Operation Management

Operation Management. Gears And Operations Management Mechanism Stock Photo Picture And Royalty Free Image Image 57464235.

LEARNING OBJECTIVES. Define the term operations management. Identify the three major functional areas of organizations and describe how they interrelate. Compare and contrast service and manufacturing operations. Describe the operations function and the nature of the operations manager’s job. Differentiate between design and operation of production systems. Describe the key aspects of operations management decision making. Briefly describe the historical evolution of operations management. Identify current trends that impact operations management..

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Operation Management. The management of systems or processes that create goods and/or provide services..

THE ORGANIZATION. Figure 1.1. The Three Basic Functions.

VALUE ADDED PROCESS. The operations function involves the conversion of inputs into outputs.

VALUE-ADDED AND PRODUCT PACKAGES. Value-added elements make the difference between the cost of inputs and the value or price of outputs. Product packages are a combination of goods and services. Product packages can make a company more competitive..

THE GOODS-SERVICE CONTINUM. Figure 1.3. Automobile assembly, steel making.

FOOD PROCESSOR. Table 1.2. Inputs. Processing. Outputs.

HOSPITAL. Table 1.2. Inputs. Processing. Outputs.

MANUFACTURING OR SERVICE. Tangible Act.

PRODUCTION OF GOODS VS. DELIVERY OF SERVICE. Production of goods – tangible output Delivery of services – an act Service job categories Government Wholesale/retail Financial services Healthcare Personal services Business services Education.

KEY DIFFERENCES. 1. Customer contact 2. Uniformity of input 3. Labor content of jobs 4. Uniformity of output 5. Measurement of productivity 6. Production and delivery 7. Quality assurance 8. Amount of inventory 9. Evaluation of work 10. Ability to patent design.

GOODS VS. SERVICE. Table 1.3. Characteristic Goods Service Customer contact Low High Uniformity of input High Low Labor content Low High Uniformity of output High Low Output Tangible Intangible Measurement of productivity Easy Difficult Opportunity to correct problems High Low Inventory Much Little Evaluation Easier Difficult Patentable Usually Not usually.

SCOPE OF OPERATIONS MANAGEMENT. Operations Management includes: Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating and training employees Locating facilities Supply chain management And more . . ..

TYPES OF OPERATION. Table 1.4. Operations Examples Goods Producing Farming, mining, construction , manufacturing, power generation Storage/Transportation Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines Exchange Retailing, wholesaling, financial advising, renting or leasing Entertainment Films, radio and television, concerts, recording Communication Newspapers, radio and TV newscasts, telephone, satellites.

Figure 1.4a. Figure 1.4b. Singapore Manufacturing vs. Service Employment.

DECLINE IN MANUFACTURING JOBS. Productivity Increasing productivity allows companies to maintain or increase their output using fewer workers Outsourcing Some manufacturing work has been outsourced to more productive companies.

CHALLENGES OF MANAGING SERVICES. Service jobs are often less structured than manufacturing jobs Customer contact is higher Worker skill levels are lower Services hire many low-skill, entry-level workers Employee turnover is higher Input variability is higher Service performance can be affected by worker’s personal factors.

KEY DECISIONS OF OPERATION MANAGERS. What What resources/what amounts When Needed/scheduled/ordered Where Work to be done How Designed/Resources allocated Who To do the work.

OPERATIONS MANAGEMENT DECISION MAKING. Models Quantitative approaches Performance metrics Analysis of trade-offs Systems approach Establishing priorities Ethics.

MODELS. A model is an abstraction of reality„. – Physical – Schematic – Mathematical.

MODELS ARE BENEFICIAL. Easy to use, less expensive Require users to organize Increase understanding of the problem Enable “what if” questions Consistent tool for evaluation and standardized format Power of mathematics.

LIMITATIONS OF MODEL. Quantitative information may be emphasized over qualitative Models may be incorrectly applied and results misinterpreted Nonqualified users may not comprehend the rules on how to use the model Use of models does not guarantee good decisions.

QUANTITATIVE APPROACHES. Linear programming Queuing techniques Inventory models Project models Statistical models.

PERFORMANCE METRICS. To control different aspects of operations Many: Profits Costs Quality Productivity Assets Inventory Schedules Forecast accuracy.

SYSTEMS APPROACH. “ The whole is greater than the sum of the parts .”.

ESTABLISHING PRIORITIES. Pareto phenomenon A few factors account for a high percentage of the occurrence of some event(s). 80–20 Rule: 80% of problems are caused by 20% of the activities..

ETHICAL ETHICS. Financial statements Worker safety Product safety Quality Environment Community Hiring/firing workers Closing facilities Worker’s rights.

OVERLAP OF BUSINESS FUNCTIONS. Figure 1.5. Operations.

OPERATIONS INTERFACES. Figure 1.6. Operations Personnel Human resources MIS Legal Public Relations Accounting.

OM DECISIONS. w0005-n.

HISTORICAL SUMMARY OF OPERATIONS MANAGEMENT. Industrial revolution (1770s) Scientific management (1911) Mass production Interchangeable parts Division of labor Human relations movement (1920 – 60) Decision models (1915, 1960 –’ 70s) Influence of Japanese manufacturers.

TRENDS IN BUSINESS. Major trends The Internet, e-commerce, e-business Management technology Globalization Management of supply chains Outsourcing Agility Ethical behavior.

MANAGEMENT TECHNOLOGY. Technology: The application of scientific discoveries to the development and improvement of goods and services Product and service technology Process technology Information technology.

SIMPLE PRODUCT SUPPLY CHAIN. Figure 1.7. Suppliers’ Suppliers.

A SUPPLY CHAIN FOR BREAD. Stage of Production Value Added Value of Product Farmer produces and harvests wheat $0.15 $0.25 Wheat transported to mill $0.08 $0.33 Mill produces flour $0.15 $0.48 Flour transported to baker $0.08 $0.56 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.

OTHER IMPORTANT TRENDS. Operations strategy Working with fewer resources Revenue management Process analysis and improvement Increased regulation and product liability Lean production.