Operations Management Study Guide

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1: Operations and Productivity
I. What is Operations Management?
a. The business functions responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services. b. Production is the creation of goods and services

c. OM is the set of activities that create value in the form of goods and services by transforming inputs (human resources, facilities and processes, technologies, raw materials) into outputs (goods & services). d. Basic Management Functions: Planning, Organizing, Staffing, Leading, Controlling Strategic Decisions| Tactical Decisions|

* Broad in scope * Long-term in nature * All encompassing| * Narrow in scope * Short-term in nature * Concerning a small group of issues| II. Why Study OM?
e. We want and need to know how goods and services are produced f. We want to understand what operations managers do
g. OM is such a costly part of an organization
III. What OM people do: 10 Critical Decisions
1. Design of Goods and Services: What good or service should we offer? How should we design these products and services? 2. Managing Quality: How do we define quality? Who is responsible for quality? 3. Process and Capacity Design: What process and what capacity will these products require? What equipment and technology is necessary for these processes? 4. Location Strategy: Where should we put the facility? On what criteria should we base the location decision? 5. Layout Strategy: How should we arrange the facility? How large must the facility be to meet our plan? 6. Human Resources and Job Design: How do we provide a reasonable work environment? How much can we expect our employees to produce? 7. Supply-chain management: Should we make or buy this component? Who should be our suppliers and how can we integrate them into our strategy? 8. Inventory, Material requirements, planning, and JIT: How much inventory of each item should we have? When do we re-order? 9. Intermediate and short-term scheduling: Are we better off keeping people on the payroll during slowdowns? Which jobs do we perform next? 10. Maintenance: How do we build reliability into our processes? Who is responsible for maintenance? IV. Differences in Goods and Services

Services| Manufacturing (GOODS)|
* Intangible product * Product cannot be inventoried * High customer contact/interaction * Short response time * Labor intensive| * Tangible product * Product can be inventoried * Low customer contact * Longer response time * Capital intensive| V. Productivity- the ratio of outputs/inputs ** want to improve productivity!!!! h. Service Sector: segment of the economy including trade, financial, lodging, education, legal, medical & others. 80% will be doing service related jobs! i. Service Productivity: labor intensive, frequently focused on unique individual attributes or desires, intellectual task performed by professionals, difficult to evaluate for quality because the end product is hard to define j. ** See types of productivity and calculations

k. Productivity at Taco Bell: revised menu, easy preparation meals, efficient layout, training and employee empowerment, new water and energy saving grills

2: Operations Strategy in a Global Environment
I. A Global View of Operations: Reasons to Globalize
1. Reduce Costs: foreign locations with lower wage rates can lower direct and indirect costs. EX: outsourcing jobs, maquiladoras, WTO, NAFTA, EU 2. Improve Supply Chain: locating facilities closer to unique resources. EX: Auto design to California (expertise), Athletic shoe production to China (labor), Perfume manufacturing in France (raw materials) 3. Provide Better Goods and Services: to increase the number of on time deliveries, improved cultural understanding as a result of local presence...
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