Operations Management Course Outline

1. Introduction to Operations Management

2. Specifying an Operations Strategy
3. Product Design/ Service Design (and Process Design)
4. Managing for Quality and Total Quality Management (TQM)
5. Design Supply (Chain) Network and Logistics Systems
6. Operations Facility Location Strategy
7. Operations Capacity Planning and Capacity Management Strategies
8. Process Technologies and Process Types
9. Operations Facility Layout Design
10. Work System and Job Design, and Work Measurement
11. Sales and Operations Planning
12. Master Production Scheduling (MPS) and Material Requirements Planning
(MRP)
13. Inventory Management
14. Lean Management, JIT and Six Sigma Approaches
15. The Future of Operations Management

Chapter 1: Introduction to Operations Management (OM):.............................................. 1

Chapter 2: Operations Strategy........................................................................................ 4
Chapter 3 : Product Design/ Service Design (and Process Design).................................7
Chapter 4: Design Supply Chain (Network) and Logistics Systems for Operations....... 12
Chapter 5 : Managing for Quality and Total Quality Management (TQM).......................15
Chapter 6:Operations Facility Location Planning & Strategies....................................... 22
Chapter 7 :Operations Capacity Planning and Capacity Modification Strategies........... 25
Chapter 8 : Process Selection........................................................................................ 29
Chapter 9 : Operations Facility Layout Design............................................................... 32
Chapter 10 : Work System and Job Design, Work Method Analysis and Work
Measurement.................................................................................................................. 40
Chapter 11 : Production Scheduling and Material Requirements Planning (MRP).........43
 ● Value Creation: OM is essential
Chapter 1: Introduction to Operations for creating value by ensuring
Management (OM): goods or services are produced
efficiently and meet customer
1. What is Operations Management needs.
(OM)? ● Cost Management: It helps
businesses reduce costs,
● Definition:
improve quality, and optimize
Operations Management involves
productivity.
the design, operation, and
● Customer Satisfaction: Effective
improvement of the processes
OM ensures that products are
that transform inputs (materials,
delivered on time, in the right
information, customers) into
quantity, and meet quality
outputs (goods or services). It is
standards, leading to customer
a key function in any business
satisfaction.
focused on producing products or
services effectively and efficiently. 4. Key Contributions to OM
● Scope of OM:
OM covers the management of OM relies on several interdisciplinary
resources (human, materials, and fields for knowledge and methods,
technology) and the processes including:
that create products or services.
It includes activities in ● Industrial Engineering
manufacturing, production, and ● Physical Sciences
service delivery. ● Economics
● Statistics & Operational Research
2. Key Functions of OM ● Management
● Information Technology
OM is one of the three core functions of ● Analytics
a business, alongside:
5. Roles of Operations Managers
1. Product Development (R&D):
Focuses on designing new Operations Managers are responsible
products or improving existing for making decisions related to
ones. production and service delivery at
2. Marketing: Deals with promoting various levels within the organization:
and selling products or services.
3. Operations: Responsible for the ● Top-level Operations Managers:
actual creation and delivery of Make strategic decisions, such as
products or services. setting operations strategy and
introducing new technologies.
3. Importance of OM in Business

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 ● Middle-level Managers: Manage ● Finance: OM supports cost
resources, allocate capacity, and management and contributes to
oversee the implementation of financial performance.
strategies. ● HR: OM involves managing staff
● Lower-level Managers: Handle effectively for optimal
day-to-day activities like performance.
scheduling, quality control, and ● IT: OM uses technology to
managing staff. enhance operational efficiency.

6. Where OM Jobs Are Found 8. Emerging Responsibilities of OM

Operations Management plays a Modern OM faces new challenges, such

significant role in various areas, as:
including:
● Globalization: Managing
● Introducing new technologies and operations across different
methods. countries.
● Designing products and ● Supply Chain Management:
processes. Ensuring smooth integration of
● Managing operations strategies, suppliers and partners.
such as improving facility ● Sustainability: Managing
locations and optimizing space operations in an environmentally
utilization. responsible way.
● Ensuring high-quality standards ● Technology and Innovation:
and customer service. Adopting new technologies for
● Scheduling production, managing competitive advantage.
inventory, and planning ● Lean Operations: Reducing
resources. waste and improving efficiency.
● Enhancing productivity and ● Risk Management: Identifying
improving operational efficiency. and managing risks in operations.
● Change Management: Adapting
7. Relationship Between OM and Other to changes in the business
Functions environment.

OM is interdependent with other 9. The Transformation Process Model

business functions, like: (TPM)
● Marketing: OM helps ensure the OM can be understood through the
production of goods that meet Transformation Process Model, which
customer needs. identifies the operations as processes
that transform inputs into outputs (goods

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or services). The key components of this consumption. Examples include
model are: products like smartphones or
cars.
1. Inputs: Resources required for ● Services: Intangible, produced
production, including transformed and consumed simultaneously,
resources (materials, information, and harder to store or transport.
customers) and transforming Examples include healthcare,
resources (facilities, staff). education, or consulting.
2. Transformation Processes: The ● Hybrid Products: Many
processes that convert inputs into businesses offer a mix of goods
outputs, such as physical and services, such as restaurants
changes in manufacturing or (food and service) or hotels
services provided in healthcare. (accommodation and services).
3. Outputs: The final goods or
services delivered to customers.

10. Types of Transformation Processes 12. Why Study Operations

Management?
Transformation processes can vary by
industry and type of business: Understanding OM is essential because:

● Physical: As in manufacturing. 1. It is a core business function that

● Location: As in transportation influences organizational
(e.g., delivery services). success.
● Exchange: As in retail (buying 2. It explains how goods and
and selling products). services are produced and
● Storage: As in warehousing. delivered.
● Physiological: As in healthcare 3. OM is integral to understanding
services. how businesses create value for
● Psychological: As in customers and manage costs.
entertainment (e.g., movies, 4. OM decisions have a direct
events). impact on organizational
● Informational: As in efficiency, quality, and profitability.
telecommunication or data 5. A basic understanding of OM is
services. crucial for all managers, even
those outside the operations
function.

11. Goods vs. Services

● Goods: Tangible, can be stored,

and production occurs before

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Chapter 2: Operations Strategy

Operations vs. Operational

● Operations: Transformation
processes that create
products/services. They make
strategic impacts on business
performance.
● Operational: Day-to-day, detailed
aspects of operations, focusing
on immediate tasks rather than
long-term goals.
Key Concept: Operations Strategy (OS)
Key Concept: Strategy
Definition: An approach aligned with
Definition (Johnson et al., 2005): The business strategy that guides the
direction and scope of an organization operations function of a firm.
over the long term, aiming to fulfill
Purpose of OS:
stakeholder expectations by leveraging
resources in a changing environment. Design and manage operations to
support business strategy.
Strategies are formulated by top
management to achieve business or Ensure optimal use of resources.
functional objectives and performance
goals. Build competitive advantages and
satisfy customer demands.

Levels of Strategy

1. Corporate Strategy: Overall

direction of the organization.
2. Business Strategy: How the
organization competes in specific
markets.
3. Operations Strategy: How
operations resources and
processes support the business
strategy.

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The Four Perspectives on OS 1. Cost: Minimize costs to offer
competitive pricing.
1. Top-down Perspective: Aligns OS 2. Quality: Deliver high-quality or
with what the business wants differentiated products/services.
operations to achieve. 3. Speed: Deliver products/services
2. Bottom-up Perspective: Adapts quickly to meet customer
OS based on operational demands.
experiences. 4. Dependability: Consistently
3. Market Requirements deliver on time.
Perspective: Focuses on what 5. Flexibility: Adapt to changes in
the market demands from products, volumes, and customer
operations. needs.
4. Operations Resources
Perspective: Builds strategies Trade-Off:
based on the capabilities of Organizations cannot excel at all OPOs
operational resources. simultaneously. Prioritizing certain
objectives based on business goals is
essential.

Key Concepts: Order Qualifiers and

Order Winners

Order Qualifiers: Minimum standards

required to compete in the market.

Order Winners: Unique features that

differentiate a product/service, making it
superior to competitors.

Stages of OS Contribution

1. Internally Neutral (Stage 1):

Corrects the worst problems.
2. Externally Neutral (Stage 2):
Operations Performance Objectives Matches competitors by adopting
(OPOs) best practices.
3. Internally Supportive (Stage 3):
These are capabilities that enable the Links strategy with operations to
operations function to provide achieve excellence.
competitive advantages: 4. Externally Supportive (Stage 4):
Redefines industry standards and
provides a strategic advantage.

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Developing and Implementing OS Strategy and Improvement: Framework
for continuous performance
Steps to craft and implement OS enhancement.
effectively:

1. Identify market requirements and

success factors.
2. Assess the current operational
performance compared to
competitors.
3. Determine areas for
improvement.
4. Devise strategies to enhance
operations.
5. Implement the strategies with
alignment to business goals.

Assessing Operations Performance Characteristics of a Good OS

Operations performance is measured An effective operations strategy must

using: be:

1. Traditional Metrics: Productivity, ● Appropriate: Relevant to

efficiency, throughput, and costs. business goals and market
2. Business Performance Metrics: needs.
Response rate/time, sales ● Comprehensive: Inclusive of all
revenue, and profitability. necessary resources and
3. Triple Bottom Line (TBL): processes.
Evaluates performance based on ● Coherent: Logical and
People (social impact), Planet well-structured.
(environmental impact), and ● Consistent Over Time: Reliable
Profit (economic performance). and adaptable to changing
conditions.
Slack et al.’s Model of Operations
Management

Key elements include:

Environment: External factors impacting

operations.

Design, Planning, and Control: Core

operational activities.

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Chapter 3 : Product Design/ Service Definition:
Design (and Process Design) Process design determines the steps
and resources needed to produce a
Product and Service Design product or deliver a service, focusing on
sequencing tasks and assigning
Definition: responsibilities.
Product and service design involves
deciding on the specific features, Key Relationship Between Product and
characteristics, and processes required Process Design:
to deliver a company's offerings
effectively. 1. Interdependence: Product or
service design dictates the
Product Design (Manufacturing) required processes.
2. Flexibility: Processes should
Focuses on: accommodate changes for new
designs or innovations.
1. Appearance: Shape, color, size.
2. Materials: Selection based on
durability, cost, and usability.
3. Dimensions and Tolerances:
Precision measurements for
functionality and compatibility.
4. Performance Standards:
Ensuring the product meets
quality and operational
expectations.

Service Design (Operations)

Defines:

1. Physical Elements: Layout, tools,

and physical aspects of service
delivery.
2. Customer Experience: Aesthetic
Product Life Cycle
appeal, comfort, and emotional
impact. 1. Stages: From introduction to
3. Psychological Benefits: Usability, growth, maturity, and decline.
convenience, and satisfaction. Duration may vary from days to
decades.
Process Design

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 2. Role of Operations: Adapts A framework to convert customer
strategies and innovates to meet requirements into actionable design
demands at each stage. features.

Phases in the Product Development House of Quality Diagram includes:

Process
○ Customer Requirements:
1. Idea Generation: Brainstorm What customers want.
creative concepts. ○ Design Characteristics:
2. Feasibility Analysis: Assess Features meeting those
technical and financial viability. needs.
3. Product Specifications: Define ○ Competitive Assessment:
key features, materials, and Comparing with
functionality. competitors.
4. Process Specifications: Map the ○ Relationship Matrix: Links
steps required for production. between requirements and
5. Prototype Development: Build features.
and test a sample product. ○ Target Values: Specific
6. Design Review: Identify and goals for performance.
correct issues in the prototype.
7. Market Testing: Trial with a target
audience to collect feedback.
8. Product Introduction: Launch for
full-scale production and market
release.
9. Follow-Up Evaluation: Monitor
customer feedback and product
performance for improvements.

Key Concepts in Product and Service

Design

1. Concurrent Engineering

Cross-functional teams (engineering,

marketing, and design) work
collaboratively from the start to improve
efficiency and innovation. 3. Computer-Aided Design (CAD)
○ Use of advanced software
2. Quality Function Deployment for creating precise
(QFD)

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 product designs and Final Design: Push-and-snap assembly
documentation. for efficiency.
○ Benefits: Faster
development, reduced 6. Design for Manufacturing and
errors, and lower costs. Assembly (DFMA)
4. Standardization and Modular ○ Ensures products are
Design cost-effective and
○ Standardization: Simplifies straightforward to produce
manufacturing by reducing and assemble.
variations in design. 7. Environmental Design
○ Modular Design: Breaks ○ Incorporates sustainability
products into by using recyclable
interchangeable materials, minimizing
components, enhancing energy use, and reducing
flexibility and ease of environmental impact.
repair.
5. Value Analysis/Value Engineering Product Documentation
○ Focuses on simplifying
Product documentation provides
product designs to cut
detailed specifications, drawings, and
costs while maintaining or
instructions that guide the
improving quality.
manufacturing and assembly process.
○ Example: Reducing
complex assemblies to Key Elements in Product Documentation
single, more efficient parts.
1. Rigorous Specifications

Developed during the design phase to

ensure accuracy and standardization.

2. Engineering Drawings

Detailed visuals showing:

○ Dimensions:
Measurements for
components.
Original Design: Complex assembly
○ Tolerances: Permissible
using many fasteners.
variations in
Revised Design: Simplified, with fewer measurements.
parts (e.g., one-piece base). ○ Materials: Type and grade
of materials used.

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 3. Bill of Material (BOM) Helps in identifying key production
points and integration steps.
Lists all components of a product,
including:

● Quantities required.
● Usage and where each
component fits in the product
structure.

Documents for Production

1. Assembly Drawing

Provides an exploded view of the

product.

Highlights:
3. Route Sheet
○ Relative Locations: Shows
where each component Details the sequence of operations and
fits. time required to produce a component.
○ Assembly Instructions:
Includes:
Guides the assembly
process. ● Process Steps: Descriptions of
operations like insertion,
soldering, or testing.
● Machine Setup Time: Time
needed to prepare machines.
● Operation Time/Unit: Time to
complete each task.

2. Assembly Chart

Maps the flow of components into

subassemblies and eventually into the
final product.

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 ○ Staff Actions: What
4.Work Order employees do to deliver
the service.
● Provides instructions for ○ Customer Interactions:
producing a specified quantity of How customers engage
an item according to a schedule. with the service.
● Typically used to streamline 2. Process Flowcharts: Diagram
production and meet deadlines. steps for both products and
services to optimize processes.

Product Life Cycle Management (PLM)

1. Definition: Software systems that

integrate design, production, and
maintenance of products.
2. Key Features:
○ CAD integration.
○ Real-time updates to
Service Design Tools assembly instructions.
○ Environmental impact
1. Service Blueprints: Visual maps
tracking.
of the service delivery process.

Key Elements:

○ Physical Evidence: Layout,

tools, and environment.

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Chapter 4: Design Supply Chain ● A supply chain consists of
(Network) and Logistics Systems for upstream and downstream flows
Operations of products/(services)information,
and finances from a source to a
The Supply Network Perspective customer.
● Participants in a Supply Chain:
● Definition: A supply network ○ Suppliers
considers an operation (business ○ Manufacturers or service
model or strategic business unit) providers
within the context of other ○ Distributors, wholesalers,
operations it interacts with, such and intermediaries
as suppliers and customers. ○ Retailers and final
● Components: customers
○ Supply Side: First-tier and
second-tier suppliers of Key Flows in a Supply Chain
parts, information, or
services. 1. Product and Service Flow:
○ Demand Side: First-tier Movement of goods and services
and second-tier from suppliers to customers,
customers. including returns and customer
● Every product or service passes service.
through a supply chain, and each 2. Information Flow: Sharing data
supply chain is unique. like forecasts, orders, shipment
tracking, and updates.
Supply Chains and Supply Chain 3. Financial Flow: Involves
Management (SCM) payments, credit terms, and
ownership agreements.
● Definition: SCM coordinates
activities across the supply chain Key Supply Network Design Decisions
from raw material sourcing to Affecting Operations Activities
delivering the product/service to
the customer. ● Specifying supply and operations
strategies.
● Make-or-buy decisions.
● Scope of operations (vertical
integration or outsourcing).
● Facility locations (factories,
warehouses, retail outlets, etc.).
● Capacity planning and resource
allocation.

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 ● Supplier network development Impact of Corporate Strategy on Supply
and relationships. Chains
● Procurement systems.
● Logistics strategies (inventory, ● Low-Cost Strategy: Minimize
transportation, warehousing). inventory and use inexpensive
● Coordination and collaboration transportation.
among supply chain partners. ● Response Strategy: Use buffer
stocks and prioritize speed.
The SCOR Model in Supply Chain ● Differentiation Strategy: Provide
Management premium customer service and
gather market insights.
The Supply Chain Operations
Reference (SCOR) model outlines five
key activities:

1. Plan: Forecast demand and plan

resources.
2. Source: Procure raw materials or
components.
3. Make: Manufacture or produce
the product.
4. Deliver: Distribute products to
customers.
5. Return: Manage returns and
repairs.

Supply Chain Types

1. Push-Based: Production driven

by anticipated demand.
2. Pull-Based: Production triggered
by actual customer demand.

Product Strategies in Supply Chains

1. Make-to-Stock: Standardized
products manufactured in
advance (e.g., FMCG).
2. Assemble-to-Order: Modular
products assembled upon order
(e.g., custom PCs).

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 3. Make-to-Order: Products made ○ Private: Owned and
based on customer specifications operated by the business.
(e.g., wedding cakes). ○ Public: Rented facilities.
4. Design-to-Order: Fully
customized designs created upon Service Supply Chains
order (e.g., fashion garments).
● Initially supported manufacturing
but now recognized as
standalone.
● Definition: Includes suppliers,
consumers, service providers,
and supporting units delivering
core services.

Key Takeaways

● A supply chain connects

suppliers to customers with
upstream (supply) and
downstream (demand) flows.
Logistical Systems and Channels ● Effective supply chain
management aligns operations,
1. Logistics Infrastructure
logistics, and customer
Strategies:
satisfaction.
○ In-house logistics facilities.
● The choice of supply chain and
○ Outsourced logistics (e.g.,
logistics strategies impacts costs,
rented services).
efficiency, and competitiveness.
○ Third-Party Logistics
(3PL): External partners
handle logistics functions.
2. Components of Modern Logistics:
○ Warehousing and material
handling.
○ Transportation (trucks, rail,
air, water, pipeline,
intermodal).
○ Packaging and inventory
management.
○ Reverse logistics and
customer service.
3. Types of Warehouses:

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Chapter 5 : Managing for Quality and characteristics of a product/service that
Total Quality Management (TQM) satisfies given needs."

What is Quality? Perspectives of Quality

Quality is a multi-faceted concept 1. Producer's Perspective:

defined differently based on ○ Quality of Conformance:
perspectives: Ensures the
product/service meets
● Transcendent View: Quality design specifications.
means excellence. ○ Relies on production
● Product-Based View: Focuses on process, equipment,
measurable product attributes. materials, and employee
● Value-Based View: Quality is a training.
balance between price and value. 2. Customer's Perspective:
● Manufacturing-Based View: ○ Quality of Design:
Emphasizes conformance to Incorporates desired
standards. characteristics into the
● User-Based View: Relates to product/service.
better performance and features ○ Factors include price,
perceived by the customer. performance, and fitness
for use.
Definition by the American Society for
Quality: Key Insight: Customer’s perspective
"Quality is the totality of features and dominates quality considerations.

Dimensions of Quality

1. Product Quality Dimensions:

Performance, durability,
aesthetics, reliability, etc.
2. Service Quality Dimensions:
○ Reliability: Consistency
and dependability.
○ Responsiveness:
Willingness to help.
○ Competence: Skill and
knowledge.
○ Tangibles: Physical
evidence of service.

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 ○ Empathy: Understanding 4. Quality Improvement:
customer needs. Continuously enhancing
processes.

Coordination: Effective quality

management requires collaboration
between marketing, R&D, operations,
and quality control.

Impacts of Improved Quality on

Business

● Increases customer satisfaction,

loyalty, and market share.
● Reduces costs through fewer
defects and efficient processes.

Key Leaders in Quality Management

1. W. Edwards Deming:
What is Quality Management?
Emphasized management's role
Managing all organizational activities to in building systems and
achieve desired excellence in outputs: introduced the 14 points for
quality improvement.
● Supports differentiation, 2. Joseph M. Juran: Advocated for
cost-efficiency, and top-management involvement
responsiveness. and defined quality as "fitness for
● Focuses on product, service, and use."
process quality. 3. Armand Feigenbaum: Introduced
● Requires a well-designed Total Total Quality Control and
Quality Management (TQM) cross-functional teamwork.
system to meet customer needs. 4. Philip B. Crosby: Promoted the
idea that "Quality is free" and
Four Main Components of Quality introduced the concept of zero
Management defects.

1. Quality Planning: Defining quality

standards.
2. Quality Assurance: Ensuring
standards are met.
3. Quality Control: Monitoring and
improving outputs.

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 •Defining, improving, and controlling
processes •Reducing waste •Preventing
mistakes •Lowering costs •Facilitating
and identifying training opportunities
•Engaging staff •Setting
organization-wide direction
•Communicating a readiness to produce
consistent results

ISO 9000 Standards

● A global standard for QMS,

emphasizing customer
satisfaction and risk-based
thinking.
Quality Management System (QMS) ● Key Principles:
1. Leadership.
A QMS formalizes processes, 2. Customer focus.
procedures, and responsibilities to 3. Continuous improvement.
achieve quality objectives: 4. Employee involvement.
5. Data-driven
● Elements: decision-making.
○ Quality policy and
objectives. Total Quality Management (TQM)
○ Procedures and records.
○ Data management. A company-wide approach to improving
○ Customer satisfaction customer satisfaction and business
tracking. performance by:
○ Opportunities for
● Empowering employees.
continuous improvement.
● Encouraging teamwork and
Benefits: continuous improvement.
● Involving suppliers and
● Ensures customer and regulatory customers.
compliance.
● Reduces waste and errors. Key Elements:
● Lowers costs and enhances
● Customer orientation.
operational efficiency.
● Strategic quality planning.
Other benefits ● Statistical quality control.
● Training and shared
problem-solving.

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Cost of Quality (CoQ) 2. Six Sigma: Reduces defects to
3.4 per million opportunities.
A framework analyzing costs related to 3. PDCA Cycle: Plan-Do-Check-Act
achieving or failing quality standards: for quality improvements.
4. Benchmarking: Comparing with
1. Prevention Costs: Avoiding
industry leaders.
defects.
5. Just-In-Time (JIT): Reduces
2. Appraisal Costs: Inspection and
inventory waste.
testing.
3. Internal Failure Costs: Errors Ethics in Quality Management
before delivery.
4. External Failure Costs: Errors ● Ensuring safe, reliable products.
after delivery. ● Avoiding risks of injuries,
lawsuits, or recalls.
● Ethical behavior builds trust with
stakeholders.

Evaluating Performance (1 of 2)
Service Quality
SERVQUAL Technique
● Challenges: Intangibility of
services and varying customer ● A tool for measuring service
expectations. quality by directly comparing
● Tools: customer expectations with
actual service experiences.
SERVQUAL: Measures gaps between ● Focuses on identifying gaps in 10
expectations and actual service. service quality determinants,
such as:
Marriott's LEARN Strategy: Listen,
○ Reliability
Empathize, Apologize, React, Notify.
○ Responsiveness
Service Recovery Strategy ○ Competence
○ Access
• Managers should have a plan for when ○ Courtesy
services fail ○ Communication
○ Credibility
• Marriott's LEARN routine – Listen – ○ Security
Empathize – Apologize – React – Notify ○ Understanding/Knowing
the customer
Continuous Improvement Tools ○ Tangibles
1. Kaizen: Continuous improvement
Evaluating Performance (2 of 2)
philosophy.

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Collapsing the Determinants Statistical Definition: Achieving
99.9997% defect-free performance (3.4
● The most commonly used version defects per million opportunities).
of SERVQUAL groups the
determinants into five core Program Goals:
dimensions:
1. Reliability: Ability to ■ Reduce defects.
perform the promised ■ Lower costs.
service dependably and ■ Save time.
accurately. ■ Enhance customer
2. Assurances: Knowledge satisfaction.
and courtesy of employees
3.DMAIC Approach:
and their ability to inspire
trust. Define: Project purpose and scope.
3. Tangibles: Physical
facilities, equipment, and Measure: Collect and analyze data.
appearance of personnel.
4. Empathy: Provision of Analyze: Identify key factors causing
caring and individualized variation.
attention.
Improve: Optimize processes.
5. Responsiveness:
Willingness to help and Control: Sustain improved performance.
provide prompt service.
3. Employee Empowerment
Key Concepts of Total Quality
Management (TQM) Encouraging employees to participate in
process and product improvement.
1. Continuous Improvement
Techniques include:
Ongoing effort to improve products,
services, or processes. ○ Open communication.
○ Supportive supervision.
Covers all aspects: people, equipment, ○ High morale and team
materials, suppliers, and procedures. structures (e.g., Quality
Circles).
Key philosophies: Kaizen, TQM, and
4. Benchmarking
zero defects.
Adopting best practices as standards for
2. Six Sigma
performance.

Steps:

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 ○ Identify what to Deming Wheel (PDCA Cycle)
benchmark.
○ Form a benchmarking ● A four-step iterative model for
team. continuous improvement:
○ Select benchmarking 1. Plan: Identify and analyze
partners. issues.
○ Collect and analyze data. 2. Do: Implement solutions.
○ Implement changes to 3. Check: Monitor results and
meet or exceed evaluate performance.
benchmarks. 4. Act: Standardize
5. Just-in-Time (JIT) successful improvements.

A production system producing only Seven Tools of TQM

when needed.
1. Check Sheet: Records and
Reduces inventory and highlights organizes data systematically.
process inefficiencies.

Improves quality by:

● Lowering costs of defects.

● Encouraging efficient operations.

2. Scatter Diagram: Plots

relationships between two
6. Taguchi Concepts
variables.
○ Robust Design: Reduces
variation through
engineering.
○ Target-Oriented Quality:
Focuses on meeting
optimal standards.
○ Quality Loss Function:
Quantifies costs of
deviation from desired
3. Cause-and-Effect Diagram:
quality.
Identifies possible causes of a
7. Knowledge of TQM Tools
problem.
○ Tools include methods to
generate ideas, organize
data, and identify
problems.

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 Is the product damaged? (Yes/No)

Does the item meet specifications?

(Acceptable/Unacceptable)

Is the packaging sealed? (Good/Bad)

● Simplistic: Attributes tell us

whether something meets a basic
standard but don’t provide
detailed insights into why or how
much it varies from the desired
4. Pareto Chart: Highlights the most
standard.
significant problems or defects.
● Evaluation: Usually involves
counting occurrences (e.g.,
number of defective items in a
batch).

Variables

● Variables are quantitative

characteristics.
● They measure specific
dimensions that can take any
5. Flowchart: Maps out process value within a range.
steps. ● Examples:
6. Histogram: Shows frequency ○ Weight of a product (e.g.,
distributions. 250g ± 5g).
7. Statistical Process Control (SPC) ○ Length of a component
Chart: Monitors performance over (e.g., 10 cm ± 0.1cm).
time. ○ Temperature of a process
(e.g., 75°C ± 2°C).
Attributes ● Detailed Analysis: Variables
provide numerical data, allowing
● Attributes are qualitative for detailed analysis of how much
characteristics. the measurement differs from the
● They represent binary outcomes, desired target.
meaning there are only two ● Statistical Techniques: Tools like
possible states (e.g., "pass" or control charts, histograms, or
"fail"). standard deviation calculations
● Examples: are used to monitor and evaluate
variables.

21
Chapter 6:Operations Facility 3. Close existing sites and
Location Planning & Strategies relocate.

Operations Facility Location Approaches to Location Planning

● Definition: Refers to selecting the 1. Cost Focus (Supply-Side): Ideal

geographical position of for manufacturing; focuses on
operation systems, including minimizing operational costs.
facilities like factories, 2. Revenue Focus (Demand-Side):
warehouses, and retail outlets. For services; emphasizes
● Purpose: To align location with customer proximity to maximize
operation inputs, customer revenue.
proximity, and operational
efficiency. 4. Factors Influencing Location
Decisions
2. Nature of Location Decision
Global Factors:
● Strategic Importance: Critical for
both manufacturing and service ● Political and economic stability.
organizations due to its influence ● Exchange rates and trade
on fixed/variable costs and regulations.
overall performance. ● Availability of raw materials,
● Global Context: With labor, and technology.
globalization, decisions often ● Transportation and logistics
involve international factors. infrastructure.
● Characteristics:
Regional/Community Factors:
○ Rarely reversible without
significant resource use. ● Labor availability, cost, and
○ Affects costs, customer education levels.
access, and long-term ● Proximity to customers, suppliers,
competitiveness. and competitors.
● Community services and
3. Location Planning and Analysis government incentives.
● Land and construction costs.
● Objective: Maximize benefits for
● Climate and local regulations.
the firm through optimal location
choices. Site-Specific Factors:
● Options for Location Decisions:
1. Expand existing facilities. ● Land size and cost.
2. Maintain current sites ● Accessibility via air, rail, and road
while adding new ones. systems.

22
 ● Environmental impact and zoning ● Key Factors: Labor cost, raw
restrictions. materials, government incentives,
and infrastructure.
5. Evaluating Location Alternatives
Service/Retail Firms:
Steps in Decision Process:
● Revenue Focus: Proximity to
1. Identify Key Factors: Determine customers, demographics, and
critical success factors relevant to competition.
the business. ● Key Factors: Accessibility,
2. Develop Alternatives: Consider visibility, and physical quality of
various location options. facilities.
3. Evaluate Options: Use both
qualitative and quantitative
techniques.

Techniques for Evaluation:

1. Factor Rating Method: Assign

weights to key factors and
calculate scores.
2. Load-Distance Model: Measures
distance-related costs.
3. Center of Gravity Approach:
Finds a central location to
minimize costs.
4. Break-Even Analysis: Compares
fixed and variable costs across
locations.
5. Transportation Method:
Optimizes distribution costs
between supply and demand
points.

6. Location Strategies for Different

Industries

Manufacturing Firms:

● Cost Focus: Tangible costs (e.g.,

transportation, utilities, taxes) and
proximity to suppliers.

23
7. Practical Example: Factor Rating 2. Plot the total costs of each
Method location on a graph.
3. Identify the output ranges
where each location has
the lowest total cost.
4. Solve algebraically for the
break-even points across
identified ranges.

Transportation Model

● Purpose: Optimizes the

transportation of goods from
multiple supply points (e.g.,
factories/warehouses) to multiple
demand points (e.g., distribution
● Steps: centers) to minimize total costs.
1. List key location factors ● Type: This is a special class of
and assign weights (e.g., linear programming problems that
labor pool, proximity to focus on minimizing
suppliers). transportation/logistics costs.
2. Score potential locations
based on each factor.
3. Multiply scores by weights 8. Reasons for Location Changes
and sum them for a total
score. 1. Increasing demand for capacity.
4. Select the location with the 2. Changes in resource availability.
highest weighted score. 3. Shifting customer demand
geography.
Break-Even Analysis (Location 4. Political, economic, or
Cost-Volume Analysis) environmental factors.
5. Introduction of new products or
● Purpose: Determines the volume
services.
of goods that needs to be sold to
6. Response to natural disasters.
cover both fixed and variable
costs for a location.
● Steps:
1. Determine fixed and
variable costs for each
location.

24
Chapter 7 :Operations Capacity Measures of Operations Capacity
Planning and Capacity Modification
Strategies Example Applications:

Operations Capacity Planning ● Automobile Manufacturer:

Definition: Operations capacity planning Input – number of workers,

is the process of determining the ability Output – number of vehicles
of an organization's operations system produced.
to meet its future demands. It involves
● Garment Factory:
both long-term decision-making and has
significant consequences on operating Input – labor hours, Output –
costs, response rates, and overall number of garments.
business operations.
● Power Company:
● Types of Decisions:
Input – energy units, Output –
Long-Term Decisions: Influence megawatts generated.
operating costs and strategy (e.g.,
location, equipment, labor force). ● Hospital:

Medium and Short-Term Decisions: Input – medical staff, Output –

Affect daily operations, such as number of patients treated.
production schedules, workforce
management, and resource allocation. ● University:

Input – faculty and classrooms,

What is Operations Capacity?
Output – number of students
Operations Capacity: Refers to the educated.
maximum output or throughput a facility,
plant, or unit can produce, store, or Operational Consequences of Capacity
process over a specific time period. Issues

● Capacity Measures: ● Inadequate Capacity: Leads to

○ Measured in terms of underperformance, missed
inputs and outputs. deadlines, increased lead times,
○ Varies across different and customer dissatisfaction.
industries (e.g., ● Excessive Capacity: Causes
manufacturing, service, underutilization of resources,
utilities). higher costs, and waste.

25
 3. Actual Capacity: The actual
output achieved, which may be
Strategic Capacity affected by unplanned disruptions
Planning/Management such as breakdowns or
absenteeism.• Often lower than
● Strategic Capacity Planning: effective capacity
Involves decisions regarding the
capacity level of capital-intensive Example: Frito-Lay’s actual capacity
resources (e.g., machinery, may be further reduced to 12,750
equipment, workforce) to support bags/day due to machine breakdowns.
long-term business operations.
● Tactical Capacity Planning: Capacity Utilization and Efficiency
Involves managing medium-term
adjustments like workforce and ● Utilization: The percentage of the
inventory planning, aggregate design capacity that is actually
production planning, and achieved.
day-to-day resource use.
Formula:
Capacity Measurements: Design,
Utilization = Actual Output / Design
Effective, and Actual Capacity
Capacity
1. Design Capacity: The maximum
● Efficiency: The percentage of
output under ideal conditions. It
effective capacity that is
represents the theoretical limit of
achieved.
production.
Formula:
Example: A machine designed to
produce 1,000 bags of chips per hour Efficiency = Actual Output / Effective
for 16 hours/day results in a design Capacity
capacity of 16,000 bags/day.

2. Effective Capacity: The expected

achievable capacity, considering
planned maintenance, employee
breaks, product changes, and
setup times.

Example: Frito-Lay may lose 3

hours/day for maintenance and setup,
resulting in effective capacity of 13,000
bags/day.

26
 Concerns in Adjusting Long-Term
Capacity

● Capacity increases depend on:

○ Volume and certainty of
demand.
○ Strategic objectives.
○ Costs of expansion and
operation.
● Common Long-Term Strategies:
○ New facilities, production
lines, or equipment.
○ Hiring more staff or
downsizing.
○ Outsourcing, mergers, or
acquisitions.

Capacity Planning Decisions Capacity Adjustment Strategies

Key decisions in capacity planning: 1. Level Capacity: Maintain constant

production regardless of demand
● Assessing existing capacity. fluctuations.
● Forecasting capacity needs. 2. Chase Demand: Adjust capacity
● Estimating labor and equipment based on fluctuating demand.
requirements. 3. Demand Management: Manage
● Identifying and evaluating demand to match capacity, e.g.,
alternative capacity strategies. raising prices or altering lead
● Selecting the most suitable times.
capacity alternative aligned with
strategic goals. Tactics for Matching Operations
Capacity to Demand

1. Inventory Management: Use

buffer stocks, back orders, or
customer waits to manage
demand peaks.
2. Staffing Adjustments: Hire, lay
off, or adjust working hours.
3. Equipment Adjustments:
Purchase additional machinery or
sell/lease existing equipment.

27
 4. Process Improvement: Increase Other Capacity Planning Concepts
throughput by enhancing
production processes. 1. Capacity Flexibility: Ability to
5. Outsourcing: Outsource some quickly adjust production levels or
operations to external firms. shift capacity between products.
6. Product Redesign: Adapt ○ Achieved through flexible
products to streamline production plants, processes, and
and increase capacity. workers.
2. Capacity Cushion: Extra capacity
Managing Demand added to meet unexpected
demand surges, seasonal
● When Demand Exceeds changes, or production flexibility
Capacity: Raise prices, increase needs.
lead times, or curtail demand by
focusing on profitable customers. Economies & Diseconomies of Scale
● When Capacity Exceeds
Demand: Stimulate demand ● Economies of Scale: As
through marketing, product production volume increases,
diversification, or by introducing per-unit costs decrease.
complementary products. ● Diseconomies of Scale: After
reaching an optimal production
Capacity Planning in Service Industries level, further increases in scale
may lead to inefficiencies and
● Challenges: higher per-unit costs.

Managing fluctuating customer demand. Evaluation Techniques of Capacity

Alternatives
Ensuring service quality while scaling
capacity. 1. Break-Even Analysis: Helps
evaluate different capacity
Adapting to seasonal demand
alternatives by comparing costs
variations.
and output levels.
● Strategies for Service Industries: 2. Net Present Value (NPV):
Assesses the financial viability of
Use of flexible service capacity (staffing, capacity investments.
resources). 3. Internal Rate of Return (IRR):
Measures the return rate of
Outsourcing specific services to handle capacity investment.
peak demand. 4. Decision Trees: Helps assess
possible decisions under
Adjusting service delivery times.

28
 uncertainty by evaluating Chapter 8 : Process Selection
probabilities and costs.
Process Technology
Example - Decision Tree:
● Definition: Refers to the tools,
● Scenario: A glass factory faces a methods, and systems used to
backlog and considers three produce goods and deliver
actions: services.
○ A: Subcontracting. ● Goal: Aims to improve production
○ B: Building new facilities. processes by enhancing
○ C: Do nothing. efficiency, quality, and
cost-effectiveness.
Probability of Demand: Low (10%), ● Role: Plays a crucial role in
Medium (50%), High (40%). shaping production methods and
service delivery.
Cost Implications: Each decision leads
to different outcomes based on the
Process Selection and Strategy
demand scenario.
● Process Selection: The
decision-making process on how
goods or services will be
produced.
● Key Implications:
○ Affects capacity planning,
facility layout, equipment,
and work systems design.
○ Applies when designing
new products, introducing
technological changes, or
updating processes due to
competition.

29
Objectives of Process Strategy ○ High Volume: Large
quantities of standardized
● Primary Goal: To design a products.
process that meets customer ● Process Variety:
requirements while balancing ○ Low Variety: Limited
cost and managerial goals. product/service types.
● Long-Term Effects: ○ High Variety: Wide range
○ Efficiency: Optimizing of product/service types,
operations for better often customized.
resource utilization and
speed. Types of Manufacturing Processes
○ Production Flexibility:
Ability to adapt to 1. Project Processes:
changing product ○ Unique, non-repetitive
demands or designs. production for customized
○ Costs and Quality: Direct outputs.
impact on production costs ○ Examples: Construction,
and the quality of the consulting, custom cakes.
output. ○ Coordination: Requires
managing various skills,
Process Strategies often by a project
manager.
Four basic strategies 2. Jobbing Processes:
○ Small-scale production
1. Process focus
based on specific
2. Repetitive focus
customer needs.
3. Product focus
○ Examples: Machine shops,
4. Mass customization
printing, aircraft
Within these basic strategies, there are manufacturing.
many ways they may be implemented ○ Requires: Broad skill set
for handling diverse
Process Types and Classification customer orders.
3. Batch Processes:
● Process Volume: ○ Products made in batches
○ Low Volume: Small with varying types and
quantities of customized volumes.
products. ○ Examples:
○ Medium Volume: Moderate Pharmaceuticals,
quantities with some electronics, bakeries.
standardization. ○ Characteristics: Requires
specialized skills, set-ups,

30
 and changeovers at ● Industry 4.0: Refers to the
production stages. integration of smart technologies
4. Mass (Repetitive) Processes: like AI, IoT, and robotics in
○ Production of standardized manufacturing processes.
products in high volumes
using assembly lines.
○ Examples: Automobile
assembly, toy
manufacturing.
○ Characteristics: Narrow
skills and minimal set-up
time required.
5. Continuous Processes:
○ Production of standardized
products in continuous
flow.
○ Examples: Oil refineries,
Service Process Strategies
chemical plants.
○ Characteristics: Highly ● Mass Service:
automated and ○ High labor involvement
capital-intensive, with few and standardized services
interruptions. for large numbers of
customers.
Automation in Processes
○ Examples: Call centers,
● Automation: Replacing manual fast-food services.
labor with machines that operate ○ Focus on efficient service
automatically, using sensors and delivery with cost control.
control systems. ● Professional Service:
○ Types of Automation: ○ Customized services
requiring high skill levels
Fixed Automation: Machines dedicated and expertise.
to high-volume production of a specific ○ Examples: Legal services,
product. healthcare.
○ Focus on personalized
Programmable Automation: Machines service and highly skilled
that can be reprogrammed for different workers.
tasks. ● Service Factory:
○ Low labor intensity with
Flexible Automation: Systems capable
high automation for
of adapting quickly to product changes.
standardized services.

31
 ○ Examples: Automated ● Production Flexibility: Ability to
banking, online services. adapt to changing demands or
○ Focus on efficient service external factors.
delivery with tight quality ● Capacity and Scalability: The
control. process should support business
● Service Shop: growth without incurring high
○ Moderate labor intensity costs.
with a combination of
automation and skilled Chapter 9 : Operations Facility
labor. Layout Design
○ Examples: Car repairs,
high-end restaurants. What is Layout Planning?
○ Requires skilled labor,
Layout planning is the process of
control, and personalized
determining the best physical
service.
arrangement of operating resources
(e.g., machinery, workstations, people)
Service Process Matrix
within a facility.
● The Service Process Matrix helps
The goal is to design the layout of the
analyze the relationship between
building and its surroundings to optimize
labor intensity, customer
the workflow of production or service
interaction, and service
delivery.
technology.
○ Service Factory/Shop: Importance of Layout
Focus on automation and
standardized services with The layout impacts how transforming
low customer interaction. resources (e.g., machines, labor) are
○ Mass/Professional positioned relative to each other and
Service: High labor how tasks are allocated.
involvement with
personalized services. A good layout can provide a competitive
advantage by facilitating the flow of
Process Strategy Decisions materials, people, and information.

● Customer Satisfaction: The Layout Design Objectives

process must ensure
products/services meet customer Smooth workflow: Ensures that
expectations. operations are organized to avoid
● Cost Efficiency: The strategy bottlenecks.
must balance costs with quality.
Safety: Layouts should ensure no harm
to staff or customers.

32
Efficiency: Minimize the length of Combines features of both product and
material or customer flow. process layouts.

Flexibility: Layouts should accommodate Uses "work cells" to produce product

future changes in product or service families, balancing flexibility and
demands. efficiency.

Space utilization: Maximize use of Other Layout Types

available space while maintaining
workflow. ● Office Layout: Optimizes
workspace for communication
Basic Types of Layouts and information flow.
● Retail Layout: Focuses on
● Fixed-Position Layout: customer flow and product
display.
Used when the product is too large or
● Warehouse Layout: Balances
fragile to move (e.g., shipbuilding,
storage needs with efficient
construction).
material handling.
Equipment and workers move to the
Layout Strategies
product rather than vice versa.
● Office Layout: Employees with
● Process (Functional) Layout:
frequent interactions should be
Groups similar resources together (e.g., close to one another.
departments in hospitals or ● Retail Layout: Design to expose
supermarkets). customers to high-margin items
(e.g., stores like Kroger's and
Complex flow patterns as different Bloomingdale's).
products or customers may require ● Warehouse Layout: Aims to
different routes. balance low-cost storage with
material handling efficiency.
● Product (Flow-shop) Layout: ● Project Layout: Focuses on
moving materials and resources
Arranges resources in a sequence
to the product location (e.g.,
matching the product’s production
construction sites, shipbuilding).
process.
● Job Shop Layout: Flexible and
Suitable for standardized products (e.g., varied material flow for each
mass production of cars or garments). product (e.g., hospitals,
restaurants).
● Hybrid (Cellular) Layout: ● Work Cell Layout: Groups
equipment and workers for
product families, reducing

33
 inventory and enhancing Product (Flow-shop) Layouts
efficiency.
● Repetitive/Continuous Layout:
Aimed at balancing tasks across
workstations for efficient mass
production.

Process (Job-shop/Functional) Layouts

● Resources are grouped by

function (e.g., different
departments in a hospital or
factory). ● Resources are arranged in a
● Each product or customer follows fixed sequence to match the
a different path depending on the production process.
required services. ● Ideal for mass production of
● Typically results in complex standardized products (e.g.,
material flow. automotive or garment factories).
● Key Characteristics: ● Key Characteristics:
○ Flexible and ○ Specialized equipment
labor-intensive. and resources.
○ Higher material handling ○ High capital intensity and
costs and slower low flexibility.
processing rates. ○ Faster processing and
○ Complex scheduling and lower material handling
space requirements. costs.
● Requirements:
○ High volume and stable
product demand.
○ Standardized product or a
stable product life cycle.
● Advantages:
○ Lower cost per unit, less
material handling, and
faster throughput.
● Disadvantages:
○ High volume requirement,
lack of flexibility, and
disruption risk from work
stoppages.

34
Fixed-position Layouts ○ Increased machinery
utilization.
● Used when the product or service
is too large or delicate to move
(e.g., ships or open-heart
surgery).
● Workers and equipment are
moved to the product, not vice
versa.
● Key Characteristics:
○ The product remains
stationary, and resources
move to it.
○ Requires highly skilled
labor and has low
equipment utilization.

Hybrid (Cellular) Layouts

● Combines product and process

layouts to maintain efficiency
while offering flexibility.
● Work Cells: Groups of resources
dedicated to a product family. Designing Layouts
● Advantages:
○ Reduced work-in-progress ● Process Layout Design:
inventory and space ○ Focuses on minimizing
requirements. material handling costs
○ Lower labor and material and optimizing the
costs. movement between work
centers.

35
 ○ Techniques:

Block Diagramming: Uses quantitative

data to minimize non-adjacent loads.

Relationship Diagramming: Uses

qualitative data to assign areas based
on location preference.

● Product Layout Design:

○ Aims to balance the line so
that each workstation is
assigned an equal portion
of work.

36
 ○ Assembly-Line Balancing
is key:

Calculate cycle time (time per product).

Determine theoretical minimum

workstations.

Assign tasks using priority rules like task

duration or precedence.

● Cycle Time: The time between

two consecutive products being
produced.

37
 Example: Automobile assembly lines,
food processing.
Computer Software for Layout Design
Marks of a Good Layout
● Graphical and Computerized
Tools: Used to handle larger, 1. Good Layout for Manufacturing and
more complex layouts. Back-office Operations
● Tools like Proplanner help
calculate material handling A good layout ensures efficiency,
distances and times. minimal wastage, and smooth workflow.
● 3D Visualization Software: Allows Key characteristics include:
for evaluating efficiency, material
flow, and safety before ● Straight-line flow pattern: Avoids
implementation. unnecessary detours and
promotes efficiency.
What Type of Layout Should an ● Minimal backtracking: Reduces
Operation Choose? redundant movements and
enhances process flow.
The type of layout chosen for an ● Predictable production time:
operation depends heavily on its volume Allows for accurate planning and
and variety characteristics: scheduling.
● Minimal inter-stage storage:
Principle 01: For Prevents excess inventory and
low-volume/high-variety processes: promotes lean operations.
● Open plant floors: Facilitates
The layout should handle irregular flows
visibility and coordination.
effectively.
● Controlled bottlenecks: Ensures
Process Layouts or Fixed-Position smooth processing without
Layouts are ideal as they provide delays.
flexibility. ● Proximity of workstations:
Reduces material handling time
Example: Hospitals, custom furniture and effort.
workshops. ● Orderly material handling:
Enhances organization and
Principle 02: For reduces clutter.
high-volume/low-variety processes: ● No unnecessary re-handling:
Saves time and effort.
The layout should ensure smooth,
● Adaptability: Allows for quick
regular flow.
adjustments to changing
Product Layouts or Hybrid Layouts are production demands.
suitable as they streamline flow.

38
2. Good Layout for Face-to-Face Objective: Maximize net profit per
Services square foot of space, particularly in retail
and service-oriented businesses like
In service environments, layouts should supermarkets or banks.
prioritize customer experience and
operational efficiency. Key features Flow Optimization: Ensure logical
include: placement of products or services to
encourage purchases (e.g., placing
● Easily understood service flow: essentials at the back of a store to
Customers should intuitively increase exposure to other items).
know where to go.
● Adequate waiting facilities: Office Layouts
Prevents overcrowding and
enhances customer satisfaction. ● Key Considerations:
● Easy communication: Facilitates
Human Interaction: Enable collaboration
interaction between customers
and communication while ensuring
and service providers.
efficiency.
● Customer observation: Enables
better service monitoring. Physical Environment: Include
● Clear entry and exit points: ergonomic workspaces and access to
Reduces confusion and improves natural light.
flow.
● Strategic arrangement of Psychological Needs: Create
processes: Ensures customers comfortable and motivating spaces to
see only the intended areas. enhance productivity.
● Balance between waiting and
service areas: Optimizes space Proximity and Privacy: Maintain a
utilization. balance between open layouts for
● Minimal walking and movement: teamwork and private areas for focused
Enhances convenience. work.
● Clutter-free environment:
● Flexible Designs:
Promotes comfort and
organization. Use concepts like office landscaping
and interior designing to address privacy
Designing Service and Office Layouts
and adaptability issues.
Service Layouts
Incorporate movable partitions and
Dual Focus: Must be both functional modular furniture to accommodate
(operationally efficient) and attractive changing requirements.
(appealing to customers).

39
Chapter 10 : Work System and Job 5. Why: Objectives and motivations
Design, Work Method Analysis and behind the job.
Work Measurement 6. How: Methodology and tools
used in task performance.
Introduction to Work System Design
Elements of a Job
Work system design is part of
operations strategy and focuses on ● Job: Set of tasks.
achieving high productivity without ● Task: Combination of elements
compromising: into a complete activity.
● Element: Grouping of
○ Quality micro-motions.
○ Service ● Micro-motion: Smallest work
○ Responsiveness activity (e.g., reaching, lifting).
A work system encompasses: 3. Job Design Approaches
○ Job Design ● Physical Considerations:
○ Work Measurement and
Standards Aim for productivity through labor
○ Worker Compensation specialization (cost of performing tasks
< value added).
2. Job Design
● Behavioral Considerations:
Definition: Specifies the work activities
of an individual or a group in an Focus on employee satisfaction by
organization. ensuring jobs are intrinsically rewarding.

Objective: Create job structures that 4. Motion Studies in Job Design

align with organizational needs while
fulfilling employees' personal and ● Purpose: Identify the most
professional requirements. efficient way to perform tasks.
● Introduced by Frank and Lillian
Key Decisions in Job Design Gilbreth, motion studies utilize
videotaping and analysis to
1. Who: Characteristics of the optimize performance.
workforce.
2. What: Tasks to be performed. General Guidelines for motion studies
3. Where: Geographic location and
workspace arrangement. 1. Efficient use of the human body:
4. When: Timing of tasks in the
workflow. Simplified, rhythmic motions.

40
Coordination and simultaneous use of Sociotechnical Systems
hands/arms.
Consistent with the job enrichment
2. Workplace arrangement: approach . Focus on balancing
technological needs with worker/group
Tools and materials within easy reach. requirements (e.g., task variety,
feedback, and autonomy).
Comfortable and ergonomic setups.
6. Team Approach to Job Design
3. Equipment use:

Foot-operated tools to reduce hand A development in job design which is

stress. closely linked to the empowerment
concept is that of team-based work
Mechanized tools for efficiency. organization (sometimes called
self-managed work teams).
5. Behavioral Considerations
● Types of Teams:
● Labor Specialization:
Problem-solving teams: Identify and
Management perspective: High solve workplace problems.
productivity but risks of high
absenteeism and turnover. Special-purpose task forces: Short-term
teams for specific objectives.
Employee perspective: Low skill
requirement but risks boredom and Self-managed teams: Plan, manage,
dissatisfaction. and control workflow through
consensus.
Methods to Address Boredom

● Job Enlargement: Horizontal

expansion by increasing task
scope.
● Job Enrichment: Vertical
expansion by adding
responsibilities like planning or
inspection.
● Job Rotation: Switching tasks to
reduce monotony and enhance
skills.

41
Benefits of Team-Based Job Designs Objective: Improve productivity by
eliminating non-value-added steps.
● Improved job satisfaction and
motivation. 10. Work Measurement and
● Enhanced quality and Standards
productivity.
● Reduced turnover and ● Purpose: Establish time
absenteeism. standards to:
○ Schedule work and
7. Flexible Working allocate capacity.
○ Motivate and measure
● Encourages a balance between workforce performance.
work, home, and social life. ○ Estimate costs and
● Involves flexibility in: improve processes.
○ Skills
○ Time Work Measurement Techniques
○ Location
1. Direct Methods:
8. Attributes of Good Job Design ○ Time Studies: Analyze
task time using stopwatch
● Includes: or video.
○ Appropriate repetitiveness. ○ Suitable for repetitive,
○ Feedback and control over detailed work.
tasks. 2. Indirect Methods:
○ Use of skills. ○ Use historical or standard
○ Opportunities for motion data.
decision-making and
interpersonal relationships. Time Study Process

9. Work Methods and Methods 1. Break job into elements and time
Analysis them individually.
2. Compute:
● Work Methods: Define how work
should be accomplished. Actual Time (AT) = Total time worked ÷
● Methods Analysis: No. of units produced.
○ Steps:
Normal Time (NT) = AT × Performance
1. Identify operations for analysis.
rating.
2. Gather relevant information.
3. Consult employees.
4. Chart and evaluate steps.
5. Revise and implement new
methods.

42
11. Work Sampling

● Observes a sample of work and

draws conclusions about overall
performance.
● Advantages over Time Study:
○ Less observer training
needed.
○ Can study long cycle tasks
with minimal hours.
○ Minimizes operator
influence.

Chapter 11 : Production Scheduling

and Material Requirements Planning
(MRP)

Resource Planning

Resource planning involves taking sales

and operations plans and processing
them using time standards, routing, and
other production information to
determine input requirements.

Independent vs. Dependent Demand

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 ● Independent Demand: Demand 2. How much is needed?
for finished goods (e.g., final 3. When is it needed?
products), which can be
forecasted. Inputs to MRP
● Dependent Demand: Demand for
components and raw materials 1. Master Production Schedule
derived from the demand for (MPS): Specifies what needs to
finished goods. be produced and when.
2. Bill of Materials (BOM): A
Key Concepts in Dependent Demand structured list of components and
materials required for production.
1. Dependent Demand: Varies 3. Inventory Records: Includes
based on the production of other on-hand inventory and scheduled
items. receipts.
2. Parent: A product made from one 4. Lead Time: Time required to
or more components. produce or procure components.
3. Component: An item used to
create a parent product. Master Production Schedule (MPS)

Material Requirements Planning ● A time-phased plan specifying

(MRP) the number of items to produce
within set time frames.
● MPS must:
○ Align with sales and
operations plans.
○ Consider production
capacities and
bottlenecks.
○ Be tested for feasibility
using Capacity
Requirements Planning
(CRP).

MRP is a computerized system that

helps manufacturers manage dependent
demand inventory and schedule
replenishment orders.

Purpose of MRP:
To answer three key questions:

1. What is needed?

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Bill of Materials (BOM) accurately reflect current
data.
● A hierarchical list detailing ○ Errors in purchase orders
components, ingredients, and can lead to issues such as
materials for a product. stockouts, excess
● It visually represents the inventory, or production
relationship between parent delays.
products and their components.
Lead Times

Lead time refers to the time required to

complete a specific process, from
initiation to completion.

1. For Production Items:

Product structure tree: ○ Includes the sum of the
following:
Visual depiction of the requirements in a
I. Order Time: Time to place the
bill of materials, where all components
order.
are listed by levels.
II. Wait Time: Waiting for resources
Provides product structureItems above or prioritization.
given level are called parentsItems III. Move Time: Transporting items
below given level are called children between workstations.
IV. Setup Time: Preparing machines
Accurate Records for Outstanding or systems.
Purchase Orders (Scheduled Receipts) V. Store Time: Inventory storage
before use.
Importance of Accuracy: VI. Run Time: Actual production or
Accurate inventory and purchase order assembly time.
records are critical for the success of 2. For Purchased Items:
MRP or any dependent demand system. ○ Includes the time between:
I. Recognition of Need: When the
○ MRP systems require requirement is identified.
more than 99% accuracy II. Availability: When the item is
in records to function available for production.
effectively.
Time-Phased Product Structure
Outstanding Purchase Orders:
A Time-Phased Product Structure is a
○ Quantities and scheduled visual representation of when
receipts in outstanding components and subassemblies are
purchase orders must

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required during production, based on ● Gross Requirements: Total
their lead times. demand.
● Scheduled Receipts: Items due to
Purpose: arrive.
● Projected On-Hand: Inventory
Helps to coordinate the scheduling of
expected at the start of each
materials and production processes to
period.
ensure on-time completion.
● Net Requirements: Actual
amount required.
MRP Outputs
● Planned-Order Receipts:
1. Primary Outputs: Expected quantities received
○ Planned Orders: after lead time.
Production/purchase ● Planned-Order Releases:
schedules. Planned order quantities for
○ Order Releases: production or purchase.
Authorization for planned
orders. Updating MRP Systems
○ Changes: Adjustments to
MRP is dynamic and must be updated
orders (quantity, timing,
to reflect changes:
etc.).
2. Secondary Outputs: ● Regenerative Systems: Periodic
○ Performance Reports: updates in batches.
Highlight deviations, costs, ● Net-Change Systems:
and issues like stockouts. Continuous updates in real-time.
○ Planning Reports: Assess
future material Evolution of MRP Systems
requirements.
○ Exception Reports: Flag 1. MRP: Focused on material
major discrepancies. scheduling.
2. Closed-Loop MRP: Incorporated
MRP Processing feedback mechanisms.
3. MRP II: Integrated with
MRP "explodes" the end-item manufacturing resource planning.
requirements from the MPS into 4. ERP: Comprehensive systems
time-phased schedules for tying customers, suppliers, and
subassemblies, components, and raw internal processes.
materials, offset by lead times.
Enterprise Resource Planning (ERP)
Key Elements of MRP Records:
ERP extends MRP functionalities to
integrate all business processes, from

46
supplier evaluation to customer E R P in the Service Sector
invoicing.
• E R P systems have been developed
Key Features of ERP: for health care, government, retail
stores, hotels, and financial services
1. Automation and integration of
business processes. • Also called efficient consumer
2. Real-time data sharing. response (E C R) systems in the
3. Modules for finance, HR, supply grocery industry
chain management (SCM), and
customer relationship • Objective is to tie sales to buying,
management (CRM). inventory, logistics, and productio

Advantages of ERP Systems

1. Improved integration across

supply chain, production, and
administration.
2. Enhanced data quality and
accuracy.
3. Facilitates strategic initiatives like
Just-in-Time (JIT).

Challenges of ERP Systems

1. High costs for purchase and

customization.
2. Resistance to change during
implementation.
3. Ongoing training requirements.
4. Complex and time-consuming
setup.

Leading ERP Vendors

● SAP
● Oracle
● Microsoft
● Sage

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