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1-OM Operations Management

The OM is the science and art of ensuring that goods and

services are created and delivered successfully to customers .

10/11/2011 Seshasayee mk 1

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The conversion ProcessManufacturing organizations generally transform some

tangible inputs into some tangible output

Value-Added: The difference between the cost of inputs and

the value or price of outputs.


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Scope of Operations Management


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2-Nature of Operations Management

Planning provides the basis for future activities by developing

strategies ,goals,and objectives and establishing guidelines

,actions and schedules for meeting them .

Organizing is the process of bringing together the resources

people ,materials ,equipments ,technology information and

capitalnecessary to perform planned activities .

Directing is the process ofturning plans into realities by

assigning specific tasks and responsibilities to employees

motivating them and co coordinating their effort .

Controllingevaluating performances and applying corrective

measuresis necessary to ensure that plans are achieved .


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3- Goods and services

Goods are tangibleServices are intangible

Customers participate in many service processes ,activities andtransactions

Demand for services are more difficult to predict than the

demand for goods . Services cannot be stored as physical inventory .

Service management skills are paramount to a successfulservice encounter .

Service facilities typically need to be in close proximity to thecustomer

Patents do not protect services


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4-Customer Benefit Package

A customer benefit package is a clearly defined set of tangible

(Goods content) and intangible (Service Content) features that

the customer recognizes ,pays for uses or experiences .

A primary good or service is the core offering that attracts

customers and responds to their primary wants and needs .

Peripheral goods or services are those that are not essential tothe primary good or service ,but enhance it .


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5-Processes and value chains

Processes are the building blocks for the creation of goods andservices .

AProcess is a sequence of activities that is intended to createa certain result such as a physical good or service orinformation .

Support processes purchasing managing inventory ,customersupport R&D

General management processesHR/MIS,Finance/Controlling

e.g. of process-- Sales order process ,Production order process Atransformation process involves the creation of value in

terms of time ,place ,information ,entertainment ,exchange orform utility .


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Value chain

A value chain is a network of facilities and processes that

describes the flow of goods and services, information and

financial transactions from suppliers through the facilities and

processes that create goods and services and delivers them to

customers .

Supply chain is the portion of value chain that focuses

primarily on the physical movement of goods and materials

and supporting flows of information and financial transactionsthrough the supply ,production and distribution processes .


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6-Quantitative methods in OperationsManagement

Quantitative ToolsProblem specific

Line balancing ,facility Location and layout etc

Quantitative tools are based on Models

General Toolsstatistical methods and techniques .e.g. linear

programming ,simulation, waiting line theory ..

A model is basically a set of assumptions that characterize a

decision situation and allow us to draw conclusions about thereal situation through some type of analysis


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7--The Historical Evolution


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History


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History


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History


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8-Quality Revolution

Post 2nd world war Japan leaned heavily on W Edwards

Deming and Joseph JuranEmbraced Quality .By 1970 their

products ruled the world .

The Q R started in 1980 ;If Japan can why cant we ? Quality

became an obsession .

In 1987 US Govt established the Malcolm Baldridge National

Quality Award .This Baldridge program has been instrumental

in bringing quality to the attention of Top Management


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Using Models on OM

A model is a set assumptions that characterize a decision

situation and allow us to draw a conclusion about the real

situation through some type of analysis

Using EXCEL we can develop and use a variety of models to

assist us in making key OM decisions .we will learn how to

develop and use models and interpret the results in OM .

An assumption in BEPV is that the costs and revenues are

occurring simultaneously .Not true .Time is not a critical

variable is an assumption .


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What is a Model

A model can come in many shapes, sizes, and styles. It is

important to emphasize that a model is not the real world but

merely a human construct to help us better understand real

world systems. In general all models have an information

input, an information processor, and an output of expectedresults. Key features in common with the development of any

model is that:

simplifying assumptions must be made;

boundary conditions or initial conditions must be identified;

the range of applicability of the model should be understood.


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Quantitative decision tools

Costs and prices are constant over timenot true

Unit variable cost and unit prices do not vary .Not true

quantity discounts are frequent.

Facilities and capacity remains infiniteNot true .As theoutput increases or decreases the firm may change technology

requiring variable fixed costs .

Models are extremely useful if properly applied .


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Goods and Services Characteristics


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Service Revolution

1955 .In US 50% of the work force was employed in service

sector .

Today it is 4 out of every 5 jobs are in Service sector . Moreover the 50% goods producing industries Jobs are

service related /HR/FI etc

Meaning if you are working in US You are most likely

working in Service sector . However Manufacturing is not Dead .It is alive and kicking .


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The Challenges

Consumers .

Workers

Environment .

Technology


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Organization Structure


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Scale of services vs. Product Dominance


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OM Strategic Decision Areas


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Conversion Process


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Functions within an Organization


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Customization and design

Quality means much more

Lean production system

Just in Time

Agile Manufacturing


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GDP

GDP

Rate of Growth

Infrastructure Development .

Service Sector Growth Shift of Manufacturing Industries

Out Sourcing

etc


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GDP $ 1.73 Trillions


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Operations strategy


01 Intro to OM

Documents