Grade

12

ENTREPRENEURSHIP
QUARTER 2 – MODULE TWO

MELCS: Demonstrate understanding of the

4Ms of operations (CS_EP11/12ENTREP-0h-j-12)
Describe the 4Ms (Manpower, Method, Machine, Materials) of
operations in relation to the business opportunity
SHS
Republic of the Philippines
12 DEPARTMENT OF EDUCATION
Region I
Schools Division of Pangasinan II
Binalonan, Pangasinan

ENTREPRENEURSHIP
Quarter 2 Module 2
MELCS: Demonstrate understanding of the
4Ms of operations (CS_EP11/12ENTREP-0h-j-12)
Describe the 4Ms (Manpower, Method, Machine, Materials) of operations in relation to
the business opportunity
• Test the product prototype
• Validate the service description of the product with potential customers to determine its
market acceptability
• Select/pinpoint potential suppliers of raw materials and other inputs necessary for the
production of the product or service

Prepared by:
ANNA MARY B. DE VERA
SHS Teacher II
 THIS MODULE HAS THE FOLLOWING PARTS:

What I Need to Know

What I Know

Looking Back

What’s New

Pre-Test

What is It

The Nine Critical Sub-Processes Or Sub-Systems in the Transformation Process

What’s More

Post Test

• Answer Key

• References

HOW TO USE THIS MODULE?

1. Use the module with care. Do not put unnecessary mark(s)/on any part of the module. Use separate
paper in answering the exercises or much better if you have a notebook.
2. Read the instruction carefully before doing each task.
3. Observe honesty and integrity in doing the tasks and checking your answers.
4. Finish the task at hand before proceeding to the next.
5. Return this module to your teacher once you are through with it.

What I Need to Know?

After going through this module, you are expected to:

1. Understand the Operations Management of the Transformation Process.
2. Determine the purpose of the Quality, Delivery and Price expectations of the customers about the
product.
3. Understand the purpose of Operating Systems in running the entire operations of making the
product
 What I Know?

To check your prior knowledge about the past lesson, answer the activity below.
Directions: Read and analyze the statements below and identify the correct answer. Write your
answer on the space provided.

____________1. It is all operating systems and work methods involved.

____________2. These are inputs that must be converted to the final outputs.

____________3. This enables the entire transformation process to operate by manning the machines or
rendering the services required.

____________4. It involves of all machinery and equipment.

____________5. It involves the harnessing of human, money, and physical resources from well-selected
sources.

____________6. It involves revenues/sales, market share and market reach.

____________7. It involves profits and return on investment.

____________8. It compose of quality, delivery and price.

____________9. These are the products or goods made in the Enterprise Delivery System.

____________10. It is the transformation process.

Direction: Complete the table below.

Enterprise Delivery System and the Customer, Market and Financial Outcomes
Input Throughput Output Final Delivery to Outcomes
Customers
Resources 3. Products Marketing and Customer Expectations
Mobilized _______________ Customer Servicing 6. __________
1.__________ 4. 7. __________
• Method Conversion of _____________ 5. ____________ • Price
• Machine Input into Output Market Expectations
2.__________ Service Level • Revenues/Sales
Experience 8. __________
9. __________
Finance Expectations
o Profits
10. ___________

You have finished answering the pre-test. You may request your facilitator/guardian to check your
work. Congratulations and keep on learning!
 What’s New

TRUE OR FALSE
Direction: Shade the correct answer below the statement.
1. For enterprises with multiple products or services, Production Programming and Scheduling can be a
very daunting and complicated activity.
o TRUE
o FALSE

2. Market demand is the hardest to figure out.

o TRUE
o FALSE

3. Consumer’s tastes change in a long period of time.

o TRUE
o FALSE

4. The larger the facility, the smaller the capital investment and financing requirements needed.
o TRUE
o FALSE

5. The materials and supplies used must adhere to strict technical standards that would produce the
desired output.
o TRUE
o FALSE

6. Every step in the Transformation Process must also be measured, monitored, and evaluated according
to the QDP standards of the transformation stage.
o TRUE
o FALSE

7. The input must be delivered to the factory or service shop at mediocre schedules.
o TRUE
o FALSE

8. Operating Systems and Procedures are engineered methods.

o TRUE
o FALSE

9. Operating systems have been experimented on and tested successfully in the actual work setting.
o TRUE
o FALSE

10. Operating systems and methods have been judged optimally for the market being served.
o TRUE
o FALSE
 What is It

The Nine Critical Sub-Processes Or Sub-Systems in the Transformation Process

The transformation process or throughput system is what differentiates a well-managed from a poorly-
managed EDS. There are nine critical sub-processes or sub-systems in the transformation process namely:

A. Production Programming and Scheduling

B. Quality Control
C. Operating Systems and Procedures
D. Layouting
E. Operating Work Flow
F. Worker Motivation, Skilling, Deployment, Compensation, and Control
G. Operations Management, Supervision and Control
H. Technology Application and Utilization
I. Support Services

The first three that we will discuss in this module are Production Programming and Scheduling,
Quality Control, and Operating Systems and Procedures.

Production Programming and Scheduling

Operations management is responsible for Production Programming and Scheduling (PPS). It is the
proper determination of: (1) what goods or services to produce, (2) in what sizes and packaging, (3) in what
machinery and equipment (or production/service line), (4) in how many units, and (5) precisely when.

For enterprises with multiple products or services, PPS can be a very daunting and complicated activity.
Operations must consider four critical factors in determining the right PPS. These are (1) market demand in
terms of volume expectations, trends, cycles, a seasonality; (2) capital investment and financing requirements;
(3) product line profitability and capacity utilization; and (4) the number of products and market segments the
enterprise wants to serve and their implications on the complexity and dexterity of the production system.

Market demand is the hardest to figure out. The enterprise should not produce too many goods,
otherwise there would be a lot of excess or obsolete inventory. It cannot produce too little because there might
be a stock out, hence, substantial opportunity losses. Because of thus, enterprises prefer to produce just enough
goods or services to meet the demand. Good market forecasting should therefore dictate the PPS. However,
consumer’s tastes change over time, competing products become more aggressive, substitute enter the market
place and seasons of the year create peaks and valleys of demand. One solution is to have excess production
capacity to meet unexpected sales increases. Another solution is to outsource or subcontract production to
other producers. However, these have capital and cost implications.

Having sufficient production capacity to meet excess demand will require a fairly large production
facility. Unfortunately, the larger the facility, the larger the capital investment and financing requirements
needed. Because of this, the enterprise must decide whether it is better to have a very large production capacity
in order to meet peak demand periods, or to have just a small capacity but accumulate the needed inventory
during the lean months of the year.

The third critical factor in determining the PPS is a good product line analysis. Each product line of
the enterprise has its own demand and supply analysis. At the end of the day, the operations manager must
figure out how much production capacity a particular product line would potentially consume. This would
depend on two things: (1) the estimated demand for the product line; and (2) the number of machine and labor
hours the product line would consume in the factory or service shop.
 The operations manager must also compute for the contribution margin of each product line. This can
be derived by subtracting the unit variable cost of the product from the unit price of the product. This unit
contribution margin should then multiplied by the total expected sales volume of the product line to derived
the total profit contribution of the product line. Of course, it would be natural for the operations manager to
give priority to the product lines that yield the greatest profit contribution.

The fourth critical factor is the number of products and market segments the enterprise wants to serve.
Without discussing the marketing ramification of having too many products, the production system is bound
to become more and more complex as product lines are added.

Quality Control

The Quality, Delivery and Price expectations of customers must be matched with the Quality, Delivery,
and Productivity measurement, monitoring and evaluation system at every stage of the Enterprise Delivery
System.

Before the input is accepted by the Transformation Process, it must conform strictly to certain QDP
specifications at this acceptance stage. The materials and supplies used must adhere to strict technical
standards that would produce the desired output. The input must be delivered to the factory or service shop at
optimal schedules. They should also come at a reasonably low cost, arrive in sufficient quantities, and be
adequately prepared for easy convertibility into output in order to ensure high productivity.

Every step in the Transformation Process must also be measured, monitored, and evaluated according
to the QDP standards of the transformation stage. Every machine, every worker, and every conversion process
has an impact on the customers’ QDP expectations. Some of these machines, workers, and processes are
critical because they are the major determinants of Quality, or of Delivery, or of Productivity and Cost, which
affects Price. Some affect all three. More rigor and emphasis should be exerted on these critical factors.

Finally, there are QDP specifications at the output stage. If the QDP at the input and throughput stages
were done properly, then the output should pass the final QDP tests. The output should be very acceptable to
customers. They should be produced at high levels of productivity and at relatively low costs, enabling the
enterprise and its customers to settle at a mutually acceptable price.

Operating Systems and Procedures

Operating Systems and Procedures (OSP) are the enterprise standards for running the entire operations
of the factory or service shops. They are “engineered methods”.
This means that these operating systems or methods have been subjected to conceptual, analytical,
critical, and creative thinking process. They have been experimented on and tested successfully in the actual
work setting. They have been judged optimally for the market being served. They have been proceduralized
and stardardized for consistency and manualized for replicability (i.e., Operations Manual). the optimal OSP
would differ from enterprise to enterprise depending on the environmental conditions and the market dynamics
of supply and demand.
 What’s More

ACTIVITY 1: CHOOSE ME!!!

Directions: Multiple Choice. Choose the best answer for each statement from the four choices given
below. Write the letter of your choice before the number.

A. Market demand in terms of volume expectations, trends, cycles, a seasonality

B. Capital investment and financing requirements
C. Product line profitability and capacity utilization
D. The number of products and market segments the enterprise wants to serve and their implications on
the complexity and dexterity of the production system.

______1. The enterprise should not produce too many goods, otherwise there would be a lot of excess or
obsolete inventory.
______2. Having sufficient production capacity to meet excess demand will require a fairly-large production
facility.
______3. The larger the facility, the larger the capital investment and financing requirements needed.
______4. Without discussing the marketing ramification of having too many products, the production system
is bound to become more and more complex as product lines are added.
______5. The operations manager must compute for the contribution margin of each product line.
______6. Good market forecasting should therefore dictate the Production Programming and Scheduling.
______7. Each product line of the enterprise has its own demand and supply analysis.
______8. Market demand cannot produce too little because there might be a stock out, hence, substantial
opportunity losses.

ACTIVITY 2: Warming Up
Directions: Answer the question below (5 pts. each).
1. Why is it that the Quality, Delivery, and Price expectations of the customers should be considered in
the transformation process?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________

2. Why Operating Systems and Procedures are called “engineered methods?”

_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________

Congratulations! You are almost done in this lesson. Please proceed to the next part which is the
Post-test.
 Post-Test

MULTIPLE CHOICE. Directions: Read and analyze the statements below and identify the correct
answer. Write the letter of your answer on the space provided.
A. Production Programming and Scheduling
B. Quality Control
C. Operating Systems and Procedures

_____1. Each product line of the enterprise has its own demand and supply analysis.

_____2. The enterprise should not produce too many goods, otherwise there would be a lot of excess or
obsolete inventory.

_____3. The materials and supplies used must adhere to strict technical standards that would produce the
desired output.

_____4. The input must be delivered to the factory or service shop at optimal schedule.

_____5. These are “engineered methods”.

_____6. The larger facility, the larger the capital investment and financing requirements needed.

_____7. Every step in the transformation process must be measured, monitored, and evaluated according to
the QDP standards in the transformation process.

_____8. Consumer tastes change over time and competing products become more aggressive.

_____9. They have been subjected to conceptual, analytical, critical, and creative thinking processes.

_____10. They should be delivered at the right times and under the best terms and conditions.
Answer Key:
What I Know?
Part I
1. Methods 6. Market Expectations
2. Materials 7. Finance
3. Manpower 8. Customer
4. Machines 9. Outputs
5. EDS 10. Throughput
Part II
1. Manpower 6. Quality
2. Materials 7. Delivery
3. Transformation Process 8. Market Share
4. Goods made or Services rendered 9. Market Reach
5. Marketing Program 10. Return on Investment

What’s New
1. TRUE 6. TRUE
2. TRUE 7. FALSE
3. FALSE 8. TRUE
4. FALSE 9. TRUE
5. TRUE 10. TRUE

What’s More
ACTIVITY 1
1. A
2. B
3. B
4. D
5. C
ACTIVITY 2
5 4 3 2 1
Insightful and Through Adequate Marginal Response reflects
well- crafted response with response with response reflects inadequate
response that strong support limited minimal understanding of
extends beyond from the subject elaboration and understanding of the subject.
the obvious support from the the subject, but
interpretation of subject. lacks support.
the subject and
offers strong
support from the
text.
Post Test
1. A 6. A
2. A 7. B
3. B 8. A
4. B 9. C
5. C 10. B

References:

A. Book
Morató,E Jr. (2016). ENTREPRENEURSHIP pp. 141-142. REX Bookstore.