unm mgt 300 slides fall 2004

8/11/2019 UNM MGT 300 Slides Fall 2004

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McGraw-Hill/Irwin

Operations Management, Seventh Edition, by William J. Stevenson

Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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INTRODUCTIONPART ONE

UNM Management 300

Operations ManagementMonday/Wednesday

8:009:15 am


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Introductionto

OperationsManagement


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Operations Management

Organization

Finance Operations Marketing

The management of systems or processes thatcreate goods and/or p rovide services

Text Book Definition

Operations managementis the set of activities that creates value

in the form of goods and services by transforming inputs into

outputs


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The Heritage of Operations Management

Division of labor (Adam Smith 1776 and Charles Babbage 1852)

Standardized parts (Whitney 1800)

Scientific Management (Taylor 1881)Coordinated assembly line (Ford/Sorenson/Avery 1913)

Gantt charts (Gantt 1916)

Motion study (Frank and Lillian Gilbreth 1922

Quality control (Shewhart 1924; Deming 1950)

Computer (Atanasoff 1938)

CPM/PERT (DuPont 1957)


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The Heritage of Operations Management Cont

Material requirements planning (Orlicky 1960)

Computer aided design (CAD 1970)

Flexible manufacturing system (FMS 1975)

Baldrige Quality Awards (1980)Computer integrated manufacturing (1990)

Globalization(1992)

Internet (1995)

For 25 Extra Credit Points: F ind at least 3 signif icant

changes/innovations in OM that have occur red since 1995.

Due Monday 8/30/04


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1-6 MY CHOICE FOR THE BIG GUNS OF OPERATIONS MANAGEMENT

Eli Whitney

Born 1765; died 1825

In 1798, receivedgovernment contract to make10,000 muskets

Showed that machine toolscould make standardized

parts to exact specifications Musket parts could be used in

any musket 1995 Corel Corp.


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1-7 My Chocie For the Big Guns of Operations Research

Frederick W. Taylor


Known as father of scientific

management

In 1881, as chief engineer forMidvale Steel, studied how taskswere done

Began first motion & time studies Created efficiency principles

1995 Corel Corp.





1-8 My Choice For The Big Guns Of Operations Management

Frank & Lillian Gilbreth Frank (1868-1924); Lillian

(1878-1972)

Husband-and-wifeengineering team

Further developed workmeasurement methods

Applied efficiency methodsto their home & 12

children! (Book & Movie: Cheaper

by the Dozen, book:

Bells on Their Toes)

1995 Corel Corp.





1-9 My Choice For The Big Guns Of Operations Management

Henry Ford In 1903, created Ford

Motor Company

Born 1863; died 1947 In 1913, first used

moving assembly lineto make Model T

Unfinished productmoved by conveyorpast work station

Paid workers very well for 1911 ($5/day!)

Make them all

alike!

1995 CorelCorp.





1-10 My Choice For The Big Guns of Operations Management

W. Edward Deming


Engineer & physicist

Credited with teaching

Japan quality controlmethods in post-WW2

Used statistics to analyze

process His methods involve

workers in decisions





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Operations Management includes:

Forecasting

Capacity planning

Scheduling

Managing inventories

Assuring quality

Motivating employees

And more . . .

Introduction to Operations Management





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Business Operations Overlap

Marketing

Operations

Finance






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Operations Management Enables

You To Be Competitive On:

Cost

Quality Flexibility

Speed To Market





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Steel production

Automobile fabrication

House building

Road construction

Dressmaking

Farming

Auto Repair

Appliance repair

Maid Service

Manual car wash

Teaching

Lawn mowing

Low service content

High goods content

High service content

Low goods content

Increasinggoods contentIncreasing

service content

Goods-service continuum


I t d ti t O ti M t





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Stage of Production ValueAdded

Value ofProduct

Farmer produces and harvests wheat $0.15 $0.15

Wheat transported to mill $0.08 $0.23

Mill produces flour $0.15 $0.38

Flour transported to baker $0.08 $0.46

Baker produces bread $0.54 $1.00

Bread transported to grocery store $0.08 $1.08

Grocery store displays and sells bread $0.21 $1.29

Total Value-Added $1.29


Ops Management Is All About Value Added

1 16 I t d ti t O ti M t





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Value-Added

The difference between the cost of inputsand the value or price of outputs.

InputsLand

Labor

Capital

Transformation/

Conversion

process

OutputsGoods

Services

Management

Feedback

FeedbackFeedback

Value added







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Operations Management Interfaces

Public Relations

Accounting

IndustrialEngineering

Operations

Maintenance

PersonnelPurchasing

Distribution

MIS







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OM Strategy/Decision Making Determines:

System DesignCapacity/based on Forecasts

Location/based on customers

Arrangement of departments/based on productivity

Product and service planning/based on customer demands

Acquisition and placement ofequipment/based on productivity







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OM Strategy/Decision Making Determines:

System operationpersonnelinventoryscheduling

projectmanagement

quality assurance


1 20 Introduction to Operations Management





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Type of Operations We Will Cover

Project

Aircraft carrier

Batch production

PrintersMass production

Automobiles

Continuous productionGasoline







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Key Differences BetweenProduction & Services

Amount of Customer contact Uniformity of inputs

Labor content

Uniformity of output Measurement of productivity

Quality assurance

These differences are beginning to fadein many cases




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Manufacturing vs Service

CharacteristicOutput

Customer contact

Uniformity of input

Labor content

Uniformity of output

Measurement of productivity

Opportunity to correct

ManufacturingTangible

Low

High

Low

High

Easy

High

ServiceIntangible

High

Low

High

Low

Difficult

Lowquality problems

High


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Type of Models

A model is an abstraction of reality used to

aid management decision making.

Physical/ e.g. Plant Layout

Schematic/Product Blueprint

Mathematical/Forecast Model

What are the pros and cons of models?

Tradeoffs




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Quantitative ModelingApproaches We Will Study

Linear programming

Queuing Techniques

Inventory models

Project models

Statistical models


1-25 Introduction to Operations Management


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Responsibilities of an Operations Manager

Products & services

Planning Capacity Location

Make or buy Layout Projects SchedulingControlling

Inventory Quality

Organizing Degree of centralization SubcontractingStaffing Hiring/laying off Use of OvertimeDirecting Incentive plans Issuance of work orders

Job assignments




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Systems ApproachThe who le is greater than the sum of the parts.

But what is the whole system? Peter Checkland has pointed out that there

are no such things as systems in the real world waiting to be identified;rather we choose to identify a certain collection of people and things as a

system. To talk about systems is to talk about a way of looking at the

world, not the way.

Suboptimization




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Pareto Phenomenon

A vital few things are important for reachingan objective or solving a problem.

80/20 Rule - 80% of problems are caused by

20% of the activities.

How do we identify the vital few?


1-28 Pareto and Juran


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1 28 Pareto and Juran

How Pareto got credit proving that youcan get credit even when you dont deserve it.

All you need is to have it sound good.

In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describethe unequal distribution of wealth in his country, observing that twenty percent of thepeople owned eighty percent of the wealth. In the late 1940s, Dr. Joseph M. Juraninaccurately attributed the 80/20 Rule to Pareto, calling it Pareto's Principle. While itmay be misnamed, Pareto's Principle or Pareto's Law as it is sometimes called, can bea very effective tool to help you manage effectively.

Where It Came From

After Pareto made his observation and created his formula, many others observedsimilar phenomena in their own areas of expertise. Quality Management pioneer, Dr.Joseph Juran, working in the US in the 1930s and 40s recognized a universal principlehe called the "vital few and trivial many" and reduced it to writing. In an early work, alack of precision on Juran's part made it appear that he was applying Pareto'sobservations about economics to a broader body of work. The name Pareto's Principlestuck, probably because it sounded better than Juran's Principle.

As a result, Dr. Juran's observation of the "vital few and trivial many", the principle that

20 percent of something always are responsible for 80 percent of the results, becameknown as Pareto's Principle or the 80/20 Rule. You can read his own description of theevents in the Juran Institute article titled Juran's Non-Pareto Principle.

http://clk.about.com/?zi=1/XJ&sdn=management&zu=http%3A%2F%2Fwww.juran.com%2Fresearch%2Farticles%2FSP7518.htmlhttp://clk.about.com/?zi=1/XJ&sdn=management&zu=http%3A%2F%2Fwww.juran.com%2Fresearch%2Farticles%2FSP7518.htmlhttp://clk.about.com/?zi=1/XJ&sdn=management&zu=http%3A%2F%2Fwww.juran.com%2Fresearch%2Farticles%2FSP7518.htmlhttp://clk.about.com/?zi=1/XJ&sdn=management&zu=http%3A%2F%2Fwww.juran.com%2Fresearch%2Farticles%2FSP7518.html


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The Internet

E-Business

Supply Chain Management

Recent Trends (Last 10 Years)Effecting/Changing

OM Principles




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Suppliers

Suppliers

Direct

Suppliers Producer

DistributorFinal

Consumer

Simple Product Supply Chain(But It Never Really Looks Like This)




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The Things In OM That Havent Changed

Quality and process improvement

Technology

Globalization

Operations strategy Environmental issues


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