next three (3) weeks
of the course, you need to fully understand the following essential knowledge that will be
laid down in the succeeding pages. Please note that you are not limited to exclusively
refer to these resources. Thus, you are expected to utilize other books, research articles
and other resources that are available in the university’s library e.g. ebrary,
search.proquest.com etc.

1. PLANNING A PROJECT. Project is temporary in nature and it can refer to a set of

related activities that targets a specific outcome. For this to realize, big firms
formulate a project team organization that will focus on conducting the 3 phases
of project management. They are tasked to monitor the day-to-day operation of the
project; special attention will be given to such project until the very end of the
project. Below are the specific activities done in this phase:

In relation, there are four famous methods that project managers used in the 3
different phases, these are: Work Breakdown Structure, Gannt Chart, PERT and
CPM. The Project Management Institute (PMI) stated that “a project is a temporary
endeavor undertaken to create a unique product, service or result.” First to note
here is that project has a start and finishing activities; project are not continuous
with no end because it’s just temporary. Thus, project management requires a
different approach and attention in managing as compared to normal operation in
business.

1.1 Project Organization. This is a team developed to assure that project

planning, scheduling, and controlling are well taken care of. Again, this is just
a temporary team unless a certain firm creates a particular unit tasked to
handle different projects, this is headed by a project manager which is
responsible in monitoring from the entire duration of project.

29
 DEPARTMENT OF BUSINESS ADMINSTRATION EDUCATION /
HUMAN RESOURCE MANAGEMENT PROGRAM
Contact: 09955870420 / 09107045559

1.2 Project Organization Works Best when:

● Task will be specifically identified specially when objectives/goals are set
using the mnemonic SMART (Specific, measurable, achievable, realistic,
and time-bounded);
● Task is not common and routinary to the usual operation of the business;
● Task involves complicated interrelated job that requires some unique skill
set; and
● project is related at all units in the organization.
● Project Manager’s Role. The role of project manager encompasses all
the necessary attributes that a good manager should have. This is a
demanding job since the outcome of the project can make or break the
company itself. They should be a good mentor with overflowing patience,
has good interpersonal skills, and should have a know-how of the different
fields that can be affected in the project operations. Most specially, a
Project manager should be accessible to everyone, and ensuring that:
● Task are accomplished on schedule;
● Budget are not compromised and fit;
● Quality is not sacrificed despite the deadline and cost of raw materials;
and
● Human resources must always be treated with utmost respect, they must
feel valued, and motivated so that they will take pride in whatever task
given to them.
2. Work Breakdown Structure. One of the method used in Project planning that
portrays a ranked task of a project specifying the detailed activities of the major
task. Project team starts its job by identifying possible task that shall be undertaken
to complete the project.
2.1 Splitting up the project into bits and pieces can be hard, yet it is crucial in project
management and scheduling. At this stage, materials, people, and cost are also
estimated by the team.
2.2 WBS usually declines in size from highest to bottommost and is portrayed like
the one below:

Level
1 Project
2 Major Task in the project
3 Subtasks in major tasks
4 Activities (or “work packages”) to be completed

30
 DEPARTMENT OF BUSINESS ADMINSTRATION EDUCATION /
HUMAN RESOURCE MANAGEMENT PROGRAM
Contact: 09955870420 / 09107045559

Note: In order to create a WBS, use the Level ID as guide. In the assessment,
Level ID with Work description will be arranged together in a table in random
order.
3. Project Scheduling. In this phase, it ensures that the entire task was planned,
their connectivity is checked and estimated time of completion considering the
best, worst and the safest are identified. Some activities include:

3.1 Purposes of Project Scheduling. Whatever means that a project manager

used in completing the project, scheduling a project displays:
● The connectivity of all activities from beginning to end;
● The precedence relationships of the activties;
● Inspires the identification of time and cost estimates in a realistic setting;
and
● Aids in managing the organizational resources (5Ms) by identifying
bottlenecks.
3.2 Gantt Chart. Charts of preparation used to plan organizational resources and
assign time. This was developed by Henry L. Gantt which became popular due
to low-cost means of helping managers make sure that:
● Task are premeditated;

31
 DEPARTMENT OF BUSINESS ADMINSTRATION EDUCATION /
HUMAN RESOURCE MANAGEMENT PROGRAM
Contact: 09955870420 / 09107045559

● The execution order has record keep;

● Expected time of completion is logged; and
● Entire project time completion is formulated.
Below is an illustration of a routine servicing of a Delta jetliner during a 40-
minute layover which can be used for scheduling repetitive operations. In this
case the chart helps points out potential delays.

4. Controlling of the Project. Controlling is part of the basic management functions and
it’s always the last process or phase since it involves assessment or evaluation of the
activity or project. This contains the following activities like monitoring organizational
resources, project costs, and project schedule. Regular assessment enables the
project team to give recommendations on the possible revisions, status, and shifting
of resources.
4.1 This phase yields the following reports:
● Breakdown of normal and crash cost for every activity;
● labor productivity;
● tables of the distribution of cost;
● Work Costs and timetable summary;
● Expense/Expenditure report or forecast
● Reporting of variances;
● Analyzing and reporting Timeline; and
● Status of work update.

32
 DEPARTMENT OF BUSINESS ADMINSTRATION EDUCATION /
HUMAN RESOURCE MANAGEMENT PROGRAM
Contact: 09955870420 / 09107045559

Below show several activities done for Project Controlling. Further discussions of
the technique used will be discussed in ULOb.

Self-Help: You can also refer to the sources below to help you
further understand the lesson:
* Heizer, J. and Render, B. (2011). Principles of Operations management. 10th edition.
Upper Saddle River, NJ: Prentice Hall, pp 90 - 94.

* Schroeder, R. G., Goldstein, S. M. and Rungtusanatham, M. J. (2017). Operations

management in the supply chain: decisions and cases. 7TH edition. New York,
NY: McGraw-Hill Education, 263 - 268.

Let’s Check

QUIZ EXERCISE 4. Encircle the letter that best describes the answer (10 points).
1. Which of the following statements regarding Gantt Charts is true?
a. Gantt charts give a timeline and precedence relationships for each activity of
a project
b. Gannt Charts use the four standard spines: Methods, Materials, Manpower,
and Machinery
c. Gantt Charts are visual devices that show the duration of activities in a project
d. Gantt Charts are expensive
2. When a firm monitors resources, costs, quality, and budgets which may result to
making necessary revisions or shifting of resources in order to meet time and
cost demands, the firm is under which specific phase of managing a project?
a. Planning c. Forecasting
b. Controlling d. Scheduling
3. Below are activities done in Scheduling a project, EXCEPT;
a. Assigning People c. Scheduling Resources
b. Schedule Deliverables d. Shifting of Resources

33
 DEPARTMENT OF BUSINESS ADMINSTRATION EDUCATION /
HUMAN RESOURCE MANAGEMENT PROGRAM
Contact: 09955870420 / 09107045559

4. Which among the activities listed below would fall under planning the project?
a. Developing Work Breakdown Structure c. Sequencing Activities
b. Shifting Resources d. Monitoring
5. Planning charts used to schedule resources and allocate time.
a. PERT c. CPM
b. Gantt Charts d. Work Breakdown Structure

Let’s Analyze

ASSIGNMENT EXERCISE 2 - Work Breakdown Structure (20 points)

Instruction: Create two WBS using the data below.

Answer (Draw it in landscape format):

34
DEPARTMENT OF BUSINESS ADMINSTRATION EDUCATION /
HUMAN RESOURCE MANAGEMENT PROGRAM
Contact: 09955870420 / 09107045559

35
 DEPARTMENT OF BUSINESS ADMINSTRATION EDUCATION /
HUMAN RESOURCE MANAGEMENT PROGRAM
Contact: 09955870420 / 09107045559

ASSIGNMENT EXERCISE 3 – Gantt Chart (20 points)

Instruction: Create 2 Gantt Charts using the data below

Answer:

36
 DEPARTMENT OF BUSINESS ADMINSTRATION EDUCATION /
HUMAN RESOURCE MANAGEMENT PROGRAM
Contact: 09955870420 / 09107045559

In a Nutshell
Knowing Project Management is essential as anybody can be a project manager in a
company. In this portion, you will be required to state your arguments or synthesis
relevant to the topics presented. I will supply the first two items and you will continue the
rest.
1. Differentiating Project to non-project must be done to effectively do the job well.
2. In making a Gantt Chart, labeling the time of completion must be written inside the cell
not in the borderline in order for shading to be clear and concise.
Your Turn

3. ______________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

4. ______________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

Q&A LIST.
In this section, students may list down all emerging questions or issues to help you in
your review of concepts and essential knowledge. Answers will be specifically discussed
in the scheduled video conferencing.
Do you have any Questions or clarifications?
Questions/Issues Answers

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1.

2.

KEYWORDS INDEX.

Project Management Work Breakdown Program Evaluation Project Controlling

Structure Review Technique
Gantt Charts Project Organization Project Scheduling Project Planning
Big Picture B in Focus: ULOb.
b. Rationalize the concept of Network Techniques: PERT/CPM.

Metalanguage
In this unit, you will learn how to use PERT/CPM technique in managing both small and
large projects. Controlling Project is done by several teams which works as one. Time,
cost, and performance were monitored by this team aligned in the set plan of the project.
When troubles are detected, immediate corrective action are considered which includes
plan revision, reallocation of budget, change in personnel, and many others. The decision
to shift or change the original plan must be made realistic by the project team.
1. Project closing is concerned with formally ending a project.
2. Project crashing. Shortening the network of operation to reduce the period on the
critical path, thereby decreasing overall completion time.
3. Program Evaluation Review Technique. A technique for project management
which have three estimates of time for each task. Consider precedence
relationships and interdependencies.
4. Activity on node (AON). A network diagram designating activities by nodes.
5. Activity on arrow (AOA). A network diagram designating activities by arrows.

Essential Knowledge

To perform the aforesaid big picture (unit learning outcomes) for the next three weeks of
the course, you need to fully understand the following essential knowledge relating to the
techniques used in Project Controlling. Please note that you are not limited to exclusively
refer to these resources. Thus, you are expected to utilize other books, research articles
and other resources that are available in the university’s library e.g. ebrary,
search.proquest.com etc.

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1. Project Management Techniques: PERT and CPM. The former was formulated
in the year 1950s that serve as aid to several managers in scheduling, monitoring,
and controlling huge and complicated project. The latter was developed first in the
year 1957 as a tool formulated by J.E Kelly of Remington and M.R. Walker of
DuPont for chemical plants. Autonomously, PERT was developed in 1958 by Booz,
Allen & Hamilton for the U.S. Navy, for Polaris missile.
1.1 Program Evaluation Review Technique. A technique for project
management which have three estimates of time for each task. Consider
precedence relationships and interdependencies.
1.2 Critical Path Method. A technique for project management that requires only
one-single factor per task.
1.3 Critical Path. The longest time path (s) over a network computed.
2. The Framework of PERT and CPM. PERT and CPM both follow six basic steps:
● Identifying of the project details and formulation of WBS;
● Identification of its precedence relationship;
● Illustrating the previous step by making a diagram;
● Identification of time estimates per activity;
● Identifying of the different path most especially the critical path, the longest
time path through the network; and
● Utilization of the network for planning, scheduling, and
monitoring/controlling the entire project.
3. Questions PERT & CPM Can Answer.
● The Expected Project Completion time;
● Critical activities and noncritical activities;
● Specific date of completion of the project;
● Project Status if behind, or ahead schedule;
● Project Cost monitoring if it is equal, lesser than or greater than the budget;
● Availability of Resources to finish the project;
● If project will be shorten how much will be incurred in addition and what is
the least time a project can be finished.
4. Network Diagrams and Approaches. Project Network can be done in two ways:
Activity on node (AON) and Activity on arrow (AOA). To differentiate, in AON
nodes represents the activities while in AOA arrows represents the activities. Thus,
the nodes in AON have no time nor resources. For easy understanding, we will
use the AON as our official approach in doing the PERT diagram:
4.1 Activity on node (AON). A network diagram designating activities by nodes.
4.2 Activity on arrow (AOA). A network diagram designating activities by arrows.
4.3 Illustrated below are examples of AON and AOA illustration that helps you
differentiate both approach.

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4.4 Note that in illustration (e) and (f) below under AOA approach provides a
dummy activity (see broken arrow) just to clarify relationships.

4.5 Dummy activity. This is an activity added that don’t possess any time and
resources but used for the purpose of maintaining the logic of the network. In
AON, two dummies are required most especially if the project has multiple star
and end activities. In AON, it is portrayed using a broken/dashed arrow.
5. Activity-on-node Example. Notice below that to make the diagram it is important
to identify the immediate predecessors for each activity.

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PROBLEM ► Milwaukee Paper Processing, Inc., headquartered near downtown Milwaukee,

has long endeavored to escape the costs of building air pollution control systems at its facility.
Recently, the US Environmental Protection Agency (EPA) has given him 16 weeks to install a
complex system to filter the air. Milwaukee Paper received the warning that it will have to close
its factory unless it installs a complex system to filter the air Joni Steinberg, administrator of the
plant, wants to make sure that the installation of the filtration system goes smoothly and ends on
time.
APPROACH ► Milwaukee Paper has identified the eight activities that must be completed to
complete the project with the time required for each activity in weeks. These appear in the table
below.

5.1 In the sample above, dashed line means having no predecessor (refer to
Activity A and B). So, it means that both can start simultaneously and are
connected to a dummy Start. Dummy Start is necessary in making PERT in
order to clarify the beginning of the project, this actually do not exist since it’s
a dummy. The start activity serves as the predecessor of A and B since both
doesn’t have any.

5.2 Next, as based on the table, activity C succeed activity A. Thus, C must be
connected to A by drawing an arrow and node. As for activity D since it has
two predecessors A and B arrows must be created from both predecessors
and must be connected to activity D.

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5.3 Repeat the process, adding arrow from the predecessor of the activity
connecting it to the activity (its successor). Displayed below is the finished
AON project network of Milwaukee Paper Manufacturing.

6. Variability in Activity Times. In computing the estimated completion for every

activity handling three-time estimate let the project manager to safely gauge the
variation in finishing each of it. CPM implies that we have a set period of time for
every activity and that there is no variation in the operation times.
6.1 Three Time Estimates. In PERT, the 3-time estimate was used in probability
distribution:
● Optimistic time (a) – If everything goes according to schedule. This is
the optimal completion period for operation that could be obtained in a
PERT network.
● Pessimistic time (b) – Considering circumstances which are rather
adverse. This is the "worst" period of operation that a PERT network
might predict.
● Most likely time (m) – most realistic estimate. This is the most probable
period to perform an operation inside a more reasonable approximation
of a PERT network.
6.2 To compute the expected time per activity we used the formula:

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6.3 Assign Time and Cost Estimates, using the formula above, we have:

6.4 Determining the Project Schedule. After computing the estimated activity
completion considering the three time estimates, this is now the time estimates
for Milwauke Paper Manufacturing.

6.5 Although the total time (weeks) when added equals to 25 weeks it does not
entail that it can be completed in 25 weeks in general. Remember that there
are activities that simultaneously started, unless the relationship is linear the
project completion time is always lesser than the added time (in weeks).
6.6 Project Schedule Determination. When you already computed the expected
time completion per activity you are now ready to identify the total project
computation using the forward pass and backward pass.
6.6.1 Note of the parts inside the Nodes. The Earliest time estimates are on
the upper part labeled as ES and EF. The latest time estimates are at
the bottom part labeled as LS and LF. Please refer to the image below:

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6.6.2 Two-pass process were used in computing to evaluate certain time

schedules for each operation this comprises of a forward pass and a
backward pass. During the forward pass the early start and end times
(ES and EF) are calculated. By computing this, you will be able to
identify the project completion time of the entire project. The latest times,
(LS and LF) are identified in the backward pass.
6.6.3 This is the illustration of the PERT networks with activities containing the
activity symbol and activity duration in the Milwaukee Paper
Manufacturing.

6.6.4 Forward Pass/Earliest Start Time Rule. This section assumes that all
antecedents are accomplished accounting the earliest time that an
activity can start. Immediate predecessors should be accomplished
before starting the succeeding activity. Please take note of the rule in
computing forward pass:
● ES = EF for activities with only one predecessor;
● For multiple predecessors, ES is the maximum of all EF values of
its predecessors. That is:
ES = Max (EF of all immediate predecessor)

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6.6.5 Earliest Finish Rule. This is the earliest time that an activity can be
finished. EF is the sum of the ES and activity duration/Expected
completion of the activity. That is,
EF = ES + Activity duration
6.6.6 Shown below is an illustration for the computation using the Earliest
Start time Rule. As you can see, the last EF of an activity is the number
of weeks this project can be completed. In this case, Milwaukee Paper
Manufacturing project will be completed within 15 weeks and not 25
weeks since there are activities that will start simultaneously. In the
case that there are two or more ending activities, the highest
number shall be the ETC.

6.6.7 Backward Pass/Latest Finish Time Rule. Opposite with how to

compute using forward pass, backward pass starts with the ending
activities. The latest finish time rule is again based on the assumption
that all its immediate predecessors must be completed before an
operation can begin. Do note of the following:
● For ending activity/activities LF is/are equal to the Project
completion time of the project;
● LF is equal to the LS of its successor for single activity;
● For multiple successors, LF is equal to the minimum of the LS
activities that immediately follows it. That is:
LF = Min (LS of all immediate following activities)
6.6.8 Latest Start Time rule. To compute the latest start, please refer to the
formula below:
LS = LF – Activity Time

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6.6.9 Shown below is the complete computation using the forward pass and
backward pass as based on the formula given.

7. Calculating the slack time and identifying the critical Path (s). At this point,
you are now ready to identify which activity or path are critical and which is not.
Completing this activity is crucial as it is the basis for Crashing the project.
7.1 After performing the two-pass computation for the entire activity, it is time
now to calculate the slack time for each activity.
7.2 Slack Time. It applies to the permitted period to postpone an operation without
stopping the whole project. Both formula below will arrive with same answer:
Slack = LS – ES or Slack = LF – EF

7.3 Activities with 0 slack (A, C, E, G, and H) are called critical activities which
means the project manager must closely monitor it since it does not allow any
delay in the activities. Example, if activity A’s completion time is 2 weeks it

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must be finished on or before 2 weeks because if it lapsed, the entire project

will be affected, thus delaying it.
7.4 Activity B, D, and F are called non-critical activities since their slack time is
more than 0. Meaning, such activities can be delayed at its allowable time
(refer to the slack time). For example, activity F has slack of 6 meaning, it is
allowed to be delayed by 6 weeks without delaying the entire project. However,
if an adjacent activity has a slack time, delaying the two activities at the same
time is not allowed, this is what we called Total slack.
7.5 Total Slack. Refers to the total slack both adjacent activity can be delayed.
Refers to the total slack both adjacent activity can be delayed. Suppose activity
B is postponed by 1 week, and now has an EF of 4. This indicates activity D
currently has an ES of 4, and an EF of 8. Notice that these are the values for
LS and LF, respectively. That is, activity D will not have a slack period now,
either. Essentially, the 1-week slack that activities B and D had is exchanged
with them for that direction. Delaying any activity by one week allows not only
the activity to sacrifice its slack but also the other activity. Usually they
exchange complete slackness as two or more non-critical events occur
successively in a pathway.
7.6 Critical Path Analysis. In the result above, we can now identify several paths
that are present in this network. To identify the path, just follow the arrows from
starting to ending activities and to identify the weeks of completion per paths,
just add the activity duration, you may refer below:
● A-C-F-H = 9 weeks
● A-C-E-G-H = 15 weeks
● A-D-G-H = 13 weeks
● B-D-G-H = 14 weeks
7.6.1 Referring to path A-C-E-G-H, it is called as the critical path because it
is a continuous path across a network of projects that:
● Begins at the first activity of the project;
● Ends at the last activity in the project;
● All slack under this path is 0;
● It is the longest path through the network;
● The critical path is the shortest time in which the project can be
completed; and
● Any delay in critical path activities delays the project.
7.6.2 To reiterate, for non-critical paths which has activities with slack time,
delaying such non-critical activities will not delay the entire project. For
example, in path A-C-F-H, noticed that activity F has 6 weeks’ allowable
delay. Thus, if activity F will be delayed, it does not affect the completion
of the entire project because if:

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A-C-F-H = 9 weeks + 6 weeks (delayed) = 15 weeks

7.6.3 For Total slack, noticed that path B-D-G-H has 14 weeks of completion.
Activity B and D has 1 slack time each which is called total slack. Since
the non-critical activities appear simultaneously delaying both will delay
the entire project. Thus, only one week delay will be allowed for either B
or D:
B-D-G-H = 14 weeks + 1 week (activity B-delayed) = 15 weeks
or
B-D-G-H = 14 weeks + 1 week (activity D-delayed) = 15 weeks
8. Probability of Project Completion. CPM aids the project manager to identify the
expected project completion time of Milwaukee Paper Manufacturing which is 15
weeks. But, Joni Steinberg considers that for each time estimate variation occurs
for each activity. This variation can affect the entire completion of the critical path
which can possibly the cause of the delay of the project.
8.1 The method below was used to calculate the variance per task completion
period:
Variance = [(b – a)/6]2

Note: Can you understand that there's more variance than in others? Notice
how the optimistic and pessimistic period stretches.

8.2 PERT takes note of the variance in critical path activities to better assess the
total project variation. The project variance is determined by summing up
variances of critical activities along the critical path (see A-C-E-G-H).

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Thus referring to the critical activities:

Project variance = 0.11 (A) + 0.11 (C) + 1.00 (E) + 1.78 (G) + 0.11 (H) = 3.11

Then compute for Project standard Deviation using the formula below:

Management also has an estimation not only of the project's projected

completion time but also of the standard deviation from that forecast.
8.3 PERT sets forth two more assumptions:
● Maximum delivery periods for the project meet standard distribution of
probability; and
● The periods of operation are statistically independent.
Using such premises, the usual bell-shaped curve shown below can be used
to reflect dates of completion of a project. This normal curve indicates a 50
percent probability that the delivery period of the manufacturer's project would
be less than 15 weeks, and a 50 percent risk that it will reach 15 weeks.

8.4 This is an opportunity to study your statistical skills and using a standard
distribution table This is an opportunity to evaluate your statistical skills and
use a normal distribution table (Appendix 1: Normal Curve Areas of the book
of Heizer and Render, 2011)

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Joni Steinberg would like to find out the possibility that her proposal would be finished on or before the
EPA 16-week deadline.
APPROACH ► To do so, she needs to determine the appropriate area under the normal curve.
This is the area to the left of the 16th week.
SOLUTION ►

Where Z is the number of

standard deviations, the
targeted date or value shall be
the mean or anticipated value

In the Normal Table in Appendix 1, the Z value of 0.57 to the right of the mean shows a chance
of 0.7157. Therefore, as seen below, there is a 71.57 percent likelihood that the pollution control
equipment will be placed in operation in 16 weeks or less.

8.5 What Project Management Has Provided So Far:

● The project’s completion time (expected) is 15 weeks;
● The computed percentage or chances to complete the project is 71.57%;
● The following are the activities under critical path (A, C, E, G, and H); and
● Non-critical activities includes activities B, D, F.
8.6 Project closing is concerned with formally ending a project. This contains
final touches of the entire work, termination of contracts, bills payment,
discussion and turnover of the finished project to the client/owner, and

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reassignment of the personnel and equipment used in the entire project. It is

vital to end the project with proper documentation because this can be used
as guide of the future similar project. Usual project closing ended in the ribbon
cutting activity which also signify the start of usage of the project output by its
owner/client. Managing project is demanding and needs passion, it also needs
large amount of investment and meticulous choose of talents and quality
inputs to fight challenges.
9. Cost–Time Trade-Offs and Project Crashing. Usually, several challenges will
be encountered in project management:
● Projects are behind schedule; and
● The deadline for delivery is pushed on
9.1 Either situation requires the project manager to fast track the remaining
activities by the new desired deadline. Cutting the date of completion is called
project crashing.
9.2 Project crashing. Shortening the network of operation to reduce the period
on the critical path, thereby decreasing overall completion time. In project
crashing, identifying the cheapest activity to be shortened is the wisest thing
to do.
9.3 Factors to Consider When Crashing a Project. There are some factors that
needs to be considered when crashing a project and these are:
● The cheapest amount of an activity to be crashed shall be considered;
● Total Crash time should be monitored; and
● The total cost of crashing should be as small as possible.
9.4 Steps in Project Crashing. Crashing a project involves these steps:
1. Compute the crash cost per time period. If crash costs are linear over time:

CPM is a method that has a normal or typical duration for any operation
that we use in our computations. The average expense of the operation is
correlated with the particular duration. Another time in project
management, though, is the crash time, which is described as the shortest
time frame possible to complete an operation. The crash cost of the
operation is correlated with the crash time. We will typically shorten an
operation by introducing additional services (equipment, personnel etc.) to
it. Therefore, it is reasonable for an activity's crash cost to be greater than
its usual cost. The consequence for the Overall Crash Period (the time
required to shorten a project) and the Crash Cost per week of Milwaukee
Paper Manufacturing is seen in the next figure:

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2. Using current activity times, find the critical path and identify the critical
activities
3. If there is only one critical path, then choose the activity that (a) may still
crash on this critical path, and (b) have the lowest crash cost per period.
This activity shall be crashed for one period.

When there is more than one critical path, then choose one activity from
each critical path such that (a) each chosen activity will always crash and
(b) the smallest of all selected activities is the overall crash cost per period.
Each operation crashes by one period. Notice that there could be more
than one critical path common to the same activity.
4. Update all activity times. If her desired due dates has been reached, stop.
If not, return to Step 2.
PROBLEM► Suppose Milwaukee Paper Manufacturing was only granted 13 weeks (rather than
16 weeks) to build the latest pollution control equipment or risk a court-ordered closure. If you know,
the critical path for Joni Steinberg was 15 weeks long, but she still needs to finish the project in 13
weeks ' time.

APPROACH► To reach this due date of 13 weeks Steinberg has to decide which activities to
crash, and by how much. Steinberg is obviously involved in speeding up the project by 2 weeks, at
least at an added expense.

SOLUTION► The normal and crash times of the company, and the normal and crash costs, is
displayed in the following table. Remember, for example, that the average period of operation B is
3 weeks (the approximation used in the critical path calculation), and its crash time is 1 week. It
implies activity B will be reduced for up to two weeks if extra services are made available. The
expense of these additional services is $4,000 (= difference between the cost of crashing and the
normal cost). If we conclude that the crash cost is constant over time (the cost is the same per
week), the crash cost of Activity B is $2,000 a week (= $4,000/2).

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Step 2, 3, and 4 can now be applied to reduce Milwaukee Paper’s project completion time at a
minimum cost.

The current critical path (using normal times)

is Start A-C-E-G-H, where Start is just a dummy activity beginning from. Activity A has the lowest
crash cost per week of $750, among such critical activities. Therefore, Joni Steinberg will crash
activity A by 1 week to minimize the delivery period of the project to 14 weeks. The cost is an
additional 750$. Note the Activity A can no longer be crashed further since it reached is crash limit
to 1 week.

The original Start A-C-E-G-H path at this point remains critical, with a completion period of 14
weeks. However, with a completion period of 14 weeks, a new path Start B-D-G-H is critical now
too. On all critical paths, however, further crashing must be achieved.

We need to identify one activity on each of these critical pathways which could still be crashed. We
do would like to crash the least of the overall cost of crashing an activity on any path. We may be
tempted to simply pick the activities with the lowest crash cost per cycle for each path. When we
do so we should pick activity C from path one and activity D from path two. Therefore, the overall
risk of the crash will be $2000 (= $1,000+$1,000).

But we spot activity G being common to both paths. This is, we'll concurrently raising the completion
period of all paths by crashing activity G. While the $1,500 crash risk for activity G is greater than
that for operation C and D; we will also choose to crash G, because the overall expense of crashing
would still be just $1500 (compared to $2,000 if we crash C and D).

INSIGHT► Steinberg would crash activity A by 1 week, and activity G by 1 week to crash the project
to 13 weeks. The net total expense is $2,250 (= $750 + $1,500). It is significant, as often project
contracts provide incentives or fines for early or late completion.

9.5 Advantages of PERT/CPM:

● Helps in assessing complex projects;
● Just uses basic mathematical operation;
● Easy to understand due to illustration of graphical networks;
● Performing critical path and calculating slack time can help identify
activities to focus on;
● The details of the project and the illustrations show who is responsible for
the specific activities;
● Applicable for a wide variety of projects; and
● Effective for tracking not only plans but also prices.
9.6 Limitations of PERT/CPM:

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● WBS formulation must be specifically identified and carefully analyzed to

check interdependencies of relationship for each activity;
● Precedence relationships must be specified and networked together;
● Experts may over or under estimate expected time of completion per
activity;
● There is an inherent danger of too much; and
● Emphasis being placed on the longest, or critical, path.

Self-Help: You can also refer to the sources below to help you
further understand the lesson:

* Heizer, J. and Render, B. (2011). Principles of Operations management. 10th edition.

Upper Saddle River, NJ: Prentice Hall, pp 95-114.

* Schroeder, R. G., Goldstein, S. M. and Rungtusanatham, M. J. (2017). Operations

management in the supply chain: decisions and cases. 7TH edition. New York, NY:
McGraw-Hill Education, pp 263-285.

Let’s Check
Now that you rationalize the concept of PERT and CPM, let’s try these simple exercises.
ASSIGNMENT EXERCISE 4. Create two AON networks based on the two given problem
(17 points):

Answer:

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No. 1

No. 2

ASSIGNMENT EXERCISE. 5 Create an AON network and perform forward pass and
backward pass. Answer the Questions below:

Answer:

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Questions:
a. What is the Project completion minutes? ___________________

b. Identify the critical activities: ______________

c. Identify the non-critical activities: ______________

d. Identify the critical path: ___________________

Let’s Analyze
QUIZ EXERCISE 5. Let us raise the bar by answering the given problem below: 41
points

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Answer:

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In a Nutshell

Now that you understand the workings of PERT and CPM, you are ready to master
dealing with projects soon in your career. PERT and CPM is an essential knowledge to
possess on being an effective project manager. In this unit, you will be required to state
your arguments or synthesis relevant to the topics presented. I will supply the first two
items and you will continue the rest.

1. In crashing project, you must be wise to choose the activity with the least additional
cost that can be incurred. Always be mindful with the total crash time and as to what
path you’ll have to crash (must be in critical path).

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2. When to stop crashing? If there is no activity left to crash in at least one critical path
because continuing will not anymore lessen the time of completion.
Your Turn

3. ______________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

4. ______________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

Q&A LIST.
In this section, students may list down all emerging questions or issues to help you in
your review of concepts and essential knowledge. Answers will be specifically discussed
in the scheduled video conferencing.
Do you have any Questions or clarifications?
Questions/Issues Answers
1.

2.

KEYWORDS INDEX.

Program Evaluation Critical Path Method Probability of Project Completion

Review Technique Completion
Z-Table Activity-on-nodes Activity-on-arrow Dummy activity
Expected Time of Project Variance Project Standard Variances
Completion Deviation
Slack Total Slack Project Crashing Crash Cost
Normal Cost Crash Time Normal Time Optimistic Time
Pessimistic Time Most Likely Time Forward Pass Backward Pass
Earliest Start Earliest Finish Latest Start Latest Finish

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Big Picture C

Week 6 - 7: Unit Learning Outcomes (ULO): At the end of the unit, you are expected to

a. Rationalize the concept and importance of Forecasting;

b. Rationalize the three decision making environments and illustrate a decision tree; and

Big Picture C in Focus: ULOa.

a. Rationalize the concept and importance of Forecasting

Metalanguage

In this section, the most essential terms relevant to the study of forecasting and to
demonstrate ULOa was operationally defined and discussed in the essential knowledge
to establish a common frame of reference as to how the texts work in your chosen field
or career. In business firms, managers are all interested to forecast future sales by
predicting future demands. In the past, forecasting has been difficult since the lack of
system entails manual thinking on how to do it, some may even base it on different factors
like movement of the animals but due to the advancement of technology life has been
better and advantageous to the business firms. A lot of choices are available in
forecasting, some do the simple and others prefer the complex method. Statistical
tools/methods have been very helpful in analyzing extensive data nowadays.

1. Forecasting. Process of predicting a future event.

2. Short-range forecast. A forecast plan that last for 1 year but usually done in 3
months.
3. Medium-range forecast. This category ranges from 3 months to 3 years. This time
forecast is useful for annual planning and other major plans.
4. Long-range forecast. This ranges from 3 years to 5 years or more depending on the
firm.
5. Economic forecasts. Address business cycle by predicting inflation rate, money
supply, housing starts, etc.;
6. Technological forecasts. Predict rate of technological progress which can result in the
birth of exciting new products, requiring new plants and equipment; and
7. Demand forecasts. Projection of demand for a company’s products or services.
8. Qualitative Forecasts. This forecast includes the use of expertise and experiences
from renowned experts in the company or outside the company.
9. Quantitative Methods. Forecasts that employ mathematically modeling to forecast
demand.

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Essential Knowledge

To perform the aforesaid big picture (unit learning outcomes) for the last two weeks of the
course, you need to fully understand the following essential knowledge that will be laid
down in the succeeding pages. Please note that you are not limited to exclusively refer to
these resources. Thus, you are expected to utilize other books, research articles and
other resources that are available in the university’s library e.g. ebrary,
search.proquest.com etc.

1. Forecasting. Process of predicting a future event. Its result was used as the major
basis for all business-related matters such as but not limited to Human Resource,
Operations and Productions, and Capacity and Lay out.

Forecasting offers Walt Disney a strategic edge. In Disney, forecasting was very
helpful in assessing some crucial business operations like predicting queueing lines
for rides, opening the park early for peak season, identifying when to let cartoon
characters to parade to divert attention of the customers instead of being impatient for
long lines for rides. “Managing demand” is where Disney is good at, they have several
techniques applied to address issues and this was formulated out of the forecasting
that the park managers do every day. Their habit is to conduct daily attendance,
weather forecast, and seasonal assessment of seat sales and vacations in order to
prepare them especially on peak season. Few cast members were working during
slow days. In general, Forecasting is a major key why Disney maintain its popularity
all over the world, all that they do provides customer satisfaction to tourist that is why
it’s considered as the “happiest place on earth”.
2. Forecasting Time Horizons. There are three categories of time horizon that
businesses should consider in making a forecast:
2.1 Short-range forecast. A forecast plan that last for 1 year but usually done in 3
months. This is very important for managers to do this short-range forecast since
it aids them in deciding matters in purchasing, planning, human resource
management and others.
2.2 Medium-range forecast. This category ranges from 3 months to 3 years. This
time forecast is useful for annual planning and other major plans.
2.3 Long-range forecast. This ranges from 3 years to 5 years or more depending on
the firm. Usually this is done first since planning usually starts with the Big Picture.
This is used in strategic planning, Project Management, Business Expansion and
more. It is used in planning for new products, capital expenditures, facility location
or expansion, and research and development.
3. Types of Forecasts. There are three major types of Operation’s planning:
1.1 Economic forecasts. Address business cycle by predicting inflation rate, money
supply, housing starts, etc.;

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1.2 Technological forecasts. Predict rate of technological progress which can result
in the birth of exciting new products, requiring new plants and equipment; and
1.3 Demand forecasts. Projection of demand for a company’s products or services.
These forecast is also called sales forecasts, drive a company’s production,
capacity, and scheduling systems and serve as inputs to financial, marketing,
and personnel planning.
2. Strategic Importance of Forecasting. Forecasting is indeed crucial in business
firms, because applying this makes you one step ahead from your rival competitor.
Forecast outcome drives major decisions in different unit/department that is why it’s
crucial.
3. Seven Steps in Forecasting. Forecasting follows seven basic steps.
● Identify the main use of forecasting;
● Choose the specific items that needs to be forecasted;
● Identify what time horizon to be considered in forecasting;
● Select your chosen forecasting model (s);
● Conduct data gathering in forecasting;
● Do the forecast; and
● Check, validate and implement results
4. Forecasting Approaches. Just like when you are conducting research, forecasting
has 2 approaches, these are:
4.1 Qualitative Forecasts. This forecast includes the use of expertise and
experiences from renowned experts in the company or outside the company.
Their intuition, and wisdom has been seen as relevant especially when there is
unclear or little historical data. Qualitative forecast also has four different
techniques:
4.1.1 Jury of executive opinion. Selected high-level experts were asked
convene to do the analysis by using different statistical models. This
technique needs cooperation and collaboration since it requires working
together. Two heads are better than one yes, however combining
intellectual persons in one room is indeed a challenge due to problems
like “Group think” the tendency to eradicate someone who does not
conform with the idea of the majority.
4.1.2 Delphi method. This technique is Panel of experts, queried iteratively.
This process goes on and on until agreement will be reached. Made up of
three groups of participants: decision makers (evaluate feedback and
decision-making), staff (administer survey) and respondents (people who
can make important judgments).
4.1.3 Sales force composite. To forecast using this technique, estimates was
anchored from the individual salesperson to aggregated, meaning from
micro to macro context. The individual salesperson forecast their sales

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combined from local to national level. However, Sales representatives

might overly forecast it to make it sound positive to the top level.
4.1.4 Market Survey. Ask the customer about purchasing plans. Just like
conducting research, this is useful for various management planning. The
result of the survey can then be utilized for analysis in product
improvement and others.
4.2 Quantitative Methods. Forecasts that employ mathematically modeling to
forecast demand. When company operation is ‘stable’ and extensive historical
data exist Quantitative Methods is best to use. This includes variety of
mathematical techniques.
4.2.1 There are five quantitative forecasting methods, but only three will be
discussed in this unit, all of which use historical data. This method
assumes that history affects the future, no other factors was considered
just basing on the values.
4.2.2 Time-Series Components. A time series is based on an equally distributed
sequential data (weekly, monthly, quarterly, and so on). The decomposition of
time series is seen below:

4.2.2.1 Trend Component. Persistent, overall upward or downward

pattern. Changes due to population, technology, age, culture, etc.
Typically, several years’ duration.
4.2.2.2 Seasonal Component. Regular pattern of up and down
fluctuations due to weather, customs, etc. Occurs within a single
year.

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4.2.2.3 Cyclical Component. Repeating up and down movements.

Affected by business cycle, political, and economic factors and
has multiple years’ duration. Often causal or
associative relationships.
4.2.2.4 Random Component. Has an erratic, unsystematic, ‘residual’
fluctuations due to random variation or unforeseen events. It has
short duration and is nonrepeating.
4.2.3 Naive Approach. This approach exemplifies that previous demand equates to
future demand period. For instance, If March sales were 70,000 then April sales
will also be 70,000. This is good when operation and other factors are stable,
and this is also good for small and starting businesses.
4.2.4 Moving Average Method. Moving Averages are a series of arithmetic
measures used where there are limited or constant conditions or there is no
pattern present. Used often for smoothing, which gives cumulative data
interpretation over time. The method below was used to calculate the moving
average:

Moving average =
 demand in previous n periods
n

Example: Donna's Garden Supply needs a 3-month moving average outlook,

plus a shed revenue prediction for next January.

4.2.4.1 Weighted Moving Average. This is utilized if trend, and pattern are
present, if there is an unstable operational process WMA is bet to
use than the first two techniques. In this, immediate past data were
treated more that the older data. The experts are the ones who will
identify the appropriate weights based on his/her judgements of
course with analysis of why they choose it.

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Example: Donna’s Garden Supply wants to forecast storage shed sales by

weighting the past 3 months, with more weight given to recent data to make
them more significant.

4.2.5 Potential Problems with Moving Average. Increasing n smooths the

prediction but allows it less prone to changes. Does not well predict patterns
and needs comprehensive historical details.
4.2.6 Exponential Smoothing. A weighted moving average forecasting technique
in which an exponential function weights data points. Weights decline steadily,
with most current data weighted higher. Needs smoothing constant (α) varying
from 0.05 to .50 for business applications where the expert subjectively selects.
It entails little documentation of past records. The method for processing data
is seen below:

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Example: A car dealer predicted 142 Ford Mustangs in February. The current
demand in February was of 153 cars. The dealer needs to estimate March demand
using the exponential smoothing model using a smoothing constant selected by
management, α = .20.

Predicted demand = 142 Ford Mustangs

Actual demand = 153
Smoothing constant a = .20
Thus,

4.2.7 Effect of Smoothing Constants. The smoothing constant usually varies

from.05 to.50. Older values become less important as it rises. Thus, where
underlying average is expected to shift, choose high α values Prefer low α
values where underlying average is constant. The impact of smoothing
constant on the data as used is seen below:

4.2.8 Common Measures of Error. We cannot guarantee a 100 percent assurance

for all our forecast that is why margin of errors were considered. However, to
guide us in the future, measuring errors can be of great help. We do the
calculation by choosing the model that gives us the least forecast errors by
using the formula below:

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4.2.8.1 Mean Absolute Deviation (MAD). A calculation of a model 's

overall prediction error. We use the formula below for solving the
MAD:

MAD =
 Actual - Forecast
n

Example: The Port of Baltimore has discharged huge quantities of

grain from ships over the past 8 years. The activity manager at the
port needs to check the usage of exponential smoothing and see
how well the method performs in unladed tonnage estimation. He
predicts the first quarter's unloaded grain estimate was 175 tons.
Two α-values will be examined: α = .10 and .50

Compare the actual data with the data we forecast (using each of
the two α values) and then find the absolute deviation and MAD.

Then,

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4.2.8.2 Mean Squared Error (MSE). The average of the squared

differences between the forecasted and observed values. In solving
MSE we used the formula below:
 (Forecast errors)
2

MSE =
n

The operations manager for the Port of Baltimore now wants to

compute the MSE with same data in the previous example. Below
is the computation for .10 smoothing constant. Try to compute for
the .50 smoothing constant.

4.2.8.3 Mean Absolute Percent Error (MAPE). The measure of the total
difference between the projection and the actual values, calculated
as a percentage of the actual values. To measure MAPE follow the
following formulation:
n

100 Actual i − Forecasti / Actual i

MAPE = i =1
n
The Port of Baltimore wants now to calculate the MAPE when α =
.10 with same data in the previous example. Below is the
computation for .10 smoothing constant. Try to compute for the .50
smoothing constant.

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4.2.8.4 Comparison of Forecast Error. As you can see, all of the three
Forecast Error Measurement arrived with same conclusion that the
using α = .10 is better than using the α = .50 due to its lesser error.
It is also important to note that in selecting smoothing constant the
underlying previous data should be the basis. To reiterate, choose
high values of α when underlying average is likely to change Choose
low values of α when underlying average is stable.

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Self-Help: You can also refer to the sources below to help you
further understand the lesson:

* Heizer, J. and Render, B. (2011). Principles of Operations management. 10th edition.

Upper Saddle River, NJ: Prentice Hall, pp 133-148.

* Schroeder, R. G., Goldstein, S. M. and Rungtusanatham, M. J. (2017). Operations

management in the supply chain: decisions and cases. 7TH edition. New York, NY:
McGraw-Hill Education, pp 186-197.

Let’s Check

RESEARCH EXERCISE 2. Provide your own discussion in the blank spaces. Cite and
give References following the APA format latest edition (10 points).
Note: Answer will be rated according to this points: Answer= 6 pts, References = 4 pts.
1. Give examples of an international industry in which demand forecasting is dependent
on the demand for other products. Elaborate.
Answer:
______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

References

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Let’s Analyze

QUIZ EXERCISE 6. Answer the problem in the space provided.

Volkswagen 's iconic Beetle sales have risen steadily over the past 5 years at Car
dealerships in Nevada (see table below). In 2004 the sales manager had estimated that
revenue in 2005 would amount to 410 VW. Use exponential weight smoothing of α = .30,
develop forecast for year 2006-2010 and compute for MAD, MSE, and MAPE:
Year Sales Forecast
2005 450 410
2006 495
2007 518
2008 563
2009 584
2010 ?

Answer:

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In a Nutshell

The importance of rationalizing Forecasting is vital. In this portion, you will be required to
state your arguments or synthesis relevant to the topics presented. I will supply the first
two items and you will continue the rest.

1. Predictions are never accurate, and unexpected external conditions will affect the
prediction.
2. Product family and aggregated forecasts are more accurate than individual product
forecasts. Same goes with short and medium-range forecast because of its possibility
to be affected by uncontrollable factors (political, environmental, technological etc).
3. All forecasting error measurement arrives with same analysis, it’s up to you what
option to choose. But, the Mean Absolute Percentage Error gives a more thorough
result since it is presented in percentage. The lowest and highest error is clearly
identified unlike the other two measures who gives you an infinite number of errors.

Your Turn

4.____________________________________________________________________

______________________________________________________________________

5.____________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Q&A LIST.
In this section, students may list down all emerging questions or issues to help you in
your review of concepts and essential knowledge. Specific discussion on questions
will be tackled on the scheduled video conferencing.
Do you have any Questions or clarifications?
Questions/Issues Answers
1.

2.

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3.

KEYWORDS INDEX.

Forecasting Naïve Approach Moving Average Market Survey

Weighted moving Exponential Smoothing Constant Jury of Executive
Average Smoothing Opinion
Delphi Method Economic Forecasts Sales force Composite Technological
Forecasts
Demand Forecast Time-series Model Pattern Trend

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Big Picture C in Focus: ULOb.

b. Rationalize the three decision making environments and
illustrate a decision tree;
Metalanguage
For you to discuss ULOb, you will need to have an idea of the concept on Decision
process in Operations. Operations Manager are not just guessing in their decisions, they
need to have basis and good at decision making by using models appropriate for it.
Identifying the exact tools is subjective to the personality of the decision maker however
the success and failure of both parties lies on the quality of their decisions. There are
several decision making environment and we must consider each of it making decision
under: uncertainty, risk and certainty.

1. Decision Tables. A tabular way of evaluating alternatives to actions and their state
of nature.
2. Maximax. This criterion was used to identify the best of all the best alternatives
considering the best-case scenario.
3. Maximin. Considering the worst-case scenario, this criterion selects options of the
best among the worst outcome.
4. Equally likely. If decision-makers are uncertain but still wants a safer decision, this
criterion was usually used.
5. Expected monetary value (EMV). The expected payout or value of a variable that
has different possible state of nature, each with an associated probability.
6. Expected value of perfect information (EVPI). The difference between the payoff
under perfect information and the payoff under risk.
7. Decision Tree. A graphical way of evaluating alternatives to judgment and
environment conditions.

Essential Knowledge
Before we proceed further with the topic, it is highly important that we rationalize
discussion on Decision Making Environments then illustrate it in a Decision Tree.
1. Decision Tables. A tabular way of evaluating alternatives to actions and their state
of nature. Tables of decision place reasoning on decision making.
1.1 Shown below is Getz Product decision table, portrayed are the alternatives,
pay-offs for the different states of nature. In each alternative, 2 states of
nature were considered and a conditional value were identified to check the
consequences or outcome of such decision.

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Example ► Getz products now wishes to organize the following information

into a table. With a favorable market, a large facility will give Getz Products a
net profit of $200,000. If the market is unfavorable, a $180,000 net loss will
occur. A small plant will result in a net profit of $100,000 in a favorable market,
but a net loss of $20,000will be encountered if the market is unfavorable.

1.2 Types of Decision-Making Environments. The quality of decisions made are

of course dependent on the input they have and the current scenario they are in.
That is why a three decision-making environments were checked:
1.2.1 Decision making under uncertainty. When there is complete
uncertainty as to which state of nature in a decision environment may
occur, we rely on three decision methods. But in the end, as to which is
the best criterion to use among this three are dependent on your
personality:
1.2.1.1 Maximax. This criterion was used to identify the best of all the
best alternatives considering the best-case scenario. This
criterion chooses the highest possible gain. This criterion was
usually used by optimistic decision makers.
1.2.1.2 Maximin. Considering the worst-case scenario, this criterion
selects options of the best among the worst outcome. In short,
the alternative with the least possible loss or no loss at all was
chosen. This is commonly used by pessimistic decision makers.
1.2.1.3 Equally likely. If decision-makers are uncertain but still wants
a safer decision, this criterion was usually used. The highest
average value of the states of nature were considered.
Assumes each state of nature is equally likely to occur.
1.2.1.4 Shown below is an example on how decision making under
uncertainty was used in decision making. As presented,
Maximax choice is to construct a large plant. Maximin choice is
to do nothing. Equally likely choice is to construct a small plant.
As you see, only the Equally likely has a computation in which
you’ll just have to get its row average.

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1.2.2 Decision Making Under Risk. If probabilities are known as to what states
of nature will likely to occur, then solving the Expected monetary value
(EMV) per alternatives is the best way to decide under risk. Probabilities
are identified by the expert who analyzes the current situation or the states
of nature, probability must all sum up to 1 or 100.
1.2.2.1 Expected monetary value (EMV). The expected payout or
value of a variable that has different possible state of nature,
each with an associated probability. To compute EMV, we use
the formula below:

Example► Getz Product’s Operation manager believes that the

probability of a favorable market is exactly the same as that of an
unfavorable market, that is, each state of nature has a .50 chance of
occurring. He can now determine EMV for each alternative.

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1.2.3 Decision Making Under Certainty. If the data/information is certain to be

given by an expert or consultant solving the Expected Value of Perfect
Information (EVPI) is a need. However, the problem now is the worth of
the perfect information that they’ll give us. Going back to Getz Products
sample, the manager of the project has been approached by a marketing
research company which proposes to help him determine whether to build
the plant to manufacture storage sheds. The marketing firm is positive that
they can provide certain data using technical analysis. In other terms,
Getz 's climate should change from one under-risk decision-making to one
decision-making under certainty. For the details the communications
consulting agency will bill Getz $65,000. Will the business employ the
operation manager? And if the research data were absolutely correct, is it
worth $65,000? Given the fact that they can give you a logical analysis
for such decision, the willingness to spend for such information is the
question now. This environment will enable us to check whether the
charge of $65,000 is worth it given the perfect information.
1.2.3.1 Expected value of perfect information (EVPI). The
difference between the payoff under perfect information and
the payoff under risk. Mathematically expressed in:

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To find EVPI, we must first compute the expected value with

perfect information (EVwPI).
1.2.3.1.1 Expected value with perfect information (EVwPI).
The expected (average) return if perfect information is
available. To calculate this value, we choose the best
alternative for each state of nature and multiply its payoff
times the probability of occurrence of that state of nature.
Mathematically:

Example:

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1.2.4 Decision Tree. A graphical way of evaluating alternatives to judgment and

environment conditions. EMV is the most commonly employed standard for an
interpretation of the decision tree.
1.2.4.1 The Decision Process in Operations. Analyzing problems with
decision trees involves five steps:
1. Problem identification;
2. Plan and illustrate it to the decision tree;
3. Identify probabilities to the states of nature;
4. Approximate pay-offs for each alternatives considering the
different states of nature; and
5. Compute for the EMV for each alternative starting from right
to left for each state-of-nature.
1.2.4.2 Fundamentals of making a Decision Tree. In making a decision
tree it is very vital to check the basic terms and nodes in formulating
it. You may refer below:

Using the Getz Product problem as exampled in the decision making

under risk portion, we have:

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Note: The short parallel lines indicate the branch "prune,"

because it is less attractive than another alternative
available which can be discarded.

1.2.4.2.1 Complex Decision Tree. When a series of choices needs

to be made, decision trees are much more efficient tools
than decision tables. Not to elaborate, below is an
example of a complex decision tree used in Getz Products
considering many alternatives and state of nature.

Self-Help: You can also refer to the sources below to help you
further understand the lesson:

* Goetsch, D. L. and Davis, S. B. (2016). Quality Management for organizational

excellence: Introduction to Total Quality Management. 8th edition. Pearson
Education, Inc., River Street, Hoboken, New Jersey 07030, 272-278.
* Heizer, J. and Render, B. (2011). Principles of Operations management. 10th edition.
Upper Saddle River, NJ: Prentice Hall, pp 700-711.

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Let’s Check

ASSIGNMENT EXERCISE 6. Identify the term described in every items. Place it in the
blank space provided.
____________________1. This means an occurrence or a situation over which the
decision maker has little or no control.
____________________2. The first step in making a decision Tree is to assign
probabilities to the states of nature.
____________________3. This is the difference between the payoff under certainty and
the payoff under risk.
____________________4. The course of action or strategy that may be chosen by the
decision maker.
____________________5. The expected (average) return if perfect information is
available.
____________________6. A tabular means of analyzing decision alternatives and state
of nature. Decision tables force logic into decision-making.
____________________7. A criterion that finds an alternative that maximizes the
maximum outcomes.
____________________8. A graphical means of analyzing decision alternatives and
states of nature. EMV is the most commonly used criterion
for decision tree analysis.
____________________9. A criterion that assigns equal probability to each state of
nature.
____________________10. The expected payout or value of a variable that has different
possible state of nature, each with an associated probability.
ASSIGNMENT EXERCISE 7. Enumerate the following:
1. Decision Making Environments: ________________________________,

________________________________, and ___________________________.

2. Decision Methods under uncertainty: ________________________________,

________________________________, and ___________________________.

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3. Decision Process in Operations:

● __________________________________________________________

● __________________________________________________________

● __________________________________________________________

● __________________________________________________________

● __________________________________________________________

Let’s Analyze

QUIZ EXERCISE 7. Solve the problem below and write your answer in the blank space
provided.
PROBLEM► T.S.T. Amer's Nevada stores have a 100-day season. T.S.T. The
probability of specific store traffic, based on historical reports of skiing conditions as seen
in the table below, has been created. T.S.T. Have 4 merchandising strategies, each
targeting a common brand name. Each plan yields a net income for each day as described
in the chart. He also has a meteorologist friend, who for a small fee will accurately tell
tomorrow’s weather so T.S. can implement one of his four merchandising plans. Answer
the requirements below:

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Answer:
a) Develop a decision tree that illustrates all the information in the table.

b) What is the Expected Monetary value – EMV (Show solution below)?

EMV A1 EMV A2

EMV A3 EMV A3

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c) What is the Expected value with perfect information (EVwPI)?

d) What is the Expected Value of Perfect information (EVPI)?

e) Given the table above determine the appropriate decision under uncertainty
using Maximax, Maximin, and Equally Likely. Present it in a table:

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In a Nutshell

The importance of rationalizing decision-making environment using table and tree is vital.
In this portion of the unit, you will be required to state your arguments or synthesis relevant
to the topics presented. I will supply the first two items and you will continue the rest.

1. Using decision making under uncertainty highly relies on the kind of personality the
decision maker have. For instance, if the decision maker is optimistic then he/she will
decide using Maximax. If he/she is pessimistic, he/she will use Maximin. Lastly, if the
person wants to be safe then Most likely would be his/her option.
2. “Doing Nothing” option should not be considered at all times. One must check the
situation you are in. Example, since we are experiencing a pandemic right now,
Schools and Universities must not consider “Doing Nothing” option regarding the
resumption of class just because vaccine is not yet available. Educational Institutions
must venture on flexible learning instruction to continue educating students.

Your Turn

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3.____________________________________________________________________

______________________________________________________________________

4.____________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Q&A LIST.
In this section, students may list down all emerging questions or issues to help you in
your review of concepts and essential knowledge. Specific discussion on questions
will be tackled on the scheduled video conferencing.
Do you have any Questions or clarifications?
Questions/Issues Answers
1.

2.

3.

KEYWORDS INDEX.

Expected Value with Decision Tree Decision Table Alternatives

Perfect Information
State of nature Maximax Maximin Equally Likely
Expected Value of Expected Monetary Prune Payoff
Perfect Information Value

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Big Picture D

Week 8 - 9: Unit Learning Outcomes (ULO): At the end of the unit, you are expected to
a. Discuss the Total Quality Management’s concept, tools, gurus, and the art of good
housekeeping as used in international business.

Big Picture D in Focus: ULOa.

a. the Total Quality Management’s concept, tools, gurus, and the art
of good housekeeping as used in international business.

Metalanguage

In this section, the most essential terms relevant to the study of Total Quality Management
and to demonstrate ULOc was operationally defined and discussed in the essential
knowledge to establish a common frame of reference as to how the texts work in your
chosen field or career. The total quality concept has been accepted at US in the late
1980s and early 1990s. Yet, many statistical tools emerged such as the Six Sigma, Lean,
teamwork, continual improvement, customer satisfaction, and employee involvement that
aids business firm in the journey to total quality management. With this, combining the

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different elements and statistical tools leads to the birth of the total quality concept. This
topic gives you a general concept about total quality management.
1. Total Quality Management. An all-inclusive and well thought-out means to
organizational management that searches to advance the quality of processes,
products, services and culture through continuing minor changes in reply to constant
feedback.
2. Cost of Quality. A tool that enables a corporation to determine the extent at which its
resources are used for activities that prevent bad quality, that evaluate the quality of
the goods or services of the enterprise, and that benefit from internal and external
failures.
3. THE 5S. This is a method used in good housekeeping that aims to organize offices,
rooms, warehouse and other workstation to achieve efficiency in the company
workflow.
Essential Knowledge

To perform the aforesaid big picture (unit learning outcomes) for the last two weeks of the
course, you need to fully understand the following essential knowledge that will be laid
down in the succeeding pages. Please note that you are not limited to exclusively refer to
these resources. Thus, you are expected to utilize other books, research articles and
other resources that are available in the university’s library e.g. ebrary,
search.proquest.com etc.

1. What is Quality. We have to consider quality first in order to grasp overall output.
Quality has been described by a variety of different entities and organizations in
several different forms. Find the Definitions below:
● Performance that meets or exceeds expectations.
● Performance that meets the customer’s needs.
● Consistently meeting customer needs and expectations.
● Satisfying the customer today and getting better tomorrow.
1.1 Customers that are into businesses will define quality very clearly using
specifications, standards, and other measures. This makes the point that
quality can be defined and measured. Although few consumers could define
quality if asked, all know it when they see it. This makes the critical point that
quality is in the eye of the beholder. With this we can conclude that the definition
of quality lies in the wants of the customers.
1.2 Quality issues are dealt with people every day like eating in restaurants, buying
groceries, shopping for clothes, purchasing appliances, furniture and others.
Quality Perception is a key factor in which customers are classified in the
market. In purchasing something, criteria were usually set by the customers
and assessment began whether to buy it or not. If criteria were met, then quality
is determined.

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1.3 One way of recognizing quality as a consumer-drive definition is to take the

example of restaurant dining. How do you assess restaurant quality? The bulk
of people present these requirements as:
● Service
● Response time
● Food preparation
● Environment or atmosphere
● Price
● Selection
This example gets at one aspect of quality—the results aspect. Does the
product or service meet or exceed customer expectations? This is a critical
aspect of quality, but it is not the only one. Total quality is a much broader
concept that encompasses not just the results aspect but also the quality of
people and the quality of processes.
2. Total Quality Management. An all-inclusive and well thought-out means to
organizational management that searches to advance the quality of processes,
products, services and culture through continuing minor changes in reply to
constant feedback. Moreover, it is a business approach that aims to improve the
organization 's productivity by continually enhancing the efficiency of its goods,
facilities, employees, procedures and environments.
3. Three Legged Stool of Total Quality of Management. Let us now discussed the
three-legged stool which is customer-focused to easily understand the concept of
total quality. This ensures that the consumer as the primary arbiter on what is
appropriate in terms of pricing is in the "driver's seat" for total quality. Each of the
three legs is a specific feature of the philosophy of total quality (i.e. quantities,
individuals, and processes). The stool's "tests" leg makes the argument that it will
and will measure quality. The stool's "men" leg makes the argument that a good
or service cannot be checked for price. Instead, people who are motivated to do
their work the best way will invest in it. The stool's "processes" leg refers to
processes having to be changed, constantly and indefinitely. Where now is
deemed outstanding will be just average tomorrow. And "good enough" is rarely
sufficient enough.

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4. Importance of Total Quality Management. Quality is used to quickly improve the

growth of the organization by better implementation and alignment. Customer’s
voice promotes the development of the product and services. This can give the
business firm a competitive edge over its rival. “No quality, no sales. No sales, no
profit. No profit, no jobs.” –VP of the United Auto Workers.
5. Six Different Perspectives of Quality. Every individual has different perception
of Quality, below are the different perspective on what quality is:
● Transcendent Perspective: means excellence, meeting beyond
expectations;
● Product Perspective: quantities of product attributes, the more features it
offers the more it’s perceived as quality;
● User Perspective: fitness for intended use means if the product is usable
to the customer.
● Value Perspective: quality vs. price, the price of the product is worth the
price.
● Manufacturing Perspective: conformance to specifications, specs are
functional.
6. Types of Quality
● Quality of Design. Based on market research;
● Quality of Conformance. Meeting the standards or user based
characteristics defined in the design phase after the product is
manufactured. Defect detection, Detect root cause analysis and defect
prevention.
● Quality of Performance. How sound the product functions or service
performs when put to use.

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7. Cost of Quality. A tool that enables a corporation to determine the extent at which
its resources are used for activities that prevent bad quality, that evaluate the
quality of the goods or services of the enterprise, and that benefit from internal and
external failures. Below is a diagram which summarizes the various quality costs.

7.1 Prevention Cost. This cost was incurred to prevent future cost that will be
incurred. Few examples include processes, conduct seminars and training,
Regular inspection, etc.;
7.2 Appraisal Cost. This is also called as inspection costs. These cost are
incurred during the manufacturing process, this is done to avoid defects and
post-purchase service from its customers to ensure high performance product.
Usually a sample per batch produced was inspected based on its specification
and criteria set, if approved then that batch will then be shipped to the
customers;
7.3 Internal failure costs. As a result of inspection some defects were identified
beforehand, these costs incurred for such defective product are known as
internal failure costs. Examples of internal failure costs include cost of rework,
rejected products, scrap etc;
7.4 External failure costs. It is normal for customer to return the product due to
some defects. This activity is part of the post-purchase services of the firm.
However, this is not good to a company since it is part of the external failure
cost in which the company already had incur such cost. External costs of
failure cover replacements, substitutions, lack of revenue due to bad
reputation, liability for losses arising from the usage of faulty goods etc. Default
product shipments will annoy consumers, destroy reputation and may reduce
sales and profits.
8. Elements of TQM:

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4.1 Ethics. A combination of written and unwritten codes of principles that govern
decisions and actions within a company.
4.2 Integrity. Consistency of actions, values, methods, measures, principles,
expectations and outcomes at workplace. TQM does not work in an
environment where employees criticize and backstab each other.
4.3 Trust. Builds cooperative environment. Relationship based on reliance.
9. Benefits of TQM. TQM creates a good corporate culture, better reviews from the
customer, and better performance from employees.
10. Gurus of TQM. The concept of TQM was created due to the individual contribution
of concepts by the different quality guru. It is a combination of interrelated concepts
that aims to formulate a complex approach in doing business. There are three
quality gurus who are considered as the pioneers in developing the concept of total
quality management these are: W. Edwards Deming, Joseph M. Juran, and Philip
B. Crosby. Aside from them notable gurus were also acknowledged and these are:
Armand V. Feigenbaum and a number of Japanese experts, such as Kaoro
Ishikawa.
10.1 W. Edwards Deming. Known as the father of Quality Control. Has been
honored by naming the highest award of quality in Japan known as the Deming
Prize. Known for its contributions of the following: 14 Points, Deming Chain
Reaction, Theory of Profound Knowledge, PDSA (Deming Cycle) as shown
below. Through a distinct phrase he does not define quality and emphasized
that the roles of top management to be the pioneer through evolving processes
and structures are quite significant. He stresses the importance of identifying
and measuring customer requirements, establishing manufacturer
relationships, leveraging functional teams to identify and solve quality issues,
enhancing employee expertise, employee participation, and implementing
continuous improvement.

10.1.1 DEMING’S 14 POINT METHODOLOGY

1. Constancy of purpose

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2. The new philosophy

3. Cease dependence on inspection
4. End lowest tender contracts
5. Improve every process
6. Institute training on the job
7. Institute leadership
8. Drive out fear
9. Breakdown Barriers
10. Eliminate exhortations
11. Eliminate arbitrary numerical targets (numerical quotas)
12. Permit pride of workmanship
13. Encourage Education
14. Top management’s commitment

10.1.2 DEMING’S 7 Deadly Diseases

1. Lack of purpose in developing goods and services that have a market
that is adequate to hold the organization in operation and provide
jobs;
2. Short-term profit stress; short-term analysis motivated by
apprehension of unfriendly efforts to take control, and demand from
bankers and shareholders to raise dividends;
3. Personal management review systems by goals with no tools or
services given to meet objectives; requires performance reviews,
quality ranking and annual assessments;
4. Job-hopping by managers;
5. sing just clear evidence and knowledge in decision-making, with little
to no understanding about what is uncertain to unclear;
6. Extreme medical costs; and
7. So much risks and obligations on the part of attorneys working on
contingency services.
10.2 Philip B. Crosby. He wrote the book Quality is free in 1979. He Established
the absolutes of quality management, the only performance standard is zero
defects and the basic elements of improvement. To him, “Mistakes are
caused by two factors: lack of knowledge and lack of attention”. Education
and training will remove the first cause, while the second is cured by a
sincere dedication to success (zero flaws) while attention to detail.
10.2.1 Four Absolutes of Quality
● The definition – Quality is conformance to requirements, not
goodness.
● The system – Prevention, not appraisal
● The performance standard – Zero defects

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● The measurement – The price of non-conformance to

requirements, not quality circles.
10.2.2 14 Step Methodology
1. Management commitment
2. Quality improvement Team
3. Quality Measurement
4. Cost of Quality
5. Quality awareness
6. Corrective action
7. Zero defects planning
8. Supervisor training
9. Zero defects day
10. Goal setting
11. Error-cause removal
12. Recognition
13. Quality Councils
14. Do it over again
10.3 Joseph Juran. Assisted the Japanese in their reconstruction processes
after WWII. He is the editor of the Quality Control Handbook (1951).
Popularized the Quality Trilogies: Quality planning, Quality control & Quality
improvement. For him, Quality control must be essential part of
management, quality is no mistakes, quality must be planned, there are no
shortcuts to quality, and make use of problems as sources of improvement.
The formula in getting it are the following:
● Create an awareness about the need and purpose an opportunity
for improvement;
● Set goals for improvements;
● Systematize paths to attain the goals (begin a quality council,
identify problems, choose projects, assign teams, delegate
facilitators and so on);
● Give training;
● Do projects to resolve problems;
● Inform progress;
● Provide recognition;
● Communicate outcome
● Keep score; and
● Uphold thrust by making yearly improvements component of the
regular systems and processes of the company.
10.3.1 Quality Trilogies

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● Quality Planning includes defining the requirements, needs

and desires of the client, recommending goods and services,
establishing targets, preparation, project management,
monitoring, identification and dissemination of outcomes and
changes in systems;
● Quality Control Concerns the creation of standards, the
recognition of measures and their processes, the comparing of
findings with existing requirements and the development of
discrepancies and the action taken toward discrepancies; and
● Quality improvement. This includes the usage of formal
annual improvement projects and plans, the need for change,
the coordination of initiatives, the recognition of triggers, the
procurement and testing of solutions and the establishment of
checks to insure that the improvements achieved are sustained.
10.3.2 In his view, the approach to managing for quality consists of:
● The irregular problem is detected and acted upon by the
process of quality control;
● The constant problem needs a special process, namely, quality
improvement; and
● Such constant problems are traceable to a poor quality planning
process.
10.4 Walter A. Shewhart. “Grandfather of Quality Control” (20th century)
1891-1967 University of Illinois. Moved to California wed and get his
doctoral degree in physics. Member of the group “American Society for
Quality Control”. He mentored Juran & Deming and is known for using
Control Charts. He developed the Shewhart cycle: PDCA cycle. His work
created the foundation for statistical process control measures used
today.
10.5 Dr. Armand Feigenbaum (1922). Popularized several concept such as
the Total Quality Control-Principles, Practice and Administration (1961),
Company-wide Quality Control (Japanese version). He was the one to first
classify costs (prevention, Appraisal, Internal & External costs) and
provided the Steps to Quality: Quality Leadership, Modern Quality
Technology & Organizational commitment.
10.5.1 Ten points on TQM
1. Quality is consciousness programmed not only a technical
function;
2. Quality is not what an engineer or marketer says but it is that
what the customer speaks of;
3. Quality and cost are a sum, not differences;

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4. Quality must be organized to identify everybody’s job in the

organization;
5. Quality is a technique of managing an organization. Good mgt.
means continuous stress on the quality
6. The quality improvement highlighting must take place through
all activities of the organization;
7. Quality is realized through assistance and contribution of each
and every person related to the organization. It is also an ethic;
8. Continuous quality improvement needs extensive range of new
and existing quality technology of information applications;
9. Total quality program approach leads to productivity and is most
effective and less capital intensive; and
10. Quality comes, if it is clear, customer oriented, effective and
structured.
10.6 Kaoro Ishikawa. Born in July 13, 1915 and died on April 16 1989. Known
as the father of Quality circles (1960). Popularized the Cause & effect
diagram/Ishikawa diagram/Fishbone diagram. For him Quality is
“development, design, production and service of a product that is most
efficient, most helpful, and constantly acceptable to the consumer”. The
first guru to accentuate the importance of the internal customer, the next
person in the production process. He emphasizes on quality as a way of
management, development of participative, bottom-up view of quality.
10.6.1 7 basic tool that is indispensable for quality control:
1. Process flow chart
2. Check sheet
3. Histrogram
4. Pareto Chart
5. Cause & Effect diagram
6. Scatter diagram
7. Control Chart
10.6.2 Elements to Quality management
● Quality starts with education and culminates with
education;
● The 1st step in quality is to know the customer’s
requirements;
● The perfect state of quality control happens when
inspection is no longer compulsory;
● Take out the root cause, not the symptoms;
● Quality control is the duty of all workers and all divisions;
● Do not mistake means with the objectives;

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● Set quality first and set your sights on long-term profits;

● Market is the entry and way out of quality;
● Top management must not demonstrate annoyance when
facts are presented by subordinates;
● 99% of problems in a company can be resolved with easy
tools for analysis and problem-solving.
10.6.3 Six Fundamental principles
1. Quality first
2. Customer orientation
3. Your customer
4. Using facts & data to make presentations
5. Humanity (philosophy) & full participatory mgt.
6. Cross-functional mgt.
11. THE 5S. This is a method used in good housekeeping that aims to organize offices,
rooms, warehouse and other workstation to achieve efficiency in the company
workflow. Simple to talk about but in reality this is one of the hardest method in TQM
since it requires a habit of letting go of unnecessary things and keeping what is
important. For us Filipinos, this is hard since we usually practice to keep things as
memoirs. 5S promotes:
● Foolproof systems
● Standard policies, rules and regulations
● Healthy work culture at the organization
● Reduces waste and nonvalue activity
● Worker’s morale increase
● Customer perception on company products improve
● Organizational efficiency increased
● Lesser waste and better quality
● Faster lead times

11.1 Benefits of implementing 5S.

● Improved profitability

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● More efficient workforce

● Better service
● Safer workplace
11.2 SEIREI (SORT). This means the identification of items that is still valuable to the
company. Only necessary ones are kept for continued use which means that
unnecessary ones should be disposed or kept in storage out in the office. This
process lead to fewer hazards and less clutter that might interfere with productive
work. Label the items as “Necessary”, “Critical”, “Most important”, “Not needed
Now”, “Useless” and so on.
11.2.1 Consequences of Not Practicing Sorting
1. The unnecessary messes the place and the necessary are hard to find;
2. Every place can only contain so much.
3. Mess sometimes causes misidentification.
11.2.2 Steps in Sorting.
1. Do a Red tagging activity, label all unneeded items with conspicuous red
tags.
2. Store the needed items in the following storage sites:
✔ Ready-access storage (needed in 1-6 months)
✔ Remote storage (needed in more than 6 months)
3. Discard/dispose the red-tagged (unnecessary items).
4. Discard remote storage items by the box load at the end of the storage
period.

11.3 SET IN ORDER (SEITON). Refers to straightening and orderliness. After

sorting, the next step is to arrange the necessary things in an effective and

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efficient manner by using the principles of ergonomics. The focus is on efficient

and effective storage methods and the requirement for a tidy workplace. Also
known as “demarcation and labeling of place”.
11.3.1 In the case of items which have been processed as needed, they must
be stored in the appropriate position to ensure quick and rapid retrieval.
Orderliness goals may involve any of the following:
● SPACES – Floors, walkways, operation areas, walls, shelves,
warehouses;
● PRODUCTS – raw materials, procured parts for machinery, in-
process inventory, assembly parts, semi-finished products, finished
products;
● EQUIPMENT – machines, tools, jigs, gauges, carts, conveyance
tools, work tables, cabinets, chars
11.3.2 Visual Methods of Orderliness
● The Signboard Strategy – indicate where, what, and how many
necessary items go where, to make the facility more orderly.
Specific places – “where things go”. Specific items – “what things”.
Specific amounts – “how many things”;
● The Painting Strategy – That involves separating the walking
areas of the warehouse (walkways) from its job areas (operational
areas) using some of the following: dividing lines, door lines,
product markings, carts, job tables and tiger signs (yellow & black
colored lines).

11.3.3 Consequences of not Practicing Setting in Order

● Things are rarely obtainable when needed;
● Items are misplaced in stores;
● Items that are defectives and good ones get mixed up;
● Accidents or near-accidents take place due to mess;
● Visual control of the shop floor is not feasible;
● At times, production is lost because an item necessary is available
but cannot be seen; and
● In some offices, important records may not be traceable. This can
lead to loss, and embarrassment.
11.4 SHINE (SEISO). Stands for sweeping and cleanliness. At the end of each shift,
a work area is cleaned up and everything is restored to its place. Maintaining
cleanliness should be a daily work not a special activity. It is the comprehensive
cleaning of the area tools, machines and other equipment to make certain that
everything is returned to a “nearly new” status. Follow up cleaning is

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compulsory in order to maintain this improvement. A “shining” work

environment will lead to great efficiency gains.
11.4.1 Phases of Shine
● Daily Cleanliness
● Determine cleanliness targets
● Determine cleanliness assignments
● Determine cleanliness methods and tools
● Implement cleanliness
● Cleanliness inspection
● Maintenance
11.5 STANDARDIZE (Seiketsu). Translate as “standards”. Standards refers to
making all the cleaning, control and improvement processes a customary
activity in the workplace, allowing for control and consistency. Standardize can
be interpreted as continuing to work on the first three 5S continually and every
day. Work practices should be consistent and standardized.
11.5.1 Consequences of not practicing Standardizing:
● Good health and safety need the practice of standardizing;
● Harmful chemicals, dusty chemicals, fumes and the likes can
make it an unsafe place to work in;
● Washing thoroughly and cleaning a place makes the workplace
enjoyable; and
● Personal hygiene is indispensable for healthy workplace.
11.6 SUSTAIN (Shitsuke). Shitsuke, means maintaining the process to retain long-
term kaizen goals and to retaining and reviewing standards. Sustaining
requires the practice of establishing clear and systematic processes, and
implementing them. This stage is explained by illustration, because it is not the
individual worker but the manager / owner himself who is eventually liable for
any 5S backsliding.
11.6.1 Consequences of not practicing Standardizing:
● If standardizing is not practiced, then the first 4-S would
backslide;
● Lack of standards will affect all activities related to safety and
quality;
11.6.2 The manager/owner of the business may employ the following
measures:
● The CEO shall assume full accountability for the introduction and
execution of 5S.
● Discuss the 5S's before everybody understands it. Emphasize that
5S is the path to sustainability for the business because of its
realistic approach to reducing waste and creating savings.

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● Promote business-wide engagement, including but not limited to:

5S Poster making contest, 5S badge making contest, 5S logo
contest, 5S Ideas contest, 5S Day, 5S Work Client plant walk, and
5S snapshots.
● Render management tasks and orderliness as visible as
practicable. When red-tagging and creating signboards, be vigilant,
diligent, fast and ruthless.
● Manage the aversion of people to 5S: offer opportunities at any
moment. Offer diligent reviews, and accept them. Be respectful. Be
nice. Right now and slack-off on 5S parameters. Stick to hands-on
strategy, here-and-now. Eventually, improvement requires
commitment and passion.

Self-Help: You can also refer to the sources below to help you
further understand the lesson:

* Goetsch, D. L. and Davis, S. B. (2016). Quality Management for organizational

excellence: Introduction to Total Quality Management. 8th edition. Pearson
Education, Inc., River Street, Hoboken, New Jersey 07030, 1-12.
* Heizer, J. and Render, B. (2011). Principles of Operations management. 10th edition.
Upper Saddle River, NJ: Prentice Hall, pp 219-238.

Let’s Check

QUIZ EXERCISE 8. Identify the terms being described. Provide answer in the blank
spaces.
Set in order.
________________1. The process of taking the required items that are remaining after
the removal of clutter and arranging them in an efficient manner
Kaoro through the use of ergonomic principles.
________________2. He is known as the father of Quality circles (1960). Popularized the
Cause & effect diagram/Fishbone diagram.
Shine
________________3. Refers to making all the cleaning, control and improvement
processes a customary activity in the workplace, allowing for
Total quality control and consistency.
Management
________________4. is an approach to doing business that attempts to maximize the
competitiveness of an organization through the continual
improvement of the quality of its products, services, people,
processes, and environments.
Deming
________________5. He is known as the father of Quality Control.

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Ethics
________________6. A combination of written and unwritten codes of principles that
Integrity govern decisions and actions within a company.
________________7. Consistency of actions, values, methods, measures, principles,
expectations and outcomes at workplace. TQM does not work in
an environment where employees criticize and backstab each
Trust other.
________________8. Builds cooperative environment. Relationship based on reliance.
________________9. The costs incurred to avoid or minimize the number of defects at
Preventi first place.
on cost
________________10. A method that permits an organization to decide on the level to
which its resources are used for activities that avoid poor quality,
Cost that assess the quality of the organization’s products or services,
quality and that result from internal and external failures.

Let’s Analyze

RESEARCH EXERCISE 3. Search for answers in the questions below (References is

required). You should also provide your own analysis in the blank spaces. This activity
will be rated according to the rubrics below:
Note: Answer will be rated as follows: Answer = 5 points each; References = 5 points
1. Why is a single definition of TQM not enough?

Answer:
______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________

2. How does Quality support the achievement of competitive advantage?

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Answer________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

3. Why is service quality especially important in today’s business environment?

Answer________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

References

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In a Nutshell

The importance of rationalizing Total Quality management is vital. In this unit, you will be
required to state your arguments or synthesis relevant to the topics presented. I will
supply the first item and you will continue the rest.

1. Unless quality is internalized at the personal level, it will never become rooted in the
culture of an organization. Thus, quality must begin at a personal level (and that means
you!).

Your Turn

2.____________________________________________________________________

______________________________________________________________________

3.____________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

4.____________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Q&A LIST.
In this section, students may list down all emerging questions or issues to help you in
your review of concepts and essential knowledge. Specific discussion on questions
will be tackled on the scheduled video conferencing.
Do you have any Questions or clarifications?
Questions/Issues Answers
1.

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2.

3.

KEYWORDS INDEX.

Quality Total Quality Costs of Quality Gurus of TQM

Management
5S W. Edwards Demming Prevention Costs Appraisal Cost

COURSE SCHEDULES

Activity Date Where to submit

Virtual Class Orientation Week 1 via google meet
Video Conference (Big Picture A) Week 2-3 via google meet
Big Picture A: ULOa Activities Week 2 via Quipper.com
Big Picture A: ULOb Activities Week 3 via Quipper.com
1st Examination Week 3 via Quipper.com
Video Conference (Big Picture B) Week 4-5 via google meet
Big Picture B: ULOa Activities Week 4 via Quipper.com
Big Picture B: ULOb Activities Week 5 via Quipper.com
2nd Examination Week 5 via Quipper.com
Video Conference (Big Picture C) Week 6-7 via google meet
Big Picture C: ULOa Activities Week 6 via Quipper.com
Big Picture C: ULOb Activities Week 7 via Quipper.com
3RD Examination Week 7 via Quipper.com
Video Conference (Big Picture D) Week 8-9 via google meet
Big Picture D: ULOa Activities Week 8 via Quipper.com
Final Examination Week 9 via Quipper.com

Online Code of Conduct

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(1) All teachers/Course Facilitators and students are expected to abide by an honor
code of conduct, and thus everyone and all are exhorted to exercise self-
management and self-regulation.

(2) Faculty members are guided by utmost professional conduct as learning

facilitators in holding OBD and DED conduct. Any breach and violation shall be
dealt with properly under existing guidelines, specifically on social media
conduct (OPM 21.15) and personnel discipline (OPM 21.11).

(3) All students are likewise guided by professional conduct as learners in attending
OBD or DED courses. Any breach and violation shall be dealt with properly
under existing guidelines, specifically in Section 7 (Student Discipline) in the
Student Handbook.
(4) Professional conduct refers to the embodiment and exercise of the University’s
Core Values, specifically in the adherence to intellectual honesty and integrity;
academic excellence by giving due diligence in virtual class participation in all
lectures and activities, as well as fidelity in doing and submitting performance
tasks and assignments; personal discipline in complying with all deadlines; and
observance of data privacy.

(5) Plagiarism is a serious intellectual crime and shall be dealt with accordingly. The
University shall institute monitoring mechanisms online to detect and penalize
plagiarism.

(6) All borrowed materials uploaded by the teachers/Course Facilitators shall be

properly acknowledged and cited; the teachers/Course Facilitators shall be
professionally and personally responsible for all the materials uploaded in the
online classes or published in SIM/SDL manuals.

(7) Teachers/Course Facilitators shall devote time to handle OBD or DED courses
and shall honestly exercise due assessment of student performance.

(8) Teachers/Course Facilitators shall never engage in quarrels with students

online. While contentions intellectual discussions are allowed, the
teachers/Course Facilitators shall take the higher ground in facilitating and
moderating these discussions. Foul, lewd, vulgar and discriminatory languages
are absolutely prohibited.

(9) Students shall independently and honestly take examinations and do

assignments, unless collaboration is clearly required or permitted. Students

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shall not resort to dishonesty to improve the result of their assessments (e.g.
examinations, assignments).

(10) Students shall not allow anyone else to access their personal LMS
account. Students shall not post or share their answers, assignment or
examinations to others to further academic fraudulence online.

(11) By handling OBD or DED courses, teachers/Course Facilitators agree

and abide by all the provisions of the Online Code of Conduct, as well as all the
requirements and protocols in handling online courses.

(12) By enrolling in OBD or DED courses, students agree and abide by all the
provisions of the Online Code of Conduct, as well as all the requirements and
protocols in handling online courses.

Monitoring of OBD and DED

(1) The Deans, Asst. Deans, Discipline Chairs and Program Heads shall be
responsible in monitoring the conduct of their respective OBD classes through the
Blackboard LMS. The LMS monitoring protocols shall be followed, i.e. monitoring
of the conduct of Teacher Activities (Views and Posts) with generated utilization
graphs and data. Individual faculty PDF utilization reports shall be generated and
consolidated by program and by college.

(2) The Academic Affairs and Academic Planning & Services shall monitor the conduct
of LMS sessions. The Academic Vice Presidents and the Deans shall collaborate
to conduct virtual CETA by randomly joining LMS classes to check and review
online the status and interaction of the faculty and the students.

(3) For DED, the Deans and Program Heads shall come up with monitoring
instruments, taking into consideration how the programs go about the conduct of
DED classes. Consolidated reports shall be submitted to Academic Affairs for
endorsement to the Chief Operating Officer.

Course prepared by:

RAIZA MAE C. NARCISO, PhD

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Name of Course Facilitator/Faculty

Course reviewed by:

LUCELA B. REGIDOR, PhD

Assistant Dean

Approved by:

GINA FE G. ISRAEL, EdD

Name of Dean

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