Introduction to Operations Management
Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
§ § Define the term operations management Identify the three major functional areas of organizations and describe how they interrelate 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 § Briefly describe the historicalevolution of operations management § Identify current trends that impact 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
The Three Basic Functions
The operations function involves the conversion of inputs into outputs Value added
Inputs Land Labor Capital Transformation/ Conversion process Feedback
Outputs Goods Services
Value-Added & Product Packages
§ Value-added is the difference between the cost of inputs and the value or price of outputs. § Product packages are a combination of goods and services. § Product packages can make a company more competitive.
Service Surgery, teaching Song writing, software development Computer repair, restaurant meal
Automobile Repair, fast food Home remodeling, retail sales Automobile assembly, steel making
Raw Vegetables Metal Sheets Water Energy Labor Building Equipment
Cleaning Making cans Cutting Cooking Packing Labeling
Doctors, nurses Hospital Medical Supplies Equipment Laboratories
Examination Surgery Monitoring Medication Therapy
Manufacturing or Service?
Production of Goods vs. Delivery of Services
§ Production of goods – tangible output § Delivery of services – an act § Service job categories § § § § § § § Government Wholesale/retail Financial services Healthcare Personal services Business services Education 1-12
1. Customer contact 2. Uniformity of input 3. Labor content of jobs 4. Uniformity of output 5. Measurement of productivity
6. Production and delivery 7. Quality assurance 8. Amount of inventory 9. Evaluation of work 10. Ability to patent design
Goods vs Service
Characteristic Customer contact Uniformity of input Labor content Uniformity of output Output Measurement of productivity Opportunity to correct problems Inventory Evaluation Patentable Goods Low High Low High Tangible Easy High Much Easier Usually Service High Low High Low Intangible Difficult Low Little Difficult Not usual 1-15
Scope of Operations Management
§ Operations Management includes:
§ § § § § § § § § Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities Supply chain management And more . . . 1-16
Types of Operations
Farming, mining, construction, manufacturing, power generation Storage/Transportation Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines Exchange Retailing, wholesaling, banking, renting, leasing, library, loans Entertainment Films, radio and television, concerts, recording Communication Newspapers, radio and television newscasts,...