OM Tutorial

© 2006 Prentice Hall, Inc. 1–1

 What Is Operations
Management?

Production is the creation of

goods and services
Operations management (OM) is
the set of activities that creates
value in the form of goods and
services by transforming inputs
into outputs

© 2006 Prentice Hall, Inc. 1–2

 Productivity

Units produced
Productivity =
Input used

 Measure of process improvement

 Represents output relative to input
 Only through productivity increases
can our standard of living improve

© 2006 Prentice Hall, Inc. 1–3

 Productivity Calculations

Labor Productivity

Units produced
Productivity =
Labor-hours used

1,000
= = 4 units/labor-hour
250

© 2006 Prentice Hall, Inc. 1–4

 Multi-Factor Productivity

Output
Productivity =
Labor + Material + Energy +
Capital + Miscellaneous

 Also known as total factor productivity

 Output and inputs are often expressed in
dollars

© 2006 Prentice Hall, Inc. 1–5

 Productivity Variables

 Labor - contributes about 10% of

the annual increase
 Capital - contributes about 32% of
the annual increase
 Management - contributes about
52% of the annual increase

© 2006 Prentice Hall, Inc. 1–6

 Strategic Importance of
Layout Decisions

The objective of layout strategy is to

develop an economic layout that
will meet the firm’s competitive
requirements

© 2006 Prentice Hall, Inc. 1–7

 Types of Layout
1. Office layout
2. Retail layout
3. Warehouse layout
4. Fixed-position layout
5. Process-oriented layout
6. Work cell layout
7. Product-oriented layout
© 2006 Prentice Hall, Inc. 1–8
 Good Layouts Consider

1. Material handling equipment

2. Capacity and space requirements
3. Environment and aesthetics
4. Flows of information
5. Cost of moving between various
work areas

© 2006 Prentice Hall, Inc. 1–9

 Tutorial Q

1.5 Lori produces “final exam cargo package” for resale by her
sorority. She is currently working a total of 5hrs per day to produce
to produce 100 care packages.
a) What is Lori’s productivity?
B) Lori think that by redesigning the package , she can increase her
total productivity to 133 care package per day. What will be her
new productivity?
c) What will be the percentage increase in productivity if lori makes
the change?

© 2006 Prentice Hall, Inc. 1 – 10

 1.6 Eric Johnson makes billiard in his new England plant.
With recent increases in his cost , he has newfound interest in
efficiency . Eric is interested in determining the productivity of
his organization. he would like to know if his organization is
maintaining the manufacturing average 3% increase in
productivity. He has the following data representing a month
from last year and an equivalent month this year.
Show the productivity percentage change for each category
and then determine the improvement for labor-hours, the
typical standard .

Last year Now

Unit produced 1,000 1,000
Labor (hours) 300 275
Resin(pounds) 50 45
capital invested($) 10,000 11,000
Energy (BTU) 3,000 2,850
© 2006 Prentice Hall, Inc. 1 – 11
 1.7 Eric Johnson ( using data from problem 1.6)
determines his cost to be as follows ;
Labor : $ 10 per hr
Resin: $5 per hr
Capital expense: 1% per month of investment
Energy: $ .50 per BTU
Show the percentage change in productivity for one
month last year versus one month this year, on a multi
factor basis with dollars as common denominator.

© 2006 Prentice Hall, Inc. 1 – 12

 1.9 David Upton is president of Upton manufacturing, a
producer of go Go-kart tires. Upton makes 1,000 tires per day
with following with the following resources;
•What is the productivity per labor –hour for these tires at
Upton manufacturing?
•What is the multifactor productivity for these tires at Upton
manufacturing?
•What is the percent change in multifactor productivity if
Upton can reduce the energy bill by $1000 per day without
cutting production or changing any other input?

labor 400 hr per day @12.50 per hr

Raw material 20,000 pounds per day @ $1

per pound
Energy $ 5000 per day
Capital $ 10, 000 per day
© 2006 Prentice Hall, Inc. 1 – 13
 1.12 Lake Charles sea food makes 500 wooden
packing boxes for fresh seafood per day, working in
10 hr shift. Due to increased demand, the plant
managers have decided to operate three 8-hours shift
instead. The plant is now able to produce 650 boxes
per day. Calculate the company’s productivity
before the change in work rule and after the change.
What is the percent increase in productivity??

© 2006 Prentice Hall, Inc. 1 – 14

 8.16 the fixed and variable costs for three optimal
manufacturing plant site for a rattan chair weaver
are shown

a. Over what range of production is each optimal?

b. For a production of 200 unit , which site best

site Fixed cost perVariable cost

year per unit
1 $500 $11
2 1,000 7
3 1,700 4
© 2006 Prentice Hall, Inc. 1 – 15
 8.21

A chain of home health care firms in Louisiana need to locate a central office from
which to conduct internal audits and other periodic reviews of its facilities. These
facilities are scattered throughout the stat, as detailed in the following table. Each site,
except for Houma, will be visited three times each year by a team of workers, who will
drive from the central office to the site. Houma will be visited five times a year. Which
coordinates represent a good central location for this office ? What other factors might
influence the office location decision? Where would you place this office ? Explain.
Map Coordinates
City X Y
Covington 9.2 3.5
Donaldsonville 7.3 2.5
Houma 7.8 1.4
Monroe 5.0 8.4
Natchitoches 2.8 6.5
New Iberia 5.5 2.4
Opelousas 5.0 3.6
Ruston 3.8 8.5

© 2006 Prentice Hall, Inc. 1 – 16

 8.24 Eagel electronics must expand by building a second facility. The
search has been narrowed down to locate the new facility in one of four
cities: Atlanta(A), Baltimore(B), Chicago(C),or dalas (D)

i Score by site
Factor Weight(wi) A B C D
1 Labor quality 20 5 4 4 5
2 Quality of life 16 2 3 4 1
3 Transportation 16 3 4 3 2
4 Proximity to markets 14 5 3 4 4
5 Proximity to suppliers 12 2 3 3 4

6 Taxes 12 2 5 5 5
7 Energy supplies 10 5 4 3 3

•Using factor rating method, what is the recommended site for Eagle
Electronics’s new facility?
•For what range of value for the weight ( currently W7=10) does the site
given us the answer to part (a) remain a recommended site?

© 2006 Prentice Hall, Inc. 1 – 17

 Tutorial Questions
9.6 You have been just hired as the director of operations for
Home chocolates, a purveyor of exceptionally fine candles.
Home chocolates has two kitchen layouts under
consideration for its recipe making and testing department.
The strategy is to provide the best kitchen layout possible
so that the food scientists can devote their time and energy
to product improvement, not wasted effort in the kitchen.
You have been asked to evaluate these two kitchen
layouts and recommendation for your boss, Mr. Sumit, so
that he can proceed to place the contract for building the
kitchens.

See the alternative layouts

© 2006 Prentice Hall, Inc. 1 – 18

 Kitchen layout #1
4
4 4 4
Number of trips between work center
Refrig. 1 Counter 2 sink 3 storage 4 stove 5

Kitchen layout #2
Walking Distance in feet

sink 3 storage 4

6
12 5
9
Walking Distance in feet 7
7

Refrig. 1 Counter 2 stove 5

© 2006 Prentice Hall, Inc. 1 – 19

 9.14 The Toys r There Company has decided to manufacture a new toy
tractor,the production is of broken in to six steps. The demand for the
tractor is 4800 units per 40-hr work week:

a. Draw a precedence diagram of this operation

b. Given the demand, what is the cycle time for this operation?
c. What is the theoretical minimum number of workstations?
d. Assign tasks to workstations.
e. How much total idle time is present each cycle?
F. what is the over all efficiency of the assembly line with five stations;
and with six stations?

Task Performance time ( sec) Predecessors

A 20 none

B 30 A
C 15 A
D 15 A
E 10 B,C
F 30 D,E
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