These notes are written from the various chapters of the book.

1. Operation & Production Mgt Prof.Hakim Ali Nohrio1
Compiler:
Seetal Daas University of Sindh Laar Campus, Badin
BBA(Hons)-2k13
Combine-Chapters
Operation and Production Management
Definition: The systematic design, direction and control of process that
transforms inputs into services and products for external and internal customers.
Types of Customers
External Customer: a customer who is either an ender user or an intermediary
(manufacturing, financial institutions, retailers) buying the firm’s finished goods
or services.
Internal Customer: one or more employees or process that rely on inputs from
other employees or processes in order to perform their work.
Type of Supplier
External Supplier: the business or individuals who provide the resources,
services, products and materials for the firm’s short-term and long-term needs.
Internal Supplier: the employees or processes that supply important information
or material to a firm’s process.
Value Chain: an interrelated series of processes that produces a service or
product to the satisfaction of customers.
What is Process?
Any activity or group of activities that takes one or more inputs, transform them,
and provides one or more outputs for its customers.
Core Process: a chain of activities that delivers value to external customers.
1. Customer Relationship Process: a process that identifies, attracts, build
relationship with external customer and facilitates the placement of orders
by customers, sometimes referred to as customer relationship management.
2. New Service/Product development Process: a process that designs and
develops new services or products from inputs received from external
customer specifications or from the market in general through the customer
relationship process.
3. Order Fulfillment Process: a process that includes the activities required
to produce and deliver the service or product to the external customer.
4. Supplier Relationship Process: a process that selects the supplier’s
services, materials and information and facilitates the timely and efficient
flow of these items into the firm.

2. Operation & Production Mgt Prof.Hakim Ali Nohrio2
Compiler:
Seetal Daas University of Sindh Laar Campus, Badin
BBA(Hons)-2k13
Support Process: a process that provides vital resources and inputs to the core
processes and therefore is essential to the management of the business.
1. Capital Acquisition
2. Budgeting
3. Recruitment and hiring
4. Evaluation and Compensation
5. Human Resource Support and Development
6. Regulatory Compliance
7. Information System
8. Enterprise & Functional Management
How Process Work
Accounting Process
1-Advertisement Design & Planning Process—create the ads to the needs of
the client and prepare a plan for media exposure.
2-Client Interface Process—communicate with clients, gets needs & coordinate
progress.
3-Production Process—prepare the ads for publication & deliver to media
outlets.
Difference in Product and Service
S# Product Services
1 They are tangible. They are not tangible.
2 They have process and shape. They have not shape.
3 They are transported. They are imparted.
4 They are manufactured. They are equipped and training.
5 Heavy machinery & equipment
required.
Institutions and seminars are
required.
6 They have maximum customer
contact.
Not have maximum customer
contact.
7 They have joining parts. They do not have joining parts.
8 They are depreciated. They are amortized.
Operation a Set of Decision
1. Recognize & define the problem.
2. Generate different alternatives.
3. Evaluate the alternatives.
4. Choose the most appropriate alternative.
5. Implement the chosen alternative.

3. Operation & Production Mgt Prof.Hakim Ali Nohrio3
Compiler:
Seetal Daas University of Sindh Laar Campus, Badin
BBA(Hons)-2k13
6. Monitor the solution.
Operation and Production Manager’s Principles
1-Each part of the organization, not just an operation function must design and
operate process that are the part of value chain and deal with the quality
technology, staffing issues.
2-Each part of the organization has its own identity and yet connected to
operation.
Classification of Management
1-Horizontal Management.
2-Vertical Management.
Productivity Improvement
Productivity: is a basic measure of performance for economies, industries, firms
and process. Productivity is the value of output (services and products) product
divided by the value of inputs (wages, loss of equipment) used.
Productivity= Output/Input
Value of output can be measured by what a customer pays or simply by number
of units or customer served. The value of input can be judged by number of hours’
worker worked.
Inputs: employees, wages, working hours. Output: customer’s payment, units.
Global Competition
1. Improved transport & information technologies.
2. Loosened regulations on financial institutions.
3. Increased demand for imported goods and services.
4. Reduced imported quotas and other international services.
5. Comparative cost advantage.
Ethical, Workforce, Diversity, Environment
Business face may ethical than even before, intensified by an increasing global
presence and rapid technological change. As companies locate new operation and
acquire more supplier and customer in other countries, potential ethical dilemmas
when business can be conducted by different rules. Some countries are more
sensitive than others about lavish entertainment, conflict of interest, bribery,
discrimination against minorities and women, poverty, minimum wage level
unsafe work force.

4. Operation & Production Mgt Prof.Hakim Ali Nohrio4
Compiler:
Seetal Daas University of Sindh Laar Campus, Badin
BBA(Hons)-2k13
Operation and production manager is concerned with environment problems such
as toxic waste, poisoned drinking water, air nudity, global warming.
Breakeven Quantity: the volume at which total revenues equal to total cost.
Breakeven analysis: the use of the breakeven quantity, can be used to compare
processes by finding the volume at which two different processes have equal total
cost.
Application of Breakeven
1. It is used to increase the volume of goods & services.
2. It is used to know the fixed cost.
3. It is used to calculate variable cost.
4. It is used to calculate price.
Variable cost: the portion of the total cost that varies directly with volume of
output.
Fixed cost: the portion of the total cost that remains constant, does not change
with level of output.
Formula:
Breakeven=total revenue—total cost(fixed, variable)
Breakeven=PQ=F+VQ
Q(P—V)=F
By cross multiplication
BE=Q=F/P—V
Preference Matrix
It is a decision making tool. Decision often must be made in a situation where
multiple criteria cannot be naturally merged into a single measure.”
For instance, manager deciding in which of two cities to locate a new plant would
have considered such unquantible factors as quality of life, worker attitude
towards work community reception in two cities. Preference matrix in table
allows a manager to rate an alternative according to several performance criteria.
The criteria can be scored on any scale, such as 1 for the worst and 10 for the
best.
Disadvantages and limitation of Preference Matrix
1-State criteria before examining the alternative.

5. Operation & Production Mgt Prof.Hakim Ali Nohrio5
Compiler:
Seetal Daas University of Sindh Laar Campus, Badin
BBA(Hons)-2k13
2-Proper weight may not apparent.
3-The manager cannot decide overly on the score. The low score are hidden by
high score.
Decision Theory
Definition: Decision theory is a general approach to decision making when the
outcomes associated with alternatives are often in doubt.
It helps operation managers with decision on process, capacity, location and
inventory because such decision are about an uncertain future.
Decision theory can also use by managers in other functional areas.
1-List out the feasible alternative a basic assumption is that number of alternatives
to finite countable.
2-List the event that have impact on outcomes of the choice but they are not under
manager control.
3-Calculate the payoff for each alternative in each event. Payoff is total profit or
total cost.
4-Estimate the likelihood of each event, using past data, executive opinion or
other forecasting method.
5-Select a decision rule to evaluate the alternatives, such as choosing the
alternative with the lowest expected cost.
Payoff Table: a table that shows the amount for each alternative if each possible
event occurs.
Decision making under uncertainty
1-Maximin: choose the alternative that is the “best of the worst”. This rule is for
the pessimist, who anticipates the “worst care” for each alternative.
2-Maximax: choose the alternative that is the “best for the best”. This rule is for
the optimist, who has high expectations and prefers to “go for broke”.
3-Laplace: choose the alternative with the best weighted payoff, find payoff give
equal importance to each event, no. of events shows “n”. This rule is realist the
importance of each is 1/n, so they add up to 1.0.
4-Minimax regret: choose the alternative with the best “worst regret”. Calculates
a table of regrets or opportunity losses.

6. Operation & Production Mgt Prof.Hakim Ali Nohrio6
Compiler:
Seetal Daas University of Sindh Laar Campus, Badin
BBA(Hons)-2k13
Corporate Level Strategy: provides overall direction that serves all the
framework for carrying out the organizations function, it is specified the business/
the business company will pursue isolate new opportunity, threat in the
environment.
Strategic Alliance
In this people start their business through making a foreign partner.
1-Colloborative Sport: often arise when one firm has core competency another
need but unwilling (unable) to duplicate such arrangement commonly arises.
2-Joint Venture: in which two firm agree to produce a service or product jointly,
this approach often used by firm to get access to the foreign market.
3-Technology license: it is a form of strategic alliance in which one company
licenses its services and production method to another. License maybe used to
gain access at foreign market.