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Chapter 1

Chapter 1. Introduction. The 3 Dimensions of Operations. The Realm of Operations. The Operations Function. Marketing. Operations. Finance. -Creating Demand -Production of goods -Acquisition and -Generating Sales & services, 80% of allocation of

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Chapter 1

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  1. Chapter 1 Introduction

  2. The 3 Dimensions of Operations

  3. The Realm of Operations

  4. The Operations Function Marketing Operations Finance -Creating Demand -Production of goods -Acquisition and -Generating Sales & services, 80% of allocation of both physical & capital human resources

  5. Tangible Act Manufacturing Service • Production of goods – tangible output • Delivery of services – an act

  6. Goods vs Service Steel productionAutomobile fabrication Home remodelingRetail sales Auto Repair Appliance repair Maid Service Manual car wash Teaching Lawn mowing High percentage goods Low percentage service Low percentage goods High percentage service

  7. Output Intangible Tangible Customer contact High Low Uniformity of input Low High Labor content High Low Uniformity of output Low High Measurement of productivity Difficult Easy Opportunity to correct Low High quality problems Manufacturing vs Service Characteristic Manufacturing Service

  8. An Operation As A Productive System Inputs Outputs Energy Transformation (Conversion) Process Materials Labor Goods or Services Capital Information Feedback information for control of process inputs and process technology

  9. What is Operations Mgmt.? • Creation and Distribution of Goods and Services • Procurement of Required Materials

  10. What is Operations Mgmt.? • The Traditional Model OM transforms factors of production into goods or services of higher value • The Business Process Model of the Firm OM is involved in doing or supporting the four core sets of business processes • Determining customer needs • Developing product strategy (product innovation) • Managing the entire supply chain • Managing non-value adding support activities

  11. Implications of the Business Process Perspective • Operations Managers Must Maintain a Cross-functional perspective • Concern about pleasing the customer is paramount • A resource balancing act: things, humans and information • The Operations Manager must wear many hats • Profit = MS1 x MS2x MS3 = market size x market share x margin on sales where margin on sales = price – cost

  12. Managing the Operations Subsystem • Functions of the operations manager: • Planning • Product Planning • Facilities Design • Organizing • Determines the activities required to achieve the operations subsystem’s goals. • Assign authority for carrying them out. • Controlling • Measure the outputs to see if theyconform to what has been planned.

  13. Functions of the operations manager Planning & Organizing Inputs -Management -Labor -Capital -Land Planning & Organizing The Conversion Process Outputs -Goods -Services Feedback to enhance control

  14. General Model for Production/Operations Management

  15. Tactical & Strategic Decisions

  16. Operations Management Decisions Indep. Demand Materials Requirement Planning Process Capacity -Process Selection -Choice of Tech. -Layout Facilities Decision Sched. Oper. Proj. Sched. Inventory Job Design Work Measure Managing Work Force Planning Quality Quality Control Quality Work Force

  17. Criteria for Operations Decisions • Cost • Quality • Concerned with the quality of product or service produced by operations • Dependability • May be measured by: • Percentage of stockout • Percentage of delivery promises met

  18. Criteria for Operations Decisions • Flexibility • Involves the ability of operations to make changes in product design or in the volume of product delivery

  19. Strategy Operations Management • Evolution of Strategy • Know thy enemy/Know the customer • Forces impacting strategy • Information technology/e-commerce • Increase customer participation/demands • Market growth opportunities may be limited • Your markets might be maturing • Geographic expansion opportunities may be limited • Two Basic Approaches • Focus on your core competencies (stick to your knitting) • Demand innovation—investigate your customers’ total needs and expand your product offering scope

  20. POM: An Evolutionary Perspective

  21. A More Complicated World Common Market U.S.A. CA. Eastern Block Remants Moslem World China Other Southern Hemisphere States Japan/Korea

  22. The Impact of Pace • Dimensions of Pace • Rate of new product introductions • Rate of new process technology introductions • Rate of new players—often global, introductions • Consequences thereof on: • Organization structure • Strategic processes • Manufacturing processes

  23. Future Challenges • To the OM function • Scarcity of worthwhile human resources • Deflation, inflation and/or currency fluctuations • A wired supply chain (is B2B still valid?) • Increased customer involvement • New product/process technologies • The Intellectual Property Challenge • Globalism • China / Japan / Europe / Mexico /So-called 3rd world

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