GRADUATE SCHOOL OF BUSINESS

Mendiola Street, San Miguel Manila

PRODUCTION AND
OPERATIONS MANAGEMENT
 GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

COURSE OVERVIEW
Total Quality Management MRP ERP
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

PRODUCTION AND
PRODUCTION AND OPERATIONS
OPERATIONS
MANAGEMENT
MANAGEMENT

Project
Management
forecasting
Lean
 GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

Modules
Strategy Development and Implementations

Design and Build (New Product design, Location Strategy,

Process design and Plan layout

Work System (Job Design, HR Strategy, Labor Planning)

Operations Execution and Control (Inventory Management,

MRP etc..)

Supply Chain Management

Total Quality Management

Project Management
 GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

LEARNINGS

Introduce the various elements that comprises the field of

Production and Operations Management

Identify tools and concepts that can be useful to your current

situation / work function

Develop an appreciation of the need to interact with the other

functions within the organization

Broader understanding of the globalization trend and its effect

on production and operations management

To provide an integral framework for the understanding

production and operations management as a whole and its role
in an organization
 GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila
An Operational Perspective:

Conversion of set of INPUTS to some desirable OUTPUTS

= TRANSFORMATION PROCESS

TRANSFORMATIO
INPUTS N PROCESS
OUTPUTS

Customers and/or materials Goods and services

Physical, Location, Storage,
Informational

Inputs Components Transformation Desired Outputs

Hungry customer Chefs, waitresses Well serve and Satisfied customer
prepared food
MBA students, Professors, Imparting Quality MBA
teaching module learning knowledge and graduates
environment skills
?? ?? ?? ??
DEFINITION OF TERMS
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

COMPETITION - Rivalry in which every seller tries to get

what other sellers are seeking at the same time: sales, LL
profit, and market share by offering the best practicable A
I S
combination of price, quality, and service. Where the

market information flows freely, competition plays a
S S G
regulatory function in balancing demand and supply.

N E I N
E N
(http://www.businessdictionary.com/definition/competition)
N
IV I
COMPETITIVENESSI-T pertains Wto the ability and
E T sub-sector
performance of a firm,
U T or country to sell and
supply goodsP
the abilityM B O
and services in a given market, in relation to

CO in the same
and performance of other firms, sub-sectors or
countries A market.
COMPETITIVE ADVANTAGE - is an advantage over
competitors gained by offering consumers greater value,
either by means of lower prices or by providing greater
benefits and service that justifies higher prices
COMPETITIVE PRIORITIES
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

COST Products sold based on cost (commodity like flour,

gasoline, sugar, rice).consumers cannot distinguish the
products made by one firm or the other competitors

QUALITY-

a. Product Quality Customer requirement

b. Process Quality Defect free

DELIVERY Speed of delivery direct effect on profits and

market share of the firm (George Stalk Jr. of Boston Consulting)

FLEXIBILITY ability of the company to offer wide range of

variety of products

SERVICE- Value Added

ENVIRONMENT FRIENDLY GO GREEN

 GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

Successful Companies must be able

to:

Continuously generate new product ideas

Convert this ideas into reliable functional

designs

Designs that are readily producible

Select the proper process that will address

the customers needs (Technical and
Customer service aspect)
FACILITY LOCATION
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

Three most important factors in Service

Operations
Location
Location
Location

Facility location - is the process of

identifying the best geographic location for
a service or production facility
FACILITY LOCATION
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

Locating Facilities
Qualitative Factors
Local Infrastructure (Institutional,
Transportational)

Worker Skills -

Product Content Requirement percentage of a

product that must be made within a country for it
to be sold (Car Industry, Philippines)

Political / Economic Stability -

CAPACITY
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

Capacity Decisions

Capacity is the maximum output rate of a production or

service facility
Capacity planning is the process of establishing
the output rate that may be needed at a facility

Capacity of the production System defines the firms

competitive boundaries Response rate to market

Cost structure
Work force Composition
Level of technology
Inventory Strategy
CAPACITY
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila
Capacity Information Needed

Design capacity:
Maximum output rate under ideal conditions
A bakery can make 30 custom cakes per day
when pushed at holiday time

Effective capacity:
Maximum output rate under normal (realistic)
conditions
On the average this bakery can make 20
custom cakes per day
CAPACITY
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

Calculating Capacity Utilization

Measures how much of the available capacity is
actually being used:

actual output rate

Utilization 100%
capacity

Measures effectiveness
Use either effective or design capacity in
denominator
CAPACITY
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

Example of Computing Capacity Utilization: In the bakery

example the design capacity is 30 custom cakes per day.
Currently the bakery is producing 28 cakes per day. What is the
bakerys capacity utilization relative to both design and
effective capacity? actual output 28
Utilizatio n ef f ective (100%) (100%) 140%
effective capacity 20

actual output 28
Utilizatio n design (100%) (100%) 93%
design capacity 30

The current utilization is only slightly below its design

capacity and considerably above its effective capacity

The bakery can only operate at this level for a short period
of time
LAYOUT
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

Layout: the configuration of departments, work

centers, and equipment,
Whose design involves particular emphasis on
movement of work (customers or materials)
through the system
Importance of layout
Requires substantial investments of money and
effort
Involves long-term commitments
Has significant impact on cost and efficiency of
short-term operations
Possible Questions
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

Explain comprehensively the statement below ;

Competitiveness is all about winning

Some of the major issues facing operations management

executives today in this constantly changing business environment
are the following;
A. Reducing the development and manufacturing time for new
goods and services
B. Achieving and sustaining high quality while controlling cost
C. Integrating new technologies and control systems into existing
processes
D. Obtaining, training and keeping qualified workers and
managers

Discuss your recommendation(s) and course of action(s) for each

issue(15points)

Explain how forecast influences the operations management

function decision involving process selection, capacity
planning, facility layout
Possible Questions
GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

Salon A Salon B
Sales (Month) in 30,000 42,000
PHP
# of Customers / 250 350
week
Number of 4 5
hairdressers
Number of chairs 10 15
Design Capacity / 350 400
Week
Effective Capacity / 300 350
Week
As an owner of a Salon with 2 existing branches in
Metro Manila, you received the following information.
Requirements:
Compute for Capacity Utilization:
Design Capacity
Effective Capacity
Give your analysis and recommendation
Possible Questions
GRADUATE SCHOOL OF BUSINESS
Forecast for Week 4 Mendiola Street, San Miguel Manila

# of
Weeks
customers
1 250
2 350
3 400

Simple Exponential Exponential Smoothing

Moving
Average
Smoothing
(.7)
Ft 1 A t 1 Ft

Based on effective and design capacity of Salon A and

B and with the result of the new forecast what will be
your recommendation.
 GRADUATE SCHOOL OF BUSINESS
Mendiola Street, San Miguel Manila

GOD BLESS