© 1997 Prentice-Hall, Inc Principles of Operations Management Operations & Productivity Chapter 1

© 1997 Prentice-Hall, Inc Learning Objectives n Describe some important historical figures in operations management n Explain productivity n Define operations management n Identify OM decisions n Distinguish goods & services n Describe organization functions

© 1997 Prentice-Hall, Inc Frederick W. Taylor n Born 1856; died 1915 n Known as ‘father of scientific management’ n In 1881, as chief engineer for Midvale Steel, studied how tasks were done l Began first time & motion studies n Created efficiency principles © 1995 Corel Corp.

© 1997 Prentice-Hall, Inc Frank & Lillian Gilbreth n Frank ( ); Lillian ( ) n Husband-and-wife engineering team n Further developed work measurement methods n Applied efficiency methods to their home & 12 children! © 1995 Corel Corp.

© 1997 Prentice-Hall, Inc Henry Ford n Born 1863; died 1947 n In 1903, created Ford Motor Company n In 1911, first used moving assembly line to make Model T l Unfinished product moved by conveyor past work station n Paid workers very well for 1911 ($5/day!) ‘Make them all alike!’ © 1995 Corel Corp.

© 1997 Prentice-Hall, Inc W. Edwards Deming n Born 1900; died 1993 n Engineer & physicist n Credited with teaching Japan quality control methods in post-WW2 n Used statistics to analyze process n His methods involve workers in decisions

© 1997 Prentice-Hall, Inc Economic System

© 1997 Prentice-Hall, Inc Productivity n Measure of process improvement n Represents output relative to input n Productivity increases improve standard of living n Since 1889, U.S. productivity has increased at 2.5% annual rate Productivity Units produced Input used  

© 1997 Prentice-Hall, Inc Productivity Variables n Labor l Education, diet, & sanitation n Capital l Equipment l Building n Management l Technology l Knowledge % Capital Labor Mgmt

© 1997 Prentice-Hall, Inc Thinking Challenge Employment (Emp) in services (Svc) is greater than in manufacturing (Mfg). Yet, the contribution of services to the gross domestic product (GDP) is proportionally less. Why is service productivity lower? % AloneGroupClass

© 1997 Prentice-Hall, Inc Definition of Operations Management n Management of an organization's production system l Production system converts inputs into goods & services © T/Maker Co.

© 1997 Prentice-Hall, Inc Management Activities n Planning n Organizing n Staffing n Leading (Directing) n Controlling © T/Maker Co.

© 1997 Prentice-Hall, Inc Typical Operations Management Decisions n How much will we sell? n How do we measure quality? n Which product do we offer? n How to produce good / provide service? n Where do we locate our facility? n Is subcontracting a good idea? n How much inventory should we keep?

© 1997 Prentice-Hall, Inc Characteristics of Goods n Tangible product n Consistent product definition n Production usually separate from consumption n Can be inventoried n Low customer interaction © 1995 Corel Corp.

© 1997 Prentice-Hall, Inc Characteristics of Services n Intangible product n Inconsistent product definition n Produced & consumed at same time n Cannot be inventoried n High customer interaction © 1995 Corel Corp.

© 1997 Prentice-Hall, Inc % ||||||||| Automobile 100% Thinking Challenge The distinction between goods & services is seldom clear. Almost all goods have some service. An automobile requires maintenance. Classify (1) computer, (2) fast-food restaurant, (3) dentist, (4) counseling on the scale below. GoodService AloneGroupClass

© 1997 Prentice-Hall, Inc Organization Functions n Marketing l Gets customers n Production/Operations l Creates product n Finance/Accounting l Obtains funds l Tracks money © 1995 Corel Corp.

© 1997 Prentice-Hall, Inc Conclusion n Described some important historical figures in operations management n Explained productivity n Defined operations management n Identified OM decisions n Distinguished goods & services n Described organization functions