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Introduction to Operations Management
Chapter One Introduction to Operations Management
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Operations Management
Introduction to Operations Management Operations Management Organization Finance Operations Marketing The management of systems or processes that create goods and/or provide services
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Operations Management includes:
Introduction to Operations Management Operations Management includes: Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating employees And more . . .
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Business Operations Overlap
Introduction to Operations Management Business Operations Overlap Marketing Operations Finance
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Goods-service continuum
Introduction to Operations Management Goods-service continuum Steel production Automobile fabrication House building Road construction Dressmaking Farming Auto Repair Appliance repair Maid Service Manual car wash Teaching Lawn mowing Low service content High goods content High service content Low goods content Increasing goods content service content
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Stage of Production Value Added Value of Product
Introduction to Operations Management Stage of Production Value Added Value of Product Farmer produces and harvests wheat $0.15 Wheat transported to mill $0.08 $0.23 Mill produces flour $0.38 Flour transported to baker $0.46 Baker produces bread $0.54 $1.00 Bread transported to grocery store $1.08 Grocery store displays and sells bread $0.21 $1.29 Total Value-Added
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Types of Operations Operations Examples Goods Producing
Introduction to Operations Management Types of Operations Operations Examples Goods Producing Farming, mining, construction , manufacturing, power generation Storage/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 television newscasts, telephone, satellites
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Value-Added Value added
Introduction to Operations Management Value-Added The difference between the cost of inputs and the value or price of outputs. Inputs Land Labor Capital Transformation/ Conversion process Outputs Goods Services Control Feedback Value added
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Food Processor Inputs Processing Outputs Raw Vegetables Cleaning
Introduction to Operations Management Food Processor Inputs Processing Outputs Raw Vegetables Cleaning Canned vegetables Metal Sheets Making cans Water Cutting Energy Cooking Labor Packing Building Labeling Equipment
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Hospital Process Inputs Processing Outputs Doctors, nurses Examination
Introduction to Operations Management Hospital Process Inputs Processing Outputs Doctors, nurses Examination Healthy patients Hospital Surgery Medical Supplies Monitoring Equipment Medication Laboratories Therapy
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Operations Interfaces
Introduction to Operations Management Operations Interfaces Public Relations Accounting Industrial Engineering Operations Maintenance Personnel Purchasing Distribution MIS
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Decision Making System Design – capacity location
Introduction to Operations Management Decision Making System Design – capacity location arrangement of departments product and service planning acquisition and placement of equipment
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Decision Making System operation – personnel inventory scheduling
Introduction to Operations Management Decision Making System operation – personnel inventory scheduling project management quality assurance
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Manufacturing or Service?
Introduction to Operations Management Manufacturing or Service? Tangible Act
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These differences are beginning to fade in many cases
Introduction to Operations Management Key Differences • Customer contact Uniformity of input Labor content Uniformity of output Measurement of productivity Quality assurance These differences are beginning to fade in many cases
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Manufacturing vs Service
Introduction to Operations Management Manufacturing vs Service Characteristic Output Customer contact Uniformity of input Labor content Uniformity of output Measurement of productivity Opportunity to correct Manufacturing Tangible Low High Easy Service Intangible Difficult quality problems
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Responsibilities of Operations Management
Introduction to Operations Management Responsibilities of Operations Management Products & services Planning – Capacity Location Make or buy Layout Projects Scheduling Controlling Inventory Quality Organizing Degree of centralization Subcontracting Staffing Hiring/laying off Use of Overtime Directing Incentive plans Issuance of work orders Job assignments
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Tradeoffs Models A model is an abstraction of reality.
Introduction to Operations Management Models A model is an abstraction of reality. – Physical Schematic Mathematical Tradeoffs What are the pros and cons of models?
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“The whole is greater than the sum of the parts.”
Introduction to Operations Management Systems Approach “The whole is greater than the sum of the parts.” Suboptimization
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Quantitative Approaches
Introduction to Operations Management Quantitative Approaches • Linear programming Queuing Techniques Inventory models Project models Statistical models
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