Operations Management

Section 2 By

Pantea Alirezazadeh

Chapter 1

Introduction to Operations Management

Today we’ll address these questions:

1. What is Operations Management (OM)?2. Why should one study OM?

What are the three basic functions of a firm?

3. What are 10 decision areas of operations management?4. Where are the OM jobs?5. What are the changing challenges for the Operations Managers?6. How OM is related to productivity?

What is the productivity? How to measure productivity? What are the measurement problems that occur when one attempts

to measure productivity?

7. What are five reasons why productivity is difficult to improve in the service sector?

What is Operations Management?

OM is the set of activities that creates value in the form of goods and services by transforming inputs into output.

Example:

Why Should we study OM?

What are the three basic functions of a firm?

Marketing – generates demand Production/operations – creates the product Finance/accounting – tracks how well the organization is

doing, pays bills, collects the money

Organizing Charts for an

Service Organizations

and

manufacturing Organization

Continue : Why Should we study OM?

1. OM is one of three major functions (marketing, finance, and operations) of any organization and we study how people organize themselves for productive enterprise.

2. We want to know how goods and services are produced.

3. To understand what operations managers do.

4. It provides a major opportunity for an organization to improve its profitability and enhance its service to society.

What are 10 decision areas of operations management?

1. Product Design: What good or service should we offer? (chapter5)

2. Quality: How to define quality? (chapter 6 and 6 supp.)

3. Process: What process will these products require? (chapter 7,7supp.)

4. Location: Where should we put the facility? (chapter 8)

5. Layout: How should we arrange the facility? (chapter9)

6. Human Resources :How to provide a reasonable work environment? (10)

7. Supply Chain Management: should we make or buy this component?(11)

8. Inventory: How much inventory of each item should we have? (12, 14, 16)

9. Planning (aggregate and short-term): which job do we perform next? (13, 15)

10. Maintenance: who is responsible for maintenance? (17)

Where are the OM jobs?

Disciplines in operation part of organizations.

you need to have the knowledge of accounting, statistics, finance and OM.

Try to take courses in accounting, statistics, information systems and math.

About 40% of all jobs are in OM.

What are the changing challenges for the Operations Managers?

How OM is related to productivity?

What is the productivity? Productivity is the ratio of outputs (goods and services) divided

by one or more inputs (such as labor, capital, or management)

The operations manager’s job is to enhance this ratio of outputs to inputs.

Example

If units produced = 1000 and labor-hours used is 250

then:

Productivity = units produced / Input Used

Productivity = 1000/250 = 4 units labor-hour

The operations manager’s job is to enhance this ratio of outputs to inputs.

What are the measurement problems that occur when one attempts to measure productivity?

precise units of measure may be lacking, quality may not be consistent, and exogenous variables may change.

What are five reasons why productivity is difficult to improve in the service sector?

1. many services are labor intensive,2. they are individually (personally) processed

(the customer is paying for thatservice – the hair cut),

3. it may be an intellectual task performedby professionals,

4. it is often difficult to mechanize and automate, and

5. often difficult to evaluate for quality.

About Half of the 17-year-olds in the U.S. CANNOT Correctly Answer Questions of this type

Organization of the TextThe StrategicThe Strategic Designing the Designing the Importance ofImportance of Operating Operating Managing the Managing the Ensuring Ensuring

OperationsOperations SystemSystem Supply ChainSupply Chain QualityQuality

1.1. Introduction to Introduction to Operations and Operations and ProductivityProductivity

2.2. Operations Operations StrategyStrategy

A. Decision-Making A. Decision-Making ToolsTools

5. Products and 5. Products and ServicesServices

7. Processes 7. Processes StrategyStrategy

8. Location8. Location9. Layout9. Layout3. Project 3. Project

ManagementManagement

11.11. Supply Chain Supply Chain ManagementManagement

4. Forecasting4. Forecasting13. Aggregate 13. Aggregate

PlanningPlanning12.12. Inventory Inventory

ManagementManagementB. Linear B. Linear

ProgrammingProgramming16. Just-in-Time and 16. Just-in-Time and

Lean ProductionLean Production14. Enterprise 14. Enterprise

Resource Resource PlanningPlanning

15. Scheduling15. Scheduling

6. Quality 6. Quality ManagementManagement

S6. Statistical S6. Statistical Process Process ControlControl

D. Waiting Line D. Waiting Line ModelsModels

10.10. Human Human Resources in Resources in Operations Operations ManagementManagement

Will be coveredWill be covered Might be skippedMight be skipped

Assignment

Visit course website Install Excel OM on your laptop from CD. Read Chapter 2 and Module A by Jan 29. Assignment 1 is due to Jan 31.( You will have your first

quiz on Jan 31). I’ll post the first assignment by the end of this weekend( Jan 22).