Jihan Sheikh Ahmad MPR 3013 Business Department Kulliyyah
Jihan Sheikh Ahmad MPR 3013 -Business Department, Kulliyyah of Muamalat
What Is Operations Management? • Operations for products and services. • Where quality fits in. • Customer orientation
An operation is … … the process of changing inputs into outputs through some type of transformation system, thereby adding value. MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 4
A manager is … … someone who plans, acquires and manages resources needed to meet specific objectives. PLANS ACQUIRES MANAGES MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 5
Management of the conversion process which transforms inputs such as raw material and labour into outputs in the form of finished goods and services. Inputs (materials, employees and/or customers) Transformation Process MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) Outputs (Products and services) 6
Operations function Value Added Inputs: Land Labour Capital Transformation Process Outputs: Goods Services Feedback Control Feedback MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) Feedback 7
Types of Operations Goods Producing Examples Farming, mining, construction manufacturing, power generation Storage/Transportation Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines Exchange Retailing, wholesaling, banking, renting, leasing, library, loans Entertainment Films, radio and television, concerts, recording Communication Newspapers, radio and television newscasts, telephone, satellites MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 8 ,
Transformation process at a Food Processor Inputs Process Output Raw Vegetables Metal Sheets Water Energy Labour Building Equipment Cleaning Making cans Cutting Cooking Packing Labelling Canned vegetables MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 9
Transformation process at a Hospital Inputs Process Output Doctors Nurses Building Medical supplies Equipment Labs Examination Surgery Monitoring Medication Therapy Healthy patients MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 10
Organization Inputs Transformation Process Outputs
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�Products �Tangible �Can be inventoried �No interaction between customer and process �Services �Intangible �Cannot be inventoried �Direct interaction between customer and process 1 -6 MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 13
Source: The World Fact book 2000, Central Intelligence Agency, Washington, DC. MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 14
Goods vs. Services Differences Goods (Produce a car) Services (Teach a class) Output Tangible Intangible Customer contact Low High Uniformity of input High Low Labor content Low High Quantity of Output High Low Measurement of productivity Easy Difficult Quality assurance Easy Difficult MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 15
Low service content High goods content Steel production Automobile fabrication House building Road construction Dressmaking Farming Goods-service continuum. Most products include both elements Auto repair Appliance repair goods Maid Service Manual car wash Teaching Lawn mowing service MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) High service content Low goods content 16
DIFFERENTIATING FEATURES OF OPERATIONS SYSTEMS �A number of features differentiate operations systems �Degree of product standardization (standardized vs. customized) �Type of process (quantity of output) �Production of goods vs. services MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 17
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� We want to manage the operations to make them more productive. � The meaning of efficiency, productivity and effectiveness …. MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 19
� Efficiency is output over input. If we do things more efficiently it takes less effort. If we waste less in the process then we get more output for a given amount of input. � Productivity is the amount of product made for a unit of input. # of pieces per hour or person. Rate for a unit of some input. � Effectiveness is the power to get it done. May not consider cost of inputs. MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 20
THREE BASIC FUNCTIONS Is OM function adding value during the transformations process? What is added value? (The difference between the cost of inputs and the price of outputs) � Is there any overlapping between the main functions? � Operations Marketing Finance MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 21
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The scope of Operations Management Decision area Basic question Chapter Forecasting What will the demand be? 3 Product/ service design What customers want? How to improve products/services? 4 Capacity How much capacity will be needed? 5 Process What processes should be used? 6 Layout What is the best arrangement for the departments? 7 Location What is the best location for our next hotel? 8 Quality How to define quality? How to improve it? 9 Inventory How much to order? 11 Aggregate planning How much capacity will be needed over the medium term? 12 JIT systems How to coordinate production and purchasing? 14 Scheduling How to schedule jobs, staff? 15 Supply Chain Management Which supplier to choose? 16 MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 23
�Benefits of Buffering the Transformation Process �The process was not disturbed by environmental interaction. MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 24
�Benefits of Buffering the Transformation Process �Productivity was maximized when processes operated at continuous rates. �Process management skills were different from those of other functional activities. MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 25
� Measures the efficiency of workers and the costs associated with producing a unit of output. � Productivity specifically relates output to the amount of production time required in producing each unit. � The cost factors of the report are unit labor costs and compensation per hour.
� Quarterly labor productivity measures are available for: � Business and non-farm business sectors � Manufacturing sector (total, durable, and nondurable) � Non-financial corporations sector
� Economic indicator. � Aid economic policymakers in assessment of current economic activity and in economic analysis. � Aid Bureau of Economic Analysis in compiling compensation measures for National Income and Product Accounts. � Assessment of labor requirements. � Studies of relationships among productivity, wages, prices, and employment. � Aid in understanding sources of economic growth.
� Data is available in quarterly and annual indexes and % changes. � Productivity: Output per hours depends on: �Capital investment �Technology �Capacity utilization �Managerial skills � Costs: Indicate inflation.
TOTAL FACTOR PRODUCTIVITY Base Profit Increase Price Volume Productivity MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 31
�Example: Resources consumes for 25000 unit of jersey production ITEMS COST Labour RM 45, 000 Utility RM 25, 000 Material RM 60, 000 Capital Turnover RM 20, 000 TOTAL RM 150, 000 MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 32
Calculation: Productivity= Output Input = 25 000 unit x 100% RM 45, 000 + RM 25, 000 + RM 60, 000 + RM 20, 000 = 25, 000 unit RM 150, 000 = 16. 6% x 100% The highest PRODUCTIVITY the efficient PRODUCTION MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 33
� Consist: 1. 2. Positive aspect Normative aspect � Positive aspect Focused on what happen that will be solve by fact � Normative aspect(value) Explained on how production supposed to be made based on psychological, culture, religious and other and cannot be solved by facts MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 35
�In Islamic context, production stressed on Normative aspect �It is, consumables or services creation that consider benefit based on syara �Not only to fulfill demand �More to form akhlak to success at world and world after (falah) MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 36
� Disregard production that not consider “akhlak” factor � Implement only production that consider “ummah” welfare” utmost � Limitation of sources cannot be the reason for not endeavor to solve problem � Answered Allah s. w. t exclamation to attempt and hadrworking MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 37
� To build up fairness between human and God and between human and human � To maintain stability between human within others Allahs’ creations such as animals and plants � To consider on welfare of muslim and non muslim in decision making including fakir, women and orphans. � To gain advisable profit (responsible profitability) MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 38
1. 2. 3. Believe on world after nature Successful in Islam Wealth in Islam MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 39
1. 2. 3. Konsep kepercayaan kepada Alam Akhirat Konsep kejayaan dalam Islam Konsep kekayaan dalam Islam JIHAN SHEIKH AHMAD- MPR 3013 40
�Amalan riba adalah DILARANG �Menganjurkan sikap Amanah �Matlamat untuk mencapai kejayaan �Mencapai keredhaaan Allah s. w. JIHAN SHEIKH AHMAD- MPR 3013 41
�Prohibited RIBA �Proposed for honesty (Amanah) �Aims to achieve successful �Achieved alleviate of Allah s. w. t MPR 3013(Chap 1: Introduction to Operation and Prod Mgmt) 42
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