Operations ManagementOperations and ProductivityChapter 1

At this point:1. Introduce yourself - your students are likely to want to know something about your qualifications and interests - overall, where you are coming from.2. Have students introduce themselves. Ask why they are taking this class. If you are fortunate enough to have a Polaroid camera, take pictures of each student for later posting on a class board so both they and you get to know each other.3. Discuss both choice of textbook and development of syllabus.4. If you are expecting students to work in teams, at east introduce the choice of team members. If at all possible, have students participate in a team building or team study exercise. It works wonders. Most student have been told to work in teams in prior classes, but have never examined exactly what a team is and how it works. One hour spent in a team building/examination exercise saves many hours and avoids many problems later on.

OutlinePROFILE: HARD ROCK CAFEWHAT IS OPERATIONS MANAGEMENT?ORGANIZING TO PRODUCE GOODS AND SERVICES WHY STUDY OM?WHAT OPERATIONS MANAGERS DO

How This Book Is OrganizedWHERE ARE THE OM JOBS?

Outline - ContinuedTHE HERITAGE OF OPERATIONS MANAGEMENTOPERATIONS IN THE SERVICE SECTOR

Differences between Goods and ServicesGrowth of ServicesService PayEXCITING NEW TRENDS IN OPERATIONS MANAGEMENT

Outline - ContinuedTHE PRODUCTIVITY CHALLENGE

Productivity MeasurementProductivity VariablesProductivity and the Service Sector THE CHALLENGE OF SOCIAL RESPONSIBILITY

Learning ObjectivesWhen you complete this chapter, you should be able to :Identify or Define:Production and productivityOperations Management (OM)What operations managers doServices

Learning Objectives - ContinuedWhen you complete this chapter, you should be able to :Describe or Explain:A brief history of operations managementCareer opportunities in operations managementThe future of the disciplineMeasuring productivity

The Hard Rock CafeFirst opened in 1971

Now 110 restaurants in over 40 countriesRock music memorabiliaCreates value in the form of good food and entertainment3,500+ custom meals per day How does an item get on the menu?Role of the Operations Manager

What Is Operations Management?Production is the creation of goods and servicesOperations management is the set of activities that creates value in the form of goods and services by transforming inputs into outputs

Two additional points: 1. Any activity is an operation 2. No company produces only goods - service is a greater or lesser part of any product. (Discuss this in more detail later)

Organizing to Produce Goods and Services

Organizing to Produce Goods and ServicesEssential functions:

Marketing generates demandOperations creates the productFinance/accounting tracks organizational performance, pays bills, collects money

Organizational FunctionsMarketing

Gets customersOperations

creates product or serviceFinance/Accounting

Obtains fundsTracks money

Here is the point at which you can add to your discussion of the three business functions. In an effort to encourage student participation, you might allow students to lead the discussion as to the nature of each function, while you lead the discussion as to the relationship of the individual functions to the larger business.

Initiate a class discussion about how these functions expand as the firm grows and how new activities have become important (i.e., MIS and Human Resources)

Sample Organization Charts

Functions - Bank

Functions - Airline

1984-1994 T/Maker Co.

Functions - Manufacturer

Organizational Charts

Organizational ChartsAirlineOperationsGround support equipmentMaintenanceGround Operations Facility maintenance Catering Flight Operations Crew scheduling Flying Communications DispatchingManagement scienceFinance & AccountingAccountingPayablesReceivablesGeneral LedgerFinanceCash controlInternational exchange ratesMarketingTraffic administrationReservationsSchedulesTariffs (pricing)SalesAdvertising

Organizational ChartsManufacturing

Why Study OM?

Why Study OM?OM is one of three major functions (marketing, finance, and operations) of any organization.We want (and need) to know how goods and services are produced.We want to understand what operations managers do.OM is such a costly part of an organization.

One might ask students to consider: - marketing => deciding what is needed - finance => securing resources - operations => doing it!What are the limitations of this perspective?

Options for Increasing Contribution

Marketing Option

Finance & Accounting Option

OM Option

Current

Sales Revenue : +50%

Finance Costs: -50%

Production Costs: -20%

Sales

$100,000

$150,000

$100,000

$100,000

Cost of Goods Sold

-80,000

-120,000

-80,000

-64,000

Gross Margin

20,000

30,000

20,000

36,000

Finance Costs

-6,000

-6,000

-3,000

-6,000

Net

Margin

14,000

24,000

17,000

30,000

Taxes @ 25%

-3,500

-6,000

-4,250

-7,500

Contribution

10,500

18,000

12,750

22,500

Students can do the math! It may be useful to show a more detailed breakdown of cost-of-goods-sold, and illustrate the contribution to cost-of-goods sold of marketing, finance/accounting, and operations. It may also be helpful to use this data to introduce and illustrate fixed and variable costs and their relationship to net contribution.

What Operations Managers DoPlan - Organize - Staff - Lead - Control

This is the typical breakdown one finds in many business courses. It may be helpful to the students if you discuss each of these elements in relationship to something you or they have done. Work on a group project, for example, can provide a useful vehicle for the discussion.

Ten Critical DecisionsService, product design..Quality managementProcess, capacity design..Location .Layout design ..Human resources, job design..Supply-chain managementInventory management .Scheduling Maintenance .

Ch. 5Ch. 6, 6SCh. 7, 7SCh. 8Ch. 9Ch. 10, 10SCh. 11,11sCh. 12, 14, 16Ch. 3, 13, 15Ch. 17

This slide introduces the 10 decision areas of Operations Management. These decision areas form the structure of the text.

You may either go through this list quickly, and hold an enriched discussion using some of the slides that follow; or ask the students to give you examples of specific decisions from each area.

As mentioned before - you may forego looking for precise answers at this point - and simply try to get them thinking and involved.

The Critical DecisionsQuality management

Who is responsible for quality?How do we define quality?Service and product design

What product or service should we offer?How should we design these products and services?

Using this and subsequent slides, you might go through in more detail the decisions of Operations Management. While greater detail is provided by these slides than the earlier one, you may still decide to have the students contribute examples from their own experience.

The Critical Decisions - ContinuedProcess and capacity design

What processes will these products require and in what order?What equipment and technology is necessary for these processes?Location

Where should we put the facilityOn what criteria should we base this location decision?

The Critical Decisions - ContinuedLayout design

How should we arrange the facility?How large a facility is required?Human resources and job design

How do we provide a reasonable work environment?How much can we expect our employees to produce?

The Critical Decisions - ContinuedSupply chain management

Should we make or buy this item?Who are our good suppliers and how many should we have?Inventory, material requirements planning,

How much inventory of each item should we have?When do we re-order?

The Critical Decisions - ContinuedIntermediate, short term, and project scheduling

Is subcontracting production a good idea?Are we better off keeping people on the payroll during slowdowns?Maintenance

Who is responsible for maintenance?When do we do maintenance?

Where are the OM Jobs

Where are the OM Jobs

Where Are the OM Jobs?Technology/methodsFacilities/space utilizationStrategic issuesResponse timePeople/team developmentCustomer serviceQualityCost reductionInventory reductionProductivity improvement

Ask your students for input here. Look for positions that they or their parents have filled. You might also ask them (a) what positions they are seeking upon graduation; and (b) to predict how demand for workers in each of these areas is likely to change over time, and why. Finally, have them consider the skills required of the occupants of each position

The Heritage of Operations Management

Significant Events in Operations Management

You should stress that the time-based historical perspective is only one way to look at the development of Operations Management, outcome focus is another.

The Heritage of Operations Management

The Heritage of Operations Management - Continued

Eli Whitney

Born 1765; died 1825In 1798, received government contract to make 10,000 musketsShowed that machine tools could make standardized parts to exact specifications

Musket parts could be used in any musket

You might ask students why standardization is so important. If their answers do not raise the issue, here is a good time to introduce the concept of setup. Discussion of Whitney also raises issues of quality control, and even worker training.

Frederick W. Taylor

Born 1856; died 1915Known as father of scientific managementIn 1881, as chief engineer for Midvale Steel, studied how tasks were done

Began first motion & time studiesCreated efficiency principles

1995 Corel Corp.

Some students argue that Taylors main objective was to get more from the workers. You might discuss the difference between trying to get more out of the workers and trying to improve their efficiency.

Taylor: Management Should Take More Responsibility forMatching employees to right jobProviding the proper trainingProviding proper work methods and toolsEstablishing legitimate incentives for work to be accomplished

There are several issues which can be raised here: - the individual nature of individuals (not everyone is suited to the same job) - how does one decide what is proper training? - perhaps a poor workman blames his tools; but a workman may only be as good as his tools - a days pay for a days work - what is a days work? How do we decide? How do we arrive at a monetary value for this days work?

Frank & Lillian Gilbreth

Frank (1868-1924); Lillian (1878-1972)Husband-and-wife engineering teamFurther developed work measurement methodsApplied efficiency methods to their home & 12 children! (Book & Movie: Cheaper by the Dozen, book: Bells on Their Toes)

Ask the students: So what?Get them to think about task performance at various levels of detail. - How does one determine the most efficient motions to be used? - How does one balance the performance of a task so that one limb does not bear an excessive load? - How can one design a job before actually performing a task?

You might also wish to discuss the book and movies about the Gilbreths and their children.

Henry Ford

Born 1863; died 1947In 1903, created Ford Motor CompanyIn 1913, first used moving assembly line to make Model T

Unfinished product moved by conveyor past work stationPaid workers very well for 1911 ($5/day!)

Make them all alike!

Assembly lines are widely accepted and used. Are they actually Gods gift to repetitive manufacturing? Have students consider the Volvo experiment where teams were used to build automobiles.

W. Edwards Deming

Born 1900; died 1993Engineer & physicistCredited with teaching Japan quality control methods in post-WW2Used statistics to analyze processHis methods involve workers in decisions

Have students consider why Dr. Demings popularity was so great in Japan, but took such a long time to develop in the U.S.

Contributions FromHuman factorsIndustrial engineeringManagement scienceBiological sciencePhysical sciencesInformation science

Here you might try to make two points: - there are many contributions from outside the OM/business disciplines (one of the most important characteristics of an Operations Manager is the ability to work with or within multiple disciplines) - the greater contribution from the information sciences is not to make things occur faster (automation) but to enable the operations manager to look at problems from a different perspective.

Significant Events in OMDivision of labor (Smith, 1776)Standardized parts (Whitney, 1800)Scientific management (Taylor, 1881)Coordinated assembly line (Ford 1913)Gantt charts (Gantt, 1916)Motion study (the Gilbreths, 1922)Quality control (Shewhart, 1924)

Gives you a chance to summarize some of the critical events in the evolution of OM.

Significant Events - ContinuedCPM/PERT (Dupont, 1957) MRP (Orlicky, 1960)CADFlexible manufacturing systems (FMS)Manufacturing automation protocol (MAP)Computer integrated manufacturing (CIM)

New Challenges in OMLocal or national focusBatch shipmentsLow bid purchasing

Lengthy product development

Standard productsJob specialization

Global focusJust-in-timeSupply chain partneringRapid product development, alliancesMass customizationEmpowered employees, teams

From To

Use this and the subsequent slide to get students thinking about some of the changes taking place in OM. Try to help them understand both the causes of the changes and the implications. In particular, have them consider the role of information and of information technology.

Operations in the Service Sector

Characteristics of Goods

Tangible productConsistent product definitionProduction usually separate from consumptionCan be inventoriedLow customer interaction

You might pick a company that produces a physical product that will be familiar to the students, ask students to identify the product, and discuss its characteristics. Once the students have identified the physical characteristics of the product, you can ask What other characteristics does the company believe its product possesses? This question will often raise the issue of service.

Companies which might it be helpful to consider include: Xerox - an information management company (not just copiers) McDonalds, Burger King, Wendys - either compare the viewpoints of the three companies, or contrast them to a gourmet restaurant Volkswagen versus Volvo, Mercedes or Rolls Royce.

Characteristics of Service

Intangible productProduced & consumed at same timeOften uniqueHigh customer interactionInconsistent product definitionOften knowledge-basedFrequently dispersed

Here it is probably useful to look to the students to identify both company and product. You might use the approach of taking one characteristic at a time and asking the students to identify a service that has that characteristic: Unique - wedding planning High customer interaction - health care Inconsistent definition - consulting etc.

Service EconomiesProportion of Employment in the Service Sector

Chart1

50

52

55

58.5

60

62

62

62.5

63

63

63

66

68.5

70

71.5

72.5

72.5

73.5

73.5

73.5

74

76

Country

Percent of Total Employment

Sheet1

50525558.560626262.56363636668.57071.572.572.573.573.573.57476

PolandPortugalCzech Rep.HungaryGreeceItalySpainGermanyIrelandAustriaJapanFinlandSwitz.DenmarkFranceSwedenU.K.BelgiumNorwayLux.U.S.A.Neth.

Sheet2

Sheet3

Goods Versus ServicesCan be resoldCan be inventoried

Some aspects of quality measurableSelling is distinct from production

Reselling unusualDifficult to inventoryQuality difficult to measureSelling is part of service

Goods Service

At this point, you might approach this and the next several slides by asking students to identify a product (good or service as appropriate) that illustrates each characteristic. You might also ask them to identify products that violate one or more of these distinctions between goods and services.

Goods Versus Services - ContinuedProduct is transportableSite of facility important for cost

Often easy to automateRevenue generated primarily from tangible product

Provider, not product is transportableSite of facility important for customer contactOften difficult to automateRevenue generated primarily from intangible service.

Goods Service

Goods Contain Services / Services Contain Goods

AutomobileComputerInstalled CarpetingFast-food MealRestaurant MealAuto RepairHospital CareAdvertising AgencyInvestment ManagementConsulting ServiceCounselingPercent of Product that is a GoodPercent of Product that is a Service

This slide should help you make the point that a product is seldom only a good or only a service but usually includes some of each. You might also raise the point that as companies are reaching the limit of evolution of the physical (good), they are tending to add information (a service) to their product. Finally, it is important that the student be able to cite examples illustrating each of the ranges shown in the slide.

Organizations in Each Sector Table 1.4

Service SectorExample% of all JobsProfessional services, education, legal, medicalNew York City PS108, Notre Dame University, San Diego Zoo24.3Trade (retail, wholesale)Walgreens, Wal-Mart, Nordstroms20.6Utilities, transportationPacific Gas & Electric, American Airlines, Santa Fe R.R, Roadway Express7.2

Organizations in Each Sector Table 1.4

Service SectorExample% of all JobsBusiness & Repair ServicesSnelling & Snelling, Waste Management, Pitney-Bowes7.1Finance, Insurance, Real EstateCiticorp, American Express, Prudential, Aetna, Trammel Crow6.5Food, Lodging, EntertainmentMcDonalds, Hard Rock Caf, Motel 6, Hilton Hotels, Walt Disney Paramount Pictures5.2Public AdministrationU.S., State of Alabama, Cook County4.5

Organizations in Each Sector Table 1.4

Manufacturing SectorExample% of all JobsGeneralGeneral Electric, Ford, U.S. Steel, Intel14.8ConstructionBechtel, McDermott7.0AgricultureKing Ranch2.4MiningHomestake Mining0.4

Organizations in Each Sector Table 1.4Summary

Sector% of all JobsService75.4%Manufacturing24.6%

Development of the Service Economy

Have your students consider the U.S. Employment Services/Industry/Farming shares. What factors will ultimately act to limit changes in this graph. What about the other two graphs?

Exciting New Challenges in Operations Management

Changing Challenges for the Operations Manager

Past

Causes

Future

Local or national focus

Low-cost, reliable worldwide communication and transportation networks

Global Focus

Batch (large) shipments

Cost of capital puts pressure on reducing investment in inventory

Just-in-time shipments

Low-bid purchasing

Quality emphasis requires that suppliers be engaged in product improvement

Supply-chain partners

Lengthy product development

Shorter life cycles, rapid international communication, computer-aided design, and international collaboration

Rapid product development, alliances, collaborative designs

Changing Challenges for the Operations Manager

Past

Causes

Future

Standardized products

Affluence and worldwide markets; increasingly flexible production processes

Mass customization

Job specialization

Changing sociocultural milieu. Increasingly a knowledge and information society.

Empowered employees, teams, and lean production

Low cost focus

Environmental issues, ISO 14000, increasing disposal costs

Environmentally sensitive production, Green manufacturing, recycled materials, remanufacturing

The Productivity Challenge

The Economic System Transforms Inputs to Outputs

Ask your students to consider why the rate of growth of productivity in the U.S. is so low. As they identify factors, have them link these factors to the resources of capital, labor, and management.

This may also be a good point at which to introduce the notions of efficiency (doing a job well), and effectiveness (doing the right job). It may be especially helpful to discuss the conditions under which efficiency or effectiveness becomes the more important.

Typical Impact of Quality Improvement

As productivity improved Costs were pared Wages increased

This slide may help explain why an increasing productivity is so important if one wishes an increased standard of living.

Productivity

Measure of process improvementRepresents output relative to inputOnly through productivity increases can our standard of living improve

The productivity discussion can continue with this slide.

One question for students might be: Why is the present rate of productivity improvement in the U.S. less than in the period 1889 to 1973?

You might also ask them to consider what happens as the rate of productivity improvement approaches zero. Does this simply mean that the standard of living ceases to rise, or are there more ominous manifestations?

Multi-Product Productivity Productivity =

Output Labor + material + energy + capital + miscellaneous

This slide can be used to introduce multi-factor productivity.

Measurement ProblemsQuality may change while the quantity of inputs and outputs remains constantExternal elements may cause an increase or decrease in productivityPrecise units of measure may be lacking

Ask the students to think about why productivity is so difficult to measure. Have them identify several tasks or jobs, and help them identify some possible productivity measures. Ask them how they would go about making these measurements. Student and faculty productivity certainly provide examples that can generate discussion! You might ask your students if they believe grades measure student productivity.

Productivity VariablesLabor - contributes about 10% of the annual increaseCapital - contributes about 32% of the annual increaseManagement - contributes about 52% of the annual increase

Here again, faculty and student productivity make useful discussion generators. Students can certainly look at the role of both capital and management in the classroom - and they are likely to be able to tie the three productivity variables to the presentation or teaching methodologies of different faculty.

Key Variables for Improved Labor ProductivityBasic education appropriate for the labor forceDiet of the labor forceSocial overhead that makes labor availableMaintaining and enhancing skills in the midst of rapidly changing technology and knowledge

You might first ask students to consider the conditions under which each of the key variables is most important. Once the conditions are identified, you might list the conditions on the board or screen and ask students to develop a method for comparing various countries on the basis of these conditions. Where would they place the U.S.? Developing countries? Etc.

Jobs in the U.S

You might ask the students, how, in general, they might expect the figures shown in this graph to change over the next twenty years.In addition, initiate a discussion of how we have moved from hunting and gathering to agriculture to manufacturing to service.

Comparison of Productivity

Investment and Productivity in Selected Nations

Service ProductivityTypically labor intensiveFrequently individually processedOften an intellectual task performed by professionalsOften difficult to mechanizeOften difficult to evaluate for quality

You can use this slide to frame a discussion of service productivity.

Ask students to provide examples of services having each characteristic. Once they have done this, ask if they can think of a way to overcome or change the characteristics for that service so as to increase productivity.

The Challenge of Social ResponsibilityIncreasing emphasis on business and social responsibility

At this point:1. Introduce yourself - your students are likely to want to know something about your qualifications and interests - overall, where you are coming from.2. Have students introduce themselves. Ask why they are taking this class. If you are fortunate enough to have a Polaroid camera, take pictures of each student for later posting on a class board so both they and you get to know each other.3. Discuss both choice of textbook and development of syllabus.4. If you are expecting students to work in teams, at east introduce the choice of team members. If at all possible, have students participate in a team building or team study exercise. It works wonders. Most student have been told to work in teams in prior classes, but have never examined exactly what a team is and how it works. One hour spent in a team building/examination exercise saves many hours and avoids many problems later on.

Two additional points: 1. Any activity is an operation 2. No company produces only goods - service is a greater or lesser part of any product. (Discuss this in more detail later)Here is the point at which you can add to your discussion of the three business functions. In an effort to encourage student participation, you might allow students to lead the discussion as to the nature of each function, while you lead the discussion as to the relationship of the individual functions to the larger business.

Initiate a class discussion about how these functions expand as the firm grows and how new activities have become important (i.e., MIS and Human Resources)

One might ask students to consider: - marketing => deciding what is needed - finance => securing resources - operations => doing it!What are the limitations of this perspective?Students can do the math! It may be useful to show a more detailed breakdown of cost-of-goods-sold, and illustrate the contribution to cost-of-goods sold of marketing, finance/accounting, and operations. It may also be helpful to use this data to introduce and illustrate fixed and variable costs and their relationship to net contribution.This is the typical breakdown one finds in many business courses. It may be helpful to the students if you discuss each of these elements in relationship to something you or they have done. Work on a group project, for example, can provide a useful vehicle for the discussion.This slide introduces the 10 decision areas of Operations Management. These decision areas form the structure of the text.

You may either go through this list quickly, and hold an enriched discussion using some of the slides that follow; or ask the students to give you examples of specific decisions from each area.

As mentioned before - you may forego looking for precise answers at this point - and simply try to get them thinking and involved.

Using this and subsequent slides, you might go through in more detail the decisions of Operations Management. While greater detail is provided by these slides than the earlier one, you may still decide to have the students contribute examples from their own experience.

Ask your students for input here. Look for positions that they or their parents have filled. You might also ask them (a) what positions they are seeking upon graduation; and (b) to predict how demand for workers in each of these areas is likely to change over time, and why. Finally, have them consider the skills required of the occupants of each positionYou should stress that the time-based historical perspective is only one way to look at the development of Operations Management, outcome focus is another.You might ask students why standardization is so important. If their answers do not raise the issue, here is a good time to introduce the concept of setup. Discussion of Whitney also raises issues of quality control, and even worker training.Some students argue that Taylors main objective was to get more from the workers. You might discuss the difference between trying to get more out of the workers and trying to improve their efficiency.There are several issues which can be raised here: - the individual nature of individuals (not everyone is suited to the same job) - how does one decide what is proper training? - perhaps a poor workman blames his tools; but a workman may only be as good as his tools - a days pay for a days work - what is a days work? How do we decide? How do we arrive at a monetary value for this days work?Ask the students: So what?Get them to think about task performance at various levels of detail. - How does one determine the most efficient motions to be used? - How does one balance the performance of a task so that one limb does not bear an excessive load? - How can one design a job before actually performing a task?

You might also wish to discuss the book and movies about the Gilbreths and their children.Assembly lines are widely accepted and used. Are they actually Gods gift to repetitive manufacturing? Have students consider the Volvo experiment where teams were used to build automobiles.Have students consider why Dr. Demings popularity was so great in Japan, but took such a long time to develop in the U.S.Here you might try to make two points: - there are many contributions from outside the OM/business disciplines (one of the most important characteristics of an Operations Manager is the ability to work with or within multiple disciplines) - the greater contribution from the information sciences is not to make things occur faster (automation) but to enable the operations manager to look at problems from a different perspective.Gives you a chance to summarize some of the critical events in the evolution of OM.

Use this and the subsequent slide to get students thinking about some of the changes taking place in OM. Try to help them understand both the causes of the changes and the implications. In particular, have them consider the role of information and of information technology. You might pick a company that produces a physical product that will be familiar to the students, ask students to identify the product, and discuss its characteristics. Once the students have identified the physical characteristics of the product, you can ask What other characteristics does the company believe its product possesses? This question will often raise the issue of service.

Companies which might it be helpful to consider include: Xerox - an information management company (not just copiers) McDonalds, Burger King, Wendys - either compare the viewpoints of the three companies, or contrast them to a gourmet restaurant Volkswagen versus Volvo, Mercedes or Rolls Royce.Here it is probably useful to look to the students to identify both company and product. You might use the approach of taking one characteristic at a time and asking the students to identify a service that has that characteristic: Unique - wedding planning High customer interaction - health care Inconsistent definition - consulting etc.

At this point, you might approach this and the next several slides by asking students to identify a product (good or service as appropriate) that illustrates each characteristic. You might also ask them to identify products that violate one or more of these distinctions between goods and services.

This slide should help you make the point that a product is seldom only a good or only a service but usually includes some of each. You might also raise the point that as companies are reaching the limit of evolution of the physical (good), they are tending to add information (a service) to their product. Finally, it is important that the student be able to cite examples illustrating each of the ranges shown in the slide.Have your students consider the U.S. Employment Services/Industry/Farming shares. What factors will ultimately act to limit changes in this graph. What about the other two graphs?Ask your students to consider why the rate of growth of productivity in the U.S. is so low. As they identify factors, have them link these factors to the resources of capital, labor, and management.

This may also be a good point at which to introduce the notions of efficiency (doing a job well), and effectiveness (doing the right job). It may be especially helpful to discuss the conditions under which efficiency or effectiveness becomes the more important.This slide may help explain why an increasing productivity is so important if one wishes an increased standard of living.The productivity discussion can continue with this slide.

One question for students might be: Why is the present rate of productivity improvement in the U.S. less than in the period 1889 to 1973?

You might also ask them to consider what happens as the rate of productivity improvement approaches zero. Does this simply mean that the standard of living ceases to rise, or are there more ominous manifestations?This slide can be used to introduce multi-factor productivity.Ask the students to think about why productivity is so difficult to measure. Have them identify several tasks or jobs, and help them identify some possible productivity measures. Ask them how they would go about making these measurements. Student and faculty productivity certainly provide examples that can generate discussion! You might ask your students if they believe grades measure student productivity.Here again, faculty and student productivity make useful discussion generators. Students can certainly look at the role of both capital and management in the classroom - and they are likely to be able to tie the three productivity variables to the presentation or teaching methodologies of different faculty.You might first ask students to consider the conditions under which each of the key variables is most important. Once the conditions are identified, you might list the conditions on the board or screen and ask students to develop a method for comparing various countries on the basis of these conditions. Where would they place the U.S.? Developing countries? Etc.You might ask the students, how, in general, they might expect the figures shown in this graph to change over the next twenty years.In addition, initiate a discussion of how we have moved from hunting and gathering to agriculture to manufacturing to service.

You can use this slide to frame a discussion of service productivity.

Ask students to provide examples of services having each characteristic. Once they have done this, ask if they can think of a way to overcome or change the characteristics for that service so as to increase productivity.