Operations Management

Lecture-2 27 July, Saturday 7-9 pm

BITS Pilani Sandeep Kayastha, Hyderabad
Pilani Campus
Announcement

 The evaluation plan and weightages will be finalised in the next

week.

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 BITS Pilani
Pilani Campus

Operations and Productivity

Chapter - 1
Today’s lecture
Chapter No Topic Dates
1 Operations and Productivity 20 July, 27 July
2 Operations Strategy in a Global Environment
5 Design of Goods and Services
7 Process Strategy & Capacity and Constraint Management
8 Location Strategies
9 Layout Strategies
10 Human Resources, Job Design, and Work Measurement Mid Term Syllabus

12 Inventory Management
13 Aggregate Planning and S&OP
14 Material Requirements Planning (MRP) and ERP
15 Short-Term Scheduling
6 Managing Quality
16 Lean Operations
3 Project Management 4
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Topics

1. Operations and Operations Management

2. Operations for Goods and Services

3. Productivity
4. The Heritage (History) of Operations Management

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Productivity

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Productivity…1

Transformation
Inputs Outputs

Productivity = output /input

Example- RoI, Return on Investment = Returns/Investment

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Productivity…2

Transformation

Inputs Outputs

Productivity = output /input

All outputs and all inputs.

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Single factor productivity

Transformation

Inputs Outputs

Single Factor Productivity = One output /one input

Labour productivity-
• Laptops produced/day/manpower,
• Trucks loaded/hour/manpower
Machine productivity-
• Packets sorted/hour,
• Road roller- kms/ day
• Land- tons of wheat/ hectare

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Why single factor productivity?

Single factor productivity is used more frequently than Multi-

factor productivity.

When only one input is changed-

 Every day same machines but number of workers reporting differ

 Trained or untrained person- method different

 Different fertiliser- input different

 Calculator or Slide rule- technology different

 Shirt, Button-up or Button-down- method different

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Labour productivity measures

Single factor productivity is used more frequently than Multi-factor

productivity. Labour productivity is used more often that machine
productivity.

• Painter- sft/day
• Cleaning staff- sft/hour
• Factory worker- assemblies/shift
• Call centre staff- calls handled/shift
• Hotel housekeeping staff- rooms cleaned/shift
• Data entry operator- forms entered/shift
• Programmer- lines/day
• Doctor- patients seen/hour
• Judge- cases heard/month
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Multi-Factor productivity

Output
Multifactor =
Labor + Material + Energy + Capital + …
Productivity

Output and inputs are expressed in monetary units- Rs, Dollars, Yen…..

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Single factor productivity- Publishing.
From Textbook
Old System:
8 titles/day, Overhead = $400/day
New System:
14 titles/day, Overhead = $800/day
No Change
Staff of 4 works 8 hrs/day, Payroll cost = $640/day

Old labor 8 titles/day

= = .25 titles/labor-hr
productivity 32 labor-hrs

New labor 14 titles/day

= = .4375 titles/labor-hr
productivity 32 labor-hrs

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Multi-factor productivity

Old System:
8 titles/day, Overhead = $400/day
New System:
14 titles/day, Overhead = $800/day
No Change
Staff of 4 works 8 hrs/day Payroll cost = $640/day

Old multifactor 8 titles/day

= = .0077 titles/dollar
productivity $640 + 400

New multifactor 14 titles/day

= = .0097 titles/dollar
productivity $640 + 800

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Productivity improvement
Productivity improvement

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Productivity improvement

NITB

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Improving productivity by technology

• Calculator/Excel/Word
• Photocopy/Carbon paper
• Google maps
• Payment by BHIM
• Replace incandescent bulb with LED bulb
• Electronic thermometer
• Paper ballots to Electronic Voting Machine
• Drip irrigation
• Engage bigger truck
• Collection & Distribution- milk run

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The Flying Shuttle
NITB

• The flying shuttle invented by John

Kay in 1733 A.D.
• Allowed thread to be woven into
cloth faster.
• Doubled the amount of cloth
output per worker / per day.

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Seed Drill
NITB
Seed drill was invented by Jehtro Tull in 1701.

It planted seeds in a straight line and spaced

them out.
– The crops were planted in an orderly
fashion and the seeds did not have to
anymore fight over space to grow. No
seeds were wasted. The seed drill is still
used today.

More seeds germinated so higher crops

yield.

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 BITS Pilani
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Historical milestones in operations management

Ideas and people

1. Division of Labour- Adam Smith(1776) and Charles

Babbage (1830s)
2. Standardisation of parts- Eli Whitney, early 1800.

3. Work measurement- FW Taylor, 1890s.

4. Time and Motion Study- Frank and Lilian Gilbreth, 1910s.

5. Assembly lines- Henry Ford, 1910s.

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Division of labour
Adam Smith (1776) and Charles Babbage (1830s)

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Manufacturing pins- 1770s
NITB

• Operations in manufacturing of
pins- drawing, straightening,
pointing, twisting, cutting
heads, heading and tinning.

• Division of labour- one worker

does only one specific operation-
tremendously improves
productivity.
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 BITS Pilani
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Standardisation of parts
Eli Whitney- early 1800

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Parts of a Musket

NITB

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Interchangeable parts

• Eli Whitney introduced the idea of NITB

interchangeable parts to the U.S.

• Built ten guns and disassembled them

before the U.S. Congress. He placed the
parts in a mixed pile and was able to
reassemble all of the guns back.

• Before, everything was made by hand,

now parts were made by machines.

• The parts could be used in any musket.

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 BITS Pilani
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Measuring work
FW Taylor- 1890s
Coal and Pig Iron Shovelling

NITB

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Output vs. Shovel size

NITB

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FW Taylor’s results

• Original daily output increased from 12.5 tons per day to NITB

47.5 tons per day, after studying the work procedure and
using redesigned tools and procedures. This required 140
workers, 500 earlier.

Taylor’s major contribution

• Study the work- management responsibility.
• Design the procedure to do the work and train the worker.
• Matching employees to right job.
• Measure the work
• Incentive system started based on work.

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Application specific shovel

NITB

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Time and Motion study

Frank and Lilian Gilbreth- 1910s
Bricklaying

NITB

 No of motions reduced from 18 to 4.5.

 Output increased from 120 bricks/hour to 350 bricks/hour.

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“Best” way to lay the bricks

NITB

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Time and motion study- other examples

NITB

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Video

• Watch this original B&W video on Work Study and Time NITB

and Motion study.

– https://www.youtube.com/watch?v=8WDjKvzHUvw

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Remaining slides of this chapter will be covered in the next lecture.

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Assembly lines
Ford- 1910s
Slaughter house “disassembly” line - 1873
NITB

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Assembly line at Ford, 1910s

NITB
Moving assembly line to
make Model T.

Unfinished product
moved by conveyor past
work station.

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Assembly lines

NITB

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Ten strategic decisions in operations
management
DECISION
1. Design of goods and services
2. Managing quality
3. Process and capacity strategy
4. Location strategy
5. Layout strategy
6. Human resources and job design
Not part of this course.
7. Supply-chain management
8. Inventory management
9. Scheduling
10. Maintenance 43
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Next chapter-
2. Operations Strategy in a Global Environment