Transcript Why Manufacturing Matters

Why Manufacturing Matters (in
Thailand)
GDP from Manufacturing and service sections In Thailand
3,500,000
GDP from Manufacturing
3,000,000
GDP from service-education, health, social sevice
million Baht
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2002
2003
2004
2005
2006
2007
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How to improve the productivity of an
Organization
Organization
Finance
Operations
productivity 
Management
system
Marketing
outputs
inputs
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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.
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Scope of Operations Management
• Operations Management includes:
– Forecasting
Production
– Capacity planning
planning
– Scheduling
and control
– Managing inventories
(current topic)
– Assuring quality
– Motivating employees
– Deciding where to locate facilities
– Supply chain management
– And more . . .
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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
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1Reinfeld,
N.V., 1959. Production Control. , Prentice-Hall, Englewood Cliffs, NJ.
Scope of production control and the flow of information
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Scope of production control and the flow of information
(extended version)
Marketing and
sales
Production
engineering
Production
engineering
Human resource
(work force)
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purchasing
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Forecasting
Aggregation planning
(long-rang planning)
2
3
8
9
3
Inventory control
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Master production
schedule
(short-rang planning)
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5
7
Shop scheduling
Monitoring
Control
12
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Testing and
inspecting
Shipping finished
goods
assembling
Inventory
machining
Raw materials
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8
9
10
11
12
13
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Production planning and control
• Pond draining/re-order point system
• Push System/ Material Requirement
Planning System (MRP)
• Pull System/ Just In Time (JIT)
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Pond draining/re-order point system
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Push System/ Material Requirement
Planning System (MRP)
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Pull System/ Just In Time (JIT)
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Productivity
• Partial measures
–
output/(single input)
• Multi-factor measures
–
output/(multiple inputs)
• Total measure
–
output/(total inputs)
Outputs
Productivity =
Inputs
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Productivity Growth
Productivity Growth =
Current Period Productivity – Previous Period Productivity
Previous Period Productivity
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Measures of Productivity
Partial
measures
Multifactor
measures
Total
measure
Output
Labor
Output
Output
Machine Capital
Output
Labor + Machine
Output
Energy
Output
Labor + Capital + Energy
Goods or Services Produced
All inputs used to produce them
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Examples of Partial Productivity Measures
Labor
Productivity
Units of output per labor hour
Units of output per shift
Value-added per labor hour
Machine
Productivity
Units of output per machine hour
machine hour
Capital
Productivity
Units of output per dollar input
Dollar value of output per dollar input
Energy
Productivity
Units of output per kilowatt-hour
Dollar value of output per kilowatt-hour
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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
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Example 3 Solution
MFP =
Output
Labor + Materials + Overhead
MFP =
(7040 units)
$1000 + $520 + $2000
MFP =
2.0 units per dollar of input
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Productivity
Output
Productivity =
Input
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Productivity
Policies processed
Labor productivity =
Employee hours
Example 1.1a
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Productivity
600 policies
Labor productivity =
(3 employees)(40 hours/employee)
Example 1.1a
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Productivity
Labor productivity = 5 policies/hour
Example 1.1a
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Productivity
Labor productivity = 5 policies/hour
Multifactor productivity =
Quantity at standard cost
Labor cost + Materials cost + Overhead cost
Example 1.1b
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Productivity
Labor productivity = 5 policies/hour
Multifactor productivity =
(400 units)($10/unit)
$400 + $1000 + $300
Example 1.1b
$4000
=
= 2.35
$1700
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Productivity Measures
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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.
Figure 1.5a
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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:
Price:
Surcharge:
4,700
$18
$3
Value of output:
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:
Figure 1.5b
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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
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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:
Price:
Surcharge:
4,700
$18
$3
Value of output:
$98,700
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
Value of input:
Overhead:
$79,000
$195,110
Step 3. To calculate multifactor productivity, divide value of output by value of input.
Multifactor productivity:
Figure 1.5c
0.51
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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:
Figure 1.5c
$39.80
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