chap001
TRANSCRIPT
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Introduction to Operations
Management
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
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You should be able to:1. Define the term operations management2. Identify the three major functional areas of organizations and
describe how they interrelate3. Identify similarities and differences between production and
service operations4. Describe the operations function and the nature of the operations
manager’s job5. Summarize the two major aspects of process management6. Explain the key aspects of operations management decision
making7. Briefly describe the historical evolution of operations management8. Characterize current trends in business that impact operations
management
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What is operations?The part of a business organization that is
responsible for producing goods or servicesHow can we define operations
management?The management of systems or processes that
create goods and/or provide services
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Goods are physical items that include raw materials, parts, subassemblies, and final products.
•Automobile•Computer•Oven•Shampoo
Services are activities that provide some combination of time, location, form or psychological value.
•Air travel•Education•Haircut•Legal counsel
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Suppliers’suppliers
Directsuppliers
Producer DistributorFinal
Customers
Supply Chain – a sequence of activities and organizations involved in producing and delivering a good or service
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Operations FinanceMarketing
Organization
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Inputs•Land•Labor•Capital•Information
Outputs•Goods•Services
Transformation/Conversion
Process
Control
Measurementand Feedback
Measurementand Feedback
Measurementand Feedback
Value-Added
Feedback = measurements taken at various points in the transformation process
Control = The comparison of feedback against previously established standards to determine if corrective action is needed.
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Automobile Assembly, Steelmaking
Products are typically neither purely service- or purely goods-based.
Goods Services
Home Remodeling, Retail Sales
Computer Repair, Restaurant Meal
Songwriting, Software Development
Surgery, Teaching
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Tangible Act-Oriented
Goods
Services
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Can you certainly recognize whether a firm is producing goods or services?
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1. Degree of customer contact2. Uniformity of input3. Labor content of jobs4. Uniformity of output5. Measurement of productivity6. Production and delivery7. Quality assurance8. Amount of inventory9. Evaluation of work10. Ability to patent design
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1. Jobs in services are often less structured than in manufacturing
2. Customer contact is generally much higher in services compared to manufacturing
3. In many services, worker skill levels are low compared to those of manufacturing employees
4. Services are adding many new workers in low-skill, entry-level positions
5. Employee turnover is high in services, especially in low-skill jobs
6. Input variability tends to be higher in many service environments than in manufacturing
7. Service performance can be adversely affected by many factors outside of the manager’s control (e.g., employee and customer attitudes)
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Process - one or more actions that transform inputs into outputs
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Operations & Supply Chains Sales & Marketing
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Variations can be disruptive to operations and supply chain processes. They may result in additional costs, delays and shortages, poor quality, and inefficient work systems.
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The operations function includes many interrelated activities such as:
Forecasting Capacity planning Facilities and layout Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities And more . . .
The scope of operations management ranges across the organization.
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The Operations Function consists of all activities directly related to producing goods or providing services.
A primary function of the operations manager is to guide the system by decision making.
System Design DecisionsSystem Operation Decisions
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• System Design– Capacity– Facility location– Facility layout– Product and service planning– Acquisition and placement of equipment
• These are typically strategic decisions that• usually require long-term commitment of resources• determine parameters of system operation
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• System Operation• These are generally tactical and operational decisions
– Management of personnel– Inventory management and control– Scheduling– Project management– Quality assurance
• Operations managers spend more time on system operation decision than any other decision area
• They still have a vital stake in system design
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Every aspect of business affects or is affected by operations
Many service jobs are closely related to operations Financial services Marketing services Accounting services Information services
There is a significant amount of interaction and collaboration amongst the functional areas
It provides an excellent vehicle for understanding the world in which we live
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Most operations decisions involve many alternatives that can have quite different impacts on costs or profits
Typical operations decisions include: What: What resources are needed, and in what amounts? When: When will each resource be needed? When should the
work be scheduled? When should materials and other supplies be ordered?
Where: Where will the work be done? How: How will he product or service be designed? How will the
work be done? How will resources be allocated? Who: Who will do the work?
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Modeling is a key tool used by all decision makersModel - an abstraction of reality; a simplification of
something. Common features of models:
They are simplifications of real-life phenomenaThey omit unimportant details of the real-life systems
they mimic so that attention can be focused on the most important aspects of the real-life system
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Types of Models:Physical Models
Look like their real-life counterpartsSchematic Models
Look less like their real-life counterparts than physical models
Mathematical ModelsDo not look at all like their real-life counterparts
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1. Models are generally easier to use and less expensive than dealing with the real system
2. Require users to organize and sometimes quantify information
3. Increase understanding of the problem
4. Enable managers to analyze “What if?” questions
5. Serve as a consistent tool for evaluation and provide a standardized format for analyzing a problem
6. Enable users to bring the power of mathematics to bear on a problem.
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A decision making approach that frequently seeks to obtain a mathematically optimal solutionLinear programmingQueuing techniquesInventory modelsProject modelsForecasting techniquesStatistical models
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System - a set of interrelated parts that must work together The business organization is a system composed of subsystems
marketing subsystemoperations subsystemfinance subsystem
The systems approach Emphasizes interrelationships among subsystems Main theme is that the whole is greater than the sum of its parts The output and objectives of the organization take precedence
over those of any one subsystem
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Industrial RevolutionScientific ManagementHuman Relations MovementDecision Models and Management ScienceInfluence of Japanese Manufacturers
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Pre-Industrial Revolution Craft production - System in which highly skilled workers
use simple, flexible tools to produce small quantities of customized goods
Some key elements of the industrial revolution Began in England in the 1770s Division of labor - Adam Smith, 1776 Application of the “rotative” steam engine, 1780s Cotton Gin and Interchangeable parts - Eli Whitney, 1792
Management theory and practice did not advance appreciably during this period
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Movement was led by efficiency engineer, Frederick Winslow Taylor Believed in a “science of management” based on
observation, measurement, analysis and improvement of work methods, and economic incentives
Management is responsible for planning, carefully selecting and training workers, finding the best way to perform each job, achieving cooperate between management and workers, and separating management activities from work activities
Emphasis was on maximizing output
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Frank Gilbreth - father of motion studiesHenry Gantt - developed the Gantt chart
scheduling system and recognized the value of non-monetary rewards for motivating employees
Harrington Emerson - applied Taylor’s ideas to organization structure
Henry Ford - employed scientific management techniques to his factories
Moving assembly lineMass production
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The human relations movement emphasized the importance of the human element in job design Lillian Gilbreth Elton Mayo – Hawthorne studies on worker
motivation, 1930 Abraham Maslow – motivation theory, 1940s;
hierarchy of needs, 1954 Frederick Hertzberg – Two Factor Theory, 1959 Douglas McGregor – Theory X and Theory Y, 1960s William Ouchi – Theory Z, 1981
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F.W. Harris – mathematical model for inventory management, 1915
Dodge, Romig, and Shewart – statistical procedures for sampling and quality control, 1930s
Tippett – statistical sampling theory, 1935 Operations Research (OR) Groups – OR applications in
warfare George Dantzig – linear programming, 1947
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Refined and developed management practices that increased productivity Credited with fueling the “quality revolution Just-in-Time production
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Economic conditionsInnovatingQuality problemsRisk managementCompeting in a global economy
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SustainabilityUsing resources in ways that do not harm
ecological systems that support human existenceSustainability measures often go beyond traditional
environmental and economic measures to include measures that incorporate social criteria in decision making
All areas of business will be affectedProduct and service designConsumer education programsDisaster preparation and responseSupply chain waste managementOutsourcing decisions
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Financial statementsWorker safetyProduct safetyQualityThe environmentThe communityHiring and firing
workersClosing facilitiesWorkers rights
Ethical issues arise in many aspects of operations management:
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In the past, organizations did little to manage the supply chain beyond their own operations and immediate suppliers which led to numerous problems:Oscillating inventory levelsInventory stockoutsLate deliveriesQuality problems
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1. The need to improve operations2. Increasing levels of outsourcing3. Increasing transportation costs4. Competitive pressures5. Increasing globalization6. Increasing importance of e-business7. The complexity of supply chains8. The need to manage inventories
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Customers – what products/services do customers want Forecasting – predicting timing and volume of customer demand Design – incorporating customer wants, manufacturability, and
time to market Capacity planning – matching supply and demand Processing – controlling quality, scheduling work Inventory – meeting demand requirements while managing costs Purchasing – evaluating potential suppliers, supporting the
needs of operations on purchased goods and services Suppliers – monitoring supplier quality, on-time delivery, and
flexibility; maintaining supplier relations Location – determining the location of facilities Logistics – deciding how to best move information and materials
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