2167 operations management

8/2/2019 2167 Operations Management

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What Is OperationsManagement?


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What Is Operations Management? Operations for products and services. Where quality fits in. Customer orientation


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An operation is

the process of changing

inputs into outputs

through some type of

transformation system,

thereby adding value.


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A manager is

someone who plans, acquires and

manages resources needed to meet specificobjectives.

PLANS

ACQUIRES

MANAGES


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Operations Management

Management of the conversion process

which transforms inputs such as rawmaterial and labour into outputs in theform of finished goods and services.

Transformation ProcessTransformation Process

InputsInput

s

(materials,(materials,

employeesemployees

and/orand/or

customers)customers)

OutputsOutpu

ts

(Products(Products

andand

services)services)


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Operations function

Inputs:

Land

Labour

Capital

Transformation

Process

Outputs:

Goods

Services

Control

Feedback

FeedbackFeedback

Value Added


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Types of OperationsOperations Examples

Goods Producing Farming, mining, construction,

manufacturing, power generationStorage/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, telephone, satellites


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Transformation process at a Food Processor

Inputs Process Output

Raw Vegetables

Metal SheetsWater

Energy

Labour

BuildingEquipment

Cleaning

Making cansCutting

Cooking

Packing

Labelling

Canned

vegetables


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Transformation process at a Hospital

Inputs Process Output

DoctorsNurses

Building

Medical

suppliesEquipment

Labs

ExaminationSurgery

Monitoring

Medication

Therapy

Healthypatients


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ExamplesOrganization Inputs Transformation Process Outputs


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Relationships for Typical Systems


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Products vs. Services Products

Tangible

Can beinventoried

No interaction

betweencustomer andprocess

Services

Intangible

Cannot beinventoried

Direct

interactionbetweencustomer and

process


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Services as a Percent of Gross Domestic Product(GDP) for Different Countries

Source: The World Fact book 2000, Central

Intelligence Agency, Washington, DC.


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Goods vs. Services

Differences Goods

(Produce a car)

Services

(Teach a class)

Output Tangible Intangible

Customer contact Low High

Uniformity of input High Low

Labor content Low HighQuantity of Output High Low

Measurement ofproductivity

Easy Difficult

Quality assurance Easy Difficult


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Steel productionAutomobile fabrication

House buildingRoad construction

DressmakingFarming

Auto repairAppliance repair

Maid ServiceManual car wash

TeachingLawn mowing

Lows

ervicecontent

Highgoodsconten

t

High service contentLow goods content

goods

service

Goods-servicecontinuum.

Most products

include bothelements


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Differentiating features of Operations Systems

A number of features differentiate operations systems

Degree of product standardization (standardizedvs. customized)

Type of process (quantity of output)

Production of goods vs. services


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Product / Process Matrix

Mass

Customization

Project/

Unit

Production

Batch

Production/Job Shop

Mass

Production

Continuous

ProductionVolume

Degree of Standardization

High Variety Low Variety


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Operations Management

We want to manage the operations to

make them more productive.

The meaning of efficiency, productivityand effectiveness .


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Some terms you hear

Efficiency is output over input . If we dothings more efficiently it takes less effort.

If we waste less in the process then we getmore output for a given amount of input.

Productivity is the amount of productmade for a unit of input. # of pieces per

hour or per person. Rate for a unit of someinput.

Effectiveness is the power to get it done.May not consider cost of inputs.


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Is OM functionadding value duringthe transformationsprocess? What isadded value? (Thedifference between

the cost of inputs andthe price of outputs)

Is there anyoverlapping betweenthe main functions?

Three basic functions

Operations

Marketing Finance


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Role of OM within an Organization


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The scope of Operations ManagementDecision area Basic question Chapter

Forecasting What will the demand be? 3

Product/ service design What customers want? How to improve products/services? 4

Capacity How much capacity will be needed? 5

Process What processes should be used? 6

Layout What is the best arrangement for the departments? 7

Location What is the best location for our next hotel? 8

Quality How to define quality? How to improve it? 9

Inventory How much to order? 11

Aggregate planning How much capacity will be needed over the medium term? 12

JIT systems How to coordinate production and purchasing? 14

Scheduling How to schedule jobs, staff? 15

Supply Chain Management Which supplier to choose? 16


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Linking OM to Customers and Suppliers

Benefits of Buffering the

Transformation ProcessThe process was not disturbed by

environmental interaction.


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Linking OM to Customers and Suppliers

Benefits of Buffering theTransformation Process

Productivity was maximized whenprocesses operated at continuousrates.

Process management skills weredifferent from those of otherfunctional activities.

2167 operations management

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