Introduction to Operations Management. Learning Objectives Define the term operations management ...
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Transcript of Introduction to Operations Management. Learning Objectives Define the term operations management ...
Learning ObjectivesLearning Objectives
Define the term operations management Identify the three major functional areas of
organizations and describe how they interrelate
Compare and contrast service and manufacturing operations
Learning ObjectivesLearning Objectives
Differentiate between design and operation of production systems
Describe the key aspects of operations management decision making
Identify current trends that impact operations management
Operations ManagementOperations Management
Operations Management is:
The management of systems or processes that create goods and/or provide services
Operations Management affects: Companies’ ability to compete Nation’s ability to compete internationally
Marketing
The OrganizationThe Organization
The Three Basic Functions
Organization
Finance Operations
The Basic FunctionsThe Basic Functions
Marketing – generates demand Production/operations – creates the
product Finance/accounting – tracks how well the
organization is doing, pays bills, collects the money
Value-Added ProcessValue-Added Process
The operations function involves the conversion of inputs into outputs
Inputs Land Labor Capital
Transformation/Conversion
process
Outputs Goods Services
Control
Feedback
FeedbackFeedback
Value added
Value-Added & Product Value-Added & Product PackagesPackages
Value-added is the difference between the cost of inputs and the value or price of outputs.
Product packages are a combination of goods and services.
Product packages can make a company more competitive.
Automobile assembly, steel making
Home remodeling, retail sales
Automobile Repair, fast food
Goods-Service ContinuumGoods-Service Continuum
Computer repair, restaurant meal
Song writing, software development
Goods Service
Surgery, teaching
Food ProcessorFood Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned vegetables Metal Sheets Making cans
Water CuttingEnergy CookingLabor PackingBuilding LabelingEquipment
Hospital ProcessHospital Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy patientsHospital Surgery
Medical Supplies MonitoringEquipment MedicationLaboratories Therapy
Goods vs ServiceGoods vs ServiceCharacteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not usual
Operations Management includes: Forecasting chapter 3 Product and service design chapter 4 Capacity planning chapter 5, 6 Motivating employees chapter 7 Deciding where to locate facilities chapter 8 Assuring quality chapter 9, 10 Supply chain management chapter 11 Inventories, planning and MRP chapter 12,
13, 14 JIT and lean operation chapter 15 Scheduling chapter 16 Project management chapter 17 Management of waiting line chapter 18 More… such as Maintenance
Scope of Operations ManagementScope of Operations Management
Types of OperationsTypes of Operations
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
Decline in Manufacturing JobsDecline in Manufacturing Jobs
Productivity Increasing productivity allows companies to
maintain or increase their output using fewer workers
Outsourcing Some manufacturing work has been outsourced
to more productive companies
Why Manufacturing Matters ?Why Manufacturing Matters ?
A lot of workers are in manufacturing jobs More than half of the total R&D performed is
in the manufacturing industries Manufacturing workers earn an average of
salary more than service workers When a manufacturing job is lost, an average
of 2.5 service jobs are lost
Challenges of Managing Challenges of Managing ServicesServices
Service jobs are often less structured than manufacturing jobs
Customer contact is higher Worker skill levels are lower Services hire many low-skill, entry-level workers,
except specialist services Employee turnover is higher Input variability is higher Service performance can be affected by worker’s
personal factors
Decision Making of OMDecision Making of OM
System Design
– capacity– location– arrangement of departments
– product and service planning
– acquisition and placement ofequipment
WhatHow
Who
Where
When
Which
Decision Making of OMDecision Making of OM
System operation– personnel– inventory– scheduling– project
management– quality assurance
WhatHow
Who
Where
When
Which
OM and OM and Decision Making ToolsDecision Making Tools
Models Quantitative approaches Analysis of trade-offs Priorities Establishing Ethical Issues
Models Are BeneficialModels Are Beneficial
Easy to use, less expensive Require users to organize Increase understanding of the problem Enable “what if” questions Consistent tool for evaluation and
standardized format Power of mathematics
Limitations of ModelsLimitations of Models
Quantitative information may be emphasized at the expense of qualitative information
Models may be incorrectly applied and results misinterpreted
Nonqualified users may not comprehend the rules on how to use the model
Use of models does not guarantee good decisions
Quantitative ApproachesQuantitative Approaches
Often to obtain optimal solution to
managerial problem
• Linear programming
• Queuing Techniques
• Inventory models
• Project models
• Statistical models
Analysis of Analysis of Trade-OffsTrade-Offs
Decision on the amount of inventory to stock Increased cost of holding inventory
Vs. Level of customer service
Priorities Establishing Priorities Establishing (Pareto Phenomenon)(Pareto Phenomenon)
• A few factors account for a high percentage of the occurrence of some event(s).
• 80/20 Rule - 80% of problems are caused by 20% of the activities.
Ethical IssuesEthical Issues
Financial statements Worker safety Product safety Quality Environment Community Hiring/firing workers Closing facilities Worker’s rights
Operations InterfacesOperations Interfaces
Public Relations
Accounting
IndustrialEngineering
Operations
Maintenance
Personnel
Purchasing
Distribution
MIS
Legal
Trends in BusinessTrends in Business
Major trends The Internet, e-commerce, e-business Management technology Globalization Management of supply chains Outsourcing Agility (faster moving of technology and
fashion) Ethical behavior
Management TechnologyManagement Technology
Technology: The application of scientific discoveries to the development and improvement of goods and services
Product and service technology Process technology Information technology
Suppliers’ Suppliers
DirectSuppliers Producer Distributor Final
Consumer
Simple Product Supply ChainSimple Product Supply Chain
Supply Chain: A sequence of activitiesAnd organizations involved in producingAnd delivering a good or service