Introduction to Operations Management

3 important historical people in the evolution of OM

- Fredrick W. Taylor (1856-1915) - W. Edwards Deming (1990-1993) - Joseph Juran (1904-2008)

historical evolution of OM

- Industrial Revolution - Scientific Management - Human Relations Movement - Decision Models and Management Science - Influence of Japanese Manufacturers

factors that affect the design and management of operations systems

- degree of involvement of customers in the process - degree to which technology is used to produce and/or deliver a product or service

Why study OM?

- every aspect of business affects or is affected by operations - service jobs that 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

service jobs that are closely related to operations

- financial services - marketing services - accounting services - information services

The operations function includes many interrelated activities such as:

- forecasting - capacity planning - facilities and layout - managing inventories - assuring quality - deciding where to locate facilities - and more...

primary factors for service considerations

- forecasting and capacity planning to match supply and demand - process management - managing variations - monitoring and controlling costs and productivity - supply chain management - location planning, inventory management, quality control, and scheduling

What is operations?

- one of three major business functions - the part of a business organization that is responsible for producing goods or services

2 types of system decisions

- system design decisions - system operation decisions

manufacturing vs. service

1. Degree of 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

3 categories of business processes

1. Upper-management processes 2. Operational processes 3. Supporting processes

3 activities that finance and operations management personnel cooperate by exchanging information and expertise

1. budgeting 2. economic analysis of investment proposals 3. provision of funds

3 categories of models

1. physical 2. schematic 3. mathematical

4 basic sources of process variation

1. variety of goods or services being offered 2. structural variation in demand 3. random variation 4. assignable variation

3 basic functions of business organizations

Finance, Operations, Marketing

variety of goods or services being offered

The greater the variety of goods and services offered, the greater the variation in production or service requirements.

provision of funds

The necessary funding of operations and the amount and timing of funding can be important and even critical when funds are tight. Careful planning can help avoid cash-flow problems.

structural variation in demand

These variations, which include trends and seasonal variations, are generally predictable. They are particularly important for capacity planning.

supply chain

a sequence of activities and organizations involved in producing and delivering a good or service

airline company's operation system - locating facilities

according to managers' decisions on which cities to provide service for, where to locate maintenance facilities, and where to locate major and minor hubs

_______ supplies information to management on costs of labor, materials, and overhead, and may provide reports on items such as scrap, downtime, and inventories.

accounting

scope of operations management ranges _________ the organization

across

services

activities that provide some combination of time, location, form or psychological value (ex: air travel, education, haircut, legal counsel)

operations function consists of...

all activities directly related to producing goods or providing services.

model

an abstraction of reality; a simplified representation of something

tangible output

anything we can see or touch

schematic models

are more abstract than their physical counterparts; that is, they have less resemblance to the physical reality. Examples include graphs and charts, blueprints, pictures, and drawings. The advantage of schematic models is that they are often relatively simple to construct and change. Moreover, they have some degree of visual correspondence.

budgeting

budgets must be periodically prepared to plan financial requirements. budgets must sometimes be adjusted, and performance relative to a budget must be evaluated

assignable variation

caused by defective inputs, incorrect work methods, out-of-adjustment equipment, and so on. can be reduced or eliminated by analysis and corrective action

the greater the degree of customer involvement, the more _____ it can be to design and manage the operation

challenging

operational processes

core processes that make up value stream (ex. purchasing, production/service, marketing, sales)

most operation decisions involve many alternatives that can have quite different impacts on _____ or ______

costs, profits

system _______ essentially determines many of the parameters of system operation

design

airline company's operation system - capacity planning

essential for the airline to maintain cash flow and make a reasonable profit. (Too few or too many planes, or even the right number of planes but in the wrong places, will hurt profits.)

airline company's operation system - assuring quality

essential in flying and maintenance operations, where the emphasis is on safety, and important in dealing with customers at ticket counters, check-in, telephone and electronic reservations, and curb service, where the emphasis is on efficiency and courtesy

economic analysis of investment proposals

evaluation of alternative investments in plant and equipment requires inputs from both operations and finance people

_______ aspect of business affects or is affected by operations

every

training, human resource management, customer service, equipment repair, procurement, and administrative services are all examples of service activities that are essential in _____-producing companies

goods

transformation process - outputs

goods and services

upper-management processes

govern the operation of the entire organization (ex: organizational governance and organizational strategy)

the greater the value added, the _______ the amount of funds available for these purposes

greater

a primary function of the operations manager is to...

guide the system by decision making

purchasing (part of the operations function)

has responsibility for procurement of materials, supplies, and equipment. Close contact with operations is necessary to ensure correct quantities and timing of purchases. The purchasing department is often called on to evaluate vendors for quality, reliability, service, price, and ability to adjust to changing demand. Purchasing is also involved in receiving and inspecting the purchased goods.

typical operations decisions include: how...

how will he product or service be designed? how will the work be done? how will resources be allocated?

airline company's operation system - facilities and layout

important in achieving effective use of workers and equipment

airline company's operation system - motivating and training employees

in all phases of operations

the creation of goods or services involves transforming or converting _______ into ______

inputs, outputs

system design

involves decisions that relate to system capacity, the geographic location of facilities, arrangement of departments and placement of equipment within physical structures, product and service planning, and acquisition of equipment

distribution (part of the operations function)

involves the shipping of goods to warehouses, retail outlets, or final customers.

transformation process - inputs

land, labor, capital, information

_____ department must be consulted on contracts with employees, customers, suppliers, and transporters, as well as on liability and environmental issues.

legal

physical models

look like their real-life counterparts. Examples include miniature cars, trucks, airplanes, toy animals and trains, and scale-model buildings. The advantage of these models is their visual correspondence with reality.

_______ _______ ______ (___) is concerned with providing management with the information it needs to effectively manage. This occurs mainly through designing systems to capture relevant information and designing reports. It's also important for managing the control and decision-making tools used in operations management.

management information systems (MIS)

Feedback on system operation decisions involves _______ and ______

measurement, control

feedback

measurements taken at various points in the transformation process

random variation

natural variability is present to some extent in all processes, as well as in demand for services and products, and it cannot generally be influenced by managers

airline company's operation system - scheduling

of planes for flights and for routine maintenance; scheduling of pilots and flight attendants; and scheduling of ground crews, counter staff, and baggage handlers

airline company's operation system - managing inventories

of such items as foods and beverages, first-aid equipment, inflight magazines, pillows and blankets, and life preservers.

industrial engineering (part of the operations function)

often concerned with scheduling, performance standards, work methods, quality control, and material handling

process

one or more actions that transform inputs into outputs

_________ manager is the key figure in the system: He or she has the ultimate responsibility for the creation of goods or provision of services

operations

the _____ or _______ ______ department is concerned with recruitment and training of personnel, labor relations, contract negotiations, wage and salary administration, assisting in manpower projections, and ensuring the health and safety of employees.

personnel, human resources

Goods

physical items that include raw materials, parts, subassemblies, and final products (ex: automobile, computer, oven, shampoo)

technology choices have a major impact on...

productivity, costs, flexibility, quality, and customer satisfaction

branding is an example of ______ value

psychological

________ __________ has responsibility for building and maintaining a positive public image of the organization. Good public relations provides many potential benefits. An obvious one is in the marketplace. Other potential benefits include public awareness of the organization as a good place to work (labor supply), improved chances of approval of zoning change requests, community acceptance of expansion plans, and instilling a positive attitude among employees.

public relations

maintenance (part of the operations function)

responsible for general upkeep and repair of equipment, buildings and grounds, heating and air-conditioning; removing toxic wastes; parking; and perhaps security.

system design decisions are typically ______ decisions

strategic because they're usually long-term

airline company's operation system - forecasting

such things as weather and landing conditions, seat demand for flights, and the growth in air travel

supporting processes

support the core processes (ex: accounting, human resources, IT)

_______ operation involves management of personnel, inventory planning and control, scheduling, project management, and quality assurance. These are generally tactical and operational decisions.

system

production of goods results in a ______ output

tangible

Fredrick W. Taylor (1856-1915)

the 'father' of scientific management

control

the comparison of feedback against previously established standards to determine if corrective action is needed

value-added

the difference between the cost of inputs and the value or price of outputs

How can we define operations management?

the management of systems or processes that create goods and/or provide services

mathematical models

the most abstract: They do not look at all like their real-life counterparts. Examples include numbers, formulas, and symbols. These models are usually the easiest to manipulate, and they are important forms of inputs for computers and calculators.

lead time

time between ordering a good or service and receiving it

inputs such as capital, labor, and information are used to create goods or services using one or more _________ processes (e.g., storing, transporting, repairing)

transformation

the essence of operations function is to add value during the ______ process

transformation

typical operations decisions include: what...

what resources are needed, and in what amounts?

manufacturing and service are often different in terms of ______ is done but similar in terms of ______ it's done

what, how

typical operations decisions include: when...

when will each resource be needed? when should the work be scheduled? when should materials and other supplies be ordered?

typical operations decisions include: where...

where will the work be done?

typical operations decisions include: who...

who will do the work?