Fundamentals of Operations Management BUS 3 – 140 Mr. Jess Marino Fall, 2011
Page 2 2 Agenda –Introduction –Green Sheet review and other administrative items –Additional comments on the course –Initial Lecture
Green Sheet Review
Page 4 4 Course Overview and Objectives –Understanding how the Operations function interrelates with other functional organizations in a business –Understanding how an organization uses its resources, processes, data, and technologies to create goods and provide services to customers –Understanding how operational effectiveness can be a critical success factor in determining an organization’s Revenue, Profitability, and Shareholder return –Understanding the managerial responsibility for Operations, even when production is outsourced, or done in regions far from corporate headquarters
Page 5 5 Student Learning Objectives for the Course –Understand how Operations is relevant to all functions of a business, and all majors within a Business education –Understand Operations Management and how it fits within the overall organization strategy, objectives, and competitiveness –Develop an interest in Operations and apply that understanding, whether in a manufacturing or service career
Page 6 6 “The Goal”
Course Introduction
Page 8 8 Operations is a Key Element of a Supply Chain Revenue Utilization of Assets (People, Plant, Equip) Cash Inventory BALANCING keeping Customers completely satisfied and Resources optimally utilized ……. against spending the least amount of Cash and carrying the least amount of Inventory
Page 9 9 Scope of this Course Customer Demand Production Scheduling Materials Mgmt Production Shipping Customer Service Forecasting Aggregate Planning Strategic Capacity Planning Demand & Supply Matching Scheduling Just In Time (JIT) Project Mgmt Inventory Mgmt MRP ERP Process Layout Work System Design Lean Operations Quality
Page Highest Level Operations Management Process (Fig 1.2) There is a CONVERSION that takes Information, Intelligence, Resources, and Activities and turns them into something VALUABLE to Customers and / or Society Inputs Process (Transformation) Outputs Control Feedback * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin
Page Inputs / Process / Outputs (Table 1.1) * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin
Page Operations are managed for both Production and Services Inputs Process Outputs Raw vegetables Metal sheets Water Energy Labor Building Equipment Cleaning Making cans Cutting Cooking Packing Labeling Canned Vegetables PRODUCTION Inputs Process Outputs Doctors, nurses Hospital Medical supplies Equipment Laboratories Examination Surgery Monitoring Medication Therapy SERVICE Treated Patients Food processing Plant Hospital Result is TANGIBLE OUTPUT Result implies an ACT
Page Differences between Goods and Service (Book Table 1.3) * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin
Page Goods and Services continuum (Fig 1.3) * From Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin
Page Combination of Production and Service * Adapted from Stevenson, Operations Management, Ninth Edition, McGraw Hill Irwin Farmer produces & harvests wheat ($0.15) Wheat shipped to mill ($0.08) Mill produces flour ($0.15) Flour shipped to Baker ($0.08) Baker produces bread ($0.54) Bread shipped to Grocery Store ($0.08) Grocery store displays and sells bread ($0.21) $0.84 of Production $0.45 of Services $1.29 of total Cost and Profit throughout the Supply Chain
How Operations Interacts with Other Organizations
Page Key intersections with Sales & Marketing and with Finance FINANCE & ACCOUNTING –Budgeting –Authorizing Capital spending –Authorizing major inventory buys –Cost accounting –Make vs. Buy decisions –Location planning –Managing international trade –Analyzing trade-off decisions
Page Key intersections with Sales & Marketing and with Finance SALES & MARKETING –Forecasting Demand –Influencing demand –Committing supply –Negotiating schedules with customers –Providing competitive information –Requesting new products and services –Opening new markets
Page Interaction with other Functional Organizations