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book; An Inquiry into the Nature And Causes of the Wealth of Nations (1776); 
that: 
The greatest improvement in the productive powers of labour; and the greater 
part of the skill; dexterity; and judgment with which it is anywhere directed; 
or applied; seem to have been the effects of the division of labour。 。 。。 I have 
seen a small manufactory of this kind where ten men only were employed; 
and where some of them consequently performed two or three distinct 
operations。 But though they were very poor; and therefore but indifferently 
acmodated with the necessary machinery; they could; when they exerted 
themselves; make among them about twelve pounds of pins in a day。 There 
are in a pound upwards of four thousand pins of a middling size。 Those ten 
persons; therefore; could make among them upwards of forty…eight thousand 
pins in a day。 But if they had all wrought separately and independently; and 
without any of them having been educated to this peculiar business; they 
certainly could not each of them have made twenty。 
By Smith’s calculations; organizing production efficiently increased output 
by 2;400 times; leaving the market itself as the primary limiting factor。 
Since then the hunt has been on for ever more efficiencies in the methods of 
production。 The main production methods employed today are:
236 The Thirty…Day MBA 
。 One…off production is when a single product is made to the individual 
needs of a customer; for example a designer dress。 This is very much 
the pre…Smith way in which everything was made; o。。en without the 
use of any machinery。 
。 Batch production involves the making of a number of identical products 
at the same time; then moving on to make a different product later。 For 
example; a small food processing factory could make sausage rolls in 
the morning and pizzas in the a。。ernoon。 This approach requires some 
basic machinery and Smith would probably recognize this process were 
he alive today。 
。 Mass production is used for larger…scale production using machinery; 
o。。en many different machines; for much of the work where individual 
tasks are carried out repetitively。 This is an efficient and low…cost 
method of production for small and medium…sized businesses。 
。 Continuous…flow production produces the high volumes required by 
larger panies。 These are highly automated and their cost usually 
requires them to be run 24/7。 By reducing the workforce needed this 
eliminates one of the blockages that Smith saw: ‘the improvement of 
the dexterity of the workman necessarily increases the quantity of the 
work he can perform’。 
。 puter…aided manufacture (CAM) is a continuous…flow production 
method controlled by puters; such as used in the motor industry。 
。 Lean manufacturing is an approach ascribed to Toyota; where they 
sought to eliminate or continuously reduce waste that is anything that 
doesn’t add value。 Waste in the production process taking the ‘lean’ 
approach is categorized under such headings as: 
– Transport: Keep process close to each other to minimize movement。 
– Inventory: Carrying high inventory levels costs money and; if too 
low; orders can be lost。 ‘Just in time’ (JIT) manufacturing should be 
aimed for。 
– Motion: Improve workplace ergonomics so as to maximize labour 
productivity。 
– Waiting: Aim for a smooth; even flow so that staff and machines are 
working optimally; reducing downtime to a minimum。 
– Defects: Aim for zero defects as that directly reduces the amount of 
waste。 
Production scheduling 
Production scheduling is the process used to get the optimum amount of 
output at the lowest cost。 Its success is measured by being able to meet 
delivery promises while hi。。ing profit margin objectives。 It achieves this 
by identifying possible resource conflicts; directing sufficient labour and 
machinery to tasks on time; acmodating downtime and preventative 
Operations Management 237 
maintenance schedules; and minimizing stock and work in progress levels。 
A production schedule also gives the production team explicit targets so 
that supervisors and managers can measure their performance。 
The techniques used to facilitate scheduling which an MBA should 
understand include the following。 
Gantt Charts 
Henry Gan。。; a mechanical engineer; management consultant and associate 
of Frederick Taylor; showed how an entire process could be described in 
terms of both tasks and the time required to carry them out。 He developed 
what became known as the Gan。。 chart; to help with major infrastructure 
projects; including the Hoover Dam and US Interstate highway system; 
around 1910。 By laying out the information on a grid with tasks on one axis 
and their time sequence along the other it was possible to see at a glance 
an entire production plan as well as highlight potential bo。。lenecks。 Gan。。 
charts can be used for any task; not just production scheduling; as Figure 
10。2; giving an example of how a website design project could be planned; 
demonstrates。 
Figure 10。2 Gan。。 chart showing weekly tasks for a website design project 
'!Figure 10。2!' 
0 1 2 3 4 5 6 7 8 9 10 
Look at problem materials needed 
Start button design software 
Experiment with web design software 
Prepare website text and images 
Test website 
Make revisions 
Finish writing up project 
Critical path method (CPM) 
A more sophisticated way to schedule operations was developed in the 
late 1950s。 DuPont; the US chemical pany; first used CPM to help 
with shu。。ing down plants for maintenance。 Later; the US Navy adapted 
it and improved it for use on the Polaris project。 CPM uses a chart (see 
Figure 10。3) showing all the tasks to be carried out to plete a scheduled 
activity; the sequence in which they have to be carried out and how long 
each event; as tasks are known; will take to be pleted。 The critical path 
is the route through the network that will take the longest amount of time。 
The significance of the critical path is that any delays in carrying out events 
238 The Thirty…Day MBA 
on this path will delay the whole project。 Tasks not on the critical path have 
more leeway; and may be slipped without affecting the end date of the 
project。 This is called slack or float。 
The steps in the critical planning method process are: 
。 Identify the events。 
。 Decide on the sequence in which they must be carried out。 
。 Draw the network。 
。 Calculate the pletion time for each event。 
。 Identify the longest and hence critical path。 
。 Keep the chart updated as events unwind。 
Programme evaluation and review technique (PERT) and an activity network; 
also known as an ‘activity…on…node diagram’; are more sophisticated 
forms of CPM that allow for a degree of randomness in activity start and 
pletion times。 
Linear programming 
In 1947; George Dantzig; an American mathematician; developed an algorithm 
(a mathematical technique) that could help resolve problems involving 
operational constraints。 His algorithm could; for example; help 
with situations where several products could be produced; but materials; 
labour or machine capacity is insufficient to make all that’s demanded – the 
Start 
Task 1 
3 weeks 
Task 2 
3 weeks 
Task 5 
1 week 
Task 4 
2 weeks 
Task 3 
4 weeks End 
This path is longest – takes 10 weeks – is critical path 
This path takes 7 weeks 
Tasks 4 or 5 could between them start or finish up to 3 days 
late without delaying pletion – so critical path has 3 days slack in it 
Figure 10。3 Critical path method applied
Operations Management 239 
challenge in that last case being to decide what mix of products can be 
produced that will make the maximum profit and then plan accordingly。 
Unfortunately; the iterative nature of producing solutions using Dantzig’s 
algorithm proved so tedious that until cheap puters arrived it remained 
an academic idea of interest only to mathematics students。 
The Dantzig algorithm prises an objective; the quantity to be optimized; 
for example profit; nutrient content; water flow or production of one 
particular product out of several; any variables and constraints on them; for 
example a certain minimum amoun

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