DPB50133

OPERATION
MANAGEMENT
 CHAPTER 1:
INTRODUCTION TO OPERATION
MANAGEMENT AND PRODUCTIVITY

PN. SITI MARIAM BINTI SAMAT

Definition of Operation
Management
 Defined as activities related to the creation of goods or services by
converting or transforming inputs into outputs

Definition of Operation System

 Operations system is a system, where the main function is to

create goods and services. A system is a set of interacting or
independent components or subsystems, designed to achieve
common objectives.
Importance Of Operation
Management
 One of the major functions in an organization
-Marketing, Finance, and Operation Management.

 Enables us to know how goods and services are produced.

 Allows us to understand what operations manager do. The person

who is responsible in the operations department.
Objective of Operation Management

Achieving Adapting to
customer future survival
satisfaction

Being an
Using
effective
resources
producer
efficiently Meeting
Smooth expected
production demand and
process delivery
dates
 Objectives
1) Achieving customer’s satisfaction

2) Using resources efficiently

3) Smooth production processes

4) Meeting expected demand and delivery dates

5) Being an effective producer

6)Adapting for future survival

 Relationship between operation and
1)
other function
Goal of the organization
in an organization.
2) Capital investment
3) Marketing function
4) Computer based information

Other Function
- Finance
- Purchasing
- Marketing
- Personnel
Characteristic Of Services And
Manufactured Product.
Services Manufactured Products

➢Intangible outputs ❑Tangible products

➢Outputs cannot be stored ❑Products can be stored

➢High interaction with customer ❑Low interaction with customer

➢Difficult in measuring quality ❑Easy in measuring quality

➢Labour intensive ❑Capital intensive

 Define Productivity
❖ In control management productivity is defined as the overall efficiency and output of
a given operational system.
Productivity = unit produced (outputs) / input used

Importance Of Productivity
1) Reduction in labour cost per unit of output.
2) Reduction in overheads and power cost per unit of output.
3) Reduction in the price of goods.
4) Increase in wages and salary.
5) Increase in the reserve fund that can be utilized for expension and modernization.
 Productivity Measurement
 Productivity measurement is the best way to asses the ability of a country to improve
the living standards of its people .The same goes to an organization ,where its
productivity determines the efficient of the organization .

Productivity = Units produced (outputs)

Inputs used
calculate the productivity measurement

 The basic formula for calculating productivity is a

ratio of outputs produced to the inputs used in
production.

 Productivity= Output / Input

https://www.cleverism.com/lexicon/productivity-
formula-definition/
 Productivity (single factor) = units produced (outputs)
Inputs used

 Multifactor productivity= outputs

Labour+material+energy+capital+miscellaneous
EXAMPLE 1
Productivity refers to the rate of output per unit of labor, capital or equipment (input). We can
measure it in different ways. We can measure the productivity of a factory according to how long it
takes to produce a specific good. In the services sector, on the other hand, where units of goods
do not exist, it is harder to measure. Some service companies base their measurement on how
much revenue each worker generates. They then divide that amount by their salary.

For Example :

In a factory, you can measure it by dividing the total output by the number of workers. Imagine a
table factory that employs 100 people producing 2000 tables per day. The productivity of each
employee is:

2000 (tables) ÷ 100 (workers)

= 20 tables per worker per day
@
2000/100 = 20
Example 2
 Multifactor productivity = outputs

Labour+material+energy+capital+miscellaneous

Xyz incorporated wants to assess its productivity in a broader view. The company has
eight employees, working 8 hours per day( salary is rm10 an hour, which costs the
company rm640 of payroll per day). Other expenses incurred per day amounts to rm600.
one employee is able to produce 20 units of products in a day.
Multifactor productivity = 8 x 20
rm640 + rm600
= 160
Rm 1240
= 0.129 units per ringgit