Chapter 1 (Operations Management)

8/10/2019 Chapter 1 (Operations Management)

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oadmap

Introduction

Process Management

The Scope of Operations Management

Why Learn About Operations Management?

Operations Management and Decision

MakingThe Historical Evolution of Operations

Management

Key Trends and Issues in Business


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TRASFORMATION/CONVERSION PROCESSINPUTS OU

CONTROL

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INPUTS OPERATIONS OUT

LandLaborCapital

InformationRaw MaterialsEquipmentFacilitiesEnergy

CuttingTransportingTeaching

FarmingMixingPackingRepairingInnovating


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Hey! One examplyou like?


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INPUTS PROCESSSES OUTPUTS

Doctors, nursesHospital

Medical suppliesEquipmentLaboratories

ExaminationSurgery

MonitoringMedicationTherapy

Treated p


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Goods-service Continuum


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Characteristic Goods Service

Customer contact Low HighUniformity of input High Low

Labor content Low High

Uniformity of output High Low

Output Tangible Intangible

Measurement of productivity Easy DifficultOpportunity to correct problems High Low

Inventory Much Little

Evaluation Easier Difficult

Patentable Usually Not usual


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TRASFORMATION/CONVERSION PROCESSINPUTS OU

Operations Management


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Process

One or moreactions that

transform inputsinto outputs.


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Upper-management processes

Operational processes

Supporting processes


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1) The variety of the goods an

2) Structural variation in dema

3) Random variation

4) Assignable variation


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Scope ofOperationsManagement The operations function includes many interrelatedactivities such as:

Forecasting Capacity planning Facilities and layout Scheduling Managing inventories Assuring quality Motivating and training employees Deciding where to locate facilities And more . . .

The scope of operations management ranges acrossthe organization.


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Role of theOperationsManager

The Operations Function consists of all activitirelated to producing goods or providing services.

A primary function of the operations manager is tthe system by decision making.

System Design Decisions

System Operation Decisions


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Functions ofthe OperationsManager

System Design

Capacity Facility location

Facility layout Product and serviceplanning

Acquisition andplacement ofequipment

These are typicallystrategic decisions thatrequire

long-termcommitment ofresources

Determineparameters of systemoperation

System Operation

Managemepersonnel

Inventorymanagemecontrol

Scheduling Project ma Quality ass

Operations manspend more timsystem operatiothan any other darea

They still have in system desig


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Key Decisionsof OperationsManagers

Most operations decisions involve many alternativescan have quite different impacts on costs or profitsTypical operations decisions include:

What: What resources are needed, and in whatamounts?

When: When will each resource be needed? Wshould the work be scheduled? When should mand other supplies be ordered?

Where: Where will the work be done?

How: How will he product or service be designwill the work be done? How will resources be a

Who: Who will do the work?


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Why learnaboutoperationsmanagement?

Every aspect of business affects or is affeby operations.Have a better understanding of the worldlive in, some of the reasons that companisucceed or fail and the importance of worwith others


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GeneralApproach toDecisionMaking

Modeling is a key tool used by all decision make Model - an abstraction of reality; a simplifisomething.Common features of models:

They are simplifications of real-life pheThey omit unimportant details of the reasystems they mimic so that attention canfocused on the most important aspects oreal-life system

Models


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Models

Types of Models :

Physical ModelsLook like their real-life counterpartsSchematic Models

Look less like their real-life counterpartphysical models

Mathematical ModelsDo not look at all like their real-life cou


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UnderstandingModels

Keys to successfully using a model in decision m

What is its purpose?How is it used to generate results?How are the results interpreted and used?What are the models assumptions and limit


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A decision making approach that frequenseeks to obtain a mathematically optimal

solutionLinear programmingQueuing techniquesInventory modelsProject models

Forecasting techniquesStatistical models

Quantitative Methods


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Performance MetricsAll managers use metrics to manage acontrol operations:Profits, costs, productivity and forecaaccuracy.

Metrics


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Analysis of Trade OffsA trade off is giving up one thing in rfor something else.Carrying more inventory (an expenseorder to achieve a greater level of cusservice.

Trade Offs


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Providing highly customize products or stends to be more labor intensive.Home remodeling, plastic surgeryCustomization


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System - a set of interrelated parts that must wotogether

The business organization is a system compsubsystems

marketing subsystem

operations subsystem

finance subsystem

The systems approach

Emphasizes interrelationships among subsyMain theme is that the whole is greater thasum of its parts

The output and objectives of the organizatioprecedence over those of any one subsystem

Systems Approach


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In nearly all cases, certain issues or items are moimportant than others

Recognizing this allows managers to focus theirattention to those efforts that will do the most goPareto Phenomenon - a few factors account for a percentage of occurrence of some event(s)

8020 Rule: 80% of problems are caused by 20activities.

The critical few factors should receive the higheThis is a concept that is appropriately applied toand levels of management

Establishing Priorities


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Ethical issues arise in many aspects of operationsmanagement:

Financial statementsWorker safety

Product safetyQuality

The environment

The communityHiring and firing workers

Closing facilitiesWorkers rights

Ethics

HISTORICAL EVOLUTION OF OPERATIONS


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HISTORICAL EVOLUTION OF OPERATIONS

MANAGEMENT

Industrial Revolution

Scientific Management

The Human Relations Movement

Decision Models and Management Science

The Influence of Japanese Manufacturers


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Industrial Revolution

Craft Production

No economies of scaleSlow and costly

Began 1770 s in EnglandManagement theory and practice


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Scientific Managementbelieved in a science management baobservation, measurement, analysis aimprovement of work methods, and econ

incentives.

Frederick WinslowTaylor


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Scientific Management Frank Gilbreth father of motion study

Henry Gantt Gantt chart

Harrington Emerson

Henry Fordo Moving assembly lines Mass Production

The Human Relations


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The Human RelationsMovement

Lilian Gilbreth (1920s)

Elton Mayo (1930s)o Hawthorne Studies

Abraham Maslow (1940s)

Frederick Hertzberg (1950s)

Douglas McGregor (19

William Ouchi (1970s) Theory Z

Decision Models and Management


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Decision Models and ManagementScience

F.W. Harris mathematical model for inventory management, 1915

Dodge, Romig, and Shewart statistical procedures for sampling anquality control, 1930s

Tippett statistical sampling theory, 1935

Operations Research (OR) Groups OR applications in warfare

George Dantzig linear programming, 1947

The Influence of Japanese


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The Influence of JapaneseManufacturers

o Quality Revolution

o Just-in-Time production

KEY TRENDS IN BUSINES


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KEY TRENDS IN BUSINES The Internet, E-commerce, E-business Management of Technology Globalization Outsourcing Sustainability Agility Ethical behavior

ISSUES IN BUSINESS


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ISSUES IN BUSINESS Operations Strategy

Working with fewer resources

Revenue Management

Process analysis and improvement, and quality improvement

Lean Production


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The Need for Managing the Supply Cha In the past, organizations did little to

manage the supply chain beyond theirown operations and immediate supplierswhich led to numerous problems:

o Inventory stockoutso Late deliverieso Quality problems

Elements of Supply Chain


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Elements of Supply ChainManagement

Customers Forecasting Design Capacity planning Processing Inventory

Purchasing Suppliers Location Logistics


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Chapter 1 (Operations Management)

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