FACULTY OF ENGINEERING AND BUILDING

ENVIRONMENT SCIENCES
Managing tomorrow

Study Guide 2024

Department of Industrial Engineering

2nd Avenue and George Campuses

Production Management 1

BPJ1021/1022

Diploma: Management
Internal Programme code: 4407

Date of Implementation : February 1998

Revision : September 2021

Compiled by : Dr Paul Tai - Hing

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VALUES ESPOUSED IN THE DEPARTMENT: MANAGEMENT PRACTICE

Staff and students affiliated to the Department Management Practice at the NMU pledge to
be guided in their actions and behaviours by the following Six Core Values:

Respect for Diversity - means understanding that each person is unique,

recognising peoples differences and understanding people, embracing and
celebrating the rich dimensions of diversity in NMU.

Ubuntu - means respecting fellow human beings, treat them fairly, disagree
honestly, enjoy their fellowship and work together for a common goal and help each
other achieve it. We commit ourselves to the tenets of ubuntu by recognising that
“we are, because others are”. We therefore treat one another with dignity and
respect, and do not entertain harassment, discrimination or incivility of any sort. We
will interact with our fellow students and with our staff in a timely, professional and
responsible manner. We expect the same supportive conduct from staff in their
relations with students and colleagues, both in the classroom and in any other area
of interaction.

Excellence - means an individual's highest level of quality and his will to win, his
personal excellence. We commit ourselves to excellence in our academic work by
fulfilling and exceeding course requirements. We will make the time commitment
necessary to prepare properly, make meaningful contributions and participate in
group and class activities with thoroughness and dedication. We will be on time for all
classes and formal activities, and will turn all work in on time. We realise that the
programmes involve teamwork and accept the responsibilities associated with team
membership. We recognise that we are quantitatively judged by grades and minimum
requirements. We commit ourselves to consistently demonstrate excellence
throughout our academic studies, and to take the personal initiative to show
comprehensive development by graduation.

Environmental stewardship - means being more environmentally conscious in and

around our beautiful campus for the sake of our own health and enjoyment. We
commit ourselves to contributing to the sustainable economic, social and
environmental creation of value through our business and professional activities.

Integrity - means doing the right thing, even if nobody is watching, having courage to
say no and courage to face the truth. We commit ourselves to academic integrity in
all our work, respecting the specific policies of the NMU and the broad concept of
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academic honesty. Our work, whether done individually or through group activities,
will be accomplished through honest means. We therefore will not partake in
plagiarism, wilful misrepresentation of sources, and unethical assistance or input
from unapproved parties. We will not rob ourselves, or past, present and future
graduates of the honour and integrity that we all subscribe to. We support students
and staff who fulfil their duty by alerting the department and the School as well as the
faculty to incidences of academic dishonesty.

Social justice and equality - means being dedicated to the realisation of a socially
just, democratic society that promotes equality for all irrespective of race, gender,
sex, pregnancy, marital status, ethnic or social origin, sexual orientation, age,
physical and learning abilities, national origins, religion, conscience, belief, culture
and language. By cultivate living, learning and work environments that enable
students and staff to realise their full potential, without fear of discrimination or
harassment. And by developing our graduates as globally competent citizens who
generate, apply and transfer knowledge to contribute actively to advancing social
justice, inclusion and equality.

LEARNING & TEACHING PHILOSOPHY

CARING AND HUMANISING EDUCATION WITH PURPOSE -

To develop purposeful and meaningful educational experiences through a caring

teaching practice, thus producing innovative leaders as well as students who
approach their learning with motivation and confidence to succeed.

This will be achieved by -

 creating an environment where valuable knowledge can be shared,
 instilling life-long learning in an ethical, collaborative and caring environment,
 utilising discussion, debate, case studies and group work to unpack relevant
content and develop proficient business skills and competent professionals,
 encouraging students to be critical and curious, to be accountable with
impeccable, professional work ethic, to take ownership of their own learning,
and
 preparing students to apply what they have learned to their career and life
situations.
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DIPLOMA: MANAGEMENT

PURPOSE AND RATIONALE OF THE QUALIFICATION

This qualification is intended for persons who can function mainly as tactical
(functional) managers in any enterprise. The qualifying learner will be competent in
applying selected management principles and techniques in supporting and
implementing strategies, policies and procedures and will be able to deal effectively
with contemporary issues on a tactical (functional) level.

EXIT LEVEL OUTCOMES

On completion of the learning programme students will have acquired the necessary
skills and competencies to demonstrate the Exit Level Learning Outcomes (ELOs) as
outlined below:

a) Manage resources for the effective and efficient achievements of enterprise

goals.
b) Manage the process of transforming inputs into outputs.
c) Manage and develop people to contribute constructively to the achievement of
goals of the enterprise.
d) Initiate and manage change to support growth and survival in a dynamic
environment.
e) Manage social issues within the enterprise.
f) Manage legal requirements within the enterprise.
g) Train and supervise culturally diverse administrative staff.
h) Apply the principles of marketing within the enterprise.
i) Manage human resources within the enterprise.
j) Manage purchasing within the enterprise.
k) Manage production within the enterprise.
l) Ensure organisational effectiveness within the enterprise.
m) Develop a holistic overview and understanding of the establishment and
functioning of an enterprise.
n) Apply basic quantitative techniques for decision-making.
o) Apply basic principles of business communication within the workplace.
p) Know the basic principles of industrial relations.
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SECTION 1
TOPIC PAGE NO
1. INTRODUCTION 4
2. PURPOSE OF THE MODULE 4
3. CRITICAL CROSSFIELD OUTCOMES 4
4. LECTURER CONTACT DETAILS AND CONSULTATION TIMES 6
5. MODULE METHODOLOGY AND PRESCRIBED MATERIALS 6
6. ASSESSMENTS AND GRADING 7
7. STUDENT EXPECTED BEHAVIOUR 8
8. SYLLABUS GUIDE 10
SECTION 2
TOPIC PAGE NO
STUDY UNIT 1 12
STUDY UNIT 2 14
STUDY UNIT 3 18
STUDY UNIT 4 19
STUDY UNIT 5 23
STUDY UNIT 6 25
STUDY UNIT 7 27
STUDY UNIT 8 28
STUDY UNIT 9 29
STUDY UNIT 10 31
STUDY UNIT 11 34
SECTION 3
TOPIC PAGE NO
1. INFORMATION ON PLAGIARISM 35
2. ASSIGNMENT INSTRUCTIONS 35
3. ASSIGNMENT LEARNING OUTCOMES 36
4. ASSIGNMENT EVALUATION RUBRIC 36
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SECTION 1

1 INTRODUCTION

Welcome to Production Management 1. This course forms an integral part of the

study of the Diploma in Management and includes many of the activities routinely
carried out by and issues impacting on the effectiveness of line managers.

The major objective of this course is to provide you with an overview of the functions
that are important in the general operations management of an organisation. This will
enable you to make knowledgeable decisions based on the business implications for
any manager within the current South African context.

2 PURPOSE OF THE MODULE

The purpose of the unit standards contained in this module is to enable learners to:

 develop an understanding of operational management theories and practices

 investigate the functions routinely performed by operations managers
 build personal managerial skills
 investigate current issues affecting operations managers

3 CRITICAL CROSS-FIELD OUTCOMES

In addition to the specific module learning outcomes, students are expected to exhibit
the following graduate attributes:

 Collect, analyse, organise and critically evaluate information.

 Communicate effectively using visual, mathematical language, and/or IT skills
in the modes of oral and/or written persuasion.
 Demonstrate an understanding of the world as a set of related systems by
recognising that problem-solving contexts do not exist in isolation.
 Identify and solve problems in which responses display that decisions using
critical and creative thinking have been made.
 Work effectively as a member of a team, group, organisation, or community.

With regard to each study unit, you should be able to:

a) understand and state the essential content by naming and/or explaining the
relevant content (where possible with the aid of diagrammatic representations);
b) identify the meaning reflected in the content by indicating the most acceptable or
correct possibility from various given alternatives (for example by answering
multiple-choice statements and identifying the meaning of key terms);

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c) demonstrate the capability of establishing direct relationships, for example

between theory and practice, inter alia, by completing worksheets and finding
solutions to practical problems, answering direct questions on case particulars;
and
d) generate solutions for any relevant extensive problems, inter alia, by gathering
new information, completing work assignments, analysing case studies or
performing critical analyses.

The activities indicated for each study unit are intended to cover the above
outcomes. Note that the bold-typed verbs, i.e., so-called capability verbs, reflect a
hierarchy in the learning process. Therefore, stating essential content represents the
most basic or most simple required performance and generating solutions to the
most advanced or most complex performance (See also Table 1).

TABLE 1: OUTCOME (CAPABILITY AND ACTION) VERBS AND MEANING

Capability Action Meaning
Understand Define Demonstrate understanding of facts and ideas by
Describe organising, comparing, translating, interpreting,
Explain giving descriptions and stating main ideas or
List important facts.
Name
Differentiate Differentiate This is the simplest form of intellectual skill
Distinguish requirement that demands insight and practice.
Identify
Identify Indicate This is a somewhat more advanced intellectual
Motivate skill that requires recognition and identification of
Select facts or concepts. Knowledge is required both of
the item to be identified and the other items from
which a choice has to be made, e.g., “To identify
the tasks of managers.” Requires insight and
practice.
Analyse Contrast A somewhat more advanced intellectual skill that
Categorise intends to examine and break information into
Examine parts by identifying motives or causes. This
Motivate includes making inferences (conclusions) and
finding evidence to support generalisation.
Evaluate Appraise This deals with presenting and defending
Compare opinions by making judgments about information,
Criticise validity of ideas, or quality of work based on a set
Interpret of criteria. This requires insights and practice.
Determine
Generate Design The most advanced form of intellectual skill. It is a
Formulate form of higher-order-rule-application. It involves
Compose compiling information together in a different way
Compile by combining elements in a new pattern or
Build proposing alternative solution. Certain principles
Construct or procedures are known but new data is such
Develop that problem solution is necessary.

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Adapted from Quick Flip Questions for the Revised Bloom’s Taxonomy
4 LECTURER CONTACT DETAILS AND CONSULTATION TIMES

Module Co-ordinator and Lecturer

Dr. P. Tai-Hing

Academic administration block,

2nd Floor, Room 243, 2nd Avenue Campus.
Tel: (041) 504 3747
Email: [email protected]

Should you require any assistance or additional information, please speak to your
lecturer. Make sure you know the name of your lecturer for the module(s) in question
and his/her relevant consultation hours. All emails will be answered within a 24 hour
period.

5 MODULE METHODOLOGY AND PRESCRIBED MATERIALS

The Production Management 1 course is presented as a Semester module on the

Second Avenue and George Campuses. An overall learning outcome is stated in this
module. The module consists of a number of study units, each with specific learning
outcomes.

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CREDITS AND NQF LEVEL

The credits and NQF level for this module are as follows:
Credits: 30
NQF level: 6

Module codes: BPJ1021/BPJ1022

Title: Production Management 1

Study unit Title of study unit

1 What is operations management?
2 Productivity management
3 Forecasting
4 Queuing theory
5 Design of goods and services
6 Process design, strategy, and management
7 Quality management
8 Supply chain management
9 Inventory management
10 Capacity planning
11 Operations management challenges

The particulars of the prescribed textbooks are:

The prescribed textbook is Kruger, D and Ramphal, R. (2013). Operations

Management (4th ed.). Cape Town: Oxford University Press

In the study units, reference to the prescribed textbook is given as Van Aardt et al.
followed by the relevant chapter, section or pages.

6 ASSESSMENTS AND GRADING

The following important information is highlighted:

Two semester tests will be written for this module. Both semester tests are
compulsory for all students.

Every student must complete a group assignment. The assignment is

compulsory. Students who fail to submit an assignment will not be permitted to
write the examination (THIS MODULE IS AN EXAM MODULE).

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The weighting for evaluations is as follows:

Semester test 1 33%

Semester test 2 33%
Group assignment 33%

Calculating the final mark is as per the weights provided above.

The following rules are applicable in cases where a student writes only one semester
test:

G1.9.4 Absence from Assessments (e.g. tests, practicals):

G1.9.4.1 Satisfactory documentary evidence, e.g. a medical
certificate, is required for
absence from all types of assessments subject to rule G1.9.4.3.
G1.9.4.2 Such documentary evidence must be submitted to the
relevant lecturer no later than
three (3) working days after the assessment.
G1.9.4.3 The requirement for submitting satisfactory evidence for
absence from an
assessment is subject to the rules of the faculty or department
responsible for
administering assessments in terms of faculty or department specific
rules approved by Senate and published in the Faculty Prospectus.

 If valid documentation is submitted by the due date (within three working days
of missing the test), that is, medical certificate/organised sport
letterhead/religious objection:

 Consideration will be given to writing a ‘sick test/special test’ under

exceptional circumstances only;
 No other ‘special tests’ are written – no exceptions.

 If no medical certificate/organised sport/religious body’s letterhead is

submitted, or the sick test is not written:

 Get ‘0’ for the missed test and the test written counts an average of two.
 A second sick test WILL NOT be arranged.

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7 STUDENT EXPECTED BEHAVIOUR

It is mandatory for students to acquaint themselves with the university’s General

Rules that can be found in the General Prospectus of the NMU. Satisfactory
attendance of a minimum of 80% of normal lectures is required for this module. A
student may be excluded from an assessment or examination in a Module on the
basis of unsatisfactory attendance. This rule will be applied even when a student
makes DP (≥ 40% Class Mark) for the exam.

Students are expected to abide by the following NMU values:

 Respect for diversity
 Ubuntu
 Excellence
 Environmental stewardship
 Integrity
 Social justice and equality

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SECTION 2

UNITS OF LEARNING

STUDY UNIT 1: WHAT IS OPERATIONS MANAGEMENT?

STUDY UNIT 2: PRODUCTIVITY MANAGEMENT
STUDY UNIT 3: FORECASTING
STUDY UNIT 4: QUEUING THEORY
STUDY UNIT 5: DESIGN OF GOODS AND SERVICES
STUDY UNIT 6: PROCESS DESIGN, STRATEGY, AND MANAGEMENT
STUDY UNIT 7: QUALITY MANAGEMENT
STUDY UNIT 8: SUPPLY CHAIN MANAGEMENT
STUDY UNIT 9: INVENTORY MANAGEMENT
STUDY UNIT 10: CAPACITY PLANNING
STUDY UNIT 11: OPERATIONS MANAGEMENT CHALLENGES

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UNIT 1: WHAT IS OPERATIONS MANAGEMENT?

Introduction

When we eat, a series of activities or processes within us converts our food into the
energy that drives our bodies – these can be called operations. When furniture is
manufactured, there are also a series of operations: these include cultivating trees,
felling the trees, slicing the trees into planks, treating these planks, transforming the
planks into furniture, storing the furniture and transporting or delivering the furniture
to the customer. These are all forms of operations.

Operations do not occur only in manufacturing surroundings; they are just as

widespread in the services industry. For example, in a doctor’s surgery, there are
operations such as examining the patient, prescribing medication, and billing patients
for the consultation.

The following chapter will discuss these contents in detail. The learning objectives
are outlined as follows –

LEARNING OUTCOMES :

After studying this chapter, the learner should be able to –

 Understand what is operations management
 Discuss the activities relating to an operations manager
 Describe why operations managers exist, and why there is a need for the
study of operations management.
 Define the concepts regarding operations management
 Understand the planning of the operations function
 Know and understand the interrelationship between the operations function
and other functions within an organisation.
 Know and understand all the service departments to an operations
department.
 Discuss the differences between goods and services and understand the
influence of the latest trends on operations management.

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Activity

Prepare for a class discussion the case study on p. 33 – THE SUPER GRIP
TYRE COMPANY.

UNIT 2: PRODUCTIVITY MANAGEMENT

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LEARNING OUTCOMES :
After studying this chapter, the learner should be able to –
 Define the term, “Productivity”
 Differentiate between single and multi – factor productivity
 Measure both single and multi-factor productivity.

Introduction

The measurement of productivity can be quite direct (Stairs & Render 2012). Such is
the case when productivity is measured by labour-hours per ton of a specific type of
steel. Although labour-hours is a common measure of input, other measures such as
capital (Rands invested), materials (tons of ore), or energy (kilowatts of energy) can
be used. An example of this can be summarised in the following equation –

Productivity = units produced

Input used

For example, if units produced = 1000 and labour- hours used = 250, then :

Productivity = 1000 = 4 units per labour-hour

250

The use of just one resource input to measure productivity is known as single factor
productivity. However, a broader view of productivity is multifactor productivity,
which includes all inputs (eg., capital, labour, energy, materials). Multifactor
productivity is also known as total factor productivity. Multifactor productivity is
calculated by combining the input units –

Productivity = Output
Labour + Material + Energy + Capital + Miscellaneous

Use of productivity measures aids managers in determining how well they are doing.
But results from the two measures can be expected to vary. If labour productivity
growth is entirely the result of capital spending, measuring just labour distorts the
results. Multifactor productivity is usually better, but more complicated. Labour
productivity is the more popular measure. The multifactor productivity measures

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provide better information about the trade-offs among factors, but substantial
measurement problems remain. Some of these measurement problems are –

 Quality – may change while the quantity of inputs and outputs remains
constant.
 External elements – may cause an increase or a decrease in productivity for
which the system under study may not be directly responsible.
 Precise units of measure – may be lacking.

Productivity measurement is particularly difficult in the service sector, where the end
product can be hard to define. Productivity measurements require specific inputs and
outputs, but a free economy is producing worth – what people want – which includes
convenience, speed, and safety. Traditional measures of outputs may be a very poor
measure of these other measures of worth.

Productivity Variables –

Productivity increases are dependent on three productivity variables –

 Labour
 Capital
 Management
These three factors are critical to improved productivity. They represent the broad
areas in which managers can take action to improve productivity.

TUTORIAL

1 Art and Sandy Bidley make apple crates for resale to local growers. They and their three employees
invest 50 hours per day making 150 crates.

 What is their productivity?

 They have discussed reassigning work so the flow through the shop is smoother. If they are correct
and can do the necessary training, they think they can increase crate production to 155 per day.
What would be their new productivity?

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 What would be their increase in productivity?

2 Joanna produces Christmas tree ornaments for resale at local craft fairs and Christmas bazaars.
She is currently working a total of 15 hours per day to produce 300 ornaments.

 What is Joanna’s productivity?

 Joanna thinks that by redesigning the ornament and switching from contact cement to a hot glue
gun, she can increase her total production to 400 ornaments per day. What would be her new
productivity?

 What would be the increase in productivity?

3 A company has asked you to evaluate the firm’s productivity by comparing this year’s performance
with last year’s. You are required to calculate the productivity for each input. The following data is
available:

Last Year This Year

Output (units) 10 500 12 100
Labour (hours) 12 000 13 200
Utilities (Rands) 7600 8250
Capital (Rands) 83 000 88 000

4 Mabel’s Ceramics spent R3000 on a new kiln last year, in the belief that it would cut energy usage
25% over the old kiln. This kiln is an oven that turns “greenware” into finished pottery. Mabel is
concerned that the new kiln requires extra labour hours for its operations. Mabel wants to check
the energy savings of the new oven, and also to look over the other inputs in order to check
whether the changes were beneficial. Mabel has the following data to work with:

LAST YEAR THIS YEAR

Production (Finished Units) 4000 4000
Greenware (kg) 5000 5000
Labour (hours) 350 375
Capital (Rands) 15 000 18 000
Energy (kWh) 3000 2600

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UNIT 3: FORECASTING

Introduction

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Planning forms an integral part of all manager’s jobs. All organisations do forecasts
not because they want to but because they have to. Forecasting is nothing less than
planning and any planning that is done will have uncertainty attached to it, to a
greater or lesser extent. It is true that forecasts are, in most instances wrong.
Fortunately, using extra capacity or inventory absorbs most of the variations that
result from this. By using forecasting, a manager can remove some of this
uncertainty. Therefore, a forecast can be seen as a statement of the future value of a
changing variable.

LEARNING OUTCOMES :
After studying this chapter, the learner should be able to –

 Define and understand forecasting

 Identify the different types of forecasts
 Identify and discuss the various time horizons
 Discuss the different approaches to forecasting
 Describe and solve averaging techniques in forecasting
 Solve simple moving average problems
 Solve exponential smoothing problems
 Determine what constitutes a good forecast

Activity

Prepare for a class discussion the case study on page 67 and 68.

UNIT 4: QUEUING THEORY

LEARNING OUTCOMES :
After studying this chapter, the learner should be able to –

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 Understand the three parts of a queuing system.

 Describe the basic queuing system configurations.

FORMULAS

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TUTORIAL

1. From historical data, Harry’s Car Wash estimates that dirty cars arrive at the rate of 10 per hour
all day on Saturday. With a crew working the wash line, Harry figures that cars can be cleaned
at rate of one every 5 minutes. One car at a time is cleaned in this example of a single channel
waiting line.

You are required to calculate the following:

(a) Average number of cars in line.

(b) Average time a car waits before it is washed.
(c) Average time a car spends in the service system.
(d) Utilization rate of the car wash.

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(e) Profitability that there are no cars in the system.

2. A university cafeteria line in the student’s centre is a self – serve facility in which students select
the food items they want and then form a single line to pay the cashier. Students arrive at a rate
of abort four per minute according to a Poisson distribution. The single cashier ringing up sales
takes about 12 seconds per customers, following an exponential distribution.

(a) What is the probability that there are more than two students in the system?
(b) What is the probability that the system is empty?
(c) How long will the average student have to wait before reaching the cashier?
(d) What is the expected number of students in the queue?
(e) What is the average number of students in the system?

3. Automobiles arrive at the drive through window at a post office at the rate of 4 every 10 minutes.
The average service time is 2 minutes. The Poisson distribution is appropriate for the arrival rate
and service times are exponentially distributed. Compute the information for all studied
equations.

ASSIGNMENT :

You are required to visit a business that employs single channel queuing systems
and then to utilize the waiting line theory as studied during your lecturers. Make
suitable recommendations.

Notes :
 Assignment to be typed and bound
 Font = Arial
 Line spacing = 1.5
 Font size = 12
 Observations are required to be made over a period exceeding one sitting
 Tabulate all observations and calculate averages

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 Assignment to be handed in ---------------------------------------------- during the

lecture. Assignments handed in after the due date will be penalised at a rate
of 10% per day. A mark of 0% will be awarded should the assignment be
handed in after three days.

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UNIT 5: DESIGN OF GOODS AND SERVICES

Introduction

This chapter considers the importance of goods and service design. What do
organisations know about their customers? Have they thought about what makes
customers use the good or service in the first place and, later, what factors ensure
customer retention? Do managers think not just in terms of which services customers
use, but also, more fundamentally, in terms of the benefits that customers seek? How
do customers judge a quality good or service?

Answering these questions is very important for the organisation. The answers will
have a direct impact on their survival. Due to the rapid advancement of people in
South Africa, the majority of families in South Africa are two-income families. This
means that both adults running the household earn an income. Each family has more
disposable income available, which, in turn, drives demand for more and better
products. Another phenomenon, unique to South Africa, is the emergence of a black
middle class. As a result, there is an increase in this market’s demand for goods and
services. Organisations that have previously disregarded this market now realise this
market’s potential.

Although the objectives of goods design and those of service design are slightly
different, they share the same overall objective. That objective is to exceed customer
expectations at all times and, in doing so, earn better profits.

LEARNING OUTCOMES :
After studying this chapter, the learner should be able to –

 Raise awareness of the concept that satisfying customers is perhaps the most
important competitive goal of any business
 Understand that customers form perceptions of the quality of goods and
services by comparing their expectations with actual outcomes
 Understand the main objectives and importance of goods and service design
 Define the product life cycle and the steps in the actual design process

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 Explain the concept of a product development team

 Explain the principles and practices of kaizen
 Appreciate that gathering customer information is vital to providing a quality
service

Activity

Complete case studies 1 and 2 on page 93 of your text book for class discussion.

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UNIT 6: PROCESS DESIGN, STRATEGY, AND MANAGEMENT

Introduction

A process can be defined as a methodology that will be utilized on a continuous

basis that will result in the creation of a good or service that can be delivered to a
customer at a profit. The process can thus be seen as the “how” of the production of
a good or service. It is important to understand that process impact impacts on
various important areas of an organization. Some of these areas are capacity
planning, facility layout, types of equipment utilized in the production process, and
designing systems. For every new or redesigned product, new or redesigned
processes are required. During the design phase of processes, two major aims must
be satisfied. These are –

 The processes must add the maximum value to the good or service it will
create
 The cost added to the good or service during its creation must be minimized.

The management of these two opposites can be classified as a coincidence and can
be very difficult. It may become a case in which the so called value-added is a
perception and is in fact so small that the value is barely discernable by the
customer. In a successful process, the distance between traits added to the process
and the cost incurred as a result will be great. The result will be the further
improvement of the profit of the product.

LEARNING OUTCOMES :

After studying this chapter, the learner should be able to –

 Define a process
 Explain the reasons for process selection and why it is a strategic issue
 Discuss the influence that process selection will have on the organisation’s
performance
 Discuss the major process types
 Identify and explain the automation of processes

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 Discuss the reasons why technology must be managed

 Discuss why it will become necessary to redesign processes
 List and discuss the returns and weaknesses of process layout
 Explain process reengineering

Activity :
Complete the case study on page 109 of your text book for class discussion.

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UNIT 7: QUALITY MANAGEMENT

Introduction

Organisations exist to make a profit. In order to make a profit, they need to

manufacture goods and supply services that satisfy the needs and expectations of
their customers. Practices of quality ensure that the needs and expectations of
customers are continually determined and recognized, and ensure that the
subsequent goods and services produced satisfy these needs.

Practices of quality also ensure that the organization complies with and conforms to
regulations and standards required by the government and industry, as well as
demands from interest groups.

LEARNING OBJECTIVES :

After completing this chapter, the learner will be able to –

 Understand the need for quality in organisations
 Describe the different definitions of quality
 Describe a good or service in terms of the quality dimension
 Identify and describe the eight principles of quality systems
 Discuss some of the popular quality standards
 Name and describe the contributions of some of the quality gurus
 Describe the roles of various South African organisations for quality

Activity :
Complete the case study on page 134 for class discussion.

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UNIT 8: SUPPLY CHAIN MANAGEMENT

Introduction

An analysis of any purchase made makes it clear that there is a series of steps
between the purchase of the good and the original raw material. This is also true of
any service consumed. This series of steps is known as the supply chain. The supply
chain is a process, which originates with the supplier and continues through
manufacturing and distribution until the product ultimately reaches the customer. It
also refers to the sequence that an organization uses for all the business processes,
and information flows within that organization, to provide the goods or services.

Supply chain management (SCM) entails the planning, design, and control of all the
information and material flowing along the supply chain to ensure that customer
needs and wants, in the present and future, will be met in an effective and efficient
manner.

LEARNING OBJECTIVES :

After completing this chapter, the learner should be able to –

 Explain what is a supply chain

 Appreciate the role and importance of the supply chain
 Define supply chain management
 Understand what management of the supply chain entails
 Understand the benefits of integrating all the functions in the supply chain
 Explain outsourcing, and discuss its advantages and disadvantages
 Determine whether products should be made or bought
 Discuss materials management
 Understand the nature and role of a purchasing or procurement department
 Explain the JIT philosophy and its impact on supply chain management

Activity :
Complete the case study on page 183 and 184 for class discussion.

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UNIT 9: INVENTORY MANAGEMENT

Introduction

Inventory can generally be defined as a stockpile or store of goods. Stock holding

can include small items such as nuts, bolts, and washers, or large items such as
machines, machine parts, and assemblies of products. The type of business that an
organisation is involved with will determine the type of inventory held by the
organisation.

Inventory is one of the most expensive assets of any organisation.

A good indication of properly managed inventory is the number of times that

inventory is turned. The result of the higher turnover is that the need for keeping high
volumes of stock no longer exists.

LEARNING OUTCOMES :
After studying this chapter, the learner should be able to –
 Identify and describe classification systems, particularly ABC analysis.
 Understand the importance of record accuracy
 Identify the costs involved in inventory holding
 Define the term, “inventory”
 List the reasons for holding inventory
 Discuss the main requirements for effective inventory management
 Describe and use basic economic order quantity models
 Appreciate the need for buffer stock in inventory management
 Appreciate the need for keeping inventory
 Explain the importance of service levels in inventory management.

Activity :
Complete the case study on page 281 for class discussion.

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TUTORIAL

1. The new office supply discounter, paper clips etc., sells a certain type of economically
correct office chair which costs R300. The annual holding cost rate is 40%, annual demand
is R600, and the order cost is R20 per chair. The lead time is four days. Because demand is
variable, the company has decided to establish a customer level of 90%. The store is open
300 days per year.

(a) What is the optimal order quantity?

(b) What is the total annual cost?
(c) What is the reorder point?

2. Herb Adams sells bicycles. One particular model is highly popular with annual sales of
2000 units per year. The costs of one such bicycle is R800. Annual holding costs are 25%
of the item’s costs. The ordering cost is R40. The store is open 250 days per year.

(a) What is the economic order quantity?

(b) What is the optimal number of orders?
(c) What is the optimal number of days between orders?
(d) What are the annual total costs?

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UNIT 10: CAPACITY PLANNING

Introduction

A number of very important questions must be addressed when capacity is planned.

They are as follows –

 What is the amount of capacity required?

 What facilities, equipment, machines, and labour will be part of the planned
capacity?
 Are the existing facilities adequate to satisfy existing and impending capacity
requirements?
 Does the organisation predict any changes in existing and impending demand
patterns?
 What type of capacity is required by the organisation?
 Should the organisation erect new facilities to meet impending demand?
 When and how will capacity be totalled to operations, processes, and
systems?
 When will the organisation require the capacity?

Capacity can thus be defined as the maximum amount that something can contain or
produce.

This definition of capacity is the broadest possible definition of capacity, and should
reduce some of the confusion around the term. For the purpose of operations
management however, a more detailed definition is required. Any definition of
capacity must show a measurement of capacity and must mirror the capability of an
operation or process to satisfy customer demand for the goods or services of an
organisation.

LEARNING OUTCOMES :
After studying this chapter, the learner will be able to –
 Define the term, “capacity”.
 Understand the importance of capacity for the success of an organisation

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 Discuss the manner in which capacity can be implemented

 Understand the critical capacity decisions
 Understand the considerations that must be taken into account when capacity
is determined
 Understand the necessity for capacity measurement
 Compute effectiveness, utilisation and capacity loads
 Establish effective capacity
 Discuss capacity needs predictions
 Develop alternative capacity plans

Activity

Complete the case study on page 282 and 283 for class discussion.

TUTORIAL

1. Huge University’s Executive MBA has the facilities and faculty to handle an enrollment of
2000 students per semester. However, in an effort to limit class sizes to a “reasonable” level
(under 200, generally), they placed a ceiling on enrollment to 1500 students. Although there
was ample demand for business courses last semester, conflicting schedules allowed only
1450 students to take business courses. What are the utilization and efficiency of this
system?

2. A fleet repair facility has the capacity to repair 800 trucks per month. However, due to
scheduled maintenance of their equipment, management feels that they can repair no more
than 500 trucks per month. Last month, two of the employees were absent several days
each and only 300 trucks were repaired. What are the utilization and efficiency of the repair
shop?

3. The owner of Pizza Palace is considering a new oven in which to bake the firm’s signature
dish, vegetarian pizza. Oven type A can handle 20 pizzas an hour. The fixed cost
associated with oven A are R20, 000 and the variable costs are R2.00 per pizza. Oven B is
larger and can handle 40 pizzas an hour. The fixed costs associated with oven B are

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R30.000 and the variable costs are R1.25 per pizza. The pizzas sell for R14 each.

Calculate the break-even point in both units and Rand value.

a) If the owner expects to sell 9,000 pizzas, which oven should she purchase?

b) If the owner expects to sell 12,000 pizzas, which oven should she purchase?

4. A manufacture is currently producing an item which has a variable cost of R0.75 per unit
and a selling price of R2.00 per unit. Fixed costs are R20, 000. Current volume is 40,000
units. The firm can produce what they believe is a better product by adding a new piece of
equipment to the process line. This equipment represents an increase of R5, 000 in fixed
cost. The variable cost would decrease R0.25 per unit. Volume for the new and improved
product should rise to 50,000 units. Should the company invest in the equipment?

5. Willows is a popular resort, but regularly face a shortage of fresh water. Marie Bain has the
entrepreneurial spirit and plans to open a business shipping barges of fresh water to the
town. They estimate their fixed costs to be R2, 500,000, and their variable costs (water,
labour, fuel) to be R50, 000 per barge load. Selling price is expected to average R75, 000
per barge load.
a) What is her break-even point in units?

b) What is her break-even point in rand?

c) If she anticipates demand for 20 barges during the next year, should she enter this
business?

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UNIT 11: OPERATIONS MANAGEMENT CHALLENGES

LEARNING OUTCOMES :

After studying this module, the student should be able to –

 List current economic, social, environmental, and technological challenges in

operations management
 Explain the impact of globalization on an organization
 Define and discuss world-class manufacturing
 Understand the importance of customer satisfaction
 Discuss the social responsibility of an organization
 Discuss why an organization should take its responsibilities towards the
environment seriously
 Discuss different types of new technology
 Explain the impact of new technologies on an organization.

Activity :
Complete the case study on page 377 and 378 for class discussion

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SECTION 3

1 INFORMATION ON PLAGIARISM

It is extremely important that you understand the importance of avoiding plagiarism in

any of the work submitted in fulfilment of your course requirements. Disciplinary
action will be taken against any student who plagiarises the work of another.

The following extract on plagiarism is taken directly from the official NMU Copyright
services website from an article entitled Copyright and Plagiarism: Short guide for
students. Students must familiarise themselves with this document:

WHAT IS PLAGIARISM?

Plagiarism is similar to copyright infringement in that one is unlawfully using the work of
another person. Plagiarism occurs when an individual uses the words or ideas of another
person as if it were his/her own and without giving acknowledgement of the actual
source. Even if the source is mentioned it must be made clear when the work is being
quoted and what your own contribution is. The work that was plagiarised does not even
need to be a copyright protected work to amount to plagiarism.

R. D. Mawdsley, in an article Academic Misconduct: Cheating and Plagiarism, 1994

(Topeka: NOLPE) defined plagiarism as follows: “Plagiarism: This consists of offering as
one’s own work the words, ideas or arguments of another person, without appropriate
attribution by quotation, reference or footnote. Plagiarism occurs both when the words of
another are reproduced without acknowledgement, and when the ideas or arguments of
another are paraphrased in such a way as to lead the reader to believe that they originated
with the writer.”

2 ASSIGNMENT INSTRUCTIONS

You will be required to complete one group practical assignment. Your course
facilitator will provide you with a topic as well as a due date for submission.

In the event of a research assignment you will be required to follow the instructions
below as well as the guidelines provided in “Technical Requirements for
Assignments”. Copies hereof are available in the library and will be sent via your
student e-mail. You are advised to consult with the Writing Centre should you
require further assistance in developing your academic writing skills.

 The content of your assignment should be between 6 to 8 pages, excluding

the introduction and conclusion
 Assignments must be typed in 12 font Arial, 1½ spacing.

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 It is very important that you are able to engage in scientific writing. This
entails ensuring that you correctly reference your sources. Spelling, grammar,
and general presentation are also important.
 Staple your assignment with 1 staple in the top left hand corner of the work
and submit it in this form. Do not submit your assignment in a plastic sleeve.
 No assignments will be accepted or evaluated after the deadline date.
 If it is established that students have copied or plagiarised assignments, they
will receive zero for their project.

3 ASSIGNMENT LEARNING OUTCOMES

After completing the project, the learner will –

 Practical application of queuing theory
 Working in teams
 Project Management practice
 Practise writing skills
 Practice conflict management skills

4 ASSIGNMENT MARK SHEET

1 Presentation 5
2 Observation of results 10
3 Calculations 20
4 Assessment of results 10
5 Conclusion 5

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