1-1Introduction to Operations Management William J. Stevenson Operations Management 8 th edition.
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Transcript of 1-1Introduction to Operations Management William J. Stevenson Operations Management 8 th edition.
1-1 Introduction to Operations Management
William J. Stevenson
Operations Management
8th edition
1-2 Introduction to Operations Management
GHANA INSTITUTE OF MANAGEMENT AND PUBLIC ADMINISTRATION [GIMPA]
POST-GRADUATE PROGRAMMES
MANAGING OPERATIONS
Instructor: Samuel Famiyeh., [Ph. D., MBA., BSc. MGhIG]
Email: [email protected], [email protected] Tel: 00233 246 306296
Room : D-BLOCK ROOM 14
1-3 Introduction to Operations Management
Course Description
The way every organization manage productive resources is very critical to its strategic growth and competitiveness.
If productive resources are not well managed, organizations are not able to grow in the long run and hence not competitive and eventually get out of business in this global economy.
Operations management is the effective and efficient management of these productive resources. It entails the design and control of systems responsible for the productive use of raw materials, human resources, equipment and facilities in the development of a product or service.
1-4 Introduction to Operations Management
Course Description
Hence this course focuses on the operational processes involved in managing the value chain for a company.
Emphasis is placed on the managerial approach to acquiring resource inputs and converting them into value added inputs.
The aim here is to cover some of the most important issues facing operation managers, as well as the basic tools and techniques in dealing with these issues.
1-5 Introduction to Operations Management
Course Description
The course examines activities such as:
•Introduction to operations management•Competitiveness, Strategy and Productivity•Forecasting, •Designing products and services, •Process selection and facility Layout•Inventory, •Capacity and location planning •Project management, •Assuring and improving quality are addressed.
1-6 Introduction to Operations Management
CHAPTER1
Introduction to Operations Management
McGraw-Hill/IrwinOperations Management, Eighth Edition, by William J. StevensonCopyright © 2005 by The McGraw-Hill Companies, Inc. All rights
reserved.
1-7 Introduction to Operations Management
Operations ManagementOperations ManagementHighlights of the chapter include the following:
1. Operations as one of the three main functional concerns of most organizations.
2. The role and job of the operations manager as a planner and decision-maker.
3. Different ways of classifying (and understanding) production systems.4. System design versus system operation.5. Major characteristics of production systems.6. Contemporary issues in operations management.7. Operations as essentially managerial (planning, staffing,
etc.)8. Manufacturing operations versus service operations.
1-8 Introduction to Operations Management
Figure 1-1Figure 1-1
The management of systems or processes that create goods and/or provide services
1-9 Introduction to Operations Management
Value added Figure 1-2Value added Figure 1-2
The difference between the cost of inputs and the value or price of outputs.
1-10 Introduction to Operations Management
Food ProcessorFood Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned vegetables Metal Sheets Making cans
Water CuttingEnergy CookingLabor PackingBuilding LabelingEquipment
Table 1.2
1-11 Introduction to Operations Management
Hospital ProcessHospital Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy patientsHospital Surgery
Medical Supplies MonitoringEquipment MedicationLaboratories Therapy
Table 1.2
1-12 Introduction to Operations Management
Value added Figure 1-8Value added Figure 1-8
1-13 Introduction to Operations Management
Steel productionAutomobile fabrication
Home remodelingRetail sales
Auto RepairAppliance repair
Maid ServiceManual car wash
TeachingLawn mowing
High percentage goodsLow percentage service
Goods-service ContinuumGoods-service Continuum
Low percentage goodsHigh percentage service
Figure 1.3
1-14 Introduction to Operations Management
Manufacturing or Service?Manufacturing or Service?
Tangible Act
1-15 Introduction to Operations Management
Production of Goods vs. Delivery of ServicesProduction of Goods vs. Delivery of Services
Production of goods – tangible output Delivery of services – an act Service job categories
Government Wholesale/retail Financial services Healthcare Personal services Business services Education
1-16 Introduction to Operations Management
Key DifferencesKey Differences
1. Customer contact
2. Uniformity of input
3. Labor content of jobs
4. Uniformity of output
5. Measurement of productivity
6. Production and delivery
7. Quality assurance
8. Amount of inventory
1-17 Introduction to Operations Management
Manufacturing vs ServiceManufacturing vs Service
Characteristic Manufacturing ServiceOutput
Customer contact
Uniformity of input
Labor content
Uniformity of output
Measurement of productivity
Opportunity to correct
Tangible
Low
High
Low
High
Easy
High
Intangible
High
Low
High
Low
Difficult
Lowquality problems
High
1-18 Introduction to Operations Management
Operations Management includes: Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities And more . . .
Scope of Operations ManagementScope of Operations Management
1-19 Introduction to Operations Management
Types of OperationsTypes of OperationsTable 1.4
Operations ExamplesGoods Producing Farming, mining, construction,
manufacturing, power generationStorage/Transportation Warehousing, trucking, mail
service, moving, taxis, buses,hotels, airlines
Exchange Retailing, wholesaling, banking,renting, leasing, library, loans
Entertainment Films, radio and television,concerts, recording
Communication Newspapers, radio and televisionnewscasts, telephone, satellites
1-20 Introduction to Operations Management
U.S. Manufacturing vs. Service Employment
0
20
40
60
80
100
45 50 55 60 65 70 75 80 85 90 95 00
Year
Perc
ent
Year Mfg. Service45 79 2150 72 2855 72 2860 68 3265 64 3670 64 3675 58 4280 44 4685 43 5790 35 6595 32 6800 30 70
Figure 1.4
1-21 Introduction to Operations Management
Responsibilities of Operations ManagementResponsibilities of Operations Management
Products & services
Planning– Capacity– Location–– Make or buy– Layout– Projects– Scheduling
Controlling/Improving– Inventory– Quality
Organizing– Degree of centralization– Process selection
Staffing– Hiring/laying off– Use of Overtime
Directing– Incentive plans– Issuance of work orders– Job assignments
– Costs– Productivity
Table 1.6
1-22 Introduction to Operations Management
Key Decisions of Operations ManagersKey Decisions of Operations Managers
WhatWhat resources/what amounts
WhenNeeded/scheduled/ordered
WhereWork to be done
HowDesigned
WhoTo do the work
1-23 Introduction to Operations Management
Decision MakingDecision Making
System Design– capacity– location– arrangement of departments– product and service planning– acquisition and placement of
equipment
System operation– personnel– inventory– scheduling– project
management– quality assurance
1-24 Introduction to Operations Management
Decision MakingDecision Making
Models
Quantitative approaches
Analysis of trade-offs
Systems approach
1-25 Introduction to Operations Management
ModelsModels
A model is an abstraction of reality.
– Physical– Schematic– Mathematical
What are the pros and cons of models?
Tradeoffs
1-26 Introduction to Operations Management
ModelsModelsA model is an abstraction of reality. Models are sometimes classified as physical, schematic, or mathematical:
Physical Models: these looks like their real life counterparts. Examples include miniature cars, toy animals, scale-model buildings. Advantages are visual correspondence of reality.
Schematic models: there are more abstract than their physical counterparts: i.e. less resemblance to the physical reality. E.g. graphs, charts, blueprints, pictures and drawings.
Mathematical models: these do not look at all like their real-life counterparts. E.g. numbers, formulas, and symbols. These models are the easiest to manipulate, and are important forms of inputs for computers and calculators.
1-27 Introduction to Operations Management
Models Are BeneficialModels Are Beneficial
Easy to use, less expensive Require users to organize Systematic approach to problem solving Increase understanding of the problem Enable “what if” questions Specific objectives Consistent tool Power of mathematics Standardized format
1-28 Introduction to Operations Management
Analysis of Trade-OffsAnalysis of Trade-Offs
Operation Managers encounter decisions that can be described
are trade-off decisions.
For e.g. in deciding on the amount of inventory to stock, the
manager must take into account the trade-off between the
increased level of customer service that the additional inventory
would yield and the increased costs required to stock that
inventory.
Also in scheduling of overtime to increase output, the manager
must weigh the value of increased output against the higher
cost of overtime.
1-29 Introduction to Operations Management
A Systems ApproachA Systems Approach
A system can be defined as a set of interrelated parts
that must work together. In any business organization,
the organization can be thought of as a system
composed of subsystems (marketing subsystems,
operations subsystems, finance subsystems etc).
The system approach emphasizes interrelationships
among subsystems, but its main theme is that the
whole is greater than the sum of its individual parts.
1-30 Introduction to Operations Management
Systems ApproachSystems Approach
“The whole is greater than the sum of the parts.”
SuboptimizationSuboptimization
1-31 Introduction to Operations Management
Establishing PrioritiesEstablishing PrioritiesIn virtually every situation, managers discover that
certain elements are more important than others.
Recognizing this fact of life enables the managers to direct their efforts to where they will do the most good to avoid wasting time and energy on insignificant elements.
Consider owing a car;
Engine, Tires, Brakes, Electrical System, Cooling System
Scratches, Dents, Piece Of Mould, Seat Covers etc.
1-32 Introduction to Operations Management
Business Operations OverlapBusiness Operations Overlap
Operations
Finance
Looks more like a system than separate components
Marketing
1-33 Introduction to Operations Management
Operations InterfacesOperations Interfaces
Public Relations
Accounting
IndustrialEngineering
Operations
Maintenance
Personnel
Purchasing
Distribution
MIS
Legal
1-34 Introduction to Operations Management
EthicsEthics
Operations Managers, like all managers, have the responsibility to make ethical decisions. Ethical issues arise in many aspects of operations managers including:
• Worker safety;
• Product safety;
• Quality;
• CSR;
• Decommissioning.
1-35 Introduction to Operations Management
Suppliers’ Suppliers
DirectSuppliers Producer Distributor Final
Consumer
Simple Product Supply ChainSimple Product Supply ChainFigure 1.7
Supply Chain: A sequence of activitiesAnd organizations involved in producingAnd delivering a good or service
1-36 Introduction to Operations Management
Stage of Production Value Added
Value of Product
Farmer produces and harvests wheat $0.15 $0.15
Wheat transported to mill $0.08 $0.23
Mill produces flour $0.15 $0.38
Flour transported to baker $0.08 $0.46
Baker produces bread $0.54 $1.00
Bread transported to grocery store $0.08 $1.08
Grocery store displays and sells bread $0.21 $1.29
Total Value-Added $1.29
A Supply Chain for BreadA Supply Chain for Bread
1-37 Introduction to Operations Management
DiscussionsDiscussions1. Briefly describe the term operations
management
2. Identify the three major functional areas of business organizations and briefly describe how they interrelate
3. Describe the operations function and the nature of operation manager’s job.
4. List five important differences between goods and service operations.