Session 1

Introduction to Operations Management

By:
Dr. Vinay Surendra Yadav
Assistant Professor
Operations and Quantitative Techniques
Indian Institute of Management Shillong, India
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 Contents
• Me in a Nutshell
• Myths and Warnings
• What is Operations Management?
• History of Operations Management
• Goods and Services
• ITO Model
• Basics and Overlapping Functions in an Organizations
• Metrics and Trade-off
• Hierarchical Planning
• Quality
• Productivity

2
 Me in a Nutshell Scopus Author ID: 57196010557
Orcid ID: 0000-0002-0744-2384
Last update:
Education : Ph.D. (Supply Chain) 29/09/2024
M.Tech (Industrial Engg. & Mgmt.)
B.E. (Mech Engg.)
Past Affiliations: Post Doc (IIT Delhi)
Research Productivity:
• 25 Journals Articles (11 A, 1 B and 3 C Category: ABDC, 22 SCI/SSCI)
• 3 Book Chapters (SCOPUS)
• 6 Conferences (4 SCOPUS)
Service to Research Community:
➢ Reviewer of more than 30 International Journals and some internationally
Areas of Interest:
renowned conferences. • Supply Chain
Professional Bodies: • Blockchain
➢ Life Member of IIIE, ORSI, IEI and GIFT. • Multiple-Criteria Decision Making
• Mathematical Programming
Selected Recognitions: • Industry 4.0 Technologies
• Gold Medallist (M.Tech) Tools:
• Top Reviewer for Sustainable Production and Consumption (2022-23) • R, MATLAB, MS-Excel (Advanced),
• Best Track Paper at 8th Asian Conference on IEOM, Indonesia SPSS, AMOS, BibExcel, VOSViewer,
3 Citespace and Tableau etc.
 Myths and Warning
❑ Myths:
 Operations Management and Operations Research are same
 Operations Management is all about complex math
 Operations Management is difficult to understand

❑ Warnings:
✓ Don’t come to the class unprepared!
✓ Don’t be late for the class
✓ Don’t take Operations Management lightly

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 What is Operations Management?
 What is operations?
 The part of a business organization that is responsible for producing goods or services

 How can we define operations management?

 The management of systems or processes that create goods and/or provide services

https://www.youtube.com/watch?v=IdxE5giy0a0&list=PPSV - Hindi

https://www.youtube.com/watch?v=aPb-slJH9Vs - English

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 The Transformation Process
Value-Added

Inputs Transformation/ Outputs

•Land Conversion •Goods
•Labor •Services
•Capital
Process
•Information

Measurement Remember the

and Feedback activity we did in
Measurement Measurement the class
and Feedback and Feedback
Control

 Feedback = measurements taken at various points in the transformation process

 Control = The comparison of feedback against previously established standards
to determine if corrective action is needed.
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 Good or Service?
❑ Goods are physical items that include raw materials, parts, subassemblies, and
final products.
✓ Automobile
✓ Computer
✓ Oven
✓ Shampoo

❑ Services are activities that provide some combination of time, location, form or
psychological value.
❖ Air travel
❖ Education
❖ Haircut
❖ Legal counsel
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 Differences Between Goods and Services
CHARACTERISTICS OF SERVICES CHARACTERISTICS OF GOODS
Intangible: Ride in an airline seat Tangible: The seat itself
Produced and consumed simultaneously: Beauty salon Product can usually be kept in inventory (beauty care
produces a haircut that is consumed as it is produced products)
Unique: Your investments and medical care are unique Similar products produced (iPods)
High customer interaction: Often what the customer is Limited customer involvement in production
paying for (consulting, education)
Inconsistent product definition: Auto Insurance changes Product standardized (iPhone)
with age and type of car
Often knowledge based: Legal, education, and medical Standard tangible product tends to make automation
services are hard to automate feasible
Services dispersed: Service may occur at retail store, local Product typically produced at a fixed facility
office, house call, or via internet.
Quality may be hard to evaluate: Consulting, education, Many aspects of quality for tangible products are easy to
and medical services evaluate (strength of a bolt)
Reselling is unusual: Musical concert or medical care Product often has some residual value

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History of Operations Management

Technology Focus

Now

9
 The Heritage of Operations Management
 Division of labor (Adam Smith 1776; Charles Babbage  CPM/PERT (DuPont 1957, Navy 1958)
1852)  Material requirements planning (Orlicky 1960)
 Standardized parts (Whitney 1800)  Computer aided design (CAD 1970)
 Scientific Management (Taylor 1881)  Flexible manufacturing system (FMS 1975)
 Coordinated assembly line (Ford/ Sorenson 1913)  Baldrige Quality Awards (1980)
 Gantt charts (Gantt 1916)  Computer integrated manufacturing (1990)
 Motion study (Frank and Lillian Gilbreth 1922)  Globalization (1992)
 Quality control (Shewhart 1924; Deming 1950)  Internet (1995)
 Computer (Atanasoff 1938)

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 Basic and Overlapping Functions of Business
Organizations
Organization

Marketing Operations Finance

 Finance & Operations
 Budgeting
 Economic analysis of investment proposals
 Provision of funds
 Marketing & Operations
 Demand data
 Product and service design
 Competitor analysis
 Lead time data
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 Systems Approach

 System - a set of interrelated parts that must work together

 The business organization is a system composed of subsystems
 marketing subsystem
 operations subsystem
 finance subsystem

 The systems approach

 Emphasizes interrelationships among subsystems
 Main theme is that the whole is greater than the sum of its parts
 The output and objectives of the organization take precedence over those of any one
subsystem

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 Why Study Operations Management?
 Every aspect of business affects or is affected by operations
 Many service jobs are closely related to operations
 Financial services
 Marketing services
 Accounting services
 Information services

 Through learning about operations and supply chains you will have a better
understanding of:
 The world you live in
 The global dependencies of companies and nations
 Reasons that companies succeed or fail
 The importance of working with others
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 Scope of OM

The scope of operations management ranges across the organization.

The operations function includes many interrelated activities such as:

 Forecasting
 Capacity planning
 Facilities and layout
 Scheduling
 Managing inventories
 Assuring quality
 Motivating employees
 Deciding where to locate facilities
 And more . . .

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 Operations and Supply Chain: Career Opportunities
 Operations manager

 Supply chain manager

 Production analyst

 Schedule coordinator

 Production manager

 Industrial engineer

 Purchasing manager
 Inventory manager

 Quality manager

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 OM-Related Professional Societies
 APICS - The Association for Operations Management

 American Society for Quality (ASQ)

 Institute for Operations Research and Management Science (INFORMS)

 The Production and Operations Management Society (POMS)

 The Project Management Institute (PMI)

 Society of Operations Management (SOM)

 Charter Institute of Purchasing and Supply (CIPS)

 Council of Supply Chain Management Professionals (CSCMP)

 Indian Industrial Institute of Engineers (IIIE)

 Operational Research Society of India (ORSI)

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 Process Management

Process - one or more actions that transform inputs into outputs

 Variations can be disruptive to operations and supply chain processes. They may
result in additional costs, delays and shortages, poor quality, and inefficient work
systems.
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 Supply & Demand

Operations &
Supply Chains Sales & Marketing

Wasteful
Supply
> Demand Costly

Opportunity Loss
Supply
< Demand Customer
Dissatisfaction

Supply
= Demand Ideal

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 Role of Operations Manager
The Operations Function consists of all activities directly related to producing
goods or providing services.

A primary function of the operations manager is to guide the system by decision

making.
 System Design Decisions
 System Operation Decisions

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 System Design Decisions
• System Design
– Capacity

– Facility location
– Facility layout
– Product and service planning
– Acquisition and placement of equipment

• These are typically strategic decisions that

• usually require long-term commitment of resources
• determine parameters of system operation

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 System Operation Decisions

• System Operation
• These are generally tactical and operational decisions
– Management of personnel
– Inventory management and control
– Scheduling
– Project management
– Quality assurance

• Operations managers spend more time on system operation decision than any other decision
area
• They still have a vital stake in system design

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 OM Decision Making

 Most operations decisions involve many alternatives that can have quite
different impacts on costs or profits

 Typical operations decisions include:

 What: What resources are needed, and in what amounts?

 When: When will each resource be needed? When should the work be scheduled? When
should materials and other supplies be ordered?
 Where: Where will the work be done?

 How: How will he product or service be designed? How will the work be done? How will
resources be allocated?
 Who: Who will do the work?

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 Metrics and Trade-Offs

 Performance Metrics  Analysis of Trade-Offs

 All managers use metrics to  A trade-off is giving up one
manage and control operations thing in return for
 Profits something else
 Costs  Carrying more inventory
 Quality (an expense) in order to
 Productivity achieve a greater level of
 Flexibility customer service
 Inventories
 Schedules
 Forecast accuracy

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 Key Issues for Operations Managers Today

➢ Economic conditions

➢ Innovating

➢ Quality problems

➢ Risk management

➢ Competing in a global economy

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 Environmental Concerns

 Sustainability
 Using resources in ways that do not harm ecological systems that support
human existence
 Sustainability measures often go beyond traditional environmental and economic
measures to include measures that incorporate social criteria in decision making

 All areas of business will be affected

 Product and service design
 Consumer education programs
 Disaster preparation and response
 Supply chain waste management
 Outsourcing decisions

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 Competitiveness
Competitiveness
 How effectively an organization meets the wants and needs of customers relative to others
that offer similar goods or services
 Organizations compete through some combination of their marketing and operations
functions
• What do customers want?
• How can these customer needs best be satisfied?

Marketing’s Influence
 Identifying consumer wants and/or needs
 Pricing and quality
 Advertising and promotion

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 Businesses Compete Using Operations

1. Product and service design

2. Cost
3. Location
4. Quality
5. Quick response
6. Flexibility
7. Inventory management
8. Supply chain management
9. Service
10. Managers and workers

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 Why Some Organizations Fail
1. Neglecting operations strategy
2. Failing to take advantage of strengths and opportunities and/or failing to recognize
competitive threats
3. Too much emphasis on short-term financial performance at the expense of R&D
4. Too much emphasis in product and service design and not enough on process
design and improvement
5. Neglecting investments in capital and human resources
6. Failing to establish good internal communications and cooperation
7. Failing to consider customer wants and needs

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Hierarchical Planning

Mission

Goals

Organizational Strategies

Functional Strategies

Tactics

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 Mission and Goals
 Mission
 The reason for an organization’s existence

 It answers the question “What business are we in?”

 Goals
 Provide detail and the scope of the mission

 Goals can be viewed as organizational destinations

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 Strategies
 Strategy
 A plan for achieving organizational goals
 Serves as a roadmap for reaching the organizational destinations
 The organizational strategy guides the organization by providing direction for, and alignment of,
the goals and strategies of the functional units
 The organizational strategy is a major success/failure factor

❖ Organizational strategies
 Overall strategies that relate to the entire organization
 Support the achievement of organizational goals and mission

❖ Functional level strategies

 Strategies that relate to each of the functional areas and that support achievement of the
organizational strategy

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 Tactics and Operations
 Tactics
 The methods and actions taken to accomplish strategies
 The “how to” part of the process

 Operations
 The actual “doing” part of the process

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 Core Competencies

The special attributes or abilities that give an organization a

competitive edge

To be effective core competencies and strategies need to be

aligned

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 Sample Operations Strategies

Organizational Strategy Operations Strategy Examples of Companies or Services

U.S. first-class postage

Low Price Low Cost
Wal-Mart
Short processing times McDonald’s restaurants
Responsiveness
On-time delivery FedEx

High performance design and/or high Sony TV

Differentiation:
quality processing
High Quality
Consistent Quality Coca-Cola

Differentiation:
Innovation 3M, Apple
Newness
Differentiation: Flexibility Burger King (Have it your way”)
Variety Volume McDonald’s (“Buses Welcome”)
Differentiation: Disneyland
Superior customer service
Service IBM
Differentiation:
Convenience Supermarkets; Mall Stores
Location

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 Strategy Formulation
 Effective strategy formulation requires taking into account:
 Core competencies
 Environmental scanning - SWOT

 Successful strategy formulation also requires taking into account:

 Order qualifiers
 Order winners
 Order qualifiers
 Characteristics that customers perceive as minimum standards of
acceptability for a product or service to be considered as a potential
for purchase
 Order winners
 Characteristics of an organization’s goods or services that cause it to
be perceived as better than the competition
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 Environmental Scanning
 Environmental Scanning is necessary to identify
 Internal Factors (Strengths and Weaknesses)
Human Resources
Facilities and equipment Do SWOT analysis based on
Financial resources your experience
Customers
Products and services Remember the activity we
did in class.
Technology
Suppliers

 External Factors (Opportunities and Threats)

Economic conditions
Political conditions
Legal environment
Technology
Competition
Markets

36
 Operations Strategy
The approach, consistent with organization strategy, that is used to guide the operations
function.
Decision Area What the Decisions Affect
Product and service design Costs, quality, liability, and environmental issues
Capacity Cost, structure, flexibility
Process selection and layout Costs, flexibility, skill level needed, capacity
Work design Quality of work life, employee safety, productivity
Location Costs, visibility
Quality Ability to meet or exceed customer expectations
Inventory Costs, shortages
Maintenance Costs, equipment reliability, productivity
Scheduling Flexibility, efficiency
Supply chains Costs, quality, agility, shortages, vendor relations
Projects Costs, new products, services, or operating systems

37
 Operations Strategy
 Quality-based strategy
 Strategy that focuses on quality in all phases of an organization
 Trying to overcome a poor quality reputation
 Desire to maintain a quality image
 A part of a cost reduction strategy

 Time-based strategies
 Strategies that focus on the reduction of time needed to accomplish tasks
 It is believed that by reducing time, costs are lower, quality is higher, productivity is higher, time-to-market is
faster, and customer service is improved
 Areas where organizations have achieved time reductions:
 Planning time Product/service design time
 Processing time Changeover time
 Delivery time Response time for complaints

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 Quality
❑ "Fitness for intended use" (Dr. Joseph Juran)

❑ “Good quality means a predictable degree of uniformity and

dependability with a quality standard suited to the customer”
(Dr. W. Edwards Deming)

❑ “Quality denotes an excellence in goods and services, especially to the

degree they conform to requirements and satisfy customers”
(Philip B. Crosby)

❑ “Quality is everybody’s job, but because it is everybody’s job, it can

become nobody’s job without the proper leadership and organization.”
(Dr. Armand Feigenbaum)
We also discussed about Juran’s Trilogy, Deming 14 points, Crosby’s four absolute of quality management.

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 Total Quality Management
❖ Encompasses entire organization from supplier to customer

❖ Stresses a commitment by management to have a continuing

companywide drive toward excellence in all aspects of products and
services that are important to the customer

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 Seven Concepts of TQM
1. Continuous improvement 5. Just-in-time (JIT)

2. Six Sigma 6. Taguchi concepts

3. Employee empowerment 7. Knowledge of TQM tools

4. Benchmarking

41
 1. Continuous Improvement
► Never-ending process of continual improvement

► Covers people, equipment, materials, procedures

► Every operation can be improved

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Shewhart’s PDCA Model

4. Act 1. Plan
Implement Identify the
the plan, pattern and
document make a plan

3. Check 2. Do
Is the plan Test the
working? plan

43
 1. Continuous Improvement
❑ Kaizen describes the ongoing process of unending
improvement

❑ TQM and zero defects also used to describe continuous

improvement

44
 2. Six Sigma
► Two meanings
► Statistical definition of a process that is 99.9997% capable,
3.4 defects per million opportunities (DPMO)
► A program designed to reduce defects, lower costs, save
time, and improve customer satisfaction

► A comprehensive system for achieving and sustaining

business success

45
 2. Six Sigma
Lower limits Upper limits
► Two meanings
2,700 defects/million
► Statistical definition of a process that is
3.499.9997%
defects/million capable, 3.4 defects per
million opportunities (DPMO)
► A program designed to reduce defects,
lower costs, save time, and improve
customer satisfaction Mean
► A comprehensive system±3for achieving

and sustaining business ±6success

46
 3. Six Sigma
► Originally developed by Motorola, adopted and enhanced
by Honeywell and GE

► Highly structured approach to process improvement

► A strategy
► A discipline – DMAIC
► A set of 7 tools
6
47
 3. Six Sigma
1. Defines the project’s purpose, scope, and outputs, identifies the required
process information keeping in mind the customer’s definition of quality

2. Measures the process and collects data

3. Analyzes the data ensuring repeatability and reproducibility

DMAIC Approach
4. Improves by modifying or redesigning existing processes and procedures

5. Controls the new process to make sure performance levels are maintained

48
 Implementing Six Sigma
❑ Emphasize defects per million opportunities as a standard metric
❑ Provide extensive training
❑ Focus on corporate sponsor support (Champions)
❑ Create qualified process improvement experts (Black Belts, Green
Belts, etc.)
❑ Set stretch objectives

This cannot be accomplished without a

major commitment from top level
management

49
 3. Employee Empowerment
► Getting employees involved in product and process
improvements
► 85% of quality problems are due
to process and material
► Techniques
1) Build communication networks
that include employees
2) Develop open, supportive supervisors
3) Move responsibility to employees
4) Build a high-morale organization
5) Create formal team structures

50
 Quality Circles
► Group of employees who meet regularly to solve problems

► Trained in planning, problem solving, and statistical methods

► Often led by a facilitator

► Very effective when done properly

► The method is invented by Dr. Kaoru Ishikawa who is also known for
fishbone (cause-effect) diagram.

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 4. Benchmarking
Selecting best practices to use as a standard for performance

1. Determine what to benchmark

2. Form a benchmark team
3. Identify benchmarking partners
4. Collect and analyze benchmarking information
5. Take action to match or exceed the benchmark

52
Best Practices for Resolving Customer Complaints
Table
BEST PRACTICE JUSTIFICATION
Make it easy for clients to complain It is free market research
Respond quickly to complaints It adds customers and loyalty
Resolve complaints on first contact It reduces cost
Use computers to manage complaints Discover trends, share them, and align
your services
Recruit the best for customer service It should be part of formal training and
jobs career advancement

53
 Internal Benchmarking
 When the organization is large enough

 Data more accessible

 Can and should be established in a variety of areas

54
 5. Just-in-Time (JIT)
Relationship to quality:

► JIT cuts the cost of quality

► JIT improves quality

► Better quality means less inventory and better,

easier-to-employ JIT system

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 5. Just-in-Time (JIT)
► ‘Pull’ system of production scheduling including supply
management
► Production only when signaled

► Allows reduced inventory levels

► Inventory costs money and hides process and material
problems

► Encourages improved process and product quality

56
 6. Taguchi Concepts
► Engineering and experimental design methods to improve
product and process design
► Identify key component and process variables affecting
product variation

► Taguchi Concepts
► Quality robustness
► Quality loss function
► Target-oriented quality
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 Quality Robustness
► Ability to produce products uniformly in adverse
manufacturing and environmental conditions

► Remove the effects of adverse conditions

► Small variations in materials and process do not destroy

product quality

58
 Quality Loss Function
► Shows that costs increase as the product moves away
from what the customer wants

► Costs include customer dissatisfaction, warranty

and service, internal scrap and repair, and costs to society

► Traditional conformance specifications are too simplistic

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 Quality Loss Function
High loss
L = D2C
Unacceptable where
Loss (to L = loss to society
producing Poor
organization, D2 = square of the
customer, Fair distance from
target value
and society) Good
C = cost of deviation
Best
Low loss Target-oriented quality
yields more product in
the “best” category
Target-oriented quality
brings product toward
Frequency the target value
Conformance-oriented
quality keeps products
within 3 standard
deviations
Lower Target Upper
Specification
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 7. TQM Tools
► Tools for Generating Ideas
► Check Sheet
► Scatter Diagram
► Cause-and-Effect Diagram

► Tools to Organize the Data

► Pareto Chart
► Flowchart (Process Diagram)

► Tools for Identifying Problems

► Histogram
► Statistical Process Control Chart

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 Seven Tools of TQM
(a) Check Sheet: An organized
method of recording data

Hour

Defect 1 2 3 4 5 6 7 8

A /// / / / / /// /
B // / / / // ///
C / // // ////

62
 Seven Tools of TQM
(b) Scatter Diagram: A graph of the
value of one variable vs. another
variable

Productivity

Absenteeism

63
 Seven Tools of TQM
(c) Cause-and-Effect Diagram: A tool
that identifies process elements
(causes) that might effect an outcome
Cause
Materials Methods
Effect

Manpower Machinery

64
 Seven Tools of TQM
(d) Pareto Chart: A graph to identify and
plot problems or defects in descending
order of frequency

Frequency

Percent
A B C D E
We also discussed 80-20 rule.

65
 Seven Tools of TQM

(e) Flowchart (Process Diagram): A chart

that describes the steps in a process

66
 Seven Tools of TQM
(f) Histogram: A distribution showing the
frequency of occurrences of a variable
Distribution

Frequency

Repair time (minutes)

67
 Seven Tools of TQM
(g) Statistical Process Control Chart: A chart
with time on the horizontal axis to plot
values of a statistic

Upper control limit

Target value

Lower control limit

Time

68
 Seven Tools of TQM
Material Method
(ball) (shooting process)
Grain/Feel Aiming point
(grip)
Size of ball
Air pressure Bend knees
Hand position
Balance
Lopsidedness
Follow-through
Missed
Training
free-throws
Rim size

Conditioning Motivation Rim height

Consistency Rim alignment Backboard

stability
Concentration

Machine
Manpower (hoop &
(shooter) backboard)

69
 Pareto Charts
Data for October
– 100
70 –
– 93
– 88
60 –
54
Frequency (number)

Cumulative percent
50 – – 72

40 –
Number of
30 –
occurrences
20 –
12
10 –
4 3 2
0 –
Room svc Check-in Pool hours Minibar Misc.
72% 16% 5% 4% 3%
Causes and percent of the total

70
 Flow Charts
MRI Flowchart
1. Physician schedules MRI 7. If unsatisfactory, repeat
2. Patient taken to MRI 8. Patient taken back to room
3. Patient signs in 9. MRI read by radiologist
4. Patient is prepped 10. MRI report transferred to
5. Technician carries out MRI physician
6. Technician inspects film 11. Patient and physician
discuss

8
80%
1 2 3 4 5 6 7 11
9 10
20%

71
Statistical Process Control (SPC)

► Uses statistics and control charts to tell

when to take corrective action
► Drives process improvement
► Four key steps
► Measure the process
► When a change is indicated, find the
assignable cause
► Eliminate or incorporate the cause
► Restart the revised process
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 Control Charts

Plot the percent of free throws missed

40% Upper control limit

20% Coach’s target value

0% | | | | | | | | |
Lower control limit
1 2 3 4 5 6 7 8 9

Game number

73
 Attributes Versus Variables
► Attributes
► Items are either good or bad, acceptable or unacceptable
► Does not address degree of failure

► Variables
► Measures dimensions such as weight, speed, height, or strength
► Falls within an acceptable range

► Use different statistical techniques

74
 Productivity

 Productivity
 A measure of the effective use of resources, usually expressed as the ratio of output
to input

 Productivity measures are useful for

 Tracking an operating unit’s performance over time

 Judging the performance of an entire industry or country

75
 Why Productivity Matters?
 High productivity is linked to higher standards of living
 As an economy replaces manufacturing jobs with lower productivity service jobs, it is more
difficult to maintain high standards of living

 Higher productivity relative to the competition leads to competitive advantage

in the marketplace
 Pricing and profit effects

 For an industry, high relative productivity makes it less likely it will be

supplanted by foreign industry

76
 Productivity Measures
Output
Productivity =
Input

Output Ouput Output

Partial Measures ; ;
Single Input Labor Capital

 Output Ouput Output

Multifactor Measures ; ;
Multiple Inputs Labor +Machine Labor +Capital +Energy

 Goods or services produced

Total Measure
All inputs used to produce them

77

 Example

Units produced: 5,000

Standard price: $30/unit
Labor input: 500 hours
Cost of labor: $25/hour
Cost of materials: $5,000
Cost of overhead: 2x labor cost

What is the
multifactor
productivity?

78
 Solution

Output
Multifactor Productivity =
Labor +Material +Overhead

5,000 units  $30/unit

=
(500 hours  $25/hour) + $5,000 + (2(500 hours  $25/hour))

$150,000
=
$42,500

= 3.5294

79
 Productivity Growth

Current productivity- Previous productivity

Productivity Growth = 100%
Previous productivity

Example: Labor productivity on the ABC assembly line was 25 units per hour in 2014. In 2015, labor

productivity was 23 units per hour. What was the productivity growth from 2014 to 2015?

23 - 25
Productivity Growth = 100% = −8%
25

80
 Service Sector Productivity
❖ Service sector productivity is difficult to measure and manage because
◦ It involves intellectual activities
◦ It has a high degree of variability

❖ A useful measure related to productivity is process yield

◦ Where products are involved
◦ ratio of output of good product to the quantity of raw material input.
◦ Where services are involved, process yield measurement is often dependent on the particular
process:
◦ ratio of cars rented to cars available for a given day
◦ ratio of student acceptances to the total number of students approved for admission.

81
Factors Affecting Productivity

Methods

Capital Quality

Technology Management

82
 Improving Productivity

1. Develop productivity measures for all operations

2. Determine critical (bottleneck) operations
3. Develop methods for productivity improvements
4. Establish reasonable goals
5. Make it clear that management supports and encourages productivity improvement
6. Measure and publicize improvements
Don’t confuse productivity with efficiency : Remember the class discussion on one being quantity
driven while other being quality driven. In addition to this, remember the example of machine
utilization and overall revenue generated. Also, one is greater than one while other is less than one.

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