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Chap001 - Introduction To Operations Management
Chap001 - Introduction To Operations Management
Operations Management
William J. Stevenson
8th edition
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CHAPTER
McGraw-Hill/Irwin
Operations Management, Eighth Edition, by William J. Stevenson Copyright 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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Operations Management
Figure 1.1
The management of systems or processes that create goods and/or provide services
Organization
Finance
Operations
Marketing
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Value-Added
Figure 1.2
The difference between the cost of inputs and the value or price of outputs.
Value added
Inputs Land Labor Capital Transformation/ Conversion process
Feedback
Control
Feedback Feedback
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Goods-service Continuum
Figure 1.3
Steel production Home remodeling Auto Repair Maid Service Teaching Automobile fabrication Retail sales Appliance repair Manual car wash Lawn mowing
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Food Processor
Processing
Cleaning Making cans Cutting Cooking Packing Labeling
Table 1.2
Inputs
Raw Vegetables Metal Sheets Water Energy Labor Building Equipment
Outputs
Canned vegetables
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Hospital Process
Processing
Examination Surgery Monitoring Medication Therapy
Table 1.2
Inputs
Doctors, nurses Hospital Medical Supplies Equipment Laboratories
Outputs
Healthy patients
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Manufacturing or Service?
Tangible
Act
1-9
Government Wholesale/retail Financial services Healthcare Personal services Business services Education
Key Differences
1.
2. 3. 4. 5. 6. 7. 8.
Customer contact Uniformity of input Labor content of jobs Uniformity of output Measurement of productivity Production and delivery Quality assurance Amount of inventory
Manufacturing vs Service
Manufacturing Service
Tangible Low
High
Characteristic
Output
Customer contact Uniformity of input Labor content Uniformity of output
Intangible
High Low High Low Difficult Low
Low
High Easy
High
Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities And more . . .
Types of Operations
Examples
Table 1.4
Operations
Goods Producing
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, telephone, satellites
Figure 1.4
U.S. Manufacturing vs. Service Employment
Year Mfg. Service 45 79 21 50 72 28 55 72 28 60 68 32 65 64 36 70 64 36 75 58 42 80 44 46 85 43 57 90 35 65 95 32 68 00 30 70
100 80
Percent
60 40 20 0 45 50 55 60 65 70 75 80 85 90 95 00 Year
Planning
Capacity Location Products & services Make or buy Layout Projects Scheduling Inventory Quality Costs Productivity
Organizing
Degree of centralization Process selection
Staffing
Hiring/laying off Use of Overtime
Directing
Incentive plans Issuance of work orders Job assignments
Controlling/Improving
What
What resources/what amounts
When
Needed/scheduled/ordered
Where
Work to be done
How
Designed
Who
To do the work
Decision Making
System Design
capacity location arrangement of departments product and service planning acquisition and placement of equipment
Decision Making
System operation
personnel inventory scheduling project management quality assurance
Decision Making
Models
Tradeoffs
Easy to use, less expensive Require users to organize Systematic approach to problem solving Increase understanding of the problem Enable what if questions Specific objectives Consistent tool Power of mathematics Standardized format
Quantitative Approaches
Linear programming Queuing Techniques Inventory models Project models Statistical models
Systems Approach
Suboptimization
Pareto Phenomenon
A few factors account for a high percentage of the occurrence of some event(s). 80/20 Rule - 80% of problems are caused by 20% of the activities.
Figure 1.5
Operations
Marketing
Finance
Operations Interfaces
Industrial Engineering Maintenance
Distribution
Purchasing
Operations
Public Relations
Legal
Personnel
Accounting MIS
Human relations movement (1920-60) Decision models (1915, 1960-70s) Influence of Japanese manufacturers
Trends in Business
Major trends
The Internet, e-commerce, e-business Management technology Globalization Management of supply chains Agility
Direct Suppliers
Producer
Distributor
Final Consumer
Supply Chain: A sequence of activities And organizations involved in producing And delivering a good or service
Stage of Production
Farmer produces and harvests wheat Wheat transported to mill Mill produces flour Flour transported to baker
Value of Product
$0.15 $0.23 $0.38 $0.46
$0.54
$0.08 $0.21 $1.29
$1.00
$1.08 $1.29
Ethical behavior Operations strategy Working with fewer resources Cost control and productivity Quality and process improvement Increased regulation and product liability Lean production