Introduction to Operations Management

1. 1 Introduction to Operations Management

2. Learning Objectives • Define the term operations management. • 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.

3. Learning Objectives • Briefly describe the historicalevolution of operations management. • Definition of Supply Chain and value generation through supply chain. • Identify current trends that impact operations management.

4. Operations Management • Operations Management is: The management of systems or processes that create goods and/or provide services • Operations Management affects: • Companies’ ability to compete • Nation’s ability to compete internationally

5. Value added Inputs Outputs Transformation/ Land Goods Conversion Labor Services process Capital Feedback Control Feedback Feedback Value-Added Process Figure 1.2 The operations function involves the conversion of inputs into outputs

6. Goods-service Continuum Figure 1.3 Goods Service Surgery, teaching Song writing, software development Computer repair, restaurant meal Automobile Repair, fast food Home remodeling, retail sales Automobile assembly, steel making

7. Key Differences 1. Customer contact 2. Uniformity of input 3. Labor content of jobs 4. Uniformity of output 5. Measurement of productivity

8. Key Differences 6. Production and delivery 7. Quality assurance 8. Amount of inventory 9. Evaluation of work 10. Ability to patent design

9. Goods vs Service

10. Figure 1.4

11. Employment in Turkish Industry

12. 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

13. Operations Management Decision Making • Models • Quantitative approaches • Analysis of trade-offs • Systems approach • Establishing priorities • Ethics

14. Key Decisions of Operations Managers • What What resources/what amounts • When Needed/scheduled/ordered • Where Work to be done • How Designed • Who To do the work

15. System Design – capacity – location – arrangement of departments – product and service planning – acquisition and placement of equipment Decision Making

16. System operation – personnel – inventory – scheduling – project management – quality assurance Decision Making

17. Decision Making • Models • Quantitative approaches • Analysis of trade-offs • Systems approach

18. Physical – – Schematic – Mathematical Models A model is an abstraction of reality. Tradeoffs What are the pros and cons of models?

19. 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

20. Limitations of Models • 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

21. Quantitative Approaches • Linear programming • Queuing Techniques • Inventory models • Project models • Statistical models

22. Analysis of Trade-Offs • Decision on the amount of inventory to stock • Increased cost of holding inventory Vs. • Level of customer service

23. Suboptimization Systems Approach “The whole is greater than the sum of the parts.”

24. 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. How do we identify the vital few?

25. Ethical Issues • Financial statements • Worker safety • Product safety • Quality • Environment • Community • Hiring/firing workers • Closing facilities • Worker’s rights

26. Historical Evolution of Operations Management Table 1.7 • Industrial revolution (1770’s) • Scientific management (1911) • Mass production • Interchangeable parts • Division of labor • Human relations movement (1920-60) • Decision models (1915, 1960-70’s) • Influence of Japanese manufacturers

27. Trends in Business • Major trends • The Internet, e-commerce, e-business • Management technology • Globalization • Management of supply chains • Outsourcing • Agility • Ethical behavior

28. 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

29. Suppliers’ Suppliers DirectSuppliers Final Consumer Distributor Producer Simple Product Supply Chain Figure 1.7 Supply Chain: A sequence of activities And organizations involved in producing And delivering a good or service

30. A Supply Chain for Bread