Operations Management Section 2 By Pantea Alirezazadeh

Chapter 1 Introduction to Operations Management

Today we’ll address these questions: What is Operations Management (OM)? Why should one study OM? What are the three basic functions of a firm? What are 10 decision areas of operations management? Where are the OM jobs? What are the changing challenges for the Operations Managers? How OM is related to productivity? What is the productivity? How to measure productivity? What are the measurement problems that occur when one attempts to measure productivity? What are five reasons why productivity is difficult to improve in the service sector?

What is Operations Management? OM is the set of activities that creates value in the form of goods and services by transforming inputs into output. Example:

Why Should we study OM? What are the three basic functions of a firm? Marketing – generates demand Production/operations – creates the product Finance/accounting – tracks how well the organization is doing, pays bills, collects the money

Service Organizations and manufacturing Organization Organizing Charts for an Service Organizations and manufacturing Organization

Continue : Why Should we study OM? OM is one of three major functions (marketing, finance, and operations) of any organization and we study how people organize themselves for productive enterprise. We want to know how goods and services are produced. To understand what operations managers do. It provides a major opportunity for an organization to improve its profitability and enhance its service to society.

What are 10 decision areas of operations management? Product Design: What good or service should we offer? (chapter5) Quality: How to define quality? (chapter 6 and 6 supp.) Process: What process will these products require? (chapter 7,7supp.) Location: Where should we put the facility? (chapter 8) Layout: How should we arrange the facility? (chapter9) Human Resources :How to provide a reasonable work environment? (10) Supply Chain Management: should we make or buy this component?(11) Inventory: How much inventory of each item should we have? (12, 14, 16) Planning (aggregate and short-term): which job do we perform next? (13, 15) Maintenance: who is responsible for maintenance? (17)

Where are the OM jobs? Disciplines in operation part of organizations. you need to have the knowledge of accounting, statistics, finance and OM. Try to take courses in accounting, statistics, information systems and math. About 40% of all jobs are in OM.

What are the changing challenges for the Operations Managers?

How OM is related to productivity? What is the productivity? Productivity is the ratio of outputs (goods and services) divided by one or more inputs (such as labor, capital, or management) The operations manager’s job is to enhance this ratio of outputs to inputs.

Example Productivity = units produced / Input Used If units produced = 1000 and labor-hours used is 250 then: Productivity = units produced / Input Used Productivity = 1000/250 = 4 units labor-hour

The operations manager’s job is to enhance this ratio of outputs to inputs.

precise units of measure may be lacking, What are the measurement problems that occur when one attempts to measure productivity? precise units of measure may be lacking, quality may not be consistent, and exogenous variables may change.

many services are labor intensive, What are five reasons why productivity is difficult to improve in the service sector? many services are labor intensive, they are individually (personally) processed (the customer is paying for that service – the hair cut), it may be an intellectual task performed by professionals, it is often difficult to mechanize and automate, and often difficult to evaluate for quality.

About Half of the 17-year-olds in the U. S About Half of the 17-year-olds in the U.S. CANNOT Correctly Answer Questions of this type

Organization of the Text The Strategic Designing the Importance of Operating Managing the Ensuring Operations System Supply Chain Quality Introduction to Operations and Productivity Operations Strategy A. Decision-Making Tools 5. Products and Services 7. Processes Strategy 8. Location 9. Layout 3. Project Management 11. Supply Chain Management 4. Forecasting 13. Aggregate Planning Inventory Management B. Linear Programming 16. Just-in-Time and Lean Production 14. Enterprise Resource Planning 15. Scheduling 6. Quality Management S6. Statistical Process Control D. Waiting Line Models 10. Human Resources in Operations Management Will be covered Might be skipped

Assignment Visit course website Install Excel OM on your laptop from CD. Read Chapter 2 and Module A by Jan 29. Assignment 1 is due to Jan 31.( You will have your first quiz on Jan 31). I’ll post the first assignment by the end of this weekend( Jan 22).