om lecture 1
TRANSCRIPT
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Lecture 1Instructor Zia-ur-Rehman
Email [email protected]
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Operations Management involves:` Product and Service design` Process selection` Selection and management of technology` Design of work systems` Location planning`
Facilities planning` Quality improvement of the organization¶s products
and services
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Operations management can be defined as:` ³The management of systems or processes that create
goods and/or provide services´` ³The ongoing activities of designing, reviewing and
using the operating system, to achieve service outputsas determined by the organization for customers´.
Contd.
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G oods & ServicesG oods & Services
` Services` Intangible product` Services cannot be
inventoried` High customer contact` Short response time
` Labor intensive
` M anufacturing` Tangible product` Product can be
inventoried` Low customer contact` Longer response time
` Capital intensive
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P roduction of G oods vs Delivery of P roduction of G oods vs Delivery of ServicesServices
Production of goods results in a tangible output.
G overnment (federal, state, local).Wholesale/retail (clothing, food, appliances, stationery, toys, etc.).Financial services (banking, stock brokerages, insurance, etc.).Health care (doctors, dentists, hospitals, etc.).Personal services (laundry, dry cleaning, hair/beauty, gardening, etc.).Business services (data processing, e-business, delivery, employmentagencies, etc.).Education (schools, colleges, etc.)
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O n the other hand«O n the other hand«
` Both use technology` Both have quality, productivity, & response
issues`
Both must forecast demand` Both will have capacity, layout, and location
issues` Both have customers, suppliers, scheduling
and staffing issues` M anufacturing often provides services` Services often provides tangible goods
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DifferencesDifferences Between G oods andBetween G oods andServiceService
Degree of customer contact.Uniformity of input.Labor content of jobs.
Uniformity of output.Measurement of productivity.Production and delivery.Quality assurance.
Amount of inventory.Evaluation of work.
Ability to patent design.
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O RGAN IZAT ION
Finance Operations Marketing
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Typical O rganization ChartTypical O rganization Chart
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` Finance: T his area is responsible for securingfinancial resources at favorable prices andallocating those resources throughout the
organization.` Marketing: T his area is responsible for assessing
consumer wants and needs, and selling andpromoting the organization¶s goods or services.
Contd.
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` Operations: T his area is responsible for producingthe goods or providing the services offered by theorganization.
` In other words the role of operations managementis to transform a company¶s inputs into thefinished goods or services.
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It involves:` Inputs: T hat is capital, labor, land and information` T ransformational Processes: T hat is storing,
transporting, cutting etc.` Outputs: T hat is goods and services.
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I nputsI nputs OutputsOutputsConversionConversionSubsystemSubsystem
Production SystemProduction System
ControlControl
SubsystemSubsystem
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OM¶ s T ransformation P rocessOM¶ s T ransformation P rocess
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OM¶ s T ransformation P rocessOM¶ s T ransformation P rocess
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` T he essence of the operations function is to addvalue during the transformation process.
` Value Added: It is the term used to describe the
difference between the cost of inputs and thevalue or price of outputs.or
` T he net increase created during the
transformation of inputs into final outputs.
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Firms use the money generated by value-added for ` Research and development,` Investment in new facilities and equipment,` Worker salaries, and,` Profits.
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Value-Added: T he difference between the cost of inputs and the value or price of outputs.
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OM¶ s Transformation RoleOM¶ s Transformation Role
` To add value
Increase product value at each stage
Value added is the net increase between output product value
and input material value
` Provide an efficient transformation
Efficiency ± means performing activities well for least possible
cost
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Introduction to operations M anagementIntroduction to operations M anagement
` Operations: All activities that involved in theConversion Process of Input to Output
(G oods/service)
` Management: T he Process of Planning, Organizingand Controlling in achieving the desired objectives.
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Introduction to O perationsIntroduction to O perations M anagementM anagementUniversity as an Example:University as an Example:
Input Planning &controlling
SupportiveSubsystems
Output
Students
Professor
Buildings
Class T imes
CourseDevelopment
SchoolRegulations
Book store
Library
Computer Lab
Educated
Students
ResearchOutcomes
Service toPublic
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Scheduling / Capacity Planning / Purchasing / QualityControl / Facility Location & Layout / Production andProcess Design / Job Design / Maintenance / Project
Management / ««
Functions of Operations Management
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Operations Management as
a Function
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` Degree of customer involvement, and` Degree to which technology is used to produce
and/or deliver a product or service.
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Intangibility
Perishability
Heterogeneity
Inseparability
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Simple Flowchart for Delivery of
People-Processing Service
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P ossession- P rocessing Service
Simple Flowchart for Delivery
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Simple Flowchart for Delivery of
Mental St imulus Processing Service
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Simple Flowchart for Delivery of I nforma t ion-Processing
Service
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T he Scope of O perationsT he Scope of O perationsM anagementM anagement
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