Production and Operations

Management
Spring 2012

Foundations of Operations Management, Canadian Edition

Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

Reference
Larry P. Ritzman. Foundations of
Operations Management. China Renmin
University Press ,Aug. 2004.
Or latter edition

Foundations of Operations Management, Canadian Edition

Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Grading
Exams:
60%
Attendance,quiz and assignments:
40%

Foundations of Operations Management, Canadian Edition

Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Chapter 1

Competing with
Operations
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

What Is a Process?
Process
Activities that transform inputs, add value
and generate output(s)

Example: Furniture Manufacturing

Primary Process
Cutting or staining wood

Non-Manufacturing Process
Controlling Inventory
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Processes & Operations

Internal and
external customers

Inputs

Workers
Managers
Equipment
Facilities
Materials
Services
Land
Energy

Figure 1.1

Processes and
operations
1

Outputs

3
5

Services
Goods

Information on
performance
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Nested Processes at a Large

Bank
BANK

Operations

Retail

Products

Wholesale

Cash Management
Loan operations
Trading operations
Others

Distribution
Compliance
Finance
Human resources

Auto Finance
Cards
Mortgages
Others

Trading
Loan administration
Leasing
Others

ATM support
Customer transactions
Service quality
Others

Teller line transactions

Track branch sales
ATM hotline
Others

Credit applications
Manage retail products
Originate lease portfolio
Others

Fund management
Market making spot
Dealer support
Others

Maintain cards
Research problems
Site analysis
Others

Process deposits
Cash checks
Safe deposit boxes
Others

Loan documentation
Review credit standing
Obtain manager approval
Others

Prepare reports
Attend meetings
Input funds deals
Others

Figure 1.2
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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What Is Operations
Management?
Efficiently using processes to transform
inputs into valuable outputs
Successful operations management
results from careful allocation of:
Human Resources
Capital
Information
Materials
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Operations Management as a
Function

Figure 1.3

Foundations of Operations Management, Canadian Edition

Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Operations Management As
a Function
Skill Areas
Quantitative methods
Organizational
behavior
General management
Information systems
Economics
International business
Business ethics
and law
Figure 1.3
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Trends & New Challenges in

Operations Management
Growth of the Service Sector
Intense Productivity pressures
Global Competition
Firms can no longer hide behind borders

Ethics, Diversity & Environmental Issues

Conflicting business protocol
Cultural dilemmas
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Service Sector Jobs

Foundations of Operations Management, Canadian Edition

Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Strategic Considerations
Business Environment
Continuous Environmental Scanning is necessary

Flexibility
Capacity to meet ever-changing client demands

Core Competencies
Using the firms unique strengths to seize
opportunities
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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The Importance of Market

Analysis
Market Segmentation
identify groups or sub-groups of clients

Needs Assessment
identify the requirements of each group
Product or service needs
Delivery system needs
Volume needs
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Selecting Competitive Priorities

Corporate strategy
goals
core competencies
environmental responses
new products/services
global strategies

Competitive Priorities
Cost
1. Low-cost operations
Quality Market
2.analysis
High-performance design
segmentation
3.assessment
Consistent quality
needs
Time
4. Fast delivery
5. On-time delivery
6. Development speed
Flexibility 7. Customization
8. Volume flexibility
Figure 1.5
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Selecting Competitive Priorities

Corporate strategy
goals
core competencies
environmental responses
new products/services
global strategies

Market analysis
segmentation
needs assessment
Competitive priorities
Operations Marketing
cost
quality
Finance
time
flexibility Others

Figure 1.5

Capabilities
current
needed
plans

Functional area strategies

finance
marketing
operations
others
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Strategy and Decisions

Corporate strategy
Market analysis
Competitive priorities
Figure 1.8

Operations strategy

Services
Standardized services
Assemble-to-order
Customized services

Manufacturing
Make-to-stock
Assemble-to-order
Make-to-order

Foundations of Operations Management, Canadian Edition

Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Examples of Service
Strategies
Standardized services
Canada Post

Assemble-to-order
Cable companies (pre-arranged packages)
Customized services
Health clinics
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Health Clinic Process

R
T

Figure 1.6

D:
R:
T:
B:
P:

P
B

Doctor (examination rooms)

Radiology (X-ray)
Triage (assess severity of illness)
Blood (lab test)
Pharmacy (fill prescriptions)

Foundations of Operations Management, Canadian Edition

Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

1-19

Health Clinic Process

Physical exam
Physical exam

R
T

Figure 1.6

D:
R:
T:
B:
P:

P
B

Doctor (examination rooms)

Radiology (X-ray)
Triage (assess severity of illness)
Blood (lab test)
Pharmacy (fill prescriptions)

Foundations of Operations Management, Canadian Edition

Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

1-20

Health Clinic Process

Physical exam
Physical exam

Broken arm

Broken arm

Figure 1.6

D:
R:
T:
B:
P:

B
Doctor (examination rooms)
Radiology (X-ray)
Triage (assess severity of illness)
Blood (lab test)
Pharmacy (fill prescriptions)

Foundations of Operations Management, Canadian Edition

Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

1-21

Health Clinic Process

Physical exam
Physical exam

Flu

Broken arm

Broken arm

Flu

Figure 1.6

D:
R:
T:
B:
P:

Doctor (examination rooms)

Radiology (X-ray)
Triage (assess severity of illness)
Blood (lab test)
Pharmacy (fill prescriptions)

Foundations of Operations Management, Canadian Edition

Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Examples of
Manufacturing Strategies
Make-to-stock
Mass-produced automobiles

Assemble-to-order
Upscale Unique Furniture

Make-to-order
High-end homes
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Automobile Assembly
Process
A

Figure 1.7

A: Front-end body-tochassis assembly

H: Hood attachment
F: Fluid filling
S: Start-up testing
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Automobile Assembly
Process
A

Figure 1.7

A: Front-end body-tochassis assembly

H: Hood attachment
F: Fluid filling
S: Start-up testing
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

1-25

Automobile Assembly
Process
A

Figure 1.7

A: Front-end body-tochassis assembly

H: Hood attachment
F: Fluid filling
S: Start-up testing
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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Strategy and Decisions

Corporate strategy
Market analysis
Competitive priorities
Operations strategy
Services

Manufacturing

Process
decisions
Standardized
services Make-to-stock
Assemble-to-order
Assemble-to-order
Quality
decisions
Customized services
Make-to-order
Capacity, location, and layout decisions
Operating decisions
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

Figure 1.8

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Strategy and Decisions

Corporate strategy
Market analysis
Competitive priorities
Operations strategy
Services
Manufacturing
Standardized services Make-to-stock
Assemble-to-order
Assemble-to-order
Customized services
Make-to-order

Process decisions
Quality decisions
Capacity, location, and layout decisions
Operating decisions
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

Figure 1.8

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Strategy and Decisions

Corporate strategy
Market analysis
Competitive priorities

Capabilities

Operations strategy
Services
Manufacturing
Standardized services Make-to-stock
Assemble-to-order
Assemble-to-order
Customized services
Make-to-order

Process decisions
Quality decisions
Capacity, location, and layout decisions
Operating decisions
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

Figure 1.8

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Cross-Functional
Coordination
Removing barriers between departments
Moving from sequential decision-making to
coordination leads to:
Improved communication
More accurate market information
More timely internal feedback
Foundations of Operations Management, Canadian Edition
Ritzman, Krajewski, Klassen 2004 Pearson Education Canada Inc.

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