1. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Welcome to ISQS 5243 Instructor: Dr. Burns SUMMER II 2004 SEMESTER Telephone: 742-1547 Email: jurns@ba.ttu.edu jurns@ba.ttu.edu Off hrs: 9:30-10:30 MTWR Website: burns.ba.ttu.edu

2. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. My web site http://burns.ba.ttu.edu

3. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Prerequisites STATISTICSSTATISTICS ISQS 5242 or as a co-requisiteISQS 5242 or as a co-requisite COMPUTER LITERACYCOMPUTER LITERACY

4. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Requirements 3 homework sets3 homework sets –Collected the day before we do our review –TO GET US READY TO TAKE THE EXAMS 3 exams3 exams

5. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Grading The homework is worth a total of 10%The homework is worth a total of 10% Each exam is worth 30%Each exam is worth 30%

6. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Taking the course for three hours CREDIT?? If so…. The homework is worth 10%The homework is worth 10% Each exam is worth 23%Each exam is worth 23% A term project is worth 21%A term project is worth 21%

7. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Grades 90-100---A90-100---A 80-89.999---B80-89.999---B 70-79.999---C70-79.999---C 90-92.4999—A-90-92.4999—A- 92.5-97.4999---A92.5-97.4999---A 97.5-on up---A+97.5-on up---A+

8. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Five days or Four days with Friday off???

9. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. JOB Growth in the next 10 years 56 million job openings in US (21 million new jobs)56 million job openings in US (21 million new jobs) 5.4 milion job openings in management business and financial5.4 milion job openings in management business and financial –750,000 business operations –500,000 top executive positions –500,000 financial analyst positions

10. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. More Job Growth –600,000 operations specialty managers –350,000 Advertising, marketing and sales manager positions –1,500,000 other management occupations AgricultureAgriculture ConstructionConstruction EducationEducation Medicine and Health ServiceMedicine and Health Service

11. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. IT Job Growth Six of the top 20 fastest growing careers are IT related—they areSix of the top 20 fastest growing careers are IT related—they are –Computer systems analysts –Applications software engineers –Systems software engineers –Data communications analysts –Network and computer systems administrators –Computer programmers

12. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Chapter 1 Introduction to Operations and Competitiveness To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved.

13. Some web sites for Chapter 1 The web sitesThe web sites http://myphliputil.pearsoncmg.com/st udent/bp_russell_opsmgmt_4/01web. htmlhttp://myphliputil.pearsoncmg.com/st udent/bp_russell_opsmgmt_4/01web. htmlhttp://myphliputil.pearsoncmg.com/st udent/bp_russell_opsmgmt_4/01web. htmlhttp://myphliputil.pearsoncmg.com/st udent/bp_russell_opsmgmt_4/01web. html

14. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as a transformation process Operations as a transformation process Operations as a basic function Operations as a basic function Operations as the technical core Operations as the technical core The Operations Function

15. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as a Transformation Process INPUT Material Machines Labor Management Capital

16. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as a Transformation Process INPUT Material Machines Labor Management Capital TRANSFORMATION PROCESS

17. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as a Transformation Process INPUT Material Machines Labor Management Capital OUTPUT Goods Services TRANSFORMATION PROCESS

18. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as a Transformation Process Feedback INPUT Material Machines Labor Management Capital OUTPUT Goods Services TRANSFORMATION PROCESS

19. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Transformation Processes Physical(manufacturing) Physical(manufacturing) Locational(transportation/ warehouse) Locational(transportation/ warehouse) Exchange(retail) Exchange(retail) Physiological(health care) Physiological(health care) Psychological(entertainment) Psychological(entertainment) Informational(communications) Informational(communications)

20. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as the Technical Core

21. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Operations as the Technical Core Operations Finance/Accounting Human Resources Marketing Suppliers Production and Inventory data Capital budgeting requests Capacity expansion and Technology plans Budgets Cost analysis Capital investments Stockholder requirements Orders for materials Production and delivery Schedules Quality Requirements Design/ Performance specs Material availability Quality data Delivery schedules Designs Product/Service Availability Lead-time estimates Status of order Delivery schedules Sales forecasts Customer orders Customer feedback Promotions Personnel needs Skill sets Performance evaluations Job design/work measurement Hiring/firing Training Legal requirements Union contract negotiations

22. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Historical Events in OM Industrial Revolution Industrial Revolution Scientific Management Scientific Management Human Relations Human Relations Management Science Management Science Quality Revolution Quality Revolution Globalization Globalization Information Age/Internet Revolution Information Age/Internet Revolution

23. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Historical Events in OM Industrial Revolution Steam engine1769James Watt Division of labor1776Adam Smith Interchangeable parts1790Eli Whitney Scientific Management Principles1911Frederick W. Taylor Time and motion studies1911Frank & Lillian Gilbreth Activity scheduling chart1912Henry Gantt Moving assembly line1913Henry Ford

24. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Historical Events in OM Human Relations Hawthorne studies1930Elton Mayo Motivation theories1940sAbraham Maslow 1950sFrederick Hertzberg 1960sDouglas McGregor Management Science Linear programming1947George Dantzig Digital computer1951Remington Rand Simulation, PERT/CPM, 1950sOperations research Waiting line theory groups MRP1960sJoseph Orlicky, IBM

25. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Historical Events in OM Quality Revolution JIT1970sTaiichi Ohno, Toyota TQM1980sW. Edwards Deming, Joseph Juran, et. al. Strategy and operationsSkinner, Hayes Reengineering1990sHammer, Champy World Trade Organization1990sNumerous countries and companies Globalization European Union and1970sIBM and others other trade agreements EDI, EFT, CIM1980s

26. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Historical Events in OM Information Age/ Internet Revolution Internet, WWW, ERP1990sARPANET, Tim Supply chainBerners-Lee, SAP, i2 management,Technologies, ORACLE, E-commercePeopleSoft, Amazon, Yahoo, eBay, and others

27. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Categories of E-Commerce

28. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Categories of E-Commerce Business ConsumerBusinessConsumer B2B Commerceone.com B2C Amazon.com C2B Priceline.com C2C eBay.com

29. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. A New Value Chain Manufacturer Wholesaler/ distributor Wholesaler/ distributor Retailer Consumer (a) Traditional Value Chain

30. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. A New Value Chain Manufacturer Wholesaler/ distributor Wholesaler/ distributor Retailer Consumer Manufacturer Wholesaler/ distributor Wholesaler/ distributor Retailer Consumer (a) Traditional Value Chain (b) Intermediaries Eliminated (Deintermediation)

31. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. A New Value Chain Manufacturer Wholesaler/ distributor Wholesaler/ distributor Retailer Consumer Infomediary Manufacturer E-Retailer E-Retailer Aggregator Portal Portal Consumer Manufacturer Wholesaler/ distributor Wholesaler/ distributor Retailer Consumer (a) Traditional Value Chain (b) Intermediaries Eliminated (Deintermediation) (b) New Intermediaries Introduced (Reintermediation)

32. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. An Integrated Value Chain

33. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. An Integrated Value Chain ManufacturerSupplierCustomer Flow of information (customer order)

34. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. An Integrated Value Chain ManufacturerSupplierCustomer Flow of information (customer order) Flow of product (order fulfillment)

35. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The Growth of E-Commerce 8000 8000 – 6000 6000 – 4000 4000 – 2000 2000 – 0 0 – ||||| 20002001200220032004 Year Trillions of Dollars

36. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The Growth of E-Commerce B2BB2C 8000 8000 – 6000 6000 – 4000 4000 – 2000 2000 – 0 0 – ||||| 20002001200220032004 Year Trillions of Dollars

37. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Types of B2B Transactions BuyerSeller Buyers Sellers Buyer Sellers BuyersSellers (a) Electronic Storefront(b) Seller’s Auction (c) Buyer’s Auction(d) Exchange or E-Marketplace

38. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. E-Business Promotes: Better customer relations Better customer relations More efficient processes More efficient processes Lower cost of materials Lower cost of materials Information technology synergy Information technology synergy Better and faster decision making Better and faster decision making

39. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. E-Business Promotes: New forms of organizations New forms of organizations Expanded supply chain Expanded supply chain Higher customer expectations Higher customer expectations New ways of doing business New ways of doing business Globalization Globalization

40. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. An International Comparison of Hourly Wage Rates |||||| 197519801985199019952000 $ 35 $ 35 – $ 30 $ 30 – $ 25 $ 25 – $ 20 $ 20 – $ 15 $ 15 – $ 10 $ 10 – $ 5 $ 5 – $ 0 $ 0 –

41. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. An International Comparison of Hourly Wage Rates |||||| 197519801985199019952000 $ 35 $ 35 – $ 30 $ 30 – $ 25 $ 25 – $ 20 $ 20 – $ 15 $ 15 – $ 10 $ 10 – $ 5 $ 5 – $ 0 $ 0 –Germany Japan United States EU Asian NIEs Mexico

42. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Multinational Corporations CountryForeign Sales Companyof Originas % of Total NestléSwitzerland98.2 NokiaFinland97.6 PhilipsNetherlands94.0 BayerGermany89.8 ABBGermany87.2 SAPGermany80.0 Exxon MobilUnited States79.6 Royal Dutch/ShellNetherlands73.3 IBMUnited States62.7 McDonald’sUnited States61.5

43. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Competitiveness The degree to which a nation can produce goods and services that meet the test of international markets while simultaneously maintaining or expanding the real incomes of its citizens.

44. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Productivity Productivity = OutputInput

45. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Productivity Become more efficient Become more efficient Downsize Downsize Expand Expand Retrench Retrench Achieve breakthroughs Achieve breakthroughs Productivity = OutputInput Productivity improves when firms:

46. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Productivity in the ‘90s |||||||||||| ‘90‘91‘92‘93‘94‘95‘96‘97‘98‘99‘002001 – 7 7 – 6 6 – 5 5 – 4 4 – 3 3 – 2 2 – 1 1 – 0 0 – -1 -1 – -2 -2 – -3 -3 –

47. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Productivity Growth in the ‘90s |||||||||||| ‘90‘91‘92‘93‘94‘95‘96‘97‘98‘99‘002001 – 7 7 – 6 6 – 5 5 – 4 4 – 3 3 – 2 2 – 1 1 – 0 0 – -1 -1 – -2 -2 – -3 -3 – United States Germany Japan

48. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Measures of Competitiveness Productivity Productivity GDP (Gross domestic product) growth GDP (Gross domestic product) growth Market capitalization Market capitalization Technological infrastructure Technological infrastructure Quality of education Quality of education Efficiency of government Efficiency of government

49. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Competitiveness of Selected Countries USSingaporeFinlandIrelandGermanyUKJapanMexicoRussia 100806040200

50. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Competitiveness of Selected Countries USSingaporeFinlandIrelandGermanyUKJapanMexicoRussia 100806040200

51. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Barriers to Entry Economies of scale Economies of scale Capital investment Capital investment Access to supply and distribution channels Access to supply and distribution channels Learning curves Learning curves

52. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Competition Within Industries Increases When Firms are relatively equal in size and resources Firms are relatively equal in size and resources Products and services are standardized Products and services are standardized Industry growth is slow or exponential Industry growth is slow or exponential

53. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Ch 1 - 12 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Things Gone Wrong In First Eight Months Per 100 Cars, 1992 Chrysler 285 GM256 Ford214 Japanese132 Toyota 55

54. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Ch 1 - 13 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Quality Of Semiconductors, 1990 U.S.Japan Defective on delivery16% 0% Failure after 1000 hrs14% 1%

55. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Ch 1 - 14 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Quality Of Room Air Conditioners, 1990 U.S.Japan U.S.Japan Fabrication defects4.4% <0.1% Assembly line defects63.5%0.9% Service calls 10.5%0.6% Warranty cost 2.2%0.6% (% of sales)

56. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Ch 1 - 15 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Quality Of Color TVs, 1990 U.S.Japan Assembly defects1.40.01 Service calls1.00.09 (per set)

57. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The Experience of Matsushita Purchased Motorola’s failing Quasar TV manufacturing plant in Chicago, circa 1985Purchased Motorola’s failing Quasar TV manufacturing plant in Chicago, circa 1985 Were required to keep the 1000 workersWere required to keep the 1000 workers With those same 1000 workers and no additional capital investment, theyWith those same 1000 workers and no additional capital investment, they –Doubled production –Halved the management staff –Cut assembly repairs from 130 to 6 percent –Reduced warranty costs from $16M to $2M Motorola took notice—jumped on the quality bandwagonMotorola took notice—jumped on the quality bandwagon

58. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Ch 1 - 16 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Globalization Take advantage of favorable costsTake advantage of favorable costs Gain access to foreign marketsGain access to foreign markets Reduced trade barriersReduced trade barriers Changing marketsChanging markets

59. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Ch 1 - 18 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Growth in Volume of World Trade

60. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Ch 1 - 19 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Impact of Trade Agreements

61. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Ch 1 - 20 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Risks In Globalization Weak infrastructureWeak infrastructure Distinct languages, customs, trade barriersDistinct languages, customs, trade barriers Inefficient distribution channelsInefficient distribution channels Instability of governmentsInstability of governments Poor economic conditionsPoor economic conditions

62. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Primary Topics in Operations Management Strategy Strategy Products and services Products and services Processes and technologies Processes and technologies Facilities Facilities Project management Project management Managing the supply chain Managing the supply chain Forecasting demand for products and services Forecasting demand for products and services Production planning and scheduling Production planning and scheduling Ensuring quality Ensuring quality

63. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Purpose of the Text/Course To gain an appreciation of the strategic importance of operations and how operations relates to other business functions To gain an appreciation of the strategic importance of operations and how operations relates to other business functions To develop a working knowledge of the concepts and methods related to designing and managing operations To develop a working knowledge of the concepts and methods related to designing and managing operations To develop a skill set for organizing activities as a part of a process To develop a skill set for organizing activities as a part of a process

64. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Organization of the Text The StrategicDesigning the Importance ofOperating Managing the Ensuring OperationsSystemSupply ChainQuality 1.Introduction to Operations and Competitiveness 2.Operations Strategy 3.Products and Services 4.Processes and Technologies 5.Facilities 6.Project Management 7.Supply Chain Management 8.Forecasting 9.Capacity and Aggregate Planning 10.Inventory Management 11.Just-in-Time and Lean Production 12.Enterprise Resource Planning 13.Scheduling 14.Quality Management 15.Statistical Process Control 16.Waiting Line Models for Service Improvement 17.Human Resources in Operations Management