1. © The McGraw-Hill Companies, Inc., 2004 1

2. 2 Chapter 1 Overview: Introduction to the Field

3. © The McGraw-Hill Companies, Inc., 2004 3 Operations Management Why Study Operations Management? Production System Defined Operations as a Service Plan of This Book Historical Development of OM Current Issues in OM OBJECTIVES

4. © The McGraw-Hill Companies, Inc., 2004 4 What is Operations Management? Defined Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services

5. © The McGraw-Hill Companies, Inc., 2004 5 Why Study Operations Management? Business Education Systematic Approach to Org. Processes Career Opportunities Cross-Functional Applications Operations Management

6. © The McGraw-Hill Companies, Inc., 2004 6 What is a Production System? Defined A production system is defined as a user of resources to transform inputs into some desired outputs

7. © The McGraw-Hill Companies, Inc., 2004 7 Transformations Physical--manufacturing Locational--transportation Exchange--retailing Storage--warehousing Physiological--health care Informational--telecommunications

8. © The McGraw-Hill Companies, Inc., 2004 8 What is a Service and What is a Good? “If you drop it on your foot, it won’t hurt you.” (Good or service?) “Services never include goods and goods never include services.” (True or false?)

9. © The McGraw-Hill Companies, Inc., 2004 9 OM in the Organization Chart Operations Plant Manager Operations Manager Operations Manager Director Manufacturing, Production control, Quality assurance, Engineering, Purchasing, Maintenance, etc FinanceMarketing

10. © The McGraw-Hill Companies, Inc., 2004 10 Core services are basic things that customers want from products they purchase Core Services Defined

11. © The McGraw-Hill Companies, Inc., 2004 11 Core Services Performance Objectives Operations Management Flexibility Quality Speed Price (or cost Reduction)

12. © The McGraw-Hill Companies, Inc., 2004 12 Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way Value-Added Services Defined

13. © The McGraw-Hill Companies, Inc., 2004 13 Value-Added Service Categories Operations Management Information Problem Solving Sales Support Field Support

14. © The McGraw-Hill Companies, Inc., 2004 14 Plan of This Book I. Operations Strategy and Managing Change 1. Introduction to the Field 2. Operations Strategy and Competitiveness 3. Project Management III. Supply Chain Design 9. Supply Chain Strategy 10. Strategic Capacity Management 11. Just-in-Time and Lean Systems IV. Planning and Controlling the Supply Chain 12. Forecasting and Demand Management 13. Aggregate Sales and Operations Planning 14. Inventory Control 15. Materials Requirements Planning 8. Operations Consulting and Reengineering 16. Operations Scheduling II. Product Design and Process Selection 4. Process Analysis 5. Product Design and Process Selection -Manufacturing 6. Product Design and Process Selection -Services 7. Quality Management 17. Synchronous Manufacturing and Theory of Constraints

15. © The McGraw-Hill Companies, Inc., 2004 15 Historical Development of OM JIT and TQC Manufacturing Strategy Paradigm Service Quality and Productivity Total Quality Management and Quality Certification

16. © The McGraw-Hill Companies, Inc., 2004 16 Historical Development of OM (cont’d) Business Process Reengineering Supply Chain Management Electronic Commerce

17. © The McGraw-Hill Companies, Inc., 2004 17 Current Issues in OM Effectively consolidating the operations resulting from mergers Developing flexible supply chains to enable mass customization of products and services Managing global supplier, production and distribution networks Increased “commoditization” of suppliers

18. © The McGraw-Hill Companies, Inc., 2004 18 Current Issues in OM (cont’d) Achieving the “Service Factory” Enhancing value added services Making efficient use of Internet technology Achieving good service from service firms

19. © The McGraw-Hill Companies, Inc., 2004 19 Question Bowl A major objective of this book is to show how smart managers can do which of the following? a.Improve efficiency by lowering costs b.Improve effectiveness by creating value c.Increasing value by reducing prices d.Serving customers well e.All of the above Answer: e. All of the above

20. © The McGraw-Hill Companies, Inc., 2004 20 Question Bowl In the Input-Transformation-Output Relationship, a typical “input” for a Department Store is which of the following? a.Displays b.Stocks of goods c.Sales clerks d.All of the above e.None of the above Answer: e. None of the above (The above are considered “Resources” of a department store. The correct answer is “Shoppers”.)

21. © The McGraw-Hill Companies, Inc., 2004 21 Question Bowl In which of the following decades did the concept of quality control originate? a.1920’s b.1930’s c.1940’s d.1950’s e.1970’s Answer: b. 1930’s (Tools such as sampling inspection and statistical tables where first developed by Walter Shewhart, H. F. Dodge, and H. G. Romig.)

22. © The McGraw-Hill Companies, Inc., 2004 22 End of Chapter 1