2011 om lec 1 intro to om feb 18 2011

8/3/2019 2011 OM Lec 1 Intro to OM Feb 18 2011

1/30

1-1 Introduction to Operations Management

CHAPTER

1

Production

&

Operations Management

McGraw-Hill/IrwinOperations Management, Eighth Edition, by William J. Stevenson

Copyright 2005 by The McGraw-Hill Companies, Inc. All rights reserved.


2/30


William J. Stevenson


8th edition


3/30


CHAPTER

1

Introduction to


McGraw-Hill/IrwinOperations Management, Eighth Edition, by William J. Stevenson

Copyright 2005 by The McGraw-Hill Companies, Inc. All rights reserved.


4/30


What is meant by OPERATIONSWhat is meant by OPERATIONS

yThe operations function

consists of all activities

directly related to producing

goods or providing services.


5/30

1-5 Introduction to Operations Managementxamp es o pera onsxamp es o pera ons

Performed by OrganizationsPerformed by OrganizationsTable 1.4

Operation 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


6/30


Main Functions in organizationsMain Functions in organizations

yThe operations function is a core

function in all organizations.

Organizatio

n

Finance Operations Marketing


7/30


Operations ManagementOperations Management

The management of

systems or processes orfunction in an organization

that create goods and/orprovide services


8/30


ValueValue--AdditionAddition

The difference between the cost of inputsand the value or price of outputs.

Inputs

Land

Labor

Capital

Transformation/

Conversion

process

Outputs

Goods

Services

Control

Feedback

FeedbackFeedback

Value added

Figure 1.2


9/30


Food ProcessorFood Processor

Inputs Processing Outputs

Raw Vegetables Cleaning Canned

vegetablesMetal Sheets Making cansWater CuttingEnergy CookingLabor PackingBuilding Labeling

Equipment

Table 1.2


10/30


Hospital ProcessHospital Process

Inputs Processing Outputs

Doctors, nurses Examination Healthy

patientsHospital SurgeryMedical Supplies MonitoringEquipment MedicationLaboratories Therapy

Table 1.2


11/30


Manufacturing or Service?Manufacturing or Service?

Tangible Act


12/30


y

Operations Management includes:y Forecasting of demand

y Capacity planning

y Scheduling

y Managing inventories

y Assuring quality

y Motivating employees

y Deciding where to locate facilities

y And more . . .

cope o pera onscope o pera ons

ManagementManagement


13/30


U.S. Manufacturing vs. Service Employment

0

20

40

60

80

100

45 50 55 60 65 70 75 80 85 90 95 00

Year

P

e

r

c

e

n

t

Year Mfg. Service45 79 21

50 72 28

55 72 28

60 68 32

65 64 36

70 64 36

75 58 42

80 44 46

85 43 57

90 35 65

95 32 68

00 30 70

Figure 1.4


14/30


Responsibilities of OperationsResponsibilities of OperationsManagementManagement

Products & services

Planning Capacity

Location

Make or buy

Layout

Projects

Scheduling

Controlling/Improving

Inventory

Quality

Organizing Degree of centralization

Process selection

Staffing

Hiring/laying off

Use of Overtime

Directing Incentive plans

Issuance of work orders

Job assignments

Costs

Productivity

Table 1.6


15/30


Key Decisions of OperationsKey Decisions of OperationsManagersManagers

yWhat

What resources/what amounts

yWhen

Needed/scheduled/orderedyWhere

Work to be done

y HowDesigned

yWho

To do the work


16/30


Decision MakingDecision Making

System Designcapacity

location

arrangement of departments

product and service planning

acquisition and placement ofequipment


17/30



System operationpersonnel

inventory

scheduling

projectmanagement

quality assurance


18/30



y Models

y Quantitative approaches

y Analysis of trade-offs

y Systems approach


19/30


Systems ApproachSystems Approach

The whole is greater than

the sum of the parts.

SuboptimizationSuboptimization


20/30


Business Operations OverlapBusiness Operations Overlap

Operations

Finance

Figure 1.5

Marketing


21/30


Operations InterfacesOperations Interfaces

Public

Relations

Accounting

IndustrialEngineering

Operations

Maintenance

Personnel

Purchasing

Distribution

MIS

Legal


22/30


Trends in BusinessTrends in Business

yMajor trendsyThe Internet, e-commerce, e-business

yManagement technology

yGlobalization

yManagement of supply chainsyAgility


23/30


Other Important TrendsOther Important Trends

yEthical behavior

yOperations strategy

y

Working with fewer resourcesyCost control and productivity

yQuality and process improvement

y Increased regulation and product

liability

yLean production


24/30


Pareto PhenomenonPareto Phenomenon

A few factors account for ahigh percentage of the

occurrence of some event(s).

80/20 Rule - 80% of problems

are caused by 20% of the

activities.

How do we identify the vital few?


25/30


ModelsModels

A model is an abstraction of reality.

Physical

Schematic

Mathematical

What are the pros and cons of models?

Tradeoffs


26/30


Models Are BeneficialModels Are Beneficialy Easy to use, less expensive

y Require users to organize

y Systematic approach to problem solving

y

Increase understanding of the problemy Enable what if questions

y Specific objectives

y Consistent toolyPower of mathematics

y Standardized format


27/30


Quantitative ApproachesQuantitative Approaches

Linear programming

Queuing Techniques

Inventory models

Project models

Statistical models


28/30

1-28 Introduction to Operations ManagementHistorical Evolution of OperationsHistorical Evolution of OperationsManagementManagement

y Industrial revolution (1770s)

y Scientific management (1911)

y Mass production

y Interchangeable parts

y Division of labor

y Human relations movement (1920-60)

y Decision models (1915, 1960-70s)

y Influence of Japanese manufacturers

Table 1.7


29/30


Suppliers

SuppliersDirect

Suppliers ProducerDistributor

Final

Consumer

Simple Product Supply ChainSimple Product Supply ChainFigure 1.7

Supply Chain: A sequence of

activities and organizations

involved in producing

and delivering a good or service


30/30


Stage ofProduction Value Added Value of

Product

Farmer produces and harvests wheat $0.15 $0.15

Wheat transported to mill $0.08 $0.23

Mill produces flour $0.15 $0.38

Flour transported to baker $0.08 $0.46

Baker produces bread $0.54 $1.00

Bread transported to grocery store $0.08 $1.08

Grocery store displays and sells

bread

$0.21 $1.29

Total Value-Added $1.29

A Supply Chain for BreadA Supply Chain for Bread

2011 om lec 1 intro to om feb 18 2011

Documents