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Introduction to Production and Operations equipment, and facilities in the

Management development of a product or services.
The Operations Definition DESIRABLE FEATURES
Operations as a basic function OF THE PROCESS
Operations as a • LOW COST
transformation process • HIGH QUALITY
Operations as the • FLEXIBILITY
technical core • SPEED OF DELIVERY
The Operation As A Basic Function • INNOVATION
Operations function is about the arrangement of • ENVIRONMENTALLY ACCEPTABLE
resources which are devoted to the production The Three Necessary Functions
and delivery of its product and services. To create goods and services, all organizations
Operations As A Transformation Process – nasa require three functions:
scratch 1. Marketing - generates demand; takes order
THE 5 Ps or THE 5 Ms of OM 2. Production/Operations - creates the goods or
5 Ps 5 Ms service
People Manpower 3. Accounting - tracks the performance of
Plants Machines organization, pays bills, collects money
Parts Money Competitiveness - The degree to which a nation
Processes Materials can produce goods and services that meet the
Planning Methods and test of international markets while
and Control Management simultaneously maintaining or expanding the
Transformation Processes real incomes of its citizens.
Physical (manufacturing) - How effectively an organization meets the
Locational (transportation/ wants and needs of customers relative to others
warehouse) that offer similar goods or services
Exchange (retail)
Physiological (health care) Productivity = output/Input
Psychological (entertainment) • A measure of the effective
Informational (communications) use of resources, usually
Characteristics of Goods expressed as the ratio of
Tangible product output to input.
Consistent product definition Productivity improves when firms:
Production usually separate from consumption  Become more efficient
Can be inventoried  Downsize
Low customer interaction  Expand
Characteristics of Services  Retrench
Intangible product
 Achieve breakthroughs
Inconsistent product definition
Measures of Competitiveness
Produced & consumed at same time
 Productivity
Cannot be inventoried
High customer interaction  GDP (Gross domestic product) growth
Operations as the Technical Core – nasa  Market capitalization
handout  Technological infrastructure
Definition of  Quality of education
Operations Management  Efficiency of government
• Management of an organization's
production system Barriers to Entry Economies of scale
– Production system converts  Capital investment
inputs into goods & services  Access to supply and distribution
• OPERATIONS MANAGEMENTPLANNING channels
• ORGANIZING  Learning curves
• STAFFING
• DIRECTING and Marketing influences competitiveness in
• CONTROLLING several ways:
of activities relating to the creation of 1. Identifying consumer wants and/or needs.
goods and services through the transformation 2. Pricing
of inputs into outputs 3. Advertising and promotion
Operations influences competitiveness in
Definition of several ways:
Operations Management 1. Product & service designs
⇒ The design, operation, and 2.Cost
improvement of production systems 3. Location
that create the firm’s primary products 4. Quality
or services. 5. Quick response
⇒ The design and control of the systems 6. Flexibility
responsible for the productive use of 7. Inventory management
raw materials, human resources, 8. Supply chain management

Scale-based Strategies. Location the preceding period. Facilities and equipment • Design of the workspace 3. Time • The increase in productivity 4. minimum standards of Productivity Yield acceptability for a product to be • The ratio of output of god considered for purchase. Technology • New workers 5. Human Resources • Layoffs 2. • Use of the Internet Key External Factors • Computer viruses 1. Organizations have achieved time reduction in Strategies are plans for achieving organizational some of the following: goals. Legal environment • Scrap rates 4. Service relative to the productivity in 6. organization. Sustainability system that organizations can use to clarify their vision and Strategy Factors strategy and transform them 1. • Response Time for Complaints Specialization Balance Scorecard Newness. product to the quantity of raw Order Winners material input. and • The approach. Customers  Focus on supply chain management 5. required to accomplish various Goals serve as a foundation for the activities. Service • Focus on maintaining or 10. Competition • Safety 6. High quality • It is a top-down management Service. Strategy Formulation SWOT Approach • Strength • Weaknesses Productivity Measure • Opportunities • Can be used to track • Threats performance over time. Economic conditions • Searching for lost or misplaced 2. consistent with technologies the organization strategy. Suppliers  Long term role of new Operations Strategy products. 2. Products and services  Short term role of product 6. Quality Productivity Growth 3.  Satisfy customer demand Quality-based Strategies  Uninterrupted product flow with no defective items . Political conditions items wastes 3. development of organizational strategies. Markets • A shortage of information technology workers and other Key Internal Factors technical workers 1. Flexible operations. Flexibility from one period to the next 5. • Processing Time Here are some examples of different strategies • Changeover Time an organization might choose from: • Delivery Time Low cost. processes. Time-based Strategies Mission Statement states the purpose of an • Focus on reducing the time organization. • Can be used to judge the Order Qualifiers performance of an entire • Those characteristics that industry or the productivity of a potential customers perceive as country as a whole. • Those characteristics of an Factors that affect Productivity: organization’s good or services • Standardizing that cause them to be perceived • Quality differences as better than the competition. that is  Focus on Total Quality Management used to guide the operations function. Managers and workers improving the quality of an organization’s products or Mission is the reason for the existence of an services.9. Technology demand 7. Price into action. • Planning Time Tactics are methods and actions used to • Product/Service Design Time accomplish strategies. Financial resources Forecasting –refer to handout 4.

Historical Analogy. opinion High quality: Error-free designs which fulfil  Use management. smooth out changes  Ease of maintenance/service • Use when demand is stable with no trend or seasonal pattern Product Liability . Availability of qualified personnel  Appearance Moving Average • Average several periods of data  Ease of production/assembly • Dampen. marketing.periodic -meet expectations. long time frame -satisfy  seasonal patterns. Accuracy required  Cost/profit 4.no pattern -easy Types of Forecasts Operations managers tend to focus on the  Qualitative (Judgmental) design of the transformation process  Management judgment. moved from concept to detailed Panel Consensus specification in a short time  Quantitative Dependably delivered: Designs which are  Time Series Analysis delivered when promised  Causal Relationships Produced flexibly: Designs which include the latest ideas to emerge during the  Simulation process Low cost: Designs produced without Time Series Analysis consuming excessive resources  Time series forecasting models try to Objectives of Product and Service Design predict the future based on past data.Products carry an Forecast Control implication of merchantability and fitness.  Main focus  You can pick models based on:  Customer satisfaction 1. weekly monthly versa. oscillation in demand which -perform repeats -reliable  random. forecasts of sales data Major factors in design strategy Up to 2 years into the future  Cost  Quality  long-range – beyond 2 yr strategic planning of goals. of future behavior. Finished designs which are: expertise.  Time-to-market productsand markets  Customer satisfaction  Demand Behavior  Competitive advantage  Trend-gradual. Time horizon to forecast  Secondary focus 2. produces those products or services and vice range. Uniform Commercial Code . their purpose in an effective and creative purchasing. Executive Judgement. Market Research. long-term up The Purpose of Design is to Satisfy or down movement Customers Product designers will seek to create things  Cycles-up & down that: movement repeating over -are aesthetically pleasing.daily.  Necessary for strategic planning Decisions taken during the design of a product Components of Forecasting DemandTime or service will have an impact on the decisions Frame taken during the design of the process which  Short-range to medium. Grass Roots.  Reasons for out-of-control Designers Adhere to Guidelines forecasts  Produce designs that are consistant with  Change in trend the goals of the company  Appearance of cycle  Give customers the value they expect  Weather changes  Make health and safety a primary concern  Promotions  Consider potential harm to the  Competition environment  Politics Other Issues in Product and Service Design Product and Service design  Product/service life cycles Nature & Purpose of the Design Activity Products.A manufacturer is liable for • The simple moving average model any injuries or damages caused by a faulty assumes an average is a good estimator product. engineering way Ex. services and the processes which  How much standardization produce them all have to be designed  Product/service reliability  Range of operating conditions Standardization . Speedily produced: Designs which have Delphi Method. Data availability  Function of product/service 3. Size of forecasting budget  Quality 5.

is an approach that subdivides into commercial a system into smaller parts (modules) that can applications. and broad range of conditions inspection procedures Taguchi Approach Robust Design  Orders fillable from inventory  Design a robust product  Opportunities for long production runs  Insensitive to environmental and automation factors either in manufacturing  Need for fewer parts justifies increased or in use. standardized goods or services.  Development converts E.  Determines: Disadvantages of Standardization  factors that are controllable and  Designs may be frozen with too many those not controllable imperfections remaining. be independently created and then used in  Manufacturability is the ease of different systems to drive multiple fabrication and/or assembly which functionalities is important for: E.  their optimal levels relative to  High cost of design changes increases major product advances resistance to improvements. but incorporating some degree of customization Research & Development (R&D)  Organized efforts to increase scientific knowledge or product Delayed differentiation (Postponement) -a innovation & may involve: concept in supply chain management where the manufacturing process starts by making a  Basic Research advances generic or family product that is later knowledge about a subject differentiated into a specific end-product. expenditures on perfecting designs and  Central feature is Parameter Design. product. of a competitor’s product to discover Mass customization -A strategy of producing product improvements.g. part. or system does not perform as Concurrent engineering intended is the bringing together of engineering design and . or service until customer preferences or  Applied Research achieves specifications are known commercial applications. improving quality control procedures. part.Producing but not quite completing a product applications. Benetton results of applied research Modular design.g. Computers  Cost Modular design is a form of standardization in which component parts are subdivided into  Productivity modules that are easily replaced or  Quality interchanged. It allows:  Beyond the overall objective to  easier diagnosis and remedy of achieve customer satisfaction while failures making a reasonable profit is:  easier repair and replacement  Design for Manufacturing(DFM)  simplification of manufacturing  The designers’ consideration of the and assembly organization’s manufacturing capabilities when designing a  Reliability: The ability of a product. or system to perform its intended function under a prescribed set of  The more general term design for conditions operations encompasses services as well as manufacturing  Failure: Situation in which a product. Reverse engineering is the dismantling and  Decreased variety results in less inspecting consumer appeal. conditions under which an item’s service or process reliability is specified  Standardized products are Product Design immediately available to  Product Life Cycles customers  Robust Design Advantages of Standardization  Concurrent Engineering  Fewer parts to deal with in inventory &  Computer-Aided Design manufacturing  Modular Design  Design costs are generally lower Robust Design: Design that results in  Reduced training costs and time products or services that can function over a  More routine purchasing.  Extent to which there is an  Normal operating conditions: The set of absence of variety in a product. handling. without near-term Delayed differentiation is a postponement tactic expectations of commercial .

manufacturing personnel early in the design phase.  Computer-Aided Design (CAD) is product design using computer graphics. and skills needed to provide a service  Product bundle  The combination of goods and services provided to a customer  Service package  The physical resources needed to perform the service Differences Between Product and Service Design Tangible – intangible Services created and delivered at the same time Services cannot be inventoried Services highly visible to customers Services have low barrier to entry Location important to service . 3 to 10 times  creates a database for manufacturing information on product specifications  provides possibility of engineering and cost analysis on proposed designs  Service is an act  Service delivery system  Facilities  Processes  Skills  Many services are bundled with products  Service design involves  The physical resources needed  The goods that are purchased or consumed by the customer  Explicit services  Implicit services  Service  Something that is done to or for a customer  Service delivery system  The facilities.  increases productivity of designers. processes.