1. Why Manufacturing Matters (in Thailand)

2. How to improve the productivity of an Organization
Finance
Operations
Marketing
Management
system

3. Operations Management (supplement topic)
APICS defines operations management as "the field of study that focuses on the effective planning, scheduling, use and control of a manufacturing or service organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions as they affect the organization" (APICS Dictionary, 11th edition)
APICS was founded in 1957 as the American Production and Inventory Control Society
Currently, APICS becomes The Association for operations management , a not-for-profit international education organization, offering certification programs, training tools and networking opportunities to increase workplace performance.

4. Scope of Operations Management
Operations Management includes:
Forecasting
Capacity planning
Scheduling
Managing inventories
Assuring quality
Motivating employees
Deciding where to locate facilities
Supply chain management
And more . . .
Production planning and control
(current topic)

5. Production Planning and Control
Production control is:
“the task of predicting, planning and scheduling work, taking into account manpower, materials availability and other capacity restrictions, and cost so as to achieve proper quality and quantity at the time it is needed and then following up the schedule to see that the plan is carried out, using whatever systems have proven satisfactory for the purpose.” 1
Man
Machine
Materials
Capital
Information
Production planning and
control
systems
Quality
Quantity
Delivery time
Inventory management
MRP, ERP, JIT
1Reinfeld, N.V., Production Control. , Prentice-Hall, Englewood Cliffs, NJ.

6. Scope of production control and the flow of information

7. (short-rang planning)
Scope of production control and the flow of information (extended version)
Marketing and
sales
Production
engineering
Production
engineering
Human resource
(work force) 4
purchasing
Forecasting 1
Aggregation planning
(long-rang planning) 2 3
Master production
schedule
(short-rang planning) 5 8 9 6 7 3
Shop scheduling
Monitoring
Control
Inventory control 11 12 10
Raw materials
Testing and
inspecting
assembling
machining
Shipping finished
goods
Inventory

15. Production planning and control
Pond draining/re-order point system
Push System/ Material Requirement Planning System (MRP)
Pull System/ Just In Time (JIT)

16. Pond draining/re-order point system

17. Push System/ Material Requirement Planning System (MRP)

18. Pull System/ Just In Time (JIT)

19. Productivity Productiv ity = Outputs Inputs Partial measures
output/(single input)
Multi-factor measures
output/(multiple inputs)
Total measure
output/(total inputs)
Productiv
ity =
Outputs
Inputs

20. Productivity Growth Productivity Growth =
Current Period Productivity – Previous Period Productivity
Previous Period Productivity

21. Measures of Productivity
Partial Output Output Output Output measures Labor Machine Capital Energy
Multifactor Output Output
measures Labor + Machine Labor + Capital + Energy
Total Goods or Services Produced
measure All inputs used to produce them

22. Examples of Partial Productivity Measures
Units of output per kilowatt-hour
Dollar value of output per kilowatt-hour
Energy Productivity
Units of output per dollar input
Dollar value of output per dollar input
Capital Productivity
Units of output per machine hour
machine hour
Machine Productivity
Units of output per labor hour
Units of output per shift
Value-added per labor hour
Labor Productivity

23. Example 3 7040 Units Produced Cost of labor of $1,000
Cost of materials: $520
Cost of overhead: $2000
What is the multifactor productivity?
Ans. 2.0 units per dollar of input

24. Example 3 Solution MFP = Output Labor + Materials + Overhead
MFP = (7040 units)
$ $520 + $2000
MFP = 2.0 units per dollar of input

25. Productivity Output Input Productivity =
This series of slides illustrates the productivity calculations shown in Example 1.1. The series builds in steps to the conclusion of the Example showing the development of key equations along the way.
This slide advances automatically..

26. Productivity Policies processed Employee hours Labor productivity =
From this point the slides present the insurance policy portion of Example 1.1.
Example 1.1a

27. (3 employees)(40 hours/employee)
Productivity
Labor productivity =
600 policies
(3 employees)(40 hours/employee)
The numbers are substituted in the equation.
Example 1.1a

28. Productivity Labor productivity = 5 policies/hour Example 1.1a
The the productivity is found.
Example 1.1a

29. Quantity at standard cost Labor cost + Materials cost + Overhead cost
Productivity
Labor productivity = 5 policies/hour
Multifactor productivity =
Quantity at standard cost
Labor cost + Materials cost + Overhead cost
This series of slides presents the multifactor productivity calculations in Example 1.1. We have used a graphic of carpet installation as this is mentioned in the text as an example of multifactor productivity.
Example 1.1b

30. Productivity Labor productivity = 5 policies/hour
Multifactor productivity =
(400 units)($10/unit) $4000
$400 + $ $300 $1700
= = 2.35
Example 1.1b

31. Productivity Measures
This series of slides presents the OM Tutor productivity exercise described following Example 1.1 in the text. Instructors may wish to skip this series of slides if they are using actual spreadsheet displays in the classroom.
This slide advances automatically.

32. Productivity Measures
OM Explorer
Tutor 1.1—Productivity 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 summer season. During that period, the ferry service will experience $110,000 in labor costs. Materials required for each passage sold (tickets, a tourist-information sheet, and the like) cost $1.30. Overhead during the period comes to $79,000.
a. What is the multifactor productivity ratio?
b. If ferry-support staff work an average of 310 person-hours per week for the 8 weeks of the summer season, what is the labor productivity ratio? Calculate labor productivity on an hourly basis.
Click here to continue.
The first slides shows the introductory screen from the Productivity example in OM Tutor.
Figure 1.5a

33. Productivity Measures
Tutor 1.1—Productivity Measures
Enter 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 the surcharge per ticket. To compute value of output, multiply tickets sold by the sum of price and surcharge.
Tickets sold: 4,700 Value of output:
Price: $18
Surcharge: $3
Step 2. Enter labor costs, materials costs per passenger, and overhead cost. For value of input, add together labor costs, materials costs times number of passengers, and overhead costs.
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:
The next two slides show the data input operations. This has been broken up into two slides to improve readability.
Figure 1.5b

34. Productivity Measures
Tutor 1.1—Productivity Measures
Enter 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 is computed in part a, step 1.
Step 1. Enter person-hours per week and the number of weeks in the season; multiply the two together 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.
Figure 1.5b

35. Productivity Measures
Tutor 1.1—Productivity Measures
Place 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 the surcharge per ticket. To compute value of output, multiply tickets sold by the sum of price and surcharge.
Tickets sold: 4,700 Value of output: $98,700
Price: $18
Surcharge: $3
Step 2. Enter labor costs, materials costs per passenger, and overhead cost. For value of input, add together labor costs, materials costs times number of passengers, and overhead costs.
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:
These slides show the results of the exercise. Again, there are two slides to improve readability.
Figure 1.5c

36. Productivity Measures
Tutor 1.1—Productivity Measures
Place 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 is computed in part a, step 1.
Step 1. Enter person-hours per week and the number of weeks in the season; multiply the two together 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
Figure 1.5c