opm lect 1
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INTRODUCTION OF OPERATIONS
MANAGEMENT
WHAT IS OPERATIONS MANAGEMENT
• Operations Management is concerned with the production of goods and services . In conjunction with other functional areas it also deals with the management of resources (inputs) and the distribution of finished goods and services to customers (outputs)
Value-Added
The difference between the cost of inputs and the value or price of outputs.
Inputs Land Labor Capital
Transformation/Conversion
process
Outputs Goods Services
Control
Feedback
FeedbackFeedback
Value added
• Operations Management includes:– Forecasting– Capacity planning– Scheduling– Managing inventories– Assuring quality– Motivating employees– And more . . .
Introduction to Operations Management
A Preview of Operations Management
• Introduction
Organizational Levels– Executive
Management– Operations
Management– Operations
Why Study Operations Management?
Business Education
Systematic Approach to Org. Processes
Career Opportunities
Cross-Functional Applications
OperationsManagement
Manufacturing Operations• Types of Manufacturing Operations
– Based on Processing after Order• Make-to-order (MTO)• Make-to-stock (MTS)• Assemble-to-order (ATO)
– Based on System Flexibility / Economics• The Job Shop• Batch Production • Line-Flow Production (and Continuous Flow)• Project Manufacturing
Manufacturing Operations
• Types of Manufacturing Operations
A BA B
C DC D
A D BA D B
C B AC B A
Product 1
Product 2
Product 1
Product 2
Job Shop Line-Flow
Service Operations
• Defining Services– The Transformation Process
Inputs Process Output
Performance Measurement
CLASSIFICATION OF SERVICE OPERATIONS
•Extent of service contact.•Extent of service customization.•Extent of relationship between customer and firm.
High Contact Services
• Customer is an essence in the production of services.
• Scheduling is difficult as customer demand varies.
• Work force attitude effects the customer’s view of the services.
LOW CONTACT SERVICES
• Customer cannot strongly influence the process by which the service is provided.
• Standardization makes managerial control easy and straightforward.
• Low contact service firms tend to have a systematic and predictable operation.
Service Operations
• Defining ServicesGoods Services
100% 75 50 25 0 25 50 75 100%
Video Rental Stores
Appliance Stores
Florists
Fast-food Restaurants
Gourmet Restaurants
Lawn Services
Hospitals
Banks
Manufacturing vs Service
CharacteristicOutput
Customer contact
Uniformity of input
Labor content
Uniformity of output
Measurement of productivity
Opportunity to correct
ManufacturingTangible
Low
High
Low
High
Easy
High
ServiceIntangible
High
Low
High
Low
Difficult
Lowquality problems
High
Service Operations
• Discussion Questions • 1. Why are quality and productivity more difficult
to measure in service operations than manufacturing operations?
2. In what ways might the management style of a service operations manager differ from that of a manufacturing operations manager?
3. For some service industries with which you are familiar, describe some ways they are trying to improve productivity.
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