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Why Manufacturing Matters (in Thailand)
GDP from Manufacturing and service sections In Thailand
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
2002 2003 2004 2005 2006 2007
mill
ion
Bah
t
GDP from Manufacturing
GDP from service-education, health, social sevice
1
How to improve the productivity (ผลิ�ตภาพ) of an Organization
Organization
Finance Operations Marketing
2
inputs
outputstyproductivi
Managementsystem
Operations Management Operations Management (supplement topic)(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.
3
• Operations Management includes:– Forecasting– Capacity planning
(การวางแผนก�าลิ�งการผลิ�ต)– Scheduling
(การทำ�าตารางการผลิ�ต)– Managing inventories– Assuring quality– Motivating employees– Deciding where to locate facilities– Supply chain management– And more . . .
Scope of Operations Management
Production planning and control
(current topic)
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Supply Chain ManagementManaging supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer (Supply Chain Council)
การบร�หารอุ�ปทำานแลิะอุ�ปสงค์� น�บต��งแต�แหลิ�งว�ตถุ�ดิ�บ แลิะชิ้��นส�วน การผลิ�ตแลิะการประกอุบค์ลิ�งส�นค์�าแลิะ
ต�ดิตามส�นค์�าค์งค์ลิ�ง การป!อุนใบส�#ง การกระจายส�นค์�าตลิอุดิทำ�กๆชิ้�อุงทำางแลิะการส�งมอุบให�ก�บลิ'กค์�า
SCM ม(จ�ดิม��งหมายพ)�นฐานเพ)#อุค์วบค์�มว�สดิ�ค์งค์ลิ�งโดิยการจ�ดิการการไหลิขอุงว�สดิ�ระหว�างผ'�ส�งมอุบแลิะ
บร�ษั�ทำ ภานในบร�ษั�ทำ แลิะระหว�างบร�ษั�ทำ จนถุ0งลิ'กค์�าให�ไหลิร)#นดิ�วยจ�งหวะค์วามเร1วทำ(#สมดิ�ลิแลิะย)ดิหย��นในการ
ตอุบสนอุงค์วามต�อุงการขอุงลิ'กค์�าอุย�างรวดิเร1ว แลิะดิ�วยต�นทำ�นต�#าทำ(#ส�ดิ ( พ�ภพ ลิลิ�ตาภรม 2549)
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
1Reinfeld, N.V., 1959. Production Control. , Prentice-Hall, Englewood Cliffs, NJ.
Production planning andcontrol systems
ManMachineMaterialsCapitalInformation
QualityQuantityDelivery time
Inventory management
MRP, ERP, JIT
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Scope of production control and the flow of information
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Scope of production control and the flow of information (extended version)
ForecastingAggregation planning (long-rang planning)
Master production schedule
(short-rang planning)
Inventory controlShop scheduling
MonitoringControl
Marketing and sales
Production engineering
Production engineering
Human resource (work force)
Testing and inspecting
purchasing
Raw materials
InventoryShipping finished
goods
assembling machining
1 2 3
4
5
6 7
8
3 9
11
1012
8
9
10
11
12
13
14
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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)
Productivity = Outputs
Inputs20
Productivity GrowthProductivity Growth
Current Period Productivity – Previous Period ProductivityPrevious Period Productivity
Productivity Growth =
21
Measures of ProductivityMeasures 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
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Units of output per kilowatt-hourDollar value of output per kilowatt-hour
Energy Productivity
Units of output per dollar inputDollar value of output per dollar input
Capital Productivity
Units of output per machine hourmachine hour
Machine Productivity
Units of output per labor hourUnits of output per shiftValue-added per labor hour
Labor Productivity
Examples of Partial Productivity Examples of Partial Productivity MeasuresMeasures
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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 input24
Example 3 Solution
MFP = OutputLabor + Materials + Overhead
MFP = (7040 units)$1000 + $520 + $2000
MFP = 2.0 units per dollar of input
25
Productivity
Productivity = Output
Input
26
Productivity
Labor productivity = Policies processed
Employee hours
Example 1.1aExample 1.1a 27
Productivity
Labor productivity = 600 policies
(3 employees)(40 hours/employee)
Example 1.1aExample 1.1a 28
Productivity
Labor productivity = 5 policies/hour
Example 1.1aExample 1.1a 29
Productivity
Labor productivity = 5 policies/hour
Multifactor productivity =
Quantity at standard cost
Labor cost + Materials cost + Overhead cost
Example 1.1bExample 1.1b 30
Productivity
Labor productivity = 5 policies/hour
Multifactor productivity =
(400 units)($10/unit) $4000
$400 + $1000 + $300 $1700= = 2.35
Example 1.1bExample 1.1b 31
Productivity Measures
32
Productivity Measures
Figure 1.5aFigure 1.5a
OM ExplorerOM 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.Click here to continue.
33
Productivity MeasuresTutor 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: $18Surcharge: $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:
Figure 1.5bFigure 1.5b 34
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.Click here to view the Results sheet.
Productivity Measures
Figure 1.5bFigure 1.5b 35
Productivity MeasuresTutor 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: $98,700Price: $18Surcharge: $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: 0.51
Figure 1.5cFigure 1.5c 36
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
Productivity Measures
Figure 1.5cFigure 1.5c 37