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TRANSCRIPT
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To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition 2004 Prentice Hall, Inc. All rights reserved.
Chapter 1Chapter 1
Operations as aOperations as a
Competitive WeaponCompetitive Weapon
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To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition 2004 Prentice Hall, Inc. All rights reserved.
Process View of an Ad AgencyProcess View of an Ad Agency
Figure 1.1Figure 1.1
Accounting process
Production process Prepare ad for publication
and deliver to media outlets
Advertisement design
and planning process Create the ad to the
needs of the client andprepare a plan formedia exposure
Client interface process
Communicate with client,get needs, andcoordinate progress
Inputs
Clients
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To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition 2004 Prentice Hall, Inc. All rights reserved.
Nested ProcessesNested Processes
Figure 1.2Figure 1.2
Advertisement Design and Planning Process
Creative design process Receive work request Create team Prepare several designs Receive inputs from
Account Executive Prepare final concept
Revise concept perclients inputs
Media planning process Receive work request Prepare several media
plans Receive inputs from
Account Executive Prepare final plan
Revise plan per clientsinputs
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To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition 2004 Prentice Hall, Inc. All rights reserved.
Internal Value-Chain LinkagesInternal Value-Chain LinkagesShowing Work and Information FlowsShowing Work and Information Flows
Figure 1.3Figure 1.3
Externa
lsuppliers
E
xterna
lcustom
ers
Support processes
Supplier
relationship
process
Order
fulfillment
process
New service/
product
development
process
Customer
relationship
process
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To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition 2004 Prentice Hall, Inc. All rights reserved.
Support ProcessesSupport Processes
Capital Acquisition The provision of financial resources for the organization to do its work and toexecute its strategy
Budgeting The process of deciding how funds will be allocated over a period of time
Recruitment and Hiring The acquisition of people to do the work of the organization
Evaluation andCompensation
The assessment and payment of the people for the work and value theyprovide to the company
Human ResourceSupport andDevelopment
The preparation of the people for their current jobs and future skill andknowledge needs
Regulatory Compliance The process that insure the company if meeting all laws and legal obligations
Information Systems The movement and processing of data and information to expedite businessoperations and decisions
Enterprise andFunctional Management
The systems and activities that provide strategic direction and ensureeffective execution of the work of the business
Table 1.1 Examples of Support ProcessesTable 1.1 Examples of Support Processes
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To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition 2004 Prentice Hall, Inc. All rights reserved.
Types of OM DecisionsTypes of OM Decisions
Strategic choicesStrategic choices New ProcessesNew Processes QualityQuality Value ChainsValue Chains
Operating DecisionsOperating Decisions ProcessProcess
ManagementManagement Project ManagementProject Management InventoryInventory SchedulingScheduling
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Operations ManagementOperations Management
as a Functionas a Function
Figure 1.4Figure 1.4
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ProductivityProductivity
Productivity =
Output
Input
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ProductivityProductivity
Labor productivity = Policies processedEmployee hours
Example 1.1aExample 1.1a
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ProductivityProductivity
Labor productivity = 600 policies(3 employees)(40 hours/employee)
Example 1.1aExample 1.1a
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ProductivityProductivity
Labor productivity = 5 policies/hour
Example 1.1aExample 1.1a
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ProductivityProductivity
Labor productivity = 5 policies/hour
Multifactor productivity =
Quantity at standard costLabor cost + Materials cost + Overhead cost
Example 1.1bExample 1.1b
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ProductivityProductivity
Labor productivity = 5 policies/hour
Multifactor productivity =
(400 units)($10/unit) $4000$400 + $1000 + $300 $1700
= = 2.35
Example 1.1bExample 1.1b
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Productivity MeasuresProductivity Measures
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Productivity MeasuresProductivity Measures
Figure 1.5aFigure 1.5a
OM ExplorerOM Explorer
Tutor 1.1Productivity Measures
The state ferry service charges $18 per ticket plus a $3 surcharge to fund planned
equipment upgrades. It expects to sell 4,700 tickets during the eight-week summerseason. During that period, the ferry service will experience $110,000 in laborcosts. Materials required for each passage sold (tickets, a tourist-informationsheet, and the like) cost $1.30. Overhead during the period comes to $79,000.
a. What is the multifactorproductivity ratio?
b. If ferry-support staff work an average of 310 person-hours per week for the 8weeks of the summer season, what is the laborproductivity ratio? Calculate laborproductivity on an hourly basis.
Click here to continue.Click here to continue.
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Productivity MeasuresProductivity Measures
Tutor 1.1Productivity MeasuresEnter data in yellow areas. Use Tab to advance from one input cell to the next.
a. Multifactor productivity is the ratio of the value of output to the value of input.
Step 1. Enter the number of tickets sold during a season, the price per ticket, and thesurcharge per ticket. To compute value of output, multiply tickets sold by the sum of priceand surcharge.
Tickets sold: 4,700 Value of output:Price: $18Surcharge: $3
Step 2. Enter labor costs, materials costs per passenger, and overhead cost. For value ofinput, add together labor costs, materials costs times number of passengers, and overheadcosts.
Labor costs: $110,000 Materials costs: $1.30 Overhead: $79,000
Value of input:
Step 3. To calculate multifactor productivity, divide value of output by value of input.
Multifactor productivity:
Figure 1.5bFigure 1.5b
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17/20To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition 2004 Prentice Hall, Inc. All rights reserved.
Tutor 1.1Productivity MeasuresEnter data in yellow areas. Use Tab to advance from one input cell to the next.
b. Labor productivity is the ratio of the value of output to labor hours The value of output iscomputed in part a, step 1.
Step 1. Enter person-hours per week and the number of weeks in the season; multiply the twotogether to calculate labor hours of input.
Hours per week: 310 Weeks: 8
Labor hours of input:
Step 2. To calculate labor productivity, divide value of output by labor hours of input.
Labor productivity:
Click here to view the Results sheet.Click here to view the Results sheet.
Productivity MeasuresProductivity Measures
Figure 1.5bFigure 1.5b
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18/20To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition 2004 Prentice Hall, Inc. All rights reserved.
Productivity MeasuresProductivity Measures
Tutor 1.1Productivity MeasuresPlace cell pointer on green shaded areas to examine formulas.
a. Multifactor productivity is the ratio of the value of output to the value of input.
Step 1. Enter the number of tickets sold during a season, the price per ticket, and thesurcharge per ticket. To compute value of output, multiply tickets sold by the sum of priceand surcharge.
Tickets sold: 4,700 Value of output: $98,700Price: $18Surcharge: $3
Step 2. Enter labor costs, materials costs per passenger, and overhead cost. For value ofinput, add together labor costs, materials costs times number of passengers, and overheadcosts.
Labor costs: $110,000 Materials costs: $1.30 Overhead: $79,000
Value of input:$195,110
Step 3. To calculate multifactor productivity, divide value of output by value of input.
Multifactor productivity: 0.51
Figure 1.5cFigure 1.5c
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8/8/2019 ab.az_ch01
19/20To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition 2004 Prentice Hall, Inc. All rights reserved.
Tutor 1.1Productivity MeasuresPlace cell pointer on green shaded areas to examine formulas.
b. Labor productivity is the ratio of the value of output to labor hours The value of output iscomputed in part a, step 1.
Step 1. Enter person-hours per week and the number of weeks in the season; multiply the twotogether to calculate labor hours of input.
Hours per week: 310 Weeks: 8
Labor hours of input: 2,480
Step 2. To calculate labor productivity, divide value of output by labor hours of input.
Labor productivity: $39.80
Productivity MeasuresProductivity Measures
Figure 1.5cFigure 1.5c
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Operations RoadmapOperations Roadmap
Figure 1.6Figure 1.6
Competing with Operations
Operations As aCompetitive Weapon
1
Operations Strategy
2
Process Design Strategy3
Designing Value Chains
Supply ChainDesign
9
Lean Systems11
Location10
Designing andImproving Processes
Process Analysis4
ProcessPerformance and
Quality5
ProcessCapability6
ProcessLayout7
Planning andManaging Projects
8
Operating Value Chains
Information Technologyand Value Chains
12
Forecasting13
InventoryManagement
15
ResourcePlanning
16
Scheduling17
Aggregate Planning14
Outcomes