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OM Chap 1
OM Chap 1
McGraw-Hill/Irwin
Learning Objectives
Define the term operations management Identify the three major functional areas of organizations and describe how they interrelate Compare and contrast service and manufacturing operations Describe the operations function and the nature of the operations managers job
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Learning Objectives
Differentiate between design and operation of production systems Describe the key aspects of operations management decision making Briefly describe the historicalevolution of operations management Identify current trends that impact operations management
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Operations Management
Operations Management is: The management of systems or processes that create goods and/or provide services Operations Management affects:
Companies ability to compete Nations ability to compete internationally
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The Organization
Figure 1.1
Finance
Operations
Marketing
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Value-Added Process
Figure 1.2
Control
Feedback Feedback
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Goods-service Continuum
Figure 1.3
Goods
Service Surgery, teaching Song writing, software development Computer repair, restaurant meal
Automobile Repair, fast food Home remodeling, retail sales Automobile assembly, steel making
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Food Processor
Table 1.2
Inputs
Raw Vegetables Metal Sheets Water Energy Labor Building Equipment
Processing
Cleaning Making cans Cutting Cooking Packing Labeling
Outputs
Canned vegetables
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Hospital Process
Table 1.2
Inputs
Doctors, nurses Hospital Medical Supplies Equipment Laboratories
Processing
Examination Surgery Monitoring Medication Therapy
Outputs
Healthy patients
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Manufacturing or Service?
Tangible
Act
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Key Differences
1. Customer contact 2. Uniformity of input 3. Labor content of jobs 4. Uniformity of output 5. Measurement of productivity
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Key Differences
6. Production and delivery 7. Quality assurance 8. Amount of inventory 9. Evaluation of work 10. Ability to patent design
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Goods vs Service
Characteristic Customer contact Uniformity of input Labor content Uniformity of output Output Measurement of productivity Opportunity to correct problems Inventory Evaluation Patentable Goods Low High Low High Tangible Easy High Much Easier Usually Service High Low High Low Intangible Difficult Low Little Difficult Not usual 1-15
Types of Operations
Table 1.4
Operations
Goods Producing
Examples
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
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Figure 1.4
02
Percent
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Outsourcing
Some manufacturing work has been outsourced to more productive companies
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When
Needed/scheduled/ordered
Where
Work to be done
How
Designed
Who
To do the work
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Decision Making
System Design
capacity location arrangement of departments product and service planning acquisition and placement of equipment
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Decision Making
System operation
personnel inventory scheduling project management quality assurance
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Decision Making
Models Quantitative approaches Analysis of trade-offs Systems approach
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Models
A model is an abstraction of reality.
Physical Schematic Mathematical
Tradeoffs
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Limitations of Models
Quantitative information may be emphasized over qualitative Models may be incorrectly applied and results misinterpreted Nonqualified users may not comprehend the rules on how to use the model Use of models does not guarantee good decisions
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Quantitative Approaches
Linear programming Queuing Techniques Inventory models Project models Statistical models
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Analysis of Trade-Offs
Decision on the amount of inventory to stock
Increased cost of holding inventory
Vs.
Level of customer service
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Systems Approach
The whole is greater than the sum of the parts.
Suboptimization
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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. How do we identify the vital few?
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Ethical Issues
Financial statements Worker safety Product safety Quality Environment Community Hiring/firing workers Closing facilities Workers rights
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Operations
Marketing
Finance
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Operations Interfaces
Industrial Engineering Maintenance Distribution
Purchasing
Operations
Public Relations
Table 1.7
Human relations movement (1920-60) Decision models (1915, 1960-70s) Influence of Japanese manufacturers
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Trends in Business
Major trends
The Internet, e-commerce, e-business Management technology Globalization Management of supply chains Outsourcing Agility Ethical behavior
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Management Technology
Technology: The application of scientific discoveries to the development and improvement of goods and services Product and service technology Process technology Information technology
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Suppliers Suppliers
Direct Suppliers
Producer
Distributor
Final Consumer
Supply Chain: A sequence of activities And organizations involved in producing And delivering a good or service
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Value Added
$0.15 $0.08 $0.15 $0.08 $0.54 $0.08 $0.21 $1.29
Value of Product
$0.15 $0.23 $0.38 $0.46 $1.00 $1.08 $1.29
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