Download - DS412:Intro
Introduction
DS 412Spring 2014
Outline
1. Define operations management.2. Three major functional areas of organization.3. Service vs. manufacturing operations.4. Decision making in operations management
(OM).
What is Operations Management?
Operations Management is:
The management of systems or processes that create goods and/or provide services.
The Organization
The Three Basic Functions
Organization
FinanceManage cash flows, assets and capital
investments
OperationsManage people,
equipment, material, technology,
information. Produce goods and
services.
MarketingMange customer
demand. Generate sales for
goods/services
Conversion of inputs into outputs
The Operations FunctionThe operations function involves the conversion of inputs into outputs
Value-added is the difference between the cost of inputs and the value or price of outputs.
Inputs Transformation/Conversion
process
Outputs Goods Services
Control
Value added
Labor FacilitiesEquipmentMaterialCapitalTechnology
Goals of the Transformation Process
1. To add valueValue added is the net increase between output
product value and input material value.
2. To improve efficiencyEfficiency – means performing activities well for
least possible cost.
DS 412 will cover several methods and approaches
to achieve these goals.
Manufacturing Goods vs. Providing ServicesKey Differences Goods Services
Output Tangible Intangible
Uniformity of input High Low
Uniformity of output
High Low
Customer contact Low High
Time lag High Short
Labor content Low High
Measuring productivity
Easier Harder
Quality assurance Easier Harder
Automobile assembly, steel making
Home remodeling, retail sales
Automobile Repair, fast food
Goods-Service Continuum
Computer repair, restaurant meal
Song writing, software development
Goods ServiceSurgery, teaching
Both use technology must forecast demandhave quality, productivity, & response issuescan have capacity, layout, and location issueshave customers, suppliers, scheduling and staffing issues
Many of the topics we cover in DS 412 apply to both services and manufacturing.
Similarities for Service/Manufacturers
Decisions in OMAll organizations make decisions and follow a similar path
First decisions – Strategic decisionsset the direction for the entire company; broad in scope and long-term in nature.
Second decisions – Tactical decisionsfocus on specific day-to-day issues like resource needs, schedules, & quantities to produce
Tactical and Strategic decisions must align
How are Decisions Made in OM?
Extensive use of: Models and Quantitative approaches.
Models are abstractions of reality.— Easy to use, less expensive.— Provide useful insight to the problem.— Enable “what if” questions. usually a Mathematical model
Caution: Numerical results may be over-emphasized over qualitativeinformation.Models may be poorly designed.
Analysis of trade-offs and priorities.What are the pros and cons?
Tradeoffs
Model Example
Real Life Problem
Abstract
Make Assumpitions
Model
What are the Key Questions/Decisions?
What: What resources/what amountsWhen: Needed/scheduled/orderedWhere: Work to be doneHow: DesignedWho: To do the work
To answer these questions , tradeoffs must be made on Cost? Quality? Time? Flexibility?All of the above? Some?
Organization of Text Book Chapter 1 IntroductionChapter 2 Strategy and CompetivenessChapter 3 Product Design & Process SelectionChapter 4 Supply Chain ManagementChapter 5 Total Quality ManagementChapter 6 Statistical Quality ControlChapter 7 Just in Time and Lean SystemsChapter 8 ForecastingChapter 9 Capacity Planning & Facility LocationChapter 10 Facility LayoutChapter 11 Work System DesignChapter 12 Inventory ManagementChapter 13 Aggregate PlanningChapter 14 Resource PlanningChapter 15 SchedulingChapter 16 Project ManagementSupplement B Introduction to Optimization
Strategic
TacticalWe will omit shaded chapters.The chapters we cover are shown in red: 1,5,6,8,9,12,16
Sequence of Topics in this Course
Chapter 1: Introduction to Operations ManagementChapter 8: ForecastingChapter 9: Capacity Planning & Facility LocationSupplement B: Introduction to OptimizationChapter 12: Inventory ManagementChapter 16: Project ManagementChapters 5 & 6: Quality Management