© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  Who am I?  Syllabus highlights  Who are you?  Introduction to Operations Management BA 357 Operations Management John Sloan Day 1 Agenda

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  Third year on the OSU Faculty, teaching BA 357, BA 462, and BA 550  28 years of operations / project management experience with Hewlett-Packard:  Different geographical locations  Different product lines  Different functional responsibilities  International experience  Experience teaching in business setting  BA Mathematics, 4 years USAF, MBA Who am I?

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  Get the book  Come to class. I will not formally take attendance – but if you don’t come, don’t expect to do well.  Be prepared for class & participate in class  Eight quizzes – You can drop one (1/3 of grade)  Midterm exam (1/3 of grade)  Final exam (1/3 of grade)  All subject to change Syllabus Highlights

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J All students are expected to abide by the university rules on academic honesty, which forbid cheating or plagiarism. Failure to do so will result in failing the class. Policy on Cheating

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Schedule – BA 357 Section 4 Date Chapter / Topic Quiz / Assignment due 1/4/05 Introductions Syllabus review Ch 1: Introduction to Operations Management 1/6/05 Ch 2: Operations Strategy Regal Marine Video Homework 1 1/11/05 Ch 3: Business Processes King Sooper VideoQuiz 1 1/13/05 Supplement 7: Capacity Planning 1/18/05Quantitative Module A: Decision-Making Tools Quiz 2 Homework 2 1/20/05 Ch 6: Quality Management Quiz 3 Homework 3 1/25/05 Ch 12: Inventory Management 1/27/05 Ch 16: JIT / Lean SystemsQuiz 4 Homework 4 2/1/05 JIT Exercise Two Canneries Video 2/3/05 Midterm course review / Catch-up 2/8/05 Midterm exam

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Schedule – p2 2/10/05 Quantitative Module D: Waiting Line Models 2/15/05 Quantitative Module F: Simulation Quiz 5 Homework 5 2/17/05 Supplement 11: SCM & E-Commerce RM Video 2/22/05 Ch 4: Forecasting 2/24/05Ch 13: Aggregate Planning Air NZ VideoQuiz 6 Homework 6 3/1/05 Ch 14: MRP & ERP Quiz 7 Homework 7 3/3/05 Ch 14: MRP & ERP (continued) Ch 15: Short-Term SchedulingQuiz 8 Homework 8 3/8/05Ch 3 (Heizer): Project Management Homework 9 3/10/05 Sustainability Final course review 3/14/05Final exam 7:30 AM

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J  Name and major  Work experience  I know it is early for some of you, but… What do you want to be doing once you graduate? Who Are You?

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Operations Management Introduction Chapter 1

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Operations & Operations Management  Operations : the collection of people, technology, and systems within an organization that has primary responsibility for providing the organization’s products or services  Operations management : the planning, scheduling, and control of the activities that transform inputs into finished goods and services

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Supply Chain & SCM  Supply chain : the network of manufacturers and service providers that work together to move goods from the raw materials stage through to the end user. These manufacturers and service providers are linked together through physical flows, information flows, and monetary flows.  Supply chain management : the active management of supply chain activities and relationships to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by a firm or group of firms to develop and run supply chains in the most effective and efficient ways possible.

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Processes and Operations Outputs Services Goods Internal and external customers Information on performance Processes and operations Inputs Workers Managers Equipment Facilities Materials Services Land Energy

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Goods vs. Services

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Goods Contain Services & Services Contain Goods Automobile Computer Installed Carpeting Fast-food Meal Restaurant Meal Auto Repair Hospital Care Advertising Agency Investment Management Consulting Service Counseling Percent of Product that is a Good Percent of Product that is a Service

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Organization Chart Operations Finance/ Accounting Marketing Production Control Manufacturing Quality Control Purchasing General manager

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Some Cross-functional Linkages  Engineering: what products and processes are needed  Marketing: can we make what we wish to sell / what products cost the most to make / customer expectations  Accounting: inventory management / JIT / work standards / cost verses price  Finance: make verses buy / quantifying quality / cash flow and capital requirements / cost verses price  Human resources: what skills do our employees need / who to hire / type of compensation to match strategy  Information Systems: what information is needed and by whom / flow of goods / linkages to rest of supply chain

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Trends in Operations & SCM  E-commerce improves speed, quality and cost of business communication  Increased competition and globalization in markets increasing rate of change in markets, products and technology  Relationship management of all operations activities, the most susceptible to break down The freethinking of one age is the common sense of the next Matthew Arnold (1822 – 1888)

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Why Study Operations Management?  Every organization must make a product or provide a service that someone values Operations has primary responsibility for providing the organization’s products or services  Most organizations function as part of larger supply chains Supply chains are networks of manufacturers and service providers that work together to move goods from the raw materials stage through to the end user  Organizations must carefully manage their operations and supply chains in order to prosper, and indeed, survive Decisions and actions in operations directly affect company growth, market share, and profitability

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Why Study Operations Management?  This is where the good or service comes into being – if you do not understand this part of the company, you are not being the best accountant, marketer, or whatever, that you could be.  Strategies in all functional areas must be linked/aligned to support the business strategy.  This is where companies focus a great deal of energy – because this is where most companies incur the majority of their costs. Therefore this is an area where you can have a major impact on a firm’s competitiveness.

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Options for Increasing Contribution Current Sales $100,000 Cost of Goods -80,000 Gross Margin 20,000 Finance Costs -6,000 Net Margin 14,000 25% -3,500 Contribution 10,500 Marketing Option Sales + 50% $150, ,000 30,000 -6,000 24,000 -6,000 18,000 Finance/Acct Option $100, ,000 20,000 -3,000 17,000 -4,250 12,750 OM Option $100, ,000 36,000 -6,000 30,000 -7,500 22,500 Finance Costs 50% – Production Costs 20% –

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Productivity = output / input (bigger is better) Single-factor productivity output / labor hours output / labor $ sales / sales rep sales / retail outlet, etc Multi-factor productivity output / (labor + material + overhead) Productivity Productivity Worksheet

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J Conclusions for Day 1  OM is the management of the processes that add value directly to our goods and services.  Functional area strategies must be linked to support the business strategy  There is lots of money in improving operations  Goods and services are part of the same continuum  Productivity is the ratio of output to input, either single-factor or multi-factor.  Homework assignment 1 in public folder