PRODUCTION AND OPERATIONS

MANAGEMENT
12th Edition, McGraw Hill

CHAPTER 1:
INTRODUCTION TO Rafael Paolo Ireneo, MBA,
CSSBB
OPERATIONS MANAGEMENT
 LECTURE OVERVIEW
❖ DEFINE OPERATIONS MANAGEMENT (OM)
❖ THREE MAJOR FUNCTIONAL AREAS OF ORGANIZATIONS
❖ SERVICE & MANUFACTURING OPERATIONS
❖ OPERATIONS MANAGER’S JOB FUNCTION
❖ DESIGN & OPERATION OF PRODUCTION SYSTEMS
❖ ASPECTS OF OM DECISION MAKING
❖ BRIEF HISTORY
❖ CURRENT TRENDS IN OM
 What is Operations Management?

❖ MANAGEMENT - planning, leading, organizing,

controlling group of people working towards a common
function
❖ OPERATION - systems or processes that creates goods
and/or services
3 BASIC FUNCTIONS OF AN ORGANIZATION

Opera&ons

Marke+ng Finance
WHAT IS OPERATIONS MANAGEMENT?

❖ Operation Management - the management of systems

and processes that create goods and/or provide
services.
 TYPES OF OUTPUT
❖ GOOD
❖ physical items
❖ ex. automobile, computer

❖ SERVICE
❖ activities that provide some combination of time, location or
psychological value
❖ ex. education, haircut
DELIVERY OF GOODS/SERVICE
❖ SUPPLY CHAIN
❖ sequence of activities and organizations involved in
producing and delivering goods and service

Suppliers’ Direct Final

Producer Distributor
suppliers suppliers Customers
TRANSFORMATION PROCESS
Value-Added

Inputs Transformation/ Outputs

• Land Conversion • Goods
• Labor • Services
• Capital
Process
• Information

Measurement
and Feedback
Measurement Measurement
and Feedback and Feedback
Control
 GOODS VS SERVICE
1.  Degree of customer contact
2.  Uniformity of input
3.  Labor content of jobs
4.  Uniformity of output
5.  Measurement of productivity
6.  Production and delivery
7.  Quality assurance
8.  Amount of inventory
9.  Evaluation of work
10.  Ability to patent design
WHY STUDY OPERATIONS MANAGEMENT?

Organization

Marketing Operations Finance

 FUNCTION OVERLAP
❖ FINANCE
❖ Budgeting
❖ Economic Analysis
❖ Provisions of funds

❖ MARKETING
❖ Demand data
❖ Product and service data
❖ Competitor Analysis
❖ Lead time data
CAREERS IN OPERATIONS MANAGEMENT

❖ Operations Manager
❖ Supply Chain Manager
❖ Production Analyst
❖ Schedule Coordinator
❖ Production Manager
 PROCESS MANAGEMENT
❖ PROCESS
❖ one or more activites that
transforms inputs into
outputs

Three Categories of Business Processes:

Upper-management processes These govern the operation of the entire
organization.
Operational processes These are core processes that make up the
value stream.
Supporting processes These support the core processes.
 PROCESS VARIATION
Four Sources of Variation:
Variety of goods or services
being offered
Structural variation in demand
Random variation
Assignable variation
The greater the variety of goods and services
offered, the greater the variation in production
or service requirements.
These are generally predictable. They are
important for capacity planning.
Natural variation that is present in all
processes. Generally, it cannot be influenced
by managers.
Variation that has identifiable sources. This
type of variation can be reduced, or
eliminated, by analysis and corrective action.
SCOPE OF OPERATIONS MANAGEMENT
❖ SYSTEM DESIGN
❖ Capacity
❖ Facility location
❖ Facility layout
❖ Product and service planning
❖ SYSTEM OPERATION
❖ Management of personnel
❖ Inventory management and control
❖ Scheduling
❖ Project Management
 OM DECISION MAKING
—  Most operations decisions involve many alternatives that can
have quite different impacts on costs or profits
—  Typical operations decisions include:
—  What: What resources are needed, and in what amounts?

—  When: When will each resource be needed? When should the work be
scheduled? When should materials and other supplies be ordered?
—  Where: Where will the work be done?

—  How: How will he product or service be designed? How will the work be
done? How will resources be allocated?
—  Who: Who will do the work?
GENERAL APPROACHES TO DECISION MAKING

❖ MODELING
❖ QUANTITATIVE APPROACHES
❖ SYSTEMS APPROACH
GENERAL APPROACHES TO DECISION MAKING

❖ MODELING
❖ simplification of something.
❖ easier to use and less expensive
❖ require users to organize information
❖ “what if?”
❖ ex. crash test dummies
GENERAL APPROACHES TO DECISION MAKING

❖ QUANTITATIVE APPROACH
❖ mathematical solution
❖ ex. Linear Programming, Statistical models
GENERAL APPROACHES TO DECISION MAKING

❖ SYSTEMS APPROACH
❖ a SYSTEM is a set of interrlated parts that must work
together
❖ marketing subsystem, operations subsystem, finance
subsystem
❖ “The whole is greater than the sum of its parts”
 ESTABLISHING PRIORITIES

❖ PARETO PHENOMENON or 80/20 rule

❖ certain issues are more important than others
❖ critical few factors should recieve the higherst priority
PARETO PRINCIPLE
WHY STUDY OPERATIONS MANAGEMENT?

❖ Finance and Operations

❖ Budgeting
❖ Economic analysis of
investment proposals
❖ Provision of funds

❖ Marketing and Operations

❖ Assessing customer needs
❖ Consumer preferences
❖ Lead time
 CAREER OPPORTUNITIES
❖ Operations Manager
❖ Production Analyst
❖ Production Manager
❖ Industrial Engineer
❖ Time study analyst
❖ Inventory manager
❖ Purhcasing manger
❖ Schedule coordinator
❖ Quality Analyst
 TRENDS IN BUSINESS
❖ Internet
❖ Management of technology
❖ Globalization
❖ Management of Supply Chains
❖ Outsourcing
❖ Agility
❖ Ethical Behavior
 TRENDS IN BUSINESS
❖ Technology
❖ application of scientific
discoveries to the
development and
improvement of goods and
services
1. Product and service
technology
2. Process technology
3. Information technology
 OTHER IMPORTANT TRENDS
❖ PROCESS ANALYSIS AND
IMPROVEMENT (SIX SIGMA)
❖ LEAN PRODUCTION
SYSTEMS
 CASE STUDY
❖ Will be uploaded in edmodo
❖ Write the answers in a 1 whole sheet bond paper (computerized)
❖ Name, Section and Schedule on top left corner of the first page
❖ Size: short
❖ Spacing: single
❖ Indention: Justified
❖ Font: Calibri, 12