Lecture outline
Learning objectives of the course
Course descriptions-topics to be covered
Evaluation scheme
Chaper 1
Historical evolution of the course
Role of PPC in organizations
Strategy formulation and deployment
Learning Objectives
Student will be able to
Describe strategic importance of PPC and
operations for any organization
Describe the relationships of PPC with other
functions in an organization
Develop a skill set of analytical tools to solve
practical problems of production planning in
different industries
Topics to be covered
Topics to be covered Learning Objectives
Ch 1 Introduction to the function of Student will be able to demonstrate the importance of
PPC and developing strategy to be PPC in an organization. He/she will equipped with
successful methods to formulate and deploy strategy.
Student will be able to make a choice of economic
Ch 6 & Ch 1S Production process process under given level of production requirement
selection, design and technology using break even analysis. He/she will be able to make
decisions process analysis for identifying the scope for
improvement.
Student will be able to judicially decide on strategies
for aligning capacity with demand. He/she will also be
Ch 7 Capacity and facility planning
able to design layout of the plant for meeting different
objectives such as efficiency or effectiveness.
Student will be able to decide the appropriate location
Ch 7S Facilities location of a facility to meet different objectives using
mathematical tools as well as qualitative factors.
Topics to be covered
Topics to be covered Learning Objectives
Student will be able to forecast for operations management using
Ch 12 Forecasting different mathematical methods.
Student will be able to use classic analysis of inventory control
for economic operation management. He shall be able to decide
Ch 13 Role of Inventory on the choice of inventory management system and also decide
management on the safety stock using probabilistic models. He shall be able
to classify items based on their importance and accordingly
choose the appropriate inventory control model.
Ch 14 & 14S Aggregate Student will be able to use hierarchy in planning decision for
sales and operations effective aggregate planning and developing master schedule.
planning
Student will be able to use appropriate short-term scheduling
rules to solve different situations in operations. Student will be
Ch 17 Production
also be equipped to deal with more complex scheduling
scheduling
situations involving n-jobs of one machine, n-jobs on 2 machines
and use of theory of constraints.
Topics to be covered
Topics to be covered Learning Objectives
Student will be able to use project
scheduling techniques such as
Ch 9 Managing projects
PERT/CPT for effective project
management.
Student will be able to design
services to meet different
Ch 5 Designing services
requirements using tools such as
waiting line analysis etc.
Student will be equipped with
different HR strategies to manage the
Ch 8 HR in Operations
operations. Student will be able to
Management
use time and motion studies for job
design.
Topics to be covered
Topics to be covered Learning Objectives
MRP, Batching of discrete variable demand,
Ch 15 Resource Planning Extensions to MRP, JIT systems.
Systems
Students will be equipped with quality
Ch 2, Ch3 and Ch 3S Quality
management and control tools such
management and methods of
sampling plans, OC curve, SPC and Control
Quality control
Charts.
Student will be able to demonstrate the role
of lean production and JIT for effective
Ch 16 Lean Production operations management.
Student will be equipped with analytical
procedures to aid the new product design
Ch 4 Designing products activity. Student will be able to design
products for specific aims such as design for
manufacturing or design for reliability.
Evaluation components
Component Duration Marks
Mid Test 90 Min. 90
Quizes To be announced for 30
each quiz
Assignments To be announced for 30
/case studies each assignment
Compre 180 Min 80
exam
Text Book
Russel, R.S. and Taylor III, B.W., (2015),
Operations Management along the
Supply Chain, WSE, 8th Edition.
Chapter 1
Operations and supply chain
management introduction
Organization as
Transformation Process
INPUT
•Material
OUTPUT
•Machines TRANSFORMATION
•Goods
•Labor PROCESS
•Services
•Management
•Capital
Feedback
Task at hand: Design, operation, and improvement of productive
systems
The Material Flow Cycle
Cycle time
95% 5%
Input Wait for Wait to Move Wait in queue Setup Run Output
inspection be moved time for operator time time
WHY & HOW TO STUDY
AN INDUSTRIAL SYSTEM
Measure/estimate performance, Improve operation
Prepare for failures
System
Experiment Experiment with
Experiment with a
with the a physical model
Model of the system
actual system of the system
Mathematical
Simulation
Models
PPC and its relation to
operations management
Operations management is a broader term
encompassing both services and manufacturing while
the term PPC is relevant only in manufacturring
In modern times, the organizations involve in a
continuum of manufacturing and services and
operations have represented what PPC function does
traditionally
So, the course will have a broader operations focus in
mind as well
Continuum from Goods
to Services
Source: Adapted from Earl W. Sasser, R. P. Olsen, and D. Daryl Wyckoff,
Management of Service Operations (Boston: Allyn Bacon, 1978), p.11.
Evolution of industrial
systems
Craft production
process of handcrafting products or
services for individual customers
Division of labor
dividing a job into a series of small tasks
each performed by a
Scientific management
systematic analysis of work methods
different worker
Evolution of industrial
systems (cont.)
Mass production
high-volume production of a standardized
product for a mass market
Interchangeable parts
standardization of parts initially as
replacement parts; enabled mass
production
Lean production
adaptation of mass production that prizes
quality and flexibility
Historical Journey of
industrial developments
Era Events/Concepts Dates Originator
Steam engine 1769 James Watt
Industrial
Division of labor 1776 Adam Smith
Revolution
Interchangeable parts 1790 Eli Whitney
Principles of scientific
1911 Frederick W. Taylor
management
Frank and Lillian
Scientific Time and motion studies 1911 Gilbreth
Management Activity scheduling chart 1912 Henry Gantt
Moving assembly line 1913 Henry Ford
Historical Journey of
industrial developments (cont.)
Era Events/Concepts Dates Originator
Hawthorne studies 1930 Elton Mayo
Human 1940s Abraham Maslow
Relations Motivation theories 1950s Frederick Herzberg
1960s Douglas McGregor
Linear programming 1947 George Dantzig
Digital computer 1951 Remington Rand
Simulation, waiting
Operations Operations research
line theory, decision 1950s
Research groups
theory, PERT/CPM
1960s, Joseph Orlicky, IBM
MRP, EDI, EFT, CIM
1970s and others
Historical Journey of
industrial developments (cont.)
Era Events/Concepts Dates Originator
JIT (just-in-time) 1970s Taiichi Ohno (Toyota)
TQM (total quality W. Edwards Deming,
1980s
management) Joseph Juran
Quality
Strategy and Wickham Skinner,
Revolution 1990s
operations Robert Hayes
Business process Michael Hammer,
1990s
reengineering James Champy
Historical Journey of
industrial developments (cont.)
Era Events/Concepts Dates Originator
Globalization WTO, European Union, 1990s Numerous countries
and other trade 2000s and companies
agreements
Internet Internet, WWW, ERP, 1990s ARPANET, Tim
Revolution supply chain Berners-Lee SAP,
management i2 Technologies,
ORACLE,
PeopleSoft
E-commerce 2000s Amazon, Yahoo,
eBay, and others
Impact of E-Business
Benefits of E-Business Impact on Operations
Access to customers Demand increases; order fulfillment
and logistics become major issues;
worldwide production moves overseas
Logistics change from delivering to a
store or distribution center to
Middlemen are delivering to individual homes;
eliminated consumer demand is more erratic and
unpredictable than business demand
Outsourcing increases; more alliances
Access to suppliers and partnerships among firms are
worldwide formed; supply is less certain; global
supply chain issues arise
Lec 2
Measures of performance
Barriers to improve performance
Importance of PPC to support corporate
strategy
Methods of strategy formulation and
deployment
Case study
MEASURES OF
PERFORMANCE
The concepts of
efficiency,
effectiveness
productivity, .
WHY & HOW TO STUDY
AN INDUSTRIAL SYSTEM
Measure/estimate performance, Improve operation
Prepare for failures
System
Experiment Experiment with
Experiment with a
with the a physical model
Model of the system
actual system of the system
Mathematical
Simulation
Models
Efficiency
Measures the resources expected to be
consumed as compared to the resources
actually consumed.
Hence, it focuses on the input side of the
system. (Doing the things right)
Effectiveness
Measures what the system sets out to
accomplish (objective) with what was actually
accomplished; plan vs. actual
Hence, effectiveness is an output measure.
(Is the output “right” - right quality, right
quantity, on time, etc.)
Shortly, effectiveness means doing the
right thing.
Productivity
Productivity-- a broader concept
than efficiency;
It refers to effective use of a
given set of resources
Roy D. Shapiro, Core
Reading: Process Analysis,
HBP No. 8007 (Boston:
Harvard Business School
Publishing, 2013).
Competitiveness and
Productivity
Measures of Productivity
Productivity Increase
Become efficient
output increases with little or no increase in input
Expand
both output and input grow with output growing
more rapidly
Achieve breakthroughs
output increases while input decreases
Downsize
output remains the same and input is reduced
Retrench
both output and input decrease, with input
decreasing at a faster rate
What are the factors that
affect productivity?
Training Methods
Technology Management
31
Barriers to improve
performance
Economies of Scale
Capital Investment
Access to Supply and Distribution
Channels
Learning Curve
Example: Single Factor Productivity
10,000 Units Produced
Sold for $10/unit
What is the
500 labor hours labor productivity?
Labor rate: $9/hr
33
Example: Labor Productivity
10,000 units / 500hrs = 20 units/hr
(10,000 units * $10/unit) / 500hrs = $200/hr
10,000 units / (500hrs * $9/hr) = 2.2 unit/$
(10,000 units * $10/unit) / (500hrs * $9/hr) = 22.22
The last one is unit-less
Example: Multi-Factor Productivity
10,000 Units Produced
Sold for $10/unit
500 labor hours
Labor rate: $9/hr
Cost of raw material: $30,000
Overhead: $15,500 35
Example : Multi-Factor Productivity
Output
MFP = Labor + Materials + Overhead
(10,000 units) * ($10)
MFP =
(500)*($9) + ($30,000) + ($15,500)
MFP = ?
36
DEVELOPING STRATEGIES
1-37
Strategies to gain Competitive
Advantage
1. Differentiation – better, or at
least different
2. Cost leadership – cheaper
3. Response – more responsive
Strategic Planning
Mission
and Vision
Corporate
Strategy
Marketing Operations Financial
Strategy Strategy Strategy
1-39
Four Steps for Strategy
Formulation
Defining a primary task
What is the firm in the business of doing?
Assessing core competencies
What does the firm do better than anyone else?
Determining order winners and order qualifiers
What wins the order?
What qualifies an item to be considered for purchase?
Positioning the firm
How will the firm compete?
Cost
Quality
Flexibility
Speed
1-40
PPC’s Role in Corporate
Strategy
It provides support for a differentiated
strategy
It serves as a firm’s distinctive competence
in executing similar strategies better than
competitors
1-41
Strategy Deployment
Translating corporate
strategy into measurable
objectives
1-42
Top-down Approach
Operations Strategy Decisions
Strategic (long-range)
Facility Location, Long-Range
Capacity Planning
Tactical (medium-range)
Facility Layout, Acquisition of
resources
Operational planning
and control (short-range)
Scheduling work-force and
machinery
1–43
BALANCED SCORECARD
Copyright 2006 John Wiley & Sons, Inc. 1-45
Balanced Scorecard
Radar Chart Dashboard
Strategy formulation case study
Visualize This (VT) is a small start-up company specializing in virtual reality and computer
visualizations. Located in the research park of a major university, the company was founded by
Isaac Trice, a university professor, and staffed with the brightest of his former students. By all
accounts the technology is cutting edge. Facilities include a lab of 14 high-end computer
workstations adjacent to a CAVE (computer-aided virtual environment) and a small office. A
conference room and central lobby are shared with other tenants in the building. Originally the
company had partnered with the Swedish firm Salvania to create virtual environments for
medical and industrial design. Trice and his staff would develop the software for each
application, create a visual database supported with engineering or medical data, and run
design sessions for their clients in the CAVE. Salvania provided the capital, generated the
clients, and handled the business end of the operations. In its first two years of business, VT
completed four projects. With each project, VT advanced its skills in visualization and
developed customized tools to help its clients design intricate products. The clients were
pleased but did not anticipate repeating the intensive design process for several years.
Unfortunately, Salvania was unable to remain solvent and dissolved its partnership
with VT. VT was able to keep its workstations (whose salvage value was low), but gave up its
rights to the CAVE and furloughed all but three employees. To stay afloat, VT needed new
clients and a steady stream of income.
Trice lists the following possibilities:
• Designing computer-based training sessions for bank tellers of an international
finance institution
•Conducting software certification for the sales staff of a large software vendor
• Designing virtual reality tours through history for a major museum
• Developing Web-based virtual models for a women’s clothing retailer
• Creating virtual catalogues in which a customer can enlarge, rotate, and dissect a
product online.
1 Help Professor Trice formulate a strategy for his
company by going through the steps of strategy formulation.
2. Compare the processes required to satisfy each customer
on Trice’s client list. Consider the mix of equipment
and personnel, the length and scope of each
project, and the potential for future business. How do
the requirements differ from the projects already
completed by VT?
3. Which projects would you recommend to VT? Why?
1 Help Professor Trice formulate a strategy for his
company by going through the steps of strategy formulation.
2. Compare the processes required to satisfy each customer
on Trice’s client list. Consider the mix of equipment
and personnel, the length and scope of each
project, and the potential for future business. How do
the requirements differ from the projects already
completed by VT?
3. Which projects would you recommend to VT? Why?