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1、INTRODUCTION TO OPERATIONS MANAGEMENT,Operations function is that part of a business organization that is responsible for the creation of goods or services,OPERATIONS AND OPERATIONS FUNCTION,WHAT IS OPERATIONS MANAGEMENT,The management of systems or processes that creates value in the form of goods
2、and services by transforming inputs into desired outputsThe design,operation and improvement of the systems or processes that create goods and/or provide services,3,Operations as a transformation processOperations as a basic functionOperations as the technical core,THE OPERATIONS FUNCTION,THE TRANSF
3、ORMATION PROCESS,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.,WHAT IS VALUE ADDED?,The essence of operations function is to add value during the tra
4、nsformation processValue added is the difference between the cost of intputs and the value or price of outputs.,FIRMS USE THE MONEY GENERATED BY VALUE ADDED FOR:,R&DInvestment in new facilities and equipmentPaying workersPaying for materialsPaying for general expensesProfits,TRANSFORMATION PROCESS O
5、F A CANNED FOOD PROCESSOR,Inputs,Processing,Outputs,Metal sheets Raw vegetablesWaterEnergyLaborBuildingEquipment,TRANSFORMATION PROCESS OF A HOSPITAL,Inputs,Processing,Outputs,EXAMPLES OF VARIOUS OPERATIONS,TYPES OF TRANSFORMATION PROCESSES,Physical-manufacturingLocational-transportationExchange-ret
6、ailingStorage-warehousingPhysiological-health careInformational-telecommunicationsPsychological-entertainment,MarketingGenerates demand gets customers,Operationscreates product or serviceFinance/AccountingObtains fundsTracks organizational performance,OPERATIONS AS A BASIC FUNCTION,BASIC FUNCTIONS O
7、F THE BUSINESS ORGANIZATION,14,BUSINESS FUNCTIONS BANK(1 of 3),15,BUSINESS FUNCTIONS AIRLINES(2 of 3),16,BUSINESS FUNCTIONS MANUFACTURING(3 of 3),BUSINESS FUNCTIONS OVERLAP,Operations,Finance,Marketing,OPERATIONS INTERFACES,19,OPERATIONS AS THE TECHNICAL CORE,IMPORTANCE OF OM(WHY STUDY OM?)(1 of 2),
8、Operations is one of the three(marketing,finance and operations)major functions of an organizationOffers a major opportunity for an organization to improve its productivity and profitabilityOM affects 1)the companies ability to compete and 2)the nations ability to compete internationallyNearly half
9、of the employed people over the world have jobs in operations,IMPORTANCE OF OM(WHY STUDY OM?)(2 of 2),The OM function is responsible for a major portion of the assets of most organizationsOM is a costly part of an organizationThe concepts,tools and techniques of OM are widely used in managing other
10、functions.Business students have to understand what operations managers do Presents career opportunities,OPTIONS FOR INCREASING CONTRIBUTION,23,TYPES OF PRODUCTION PROCESSES(PROCESS FLOW STRUCTURES),INTERMITTENTJob shopBatch productionCONTINOUSMass productionMass assemblyContinuous flow productionPR
11、OJECT,24,Raw materialsor customer,F G,Station 2,Station 3,Station 4,Material and/or labor,Station 1,Material and/or labor,Material and/or labor,Material and/or labor,Used for Repetitive or Continuous Processing,AUTOMOBILE PLANT,sequential,25,EMERGENCY ROOM,PRODUCTION OF GOODS VS.DELIVERY OF SERVICES
12、,27,Manufacturing and Service Organizations differ chiefly because manufacturing is goods-oriented and service is act-oriented.,MANUFACTURING vs.SERVICE,28,Automobile Assembly,Steelmaking,Products are typically neither purely service-or purely goods-based.,GoodsServices,Home Remodeling,Retail Sales,
13、Computer Repair,Restaurant Meal,Songwriting,Software Development,Surgery,Teaching,GOODS-SERVICE CONTINUUM,29,GOODS CONTAIN SERVICES/SERVICES CONTAIN GOODS,Automobile assembly,steel making,Computer,Home remodeling,retail sales,Fast-food Meal,Restaurant Meal,Auto Repair,Hospital Care,Advertising Agenc
14、y,Investment Management,Consulting Service,Surgery,Teaching,Counseling,Percent of Product that is a Good,Percent of Product that is a Service,30,Steel productionAutomobile fabrication,Home buildingRoad constructio,Auto repairAppliance repairDressmakingFarming,Maid ServiceManual car wash,TeachingLawn
15、 mowing,High goods contentLow service content,GOODS-SERVICES CONTINUUM,Low goods contentHigh service content,CHARACTERISTICS OF GOODS(1 of 5),Tangible productConsistent product definitionHigh uniformity of inputs and outputsOften easy to automate,CHARACTERISTICS OF GOODS(2 of 5),Activities tend to b
16、e smooth and efficientProduction usually separate from consumption ie.often produced for later consumption(can be inventoried)Requires no or low customer contact,CHARACTERISTICS OF GOODS(3 of 5),Low labor contentMeasurement of productivity is easySite of facility is important for cost Location is of
17、ten centralized,CHARACTERISTICS OF GOODS(4 of 5),Can be resoldQuality is generally measurableQuality assurance is more straightforwardSelling function is distinct from production,CHARACTERISTICS OF GOODS(5 of 5),Product is transportableThe production activities are quite obvious,CHARACTERISTICS OF S
18、ERVICES(1 of 5),Intangible Inconsistent product definitionLow uniformity of inputs and outputsOften unique and/or often knowledge based,so difficult to automate,CHARACTERISTICS OF SERVICES(2 of 5),Activities are slower and awkwardProduced&consumed simultaneously(cannot be inventoried)Generally requi
19、res high customer contact,CHARACTERISTICS OF SERVICES(3 of 5),High labor contentMeasurement of productivity is difficultSite of facility is important for customer contactLocation is often dispersed,CHARACTERISTICS OF SERVICES(4 of 5),Reselling is unusualQuality is difficult to measureQuality assuran
20、ce is more challengingSelling is part of service,CHARACTERISTICS OF SERVICES(5 of 5),Provider,not the product is transportableThe production function may be less obvious,GOODS VS.SERVICES(1 of 3),GOODS VS.SERVICES(2 of 3),GOODS VS.SERVICES(3 of 3),44,MANAGING SERVICES IS CHALLENGING,Jobs in services
21、 are often less structured than in manufacturingCustomer contact is generally much higher in services compared to manufacturingIn many services,worker skill levels are low compared to those of manufacturing employeesServices are adding many new workers in low-skill,entry-level positionsEmployee turn
22、over is high in services,especially in low-skill jobsInput variability tends to be higher in many service environments than in manufacturingService performance can be adversely affected by many factors outside of the managers control(e.g.,employee and customer attitudes),SERVICE JOB CATEGORIES(1 of
23、2),Governmental servicesMunicipal servicesTrade services(wholesale/retail)Finance,insurance,real estateMedical(healthcare)Personal services,SERVICE JOB CATEGORIES(2 of 2),Business servicesEducationFood,lodging and entertainmentUtilities and transportationLegal,consultingRepair,DEVELOPMENT OF THE SER
24、VICE ECONOMY,1-48,49,THE DECLINE IN MANUFACTURING EMPLOYMENT,ProductivityIncreasing productivity allows companies to maintain or increase their output using fewer workersOutsourcingSome manufacturing work has been outsourced to more productive companiesA Statistical ArtifactManufacturers are increas
25、ingly using contract and temporary labor which no longer show up in the statistics as manufacturing employment,SERVICES IN MANUFACTURING,In manufacturing,services can be divided into two groups:Core ServicesValue-added Services,Core services are basic things that customers want from products they pu
26、rchase,CORE SERVICES,CORE SERVICES PERFORMANCE OBJECTIVES,Operations,Management,Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way,VALUE-ADDED SERVICES,VALUE-ADDED SERVICE CATEGORIES,Operations,Management,55,
27、PROCESS MANAGEMENT,Process-one or more actions that transform inputs into outputs,MATCH BETWEEN SUPPLY&DEMAND,Operations&Supply Chains,Sales&Marketing,57,PROCESS VARIATION,Variations can be disruptive to operations and supply chain processes.They may result in additional costs,delays and shortages,p
28、oor quality,and inefficient work systems.,THE SCOPE OF OM:WHAT DO OPERATIONS MANAGERS DO,Plan-Organize-Staff-Lead-Control,CRITIAL OM DECISIONS,CRITICAL OM DECISIONS,Service,product designProcess,capacity designPlanning of the technologyLocationLayout designHuman resources,job designProduction planni
29、ng and schedulingSupply chain managementInventory managementMaintenanceQuality management and more,61,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.Sy
30、stem Design DecisionsSystem Operation Decisions,ROLE OF THE OPERATIONS MANAGER,62,SYSTEM DESIGN DECISIONS,System Design Decisions CapacityFacility locationFacility layoutProduct and service planningProcess planningTechnology planningAcquisition and placement of equipmentThese are typically strategic
31、 decisions that requirelong-term commitment of resourcesDetermine parameters of system operation,63,SYSTEM OPERATION DECISIONS,System OperationManagement of personnelInventory management and controlSchedulingProject managementQuality assuranceOperations managers spend more time on system operation d
32、ecision than any other decision area but they still have a vital stake in system design,Most operations decisions involve many alternatives that can have quite different impacts on costs or profitsTypical operations decisions include:What:What resources are needed,and in what amounts?When:When will
33、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?,OPERATIONS MANAGEMENT AND
34、 DECISION MAKING,OPERATIONS MANAGEMENT AND DECISION MAKING,Models Quantitative approaches Analysis of tradeoffs Systems approach Establishing priorities,66,GENERAL APPROACH TO DECISION MAKING,Modeling is a key tool used by all decision makersModel-an abstraction of reality;a simplification of someth
35、ing.Common features of models:They are simplifications of real-life phenomena They 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,MODELS,Types of Models:Physical ModelsLook like their real-life count
36、erpartsSchematic ModelsLook less like their real-life counterparts than physical modelsMathematical ModelsDo not look at all like their real-life counterparts,68,UNDERSTANDING MODELS,Keys to successfully using a model in decision making What is its purpose?How is it used to generate results?How are
37、the results interpreted and used?What are the models assumptions and limitations?,BENEFITS OF MODELS,Models are generally easier to use and less expensive than dealing with the real systemRequire users to organize and sometimes quantify informationProvide a systematic approach to problem solvingIncr
38、ease understanding of the problemEnable managers to analyze“What if?”questionsEnable managers to specify objectives Serve as a consistent tool for evaluation and provide a standardized format for analyzing a problemEnable users to bring the power of mathematics to bear on a problem.,MODEL LIMITATION
39、S,Quantitative information may be emphasized at the expense of qualitative informationModels may be incorrectly applied and the results misinterpreted This is a real risk with the widespread availability of sophisticated,computerized models are placed in the hands of uninformed users.The use of mode
40、ls does not guarantee good decisions.,QUANTITATIVE APPROACHES(ANALYTICAL TOOLS USED IN OM),A decision making approach that frequently seeks to obtain a mathematically optimal solutionLinear programmingQueuing techniquesInventory modelsProject modelsStatistical modelsSimulationDecision analysis,72,ME
41、TRICS AND TRADE-OFFS,Performance MetricsAll managers use metrics to manage and control operationsProfitsCostsProductivityForecast accuracy,Analysis of Trade-OffsA trade-off is giving up one thing in return for something elseCarrying more inventory(an expense)in order to achieve a greater level of cu
42、stomer service,Tradeoffs,73,DEGREE OF CUSTOMIZATION,Relative to other standardized products and services customized products:Tend to be more labor intensiveTend to be more time consumingTend to require more highly-skilled peopleTend to require more flexible equipmentHave much lower volume of outputH
43、ave higher price tagsDegree of customization has a significant influence on the entire organizationProcess selectionJob designAffects marketing,sales,accounting,finance,and information systems,74,ESTABLISHING PRIORITIES,In nearly all cases,certain issues or items are more important than othersRecogn
44、izing this allows managers to focus their attention to those efforts that will do the most goodPareto Phenomenon-a few factors account for a high percentage of occurrence of some event(s)The critical few factors should receive the highest priority80/20 Rule-80%of the problems are caused by 20%of the
45、 activities This is a concept that is appropriately applied to all areas and levels of management,75,SYSTEMS APPROACH,System-a set of interrelated parts that must work togetherThe business organization is a system composed of subsystemsmarketing subsystemoperations subsystemfinance subsystemThe syst
46、ems approach Emphasizes interrelationships among subsystemsMain theme is that the whole is greater than the sum of its partsThe output and objectives of the organization take precedence over those of any one subsystem,ETHICAL ISSUES IN OPERATIONS,Ethical issues arise in many aspects of operations ma
47、nagement:,Financial statementsWorker safetyProduct safetyQualityThe environmentThe communityHiring and firing workersClosing facilitiesWorkers rights,HISTORICAL EVOLUTION OF OPERATIONS MANAGEMENT,HISTORICAL EVENTS IN OM,Industrial Revolution(1770s)Scientific Management(1911)Human Relations Movement(
48、1920-1960)Decision Models Management Science(1915,1940-70s)Quality Revolution(1970s-1990s)Globalization(1970s-)Information Age/Internet Revolution(1990s-),79,INDUSTRIAL REVOLUTION,Pre-Industrial RevolutionCraft production-System in which highly skilled workers use simple,flexible tools to produce sm
49、all quantities of customized goodsSome key elements of the industrial revolutionBegan in England in the 1770sDivision of labor-Adam Smith,1776Application of the“rotative”steam engine,1780sCotton Gin and Interchangeable Parts-Eli Whitney,1792Management theory and practice did not advance appreciably
50、during this period,80,SCIENTIFIC MANAGEMENT,Movement was led by efficiency engineer,Frederick Winslow TaylorBelieved in a“science of management”based on observation,measurement,analysis and improvement of work methods,and economic incentivesManagement is responsible for planning,carefully selecting
