Post on 07-Jul-2018
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Chapter 1
Introduction to
OperationsManagement
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Three Functions in aBusiness
• Marketing – to “sell” products
• Operations – to “make” products
• Finance and Accounting
– to use money efectivelyand keep track businessactivities in terms o dollar
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Role of “Operation”
• !ole o operation in abusiness is to transorm a
company"s input into the#nished goods or services
•$alue o the product is addedin the process o operation
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Business Operation as aValue Added Process
Inputs in $$Transformation
ProcessOutputs in $$$
Value Added by Process
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Operations Management
• %he business unctionresponsible or planning&
coordinating& and controllingthe process and resourcesneeded to produce acompany"s products andservices
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Essential Pursuit of OM
• %he essential pursuit ooperations management is
'FF(C(')C* +or productivity&or efectiveness,
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Manufacturing s!"erice
Manuacturing-
• %angible product
• .roduct can be
inventoried
• /o0 customercontact
• Capital intensive• /ong response time
ervices-
• (ntangible product
• .roduct cannot be
inventoried
• 2igh customercontact
• /abor intensive• hort response
time
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OM #ecisions
• trategic decisions- – 3ecisions that set the direction or the
entire company
– 4road in scope 5 long6term in nature
• %actical decisions- –
hort6term 5 speci#c in nature – 4ound by the strategic decisions
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"pectrum of OM#ecisions
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Milestones of OM#eelopment
(ndustrial !evolution /ate 1788scienti#c Management 'arly 1988s
2uman !elations Movement 19:8s to 19;8s
Management cience Mid61988s
Computer Age 1978s
uality Management +%>M, 19=8s
!eengineering 19=8s
Fle?ibility 1998s
%ime6based Competition 1998s
upply Chain Management 1998s@lobal Competition 1998s
'nvironmental (ssues1998s
'lectronic Commerce/ate 1998s 'arly B1st Century
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Industrial Reolution$late %&''s(
• !eplaced traditional crat methods
• ubstituted machine po0er or
labor +
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,uman RelationsMoement $%+-'s.%+/'s(
• !ecognition that actors other thanmoney contribute to 0orkerproductivity
• MaEor contributions- – Gnderstanding o the Hawthorn efect -
tudy o estern 'lectric plant in 2a0thorn& (llinois intendedto study impact o environmental actors +light 5 heat, on
productivity& but ound 0orkers responded to management"sattention regardless o environmental changes
–
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Management "cience$mid.%+''s(
• 3eveloped ne0 HuantitativetechniHues or common OM problems-
– MaEor contributions include- inventory
modeling& linear programming& proEectmanagement& orecasting& statisticalsampling& 5 Huality control techniHues
– .layed a large role in supportingAmerican military operations duringorld ar ((
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0omputer Age $%+&'s(
• Computer provided the tool necessary tosupport the 0idespread use oManagement cience"s Huantitative
techniHues the ability to process hugeamounts o data Huickly 5 relativelycheaply
• MaEor contributions include thedevelopment o Material !eHuirements.lanning +M!., systems or productioncontrol
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#eelopment in %+1's
• M,-
– %echniHues designed to achieve high levels oproduct Huality through shared responsibility 5 byeliminating the root causes o product deects
• 4usiness .rocess !eengineering- – Clean sheet" redesign o 0ork processes to increase
eJciency& improve Huality 5 reduce costs
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#eelopment since%++'s $%(
• Fle?ibility- – Ofer a greater variety o product choices on a
mass scale +mass customiKation,
• %ime6based competition- – 3eveloping ne0 product designs 5 delivering
customer orders more Huickly than competitors
• upply Chain Management- – Cooperating 0ith suppliers 5 customers to
reduce overall costs o the supply chain 5increase responsiveness to customers
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#eelopment since%++'s $2(
• @lobal competition- – (nternational trade agreements open ne0
markets or e?pansion 5 lo0er barriers to theentry o oreign competitors +eg- )AF%A 5 @A%%,
– Creates the need or decision6making tools oracility location& compliance 0ith localregulations& tailoring product oferings to localtastes& managing distribution net0orks& D
• 'nvironmental issues- – .ressure rom consumers 5 regulators to reduce&
reuse 5 recycle solid 0astes 5 discharges to air5 0ater
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Electronic 0ommerce$since late %++'3s(
• (nternet 5 related technologiesenable ne0 methods o businesstransactions- – '6retailing creates a ne0 outlet or selling goods 5
services 0ith global access and BL67 availability4BC
– (nternet provides a cheap net0ork or coordinating
supply chain management inormation 4B4
• 3eveloping inIuence o broadband5 0ireless