Operation Management

Mahr Irfan Ahmad Tahir

B.Sc., ACFMA(Pak), MIPA(Aus)
AFA(UK)
 OM-Market Analysis
• Market analysis divides customer into market segment and identifies
the needs of each market segment
– Market segmentation is the process of identifying groups of customers with
enough in common to warrant the design and provision of services or product
that the group wants and needs
– Identifies the needs of each segment and assesses how well competitors are
addressing those needs
– Market needs may be grouped
• Service or product needs(attributes such as price, quality and degree of customization)
• Delivery system needs(attributes of processes and supporting system and recourses
needed to deliver such as availability, convenience, courtesy, safety, accuracy, reliability)
• Volume needs(attributes of demand such as high/low volume, degree of variability in
volume, degree of predictability in volume)
• Other needs(other attributes such as reputation, no of years in business, after sale
technical support, ability to invest, competent legal services)
 Competitive priorities and capabilities

• Competitive priorities are the critical

operational dimensions a process or supply
chain must to satisfy internal or external
customers, both now and in future
• Competitive capabilities(cost, quality, time and
flexibility dimensions that a supply chain or
process actually possesses and able to deliver)
 Order winner and qualifier
• Order winner- a criterion customers to
differentiate the services or products of one
firm from others
• Order qualifier-minimal level from a set of
criteria for a firm to do business in a particular
market segment.
 Trends and challenges in OM
• Productivity Improvement (value of output
produced divided by the value of input)
– Productivity=output/input
– Measuring productivity
 OM-Productivity calculation
• Three employees process 600 insurance
policies in a week. They work 8 hrs/day,
5days/week.
• A team make 400 units, market price@$10
each. Job costs are $400 labor, $1000 material,
$300 overheads.
 OM-Trends and challenges
• Role of management (how addressed)
• Global competition
comparative cost advantage (china& india
have low cost)
disadvantage of globalization (quality,
technology, training etc)
strong global competition affects
industries everywhere)
 Designing & operating Process and SC

• Managing processes
– Process strategy and analysis
– Quality & performance
– Capacity planning
– Constraint management
– Lean systems
– Project management
 Designing & operating Process and SC
• Managing customer demand
– Forecasting
– Inventory management
– Operations planning &scheduling
– Resource planning
• Managing supply chains
– Supply chain design
– Supply chain logistic networks
– Supply chain integration
– Supply chain sustainability
 OM-problems
• Student tuition at university is $150 per semester
credit hour. The supplements school revenue by $100
per semester credit hour. Average class size of 3-credit
hour is 50 students. Labor costs are $4,000/class,
material costs $20per student per class and overhead
costs are $25,000 per class.
– Calculate multifactor productivity ratio for this course
process
– If instructor work an average of 14 hours per week for 16
weeks for each 3-credit class of 50 studens, what is labor
productivity ratio?
 OM-problem
• NA makes garments. In a week, employees
worked 360 hours for batch of 132 garments,
of which 52 were “seconds”. Seconds are sold
@ $90 each. Rest are sold @$200 each. What
is the labor productivity ratio?